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Well, today is going to be another absolute banger. We've got a great group of
people, great lineup.

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Let me try and think of some of the panels we set up.

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The next one coming up is going to be Coin Joins and Coin Swaps, Lightning Privacy,
Lightning Payments.

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We have a sidechains panel, a mempool panel, so an absolute fire lineup for today.

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Keep the high signal content going over here on the open source stage.

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Once again, I just want to thank everybody who helped make this happen.

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I mean, there's a team of 10, 20 people back there that no one sees.

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I make sure all this goes smoothly. We've got all these production guys in the back.

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Really couldn't do without them.

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We also have a panel today on open source funding and raising money for developers.

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If you were here yesterday, I talked about my initiative at opensats.org.

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My co-founder will be on that panel.

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What I didn't mention and that I should have mentioned is that

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we are accepting applications for projects and contributors to be listed on
opensats.org.

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So if you are a contributor, if you are a developer or you're a maintainer of a
project,

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make sure you submit it so we can get you listed. We have some people listed
already.

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So you can go to opensats.org. You can donate to our general fund where we
contribute 100% of the proceeds

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to board-selected projects, or you can actually choose the individual projects you
want to do.

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Now, when you go to that donation page, some people said, oh, it says email name is
required.

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That's only if you check the tax deductible. If you check non-tax deductible,

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you don't have to provide us any information. You can just donate sats directly to
the cause.

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What else do I have on my homework that I'm supposed to talk about right now?

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We have Raspi Blitz auction happening at 3 o'clock.

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There's going to be three Raspi Blitz nodes available for that.

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Proceeds of that auction will go 50% to opensats, 50% to Raspi Blitz development.

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So if you want a really nice hardware node, consider coming for that

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and supporting a good cause at the same time.

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I just want to say that these last three days, it's been six months in the making,

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eight months in the making. It's been extremely rewarding.

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This is a global movement. A lot of times people get caught up in a lot of drama and
a lot of bullshit.

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But at the end of the day, we have passionate people around the world

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that are moving this mission forward, that are contributing to open-source projects,

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that are contributing to code, that will outlive all of us.

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And we can't do it alone. So being able to meet all of you, talk to you in person,

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is just really one of the most rewarding things.

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And I know it can feel exhausting at times. It can feel overwhelming.

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But one step at a time. We get through it together.

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And I really do think we can make the world a better place in a very actionable way.

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So, appreciate all of you.

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Unfortunately, well, fortunately and unfortunately, I've been basically in this room
all three days.

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So I haven't been to the main stage.

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But there was some really great talks that I heard about yesterday.

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That I do, if, you know, these things, it's very hard to view all the content in
person.

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So do consider checking out all the video on demand after the fact.

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Everything was recorded in high quality.

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I know Foday had a really great keynote yesterday,

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talking about his new Bitcoin Africa conference, which I'm really excited about.

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I really like this blossoming communities that are happening in the developing
world.

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They're extremely powerful.

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Gladstein had an absolutely insane freedom panel.

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That really is what this movement is about.

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So go check that out.

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And of course, the guy who stole the show, Mollers, Jack Mollers,

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had his announcement about nearly 50% of US merchants starting to accept Lightning
with no KYC,

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payable from any Lightning wallet.

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And we have two panels today, Lightning privacy and Lightning payments,

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that are going to be highly relevant to that conversation.

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So the timing could not be better.

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Anyway, with all that said, I love you all.

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We're going to fucking do this thing. I hope you enjoyed today.

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Huge thank you to the Bitcoin Magazine team for putting this all together

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and getting this fantastic space.

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Huge thanks to our sponsor Cash App, who also helped make this happen.

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This was, this is not cheap.

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This is not cheap and I really do appreciate it.

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And thank you to all our open source contributors and all around the world,

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especially those who couldn't make it.

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Appreciate you all. Let's do this.

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Hello, hello, hello. How's everyone doing today?

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Glad to be back here in Miami.

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I'm humbled and honored to be presenting this panel with this great cast of builders
over here.

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It's a very important panel on coin joins and coin swaps,

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which are some essential tools that we can use to give Bitcoiners privacy on chain.

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My name is Evan Kaloudis. I'm an application developer.

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I'm the founder of Zeus, a Lightning wallet.

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And I've got quite a cast here today.

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Let's start from the left. I got Ben Carman from Bitcoin Company.

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You've been working on some stuff with coin joins and lightning.

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It's called Ellen Vortex, right?

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Yeah, yeah. I made a proof of concept application to open up lightning channels
inside of a coin join.

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And hopefully we're actually launching it soon.

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Super exciting. Excited to play around with that.

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Next, we got Craig Roth from Sparrow Wallet, which is my favorite way to manage my
on-chain funds.

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He's recently added support for doing Samurai Whirlpool coin join transactions.

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And you've also got like Paynm stuff in there.

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Yeah.

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So it's really cool to see another wallet implement those two tools.

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And it's going to be fun to get into that in a bit.

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Next up, we got Fontaine. How are you doing today, Fontaine?

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Good. And you?

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Great. So Fontaine, you've got a iOS application, fully noted.

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And you've recently implemented a UI in there for managing coin join instances or
join market instances,

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which are a form of coin join that use like a maker-taker model, right?

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Correct.

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Excellent stuff. Really excited to have more tooling, more UI for join market.

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So that's great.

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And last up, we got Nick Gregory from Mercury Wallet.

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He has a new product.

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It's a state chain wallet that performs coin swaps.

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It's quite a bit different from coin joins.

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But I've been messing around with it this week, and I've been loving the experience
so far.

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So excited to get into that as well.

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So yeah, I don't think we really got to get into why Bitcoin privacy is important in
this volatile world

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where we're seeing people getting de-platformed from different accounts

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and all the turmoil in the world between people in Ukraine and Russia

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dealing with their governments and the situation there,

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people living just generally under authoritarian regimes.

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And more closely, what's happened in Canada with the trucker protest

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and the scrutiny that people have gotten after making these Bitcoin-driven
donations.

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So let's kick into the difference between a coin join and a coin swap.

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There's a lot of similarities, but very distinct methods of getting on-chain
privacy.

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So anyone want to give us a good overview of what a coin join really is, what it
consists of?

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Sure, I'll have a go at that.

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So I think the issue that we're trying to address with both coin joins and coin
swaps

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is the fundamental issue that Bitcoin is non-fungible, right?

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So we wish we had non-fungibility at a protocol layer.

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We don't have that, so we have to address that on an application layer.

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And both coin joins and coin swaps are attempts to do that.

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They differ in the sense that with a coin swap,

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you are effectively swapping out one coin's history for a different coin's history.

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So, for example, you may have two coins of the same size,

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and then you're trying to say, well, I'm going to swap my history with yours.

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For example, Evan.

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With a coin join, what we have is a number of different participants come

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and they join together to basically create what we call, for the most part,

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an equal output coin join where we have a set of inputs and a set of outputs.

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And the outputs are all the same size.

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And if they're all the same size, then it's very difficult to tell

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where the ownership of funds went after the fact.

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So particularly if we have multiple rounds of coin joins,

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we have this anonymity set which builds over time.

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So the chief difference between the two is that instead of swapping one person's
history

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or one kind of individual's history for a different history,

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what we have is swapping your history for the entire coin join

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and anonymity set that you are taking part, or at least that part that applies to
you.

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And that's kind of the difference as I see it between the two.

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Cool. Yeah, that's a great overview.

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So now coin swaps, at least in the case of Mercury Wallet,

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are being built off of a state chain.

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Nick, would you want to get into what a state chain is for people?

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So a state chain is another Bitcoin layer 2.

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It's obviously not as well known as the others like a sidechain or a lightning
network.

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But it was an idea that was drafted in a paper written by Ruben Somsen in 2019.

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And it's a way of basically transferring your private keys or UTXOs off-chain.

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And yeah, so we built the first version of this.

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And essentially we swap the coins and we swap the private keys.

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It's non-custodial.

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So the first use case was coin swap.

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Now it is different than coin join in that you're essentially swapping history.

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So there are some positives.

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The positives are that there's no on-chain taint of a coin join.

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The negatives is that you could end up with an undesirable coin, for example.

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To deal with that issue, we built a sparse Merkle tree of all the coin swaps.

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So if you were ever in a situation where you coin swapped with a coin

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that you don't necessarily want to have,

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you could prove that you participated in the coin swap

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because we attested to the Bitcoin network.

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Very interesting, very interesting.

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So as a, what do you say, like an orchestrator of the state chain, right?

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Yeah, I mean the way to view a state chain at a high level is,

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I think someone termed it once, like virtual open dimes.

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So essentially these open dimes now, we can swap them.

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So long as they've got the same denomination,

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we swap them using a similar protocol to the zero link.

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And so we don't know who has swapped with who.

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But as part of our state chain implementation,

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we provide a kind of coordination service

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which swaps these kind of virtual open dimes or UTXOs.

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So let's say you got scrutiny, for example, from like a state actor.

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Would you guys be able to blacklist UTXOs from participating?

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Well, we do actually have a blacklist,

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like many of the coin join coordinators,

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because if people misbehave, that's a DDoS attack.

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So if someone was to participate in a coin swap

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and constantly not let the coin swap complete.

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Yeah, like join the round and exit out,

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just to throw off the process so that less coins get mixed.

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So we have to implement that coin swap anyway.

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But long term, we're looking at making the coin swap more blinded.

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We're looking at integrating with Lightning.

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And with Schnoor, we can do more blinding scenarios

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where blacklisting wouldn't even be possible.

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And that's our approach.

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We could have made it blinded from day one,

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but there are a lot of UI challenges.

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But with certain events that have happened this year,

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we're kind of accelerating that, as you can imagine.

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Yeah, let's get there. That would be nice.

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How about other risks with state chains?

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Do users have to worry about the state chain orchestrator

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perhaps running off with their funds?

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With every layer 2, there are compromises.

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So if the state chain entity was to cooperate with a previous owner,

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in theory, they could steal the funds.

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We've built a load of things to not let that happen.

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We use an HSM on the back end to delete the private keys, the key shares.

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But also, I think the biggest reason we wouldn't do that

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is because every time a state coin is created,

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you have essentially a backup transaction.

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If the state chain entity was to cooperate with a previous owner,

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you'd have evidence that that would have happened.

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We call it proof of scam.

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So you can always prove that the state chain had misbehaved.

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And I think that's probably the biggest weapon we have to say

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that we're going to cooperate.

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Cryptographically proved, we stole the funds.

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That's great.

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And you know who I am. I'm here.

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Wouldn't be good.

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So yeah, we touched on blacklisting,

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at least within the context of state chains.

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Anyone want to make any comments about what we've seen

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with some of the other CoinJoin coordinators as of late?

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I know that's been a point of contention,

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and I figured we'd get some spicy discussion in.

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Ben, you look like you have something to say.

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Yeah, I used to work at Wasabi,

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so it's really sad to see that they did do that.

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For one, I can understand being like,

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we don't want the Bitfinex hack coins going through our CoinJoin

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and someone coming and arresting me.

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But for two, they're not even taking that stance.

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They're talking about using Elliptic

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to do chain analysis on every coin that comes in.

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That's just awful.

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That's sad to see.

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Really, it kind of shows the benefits of things like JoinMarket,

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where there is this no-coordinator, no-one-can-stop-it,

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no censorship there.

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Having the centralized coordinator is nice

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because it creates this nice incentive

232
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where they can make money and develop the wallet

233
00:15:36,000 --> 00:15:38,000
and do all this stuff.

234
00:15:38,000 --> 00:15:41,000
But obviously, centralization is not the best,

235
00:15:41,000 --> 00:15:44,000
and censorship comes in.

236
00:15:44,000 --> 00:15:46,000
It's sad to see.

237
00:15:46,000 --> 00:15:48,000
But I think, luckily, in this space,

238
00:15:48,000 --> 00:15:50,000
there are other alternatives.

239
00:15:51,000 --> 00:15:53,000
We're doing fine, I think.

240
00:15:53,000 --> 00:15:55,000
Not only do you have the options of

241
00:15:55,000 --> 00:15:58,000
going to another coordinator system entirely,

242
00:15:58,000 --> 00:16:00,000
like Samurai Whirlpool,

243
00:16:00,000 --> 00:16:02,000
or getting rid of a coordinator entirely

244
00:16:02,000 --> 00:16:05,000
and going to make-or-take-your-protocol,

245
00:16:05,000 --> 00:16:07,000
sort of like JoinMarket.

246
00:16:07,000 --> 00:16:10,000
But other people can run their own Wasabi instances,

247
00:16:10,000 --> 00:16:14,000
and you can just choose not to mix with the main company.

248
00:16:16,000 --> 00:16:19,000
It's not the end of the world, right?

249
00:16:19,000 --> 00:16:22,000
We're having this diverse market

250
00:16:22,000 --> 00:16:25,000
of these privacy providers of sorts

251
00:16:25,000 --> 00:16:28,000
come in to provide these services.

252
00:16:28,000 --> 00:16:30,000
But it is a little upsetting

253
00:16:30,000 --> 00:16:34,000
when people preemptively decide to do these things.

254
00:16:35,000 --> 00:16:37,000
It's a lie.

255
00:16:37,000 --> 00:16:38,000
It's a lie?

256
00:16:38,000 --> 00:16:39,000
It's a lie.

257
00:16:39,000 --> 00:16:41,000
It's not the truth.

258
00:16:41,000 --> 00:16:43,000
Don't look at it like you're preemptively

259
00:16:43,000 --> 00:16:45,000
back to the point.

260
00:16:45,000 --> 00:16:47,000
There's a legal side to the story.

261
00:16:47,000 --> 00:16:49,000
We need to build out the information

262
00:16:49,000 --> 00:16:52,000
that is legally protected towards us.

263
00:16:52,000 --> 00:16:54,000
That protects us.

264
00:16:54,000 --> 00:16:56,000
We're in a big war right now,

265
00:16:56,000 --> 00:16:58,000
so we can't just go around

266
00:16:58,000 --> 00:17:00,000
and say the truth.

267
00:17:00,000 --> 00:17:03,000
That would be more trouble than what we're already in.

268
00:17:17,000 --> 00:17:20,000
Unfortunately, we couldn't make that happen.

269
00:17:23,000 --> 00:17:24,000
We can move forward,

270
00:17:24,000 --> 00:17:27,000
unless anyone else has any other comments on that?

271
00:17:27,000 --> 00:17:29,000
Well, look, I mean, you know,

272
00:17:29,000 --> 00:17:31,000
the reality is, as far as we know,

273
00:17:31,000 --> 00:17:33,000
there are no rules or regulations

274
00:17:33,000 --> 00:17:38,000
that state that one needs to blacklist UTXOs

275
00:17:38,000 --> 00:17:41,000
coming into a centralized CoinJoin service.

276
00:17:41,000 --> 00:17:43,000
That's as far as we know,

277
00:17:43,000 --> 00:17:46,000
and that's coming from ZK Snacks,

278
00:17:46,000 --> 00:17:48,000
the makers of wasabi themselves, right?

279
00:17:48,000 --> 00:17:49,000
That's what they've said to us.

280
00:17:49,000 --> 00:17:50,000
So they're not aware of anything.

281
00:17:50,000 --> 00:17:52,000
It's from what they've said.

282
00:17:52,000 --> 00:17:54,000
We're not aware of anything.

283
00:17:54,000 --> 00:17:56,000
Certainly I'm not.

284
00:17:56,000 --> 00:17:58,000
And just, you know,

285
00:17:58,000 --> 00:18:02,000
the difficulty of trying to actually create that regular...

286
00:18:02,000 --> 00:18:04,000
If you think about what a coordinator does,

287
00:18:04,000 --> 00:18:06,000
it takes a number of different inputs,

288
00:18:06,000 --> 00:18:08,000
and it just organizes them, right?

289
00:18:08,000 --> 00:18:12,000
So to try and legally block that kind of activity

290
00:18:12,000 --> 00:18:14,000
is going to be difficult

291
00:18:14,000 --> 00:18:16,000
because how do you avoid that

292
00:18:16,000 --> 00:18:19,000
blocking a lot of other critical services in this world, right?

293
00:18:19,000 --> 00:18:21,000
You know, I mean, what we're talking about

294
00:18:21,000 --> 00:18:22,000
is not something dramatic.

295
00:18:22,000 --> 00:18:24,000
There's no custody of funds.

296
00:18:24,000 --> 00:18:25,000
You know, there's a lot of things

297
00:18:25,000 --> 00:18:27,000
that are not going on there.

298
00:18:27,000 --> 00:18:28,000
We're really just talking about

299
00:18:28,000 --> 00:18:30,000
taking a few bits of data

300
00:18:30,000 --> 00:18:32,000
and reorganizing them,

301
00:18:32,000 --> 00:18:34,000
and that kind of happens on the Internet

302
00:18:34,000 --> 00:18:36,000
for a number of different services,

303
00:18:36,000 --> 00:18:38,000
often with financial amounts involved.

304
00:18:38,000 --> 00:18:40,000
So, you know, I don't know.

305
00:18:40,000 --> 00:18:45,000
I think that it's really not good for the Bitcoin world

306
00:18:45,000 --> 00:18:47,000
when we start seeing services

307
00:18:47,000 --> 00:18:49,000
trying to approach things

308
00:18:49,000 --> 00:18:52,000
in a way that, you know,

309
00:18:52,000 --> 00:18:55,000
really highlights the fact

310
00:18:55,000 --> 00:18:57,000
that we have this non-fungible...

311
00:18:57,000 --> 00:18:59,000
It is a fact that it exists,

312
00:18:59,000 --> 00:19:01,000
but we shouldn't be trying,

313
00:19:01,000 --> 00:19:03,000
particularly as a privacy service,

314
00:19:03,000 --> 00:19:05,000
to push that forward, right?

315
00:19:05,000 --> 00:19:06,000
The more that that happens,

316
00:19:06,000 --> 00:19:08,000
the worse things get for everyone,

317
00:19:08,000 --> 00:19:10,000
and it's really sad to see.

318
00:19:15,000 --> 00:19:17,000
Okay.

319
00:19:17,000 --> 00:19:19,000
Moving forward,

320
00:19:19,000 --> 00:19:21,000
coin joins,

321
00:19:21,000 --> 00:19:23,000
coin swaps,

322
00:19:23,000 --> 00:19:25,000
do you guys see them

323
00:19:25,000 --> 00:19:28,000
as being complementary, supplementary?

324
00:19:28,000 --> 00:19:31,000
Can they be used in tandem?

325
00:19:31,000 --> 00:19:32,000
And if so,

326
00:19:32,000 --> 00:19:35,000
how would you guys propose they be used?

327
00:19:36,000 --> 00:19:38,000
I think they should be used in tandem,

328
00:19:38,000 --> 00:19:39,000
because, like,

329
00:19:39,000 --> 00:19:40,000
if you were to do a coin swap,

330
00:19:40,000 --> 00:19:42,000
for one, you're just going to give someone your coin,

331
00:19:42,000 --> 00:19:44,000
and now they could see, like, your whole history.

332
00:19:44,000 --> 00:19:47,000
So if you don't want to dox, like, your coin's history

333
00:19:47,000 --> 00:19:49,000
to this person you're coin swapping with,

334
00:19:49,000 --> 00:19:51,000
then you would want to coin join beforehand

335
00:19:51,000 --> 00:19:53,000
to see, like, okay, you don't know

336
00:19:53,000 --> 00:19:55,000
I bought this Bitcoin on Cash App or something.

337
00:19:55,000 --> 00:19:57,000
So then they would, like, you know,

338
00:19:57,000 --> 00:19:58,000
you would hide it there,

339
00:19:58,000 --> 00:19:59,000
as well as, like,

340
00:19:59,000 --> 00:20:01,000
have a larger anonymity set going in

341
00:20:01,000 --> 00:20:02,000
to protect you,

342
00:20:02,000 --> 00:20:07,000
because it's, like, a state act

343
00:20:07,000 --> 00:20:08,000
would have high incentives to come in

344
00:20:08,000 --> 00:20:10,000
and just do coin swaps all day

345
00:20:10,000 --> 00:20:12,000
to try to see who's coin swapping.

346
00:20:12,000 --> 00:20:15,000
If you come in with a coin joined output,

347
00:20:15,000 --> 00:20:17,000
they would not be able to totally tell,

348
00:20:17,000 --> 00:20:19,000
because if you just came from an address

349
00:20:19,000 --> 00:20:20,000
to withdraw from, like, Coinbase,

350
00:20:20,000 --> 00:20:21,000
they'd be like,

351
00:20:21,000 --> 00:20:23,000
oh, this is Ben Carman's coin,

352
00:20:23,000 --> 00:20:24,000
and then, you know,

353
00:20:24,000 --> 00:20:25,000
the coin swap is useless now.

354
00:20:25,000 --> 00:20:27,000
So if you came in with a coin joined,

355
00:20:27,000 --> 00:20:29,000
they'd have a much harder time figuring out who it is.

356
00:20:29,000 --> 00:20:30,000
So I really do think, like,

357
00:20:30,000 --> 00:20:32,000
both of them together just complement each other

358
00:20:32,000 --> 00:20:33,000
extremely well.

359
00:20:34,000 --> 00:20:35,000
Yeah, I agree.

360
00:20:35,000 --> 00:20:38,000
I think we're really just scratching the surface,

361
00:20:38,000 --> 00:20:39,000
and I'm sure people are, you know,

362
00:20:39,000 --> 00:20:41,000
doing their own mixes of stuff,

363
00:20:41,000 --> 00:20:42,000
but moving forward,

364
00:20:42,000 --> 00:20:44,000
it'd be really cool to see some services

365
00:20:44,000 --> 00:20:46,000
sort of combine the two,

366
00:20:46,000 --> 00:20:48,000
take the best properties of each,

367
00:20:48,000 --> 00:20:50,000
and be able to pass it on to the user.

368
00:20:52,000 --> 00:20:54,000
Nick, you had some ideas about other tools

369
00:20:54,000 --> 00:20:55,000
that could be used in conjunction,

370
00:20:55,000 --> 00:20:58,000
at least with your project and coin swaps.

371
00:20:58,000 --> 00:20:59,000
Yeah, I mean,

372
00:20:59,000 --> 00:21:01,000
we're looking to make things more blinded,

373
00:21:01,000 --> 00:21:02,000
and that's like,

374
00:21:02,000 --> 00:21:03,000
you know,

375
00:21:03,000 --> 00:21:05,000
you essentially work a lot more with lightning.

376
00:21:05,000 --> 00:21:06,000
So, you know,

377
00:21:06,000 --> 00:21:08,000
rather than to take a fee

378
00:21:08,000 --> 00:21:09,000
on our state chain,

379
00:21:09,000 --> 00:21:10,000
which, you know,

380
00:21:10,000 --> 00:21:12,000
certain companies could see the fee

381
00:21:12,000 --> 00:21:14,000
and basically figure out that our coins

382
00:21:14,000 --> 00:21:16,000
had participated in a coin swap,

383
00:21:16,000 --> 00:21:18,000
we would take a lightning fee up front,

384
00:21:18,000 --> 00:21:20,000
issue a kind of like a Chomein token,

385
00:21:20,000 --> 00:21:23,000
and that would be redeemed for like a state coin,

386
00:21:23,000 --> 00:21:25,000
and then that would make it slightly more blinded.

387
00:21:25,000 --> 00:21:27,000
And we've looked at coin joins as well

388
00:21:27,000 --> 00:21:29,000
as kind of on the withdrawal process.

389
00:21:29,000 --> 00:21:30,000
But I think as always,

390
00:21:30,000 --> 00:21:31,000
you know,

391
00:21:31,000 --> 00:21:32,000
the UI...

392
00:21:32,000 --> 00:21:33,000
So from the withdrawal process,

393
00:21:33,000 --> 00:21:34,000
you mean like,

394
00:21:34,000 --> 00:21:35,000
so going,

395
00:21:35,000 --> 00:21:36,000
pegging out of the state coin?

396
00:21:36,000 --> 00:21:37,000
Like...

397
00:21:37,000 --> 00:21:38,000
Yes, yeah.

398
00:21:38,000 --> 00:21:39,000
Okay, interesting.

399
00:21:39,000 --> 00:21:40,000
But we put that on withdrawal

400
00:21:40,000 --> 00:21:41,000
because we're more focused on lightning.

401
00:21:41,000 --> 00:21:43,000
But people got to understand

402
00:21:43,000 --> 00:21:44,000
there's a lot of things you can do,

403
00:21:44,000 --> 00:21:45,000
but the UI challenges

404
00:21:45,000 --> 00:21:48,000
are kind of harder than the technology behind it.

405
00:21:48,000 --> 00:21:49,000
You know,

406
00:21:49,000 --> 00:21:51,000
I think all technology here uses Tor.

407
00:21:51,000 --> 00:21:52,000
It's an unreliable,

408
00:21:52,000 --> 00:21:54,000
hard network to work with.

409
00:21:54,000 --> 00:21:56,000
Oh, you're going to get me started on Tor.

410
00:21:57,000 --> 00:21:59,000
And getting that working on a UI that,

411
00:21:59,000 --> 00:22:00,000
you know,

412
00:22:00,000 --> 00:22:02,000
everyone can use is a challenge.

413
00:22:02,000 --> 00:22:03,000
And that's probably why...

414
00:22:03,000 --> 00:22:05,000
But I think that's improving.

415
00:22:05,000 --> 00:22:08,000
So you mentioned a very interesting thing there,

416
00:22:08,000 --> 00:22:11,000
like a lot of application challenges,

417
00:22:11,000 --> 00:22:14,000
putting together an app to make everything

418
00:22:14,000 --> 00:22:16,000
work smoothly at the end of the day for the user.

419
00:22:16,000 --> 00:22:18,000
Do you guys think that more progress

420
00:22:18,000 --> 00:22:20,000
can be made at the protocol levels

421
00:22:20,000 --> 00:22:21,000
with these sort of things,

422
00:22:21,000 --> 00:22:22,000
like coin joins, coin swaps,

423
00:22:22,000 --> 00:22:23,000
other similar tools?

424
00:22:23,000 --> 00:22:25,000
Or do you think we need more focus

425
00:22:25,000 --> 00:22:27,000
on the UI, UX,

426
00:22:27,000 --> 00:22:29,000
the applications that we're giving the users?

427
00:22:29,000 --> 00:22:32,000
Like, where is the bigger room for improvement,

428
00:22:32,000 --> 00:22:34,000
would you say?

429
00:22:34,000 --> 00:22:37,000
I would say we could really do

430
00:22:37,000 --> 00:22:40,000
with cross-input signature aggregation.

431
00:22:40,000 --> 00:22:42,000
It would be a major improvement,

432
00:22:42,000 --> 00:22:45,000
and not just to the privacy layer of Bitcoin,

433
00:22:45,000 --> 00:22:47,000
but to the scalability as well, right?

434
00:22:47,000 --> 00:22:48,000
Indeed.

435
00:22:48,000 --> 00:22:49,000
Because we'd have less data

436
00:22:49,000 --> 00:22:51,000
going into every transaction.

437
00:22:51,000 --> 00:22:52,000
So for me,

438
00:22:52,000 --> 00:22:55,000
that is a very fundamental improvement,

439
00:22:55,000 --> 00:22:58,000
and I worry that I don't see it

440
00:22:58,000 --> 00:22:59,000
being talked about a lot.

441
00:22:59,000 --> 00:23:01,000
I think it's been very briefly mentioned

442
00:23:01,000 --> 00:23:02,000
here on the stage,

443
00:23:02,000 --> 00:23:05,000
maybe once in the last two days.

444
00:23:05,000 --> 00:23:08,000
And I'm really hoping to see more being done.

445
00:23:08,000 --> 00:23:09,000
I know that it's not a simple thing.

446
00:23:09,000 --> 00:23:11,000
I'm very aware of it.

447
00:23:11,000 --> 00:23:13,000
It's very complicated.

448
00:23:13,000 --> 00:23:16,000
It's a great challenge to implement.

449
00:23:16,000 --> 00:23:17,000
People have been thinking about it

450
00:23:17,000 --> 00:23:19,000
for many, many years.

451
00:23:20,000 --> 00:23:22,000
If it was easy to do,

452
00:23:22,000 --> 00:23:23,000
it would be done by now.

453
00:23:23,000 --> 00:23:24,000
But Craig,

454
00:23:24,000 --> 00:23:25,000
do you want to give us a little overview

455
00:23:25,000 --> 00:23:28,000
of cross-input signature aggregation,

456
00:23:28,000 --> 00:23:31,000
what it means as an overview?

457
00:23:31,000 --> 00:23:32,000
Sure.

458
00:23:32,000 --> 00:23:33,000
So basically right now,

459
00:23:33,000 --> 00:23:36,000
every Bitcoin input that you spend,

460
00:23:36,000 --> 00:23:38,000
you have to provide a signature

461
00:23:38,000 --> 00:23:40,000
which shows that you own it.

462
00:23:40,000 --> 00:23:45,000
And so we right now construct a transaction,

463
00:23:45,000 --> 00:23:46,000
and for every input,

464
00:23:46,000 --> 00:23:48,000
we have to provide this.

465
00:23:48,000 --> 00:23:52,000
Now that not only bloats the size of the transaction,

466
00:23:52,000 --> 00:23:54,000
but with Snore,

467
00:23:54,000 --> 00:23:55,000
what we can do is actually

468
00:23:55,000 --> 00:23:57,000
aggregate them down to one.

469
00:23:57,000 --> 00:23:59,000
And that enables us to not only

470
00:23:59,000 --> 00:24:01,000
decrease the size of the transaction,

471
00:24:01,000 --> 00:24:04,000
which is good from a scalability point of view,

472
00:24:04,000 --> 00:24:05,000
but in fact it can make

473
00:24:05,000 --> 00:24:07,000
privacy-focused transactions

474
00:24:07,000 --> 00:24:08,000
like coin-join transactions

475
00:24:08,000 --> 00:24:10,000
actually cheaper to make.

476
00:24:10,000 --> 00:24:11,000
Right?

477
00:24:11,000 --> 00:24:12,000
So that's a very important fact.

478
00:24:12,000 --> 00:24:13,000
Generally what we've seen

479
00:24:13,000 --> 00:24:15,000
in the history of Bitcoin

480
00:24:15,000 --> 00:24:16,000
is that advances happen

481
00:24:16,000 --> 00:24:19,000
when the cost to the user becomes less.

482
00:24:19,000 --> 00:24:20,000
Right?

483
00:24:20,000 --> 00:24:22,000
Ultimately, everything is driven by money.

484
00:24:22,000 --> 00:24:25,000
This is a monetary network we're on.

485
00:24:25,000 --> 00:24:27,000
And if we're looking for things

486
00:24:27,000 --> 00:24:28,000
to actually get adoption,

487
00:24:28,000 --> 00:24:30,000
one of the reasons SegWit

488
00:24:30,000 --> 00:24:32,000
has adoption in this world

489
00:24:32,000 --> 00:24:34,000
is because it was cheaper to do.

490
00:24:34,000 --> 00:24:35,000
So for me,

491
00:24:35,000 --> 00:24:37,000
that's a really important thing.

492
00:24:37,000 --> 00:24:39,000
It not only will enable Bitcoin to scale better,

493
00:24:39,000 --> 00:24:41,000
but it will actually make people

494
00:24:41,000 --> 00:24:44,000
turn to privacy-focused transactions

495
00:24:44,000 --> 00:24:46,000
sooner than they might otherwise.

496
00:24:46,000 --> 00:24:47,000
Yeah, absolutely.

497
00:24:47,000 --> 00:24:50,000
Bitcoin, by all of its design,

498
00:24:50,000 --> 00:24:51,000
it teaches us that

499
00:24:51,000 --> 00:24:54,000
the incentives are imperative.

500
00:24:54,000 --> 00:24:56,000
And CISA,

501
00:24:56,000 --> 00:24:58,000
or cross-input signature aggregation,

502
00:24:58,000 --> 00:25:00,000
not only makes it possible

503
00:25:00,000 --> 00:25:02,000
for us to turn every...

504
00:25:02,803 --> 00:25:05,083
makes it possible for us to turn every transaction into a CoinJoin,

505
00:25:05,083 --> 00:25:10,443
but it incentivizes that economically, which is the amazing thing.

506
00:25:10,443 --> 00:25:15,923
So you'd actually be paying more to not get in on a CoinJoin

507
00:25:15,923 --> 00:25:18,483
and improve the privacy of yourself and others.

508
00:25:18,483 --> 00:25:22,283
So yeah, that would be quite an advancement.

509
00:25:22,283 --> 00:25:26,403
And I hope it just doesn't go to the wayside

510
00:25:26,403 --> 00:25:27,963
and we could find a way to bring it to Bitcoin.

511
00:25:27,963 --> 00:25:29,163
That would be incredible.

512
00:25:30,803 --> 00:25:34,683
Fontaine, haven't heard from you too much.

513
00:25:34,683 --> 00:25:38,243
Do you want to talk a little bit about Fully Noted,

514
00:25:38,243 --> 00:25:41,963
why you picked JoinMarket to put in,

515
00:25:41,963 --> 00:25:45,683
as opposed to perhaps one of these other centralized coordinators?

516
00:25:45,683 --> 00:25:52,883
Yeah, the whole idea with Fully Noted is you run your own self-hosted server,
Bitcoin Core.

517
00:25:52,883 --> 00:25:57,003
And JoinMarket is exactly... it works the same way as Fully Noted.

518
00:25:57,003 --> 00:25:59,363
It's just built right on top of Bitcoin Core.

519
00:25:59,363 --> 00:26:03,003
So it was kind of a perfect match architecturally for the app

520
00:26:03,003 --> 00:26:09,163
and just kind of the mental model of how the app works.

521
00:26:09,163 --> 00:26:11,803
Yeah, I'm very excited about adding JoinMarket.

522
00:26:11,803 --> 00:26:16,563
It's mind-blowing how it works

523
00:26:16,563 --> 00:26:23,163
and kind of just the cryptography that goes into it to prevent Sybil attacks, I
think.

524
00:26:23,163 --> 00:26:28,083
I think the reason I like JoinMarket is because just my own intuition tells me

525
00:26:28,083 --> 00:26:32,083
it's harder to Sybil attack JoinMarket than a centralized coordinator,

526
00:26:32,083 --> 00:26:39,083
especially the ones where it's cheaper to keep remixing your coins, I think.

527
00:26:39,083 --> 00:26:42,683
So, and obviously with what has happened recently,

528
00:26:42,683 --> 00:26:47,763
has shown light that centralized servers where you're doing privacy-related stuff

529
00:26:47,763 --> 00:26:50,963
probably is going to be a target, right?

530
00:26:50,963 --> 00:26:55,523
Yeah, absolutely. We're definitely going to see more scrutiny in the coming years.

531
00:26:55,523 --> 00:26:58,963
I'm just, yeah, I'm happy that it's approved on the App Store and that it's out
there.

532
00:26:58,963 --> 00:27:03,003
And I need to write some more tutorials and get some more people,

533
00:27:03,003 --> 00:27:06,403
teach people how to use it basically and get it easier to install JoinMarket,

534
00:27:06,403 --> 00:27:09,643
which a lot of the Node packages now, they are running it,

535
00:27:09,643 --> 00:27:11,803
but they need to be running the wallet daemon

536
00:27:11,803 --> 00:27:15,163
and setting up a service for that to easily connect.

537
00:27:15,163 --> 00:27:20,523
Yeah, so we've had JoinMarket. It's been a project for some years now.

538
00:27:20,523 --> 00:27:24,603
And, you know, most people have had to just interface with it via CLI

539
00:27:24,643 --> 00:27:27,763
or very basic web interfaces.

540
00:27:27,763 --> 00:27:32,963
So I am ecstatic to see all this progress being made in terms of the UI for it.

541
00:27:32,963 --> 00:27:36,563
And it's funny because, you know, you don't have the centralized coordinator

542
00:27:36,563 --> 00:27:39,683
making fees and facilitating the development of its software.

543
00:27:39,683 --> 00:27:44,763
So you don't have a team that's been incentivized to put out a really nice UI

544
00:27:44,763 --> 00:27:47,043
like Wasabi or Samurai has.

545
00:27:47,043 --> 00:27:51,723
So it's really been sort of up to the community to get together

546
00:27:51,723 --> 00:27:55,683
and put stuff together, hook into the API and make something presentable for users.

547
00:27:55,683 --> 00:28:01,403
So it's been really awesome to see people like yourself putting out, you know, this
UI.

548
00:28:01,403 --> 00:28:07,483
We've seen some efforts from others like the Bitcoin design community.

549
00:28:07,483 --> 00:28:13,003
And I know Gigi has been deeply involved in the web UI.

550
00:28:13,003 --> 00:28:17,563
That's an alpha. I believe it's on Umbral now. It's called Flow. What is it called?

551
00:28:17,563 --> 00:28:20,603
I'm not sure what it's called, but they did release it very recently.

552
00:28:20,603 --> 00:28:24,043
And it's actually very pretty, so it's good to see.

553
00:28:24,043 --> 00:28:30,403
Yeah, yeah. So it's a great start and I'm really excited to see that project
iterate.

554
00:28:30,403 --> 00:28:37,443
And yeah, let's see more. I know there's some people working on some other mobile
apps.

555
00:28:37,443 --> 00:28:42,083
So it would be great if we could get those Android users on.

556
00:28:42,083 --> 00:28:48,603
So yeah, that has been an awesome, awesome development to see.

557
00:28:50,683 --> 00:28:54,563
So yeah, more joint market stuff.

558
00:28:54,563 --> 00:28:58,643
Ben, you want to get into some stuff with Coinjoins and Lightning?

559
00:28:58,643 --> 00:29:01,163
Let's dive a little into some Ellen Vortex stuff.

560
00:29:01,163 --> 00:29:07,003
Sure. Yeah, like Lightning kind of has this fundamental problem right now where

561
00:29:07,003 --> 00:29:10,323
when you have a Lightning channel, you just, to tell people about the channel,

562
00:29:10,323 --> 00:29:14,763
to prove you're not lying about it, you just say like, this is my UTXO, my channel
is in.

563
00:29:14,763 --> 00:29:18,603
So everyone can see like, you know, this node owns this channel.

564
00:29:18,603 --> 00:29:22,763
And then you just look at the opening inputs in there and be like, OK, this is his
wallet.

565
00:29:22,763 --> 00:29:26,083
And he docks a lot of your on-chain privacy here.

566
00:29:26,083 --> 00:29:31,403
So if you're privacy minded, what you should be doing is like Coinjoining through
something like Wasabi

567
00:29:31,403 --> 00:29:36,723
or Whirlpool or Joint Market or doing a coin swap with like Mercury Wallet or
something.

568
00:29:36,723 --> 00:29:39,123
And then so you have these new coins and then you open the channel.

569
00:29:39,123 --> 00:29:43,603
So when people see that you have the UTXO, they don't know you're actually a
hoister.

570
00:29:43,603 --> 00:29:47,363
They don't see like, oh, you got these coins from Coinbase or something.

571
00:29:47,403 --> 00:29:52,723
So, but that still is not the best because, you know, you're now having to do like
two

572
00:29:52,723 --> 00:29:55,843
or three transactions all on-chain and that takes a lot of space.

573
00:29:55,843 --> 00:30:00,323
So I tried to solve this by building Vortex, which is basically a way to,

574
00:30:00,323 --> 00:30:03,363
instead of doing a Coinjoin, then opening a channel,

575
00:30:03,363 --> 00:30:07,123
you would just open a channel in a Coinjoin with like multiple other people.

576
00:30:07,123 --> 00:30:09,923
So the idea is just, you know, you're, for one, saving on-chain space.

577
00:30:09,923 --> 00:30:15,323
And then two, like, you know, your Lightning node is going to be online like 24-7,
at least it should be.

578
00:30:15,323 --> 00:30:18,323
So why not just have this thing Coinjoining all the time as well?

579
00:30:18,323 --> 00:30:20,523
And then, you know, open channels when you need to.

580
00:30:20,523 --> 00:30:23,083
So it helps you like, you know, always increase Coinjoin liquidity,

581
00:30:23,083 --> 00:30:26,083
as well as, you know, just benefiting your Lightning node's privacy.

582
00:30:26,083 --> 00:30:31,803
And you do get a little bit of very small on-chain savings by opening a channel with
multiple people.

583
00:30:31,803 --> 00:30:38,243
So it's not just taking like your XPub from another, you know, wallet that you have
mixed

584
00:30:38,243 --> 00:30:40,963
and using that to open up channels.

585
00:30:40,963 --> 00:30:45,203
It's like you're doing the Coinjoin right into the channel open.

586
00:30:45,203 --> 00:30:46,043
Yeah, precisely.

587
00:30:46,043 --> 00:30:50,003
So it's really nice because then you just like have your channel in there.

588
00:30:50,003 --> 00:30:54,963
And if you do it a private channel, then people just don't know like what this is,

589
00:30:54,963 --> 00:30:56,403
which, you know, really benefits you.

590
00:30:56,403 --> 00:30:57,843
So how have you designed it?

591
00:30:57,843 --> 00:31:00,203
Like, you got your own coordinator in there that's putting everything together?

592
00:31:00,203 --> 00:31:00,603
Yeah, yeah.

593
00:31:00,603 --> 00:31:04,843
So it's the coordinator model because that's a lot easier to build, sadly.

594
00:31:04,843 --> 00:31:08,963
But so there's a coordinator that just like, you know, makes sure everyone's queue's
up.

595
00:31:08,963 --> 00:31:12,163
And then you queue up and everyone opens a channel at the same time.

596
00:31:12,163 --> 00:31:13,443
So what are your plans for that?

597
00:31:13,443 --> 00:31:14,763
Are you going to run your own coordinator?

598
00:31:14,763 --> 00:31:16,683
You just put the software out there?

599
00:31:16,683 --> 00:31:19,163
It might be illegal.

600
00:31:19,163 --> 00:31:19,603
I don't know.

601
00:31:19,603 --> 00:31:21,243
So maybe someone non will run it.

602
00:31:21,243 --> 00:31:22,803
But, yeah.

603
00:31:22,803 --> 00:31:31,803
You know, perhaps a NIM could step up to the plate and help us out.

604
00:31:31,803 --> 00:31:35,883
Yeah, I wouldn't want to see how the blacklist developed.

605
00:31:35,883 --> 00:31:37,603
You know, Johnny, we'll all push the pressure on you.

606
00:31:37,603 --> 00:31:39,563
So let's try to steer clear of that.

607
00:31:39,563 --> 00:31:40,683
Yeah, yeah.

608
00:31:40,683 --> 00:31:42,723
No, we have talked to some lawyers about it.

609
00:31:42,723 --> 00:31:44,883
And apparently it's like, don't say CoinJoin.

610
00:31:44,883 --> 00:31:46,963
We need to call it collaborative transactions now.

611
00:31:46,963 --> 00:31:50,363
And it's just, this isn't for privacy.

612
00:31:50,363 --> 00:31:51,843
It's for cheaper on-chain.

613
00:31:51,843 --> 00:31:52,603
I'm a businessman.

614
00:31:52,603 --> 00:31:53,683
I'm trying to save money.

615
00:31:53,683 --> 00:31:58,563
So there's actually like, people seem OK with that now.

616
00:31:58,563 --> 00:32:00,323
So, yeah.

617
00:32:00,323 --> 00:32:00,823
Cool.

618
00:32:00,823 --> 00:32:04,843
And where would you say the state of the project is right now?

619
00:32:04,843 --> 00:32:06,683
It seems very early, right?

620
00:32:06,683 --> 00:32:10,283
But it's functional, right?

621
00:32:10,283 --> 00:32:11,563
Yeah.

622
00:32:11,563 --> 00:32:13,643
On RegTest, I've opened the Lightning channel.

623
00:32:13,643 --> 00:32:15,843
So it works.

624
00:32:15,843 --> 00:32:19,363
I've been working, like, I'm too busy right now with my, like, real job.

625
00:32:19,363 --> 00:32:21,043
But, uh.

626
00:32:21,043 --> 00:32:22,323
Yeah, startup life is hard, huh?

627
00:32:22,323 --> 00:32:23,483
Yeah, startup life sucks.

628
00:32:23,483 --> 00:32:24,603
But it's also great.

629
00:32:24,603 --> 00:32:28,483
But I actually talked to like a bunch of people here this week about it.

630
00:32:28,483 --> 00:32:32,003
And I got a few people to commit to actually like,

631
00:32:32,003 --> 00:32:34,523
paying money to try to build a UI for it.

632
00:32:34,523 --> 00:32:37,403
So once I have that out, it'll be very easy to launch.

633
00:32:37,403 --> 00:32:40,523
So I should be launching it in the next month or two.

634
00:32:41,523 --> 00:32:43,923
Maybe we should talk about trying to get that into Zeus.

635
00:32:43,923 --> 00:32:44,803
That'd be pretty cool.

636
00:32:44,803 --> 00:32:46,963
Very down.

637
00:32:46,963 --> 00:32:51,763
Yeah, I've been thinking a lot about coin joins and the relationship to LN

638
00:32:51,763 --> 00:32:58,803
and what we can do to give users the interfaces and the tools

639
00:32:58,803 --> 00:33:01,163
to be able to use them in tandem.

640
00:33:01,163 --> 00:33:08,123
So, yeah, I've been working on some external account imports from XPUBs

641
00:33:08,163 --> 00:33:11,883
to pull into Zeus with the LND PSBT API.

642
00:33:11,883 --> 00:33:18,083
And I very much would like to get some coordination with some of the coin join

643
00:33:18,083 --> 00:33:25,843
projects to provide the ability to do some external signing for, like,

644
00:33:25,843 --> 00:33:31,123
unfunded, unsigned PSBT that Zeus passes it and going back.

645
00:33:31,123 --> 00:33:36,763
So that would save you from having to, like, transfer, make a transaction

646
00:33:36,763 --> 00:33:41,003
from your Samurai or Whirlpool to Zeus.

647
00:33:41,003 --> 00:33:44,363
But, you know, your solution cuts out that extra step.

648
00:33:44,363 --> 00:33:47,963
Like, just go from the coin join right into the Lightning Channel.

649
00:33:47,963 --> 00:33:50,163
And I find that fascinating.

650
00:33:50,163 --> 00:33:53,483
Yeah, I mean, it's weird because, like, a lot of people, like,

651
00:33:53,483 --> 00:33:56,603
if they want to open a Lightning Channel, a lot of their processes

652
00:33:56,603 --> 00:34:01,363
will either, like, send from, like, their exchange or their hardware wallet

653
00:34:01,363 --> 00:34:05,883
to, like, Samurai, mix it, do, like, two or three on-chain transactions,

654
00:34:05,883 --> 00:34:08,603
then send it to the LND wallet, then open the channel.

655
00:34:08,603 --> 00:34:10,963
So it's like you're wasting all this block space

656
00:34:10,963 --> 00:34:12,963
and spending all these fees, and it really sucks.

657
00:34:12,963 --> 00:34:13,643
So you just do it.

658
00:34:13,643 --> 00:34:15,143
At least you're propping up the fee market.

659
00:34:15,143 --> 00:34:16,083
That's good.

660
00:34:16,083 --> 00:34:20,883
Yeah, so you just do it all in one nice channel, yeah.

661
00:34:24,803 --> 00:34:26,403
Great.

662
00:34:26,403 --> 00:34:36,843
So let's take it back to protocol stuff versus application stuff.

663
00:34:36,843 --> 00:34:40,923
Do you guys see any other things substantially

664
00:34:40,923 --> 00:34:42,403
that application developers?

665
00:34:42,403 --> 00:34:45,763
I mean, we got into CISA earlier, and we've

666
00:34:45,763 --> 00:34:47,923
said that there are a lot of enhancements

667
00:34:47,923 --> 00:34:49,923
that we can make on protocol layers.

668
00:34:49,923 --> 00:34:53,163
But what more can application developers

669
00:34:53,163 --> 00:34:55,643
do to make these tools more accessible?

670
00:34:59,363 --> 00:35:02,003
I mean, there are some things, like, with the addition of Taproot,

671
00:35:02,003 --> 00:35:04,963
now we can do some new fancier things that we couldn't before,

672
00:35:04,963 --> 00:35:08,083
since, like, we do have the raw pubkey on-chain now.

673
00:35:08,083 --> 00:35:11,083
So you can do things like a ring signature and other stuff

674
00:35:11,083 --> 00:35:13,123
that you won't broadcast on-chain, but you

675
00:35:13,123 --> 00:35:15,443
can do that for, like, proofs inside of your coin joins.

676
00:35:15,443 --> 00:35:20,363
So there's probably now room for a lot more different models

677
00:35:20,363 --> 00:35:24,363
in, like, Zerolink or something to actually create coin joins.

678
00:35:24,363 --> 00:35:26,523
I know some people are working on research on that,

679
00:35:26,523 --> 00:35:29,883
but it would be cool to see someone, like, you know,

680
00:35:29,883 --> 00:35:32,283
now they have Taproot and all these other new properties.

681
00:35:32,283 --> 00:35:35,483
Let's, like, try to build out things that, like, actually use it.

682
00:35:35,483 --> 00:35:38,563
And because Taproot is, like, largely a privacy upgrade.

683
00:35:38,563 --> 00:35:40,483
And with it, we should be able to, like,

684
00:35:40,483 --> 00:35:45,043
create new kind of coin join protocols, or at least improve them currently.

685
00:35:45,043 --> 00:35:48,723
And we haven't really seen that yet, because it's only been a couple months.

686
00:35:48,763 --> 00:35:51,043
But I would love to see that happen.

687
00:35:51,043 --> 00:35:54,123
Yeah, we're just starting to kick off, you know,

688
00:35:54,123 --> 00:35:56,883
what Taproot is going to bring to the table.

689
00:35:56,883 --> 00:36:01,243
You know, Lightning Labs and Taro was a pretty big announcement,

690
00:36:01,243 --> 00:36:03,163
and it's going to have a lot of repercussions.

691
00:36:03,163 --> 00:36:07,163
But yeah, I would love to see, you know, more tooling through, like,

692
00:36:07,163 --> 00:36:09,883
Tapscripts and really getting creative with that

693
00:36:09,883 --> 00:36:12,203
to bring people better privacy.

694
00:36:12,203 --> 00:36:14,243
So that will be exciting.

695
00:36:14,243 --> 00:36:17,603
Yeah, I think the one thing we should also consider

696
00:36:17,603 --> 00:36:21,123
is that, you know, unless we do away with,

697
00:36:21,123 --> 00:36:24,403
which, frankly, without a hard fork, I don't see it happening,

698
00:36:24,403 --> 00:36:29,203
this kind of issue of Bitcoin being basically non-fungible

699
00:36:29,203 --> 00:36:31,123
at the protocol layer, right?

700
00:36:31,123 --> 00:36:34,963
If you can see the amounts, unfortunately, there is a coin history,

701
00:36:34,963 --> 00:36:36,883
and you can trace it back over time.

702
00:36:36,883 --> 00:36:39,203
So unless we can do away with that,

703
00:36:39,203 --> 00:36:40,603
we're going to have to deal with the fact

704
00:36:40,603 --> 00:36:44,243
that we have to build something on the application layer.

705
00:36:44,243 --> 00:36:47,083
And then, really, you're talking about, you know,

706
00:36:47,083 --> 00:36:49,603
the idea of anonymity sets, right?

707
00:36:49,603 --> 00:36:52,723
So you're sort of one of a number of people,

708
00:36:52,723 --> 00:36:54,923
and obviously, the greater that group of people,

709
00:36:54,923 --> 00:36:57,563
the more anonymous you are.

710
00:36:57,563 --> 00:37:01,683
So it's one thing to talk about, you know, how can we have new tools,

711
00:37:01,683 --> 00:37:04,723
but we also have existing tools today.

712
00:37:04,723 --> 00:37:06,323
And every time you launch a new tool,

713
00:37:06,323 --> 00:37:09,923
you're going to have to possibly start from zero

714
00:37:09,923 --> 00:37:12,043
on that anonymity set, right?

715
00:37:12,043 --> 00:37:14,163
So that crowd is going to start off with one.

716
00:37:14,163 --> 00:37:16,643
It's going to go to two and three and four, and it takes time.

717
00:37:16,643 --> 00:37:19,763
You know, it takes time for that tool to get out there.

718
00:37:19,763 --> 00:37:22,483
It takes time for people to trust the tool,

719
00:37:22,483 --> 00:37:25,043
for clients to be written at how many wallets

720
00:37:25,043 --> 00:37:26,803
are going to adopt the same tool,

721
00:37:26,803 --> 00:37:29,323
or is everyone going to have to use one wallet?

722
00:37:29,323 --> 00:37:32,363
So, you know, I think it's dangerous

723
00:37:32,363 --> 00:37:34,883
to constantly be looking into the future and saying,

724
00:37:34,883 --> 00:37:36,683
well, what could happen, right?

725
00:37:36,683 --> 00:37:40,403
Because we might end up in a place where,

726
00:37:40,403 --> 00:37:43,283
if we don't push the tools that we have today,

727
00:37:43,283 --> 00:37:47,843
then by the time we get to the tools that we think might be better,

728
00:37:47,843 --> 00:37:49,803
the world has changed to the point

729
00:37:49,803 --> 00:37:52,523
that those tools are seen as not good, right?

730
00:37:52,523 --> 00:37:54,843
But if we use the tools that we have today,

731
00:37:54,843 --> 00:37:56,803
it changes the mindset of people,

732
00:37:56,803 --> 00:37:59,643
and it changes how society views it.

733
00:37:59,643 --> 00:38:04,283
So if CoinJoin becomes, you know, a widely used thing today,

734
00:38:04,283 --> 00:38:07,123
then that will change the way that society views it.

735
00:38:07,123 --> 00:38:09,123
And I think it's important not to wait too long

736
00:38:09,123 --> 00:38:10,603
and to actually use the tools,

737
00:38:10,603 --> 00:38:13,563
because, as I was saying, the crowd grows.

738
00:38:13,563 --> 00:38:15,163
And as the crowd grows,

739
00:38:15,163 --> 00:38:17,203
which not only helps the anonymity of your coins,

740
00:38:17,203 --> 00:38:19,803
but it also changes the way that the rules

741
00:38:19,803 --> 00:38:22,683
and regulations of the world will form.

742
00:38:22,683 --> 00:38:26,083
So, you know, I think there's a different way to see it.

743
00:38:26,083 --> 00:38:27,203
And it's like very true, too.

744
00:38:27,203 --> 00:38:29,843
Like, we really aren't using all the tools we have available today.

745
00:38:29,843 --> 00:38:31,403
Like, one, we're talking about Taproot,

746
00:38:31,403 --> 00:38:33,763
but like, Liquid has existed for years

747
00:38:33,763 --> 00:38:36,203
and has confidential transactions,

748
00:38:36,203 --> 00:38:38,323
which is like perfect for CoinJoin,

749
00:38:38,363 --> 00:38:41,603
where you could have unequal amounts and do all these spends.

750
00:38:41,603 --> 00:38:43,603
You know, it is slightly different trade-offs

751
00:38:43,603 --> 00:38:47,203
with it being the sidechain and kind of custodial.

752
00:38:47,203 --> 00:38:49,723
But it would be perfect as a privacy tool.

753
00:38:49,723 --> 00:38:52,123
And like, no one is using that, or has built something,

754
00:38:52,123 --> 00:38:54,123
which is kind of like, that would be amazing.

755
00:38:54,123 --> 00:38:55,603
I would use that all the time if someone built,

756
00:38:55,603 --> 00:38:57,363
where you could CoinJoin on there

757
00:38:57,363 --> 00:38:59,843
and do all these unequal amount things,

758
00:38:59,843 --> 00:39:03,683
and then AtomicSwap back into real Bitcoin.

759
00:39:03,683 --> 00:39:06,243
And no one's built that in like four or five years.

760
00:39:06,723 --> 00:39:08,323
Like, we really aren't using our tools yet.

761
00:39:08,323 --> 00:39:11,203
And like, yeah, that's something we need to press on.

762
00:39:11,203 --> 00:39:12,643
I think we also need funding.

763
00:39:12,643 --> 00:39:13,883
Like, there's a lot of,

764
00:39:13,883 --> 00:39:16,163
there's not much money in developing wallets,

765
00:39:16,163 --> 00:39:20,123
especially self-sovereign wallets, you know?

766
00:39:20,123 --> 00:39:22,203
So, yeah.

767
00:39:22,203 --> 00:39:25,043
Yeah, it's very few players, you know,

768
00:39:25,043 --> 00:39:27,483
helping facilitate the building of these things.

769
00:39:27,483 --> 00:39:30,043
But, you know, we got some good actors

770
00:39:30,043 --> 00:39:33,003
that we're extremely grateful for, like HRF.

771
00:39:33,003 --> 00:39:38,003
HRF both threw us a Bitcoin each at about the same time.

772
00:39:38,283 --> 00:39:40,763
And yeah, it's really awesome

773
00:39:40,763 --> 00:39:43,523
that we've been able to use those sats wisely

774
00:39:43,523 --> 00:39:45,763
and continue to build out our products.

775
00:39:45,763 --> 00:39:48,763
So, you know, shouts to HRF and Alex Gladstein,

776
00:39:48,763 --> 00:39:52,483
all the good folks over there for supporting us.

777
00:39:52,483 --> 00:39:53,323
So that's great.

778
00:39:53,323 --> 00:39:55,603
But yeah, we hit on a lot of great points right there.

779
00:39:56,763 --> 00:39:59,163
I think it's very important to hit on, you know,

780
00:40:00,083 --> 00:40:02,003
perfect being the enemy of good.

781
00:40:02,043 --> 00:40:05,323
And, you know, people holding out to, you know,

782
00:40:05,323 --> 00:40:08,003
for privacy tools that may offer, you know,

783
00:40:08,003 --> 00:40:10,043
better properties or whatnot.

784
00:40:11,523 --> 00:40:13,603
But, you know, that's like speaking

785
00:40:13,603 --> 00:40:15,123
from a position of privilege.

786
00:40:15,123 --> 00:40:19,763
There are a lot of people that need Bitcoin privacy today.

787
00:40:19,763 --> 00:40:22,163
And, you know, how do we support those people?

788
00:40:23,683 --> 00:40:26,723
I think by and large, like,

789
00:40:26,723 --> 00:40:29,483
the best way is to get in on these mixes with people,

790
00:40:29,483 --> 00:40:33,803
use the tools and help increase those Anon sets.

791
00:40:33,803 --> 00:40:38,723
And, you know, we saw it even with the construction

792
00:40:38,723 --> 00:40:43,723
of this panel that, you know, CoinJoin, CoinSwaps,

793
00:40:43,883 --> 00:40:48,083
privacy in general on Bitcoin has a bit of a stigma.

794
00:40:49,163 --> 00:40:52,643
People or some companies in the space

795
00:40:52,643 --> 00:40:55,603
don't wanna touch it with a 10 foot pole.

796
00:40:55,603 --> 00:40:57,503
And that's really unfortunate.

797
00:40:58,423 --> 00:41:03,423
But what can we do to try to de-stigmatize Bitcoin privacy,

798
00:41:04,303 --> 00:41:06,703
which is a human right?

799
00:41:08,223 --> 00:41:11,143
I think the most important thing is to use the tools, right?

800
00:41:11,143 --> 00:41:12,903
That is the number one thing.

801
00:41:12,903 --> 00:41:15,983
We have to not only use the tools,

802
00:41:15,983 --> 00:41:18,663
but encourage others to use them, explain them.

803
00:41:18,663 --> 00:41:22,703
And, you know, I have like a thing I like to say,

804
00:41:22,703 --> 00:41:26,223
like normalize CoinJoin, you know, or CoinSwap, right?

805
00:41:26,743 --> 00:41:31,383
Normalize these things because they're really like privacy.

806
00:41:31,383 --> 00:41:33,383
If you believe it's a basic human rights,

807
00:41:33,383 --> 00:41:37,383
then, you know, why should we feel ashamed

808
00:41:37,383 --> 00:41:39,103
to just aim for that?

809
00:41:39,103 --> 00:41:40,863
Because that's all that a CoinJoin is doing.

810
00:41:40,863 --> 00:41:44,983
It's just giving you financial privacy over your coins.

811
00:41:44,983 --> 00:41:48,783
So, you know, the sort of worries

812
00:41:48,783 --> 00:41:51,463
and we sort of laugh at each other and smile and say,

813
00:41:51,463 --> 00:41:53,183
well, maybe it's legal.

814
00:41:53,183 --> 00:41:55,983
But actually we need to take the kind of, in my view,

815
00:41:56,663 --> 00:41:58,223
the firm view that it's not, right?

816
00:41:58,223 --> 00:42:03,183
I think that we shouldn't kind of have this kind of half view

817
00:42:03,183 --> 00:42:06,183
we should actually be brave and say, you know what?

818
00:42:06,183 --> 00:42:08,943
What we're asking for here is not something which is,

819
00:42:09,823 --> 00:42:14,823
you know, in some way strange or, you know, not kosher.

820
00:42:15,463 --> 00:42:18,663
It's really just a normal thing that we should all want.

821
00:42:18,663 --> 00:42:19,503
So.

822
00:42:19,503 --> 00:42:20,343
Yeah.

823
00:42:26,063 --> 00:42:29,663
Yeah, and, you know, it's people have this misconception

824
00:42:29,663 --> 00:42:32,663
based on, you know, I guess Bitcoin's history,

825
00:42:32,663 --> 00:42:36,263
Darknet markets that, you know, why would you want privacy?

826
00:42:36,263 --> 00:42:37,703
Are you trying to buy drugs?

827
00:42:37,703 --> 00:42:40,943
Are you trying to support terrorism?

828
00:42:40,943 --> 00:42:44,703
And it's, that couldn't be, you know,

829
00:42:44,703 --> 00:42:45,703
further from the truth.

830
00:42:45,703 --> 00:42:49,023
It's like when you make a purchase, right?

831
00:42:49,543 --> 00:42:51,623
Like, do you want the person that you pay

832
00:42:51,623 --> 00:42:54,503
to know how much money you have and to follow you

833
00:42:54,503 --> 00:42:57,263
to every other store that you go to?

834
00:42:58,303 --> 00:42:59,583
No, that sucks.

835
00:43:00,663 --> 00:43:01,503
That's garbage.

836
00:43:01,503 --> 00:43:05,863
Do you want your employer to know what you do

837
00:43:05,863 --> 00:43:09,903
with your money after every paycheck?

838
00:43:11,103 --> 00:43:12,063
Hell no.

839
00:43:13,263 --> 00:43:18,263
So, indeed, whether it be, you know,

840
00:43:18,663 --> 00:43:22,063
something as simple as getting, you know,

841
00:43:22,063 --> 00:43:24,943
medicine for you or your family or, you know,

842
00:43:24,943 --> 00:43:28,223
making other sensitive transactions that, you know,

843
00:43:28,223 --> 00:43:32,023
other people shouldn't, you know, know.

844
00:43:32,023 --> 00:43:36,263
Like these tools are imperative, you know,

845
00:43:36,263 --> 00:43:39,463
especially in a world where, you know,

846
00:43:39,463 --> 00:43:42,743
there's this increasing push by the state to,

847
00:43:42,743 --> 00:43:44,183
by not just the state, I suppose,

848
00:43:44,183 --> 00:43:47,023
but also corporations to know as much information

849
00:43:47,023 --> 00:43:50,983
about your life and your finances, first and foremost.

850
00:43:50,983 --> 00:43:53,503
It's important that, you know, we don't just try to,

851
00:43:53,503 --> 00:43:57,183
we don't just recreate these tools in this, you know,

852
00:43:57,183 --> 00:44:01,663
open blockchain system and that we give users the ability

853
00:44:02,783 --> 00:44:04,303
to take back some of that privacy

854
00:44:04,303 --> 00:44:06,623
and only selectively reveal the information

855
00:44:06,623 --> 00:44:08,463
that they want to reveal.

856
00:44:08,463 --> 00:44:09,303
So.

857
00:44:10,263 --> 00:44:12,303
It's weird because like, I can understand if you're like,

858
00:44:12,303 --> 00:44:15,383
I don't care if Twitter sends me targeted ads

859
00:44:15,383 --> 00:44:18,423
because, you know, I'll buy Tide Pods or whatever.

860
00:44:18,423 --> 00:44:21,103
But your Bitcoin privacy is extremely important

861
00:44:21,103 --> 00:44:23,023
because like, for one, it's stored,

862
00:44:23,023 --> 00:44:24,383
like the history is there forever.

863
00:44:24,383 --> 00:44:27,063
So even if you fuck it up, it's gonna be fucked up.

864
00:44:27,063 --> 00:44:28,783
Yeah, yeah, like that's,

865
00:44:28,783 --> 00:44:31,383
there's no getting the toothpaste back in the tube

866
00:44:31,383 --> 00:44:34,503
if you make an error with your on-chain interactions.

867
00:44:34,503 --> 00:44:35,343
So.

868
00:44:37,583 --> 00:44:40,703
You gotta make sure you're doing it right from the get-go.

869
00:44:40,703 --> 00:44:42,703
But even then, there's still a lot of challenges

870
00:44:42,703 --> 00:44:46,143
like you're, Anon said, deteriorating over time.

871
00:44:46,143 --> 00:44:48,783
You know, perhaps some people that are in your mixes,

872
00:44:48,783 --> 00:44:51,503
they begin to KYC themselves

873
00:44:51,503 --> 00:44:53,863
as they're trying to sell Bitcoins perhaps

874
00:44:53,863 --> 00:44:56,383
through, you know, some of these exchanges.

875
00:44:56,383 --> 00:44:58,263
Don't do that, guys, don't do that.

876
00:45:01,343 --> 00:45:04,103
Yeah, it's a can of worms, really.

877
00:45:04,103 --> 00:45:07,823
So, you know, what else can people do?

878
00:45:07,823 --> 00:45:09,303
Education, too.

879
00:45:09,303 --> 00:45:11,823
I think OpenNOMS is really great.

880
00:45:11,823 --> 00:45:13,823
He's just constantly helping people out

881
00:45:13,823 --> 00:45:17,063
and writing excellent resources.

882
00:45:17,063 --> 00:45:19,623
If you, I highly suggest looking at his GitHub

883
00:45:19,623 --> 00:45:21,623
and going through all his information.

884
00:45:23,023 --> 00:45:24,583
Indeed, indeed, he's been awesome.

885
00:45:24,583 --> 00:45:26,703
And I think what goes along with that is,

886
00:45:26,703 --> 00:45:31,583
you know, any service that blocks, you know,

887
00:45:31,583 --> 00:45:33,863
coin-joined funds, you know, take them out.

888
00:45:33,863 --> 00:45:35,983
You know, don't be afraid to call them out

889
00:45:35,983 --> 00:45:38,623
because effectively we have two forces

890
00:45:38,623 --> 00:45:39,663
pulling in the world, right?

891
00:45:39,663 --> 00:45:42,743
We've got the sort of, call them governmental forces

892
00:45:42,743 --> 00:45:45,703
that are pulling us towards the regulation,

893
00:45:45,703 --> 00:45:47,023
the KYC side.

894
00:45:47,023 --> 00:45:48,543
We need something on the other side

895
00:45:48,543 --> 00:45:49,743
and that has to be us, right?

896
00:45:49,743 --> 00:45:50,943
Who else is it going to be?

897
00:45:50,943 --> 00:45:52,183
Who else is going to stand up?

898
00:45:52,183 --> 00:45:54,143
If not us, then who?

899
00:45:54,143 --> 00:45:54,983
Exactly.

900
00:46:01,223 --> 00:46:04,543
Yeah, it's, you know, I said earlier that,

901
00:46:05,423 --> 00:46:06,983
you know, privacy is a human right,

902
00:46:07,023 --> 00:46:10,743
but rights are not granted, they're taken.

903
00:46:10,743 --> 00:46:15,183
And it's going to take a lot of, you know,

904
00:46:15,183 --> 00:46:20,103
push from us, or pulling if we're using the pulling analogy,

905
00:46:21,103 --> 00:46:23,723
to pull things in the direction we want to see them.

906
00:46:23,723 --> 00:46:26,343
So that's going to take individuals stepping up.

907
00:46:26,343 --> 00:46:29,303
That's going to take developers and projects stepping up.

908
00:46:29,303 --> 00:46:31,343
That's going to take companies stepping up

909
00:46:31,343 --> 00:46:34,463
and saying, no, this is the right thing for us,

910
00:46:35,463 --> 00:46:40,463
for our users, our customers, and for humanity as a whole.

911
00:46:40,583 --> 00:46:44,943
Because the alternative that we could, you know,

912
00:46:44,943 --> 00:46:48,743
very rapidly decline into is, you know,

913
00:46:48,743 --> 00:46:52,423
a totalitarian hellscape of sorts,

914
00:46:52,423 --> 00:46:57,303
where every transaction is recorded and known about

915
00:46:57,303 --> 00:47:01,463
from, you know, your personal transactions at the pharmacy

916
00:47:01,503 --> 00:47:02,823
or regarding to your health,

917
00:47:02,823 --> 00:47:06,203
to the pocket change that you give to your son.

918
00:47:07,983 --> 00:47:09,983
Do you really want to live in a world

919
00:47:09,983 --> 00:47:12,503
where you have to get permission from the government

920
00:47:12,503 --> 00:47:15,543
or, you know, tell them about spending money

921
00:47:15,543 --> 00:47:17,143
you give to your kids?

922
00:47:17,143 --> 00:47:18,263
I sure as hell don't.

923
00:47:20,423 --> 00:47:22,703
So yeah, we're coming up on time soon.

924
00:47:22,703 --> 00:47:25,423
We've got about two minutes to wrap up.

925
00:47:25,423 --> 00:47:27,303
Do you guys have any closing thoughts?

926
00:47:27,983 --> 00:47:28,983
Thank you for having me.

927
00:47:30,543 --> 00:47:31,383
Thanks for being here

928
00:47:31,383 --> 00:47:34,023
and thanks for building some awesome tools.

929
00:47:35,943 --> 00:47:37,583
Yeah, I would just say, if you don't CoinJoin,

930
00:47:37,583 --> 00:47:39,703
it's not, or CoinSwap, you should try them out.

931
00:47:39,703 --> 00:47:42,223
It's like actually very easy to do

932
00:47:42,223 --> 00:47:44,663
and it's monumentally benefits for you.

933
00:47:44,663 --> 00:47:46,503
So like, I know a lot of people are daunted.

934
00:47:46,503 --> 00:47:48,303
It's like, oh, that's the nerdy Bitcoin people

935
00:47:48,303 --> 00:47:50,503
that it's like, that's what the hardcore people do.

936
00:47:50,503 --> 00:47:52,783
It's like, no, it's like, I could get my mom

937
00:47:52,783 --> 00:47:55,383
to use like any of them.

938
00:47:55,503 --> 00:47:56,583
They're not that hard.

939
00:47:56,583 --> 00:47:59,143
So you should try it out if you haven't done it before.

940
00:47:59,143 --> 00:48:00,623
Yeah, absolutely.

941
00:48:00,623 --> 00:48:03,343
Get on your umbrella, download JoinMarket,

942
00:48:03,343 --> 00:48:04,663
check out Mercury Wallet.

943
00:48:04,663 --> 00:48:07,503
I've been having a great time playing with it this week

944
00:48:07,503 --> 00:48:10,143
and it's just super easy to use.

945
00:48:10,143 --> 00:48:12,663
Just deposit, auto-swap.

946
00:48:12,663 --> 00:48:15,063
I'm just running rounds and increasing my anon.

947
00:48:16,343 --> 00:48:18,943
Yeah, it's great to have users that test it.

948
00:48:18,943 --> 00:48:21,703
I mean, when we went into alpha,

949
00:48:21,703 --> 00:48:23,503
some guy decided to create the state of the art

950
00:48:24,063 --> 00:48:26,263
some guy decided to create the state chain torch

951
00:48:26,263 --> 00:48:28,463
and we learned so much in those three months.

952
00:48:28,463 --> 00:48:30,103
You know, it was passing around on Twitter.

953
00:48:30,103 --> 00:48:31,863
People were finding bugs all over the place

954
00:48:31,863 --> 00:48:33,743
and that really helped harden the product

955
00:48:33,743 --> 00:48:36,783
and get it to where we could be production ready.

956
00:48:36,783 --> 00:48:39,543
Yeah, it's important to test and try these tools

957
00:48:39,543 --> 00:48:41,703
and figure out, you know, where the bugs are,

958
00:48:41,703 --> 00:48:45,223
the rough spots and yeah, I encourage everyone

959
00:48:45,223 --> 00:48:47,983
to go out and run your coin joins,

960
00:48:47,983 --> 00:48:51,023
try some coin swaps out and to keep using these tools

961
00:48:51,023 --> 00:48:55,223
to help proliferate them and, you know,

962
00:48:55,223 --> 00:48:58,263
make privacy better for yourself but also for others.

963
00:48:58,263 --> 00:49:00,423
And if we can get some more clients as well,

964
00:49:00,423 --> 00:49:03,183
you know, the more wallets that implement these tools

965
00:49:03,183 --> 00:49:04,823
would be great, you know, you might think

966
00:49:04,823 --> 00:49:07,383
that I sort of enjoy being, you know,

967
00:49:07,383 --> 00:49:09,303
one of only two willful clients

968
00:49:09,303 --> 00:49:12,583
but really I wish there were five, I wish there were 10.

969
00:49:12,583 --> 00:49:14,143
For me, that would be great.

970
00:49:14,143 --> 00:49:16,703
It not only de-risks the entire space

971
00:49:16,703 --> 00:49:19,023
but it just makes it much more accessible to everyone

972
00:49:19,023 --> 00:49:21,263
because everyone comes in with different tools, right?

973
00:49:21,263 --> 00:49:25,143
So if there are any devs in the audience here,

974
00:49:25,143 --> 00:49:27,343
really think about building this stuff in

975
00:49:27,343 --> 00:49:31,023
because it's not like we have forever to do it, right?

976
00:49:31,023 --> 00:49:32,343
Time is critical.

977
00:49:32,343 --> 00:49:36,303
This is very much an unsolved area of Bitcoin today

978
00:49:36,303 --> 00:49:38,663
and the more people that are working on it,

979
00:49:38,663 --> 00:49:40,543
the faster or the more chance we have

980
00:49:40,543 --> 00:49:43,623
of getting to a place where I think we all want to be.

981
00:49:44,583 --> 00:49:47,583
Indeed, so if you're an application developer out there,

982
00:49:47,583 --> 00:49:50,383
please think critically about your users' privacy

983
00:49:50,383 --> 00:49:52,903
and, you know, consider implementing

984
00:49:52,903 --> 00:49:55,183
one of these tools into your wallet.

985
00:49:56,463 --> 00:49:59,063
And yeah, on that note, let's call it.

986
00:49:59,063 --> 00:50:00,383
Thank you all for joining me today.

987
00:50:00,383 --> 00:50:01,703
It's been a great discussion.

988
00:50:01,703 --> 00:50:02,543
Thank you.

989
00:50:02,543 --> 00:50:03,383
Thank you.

990
00:50:03,383 --> 00:50:04,223
Thank you.

991
00:50:04,223 --> 00:50:05,043
Thank you.

992
00:50:05,043 --> 00:50:05,883
Thank you.

993
00:50:05,883 --> 00:50:06,723
Thank you.

994
00:50:07,059 --> 00:50:18,899
Good morning, Miami. Welcome to the Bitcoin developer funding panel, open source
funding.

995
00:50:18,899 --> 00:50:23,659
My name is Mike Schmidt. We have a great panel here. My esteemed colleagues, we have
Adi

996
00:50:23,659 --> 00:50:30,939
Shankara from Summer of Bitcoin, Ben Price from OpenSats, and the Bitcoin company,
and

997
00:50:30,939 --> 00:50:37,099
Conor Ocus from Spiral. Before we get started, I don't know if Matt is out there,
but I just

998
00:50:37,099 --> 00:50:42,099
wanted to get a round of applause for Matt O'Dell and putting this together, this
open

999
00:50:42,099 --> 00:50:53,139
source stage. So, some quick introductions. Mike Schmidt. I head up Brink. We are a
501C3

1000
00:50:53,139 --> 00:50:57,579
not-for-profit organization who's focused on funding developers that are working on

1001
00:50:57,579 --> 00:51:04,979
Bitcoin protocol, Bitcoin core, and lightning technology. We are currently funding
12 developers

1002
00:51:04,979 --> 00:51:10,979
that are working on that technology right now, and they're in the form of grants as

1003
00:51:10,979 --> 00:51:16,579
well as our mentorship program for younger developers. And we have an office in
London

1004
00:51:16,579 --> 00:51:21,539
where some of them are congregating, and we're trying to build that out as a bit of
a hub.

1005
00:51:21,539 --> 00:51:27,539
And we also publish the Bitcoin Optech newsletter, and you should subscribe if you
haven't already

1006
00:51:27,539 --> 00:51:32,619
already. So, Conor, do you want to do this? Yeah, sure. So, my name's Conor. I work
at

1007
00:51:32,619 --> 00:51:40,699
Spiral. Spiral is an initiative within Block, formerly Square, and we're focused on
improving

1008
00:51:40,699 --> 00:51:45,379
the open source Bitcoin ecosystem through a number of different initiatives. One of

1009
00:51:45,379 --> 00:51:51,139
those initiatives is our grant program where we fund over, at this point, two dozen
or

1010
00:51:51,139 --> 00:51:57,179
so developers and designers and some project managers as well, all working on
various types

1011
00:51:57,179 --> 00:52:03,619
of Bitcoin projects from Bitcoin core itself to lightning infrastructure projects to
SDKs

1012
00:52:03,619 --> 00:52:10,019
that make building on top of Bitcoin a lot easier. And we have a global footprint as

1013
00:52:10,019 --> 00:52:17,139
well. So, our grantees are from all over the world, from India to Australia to
Southeast

1014
00:52:17,139 --> 00:52:22,779
Asia, America, Europe, and more. And we want to kind of continue that trend and
support

1015
00:52:22,779 --> 00:52:29,979
developers from other parts of the world as well. And just a quick shout out to some

1016
00:52:29,979 --> 00:52:36,419
other organizations who also fund open source Bitcoin development, the likes of
Maika at

1017
00:52:36,419 --> 00:52:42,139
Brink and what Ben's doing at OpenSax and some other organizations like Gemini,
Kraken,

1018
00:52:42,139 --> 00:52:50,179
Coinbase, BitMEX, all support an open source funding. And it really is a community
effort,

1019
00:52:50,179 --> 00:52:58,779
and it's really good to see funding for development moving in a positive direction,
really. So,

1020
00:52:58,779 --> 00:53:03,019
I'm really happy, personally, to continue to see that.

1021
00:53:03,019 --> 00:53:04,019
Ben?

1022
00:53:04,019 --> 00:53:15,179
Hey, everybody. My name's Ben Price. I actually have a for-profit, and we started a
non-profit.

1023
00:53:15,179 --> 00:53:19,219
The for-profit's called The Bitcoin Company. It's kind of starting as rewards and
loyalty

1024
00:53:19,219 --> 00:53:23,619
company, moving towards kind of a full-stack bank. That's the way we think that we
can

1025
00:53:23,619 --> 00:53:28,259
kind of bring Bitcoin to the most people or consumers in the world. And then what
we're

1026
00:53:28,259 --> 00:53:32,419
here to talk about or what I'm here to talk about today is OpenSats, which recently
launched,

1027
00:53:32,419 --> 00:53:39,899
which is really exciting. That is a 501c3 not-for-profit with a mission of
supporting

1028
00:53:39,899 --> 00:53:46,139
contributors to free and open source software, specifically around Bitcoin. The
board is

1029
00:53:46,139 --> 00:53:50,459
full of a bunch of Bitcoiners. We're definitely staying focused there. But
technically speaking,

1030
00:53:50,459 --> 00:53:55,179
it's all free and open source software. Anything that helps Bitcoin flourish needs a
lot of,

1031
00:53:55,179 --> 00:54:02,539
I guess there's a lot of like technical dependencies that can help Bitcoin succeed.
So, we're looking

1032
00:54:02,539 --> 00:54:08,339
forward to funding all of those. And, you know, shout out to, I think the developers

1033
00:54:08,339 --> 00:54:13,019
get a lot of love here, but there's a lot of ways to contribute back to open source,

1034
00:54:13,019 --> 00:54:19,859
including design, code review, research, just general education. So, we're really
looking

1035
00:54:19,859 --> 00:54:24,219
forward to supporting kind of anyone contributing back, not just developers.

1036
00:54:24,219 --> 00:54:25,219
Adi?

1037
00:54:25,219 --> 00:54:30,819
I'm Adi. I'm the founder and lead at Summer of Bitcoin, where together with an
incredible

1038
00:54:30,819 --> 00:54:36,939
group of open source developers, designers, and sponsor organizations, we are
helping

1039
00:54:36,939 --> 00:54:42,379
university students learn about Bitcoin and contribute to open source Bitcoin
projects.

1040
00:54:42,379 --> 00:54:47,819
One of our flagship programs is where a university student contributes to an open
source Bitcoin

1041
00:54:47,819 --> 00:54:53,219
project under the guidance of a mentor and is paid a stipend in BTC. A number of our

1042
00:54:53,219 --> 00:54:59,139
graduates have gone on to contribute to Bitcoin Core or joint organizations like
Chaincode

1043
00:54:59,139 --> 00:55:02,339
Labs, Galoy, and Blockstream.

1044
00:55:02,339 --> 00:55:11,019
So, I'd like to frame the discussion with a story that I think is interesting. I was

1045
00:55:11,019 --> 00:55:19,539
at a Bitcoin-related event, and I ended up talking to an engineer from an unnamed
altcoin,

1046
00:55:19,539 --> 00:55:24,879
and we were discussing funding, and it so happens that he was involved with a
project

1047
00:55:24,879 --> 00:55:31,699
that happened to raise some funds, and their token scheme, however it worked, ended
up

1048
00:55:31,699 --> 00:55:40,139
netting them $300 million, of which that's not all developer funding, but a lot of
that

1049
00:55:40,139 --> 00:55:48,419
would go towards developers and building the protocol and surrounding libraries, and

1050
00:55:48,419 --> 00:55:53,299
I hadn't even heard of this particular... they're not even in the top 40, if you
believe

1051
00:55:53,299 --> 00:56:03,219
in the market cap metric. So, you have a non-top 40 network raising $300 million,
and we don't

1052
00:56:03,219 --> 00:56:10,779
have that sort of scheme in Bitcoin. I would say Bitcoin is a little bit more
bottom-up

1053
00:56:10,779 --> 00:56:16,819
as opposed to some of these organizations that are top-down, and the folks here on
stage

1054
00:56:16,819 --> 00:56:25,119
are part of that bottom-up ground effort. So, Connor, how do you guys at Spiral
think

1055
00:56:25,119 --> 00:56:30,939
about prioritizing open source? Why put your energy there? Why is Spiral putting
their

1056
00:56:30,979 --> 00:56:35,219
energy there? Why is Jack getting behind it? Maybe you can talk about a little bit
of the

1057
00:56:35,219 --> 00:56:44,099
motivation there. Yeah, so, I mean, open source software in general, open source
development

1058
00:56:44,099 --> 00:56:51,659
in general, is very synonymous with public collaboration, self-organizing community.

1059
00:56:51,659 --> 00:57:00,099
All of the source code is open, available for anyone to download, use, modify,
contribute to,

1060
00:57:00,859 --> 00:57:09,299
and create projects and third-party projects as they kind of see fit. And I think at
Square,

1061
00:57:09,299 --> 00:57:16,779
Square is obviously a square block as an organization that has leveraged a lot of

1062
00:57:16,779 --> 00:57:25,459
open source tools, and Jack is no secret that Jack is a big advocate of Bitcoin, and
Bitcoin

1063
00:57:25,579 --> 00:57:35,459
being very much in alignment with Blocks and Squares policy and agenda of economic
empowerment,

1064
00:57:35,459 --> 00:57:42,339
it was very much a sense of what is the best way we can contribute back to the open
source

1065
00:57:42,339 --> 00:57:48,979
ecosystem, because like Mike just described, there is no real model behind it. A lot
of these large

1066
00:57:48,979 --> 00:57:54,539
organizations are using tools which we might consider public goods in the physical
world,

1067
00:57:54,659 --> 00:58:00,979
and governments have very much taken on the responsibility of providing those
services,

1068
00:58:00,979 --> 00:58:07,059
whether it be the streetlights, the roads, the bridges, military for example, and we
fund that

1069
00:58:07,059 --> 00:58:11,939
for our taxes, but I'm pretty sure everyone in this room wouldn't exactly want open
source

1070
00:58:11,939 --> 00:58:19,539
and software to be provided by their government. So, we're a team, we're an
initiative that's

1071
00:58:19,859 --> 00:58:26,819
focused on providing funding for open source developers, designers who are
ultimately trying

1072
00:58:26,819 --> 00:58:31,019
to push the Bitcoin ecosystem forward in a number of different ways, whether it be
privacy,

1073
00:58:31,019 --> 00:58:38,059
scalability, decentralization, developer experience, whatever it is, and just
providing the support

1074
00:58:38,059 --> 00:58:43,499
for them to kind of make those projects a reality and sustainable over the long
term.

1075
00:58:44,459 --> 00:58:51,659
You talk about supporting these projects or individuals, at Brink we sort of think
of this

1076
00:58:52,619 --> 00:58:58,619
sort of like a funnel, and there's this developer funnel specifically for let's say
Bitcoin

1077
00:58:59,259 --> 00:59:04,219
contributing, and you have people who have a programming background who maybe start
watching

1078
00:59:04,219 --> 00:59:12,059
some videos, maybe they attend summer Bitcoin program, maybe they attend chain code
residency,

1079
00:59:12,059 --> 00:59:17,259
or Jimmy Song's course, and they kind of work their way through sort of leveling up
their

1080
00:59:17,259 --> 00:59:22,859
expertise in order to get to a point where you could be funded by somebody like a
spiral,

1081
00:59:22,859 --> 00:59:29,659
and I'm sure there's similar funnels for non-Bitcoin core contributing, but how do
you get

1082
00:59:29,659 --> 00:59:36,059
people interested? Adi, you guys are focused on university students in terms of that
funnel that

1083
00:59:36,059 --> 00:59:43,099
I sort of outlined, why focus on that demographic? Sure, you know that's really an
important question

1084
00:59:43,099 --> 00:59:49,419
and is at the heart of what Summer of Bitcoin is all about. If you look at the
common trajectory

1085
00:59:49,419 --> 00:59:54,939
of a university student today, you know, in first year of their college, especially
someone who's

1086
00:59:54,939 --> 01:00:00,139
studying computer science and training to become a software developer, in their
first year of

1087
01:00:00,139 --> 01:00:05,419
college they pick up a programming language, by second year they're solving obscure
programming

1088
01:00:05,419 --> 01:00:10,939
puzzles online to get that internship at Google or Facebook by third year, and by
the time they

1089
01:00:10,939 --> 01:00:17,499
graduate, the biggest aspiration is to have an assortment of big tech AI jobs in
their kitty,

1090
01:00:17,499 --> 01:00:22,379
and so they end up joining one of these big tech companies where they're delegated
to a team that,

1091
01:00:22,379 --> 01:00:27,579
you know, is maybe resizing buttons or changing fonts every few months, but of
course, you know,

1092
01:00:27,579 --> 01:00:32,699
if you're lucky, you get to join a team that harnesses people's personal data while
those

1093
01:00:32,699 --> 01:00:38,779
same people feel insecure about their lives as they compare themselves to others,
and then maybe

1094
01:00:38,779 --> 01:00:43,739
make them feel a bit better by showing them ads to buy stuff that they never needed
in the first

1095
01:00:43,739 --> 01:00:48,219
place. That's the norm. The exception is, of course, if you didn't do well in
programming

1096
01:00:48,219 --> 01:00:53,099
puzzles, then, you know, you compensate by telling your friends that you're too
adventurous for big

1097
01:00:53,099 --> 01:00:58,859
tech and that you're joining a fintech startup, where again, the most that you do is
pry on

1098
01:00:58,859 --> 01:01:03,019
people's private transactions and, you know, in the hope of selling them dirty
credit.

1099
01:01:05,019 --> 01:01:10,539
What is really not well understood is that joining big tech today is like joining
Big Cola.

1100
01:01:11,339 --> 01:01:15,339
Both their business models revolve around triggering the same molecule in your
brain,

1101
01:01:16,059 --> 01:01:21,819
and even if you keep the moral case aside, on the innovation front, you know, you
can argue that

1102
01:01:21,819 --> 01:01:25,899
the sugar water we're drinking today is the same that it was 20 years ago,

1103
01:01:25,899 --> 01:01:29,899
and the search engine we use today is the same that it was 20 years ago.

1104
01:01:30,699 --> 01:01:37,099
At Summer of Bitcoin, our message is, if you are in university and you're a budding
technologist,

1105
01:01:37,099 --> 01:01:42,299
you want to work on frontier technologies that flip the way the world runs. Working
on Bitcoin

1106
01:01:42,299 --> 01:01:47,179
today is like working on the internet in the 90s. It might make sense to get some,

1107
01:01:47,899 --> 01:01:50,939
but not only get some, but also work on some in case it catches on.

1108
01:01:56,859 --> 01:02:01,579
There's also a case to be made for, you know, focusing on university students and
introducing

1109
01:02:01,579 --> 01:02:07,419
them to Bitcoin. Bitcoin is a political movement as much as it is a technological
movement.

1110
01:02:08,059 --> 01:02:14,299
You're forced to pick a side either as a global status or as a sovereign individual.
And as free

1111
01:02:14,299 --> 01:02:19,419
citizens who believe in the promise of sound money, we need to ensure that those in
universities

1112
01:02:19,419 --> 01:02:25,819
today are on the right side of the future, because in fact, they are the future. And
this is a side

1113
01:02:25,819 --> 01:02:36,539
from the fact that the youth is and will be an important constituency that no
politician can

1114
01:02:36,539 --> 01:02:46,059
afford to ignore. Ben, Adi's sort of talking about getting recruitment, getting
people in early,

1115
01:02:46,059 --> 01:02:54,059
bought in, and sort of like recruiting in that developer pipeline. In addition to
recruiting,

1116
01:02:54,139 --> 01:03:00,299
there's, we share some similarities in that we need to raise funds from the
community. And so

1117
01:03:00,299 --> 01:03:06,139
there's recruiting, there's fundraising. And then there's just a general awareness
that there is

1118
01:03:06,139 --> 01:03:11,899
this need and there is talent that is looking to be funded and there is talent that
needs to be

1119
01:03:11,899 --> 01:03:19,739
cultivated. Of those challenges, what challenges do you see from your perspective at
OpenSats?

1120
01:03:20,379 --> 01:03:25,979
Where can we do better? Where are the challenges? I think it's an interesting
problem because you

1121
01:03:25,979 --> 01:03:31,819
have to like kind of address all of those issues. There's a study I think OKCoin
released recently.

1122
01:03:32,539 --> 01:03:37,179
I think like not a lot of people actually know what like how Bitcoin is developed.

1123
01:03:39,259 --> 01:03:44,219
I believe a lot of people think developers are paid or maybe there is some natural
funding

1124
01:03:44,219 --> 01:03:50,059
mechanism for mining. So I think like the first thing is general education and
awareness to the

1125
01:03:50,059 --> 01:03:57,819
community that this thing doesn't really maintain itself like in a stable way. You
need to let

1126
01:03:57,819 --> 01:04:04,139
corporations, you need to let users, you need to let anyone leveraging the
technology. You need

1127
01:04:04,139 --> 01:04:10,459
to make sure they're aware that it's funded by a group of developers and designers
and coders who

1128
01:04:10,459 --> 01:04:20,299
are really just like not rationally acting. They're providing maintenance and these
things

1129
01:04:20,299 --> 01:04:26,139
for free. Nothing in the world is free. But we're lucky enough to have a few people
out there who

1130
01:04:26,139 --> 01:04:33,339
really care about the mission and the vision of Satoshi to actually build on this
thing.

1131
01:04:33,899 --> 01:04:40,139
These are some of the smartest people in the world dedicating their time for free in
many senses. So

1132
01:04:41,259 --> 01:04:45,899
you know I think the first thing is making sure that users, businesses, anyone
leveraging the

1133
01:04:45,899 --> 01:04:51,659
technology knows that it's important to give back to the people maintaining it. And
then secondarily

1134
01:04:51,659 --> 01:04:57,659
you have these pipelines of maybe it's students or you know well-trained developers
coming into

1135
01:04:57,659 --> 01:05:04,539
the system. But again it's not economically. We're all Bitcoiners here. We're
logical thinkers.

1136
01:05:05,419 --> 01:05:10,299
The economically rational thing to do if you're a brilliant coder is to go work for
Facebook.

1137
01:05:11,419 --> 01:05:16,539
If you really want Bitcoin go get a million dollar a year job and buy some Bitcoin.
Screw

1138
01:05:16,539 --> 01:05:25,659
the code base. But that's not what we're relying on. We need a way to build from the
ground up

1139
01:05:25,659 --> 01:05:31,739
like you said to create an actual self-sustaining ecosystem. And in order to do that
I think

1140
01:05:31,739 --> 01:05:38,459
instead of relying on one or two large exchanges or corporations to do the majority
of the funding.

1141
01:05:38,459 --> 01:05:43,419
Well that's important. That moves the needle. But it's really I think to create a
self-sustaining

1142
01:05:43,419 --> 01:05:48,939
ecosystem you need like a grassroots movement where everyone gives back a little
bit. If everyone

1143
01:05:48,939 --> 01:05:54,859
who's leveraging Bitcoin everyone who benefits from it gave back just a little bit.
Well then

1144
01:05:54,859 --> 01:06:00,859
we have enough to we have enough funds enough funding enough training to actually
continue

1145
01:06:00,859 --> 01:06:13,739
to sustain the ecosystem. So Adi, Ben touched on potentially some concerns that
somebody might have

1146
01:06:13,739 --> 01:06:22,059
starting their open source development career if you will. Financial was the example
Ben gave.

1147
01:06:22,859 --> 01:06:29,579
What do you hear in talking with these younger folks who may be considering a career
in open

1148
01:06:29,579 --> 01:06:38,459
source? Are there concerns? What are they excited about? Sure. We've had about
20,000 university

1149
01:06:38,459 --> 01:06:44,379
students from over 50 countries around the world apply to a program this year. And
the most common

1150
01:06:44,379 --> 01:06:50,299
question that every student starts with is will their governments ban Bitcoin? And
as they go

1151
01:06:50,299 --> 01:06:55,899
through our resources talk to us and join our seminars and study Bitcoin just like
they would

1152
01:06:55,899 --> 01:07:01,739
study TCP IP in a networking class. And remember these are computer science students
who are

1153
01:07:01,739 --> 01:07:07,339
arguably grappling with concepts much harder than those that constitute Bitcoin.
They quickly go

1154
01:07:07,339 --> 01:07:13,179
from you know hearing about Bitcoin in the media as being this illegitimate child of
technology to

1155
01:07:13,179 --> 01:07:18,779
realizing that the Bitcoin network is in fact decentralized enough resilient enough
secure

1156
01:07:18,779 --> 01:07:24,779
enough that even if you were to shut down all nodes but one the network could still
run as is

1157
01:07:24,779 --> 01:07:31,659
and bootstrap itself again. That you know the Bitcoin protocol is in fact one of the
most

1158
01:07:31,659 --> 01:07:37,739
important and beautiful innovations of the 21st century that can change the course
of human

1159
01:07:37,739 --> 01:07:43,739
history. That understanding you know coupled with the energy and clairvoyance that
the youth can

1160
01:07:43,739 --> 01:07:50,299
bring to the table is striking and remarkable to see. Having said that there's a ton
of noise in

1161
01:07:50,299 --> 01:07:56,539
the space with other crypto ecosystems the lavish marketing budgets and catchy
memes.

1162
01:07:57,659 --> 01:08:02,219
But you know so we get all kinds of questions around proof of stake and why can't we
have our

1163
01:08:02,219 --> 01:08:07,499
own coin to decentralize dentistry. But those get quickly answered by themselves
when they

1164
01:08:07,499 --> 01:08:12,619
figure out why is HTTP the most dominant way of exchanging information over the
internet

1165
01:08:12,619 --> 01:08:17,979
and how Bitcoin is similar in terms of being the dominant way of exchanging value
over the

1166
01:08:17,979 --> 01:08:24,699
internet. We have this internal aphorism in our cohorts where and it goes like
blockchain

1167
01:08:24,699 --> 01:08:32,139
has only two applications one is money and the other is marketing. And you know you
as

1168
01:08:32,139 --> 01:08:36,139
technologists you know we understand that it's never the memes it's never the
marketing that

1169
01:08:36,139 --> 01:08:41,739
changes the world it's technology that works as intended that does. When it comes to
helping

1170
01:08:41,739 --> 01:08:46,539
these students you know discover careers in Bitcoin there's a ton of thought and
work yet to

1171
01:08:46,619 --> 01:08:53,979
be put in. And congratulations to organizations like Spiral, Chaincode Labs, Brink
and OpenStats

1172
01:08:53,979 --> 01:09:04,299
for leading from the front line and showing us the way. We've talked a bit about
individuals

1173
01:09:04,299 --> 01:09:10,539
and how they can kind of progress and contribute but there's also a lot of the work
that Spiral's

1174
01:09:10,539 --> 01:09:17,499
doing is project-based and those projects also go through a sort of evolution from
sort of ideation

1175
01:09:17,499 --> 01:09:23,099
one developer onwards. How do you guys think about that progression at Spiral? Yeah
so we're going

1176
01:09:23,099 --> 01:09:28,459
to publish some content about this very soon and we're very much thinking about it
in this kind of

1177
01:09:28,459 --> 01:09:34,379
four stage process which I'll try and go through very quickly. So phase one very
much revolves

1178
01:09:34,379 --> 01:09:40,379
around like a proof of concept so an individual a team of developers have an idea
that is going

1179
01:09:40,379 --> 01:09:46,859
to help move the ecosystem forward in areas of that we talk about security, privacy,
decentralization

1180
01:09:46,859 --> 01:09:52,299
or whatever it might be. And at this stage they're very much trying to develop their
project

1181
01:09:52,299 --> 01:10:01,099
architecture. They will be doing some pitching to organizations such as ourselves
who would provide

1182
01:10:01,099 --> 01:10:07,899
no strings attached funding to help them get off the ground. And so like a
successful exit from

1183
01:10:07,899 --> 01:10:14,699
that phase might look like some alpha piece of software that it has a code base that
makes it

1184
01:10:14,699 --> 01:10:20,539
easy for new contributors to understand what is happening and also contribute to it
as well as

1185
01:10:20,539 --> 01:10:27,979
perhaps wider buy-in from the wider Bitcoin ecosystem. Phase two is this kind of

1186
01:10:27,979 --> 01:10:33,419
community development process so everyone here is very much aware that this Bitcoin
thing that

1187
01:10:33,419 --> 01:10:39,499
we're building this new money has a huge community behind it helping to drive it
forward and we want

1188
01:10:39,499 --> 01:10:45,819
to see that developed for individual projects as well. So projects might do this by

1189
01:10:45,819 --> 01:10:52,139
creating a project website which clearly outlines the vision for the project, helps
new people

1190
01:10:52,139 --> 01:10:57,739
understand how they can contribute, maybe outlines their roadmap as well and perhaps
some start

1191
01:10:57,739 --> 01:11:02,539
developing some async communication channels whether it be on Discord or Slack or
IRC

1192
01:11:04,539 --> 01:11:09,579
as well as raising awareness for their projects as well whether it be podcast
articles or social

1193
01:11:09,579 --> 01:11:16,219
media. And again a successful exit from that phase might look like they have
multiple contributors

1194
01:11:16,219 --> 01:11:22,379
who are fixing various types of bugs, adding documentation or adding new features.
Phase three

1195
01:11:22,379 --> 01:11:29,419
is this kind of multi-entity funded phase where we hope to see a project fully
sustainable by

1196
01:11:29,419 --> 01:11:37,339
having multiple donors and this might be facilitated and made a bit easier if a
project

1197
01:11:37,339 --> 01:11:43,099
starts to develop a foundation around their project that makes it easier for larger
organizations who

1198
01:11:43,099 --> 01:11:50,059
now see this piece of technology as like a critical part of their tech stack and
want to

1199
01:11:50,059 --> 01:11:55,819
find an easy way to donate without having to do the kind of long process of due
diligence on

1200
01:11:55,819 --> 01:12:03,579
individuals and contributors maybe outside of their jurisdiction. And so a
successful exit

1201
01:12:03,579 --> 01:12:09,979
from that is again multiple entities funding a project and we start to see this
project being

1202
01:12:09,979 --> 01:12:16,699
used in production environments close to like a beta type of software. And then
lastly it's like

1203
01:12:16,779 --> 01:12:23,019
we want projects to be sustainable without Spiral. So if Spiral were not funding
this

1204
01:12:23,019 --> 01:12:28,379
project it wouldn't collapse and it wouldn't cause significant damage to the project
either.

1205
01:12:29,419 --> 01:12:34,299
And at this stage the project's really kind of developed its own culture, its own
identity, and

1206
01:12:34,299 --> 01:12:41,339
can truly stand alone without a single entity. And so we very much look at these
projects as

1207
01:12:41,899 --> 01:12:49,739
active projects within the Bitcoin ecosystem that will be around for the super long
term

1208
01:12:49,739 --> 01:12:56,539
and ultimately be a part of Bitcoin's legacy. So that's like how we try to

1209
01:12:56,539 --> 01:13:02,779
try to think things through and hopefully keep funding as decentralized as possible.

1210
01:13:04,299 --> 01:13:10,939
Ben, Connor mentioned one way that a company can contribute to the space is if
they're using

1211
01:13:10,939 --> 01:13:17,339
the software they can financially support it. You're in an interesting spot because

1212
01:13:17,339 --> 01:13:25,179
you're both a for-profit company with a Bitcoin company and OpenSats donating on the
charitable

1213
01:13:25,179 --> 01:13:30,539
side. So being in that unique position, when you have your Bitcoin company hat on,

1214
01:13:30,539 --> 01:13:37,419
how do you think about contributing to the ecosystem? Yeah, that's a really
interesting

1215
01:13:37,419 --> 01:13:42,939
one and hopefully it's a challenge that the open source ecosystem can kind of do
better on. There

1216
01:13:42,939 --> 01:13:47,899
are a few, I think, really good actors in the space who are doing what they can to
give back,

1217
01:13:47,899 --> 01:13:53,179
at least financially. But there's tons of ways to give back. We're a poor startup. I
can't just

1218
01:13:53,179 --> 01:13:59,819
donate a million dollars to open source as much as I would love to. So earlier we
talked about

1219
01:14:00,459 --> 01:14:05,499
developers themselves maybe not being economically incentivized or it's not
economically rational

1220
01:14:05,499 --> 01:14:12,379
for them to pursue open source projects outside of just goodwill. But as a company,
why would it

1221
01:14:12,379 --> 01:14:17,499
help? I think recruitment is a big one. I got Ben the car man and Connor in the
audience. I think

1222
01:14:18,219 --> 01:14:24,619
without us going to these hackathons, without us giving back to some of these open
source projects,

1223
01:14:24,619 --> 01:14:29,739
I'm not going to be able to recruit them. That's what drives a lot of people in this
space

1224
01:14:29,739 --> 01:14:34,539
are working on these projects. I can't always just say add a widget, add a button
and they're going

1225
01:14:34,539 --> 01:14:40,059
to be satisfied with their job. So for me, there is some recruiting benefits, some
marketing benefits.

1226
01:14:41,179 --> 01:14:43,179
You know, I also think that like...

1227
01:14:43,341 --> 01:14:49,781
The beauty of open source is that you can build on it and I can build on it and we
both benefit.

1228
01:14:49,781 --> 01:14:53,661
It is a public good that we both win from developing on top of.

1229
01:14:53,661 --> 01:14:57,221
It's more secure, it's faster, it's better maintained.

1230
01:14:57,221 --> 01:15:02,861
And so as you just continue layering on as a company, building on these core
packages,

1231
01:15:02,861 --> 01:15:08,861
whether it's Bitcoin S or tons of open source things that we use, everyone wins.

1232
01:15:08,861 --> 01:15:15,341
And so when I give back or with the Bitcoin company, you get a benefit as well.

1233
01:15:15,341 --> 01:15:20,141
I also think like there are some ways, like especially us, we're a consumer facing
application.

1234
01:15:20,141 --> 01:15:24,861
So a little bit of what we can do is education, highlighting projects that we really
like,

1235
01:15:24,861 --> 01:15:29,901
giving bounties for things in our roadmap that we just don't have time to develop.

1236
01:15:29,901 --> 01:15:37,701
One thing that we've tried to hack together is we go to hackathons and we add prizes
to the very end of the pool.

1237
01:15:37,701 --> 01:15:41,821
So a lot of the issues is hackathon projects are sometimes kind of half-baked.

1238
01:15:41,821 --> 01:15:44,221
They get 80% of the way done and then no one finishes them.

1239
01:15:44,221 --> 01:15:49,341
So, you know, as a bootstrapping startup, what I can do is go give someone another
500 bucks

1240
01:15:49,341 --> 01:15:53,141
or a little bit of Bitcoin to finish that off, write a blog post about it,

1241
01:15:53,141 --> 01:15:56,901
get their actual project out there and hopefully users on it.

1242
01:15:56,901 --> 01:16:00,501
So there's a lot of ways to give back, including like the one that I'm most excited
about.

1243
01:16:00,501 --> 01:16:03,781
We just like, we rolled out referral codes in our application.

1244
01:16:03,781 --> 01:16:04,901
So this is an easy one.

1245
01:16:04,901 --> 01:16:10,461
If you sign up with the word OpenSats or donate, every time you make a purchase
through us,

1246
01:16:10,461 --> 01:16:14,941
a portion of your proceeds go to fund Bitcoin core development.

1247
01:16:14,941 --> 01:16:17,981
And so that's like, you know, little things that just, you know,

1248
01:16:17,981 --> 01:16:23,541
we're going to be streaming sats towards Bitcoin core developers, you know, every
day, all day.

1249
01:16:23,541 --> 01:16:26,541
And so I think it's just these little things.

1250
01:16:26,541 --> 01:16:27,421
You have to get creative.

1251
01:16:27,421 --> 01:16:33,381
Like I said, if you've got a billion dollars, just throw some money at some devs
probably.

1252
01:16:33,861 --> 01:16:37,541
If you're poor like we are, you've got to get creative.

1253
01:16:37,541 --> 01:16:40,981
But there's a lot of really interesting ways to do it.

1254
01:16:40,981 --> 01:16:45,181
And I didn't name them all, but, you know, that's what we've come up with so far.

1255
01:16:45,181 --> 01:16:50,821
So we clearly have a lot to say since we're over time.

1256
01:16:50,821 --> 01:16:53,301
So I can speak on behalf of these guys.

1257
01:16:53,301 --> 01:16:57,581
I'm sure to say, if you want to learn more, feel free to grab any of us after this

1258
01:16:57,581 --> 01:17:01,301
and we can discuss more and I would give these guys a round of applause

1259
01:17:01,301 --> 01:17:03,301
for the work they've been doing.

1260
01:17:31,301 --> 01:17:43,621
You know, before we dive into all that, I'd love to just do a quick introduction of
all our guests here.

1261
01:17:43,621 --> 01:17:48,101
Maybe, you know, say who you are and like what kind of experiences you have in
Lightning,

1262
01:17:48,101 --> 01:17:50,741
but like more specifically in the commerce space itself.

1263
01:17:50,741 --> 01:17:52,381
So, Elise.

1264
01:17:52,381 --> 01:17:52,621
Great.

1265
01:17:52,621 --> 01:17:56,101
So I'm the outlier on this panel as the non-dev.

1266
01:17:56,101 --> 01:17:59,621
I'm a VC investor that's focused purely on Bitcoin.

1267
01:17:59,621 --> 01:18:03,861
And last year and this year, we've been focused a lot on Lightning

1268
01:18:03,861 --> 01:18:08,421
and how it can impact commerce in developed and emerging markets.

1269
01:18:08,421 --> 01:18:14,781
Elise, us developers love spending time with you, so I'm glad that you're with us.

1270
01:18:14,781 --> 01:18:17,581
I'm a rock star dev.

1271
01:18:17,581 --> 01:18:21,781
I contribute to BTC-based server.

1272
01:18:21,781 --> 01:18:29,741
Started the whole thing with Nicholas and then I'm VP of engineering at Strike.

1273
01:18:29,741 --> 01:18:30,501
Yay.

1274
01:18:30,501 --> 01:18:33,581
Are there Strike people here?

1275
01:18:33,581 --> 01:18:35,181
Okay.

1276
01:18:35,181 --> 01:18:39,981
Yeah, Strike started from a small team, that open source team that did Zap Wallet.

1277
01:18:39,981 --> 01:18:42,341
I'm sure a lot of you are familiar with that.

1278
01:18:42,341 --> 01:18:50,221
And then I was employee number one specifically for Strike and here I am today.

1279
01:18:50,221 --> 01:18:51,221
So I'm Bad Ark.

1280
01:18:51,221 --> 01:18:53,461
I'm a Bitcoin hobbyist, tinkerer.

1281
01:18:53,461 --> 01:18:56,141
And I tried to encourage a few years ago more of a maker scene.

1282
01:18:56,141 --> 01:18:59,661
So we make our own nodes, but we should also be making our own points of sale,

1283
01:18:59,661 --> 01:19:03,341
hardware, hardware wallets, ATMs, vending machines,

1284
01:19:03,341 --> 01:19:06,181
all these things which are going to run on Bitcoin and Lightning payments.

1285
01:19:06,181 --> 01:19:08,621
And there wasn't much of a scene there, so I wanted to try and build one

1286
01:19:08,621 --> 01:19:11,421
and then make some projects which people could build.

1287
01:19:11,421 --> 01:19:15,061
And then from that, I then developed, I started LMBits,

1288
01:19:15,061 --> 01:19:17,661
which is a really nice sort of wallet account system you can put on your node.

1289
01:19:17,661 --> 01:19:19,301
It's a bit like WordPress for your node.

1290
01:19:19,301 --> 01:19:21,261
You can extend it in any direction which is relevant to you.

1291
01:19:21,261 --> 01:19:24,341
So if your merchant has got extensions and so on.

1292
01:19:24,341 --> 01:19:29,621
So yeah, just a hobbyist tinkerer who's been lucky enough to kind of break new
ground

1293
01:19:29,621 --> 01:19:35,941
with some of the cool Lightning stuff we're able to do.

1294
01:19:35,941 --> 01:19:36,981
Cool.

1295
01:19:36,981 --> 01:19:40,221
I'm Andre Neves, CTO and co-founder at Zebedee.

1296
01:19:40,221 --> 01:19:43,821
We are a gaming fintech company, so we build tools for game developers

1297
01:19:43,821 --> 01:19:47,741
and gamers to enable the powering of your game points,

1298
01:19:47,781 --> 01:19:52,461
your game rewards, your game assets in Bitcoin through Lightning.

1299
01:19:52,461 --> 01:19:56,741
So I'm just honored to be in this panel with all these great gentlemen and ladies.

1300
01:19:56,741 --> 01:19:58,701
So thanks, Tony, for setting this up.

1301
01:19:58,701 --> 01:19:59,501
Yeah, thank you, guys.

1302
01:19:59,501 --> 01:20:00,501
My name is Tony Giorgio.

1303
01:20:00,501 --> 01:20:04,821
I'm a Lightning developer myself working at Impervious right now.

1304
01:20:04,821 --> 01:20:08,341
So let's get started with some groundbreaking news here.

1305
01:20:08,341 --> 01:20:14,541
So Jack Mahler yesterday announced from Strike some huge integrations

1306
01:20:14,541 --> 01:20:17,861
that really changed the game for even the United States,

1307
01:20:17,861 --> 01:20:21,621
the e-commerce space, but also the physical commerce space as well.

1308
01:20:21,621 --> 01:20:24,621
Rockstar, would you like to kind of give us some perspective there?

1309
01:20:24,621 --> 01:20:30,461
And what was the announcement and what does it mean to you?

1310
01:20:30,461 --> 01:20:35,421
To me, when I said here I am, it's like culmination of all the work

1311
01:20:35,421 --> 01:20:40,861
that's happened over the past two years and what it is, like 10 months for me.

1312
01:20:40,861 --> 01:20:45,501
And I'm very unfortunate that this panel is like after Jack's speech.

1313
01:20:45,501 --> 01:20:46,661
Last year, it was easier.

1314
01:20:46,661 --> 01:20:49,941
It was like my panel, then Jack's speech.

1315
01:20:49,941 --> 01:20:52,941
Because it's so hard to follow after Jack, right?

1316
01:20:52,941 --> 01:20:55,061
You like the announcement?

1317
01:20:55,061 --> 01:20:55,861
Yeah?

1318
01:20:55,861 --> 01:20:58,221
Yeah.

1319
01:20:58,221 --> 01:21:04,701
So it's just, again, culmination of everything

1320
01:21:04,701 --> 01:21:08,341
that we've been doing for the last few years.

1321
01:21:08,341 --> 01:21:15,541
And as Jack was so excited, yeah, with that buying Coke over tour.

1322
01:21:15,541 --> 01:21:17,661
Yeah, we couldn't name it like that.

1323
01:21:17,661 --> 01:21:19,421
But it is all about that.

1324
01:21:19,421 --> 01:21:26,621
It's about having that freedom to use the money that you want to use

1325
01:21:26,621 --> 01:21:29,221
and spend it how you want to spend it.

1326
01:21:29,221 --> 01:21:33,421
So glad that that came out, and I'm looking forward

1327
01:21:33,421 --> 01:21:38,501
to some other announcements that are coming soon.

1328
01:21:38,501 --> 01:21:38,981
Awesome.

1329
01:21:38,981 --> 01:21:43,141
It feels like Lightning announcements are just left and right these days.

1330
01:21:43,141 --> 01:21:48,101
I wanted to talk a little bit about Lightning as commerce payments.

1331
01:21:48,101 --> 01:21:51,421
We really entered this era here where we haven't

1332
01:21:51,421 --> 01:21:54,661
been able to do commerce in the way that Lightning Network changes the game.

1333
01:21:54,661 --> 01:21:58,421
We have the near instant payments of Lightning.

1334
01:21:58,421 --> 01:22:02,341
We have micropayments, both the traditional credit card networks

1335
01:22:02,341 --> 01:22:04,541
and even Bitcoin on-chain layer itself aren't

1336
01:22:04,541 --> 01:22:09,341
able to fully service some of the amazing use cases we can get with Lightning.

1337
01:22:09,341 --> 01:22:11,581
I'm really curious about, from your guys' perspective,

1338
01:22:11,581 --> 01:22:15,861
all the unique innovations happening in the Lightning space

1339
01:22:15,861 --> 01:22:17,501
just across the board.

1340
01:22:17,501 --> 01:22:19,901
We could have a whole panel just on that.

1341
01:22:19,901 --> 01:22:23,501
But from your own experiences, what is really exciting

1342
01:22:23,501 --> 01:22:28,021
that we're now able to see in just the digital space itself

1343
01:22:28,021 --> 01:22:31,221
that Lightning now enables?

1344
01:22:31,221 --> 01:22:32,781
Anyone can start off with that.

1345
01:22:32,781 --> 01:22:36,381
So I mean, that's the thing which attracts me to working on Lightning,

1346
01:22:36,381 --> 01:22:38,261
is that feeling of breaking new ground.

1347
01:22:38,261 --> 01:22:40,581
And there's that kind of concept of skeuomorphic design.

1348
01:22:40,581 --> 01:22:42,421
We've got a new tool set now to do things with money

1349
01:22:42,421 --> 01:22:43,821
which we've never been able to do.

1350
01:22:43,821 --> 01:22:49,141
And then to try and imagine those things and build the tools and experiment.

1351
01:22:49,141 --> 01:22:54,021
And it's quite hard, and that's why you need real world use case

1352
01:22:54,021 --> 01:22:57,181
and real world feedback from people using the technology.

1353
01:22:57,181 --> 01:23:00,301
So much of the stuff I built was off the back of a bar in Berlin,

1354
01:23:00,301 --> 01:23:01,461
which accepted Bitcoin.

1355
01:23:01,461 --> 01:23:03,701
And now you think you've got whole countries accepting Bitcoin

1356
01:23:03,701 --> 01:23:05,901
and have Lightning payments.

1357
01:23:05,901 --> 01:23:07,301
So you get all this great data coming in,

1358
01:23:07,301 --> 01:23:09,581
which makes it a little bit easier to innovate.

1359
01:23:09,581 --> 01:23:10,341
But you're dead right.

1360
01:23:10,341 --> 01:23:12,981
And it's kind of like a snowball of ideas.

1361
01:23:12,981 --> 01:23:16,421
So something which I'm really excited about with Lightning

1362
01:23:16,421 --> 01:23:19,141
is just being able to split payments at point of sale.

1363
01:23:19,141 --> 01:23:24,061
So you pay for something, and then within that piece of production,

1364
01:23:24,061 --> 01:23:25,621
like a coffee shop, for example,

1365
01:23:25,621 --> 01:23:28,021
everybody could just be paid instantly into their wallets.

1366
01:23:28,301 --> 01:23:31,701
And that's something which is only possible by using these Lightning transactions.

1367
01:23:31,701 --> 01:23:34,581
But you could scale it up to larger production.

1368
01:23:34,581 --> 01:23:36,221
So you could buy a laptop,

1369
01:23:36,221 --> 01:23:39,061
and the payment could be split to different manufacturing distribution.

1370
01:23:39,061 --> 01:23:41,381
And it could be split down again into those different departments.

1371
01:23:41,381 --> 01:23:44,021
And then as well as that, it could impact tax.

1372
01:23:44,021 --> 01:23:49,501
So if there is a Bitcoin future, then tax collection will be hard.

1373
01:23:49,501 --> 01:23:52,581
And one easy way to collect tax is at point of sale,

1374
01:23:52,581 --> 01:23:54,301
is through value-added tax.

1375
01:23:54,301 --> 01:23:57,021
And when that happens, perhaps the user could say,

1376
01:23:57,021 --> 01:23:59,581
well, I want X amount to go here, I want X amount to go there.

1377
01:23:59,581 --> 01:24:01,421
And it's instant tax at point of sale.

1378
01:24:01,421 --> 01:24:06,741
So imagining those kind of use cases for money is very hard.

1379
01:24:06,741 --> 01:24:09,061
And this is why I like Ellen Bitz.

1380
01:24:09,061 --> 01:24:12,621
Like a lot of that concept of splitting payments for us

1381
01:24:12,621 --> 01:24:16,061
just came from an extension where Crypto Graffiti did a DJ set.

1382
01:24:16,061 --> 01:24:18,301
Then we had a QR code on the screen, people could tip.

1383
01:24:18,301 --> 01:24:20,981
And then if they tipped enough, they would get a download link for the song.

1384
01:24:20,981 --> 01:24:24,181
But then every time they tipped, 90% would go to the music producer,

1385
01:24:24,221 --> 01:24:27,221
and then 10% would go to the DJ himself.

1386
01:24:27,221 --> 01:24:30,941
And it was just that one time when we experimented with split payments,

1387
01:24:30,941 --> 01:24:32,021
we then experimented with it more.

1388
01:24:32,021 --> 01:24:35,021
Now we've got an extension specifically for split payments.

1389
01:24:35,021 --> 01:24:40,581
So yeah, you have all this kind of legacy baggage

1390
01:24:40,581 --> 01:24:43,421
of what you think you can do with money.

1391
01:24:43,421 --> 01:24:46,381
And then now we have this new type of money.

1392
01:24:46,381 --> 01:24:48,941
Theoretically, we've known that this thing would be possible.

1393
01:24:48,941 --> 01:24:51,221
But we've been able to have tiny, tiny, tiny little transactions.

1394
01:24:51,221 --> 01:24:54,501
But then thinking of new designs and new projects and new things

1395
01:24:54,501 --> 01:24:57,861
you can build on top of it, it's very exciting and a great place

1396
01:24:57,861 --> 01:24:59,021
to be in the space.

1397
01:24:59,021 --> 01:25:00,261
And that's why we saw this great innovation,

1398
01:25:00,261 --> 01:25:02,941
because obviously we're experimenting with a tool which

1399
01:25:02,941 --> 01:25:08,021
didn't previously exist for developers and builders.

1400
01:25:08,021 --> 01:25:10,541
Yeah, I think one of the beautiful things about Bitcoin

1401
01:25:10,541 --> 01:25:12,541
is that it turned this new form of money,

1402
01:25:12,541 --> 01:25:14,261
made it digital and fully programmable,

1403
01:25:14,261 --> 01:25:16,701
and Lightning makes it so much more approachable.

1404
01:25:16,701 --> 01:25:20,301
So this is a very good example of how we're just scratching

1405
01:25:20,301 --> 01:25:24,101
the surface of what it can do, what is able to be done with Lightning.

1406
01:25:24,101 --> 01:25:28,381
I think an example is looking at the dot-com in 2001 and looking at,

1407
01:25:28,381 --> 01:25:31,701
you know, right now we're streaming 8K video games across the internet.

1408
01:25:31,701 --> 01:25:34,341
It doesn't matter where you are in the world and you have low latency.

1409
01:25:34,341 --> 01:25:36,941
The people building the backbones of the internet back in the day

1410
01:25:36,941 --> 01:25:39,421
were not thinking of serving 8K video games, right?

1411
01:25:39,421 --> 01:25:41,781
They were thinking of maybe sending messages across.

1412
01:25:41,781 --> 01:25:44,301
So I think we're just scratching the surface now with money.

1413
01:25:44,301 --> 01:25:48,141
And money is such a societal, you know, an important piece to society.

1414
01:25:48,141 --> 01:25:51,181
And I think that's going to revolutionize much more than just money.

1415
01:25:51,181 --> 01:25:52,381
It's going to revolutionize industries.

1416
01:25:52,381 --> 01:25:55,101
It's going to revolutionize how society and, you know,

1417
01:25:55,101 --> 01:25:57,341
citizens interact with each other.

1418
01:25:57,341 --> 01:26:00,701
And I think Lightning is just that pivotal piece.

1419
01:26:00,701 --> 01:26:03,941
And you're seeing that with all the adoptions and announcements,

1420
01:26:03,941 --> 01:26:06,661
Strike, Kraken, BitPay, Robinhood, right?

1421
01:26:06,661 --> 01:26:09,821
So it's really that pivotal climax piece.

1422
01:26:09,821 --> 01:26:13,581
And I think next two years is going to be tremendous growth for Lightning.

1423
01:26:13,741 --> 01:26:18,261
And we're just, you know, just happy to be here building on this technology,

1424
01:26:18,261 --> 01:26:20,661
you know, with everyone.

1425
01:26:20,661 --> 01:26:24,461
On the startup side, we're also seeing very early-stage companies

1426
01:26:24,461 --> 01:26:29,981
take a broader range of experiments and projects forward.

1427
01:26:29,981 --> 01:26:33,741
And so, for example, we're seeing the integration of Lightning payments

1428
01:26:33,741 --> 01:26:37,061
for brick-and-mortar retail transactions,

1429
01:26:37,061 --> 01:26:40,501
like we saw with led by Ibex Mercado in El Salvador

1430
01:26:40,501 --> 01:26:42,941
with the adoption of Bitcoin as legal tender.

1431
01:26:42,941 --> 01:26:45,821
We're seeing the same sort of happen online.

1432
01:26:45,821 --> 01:26:48,741
We are seeing experimentation now with browser extensions

1433
01:26:48,741 --> 01:26:53,341
so that you can have your Lightning wallet sort of follow you around on the web.

1434
01:26:53,341 --> 01:26:58,901
I think that we underestimate how broadly payments exist in the world.

1435
01:26:58,901 --> 01:27:01,781
Everything where we're transacting, where there's some value,

1436
01:27:01,781 --> 01:27:03,341
of course, payments is important.

1437
01:27:03,341 --> 01:27:06,221
And through Lightning, we're able to now do that efficiently.

1438
01:27:06,221 --> 01:27:10,021
So, for instance, a portfolio company that we invested in

1439
01:27:10,021 --> 01:27:12,941
called L&D Work does Sphinx Chat,

1440
01:27:12,941 --> 01:27:15,861
which I bet a lot of people in this room are familiar with,

1441
01:27:15,861 --> 01:27:21,421
where Bitcoin can just be your native financial chat currency.

1442
01:27:21,421 --> 01:27:24,981
So, it's been interesting to see opportunities emerge

1443
01:27:24,981 --> 01:27:30,461
for entrepreneurs in the Lightning space recently.

1444
01:27:30,461 --> 01:27:32,141
And it really is snowballing as well, isn't it?

1445
01:27:32,141 --> 01:27:34,621
When you walk around and you meet some of the people who are building things

1446
01:27:34,621 --> 01:27:36,941
and all the projects now, which we now have in Lightning,

1447
01:27:36,941 --> 01:27:39,141
I was saying to someone, like, I think a year ago or something,

1448
01:27:39,181 --> 01:27:41,661
I was able to kind of keep abreast of most of the projects

1449
01:27:41,661 --> 01:27:43,261
which were in Lightning or being built,

1450
01:27:43,261 --> 01:27:46,061
the free and open-source stuff and some of the companies as well.

1451
01:27:46,061 --> 01:27:47,381
But now, I just can't keep up.

1452
01:27:47,381 --> 01:27:48,981
Like, there's so many great projects.

1453
01:27:48,981 --> 01:27:49,421
That's right.

1454
01:27:49,421 --> 01:27:54,461
So, we're probably talking to a few hundred founders a year.

1455
01:27:54,461 --> 01:27:58,501
And although sometimes I think Bitcoin gets maligned

1456
01:27:58,501 --> 01:28:01,301
for being less dynamic or creative,

1457
01:28:01,301 --> 01:28:04,661
we're seeing the exact opposite on the venture side.

1458
01:28:04,661 --> 01:28:07,661
So, the types of moonshots that people are taking

1459
01:28:07,661 --> 01:28:11,301
are just much more broad and ambitious.

1460
01:28:11,301 --> 01:28:16,181
Maybe I can also bring up that it's been nice to see the design space

1461
01:28:16,181 --> 01:28:19,821
open up through changes made at Bitcoin Core level.

1462
01:28:19,821 --> 01:28:23,221
So, earlier this week, we were just talking backstage

1463
01:28:23,221 --> 01:28:25,781
about an announcement that came out before the conference,

1464
01:28:25,781 --> 01:28:29,461
which was Lightning Lab's Tarot announcement,

1465
01:28:29,461 --> 01:28:32,541
which was a result of something that was enabled

1466
01:28:32,541 --> 01:28:35,981
because Taproot was activated last year on Bitcoin Core.

1467
01:28:35,981 --> 01:28:42,181
So, Tarot will ultimately allow you to exchange stablecoins,

1468
01:28:42,181 --> 01:28:43,981
for example, on Lightning Network,

1469
01:28:43,981 --> 01:28:49,541
which I anticipate will have a great impact on commerce on Lightning.

1470
01:28:49,541 --> 01:28:51,701
I think one of the really cool pieces about Lightning,

1471
01:28:51,701 --> 01:28:53,181
and just piggybacking off of that,

1472
01:28:53,181 --> 01:28:56,021
is that there are so many companies and so many teams

1473
01:28:56,021 --> 01:28:57,141
building so many different things.

1474
01:28:57,141 --> 01:29:01,181
And unlike Layer 1 Bitcoin, which is a consensus-based mechanism,

1475
01:29:01,181 --> 01:29:04,061
we all have to agree to the way the system works.

1476
01:29:04,061 --> 01:29:07,061
With Lightning, it is different. It is not like that.

1477
01:29:07,061 --> 01:29:09,541
So, Ben and I can have an agreement,

1478
01:29:09,541 --> 01:29:11,301
and we can exchange value on Lightning,

1479
01:29:11,301 --> 01:29:14,101
even though no one else in the network has the same agreement.

1480
01:29:14,101 --> 01:29:15,661
And I think that is beautiful

1481
01:29:15,661 --> 01:29:17,141
because it leads to a lot of innovations.

1482
01:29:17,141 --> 01:29:19,341
You have things like Build 12, you have LNURL,

1483
01:29:19,341 --> 01:29:22,101
you have Lightning Address, you have LNURLPOS.

1484
01:29:22,101 --> 01:29:25,261
And these are just things built on top of Lightning.

1485
01:29:25,261 --> 01:29:26,661
So, it's great for innovation,

1486
01:29:26,661 --> 01:29:29,781
but it also creates for potential segmentation.

1487
01:29:29,781 --> 01:29:32,501
We're now talking about certain companies pursuing this,

1488
01:29:32,501 --> 01:29:34,301
certain companies pursuing that.

1489
01:29:34,301 --> 01:29:38,021
And so, it's just a very exciting space.

1490
01:29:38,021 --> 01:29:40,221
It's very innovative and very fast-paced.

1491
01:29:40,221 --> 01:29:42,541
Strike ships all the time, Zebedee ships all the time.

1492
01:29:42,541 --> 01:29:46,381
It's fascinating to see the speed at which technology is evolving.

1493
01:29:46,381 --> 01:29:48,021
And I think, again, I'm just going to say it again,

1494
01:29:48,021 --> 01:29:50,141
I think we're just scratching the surface.

1495
01:29:50,141 --> 01:29:52,701
Just last, I believe it was two weeks ago,

1496
01:29:52,701 --> 01:29:55,181
Zebedee released a product called Zebedee Streamer,

1497
01:29:55,181 --> 01:29:57,421
which basically allows any person,

1498
01:29:57,421 --> 01:30:00,581
any content creator from anywhere in the world,

1499
01:30:00,581 --> 01:30:03,541
essentially, to put a QR code in their stream

1500
01:30:03,541 --> 01:30:06,421
and have interactions with their audience members.

1501
01:30:06,421 --> 01:30:07,941
So, you're now breaking that fourth wall

1502
01:30:07,941 --> 01:30:09,261
between your audience,

1503
01:30:09,261 --> 01:30:12,661
who used to be a passive participant of this engagement,

1504
01:30:12,661 --> 01:30:15,901
and is now using a tiny little bit of Lightning transaction

1505
01:30:15,901 --> 01:30:17,941
to interact with you, to send you a message.

1506
01:30:17,941 --> 01:30:19,701
And so, you break that fourth wall.

1507
01:30:19,701 --> 01:30:21,821
And this is something that is platform agnostic.

1508
01:30:21,821 --> 01:30:22,941
We're just using Lightning.

1509
01:30:22,941 --> 01:30:25,741
It doesn't matter if you're using on Twitch or YouTube

1510
01:30:25,741 --> 01:30:28,221
or wherever it is you're streaming.

1511
01:30:28,221 --> 01:30:29,621
This is just one of the products

1512
01:30:29,621 --> 01:30:31,981
that allows people to interact.

1513
01:30:31,981 --> 01:30:34,381
So, you can get, your audience in Japan

1514
01:30:34,381 --> 01:30:37,141
can help you in your guild, in your quest,

1515
01:30:37,141 --> 01:30:39,501
or in your stream if you're in the United States

1516
01:30:39,501 --> 01:30:41,421
or in your Brazil or in India.

1517
01:30:41,421 --> 01:30:44,421
So, the beauty of Bitcoin being global

1518
01:30:44,421 --> 01:30:46,261
enables for these types of innovations

1519
01:30:46,261 --> 01:30:47,461
which weren't possible before.

1520
01:30:47,461 --> 01:30:50,501
You can't easily send a dollar to your friend in Japan.

1521
01:30:50,501 --> 01:30:52,101
How does that actually work, right?

1522
01:30:52,101 --> 01:30:55,341
And with Bitcoin, and with Lightning, it's instant.

1523
01:30:55,341 --> 01:30:57,461
So, I think that's a very exciting part.

1524
01:30:57,701 --> 01:31:01,261
Well, what I like about people building more products

1525
01:31:01,261 --> 01:31:04,821
and projects, like with the video streamer.

1526
01:31:05,701 --> 01:31:09,341
So, with LNURL Pay, so that you're using LNURL.

1527
01:31:09,341 --> 01:31:11,781
And with LNURL Pay, there's part of the standard

1528
01:31:11,781 --> 01:31:14,781
where you can attach a memo, a note.

1529
01:31:14,781 --> 01:31:17,861
And for most use cases, that's not really very useful.

1530
01:31:18,861 --> 01:31:20,781
Or people weren't using it early on.

1531
01:31:20,781 --> 01:31:25,421
Whereas, because we got similar sort of extension in LNBits.

1532
01:31:25,941 --> 01:31:28,741
Having been able to pay in LNURL Pay,

1533
01:31:28,741 --> 01:31:30,461
and then write a little note,

1534
01:31:30,461 --> 01:31:34,781
and then for the viewer of a YouTube stream, for example,

1535
01:31:34,781 --> 01:31:37,141
being able to see that comment pop up in the video

1536
01:31:37,141 --> 01:31:39,781
with a little animated GIF or something is very cool.

1537
01:31:39,781 --> 01:31:42,621
And then that means, so it kind of guides the direction

1538
01:31:42,621 --> 01:31:45,461
of what sort of stuff is,

1539
01:31:45,461 --> 01:31:47,861
what sort, because LNURL is a wallet standard.

1540
01:31:47,861 --> 01:31:50,261
Obviously, the wallets need to implement these things.

1541
01:31:50,261 --> 01:31:51,781
So, it's almost like chicken and egg.

1542
01:31:51,781 --> 01:31:54,701
Like, without them implementing, you can't build

1543
01:31:54,701 --> 01:31:57,581
for those implementations.

1544
01:31:57,581 --> 01:31:59,421
But then, without you building something

1545
01:31:59,421 --> 01:32:00,901
to show that there's a need for it,

1546
01:32:00,901 --> 01:32:02,021
then they're not going to implement it.

1547
01:32:02,021 --> 01:32:04,701
So, it's a really interesting kind of,

1548
01:32:04,701 --> 01:32:07,301
watching those protocols kind of evolve.

1549
01:32:07,301 --> 01:32:08,821
Specifically, something like LNURL,

1550
01:32:08,821 --> 01:32:11,341
because it's so ground up and built by developers.

1551
01:32:11,341 --> 01:32:13,461
Because, for me, the biggest thing

1552
01:32:13,461 --> 01:32:17,461
is not just about technology, but about companies growing.

1553
01:32:17,461 --> 01:32:18,301
Because when you were saying,

1554
01:32:18,301 --> 01:32:19,661
there are new companies getting started,

1555
01:32:19,661 --> 01:32:20,741
it leads you.

1556
01:32:20,741 --> 01:32:22,301
Also, like existing companies.

1557
01:32:22,301 --> 01:32:25,221
When you look at Strike, as a company growing,

1558
01:32:25,221 --> 01:32:28,341
I don't know, where are my Strike employees?

1559
01:32:28,341 --> 01:32:29,821
There we go.

1560
01:32:29,821 --> 01:32:32,301
So, you see, oh, over there, over there.

1561
01:32:32,301 --> 01:32:33,461
We're everywhere.

1562
01:32:33,461 --> 01:32:38,621
But there is like Manuela, Frank, Casey, Joshua, Pablo.

1563
01:32:38,621 --> 01:32:40,741
All this exciting talent that's joining,

1564
01:32:40,741 --> 01:32:43,381
not from companies you never heard of,

1565
01:32:43,381 --> 01:32:45,581
but these are people that are joining

1566
01:32:45,581 --> 01:32:49,221
from either companies that are still not in the game,

1567
01:32:49,221 --> 01:32:50,981
but will be, like Google,

1568
01:32:50,981 --> 01:32:53,341
or companies that are getting into the game,

1569
01:32:53,341 --> 01:32:54,661
like Robinhood.

1570
01:32:54,661 --> 01:32:59,061
So, I'm really excited that Lightning, as a protocol,

1571
01:32:59,061 --> 01:33:00,501
is facilitating all of that,

1572
01:33:00,501 --> 01:33:03,781
and I'm looking forward to see how things will develop.

1573
01:33:03,781 --> 01:33:04,661
Yeah, absolutely.

1574
01:33:04,661 --> 01:33:07,181
So, we touched on it a little bit on this panel already,

1575
01:33:07,181 --> 01:33:09,581
but I want to talk about, for a second,

1576
01:33:09,581 --> 01:33:11,861
a little bit about how the Lightning Network,

1577
01:33:11,861 --> 01:33:13,461
this open monetary network,

1578
01:33:13,461 --> 01:33:16,501
is able to facilitate payments all across the globe.

1579
01:33:16,501 --> 01:33:18,141
You know, we talked about sending payments

1580
01:33:18,141 --> 01:33:19,821
to someone in Japan, you know,

1581
01:33:19,821 --> 01:33:21,941
micropayments at that level.

1582
01:33:21,941 --> 01:33:23,341
Yeah, Andre, do you want to kind of like,

1583
01:33:23,341 --> 01:33:24,941
you know, get into that a little bit more now?

1584
01:33:24,941 --> 01:33:26,101
You have gaming communities,

1585
01:33:26,101 --> 01:33:27,821
probably all around the world, right?

1586
01:33:27,821 --> 01:33:31,701
How has being able to stream, you know, micropayments,

1587
01:33:31,701 --> 01:33:33,701
being able to, you know,

1588
01:33:33,701 --> 01:33:35,901
have two users that don't know each other

1589
01:33:35,901 --> 01:33:37,101
on the complete side of the world,

1590
01:33:37,101 --> 01:33:39,141
how has this impacted their lives?

1591
01:33:39,141 --> 01:33:40,581
And, you know, down the panel,

1592
01:33:40,581 --> 01:33:42,021
we can get in, like, El Salvador

1593
01:33:42,021 --> 01:33:44,421
and other emerging markets that are using it.

1594
01:33:44,421 --> 01:33:46,621
Yeah, I think for us, specifically at Zebedee,

1595
01:33:46,621 --> 01:33:50,221
we actually have a very large Latin American community

1596
01:33:50,221 --> 01:33:52,461
of users, Brazil specifically.

1597
01:33:52,461 --> 01:33:54,661
We recently announced an integration with BIPA,

1598
01:33:54,661 --> 01:33:57,021
which is a Lightning-based exchange in Brazil.

1599
01:33:57,021 --> 01:33:58,621
And in that integration,

1600
01:33:58,621 --> 01:34:01,381
you actually can receive your SATs inside of Zebedee

1601
01:34:01,381 --> 01:34:03,501
by playing games, by winning tournaments,

1602
01:34:03,501 --> 01:34:04,701
and then you can, you know,

1603
01:34:04,701 --> 01:34:07,301
one-button click send to your BIPA account,

1604
01:34:07,301 --> 01:34:08,621
which automatically, you know,

1605
01:34:08,621 --> 01:34:11,261
FX converts into Brazilian Reais, right?

1606
01:34:11,261 --> 01:34:13,101
So we're talking about using Lightning

1607
01:34:13,101 --> 01:34:14,981
as the rail in between,

1608
01:34:14,981 --> 01:34:17,781
and at the edge nodes, you can use FX conversions.

1609
01:34:17,781 --> 01:34:20,861
So what we're seeing in Brazil is that, you know,

1610
01:34:20,861 --> 01:34:23,301
Brazil is one of the most connected, you know,

1611
01:34:23,301 --> 01:34:24,621
countries when it comes to people

1612
01:34:24,621 --> 01:34:26,421
that have access to the internet.

1613
01:34:26,421 --> 01:34:27,981
Everyone has smartphones, et cetera,

1614
01:34:27,981 --> 01:34:30,821
and it's a huge gaming, you know, community as well.

1615
01:34:30,821 --> 01:34:34,341
So folks are playing games powered by Zebedee,

1616
01:34:34,341 --> 01:34:35,701
and they're earning Satoshis,

1617
01:34:35,701 --> 01:34:38,581
and while these are primarily microtransactions,

1618
01:34:38,581 --> 01:34:40,861
and we're talking 100, 200, 1,000,

1619
01:34:40,861 --> 01:34:42,821
a couple thousand Satoshis,

1620
01:34:42,821 --> 01:34:44,141
it's not actually micro.

1621
01:34:44,141 --> 01:34:45,901
The impact is actually macro.

1622
01:34:45,901 --> 01:34:46,941
What we're seeing is that people

1623
01:34:46,941 --> 01:34:48,501
are accumulating the Satoshis,

1624
01:34:48,501 --> 01:34:49,421
and whenever they're ready,

1625
01:34:49,421 --> 01:34:51,221
whether they want to use the Satoshis themselves,

1626
01:34:51,221 --> 01:34:52,101
the Bitcoin itself,

1627
01:34:52,101 --> 01:34:54,221
or they want to transfer back to their Brazilian Reais,

1628
01:34:54,221 --> 01:34:56,541
they can do that, and the impact is very measurable.

1629
01:34:56,541 --> 01:34:58,941
We have seen people pay their rents.

1630
01:34:58,941 --> 01:35:00,781
We have people pay their grocery stores.

1631
01:35:00,781 --> 01:35:04,541
We have people, you know, buy medicine for family members,

1632
01:35:04,541 --> 01:35:06,661
and this is all enabled by, you know,

1633
01:35:06,661 --> 01:35:08,901
the ability of having money that is global.

1634
01:35:08,901 --> 01:35:11,701
We are an American company, American-based company.

1635
01:35:11,701 --> 01:35:14,661
We couldn't do that to someone in Brazil

1636
01:35:14,661 --> 01:35:17,341
because we can't easily send that value across to them,

1637
01:35:17,341 --> 01:35:19,141
right, and now in Bitcoin, with Lightning,

1638
01:35:19,141 --> 01:35:20,861
Lightning is digital money.

1639
01:35:20,861 --> 01:35:23,101
It's programmable money, and it lives on the internet,

1640
01:35:23,101 --> 01:35:24,581
right, so all of that is possible,

1641
01:35:24,581 --> 01:35:25,781
and the impact is very real.

1642
01:35:25,781 --> 01:35:27,781
Brazil is just the first, you know, country

1643
01:35:27,781 --> 01:35:30,621
that we're seeing that big change is happening

1644
01:35:30,621 --> 01:35:31,781
for us in the gaming industry,

1645
01:35:31,781 --> 01:35:33,981
but I think there's many, many more.

1646
01:35:33,981 --> 01:35:36,541
I think, you know, nations in the African continent

1647
01:35:36,541 --> 01:35:38,821
are, you know, emerging markets are exploding

1648
01:35:38,821 --> 01:35:40,581
through the roof, adoption and, you know,

1649
01:35:40,581 --> 01:35:42,261
financial inclusion and all of that,

1650
01:35:42,261 --> 01:35:44,821
so I think it's, I'm gonna repeat myself,

1651
01:35:44,821 --> 01:35:46,941
we're just scratching the surface.

1652
01:35:46,941 --> 01:35:48,981
Lightning is going to essentially take over.

1653
01:35:48,981 --> 01:35:50,381
It's going to be the story that we're going to be

1654
01:35:50,381 --> 01:35:52,701
talking about for the next five to 10 years,

1655
01:35:52,701 --> 01:35:54,981
and it's great to be here at the very beginning, right?

1656
01:35:54,981 --> 01:35:56,701
I think that's where we're headed.

1657
01:35:58,341 --> 01:36:00,461
Yeah, Rockstar, do you maybe wanna, like,

1658
01:36:00,461 --> 01:36:02,261
shine a little bit light on El Salvador

1659
01:36:02,261 --> 01:36:05,301
and some of the, you know, some of the life-changing impacts

1660
01:36:05,301 --> 01:36:06,941
that, you know, people, the citizens there

1661
01:36:06,941 --> 01:36:10,021
are able to utilize from, you know, remittance payments

1662
01:36:10,021 --> 01:36:12,021
to, you know, e-commerce, or sorry,

1663
01:36:12,021 --> 01:36:13,661
physical commerce themselves?

1664
01:36:16,261 --> 01:36:20,661
Yeah, I mean, that whole story is very personal for me

1665
01:36:20,661 --> 01:36:24,821
because on the inside, this whole thing was happening,

1666
01:36:24,821 --> 01:36:26,981
but for me, the fact that, you know,

1667
01:36:26,981 --> 01:36:31,261
one of us, a Bitcoiner like Jack, can go to El Salvador

1668
01:36:31,261 --> 01:36:35,701
and practically change the trajectory

1669
01:36:35,701 --> 01:36:38,061
of the history of a country

1670
01:36:38,061 --> 01:36:41,061
and get them to adopt that first

1671
01:36:42,781 --> 01:36:46,301
Bitcoin as a legal tender bill is just amazing.

1672
01:36:46,301 --> 01:36:50,421
And as Andre's saying, with scratching the surface,

1673
01:36:50,421 --> 01:36:54,181
we, yeah, that's just first domino.

1674
01:36:54,181 --> 01:36:57,621
And for us that, hey, yeah,

1675
01:36:57,621 --> 01:36:59,781
for us that have been in Bitcoin for so long,

1676
01:36:59,781 --> 01:37:02,141
it's just something that we have been expecting

1677
01:37:02,141 --> 01:37:05,661
because state and money will be separated.

1678
01:37:07,301 --> 01:37:08,141
Yeah.

1679
01:37:08,141 --> 01:37:08,981
Yeah.

1680
01:37:08,981 --> 01:37:09,821
I think.

1681
01:37:11,821 --> 01:37:14,541
State and money will be separated

1682
01:37:14,541 --> 01:37:18,821
and we are going to fix the money, fix the world.

1683
01:37:18,821 --> 01:37:22,621
Because when you see, for example, what happened in Canada,

1684
01:37:22,621 --> 01:37:27,621
I mean, it's just crazy that you have people honking,

1685
01:37:28,141 --> 01:37:30,621
people donating for people to honk.

1686
01:37:30,621 --> 01:37:33,461
And it's not even that people that are honking

1687
01:37:33,461 --> 01:37:35,221
are getting their bank accounts shut down,

1688
01:37:35,221 --> 01:37:37,781
it's people that send $20 to them.

1689
01:37:37,781 --> 01:37:42,741
And so I understand politicians

1690
01:37:42,741 --> 01:37:46,541
and they are trying to, you know, keep things running,

1691
01:37:46,541 --> 01:37:50,221
keep fulfilling promises that got them elected,

1692
01:37:50,221 --> 01:37:51,661
but I mean, come on.

1693
01:37:51,661 --> 01:37:53,701
You know, at a certain point,

1694
01:37:53,701 --> 01:37:57,141
you need to realize you are not going to make it

1695
01:37:57,141 --> 01:37:59,341
and look to solutions,

1696
01:37:59,341 --> 01:38:02,221
not just invent problems to stay in power.

1697
01:38:02,221 --> 01:38:06,021
And I would even expand that beyond countries.

1698
01:38:06,021 --> 01:38:10,661
Like it's even when you see what's happening with Bitcoin

1699
01:38:10,661 --> 01:38:15,421
and so many people trying to control Bitcoin

1700
01:38:15,421 --> 01:38:17,341
and narrative around Bitcoin,

1701
01:38:17,341 --> 01:38:20,341
what they need to hear and understand is that,

1702
01:38:21,221 --> 01:38:25,421
you know, Bitcoin doesn't need you, you need Bitcoin.

1703
01:38:25,461 --> 01:38:30,461
So yeah, like Mr. Wonderful ESG BS,

1704
01:38:32,301 --> 01:38:35,181
I mean, man, we don't need you, you know?

1705
01:38:35,181 --> 01:38:39,141
If we do, we have Peter Thiel, like, thank you very much.

1706
01:38:39,141 --> 01:38:43,541
So yeah, thank you.

1707
01:38:43,541 --> 01:38:48,541
And I look at Matt always and go with, you know,

1708
01:38:50,661 --> 01:38:54,901
stay humble, so I'll stay up, I'll stand there.

1709
01:38:56,341 --> 01:38:57,301
Awesome.

1710
01:38:57,301 --> 01:38:59,621
I'd like to kind of get into a little bit

1711
01:38:59,621 --> 01:39:03,221
of a different roles that we have here on this panel today.

1712
01:39:03,221 --> 01:39:05,381
You know, we have, you know, we have custodians

1713
01:39:05,381 --> 01:39:08,541
like servicing lightning payments on behalf of users.

1714
01:39:08,541 --> 01:39:11,661
We have open source tooling for self-sovereign individuals

1715
01:39:11,661 --> 01:39:14,261
to actually, you know, do lightning payments on their own,

1716
01:39:14,261 --> 01:39:15,941
both sending and receiving.

1717
01:39:15,941 --> 01:39:18,261
And we have a VC here, Elise, you know,

1718
01:39:18,261 --> 01:39:19,741
investing in some of the, you know,

1719
01:39:19,741 --> 01:39:22,341
most groundbreaking companies, you know,

1720
01:39:22,581 --> 01:39:26,061
moving at lightning speed and at like a technological level

1721
01:39:26,061 --> 01:39:29,061
that like we really don't see so much in the real world.

1722
01:39:29,061 --> 01:39:31,341
So I'd love to kind of just hear the importance

1723
01:39:31,341 --> 01:39:35,261
of like each of your roles that you have in lightning here

1724
01:39:35,261 --> 01:39:37,741
and, you know, even maybe the dichotomy between,

1725
01:39:37,741 --> 01:39:40,141
you know, custodians and open source development.

1726
01:39:40,141 --> 01:39:42,181
So like, Ben, do you want to like kind of talk about

1727
01:39:42,181 --> 01:39:43,621
like some of the open source tooling

1728
01:39:43,621 --> 01:39:46,541
that like you have created on with LNBits?

1729
01:39:46,541 --> 01:39:50,221
Yeah, so with LNBits, you can, you know,

1730
01:39:50,221 --> 01:39:51,061
run it just for yourself,

1731
01:39:51,061 --> 01:39:52,781
or you can run it for your friends or family,

1732
01:39:52,781 --> 01:39:54,901
or you can run it for a business,

1733
01:39:54,901 --> 01:39:56,301
or you can run it for the whole world if you want to

1734
01:39:56,301 --> 01:39:58,141
and be a custodian for other people's funds.

1735
01:39:58,141 --> 01:39:59,141
Then obviously you'll have to tackle

1736
01:39:59,141 --> 01:40:01,741
the regulatory stuff and whatever else.

1737
01:40:01,741 --> 01:40:06,061
So I'm not, I think within Bitcoin, you know,

1738
01:40:06,061 --> 01:40:07,541
not your node, not your rules,

1739
01:40:07,541 --> 01:40:09,301
like you should run your own node.

1740
01:40:09,301 --> 01:40:11,021
And we need to make that as easy as possible.

1741
01:40:11,021 --> 01:40:12,261
And we are making it as easy as possible

1742
01:40:12,261 --> 01:40:14,021
with all the great projects like Umbrella One

1743
01:40:14,021 --> 01:40:16,301
and RaspiBlitz and the MyNodes

1744
01:40:16,301 --> 01:40:17,781
and all these sorts of things.

1745
01:40:18,265 --> 01:40:28,265
But it's also okay to appreciate that some people will outsource that security to
somebody who they quote-unquote trust.

1746
01:40:28,265 --> 01:40:32,265
And hopefully that, you know, the amount of money which they would leave on that
service would be minimal.

1747
01:40:32,265 --> 01:40:41,265
And it could just be like a sort of a scrub service or a semi-custodial relay
Bitcoin service where Bitcoin, you know,

1748
01:40:41,265 --> 01:40:47,265
so say if you've got someone offering a custodial service and then they're receiving
Lightning payments,

1749
01:40:47,265 --> 01:40:53,265
then to have it just loop out on-chain when the amount gets too big, then as a
custodial service,

1750
01:40:53,265 --> 01:40:58,265
maybe your security threat model is that you're just leaving, you know, a couple
hundred quid on this service.

1751
01:40:58,265 --> 01:41:03,265
And then it's like, okay, well maybe for what I'm using it for, then maybe I don't
need to run my own node.

1752
01:41:03,265 --> 01:41:08,265
It's easier not to. And some people will do that. So we need to be aware of them
doing that.

1753
01:41:08,265 --> 01:41:14,265
And then we need to build for them, but do it in such a way that we can encourage
them to then run it themselves.

1754
01:41:14,265 --> 01:41:20,265
So it's not hard to run themselves. So yeah, you have like, you know, custodial,
then you have non-custodial.

1755
01:41:20,265 --> 01:41:25,265
And I think a lot of companies like, you know, like Galloy, like Allen Bits, like
we're exploring like stuff in the middle.

1756
01:41:25,265 --> 01:41:29,265
You know, what's in the middle? Is it community banking? Is it sort of scrub
services?

1757
01:41:29,265 --> 01:41:32,265
Could we get, you know, all that liquidity which is sloshing around in people's
Lightning wallets?

1758
01:41:33,265 --> 01:41:39,265
Could we pool it together? And then could those pools be used as a funding source
for custodial services?

1759
01:41:39,265 --> 01:41:44,265
So, you know, in a protocol-y way is, you know, the funds aren't being held by the
service provider.

1760
01:41:44,265 --> 01:41:51,265
And then there could be some potential yield for the people who allow their
Lightning funds to be put into that pool.

1761
01:41:51,265 --> 01:41:58,265
So I think there's some really interesting work on decentralizing custodianship and
that murky area in the middle.

1762
01:41:58,265 --> 01:42:06,265
So I think that's really important because actually one of the most important pieces
of Bitcoin and Lightning is the optionality, right?

1763
01:42:06,265 --> 01:42:10,265
It's a permissionless system. You can choose how deep in the stack you go.

1764
01:42:10,265 --> 01:42:18,265
So if you're, you know, a self-sovereign individual and you want to own the entire
stack and you want to be your own bank, you have that capability.

1765
01:42:18,265 --> 01:42:24,265
You know, you can run a Bitcoin core node, you can run a Lightning node, you can
have channel, you can do literally everything yourself.

1766
01:42:24,265 --> 01:42:29,265
I think it's a big ask to assume that each and every person in the world will
eventually do that.

1767
01:42:29,265 --> 01:42:39,265
I think the optionality is really, really important. And you having hybrid models,
having custodial models, having non-custodial models is one of the big value
propositions of Bitcoin and Lightning.

1768
01:42:39,265 --> 01:42:43,265
You know, it's you serve your own needs. You get to serve your own needs.

1769
01:42:43,265 --> 01:42:50,265
So in a world where everything online and in real life can have a value attached to
it,

1770
01:42:50,265 --> 01:42:56,265
I think everyone will be involved in Bitcoin in one way or another, even if you're
not running the software yourself.

1771
01:42:56,265 --> 01:43:00,265
I think there are different use cases, you know, thinking from our side to the
Zebedee side.

1772
01:43:00,265 --> 01:43:10,265
If you're a giant games publisher, you likely don't want to run, you know, your
banking infrastructure yourself because of lots of regulatory burdens, because of
infrastructure costs and etc.

1773
01:43:10,265 --> 01:43:13,265
So you're going to outsource that to a bigger custodian who's focusing on that.

1774
01:43:14,265 --> 01:43:23,265
But if you're a general user or you're a community bank with, you know, you and your
family want to have a, you know, a node at home and you want to run that and manage
that yourselves, you can do that, right?

1775
01:43:23,265 --> 01:43:31,265
So this is completely different to traditional finance. You can't just get a banking
license as a person and sort of begin being a bank yourself.

1776
01:43:31,265 --> 01:43:36,265
Bitcoin allows for that optionality, gives you that permission, permissionless
system, right?

1777
01:43:37,265 --> 01:43:43,265
And then you get to choose. You are a sovereign individual in Bitcoin. You get to
choose how far you go, how deep you go, how technical you go.

1778
01:43:43,265 --> 01:43:48,265
Lots of people run their email servers, lots of people don't run their email servers
and they choose to use Gmail, right?

1779
01:43:48,265 --> 01:43:53,265
Lots of people use accounts like Zebedee and Strike and lots of people run their own
Lightning nodes at home.

1780
01:43:53,265 --> 01:44:03,265
So the optionality to me is a really important piece and it's how we're going to
grow to millions and billions of Lightning users instead of every single person
having their own node at home as an essential piece of it.

1781
01:44:03,265 --> 01:44:10,265
Lightning is the future and we need to make it approachable and reachable to all
types of users, whether you're technical or not, right?

1782
01:44:10,265 --> 01:44:11,265
Yeah.

1783
01:44:14,265 --> 01:44:24,265
Yeah, to just add to that is someone that is working on both custodial solution with
Strike and then non-custodial with BTC-based server.

1784
01:44:24,265 --> 01:44:30,265
I often get messages of my BTC-based server instance, there is this problem, that
problem.

1785
01:44:30,265 --> 01:44:36,265
So yeah, it is about us creating the tools that facilitate the future.

1786
01:44:36,265 --> 01:44:49,265
And to me, one of the most natural use cases for Lightning is that big custodians
specifically exchanges.

1787
01:44:49,265 --> 01:44:56,265
So big shout out to Jesse and Pierre for Kraken integrating Lightning Network.

1788
01:44:56,265 --> 01:44:57,265
Yeah.

1789
01:44:57,265 --> 01:44:59,265
A round of applause for them.

1790
01:45:00,265 --> 01:45:11,265
Because for me, when we have big exchanges like that, it's such a natural use case
because you don't even need to deposit in exchange and get exchange hacked.

1791
01:45:11,265 --> 01:45:17,265
But rather you will have your funds in channel and yeah, you can pre-balance with
your dirty fiat.

1792
01:45:17,265 --> 01:45:24,265
So yeah, it's all about providing a range of solutions and then people can pick and
choose.

1793
01:45:25,265 --> 01:45:28,265
That's the original with Lightning, that was Satoshi's original vision, wasn't it?

1794
01:45:28,265 --> 01:45:32,265
It was anti-GOX and a unidirectional payment channel.

1795
01:45:32,265 --> 01:45:35,265
So it's really nice to see the exchanges actually implementing it.

1796
01:45:35,265 --> 01:45:37,265
Yeah, direct channel with non-GOX.

1797
01:45:37,265 --> 01:45:38,265
Yeah.

1798
01:45:38,265 --> 01:45:42,265
They can do high speed, high frequency updates to their funds.

1799
01:45:45,265 --> 01:45:50,265
At least on the VC side of things, how do you see your role in the Lightning space?

1800
01:45:50,265 --> 01:45:55,265
So our role is to be a collaborator and resource provider.

1801
01:45:55,265 --> 01:45:59,265
And I think of it as a service provider for the founders that we work with.

1802
01:45:59,265 --> 01:46:06,265
And then if we're doing our job well, it helps accelerate what the founder would
have done without us.

1803
01:46:06,265 --> 01:46:07,265
That's the goal.

1804
01:46:08,265 --> 01:46:15,265
I also, though, think of us as a way to organize capital to provide resources for
growth in the field,

1805
01:46:15,265 --> 01:46:21,265
which is more challenging in Bitcoin and Lightning than in altcoin spaces, for
example.

1806
01:46:21,265 --> 01:46:29,265
And so it's important for us to be able to talk to Bitcoin OGs that have stacked a
lot of Bitcoin

1807
01:46:29,265 --> 01:46:32,265
about why they should contribute back to the innovation ecosystem.

1808
01:46:33,265 --> 01:46:38,265
But then also to folks that might not get Bitcoin yet about why they should care.

1809
01:46:38,265 --> 01:46:44,265
And on that second group, one of the catalysts for people's curiosity has really
been Lightning.

1810
01:46:44,265 --> 01:46:45,265
There's a hook there.

1811
01:46:45,265 --> 01:46:49,265
People get it, that it changes commerce in a variety of ways.

1812
01:46:49,265 --> 01:46:53,265
But I think what's interesting, and Andre kind of spoke around this earlier,

1813
01:46:53,265 --> 01:46:58,265
is that because it's more flexible, it can meet people in communities where they're
at.

1814
01:46:58,265 --> 01:47:03,265
So, for instance, what Zebedee is doing for gamers is banking them, basically,

1815
01:47:03,265 --> 01:47:08,265
in a way that makes sense for the population and can't be done with traditional
financial tools.

1816
01:47:08,265 --> 01:47:14,265
But it can also do that in emerging markets or for lower socioeconomic status
populations

1817
01:47:14,265 --> 01:47:17,265
where traditional finance can't serve them either.

1818
01:47:17,265 --> 01:47:24,265
And so that's our job, is to recognize the opportunities that the protocols present

1819
01:47:25,265 --> 01:47:30,265
to create new utility and then find the founders that are going to be able to
execute

1820
01:47:30,265 --> 01:47:33,265
and provide for these populations.

1821
01:47:34,265 --> 01:47:35,265
Awesome, amazing.

1822
01:47:35,265 --> 01:47:37,265
So, we've got about five minutes left.

1823
01:47:37,265 --> 01:47:42,265
I did want to kind of get into almost the flip side of things.

1824
01:47:42,265 --> 01:47:47,265
What if the Lightning Network is not the future of commerce here?

1825
01:47:47,265 --> 01:47:51,265
What if Lightning Network ends up being used in other use cases?

1826
01:47:51,265 --> 01:47:53,265
Is Lightning good enough the way it is?

1827
01:47:53,265 --> 01:47:59,265
What needs to progress to move to the next level from there?

1828
01:47:59,265 --> 01:48:04,265
Do we need additional payment protocols, things like Bolt 12,

1829
01:48:04,265 --> 01:48:06,265
to be able to service some of these use cases?

1830
01:48:06,265 --> 01:48:10,265
Are there going to be alternative sub-networks within the Lightning space

1831
01:48:10,265 --> 01:48:15,265
or even additional Layer 2 or Layer 3 solutions on top of Bitcoin?

1832
01:48:15,265 --> 01:48:21,265
So, as kind of final thoughts here, what do you guys see as Lightning as the future
of commerce?

1833
01:48:21,265 --> 01:48:23,265
Is it the future of commerce?

1834
01:48:23,265 --> 01:48:27,265
Yeah, we had a really good talk in the backstage about this.

1835
01:48:27,265 --> 01:48:31,265
Maybe me and Andrew were talking about if you have additional hops,

1836
01:48:31,265 --> 01:48:35,265
it's not direct channel, success of payments is 77%.

1837
01:48:35,265 --> 01:48:36,265
Yeah, 77%.

1838
01:48:36,265 --> 01:48:38,265
And then it goes down from there.

1839
01:48:38,265 --> 01:48:41,265
But yeah, maybe you can expand on that.

1840
01:48:41,265 --> 01:48:48,265
Yeah, I think, to me, one of the important pieces of Lightning is interoperability
and Bitcoin.

1841
01:48:48,265 --> 01:48:51,265
Layer 1, we all agree on everything, it's a consensus-based layer.

1842
01:48:51,265 --> 01:48:54,265
Layer 2, we have some agreements, but like we said before,

1843
01:48:54,265 --> 01:48:58,265
different participants can have separate agreements and still transact value.

1844
01:48:58,265 --> 01:49:02,265
As we stack the layers, as we continue building the Bitcoin stack,

1845
01:49:02,265 --> 01:49:05,265
I think it's really important to maintain that interoperability,

1846
01:49:05,265 --> 01:49:09,265
as with things with LNURL, Lightning address, and so forth.

1847
01:49:09,265 --> 01:49:15,265
And I think if we reach a scenario where certain companies are doing this,

1848
01:49:15,265 --> 01:49:18,265
other teams are doing that, some certain people are doing this,

1849
01:49:18,265 --> 01:49:21,265
and they can't speak to each other, you lose a very vital piece of Bitcoin,

1850
01:49:21,265 --> 01:49:25,265
which is the ability to send money to anyone, anywhere.

1851
01:49:25,265 --> 01:49:29,265
So we're working very hard for it to be the future,

1852
01:49:29,265 --> 01:49:32,265
but there's also lots of business interests for companies,

1853
01:49:32,265 --> 01:49:35,265
there's also incentives that are different for certain teams.

1854
01:49:35,265 --> 01:49:37,265
So it would be a shame if we were to split,

1855
01:49:37,265 --> 01:49:40,265
and Lightning becomes separate things to each team.

1856
01:49:40,265 --> 01:49:42,265
And that's when, in my opinion,

1857
01:49:42,265 --> 01:49:47,265
Lightning could come to not be the holy grail that we all want it to be.

1858
01:49:47,265 --> 01:49:51,265
So I think it's a matter of communication, but it's a very tough problem.

1859
01:49:51,265 --> 01:49:55,265
How do we engage as community members, as companies,

1860
01:49:55,265 --> 01:50:00,265
to agree on standards that are being built as we're building them?

1861
01:50:00,265 --> 01:50:03,265
Bitcoin and Lightning are sort of standardized now,

1862
01:50:03,265 --> 01:50:06,265
but what about the rest of the things that are being built on top of it?

1863
01:50:06,265 --> 01:50:09,265
So I think that's one of the big interesting points.

1864
01:50:09,265 --> 01:50:13,265
Yeah, when you look at the way that Lightning specification developed,

1865
01:50:13,265 --> 01:50:17,265
which was really good with Bolt 1, Bolt 2, all the way to Bolt 11,

1866
01:50:17,265 --> 01:50:20,265
and then from there we've expanded,

1867
01:50:20,265 --> 01:50:25,265
and now we are at this point where will we sit down and talk about specifications,

1868
01:50:25,265 --> 01:50:28,265
improve them, or what will be the path forward?

1869
01:50:28,265 --> 01:50:34,265
Because for me, maybe payments is not the future of Lightning,

1870
01:50:34,265 --> 01:50:36,265
maybe tokens are.

1871
01:50:37,265 --> 01:50:40,265
I offer that thought to you.

1872
01:50:40,265 --> 01:50:45,265
What I am really excited about, though, is alternative layers, too.

1873
01:50:45,265 --> 01:50:50,265
So Coinpool, as a proposal, has come out,

1874
01:50:50,265 --> 01:50:55,265
and I see that in the future there will be a lot of development there,

1875
01:50:55,265 --> 01:50:58,265
because there are such natural use cases for that.

1876
01:50:58,265 --> 01:51:01,265
As someone working on the BTC Pay server,

1877
01:51:01,265 --> 01:51:04,265
if you just overpay your merchant,

1878
01:51:04,265 --> 01:51:07,265
now you're masking the amount that you pay to merchant,

1879
01:51:07,265 --> 01:51:10,265
and only merchant knows it, can blank it out,

1880
01:51:10,265 --> 01:51:14,265
and whatever you overpay can now become a part of the pool,

1881
01:51:14,265 --> 01:51:17,265
sort of like what Samurai is doing.

1882
01:51:17,265 --> 01:51:20,265
But let's see, yeah, let's see.

1883
01:51:20,265 --> 01:51:24,265
And invitation, if there are any more NIMs like me,

1884
01:51:24,265 --> 01:51:28,265
shadowy super coders, come to BTC Pay server at Mattermost,

1885
01:51:28,265 --> 01:51:30,265
and let's talk about Coinpool.

1886
01:51:31,265 --> 01:51:36,265
So a lot of what I think can help advance Lightning for payments

1887
01:51:36,265 --> 01:51:39,265
and make Lightning payments more reliable,

1888
01:51:39,265 --> 01:51:43,265
including when there's multiple hops in the payment,

1889
01:51:43,265 --> 01:51:44,265
is being built now.

1890
01:51:44,265 --> 01:51:46,265
So Lightning is still early.

1891
01:51:46,265 --> 01:51:50,265
There's an opportunity that many companies have described,

1892
01:51:50,265 --> 01:51:53,265
for instance, voltage recently, I think, at this conference.

1893
01:51:53,265 --> 01:51:57,265
There's an opportunity to be more efficient

1894
01:51:57,265 --> 01:52:00,265
in how you manage your nodes and channels,

1895
01:52:00,265 --> 01:52:02,265
and businesses have the same opportunity.

1896
01:52:02,265 --> 01:52:05,265
And so I think one of the strengths about the Bitcoin community

1897
01:52:05,265 --> 01:52:08,265
is that we're really self-evaluative,

1898
01:52:08,265 --> 01:52:11,265
so we're hard on ourselves, we critique ourselves.

1899
01:52:11,265 --> 01:52:13,265
And I think that makes us much stronger,

1900
01:52:13,265 --> 01:52:16,265
but we also have to remember that it's just very early.

1901
01:52:16,265 --> 01:52:19,265
And so some of the picks and shovels that need to be built

1902
01:52:19,265 --> 01:52:23,265
for Lightning to be the future of commerce are being built today.

1903
01:52:23,265 --> 01:52:24,265
We're trying to fund them.

1904
01:52:24,265 --> 01:52:27,265
One of the things that makes me most bullish, though,

1905
01:52:27,265 --> 01:52:30,265
about Lightning for the future of commerce

1906
01:52:30,265 --> 01:52:36,265
is to see the sort of feedback loop that companies like Zebedee or Strike,

1907
01:52:36,265 --> 01:52:38,265
Ibex Mercado, Lightning Labs,

1908
01:52:38,265 --> 01:52:43,265
have been using in terms of the adoption and infrastructure cycle.

1909
01:52:43,265 --> 01:52:47,265
And so, for instance, we saw in El Salvador

1910
01:52:47,265 --> 01:52:51,265
a real love and appreciation for Lightning, the protocol.

1911
01:52:51,265 --> 01:52:56,265
And then we saw perhaps some difficulty or challenge for emerging markets

1912
01:52:56,265 --> 01:53:01,265
where households might have a one ratio of how much they make

1913
01:53:01,265 --> 01:53:03,265
and how much they need to spend each month.

1914
01:53:03,265 --> 01:53:06,265
It's harder to tolerate Bitcoin's volatility,

1915
01:53:06,265 --> 01:53:11,265
at least now, before everything's denominated in Bitcoin.

1916
01:53:11,265 --> 01:53:13,265
And so as part of that feedback loop,

1917
01:53:13,265 --> 01:53:17,265
we see companies thinking about how to offer the protocol

1918
01:53:17,265 --> 01:53:21,265
without forcing exposure to Bitcoin's volatility.

1919
01:53:21,265 --> 01:53:26,265
And so those sorts of quick iterative loops based on feedback from adoption

1920
01:53:26,265 --> 01:53:30,265
will, I think, position Lightning to be in a really good place

1921
01:53:30,265 --> 01:53:32,265
to dominate commerce in the future.

1922
01:53:32,265 --> 01:53:37,265
Yeah, I mean, I think that any money, medium of exchange money,

1923
01:53:37,265 --> 01:53:39,265
which we're going to be using in the future,

1924
01:53:39,265 --> 01:53:41,265
will be built using Lightning.

1925
01:53:41,265 --> 01:53:43,265
Currently, we're just at the stage where it's messy

1926
01:53:43,265 --> 01:53:45,265
and there's all this, you know,

1927
01:53:45,265 --> 01:53:47,265
it's the free and open source way, isn't it?

1928
01:53:47,265 --> 01:53:49,265
You're making the sausage in public

1929
01:53:49,265 --> 01:53:52,265
and everyone can see all the ingredients which go into it,

1930
01:53:52,265 --> 01:53:54,265
and it's messy, it's not like a closed source system.

1931
01:53:54,265 --> 01:53:56,265
So it seems very chaotic and it seems like things are breaking,

1932
01:53:56,265 --> 01:53:59,265
aren't working, and then you have payment failures.

1933
01:53:59,265 --> 01:54:02,265
But, you know, the reason people have payment failures

1934
01:54:02,265 --> 01:54:05,265
is because they haven't balanced their channels properly.

1935
01:54:05,265 --> 01:54:07,265
And now there's all these great services which are exploring

1936
01:54:07,265 --> 01:54:09,265
how to do that in a more automated way and, you know,

1937
01:54:09,265 --> 01:54:12,265
solutions for fixing that.

1938
01:54:12,265 --> 01:54:15,265
So, yeah, and this is what I was saying before about the, you know,

1939
01:54:15,265 --> 01:54:18,265
having real world use gives you all that great feedback.

1940
01:54:18,265 --> 01:54:20,265
Like in El Salvador, the thing which was obvious for anyone

1941
01:54:20,265 --> 01:54:23,265
who went there was the payment rail was fantastic.

1942
01:54:23,265 --> 01:54:27,265
Medium of exchange sucks because you've got the volatility of Bitcoin.

1943
01:54:27,265 --> 01:54:30,265
And then we know one day that Bitcoin will have enough liquidity

1944
01:54:30,265 --> 01:54:32,265
so it won't be volatile.

1945
01:54:32,265 --> 01:54:34,265
But then how will it get there unless people are using it

1946
01:54:34,265 --> 01:54:36,265
as a stable medium of exchange?

1947
01:54:36,265 --> 01:54:40,265
So the idea of these stable coins, which can bring in Bitcoin liquidity,

1948
01:54:40,265 --> 01:54:43,265
which we can use temporarily until we get to that, you know,

1949
01:54:43,265 --> 01:54:46,265
mass where the Bitcoin price just can't move

1950
01:54:46,265 --> 01:54:48,265
because it's so incredibly liquid.

1951
01:54:48,265 --> 01:54:51,265
I think that's the inevitable kind of next step for Bitcoin.

1952
01:54:51,265 --> 01:54:52,265
It's very exciting.

1953
01:54:52,265 --> 01:54:53,265
Yeah, yeah.

1954
01:54:53,265 --> 01:54:55,265
Well, I want to give everyone a round of applause

1955
01:54:55,265 --> 01:54:57,265
for these amazing panelists.

1956
01:54:57,265 --> 01:54:59,265
Thank you guys so much.

1957
01:54:59,265 --> 01:55:01,265
That's it.

1958
01:55:01,265 --> 01:55:04,265
Thank you.

1959
01:55:31,265 --> 01:55:53,265
What's up?

1960
01:55:53,265 --> 01:55:54,265
What's up?

1961
01:55:54,265 --> 01:55:55,265
Is my mic on?

1962
01:55:55,265 --> 01:55:56,265
Hello.

1963
01:55:56,265 --> 01:55:57,265
Hello.

1964
01:55:57,265 --> 01:55:58,265
Hello.

1965
01:55:58,265 --> 01:55:59,265
Can you hear me?

1966
01:55:59,265 --> 01:56:00,265
Testing one, two.

1967
01:56:00,265 --> 01:56:02,265
Testing one, two.

1968
01:56:02,265 --> 01:56:03,265
I'm going to borrow yours.

1969
01:56:03,265 --> 01:56:05,265
Oh, I can see us.

1970
01:56:05,265 --> 01:56:06,265
Hello.

1971
01:56:06,265 --> 01:56:07,265
Testing one, two.

1972
01:56:07,265 --> 01:56:08,265
Testing one.

1973
01:56:08,265 --> 01:56:09,265
Yeah, what's up?

1974
01:56:09,265 --> 01:56:10,265
Can you guys hear me okay?

1975
01:56:10,265 --> 01:56:11,265
Yeah.

1976
01:56:11,265 --> 01:56:12,265
Cool.

1977
01:56:12,265 --> 01:56:14,265
So this is the mempools panel.

1978
01:56:14,265 --> 01:56:15,265
My name is Wiz.

1979
01:56:15,265 --> 01:56:17,265
I'm the co-founder of the mempool open source project

1980
01:56:17,265 --> 01:56:22,265
and operator of the mempool.space block explorer website.

1981
01:56:22,265 --> 01:56:26,265
And this is the mempool panel where we're going to bore you guys to death

1982
01:56:26,265 --> 01:56:29,265
and blab on for hours about the mempool.

1983
01:56:29,265 --> 01:56:33,265
These are some really cool shadowy super coder cypherpunk people

1984
01:56:33,265 --> 01:56:35,265
we are very fortunate to have here today.

1985
01:56:35,265 --> 01:56:38,265
Why don't you introduce yourself?

1986
01:56:38,265 --> 01:56:39,265
Yeah, thanks.

1987
01:56:39,265 --> 01:56:40,265
My name is Sergey Kotler.

1988
01:56:40,265 --> 01:56:44,265
I'm the founder and CEO of BitRefill.

1989
01:56:44,265 --> 01:56:45,265
Many of you probably know what we do.

1990
01:56:45,265 --> 01:56:51,265
We let you buy anything you want.

1991
01:56:51,265 --> 01:56:52,265
Cool.

1992
01:56:52,265 --> 01:56:53,265
I think I'm okay.

1993
01:56:53,265 --> 01:56:54,265
My name is Gloria.

1994
01:56:54,265 --> 01:56:59,265
I work on Bitcoin Core, mostly in the mempool code base

1995
01:56:59,265 --> 01:57:02,265
and surrounding areas such as mempool validation,

1996
01:57:02,265 --> 01:57:06,265
transaction relay, and mining.

1997
01:57:06,265 --> 01:57:09,265
As a preface, when I say the mempool,

1998
01:57:09,265 --> 01:57:11,265
people often on Twitter say I don't know what I'm talking about.

1999
01:57:11,265 --> 01:57:16,265
I mean the mempool as in the code base area, just to say.

2000
01:57:16,265 --> 01:57:19,265
And I'm founded by Brink, which is a nonprofit

2001
01:57:20,265 --> 01:57:24,265
dedicated to Bitcoin research and development.

2002
01:57:24,265 --> 01:57:25,265
Hi, I'm Merch.

2003
01:57:25,265 --> 01:57:29,265
When I talk about the mempool, I mean the transactions

2004
01:57:29,265 --> 01:57:33,265
that are unconfirmed and are shared between all the different nodes

2005
01:57:33,265 --> 01:57:37,265
that run and have their own unique perspective on the mempool,

2006
01:57:37,265 --> 01:57:39,265
which just overlaps largely.

2007
01:57:39,265 --> 01:57:45,265
So the mempool is an abstract concept that just treats this overlap.

2008
01:57:45,265 --> 01:57:48,265
And I used to stare a lot more at the mempool

2009
01:57:48,265 --> 01:57:53,265
when I was at BitGo as a back-end coins team member

2010
01:57:53,265 --> 01:57:57,265
because we had so many customers that would get stuck transactions

2011
01:57:57,265 --> 01:58:02,265
or just needed advice on how they should send their transactions.

2012
01:58:02,265 --> 01:58:08,265
Now I'm at Chaincode Labs, and while I'm still interested in mempool,

2013
01:58:08,265 --> 01:58:12,265
I sometimes do the mempool weather report.

2014
01:58:12,265 --> 01:58:16,265
Yeah, we love those mempool weather reports from Merch.

2015
01:58:16,265 --> 01:58:18,265
They haven't done any while though.

2016
01:58:18,265 --> 01:58:22,265
Maybe if we ask real nice, they'll do one for us today.

2017
01:58:22,265 --> 01:58:25,265
But let's start with the basics.

2018
01:58:25,265 --> 01:58:28,265
Sergey, do you want to just break it down for everyone

2019
01:58:28,265 --> 01:58:30,265
who's not already familiar?

2020
01:58:30,265 --> 01:58:32,265
What is a mempool?

2021
01:58:32,265 --> 01:58:35,265
Why do Bitcoin nodes have them?

2022
01:58:35,265 --> 01:58:36,265
How do they work?

2023
01:58:36,265 --> 01:58:39,265
Why are we so interested in the mempools?

2024
01:58:39,265 --> 01:58:41,265
There's a lot there.

2025
01:58:41,265 --> 01:58:47,265
I mean, the basic thing is that when you send a Bitcoin transaction,

2026
01:58:47,265 --> 01:58:51,265
it doesn't go right into a block, right?

2027
01:58:51,265 --> 01:58:53,265
Where does it go? It goes into the mempool.

2028
01:58:53,265 --> 01:58:56,265
So the mempool is the pool of transactions

2029
01:58:56,265 --> 01:59:00,265
that are waiting to be confirmed into a block.

2030
01:59:00,265 --> 01:59:03,265
A Bitcoin node will receive a transaction.

2031
01:59:03,265 --> 01:59:05,265
It will check if it's valid, put it in the mempool,

2032
01:59:05,265 --> 01:59:08,265
put it in the stuff, and it will pass it around

2033
01:59:08,265 --> 01:59:11,265
to all the other Bitcoin nodes that it knows of.

2034
01:59:11,265 --> 01:59:14,265
So each has its own perspective,

2035
01:59:14,265 --> 01:59:17,265
but there's also some level of shared knowledge

2036
01:59:17,265 --> 01:59:22,265
of what are the transactions that are waiting to be confirmed.

2037
01:59:22,265 --> 01:59:30,265
And so, I mean, from my perspective as CEO,

2038
01:59:30,265 --> 01:59:35,265
technical CEO of a company that makes many Bitcoin transactions

2039
01:59:35,265 --> 01:59:37,265
and have customers making Bitcoin transactions to us,

2040
01:59:37,265 --> 01:59:40,265
especially back in 2017,

2041
01:59:40,265 --> 01:59:42,265
when the transaction fees were really high,

2042
01:59:42,265 --> 01:59:45,265
it became, I mean, really financially important,

2043
01:59:45,265 --> 01:59:48,265
because we were spending thousands and tens of thousands,

2044
01:59:48,265 --> 01:59:52,265
even in dollars, on transaction fees almost on a daily basis.

2045
01:59:52,265 --> 01:59:56,265
And so it created a strong incentive to keep an eye, right?

2046
01:59:56,265 --> 02:00:01,265
Because the most important thing is that the mempool is sorted by the fee rate,
right?

2047
02:00:01,265 --> 02:00:03,265
So that transaction that has a higher transaction fee

2048
02:00:03,265 --> 02:00:07,265
will be sorted higher, and it's going to be prioritized first by the miners,

2049
02:00:07,265 --> 02:00:12,265
which are then working based on financial incentives, right?

2050
02:00:12,265 --> 02:00:18,265
But then it becomes important to set a fee that is just high enough,

2051
02:00:18,265 --> 02:00:20,265
but not too high, because then you're wasting money, right?

2052
02:00:20,265 --> 02:00:23,265
But not too low, because then the transaction is not going to go through,

2053
02:00:23,265 --> 02:00:26,265
maybe ever, or maybe in a long time, right?

2054
02:00:26,265 --> 02:00:30,265
And so fine-tuning that is super important,

2055
02:00:31,265 --> 02:00:35,265
and I mean, this is something that's gotten infinitely better in the past years.

2056
02:00:35,265 --> 02:00:39,265
But that's kind of how my interest got sparked into it,

2057
02:00:39,265 --> 02:00:45,265
and I still do, as a habit, even though the mempool isn't as crazy as it used to be,

2058
02:00:45,265 --> 02:00:48,265
I still watch it all, I was showing it to people,

2059
02:00:48,265 --> 02:00:52,265
I have it on my phone, you know, in my Safari.

2060
02:00:52,265 --> 02:00:56,265
Just to keep an eye on, like, because you can see, you know,

2061
02:00:56,265 --> 02:00:58,265
you can see a lot of stuff in the mempool,

2062
02:00:58,265 --> 02:01:01,265
of, like, what is going on, who's making the transactions,

2063
02:01:01,265 --> 02:01:04,265
what are they doing, where are you going, you know?

2064
02:01:04,265 --> 02:01:08,265
You learn a lot of stuff from watching it.

2065
02:01:08,265 --> 02:01:09,265
Yeah, that's a good way to put it.

2066
02:01:09,265 --> 02:01:12,265
It's kind of like the transaction queue of the Bitcoin network,

2067
02:01:12,265 --> 02:01:15,265
where whenever you use Bitcoin, it just goes into there first,

2068
02:01:15,265 --> 02:01:20,265
and it's this very interesting area to monitor and visualize, right?

2069
02:01:20,265 --> 02:01:23,265
But one thing you mentioned that was really interesting

2070
02:01:23,265 --> 02:01:27,265
is how high the transaction fees got last year.

2071
02:01:28,265 --> 02:01:31,265
Actually, this is a good question for Merch.

2072
02:01:31,265 --> 02:01:36,265
And maybe I think we have a slide for this, the history of the last year.

2073
02:01:36,265 --> 02:01:38,265
Could you guys show that first slide?

2074
02:01:38,265 --> 02:01:43,265
It's basically the mempool chart of the last three years.

2075
02:01:44,265 --> 02:01:47,265
Merch, do you want to give us your nice weather report?

2076
02:01:47,265 --> 02:01:48,265
What's going on in this chart?

2077
02:01:48,265 --> 02:01:51,265
Well, more of a historical weather overview.

2078
02:01:51,265 --> 02:01:55,265
So in the last year, we had the interesting situation that

2079
02:01:55,265 --> 02:01:59,265
from mid-December, 15th of December until 2nd of June,

2080
02:01:59,265 --> 02:02:01,265
the mempool never fully cleared.

2081
02:02:01,265 --> 02:02:05,265
So there was always at least one block worth of transactions

2082
02:02:05,265 --> 02:02:07,265
waiting to be confirmed.

2083
02:02:07,265 --> 02:02:13,265
And for some time of that, even the default mempool limit overflowed.

2084
02:02:13,265 --> 02:02:16,265
I think we are going to touch on that a little later, maybe.

2085
02:02:17,265 --> 02:02:20,265
So the colors that you see here, hopefully.

2086
02:02:20,265 --> 02:02:21,265
Yes.

2087
02:02:22,265 --> 02:02:25,265
So the lowest bar is...

2088
02:02:25,265 --> 02:02:27,265
You see color bands here, right?

2089
02:02:27,265 --> 02:02:29,265
And the color bands are fee rates.

2090
02:02:29,265 --> 02:02:34,265
And the size of the bands indicate how much data is waiting

2091
02:02:34,265 --> 02:02:36,265
to be included in blocks.

2092
02:02:36,265 --> 02:02:40,265
So at the bottom, you have this pinkish tone there.

2093
02:02:40,265 --> 02:02:44,265
That's just over default min-relay fee,

2094
02:02:44,265 --> 02:02:48,265
which is one satoshi per vbyte of transaction data.

2095
02:02:48,265 --> 02:02:53,265
And then I think yellow goes up to like 30, 40, or even...

2096
02:02:54,265 --> 02:02:55,265
100.

2097
02:02:55,265 --> 02:02:56,265
Yeah, 100.

2098
02:02:56,265 --> 02:03:01,265
So generally, the mempool is just a visualized...

2099
02:03:01,265 --> 02:03:05,265
Or this chart we're looking at here is a visualization

2100
02:03:05,265 --> 02:03:10,265
of the waiting queue of payment promises

2101
02:03:10,265 --> 02:03:14,265
to be turned into payments by being included in blocks.

2102
02:03:14,265 --> 02:03:16,265
Yeah, it was pretty crazy last year.

2103
02:03:16,265 --> 02:03:21,265
I think it was around December of, I guess, 2020

2104
02:03:21,265 --> 02:03:24,265
when we saw the fees start to rise

2105
02:03:24,265 --> 02:03:27,265
and the mempool was just congested all the time

2106
02:03:27,265 --> 02:03:30,265
until about the Miami conference last year, right?

2107
02:03:30,265 --> 02:03:31,265
It was right around when it...

2108
02:03:31,265 --> 02:03:35,265
And during that whole time, it was just totally congested.

2109
02:03:35,265 --> 02:03:39,265
And sometimes you pay as much as 300 sats per vbyte

2110
02:03:39,265 --> 02:03:42,265
just to get into the next block, like 20 US dollars

2111
02:03:42,265 --> 02:03:44,265
just to do an ordinary Bitcoin transaction.

2112
02:03:44,265 --> 02:03:49,265
It was really a unique time in Bitcoin's history, I think.

2113
02:03:49,265 --> 02:03:53,265
We hadn't really seen that kind of sustained fee market

2114
02:03:53,265 --> 02:03:54,265
really before.

2115
02:03:54,265 --> 02:03:58,265
And just to point out, sorry, there's a common expression,

2116
02:03:58,265 --> 02:03:59,265
there is no the mempool.

2117
02:03:59,265 --> 02:04:02,265
And likewise, this chart that you are seeing

2118
02:04:02,265 --> 02:04:05,265
is not a canonical view of the mempool

2119
02:04:05,265 --> 02:04:07,265
of the Bitcoin network, right?

2120
02:04:07,265 --> 02:04:09,265
This is just Wiz's node,

2121
02:04:09,265 --> 02:04:13,265
which happens to have a very large max mempool size.

2122
02:04:13,265 --> 02:04:16,265
But I don't know if you guys can still see...

2123
02:04:16,265 --> 02:04:19,265
Oh, if you could bring up the chart again, sorry.

2124
02:04:19,265 --> 02:04:22,265
I think it goes up to like 400,

2125
02:04:22,265 --> 02:04:25,265
it goes up to like 200 million virtual bytes.

2126
02:04:25,265 --> 02:04:28,265
But actually the default mempool size is 300 megabytes

2127
02:04:28,265 --> 02:04:32,265
and a lot of that is taken up by metadata, 75%, in fact.

2128
02:04:32,265 --> 02:04:37,265
So most mempools, like ordinary non-Wiz nodes

2129
02:04:37,265 --> 02:04:39,265
and not mining nodes on the network

2130
02:04:39,265 --> 02:04:43,265
are only keeping up to like 75 million virtual bytes

2131
02:04:43,265 --> 02:04:44,265
worth of transaction.

2132
02:04:44,265 --> 02:04:45,265
So they actually wouldn't even see

2133
02:04:45,265 --> 02:04:47,265
the peak of those mountains.

2134
02:04:47,265 --> 02:04:48,265
But of course, actually,

2135
02:04:48,265 --> 02:04:51,265
they're keeping the top section of the fee right,

2136
02:04:51,265 --> 02:04:52,265
not the bottom.

2137
02:04:52,265 --> 02:04:53,265
Yeah, and I think we have a slide

2138
02:04:53,265 --> 02:04:54,265
of what that looks like.

2139
02:04:54,265 --> 02:04:55,265
Can you go to the next one

2140
02:04:55,265 --> 02:04:59,265
to see what a normal node's mempool looked like last year?

2141
02:04:59,265 --> 02:05:00,265
Yeah, this is it.

2142
02:05:00,265 --> 02:05:01,265
Corey, you wanna walk us through

2143
02:05:01,265 --> 02:05:02,265
what we're looking at here?

2144
02:05:02,265 --> 02:05:06,265
Yeah, so in April or so, right,

2145
02:05:06,265 --> 02:05:08,265
they're purging all of the,

2146
02:05:08,265 --> 02:05:13,265
so okay, Sergey mentioned that we sort the mempool

2147
02:05:13,265 --> 02:05:16,265
in transactions based on their fee rate, right?

2148
02:05:16,265 --> 02:05:18,265
And I guess the first thing I probably wanna mention

2149
02:05:18,265 --> 02:05:20,265
is individual fee rate is not what matters.

2150
02:05:20,265 --> 02:05:23,265
Ancestor package fee rate is what matters.

2151
02:05:23,740 --> 02:05:26,740
So in Bitcoin, we have a unique transaction structure

2152
02:05:28,740 --> 02:05:30,700
where it's made of inputs and outputs, right?

2153
02:05:30,700 --> 02:05:35,320
We all know what the UTXO-based structure is.

2154
02:05:35,320 --> 02:05:40,320
So you can have transactions dependent upon each other

2155
02:05:41,820 --> 02:05:42,940
inside of the mempool.

2156
02:05:42,940 --> 02:05:46,420
So you can be spending a UTXO

2157
02:05:46,420 --> 02:05:48,220
that doesn't exist in the blockchain,

2158
02:05:48,220 --> 02:05:52,100
but it exists in a transaction that's still in the mempool.

2159
02:05:52,100 --> 02:05:52,940
That makes sense, right?

2160
02:05:52,940 --> 02:05:54,980
Hopefully everybody understands that.

2161
02:05:54,980 --> 02:05:58,060
But how did the Bitcoin network change during this time

2162
02:05:58,060 --> 02:06:01,100
of consistently high fee rate environment

2163
02:06:01,100 --> 02:06:03,140
and transactions getting purged?

2164
02:06:03,140 --> 02:06:04,420
Like, what was the experience like

2165
02:06:04,420 --> 02:06:06,860
for a normal Bitcoin user at this time?

2166
02:06:06,860 --> 02:06:10,780
Yeah, so I think if you had a 1SAP or VByte transaction

2167
02:06:10,780 --> 02:06:14,700
that you broadcast around April or so,

2168
02:06:14,700 --> 02:06:16,540
and as the mempool filled up,

2169
02:06:16,540 --> 02:06:19,100
your transaction was probably purged

2170
02:06:19,100 --> 02:06:23,060
by most of the mempools, most of the nodes' mempools.

2171
02:06:23,060 --> 02:06:25,860
Right, because there's this common belief

2172
02:06:25,860 --> 02:06:29,220
that you can just always send a transaction

2173
02:06:29,220 --> 02:06:32,260
at 1SAP per VByte fee rate,

2174
02:06:32,260 --> 02:06:34,700
and eventually it'll get confirmed.

2175
02:06:34,700 --> 02:06:37,260
But this is a common misconception, right?

2176
02:06:37,260 --> 02:06:40,460
I mean, if the mempool is constantly full,

2177
02:06:40,460 --> 02:06:44,140
your low-fee transactions will get purged out of the mempool.

2178
02:06:44,980 --> 02:06:47,820
There are other mempools that have lots of...

2179
02:06:47,820 --> 02:06:48,660
True.

2180
02:06:48,660 --> 02:06:49,660
And they do rebroadcast.

2181
02:06:49,660 --> 02:06:52,620
Like, when it goes down, you can see...

2182
02:06:52,620 --> 02:06:54,140
If we bring up the chart again...

2183
02:06:54,140 --> 02:06:56,980
I'll look at us, let's look at the chart.

2184
02:06:56,980 --> 02:06:57,820
When it goes down from the peak,

2185
02:06:57,820 --> 02:06:59,500
you can see over there,

2186
02:06:59,500 --> 02:07:02,100
some of the transactions are coming back, actually.

2187
02:07:02,100 --> 02:07:05,420
Like, on the right half,

2188
02:07:05,420 --> 02:07:08,620
you can see that the pink ones are coming back up.

2189
02:07:08,620 --> 02:07:09,460
Right, so the red color...

2190
02:07:09,460 --> 02:07:10,860
May or may not be.

2191
02:07:10,860 --> 02:07:13,060
The red color is like 1SAP per VByte,

2192
02:07:13,060 --> 02:07:17,340
and that light blue color is like maybe, what, 20-ish?

2193
02:07:17,340 --> 02:07:21,660
So after all the higher-fee rate transactions,

2194
02:07:21,660 --> 02:07:25,580
around 20 SATs per VByte got confirmed,

2195
02:07:25,580 --> 02:07:29,260
then you can see the low fees of 1SAP per VByte

2196
02:07:29,260 --> 02:07:31,620
started to get rebroadcasted and networked.

2197
02:07:31,620 --> 02:07:34,820
So how did BitRefill handle that during that time?

2198
02:07:34,820 --> 02:07:39,820
Like, don't you guys allow people to buy gift cards

2199
02:07:40,780 --> 02:07:43,220
with zero-conf transactions in the mempool?

2200
02:07:43,220 --> 02:07:45,620
Like, how did you guys handle this?

2201
02:07:45,620 --> 02:07:49,060
Well, this is exactly why we have to do that, right?

2202
02:07:49,060 --> 02:07:51,420
Because otherwise, the customer might be stuck

2203
02:07:51,420 --> 02:07:53,580
forever and ever, and have a horrible experience,

2204
02:07:53,580 --> 02:07:56,500
and support tickets, and confused refunds,

2205
02:07:56,500 --> 02:07:59,940
and exchange rates, it's like a whole mess.

2206
02:07:59,940 --> 02:08:03,980
So, I mean, again, like,

2207
02:08:03,980 --> 02:08:08,140
2017, when this was even worse,

2208
02:08:08,140 --> 02:08:10,620
even crazier than it was on the chart here,

2209
02:08:10,620 --> 02:08:12,100
it was a kind of formative time for us,

2210
02:08:12,100 --> 02:08:13,620
we were really struggling.

2211
02:08:13,620 --> 02:08:15,420
At the time, we were mainly doing low-value

2212
02:08:15,420 --> 02:08:17,260
phone refill transactions, you know,

2213
02:08:17,260 --> 02:08:20,700
so like, typical $5, $10 transactions.

2214
02:08:21,820 --> 02:08:24,620
And, I mean, we've done a lot of things,

2215
02:08:24,620 --> 02:08:26,820
you know, we developed, like,

2216
02:08:26,820 --> 02:08:29,980
we ourselves recommend a fee rate for the customer, right?

2217
02:08:29,980 --> 02:08:34,900
So we, like, our web server monitors this,

2218
02:08:34,900 --> 02:08:36,340
or our version of this,

2219
02:08:36,340 --> 02:08:39,140
and based on that, computes a recommendation

2220
02:08:39,140 --> 02:08:40,180
that we give to the customer,

2221
02:08:40,180 --> 02:08:44,380
and these days, most wallets do that automatically,

2222
02:08:44,380 --> 02:08:47,060
but we also sort of, like, make sure.

2223
02:08:47,060 --> 02:08:49,020
But isn't that a huge risk for your business?

2224
02:08:49,020 --> 02:08:51,540
I mean, if I go on your BitRefill site,

2225
02:08:51,540 --> 02:08:54,740
and buy an Amazon gift card for, like, $1,000,

2226
02:08:54,740 --> 02:08:57,820
and send you a low-fee transaction.

2227
02:08:57,820 --> 02:08:58,660
That's RBFable.

2228
02:08:59,740 --> 02:09:01,860
Well, if it's RBFable,

2229
02:09:01,860 --> 02:09:03,620
then we're not going to do the zero-conf,

2230
02:09:03,620 --> 02:09:05,940
I mean, you're gonna have a bad user experience.

2231
02:09:06,580 --> 02:09:09,020
But if you do that, then presumably,

2232
02:09:09,020 --> 02:09:12,540
you're savvy enough to be able to fix

2233
02:09:12,540 --> 02:09:14,180
the bad user experience yourself.

2234
02:09:15,300 --> 02:09:17,820
But, I mean, the risk factor,

2235
02:09:17,820 --> 02:09:20,940
I mean, people think that Bitcoin transactions are,

2236
02:09:20,940 --> 02:09:23,980
when they're unconfirmed, are trivially reversible,

2237
02:09:23,980 --> 02:09:28,060
and that's not true, at least not today, you know?

2238
02:09:28,060 --> 02:09:29,740
You need to collude with miners.

2239
02:09:29,740 --> 02:09:32,580
Is that, would you guys agree with that statement?

2240
02:09:32,580 --> 02:09:34,060
I think it has been shown

2241
02:09:34,060 --> 02:09:35,860
that if you're willing to put in the effort,

2242
02:09:36,660 --> 02:09:41,540
you can very successfully double-spend transactions,

2243
02:09:41,540 --> 02:09:43,500
even after they've been broadcast.

2244
02:09:43,500 --> 02:09:47,500
But you do have to really put in some effort right now.

2245
02:09:47,500 --> 02:09:49,700
We don't accept just any transaction, right?

2246
02:09:51,140 --> 02:09:52,460
There's a bit of magic going on

2247
02:09:52,460 --> 02:09:54,100
where we check and vet and make sure, right?

2248
02:09:54,100 --> 02:09:57,060
So, I mean, the low-hanging fruit stuff

2249
02:09:57,060 --> 02:09:59,380
that you have in mind, I mean, you know,

2250
02:09:59,380 --> 02:10:00,580
the goal isn't to double-spend,

2251
02:10:00,580 --> 02:10:02,460
the goal is just to trick us, right,

2252
02:10:02,460 --> 02:10:05,140
into believing that we got the money where we didn't.

2253
02:10:05,740 --> 02:10:06,620
That's the trick.

2254
02:10:06,620 --> 02:10:10,460
And, I mean, we've been doing this for seven years now.

2255
02:10:10,460 --> 02:10:15,460
I think it has happened in seven years one or two times,

2256
02:10:15,500 --> 02:10:17,340
and we do, like, you know,

2257
02:10:17,340 --> 02:10:20,420
more than 100,000 transactions every month, you know?

2258
02:10:20,420 --> 02:10:22,380
And compare that to credit cards,

2259
02:10:22,380 --> 02:10:25,900
where you, like, standard fraud rate is, like, 5%,

2260
02:10:25,900 --> 02:10:28,180
and, you know, it's, like, a cost of doing business.

2261
02:10:28,180 --> 02:10:31,140
So, and here it's, like, twice, ever,

2262
02:10:31,140 --> 02:10:33,820
and, like, it was because of bugs that we fixed.

2263
02:10:34,660 --> 02:10:37,860
I think it's still important to distinguish, though.

2264
02:10:37,860 --> 02:10:40,500
It's a little bit of a gentleman's agreement not to do it,

2265
02:10:40,500 --> 02:10:42,980
and there's no tools to do it easily.

2266
02:10:42,980 --> 02:10:46,180
There's very few people that would have the knowledge

2267
02:10:46,180 --> 02:10:50,540
and maybe connections to reliably double-spend.

2268
02:10:50,540 --> 02:10:54,580
And so, yeah, I agree that from a business perspective

2269
02:10:54,580 --> 02:10:57,620
and planning and, like, risk factors,

2270
02:10:57,620 --> 02:11:01,780
you can discard that risk for the most part.

2271
02:11:01,780 --> 02:11:06,020
But fundamentally, from how the mempool works,

2272
02:11:07,940 --> 02:11:09,980
there are some policies that help with this,

2273
02:11:09,980 --> 02:11:11,380
but it's not actually,

2274
02:11:11,380 --> 02:11:14,820
while a transaction is unconfirmed, it is unreliable.

2275
02:11:14,820 --> 02:11:17,940
And it just so happens that the policies

2276
02:11:17,940 --> 02:11:22,940
and the behavior of our society,

2277
02:11:22,980 --> 02:11:25,380
our Bitcoin society,

2278
02:11:25,380 --> 02:11:29,900
tends to confirm with our needs in regard to-

2279
02:11:30,060 --> 02:11:31,780
No, there's thieves and hackers and crooks

2280
02:11:31,780 --> 02:11:32,940
that use Bitcoin as well.

2281
02:11:32,940 --> 02:11:35,100
So, you know, it's not just the nice people

2282
02:11:35,100 --> 02:11:36,540
at the Bitcoin conference.

2283
02:11:36,540 --> 02:11:37,900
Yeah, fair, yeah.

2284
02:11:37,900 --> 02:11:40,300
Well, also, you have customer accounts, right?

2285
02:11:40,300 --> 02:11:41,580
It's not that people are completely-

2286
02:11:41,580 --> 02:11:42,580
No, no, no, no customer accounts.

2287
02:11:42,580 --> 02:11:45,100
Well, we do, but that's not related to this.

2288
02:11:45,100 --> 02:11:47,580
Yeah, I'd love to continue talking about mempool attacks,

2289
02:11:47,580 --> 02:11:50,940
because the first time we met, for me,

2290
02:11:50,940 --> 02:11:52,940
I mean, we all know that transaction relay

2291
02:11:52,940 --> 02:11:57,020
in a distributed system is, like, notoriously unreliable,

2292
02:11:57,020 --> 02:12:00,140
and there's, I think I know more than anyone

2293
02:12:00,140 --> 02:12:03,740
that there's tons of attacks, and it's a dangerous place.

2294
02:12:03,740 --> 02:12:04,860
And so when I first met you,

2295
02:12:04,860 --> 02:12:07,140
and you said you accept zero-conf transactions,

2296
02:12:07,140 --> 02:12:09,940
we had a very heated debate

2297
02:12:09,940 --> 02:12:11,900
about whether or not that's safe.

2298
02:12:11,900 --> 02:12:16,420
And I think you did manage to convince me

2299
02:12:16,420 --> 02:12:19,340
that, for you, at least,

2300
02:12:19,340 --> 02:12:24,340
it's difficult to convince the logic

2301
02:12:24,900 --> 02:12:27,940
on top of your Bitcoin operation

2302
02:12:27,940 --> 02:12:29,900
that you are going to be double-spending.

2303
02:12:29,900 --> 02:12:30,740
Yeah, it sounds like,

2304
02:12:30,740 --> 02:12:33,180
if you're going to be sending a million dollars to someone,

2305
02:12:33,180 --> 02:12:36,220
you might want to wait for six or 12 confirmations

2306
02:12:36,220 --> 02:12:37,820
on the Bitcoin blockchain.

2307
02:12:37,820 --> 02:12:40,420
But for your particular threat model,

2308
02:12:40,420 --> 02:12:42,060
where you're selling gift cards

2309
02:12:42,060 --> 02:12:45,060
of relatively small denominations,

2310
02:12:46,300 --> 02:12:48,460
and mitigating the double-spend risks,

2311
02:12:48,460 --> 02:12:50,140
like you said, no RBF,

2312
02:12:50,140 --> 02:12:53,300
they have to use a reasonably high fee rate,

2313
02:12:53,340 --> 02:12:55,300
et cetera, et cetera.

2314
02:12:55,300 --> 02:12:56,340
It sounds like you've figured out

2315
02:12:56,340 --> 02:12:59,380
how to manage this risk for your business.

2316
02:12:59,380 --> 02:13:01,660
And I mean, let's be very, very, very clear here.

2317
02:13:01,660 --> 02:13:03,380
I in no way say that you should rely

2318
02:13:03,380 --> 02:13:04,900
on unconfirmed transactions.

2319
02:13:04,900 --> 02:13:06,620
Yeah, don't do that.

2320
02:13:06,620 --> 02:13:08,300
It's advanced-level kung fu.

2321
02:13:08,300 --> 02:13:11,140
You need to have people that do it

2322
02:13:11,140 --> 02:13:13,420
and spend hours figuring it out,

2323
02:13:13,420 --> 02:13:16,740
monitoring it, evaluating, improving it, and so on.

2324
02:13:16,740 --> 02:13:18,460
It's something that you can do if you're a company

2325
02:13:18,460 --> 02:13:20,340
and have people working on this full-time.

2326
02:13:20,340 --> 02:13:23,180
It's not something for the common man, right?

2327
02:13:23,940 --> 02:13:24,780
It depends.

2328
02:13:24,780 --> 02:13:29,580
If your buddy's paying you back 10 bucks for lunch,

2329
02:13:29,580 --> 02:13:31,460
you don't have to sit there.

2330
02:13:31,460 --> 02:13:33,780
You can set it to the low-fee transaction.

2331
02:13:33,780 --> 02:13:38,780
And in fact, for, I think, quite a few,

2332
02:13:38,820 --> 02:13:42,740
I mean, maybe we can talk about the trustless aspect,

2333
02:13:42,740 --> 02:13:44,420
because I think it's very interesting

2334
02:13:44,420 --> 02:13:46,820
about how Bitcoin is all about the trustless.

2335
02:13:46,820 --> 02:13:47,820
But if you actually look

2336
02:13:47,820 --> 02:13:50,060
at most actual Bitcoin transactions,

2337
02:13:50,060 --> 02:13:52,180
there's always a very high degree of trust

2338
02:13:52,180 --> 02:13:55,740
between the parties in the sense of,

2339
02:13:55,740 --> 02:13:59,220
hey, we pay someone's salary in Bitcoin, right?

2340
02:13:59,220 --> 02:14:01,340
Okay, we're not gonna double-spend our employee,

2341
02:14:01,340 --> 02:14:02,980
because then he's not gonna go to work next week.

2342
02:14:02,980 --> 02:14:04,100
Also, it's unethical,

2343
02:14:04,100 --> 02:14:06,580
and it's not normal human behavior, right?

2344
02:14:06,580 --> 02:14:10,620
So for a lot of transactions, there is a mutual trust.

2345
02:14:10,620 --> 02:14:12,900
And in that situation, you can set the mempool fee

2346
02:14:12,900 --> 02:14:14,140
to one cent per byte,

2347
02:14:14,140 --> 02:14:15,540
and it's gonna confirm eventually.

2348
02:14:15,540 --> 02:14:17,820
In worst case, if it happens

2349
02:14:17,820 --> 02:14:20,060
that suddenly there's a big spike like that,

2350
02:14:20,060 --> 02:14:21,500
well, then you'll figure it out.

2351
02:14:21,540 --> 02:14:22,740
It's gonna be a little bit of a hassle.

2352
02:14:22,740 --> 02:14:23,980
Yeah, I think that's the big takeaway,

2353
02:14:23,980 --> 02:14:26,380
is that the fee rate you use,

2354
02:14:26,380 --> 02:14:30,900
or whether you accept the transaction

2355
02:14:30,900 --> 02:14:33,300
on zero-conf or six-confs,

2356
02:14:33,300 --> 02:14:36,260
it all really depends on your individual threat model

2357
02:14:36,260 --> 02:14:38,940
and use case and amount of the transaction.

2358
02:14:38,940 --> 02:14:40,260
It really depends.

2359
02:14:40,260 --> 02:14:41,300
And so for some people,

2360
02:14:41,300 --> 02:14:43,380
they can always send one cent per byte.

2361
02:14:43,380 --> 02:14:46,380
Even if it takes a year to get confirmed, they'll wait,

2362
02:14:46,380 --> 02:14:47,700
because they just might be sending it

2363
02:14:47,700 --> 02:14:48,940
between two of their same wallets,

2364
02:14:48,940 --> 02:14:51,140
and they know they're not going to

2365
02:14:51,140 --> 02:14:53,220
double-spend their own transaction.

2366
02:14:53,220 --> 02:14:55,100
But if I wanna say,

2367
02:14:55,100 --> 02:14:57,900
hey, let's buy a million dollars worth of gift cards,

2368
02:14:57,900 --> 02:15:00,580
I'm pretty sure you won't accept the zero-conf for that,

2369
02:15:00,580 --> 02:15:01,420
right?

2370
02:15:01,420 --> 02:15:03,660
But what about layer two networks?

2371
02:15:03,660 --> 02:15:04,740
Oh, yeah, exactly.

2372
02:15:04,740 --> 02:15:06,820
I wanted to point out that all of this

2373
02:15:06,820 --> 02:15:09,620
is assuming that transaction propagation

2374
02:15:09,620 --> 02:15:12,500
is based on this perfectly fair fee rate market,

2375
02:15:12,500 --> 02:15:14,700
where the higher the fee rate, the transaction,

2376
02:15:14,700 --> 02:15:17,380
the faster it's going to get mined.

2377
02:15:17,420 --> 02:15:20,060
And that's not quite true.

2378
02:15:20,060 --> 02:15:22,140
Right, so how does that apply to lightning, for example?

2379
02:15:22,140 --> 02:15:23,460
If I have a lightning node,

2380
02:15:23,460 --> 02:15:25,820
and I have to force close a channel,

2381
02:15:25,820 --> 02:15:27,580
how do the fees work with that?

2382
02:15:27,580 --> 02:15:29,340
Yeah, okay, so this is something

2383
02:15:29,340 --> 02:15:31,220
I spend a lot of my time thinking about,

2384
02:15:31,220 --> 02:15:34,020
because in all layer two contracts,

2385
02:15:34,020 --> 02:15:37,740
you have a particular set of conditions

2386
02:15:37,740 --> 02:15:42,740
that makes fees extremely important and dangerous.

2387
02:15:43,620 --> 02:15:45,300
So one thing is,

2388
02:15:45,300 --> 02:15:47,860
when you're doing a lightning transaction, right,

2389
02:15:47,860 --> 02:15:50,860
you and your counterparty are negotiating the fee rate

2390
02:15:50,860 --> 02:15:53,260
well before you're ever going to broadcast it.

2391
02:15:53,260 --> 02:15:54,500
Because the whole point

2392
02:15:54,500 --> 02:15:57,300
is you're going to exchange these transactions and payments

2393
02:15:57,300 --> 02:16:00,820
and only settle on-chain if you really need to,

2394
02:16:00,820 --> 02:16:03,660
or when both of you decide to close the channel, right?

2395
02:16:03,660 --> 02:16:05,140
So what really goes wrong

2396
02:16:05,140 --> 02:16:06,980
is when you have a unilateral close,

2397
02:16:06,980 --> 02:16:08,820
as in your counterparty's trying to cheat you,

2398
02:16:08,820 --> 02:16:11,060
your counterparty went offline,

2399
02:16:11,340 --> 02:16:13,060
whatever it is, something went wrong.

2400
02:16:13,060 --> 02:16:15,340
So now you need to broadcast your transaction.

2401
02:16:15,340 --> 02:16:18,100
And that might be hours, days, weeks,

2402
02:16:18,100 --> 02:16:20,060
after you decided what the fee rate

2403
02:16:20,060 --> 02:16:21,900
on that transaction is going to be.

2404
02:16:21,900 --> 02:16:23,420
And if your counterparty's trying to cheat you,

2405
02:16:23,420 --> 02:16:25,580
there's no way you're going to sign an RBF with them,

2406
02:16:25,580 --> 02:16:28,180
because they're like, I'm trying to steal your money,

2407
02:16:28,180 --> 02:16:30,140
why would I give you another signature?

2408
02:16:31,180 --> 02:16:36,180
And so that combination makes it quite dangerous.

2409
02:16:36,580 --> 02:16:39,420
So for example, if we go back to the second slide,

2410
02:16:39,460 --> 02:16:43,740
where the fee rate, the minimum fee rate of the mempool

2411
02:16:43,740 --> 02:16:47,980
went from one sat per vbyte to 20 sats per vbyte.

2412
02:16:47,980 --> 02:16:49,740
Let's say you open a Lightning channel,

2413
02:16:49,740 --> 02:16:52,380
and you have some HTLCs going,

2414
02:16:52,380 --> 02:16:55,140
and you negotiated a fee rate of 10,

2415
02:16:55,140 --> 02:16:59,780
or even 15 sats per vbyte on your commitment transaction.

2416
02:16:59,780 --> 02:17:03,900
But then something goes wrong and you need to broadcast.

2417
02:17:03,900 --> 02:17:07,060
Well, the commitment transaction will straight up

2418
02:17:07,060 --> 02:17:09,020
not even make it into anyone's mempool.

2419
02:17:09,620 --> 02:17:10,700
Maybe it will make it into Wiz's mempool,

2420
02:17:10,700 --> 02:17:14,260
because the floor is still one sat per vbyte.

2421
02:17:14,260 --> 02:17:17,220
But for the most part, it's just not going to work.

2422
02:17:17,220 --> 02:17:19,940
And then you say, oh Gloria, what about CPFB?

2423
02:17:20,940 --> 02:17:23,060
Commitment transactions have anchor outputs,

2424
02:17:23,060 --> 02:17:25,220
so either counterparty in the Lightning channel

2425
02:17:25,220 --> 02:17:28,420
should be able to attach a very high fee rate child

2426
02:17:28,420 --> 02:17:30,380
to their commitment transaction.

2427
02:17:30,380 --> 02:17:35,380
And newsflash, the first transaction will not make it in,

2428
02:17:35,620 --> 02:17:38,900
and we're actually only validating transactions

2429
02:17:39,780 --> 02:17:41,580
individually, so we'll reject the first one,

2430
02:17:41,580 --> 02:17:43,460
we'll look at the high fee child,

2431
02:17:43,460 --> 02:17:45,660
and we'll say, well, these inputs are not available

2432
02:17:45,660 --> 02:17:48,660
because they belong to a transaction we rejected.

2433
02:17:48,660 --> 02:17:52,620
And so, oops, sorry, neither of them are getting in.

2434
02:17:52,620 --> 02:17:54,300
So it sounds like Lightning has a pretty big

2435
02:17:54,300 --> 02:17:56,820
security hole right now based on what you just said.

2436
02:17:56,820 --> 02:18:00,220
Exactly, this is why I'm excited to be here today,

2437
02:18:00,220 --> 02:18:04,140
to tell you everything's broken and we need to fix it.

2438
02:18:04,140 --> 02:18:07,300
No, but I think this particular issue,

2439
02:18:07,340 --> 02:18:09,740
again, we have not seen a fee rate market like that

2440
02:18:09,740 --> 02:18:12,980
since April of last year, and I'm not saying

2441
02:18:12,980 --> 02:18:15,020
that there is a reliable attack

2442
02:18:15,020 --> 02:18:18,060
that attackers can always execute,

2443
02:18:18,060 --> 02:18:21,500
but if you think about it, as hundreds of billions

2444
02:18:21,500 --> 02:18:24,220
of dollars of capital is locked into Lightning contracts

2445
02:18:24,220 --> 02:18:29,220
and other L2 contracts, and the fee rate market,

2446
02:18:29,860 --> 02:18:33,680
or the usage of the mempool becomes less predictable,

2447
02:18:33,680 --> 02:18:37,060
we're not able to say, oh, in one week's time

2448
02:18:37,820 --> 02:18:39,860
or in one month's time, we know that there's gonna be room

2449
02:18:39,860 --> 02:18:42,780
in the mempool for a 10-SAP-4V by transaction.

2450
02:18:42,780 --> 02:18:45,980
These attacks become more and more critical,

2451
02:18:45,980 --> 02:18:49,740
and again, this is on a very long time horizon.

2452
02:18:49,740 --> 02:18:52,980
So as protocol developers, we're thinking about

2453
02:18:52,980 --> 02:18:55,300
something like this, where it's like, okay,

2454
02:18:55,300 --> 02:18:57,480
when you're building an L2, hopefully there is

2455
02:18:57,480 --> 02:19:00,860
a seamless interface between L2 and L1,

2456
02:19:00,860 --> 02:19:03,780
and I think mempool is where that security assumption

2457
02:19:03,780 --> 02:19:07,620
really breaks down, because to put it simply,

2458
02:19:07,620 --> 02:19:10,740
Lightning and all other L2 protocols

2459
02:19:10,740 --> 02:19:13,500
have a security assumption that you will always

2460
02:19:13,500 --> 02:19:16,340
be able to mitigate counterparty risk

2461
02:19:16,340 --> 02:19:20,740
by broadcasting something on-chain

2462
02:19:20,740 --> 02:19:25,740
to revoke their funds or to get your justice transaction in,

2463
02:19:26,980 --> 02:19:29,500
and that assumption is not always true.

2464
02:19:29,500 --> 02:19:33,540
It's not always false, okay, not to scare everyone,

2465
02:19:34,300 --> 02:19:36,500
but I think this is going to become more and more dangerous,

2466
02:19:36,500 --> 02:19:38,140
and we need to fix it.

2467
02:19:38,140 --> 02:19:40,220
But also on the scaring part, like, I mean,

2468
02:19:40,220 --> 02:19:42,820
normal Lightning wallet, when it opens the channel,

2469
02:19:42,820 --> 02:19:44,720
it sets that fee pretty high.

2470
02:19:44,720 --> 02:19:45,560
Yes.

2471
02:19:45,560 --> 02:19:49,500
So it sets it to a level such that it's relatively

2472
02:19:49,500 --> 02:19:53,260
unthinkable, even if 2017 were to happen again,

2473
02:19:53,260 --> 02:19:56,740
that it wouldn't even make it into people's mempools.

2474
02:19:56,740 --> 02:20:00,900
It's definitely, I mean, you can imagine it happening,

2475
02:20:00,900 --> 02:20:03,580
but it's like, it's unlikely, you know?

2476
02:20:03,580 --> 02:20:04,420
Yeah.

2477
02:20:04,420 --> 02:20:07,940
So essentially all the unilateral closes overpay heavily

2478
02:20:07,940 --> 02:20:11,740
because they cannot, so maybe to pick up

2479
02:20:11,740 --> 02:20:14,740
your point from earlier, the only thing that has

2480
02:20:14,740 --> 02:20:18,300
propagation guarantees in Bitcoin is blocks.

2481
02:20:18,300 --> 02:20:21,460
We guarantee that we will deliver blocks to other nodes

2482
02:20:21,460 --> 02:20:24,580
so that everybody can catch up to the best chain tip.

2483
02:20:24,580 --> 02:20:27,420
Transactions do not have propagation guarantees.

2484
02:20:27,420 --> 02:20:29,700
We forward them at best effort.

2485
02:20:29,700 --> 02:20:32,380
Generally, it means that all transactions

2486
02:20:32,380 --> 02:20:35,280
get to all other nodes in a minute or so.

2487
02:20:36,500 --> 02:20:38,240
And once they're in a block, of course,

2488
02:20:38,240 --> 02:20:40,720
as part of the block, they do get propagated.

2489
02:20:40,720 --> 02:20:42,900
But before that, the unconfirmed transactions

2490
02:20:42,900 --> 02:20:46,740
do not have guarantees, but essentially the L2s

2491
02:20:46,740 --> 02:20:49,140
rely on the assumption that there are guarantees

2492
02:20:49,140 --> 02:20:51,100
for transaction propagation.

2493
02:20:51,100 --> 02:20:53,860
So that's where the problem comes in.

2494
02:20:53,860 --> 02:20:56,500
Sergey, I think you run a pretty large Lightning node

2495
02:20:56,500 --> 02:20:57,580
for your business.

2496
02:20:57,580 --> 02:20:59,660
Can you tell us any stories?

2497
02:20:59,660 --> 02:21:02,940
Has BitRefill ever seen anyone trying to steal funds

2498
02:21:02,940 --> 02:21:05,820
out of a Lightning channel during that time?

2499
02:21:05,820 --> 02:21:07,340
I guess it was April of last year.

2500
02:21:07,340 --> 02:21:09,260
Did you see any shenanigans?

2501
02:21:10,580 --> 02:21:11,420
Probably not.

2502
02:21:11,420 --> 02:21:14,740
No, we've had shenanigans, but they're like

2503
02:21:14,740 --> 02:21:18,380
someone made a mistake and accidentally,

2504
02:21:18,380 --> 02:21:20,460
you know, their wallet started doing stuff,

2505
02:21:20,460 --> 02:21:24,460
and so we've, our thing is to slap them and so on.

2506
02:21:24,460 --> 02:21:26,420
And then the person reached out and said,

2507
02:21:26,420 --> 02:21:29,660
hey, I fucked up, you know, you gotta help me out,

2508
02:21:29,660 --> 02:21:30,500
and we help out.

2509
02:21:30,500 --> 02:21:33,260
But I think it's also important to keep in mind,

2510
02:21:33,260 --> 02:21:36,420
again, like we talked about, that a financial transaction

2511
02:21:36,420 --> 02:21:37,940
has a level of trust, right?

2512
02:21:37,940 --> 02:21:41,160
So for example, at BitRefill, our biggest channels

2513
02:21:41,160 --> 02:21:44,820
are going to be with other companies, right?

2514
02:21:44,820 --> 02:21:46,940
So we'll have a big channel, or multiple channels

2515
02:21:46,940 --> 02:21:51,940
with Strike, or BitFenix, BlueWallet, Asank, and so on.

2516
02:21:52,500 --> 02:21:56,620
And so it's not like, you know, I mean,

2517
02:21:56,620 --> 02:21:59,020
Bitcoin is built for the Wild West,

2518
02:21:59,020 --> 02:22:00,580
you know, everyone for themselves.

2519
02:22:00,580 --> 02:22:03,940
But in reality, most of it isn't, right?

2520
02:22:03,940 --> 02:22:06,940
I mean, just because imaginably we could

2521
02:22:06,940 --> 02:22:09,260
with a very sophisticated attack like this,

2522
02:22:09,260 --> 02:22:12,420
you know, rob our good friends of a strike of money

2523
02:22:12,420 --> 02:22:13,820
doesn't mean that we do.

2524
02:22:13,820 --> 02:22:15,980
You know, we have business really,

2525
02:22:15,980 --> 02:22:17,660
common human decency and so on.

2526
02:22:17,660 --> 02:22:20,300
So it depends, and Lightning channels

2527
02:22:20,340 --> 02:22:23,900
have a certain trust factor in them by default

2528
02:22:23,900 --> 02:22:26,860
in that you kind of rely on the person,

2529
02:22:26,860 --> 02:22:30,020
like keeping their node up and running

2530
02:22:30,020 --> 02:22:32,180
and not doing anything stupid and so on,

2531
02:22:32,180 --> 02:22:33,740
which is like a weak trust, right?

2532
02:22:33,740 --> 02:22:36,780
But there is a little bit of a type of trust.

2533
02:22:36,780 --> 02:22:38,380
You don't trust them with your money,

2534
02:22:38,380 --> 02:22:41,900
but you trust them to not mess things up.

2535
02:22:41,900 --> 02:22:44,780
I think we actually see this in many layer two networks

2536
02:22:44,780 --> 02:22:48,300
or maybe more broadly technologies built on top of Bitcoin

2537
02:22:48,300 --> 02:22:52,220
where there's not only the anarchist,

2538
02:22:52,220 --> 02:22:54,860
you know, trust of the base layer of blockchain.

2539
02:22:54,860 --> 02:22:57,140
For example, if I had a channel open with you,

2540
02:22:57,140 --> 02:22:58,980
and for some reason my node got messed up

2541
02:22:58,980 --> 02:23:02,140
and you had to like force close the channel

2542
02:23:02,140 --> 02:23:03,460
and you got those funds,

2543
02:23:03,460 --> 02:23:06,580
we have some kind of reputation or relationship together,

2544
02:23:06,580 --> 02:23:07,900
I would say, hey, can you, you know,

2545
02:23:07,900 --> 02:23:09,420
let's settle up properly.

2546
02:23:09,420 --> 02:23:10,700
I think this is quite common,

2547
02:23:10,700 --> 02:23:12,340
like you said, in the B2B space

2548
02:23:12,340 --> 02:23:16,260
where Bitcoin banks essentially have very large channels

2549
02:23:16,260 --> 02:23:18,580
between each other or Bitcoin payment processors

2550
02:23:18,580 --> 02:23:21,780
or merchants selling gift cards, et cetera.

2551
02:23:21,780 --> 02:23:25,100
And I think this is one part of the,

2552
02:23:25,980 --> 02:23:29,540
maybe to mitigate the risk in a different way

2553
02:23:29,540 --> 02:23:31,580
from what you mentioned earlier.

2554
02:23:31,580 --> 02:23:34,420
Okay, sure, Lightning has some security holes

2555
02:23:34,420 --> 02:23:36,660
or threat models maybe need to be adjusted

2556
02:23:36,660 --> 02:23:39,540
for when the mempool gets full all the time.

2557
02:23:39,540 --> 02:23:42,020
But one of these mitigations is actually

2558
02:23:42,020 --> 02:23:45,900
the social maybe capital part of it.

2559
02:23:46,340 --> 02:23:47,180
Yeah, sure.

2560
02:23:47,180 --> 02:23:51,260
But like, just maybe to play devil's advocate

2561
02:23:51,260 --> 02:23:53,820
or to provide a perspective of someone

2562
02:23:53,820 --> 02:23:58,820
who is trying to design our policy rules

2563
02:23:59,100 --> 02:24:02,500
and our mempool for the node runners

2564
02:24:02,500 --> 02:24:04,220
that are using a Raspberry Pi.

2565
02:24:04,220 --> 02:24:06,500
You know, the people in countries

2566
02:24:06,500 --> 02:24:11,420
where this is the most free option for them to transact

2567
02:24:11,420 --> 02:24:14,740
and their government is actively trying to censor,

2568
02:24:14,740 --> 02:24:18,580
or sorry, you know, someone is trying to censor

2569
02:24:18,580 --> 02:24:21,900
or freeze their ability to use money

2570
02:24:21,900 --> 02:24:23,780
for whatever it is that they need

2571
02:24:24,740 --> 02:24:29,180
that may or may not be politically accepted there, right?

2572
02:24:29,180 --> 02:24:31,540
Like we want the default option

2573
02:24:31,540 --> 02:24:36,540
to be as minimal as possible, as private as possible,

2574
02:24:36,940 --> 02:24:39,380
as censorship resistant as possible.

2575
02:24:39,380 --> 02:24:43,300
So of course there are many scenarios

2576
02:24:43,300 --> 02:24:45,500
where there is a social aspect

2577
02:24:45,500 --> 02:24:47,540
or there is a legal framework

2578
02:24:47,540 --> 02:24:50,540
with which people can use externally

2579
02:24:50,540 --> 02:24:53,820
to the Bitcoin and Lightning assumptions

2580
02:24:53,820 --> 02:24:57,140
to figure out how they're going to transact.

2581
02:24:57,140 --> 02:24:59,940
I think the most private, you know,

2582
02:24:59,940 --> 02:25:01,580
censorship resistant, blah, blah, blah,

2583
02:25:01,580 --> 02:25:03,940
option should be the default.

2584
02:25:03,940 --> 02:25:04,780
I strongly agree.

2585
02:25:04,780 --> 02:25:06,500
I mean, with everything that you say

2586
02:25:06,500 --> 02:25:08,700
and with everything that you do is super important.

2587
02:25:08,700 --> 02:25:12,140
I mean, we're building Bitcoin to survive in wartime, right?

2588
02:25:12,140 --> 02:25:13,380
I just sort of added in there

2589
02:25:13,380 --> 02:25:16,460
because maybe people get the impression

2590
02:25:16,460 --> 02:25:18,820
that shit, shit, if this goes up,

2591
02:25:18,820 --> 02:25:21,620
all of my money is going to be stolen from Lightning.

2592
02:25:21,620 --> 02:25:23,580
That's not necessarily the case, you know?

2593
02:25:23,580 --> 02:25:27,980
But we're talking about a sort of a risk

2594
02:25:27,980 --> 02:25:30,780
that is theoretical, highly unlikely,

2595
02:25:30,780 --> 02:25:32,420
requires a sophisticated attacker

2596
02:25:32,420 --> 02:25:34,380
and a special set of circumstances.

2597
02:25:34,380 --> 02:25:36,260
We need to fix that risk, right?

2598
02:25:36,260 --> 02:25:37,500
And that's what you're doing.

2599
02:25:37,500 --> 02:25:40,020
And the great people at Lightning and so on.

2600
02:25:40,060 --> 02:25:44,380
Yeah, but you know, it's important to know.

2601
02:25:44,380 --> 02:25:48,540
Yeah, I like that we have balanced voices on this panel.

2602
02:25:48,540 --> 02:25:50,660
I want to jump in here now too.

2603
02:25:50,660 --> 02:25:54,300
So, I mean, it's easy to build a trusted relationship

2604
02:25:54,300 --> 02:25:57,220
on a default of no trust necessary, right?

2605
02:25:57,220 --> 02:25:59,860
You can sort of upgrade your relationship

2606
02:25:59,860 --> 02:26:03,020
with somebody else by adding a trusted relationship

2607
02:26:03,020 --> 02:26:06,220
and then you can do more things than with the default.

2608
02:26:06,260 --> 02:26:10,380
But yeah, it is important that it works for,

2609
02:26:10,380 --> 02:26:12,260
well, Bitcoin is the money of enemies, right?

2610
02:26:12,260 --> 02:26:14,700
Taj said that very nicely.

2611
02:26:14,700 --> 02:26:16,780
So do you recommend someone to open a,

2612
02:26:16,780 --> 02:26:18,700
would you recommend someone to open a Lightning channel

2613
02:26:18,700 --> 02:26:19,900
with their enemy?

2614
02:26:19,900 --> 02:26:20,740
No.

2615
02:26:21,740 --> 02:26:22,820
I don't think that that,

2616
02:26:22,820 --> 02:26:25,940
you do open yourself up to a little bit of abuse

2617
02:26:25,940 --> 02:26:27,900
if you have a Lightning channel with someone.

2618
02:26:27,900 --> 02:26:30,380
They can make it hard for you to get your money back.

2619
02:26:30,380 --> 02:26:32,780
They can grief you for the fees for opening the channels

2620
02:26:32,780 --> 02:26:33,900
and things like that.

2621
02:26:33,900 --> 02:26:38,820
But generally, so we have the base layer

2622
02:26:38,820 --> 02:26:41,900
where you don't have to need a lot of trust.

2623
02:26:41,900 --> 02:26:43,580
And then of course you can build

2624
02:26:43,580 --> 02:26:45,020
business relationships on that

2625
02:26:45,020 --> 02:26:46,580
and you can do more with that.

2626
02:26:46,580 --> 02:26:48,220
It's sort of like we have a very simple,

2627
02:26:48,220 --> 02:26:50,340
stupid base layer in Bitcoin

2628
02:26:50,340 --> 02:26:53,780
and then we build the complex things at the edges

2629
02:26:53,780 --> 02:26:57,340
and on top because it's easier to go that direction

2630
02:26:57,340 --> 02:26:58,700
than vice versa.

2631
02:26:58,700 --> 02:27:03,060
Going from a trust necessary to an untrusted,

2632
02:27:03,300 --> 02:27:05,100
would you want to open a bank account

2633
02:27:05,100 --> 02:27:06,100
with somebody that you know

2634
02:27:06,100 --> 02:27:08,540
is going to try to steal money from you?

2635
02:27:08,540 --> 02:27:09,780
Nobody suggested that here.

2636
02:27:09,780 --> 02:27:10,620
No, no, no.

2637
02:27:10,620 --> 02:27:12,380
I'm just illustrating.

2638
02:27:12,380 --> 02:27:13,220
Yeah.

2639
02:27:13,220 --> 02:27:15,740
And obviously, hopefully nobody gets the impression

2640
02:27:15,740 --> 02:27:17,140
that I'm criticizing Lightning

2641
02:27:17,140 --> 02:27:19,380
or thinking that they're building too fast.

2642
02:27:19,380 --> 02:27:21,020
But I think in Bitcoin,

2643
02:27:21,020 --> 02:27:24,780
we have more of a philosophy of building bottom up.

2644
02:27:24,780 --> 02:27:28,460
So we have our base layer, no trust required,

2645
02:27:28,460 --> 02:27:32,660
as security model is as difficult as possible.

2646
02:27:32,660 --> 02:27:36,060
And then we're slowly building up

2647
02:27:36,060 --> 02:27:38,500
to a scalable payment system

2648
02:27:38,500 --> 02:27:42,940
that can handle the thousands of transactions per second

2649
02:27:42,940 --> 02:27:47,140
that honestly, we cannot fit into a block right now.

2650
02:27:47,140 --> 02:27:49,740
So we cannot afford to not build Lightning

2651
02:27:49,740 --> 02:27:51,700
or some scaling solution.

2652
02:27:51,700 --> 02:27:53,900
But the way that I think we do things,

2653
02:27:55,060 --> 02:27:57,540
what I like about Bitcoin development

2654
02:27:57,540 --> 02:28:01,700
is we build bottom up and we put security first.

2655
02:28:02,380 --> 02:28:04,700
I think that's the way we should think about things

2656
02:28:04,700 --> 02:28:06,580
and what I really like.

2657
02:28:06,580 --> 02:28:07,420
So-

2658
02:28:07,420 --> 02:28:09,220
Yeah, I think we covered a lot

2659
02:28:09,220 --> 02:28:12,980
of the very interesting past of the mempool,

2660
02:28:12,980 --> 02:28:14,740
historical data trends.

2661
02:28:14,740 --> 02:28:16,540
And now we just kind of touched

2662
02:28:16,540 --> 02:28:19,660
on the present state of the mempool

2663
02:28:19,660 --> 02:28:22,020
and how it affects various threat models

2664
02:28:22,020 --> 02:28:23,500
for various use cases.

2665
02:28:23,500 --> 02:28:25,300
But what about the future?

2666
02:28:25,300 --> 02:28:27,540
Mert, you usually give us like a weather report

2667
02:28:27,540 --> 02:28:28,860
of what's going on in the mempool.

2668
02:28:28,860 --> 02:28:30,140
Like, how about a prediction?

2669
02:28:30,140 --> 02:28:32,140
What's the future weather report for the mempool?

2670
02:28:32,140 --> 02:28:32,980
What do you think is gonna happen?

2671
02:28:32,980 --> 02:28:35,820
How is the mempool gonna change over time?

2672
02:28:35,820 --> 02:28:36,860
That's very interesting

2673
02:28:36,860 --> 02:28:38,420
and I've been thinking about that.

2674
02:28:38,420 --> 02:28:40,900
But I mean, I don't know.

2675
02:28:40,900 --> 02:28:45,460
But, so from the stats that I'm seeing,

2676
02:28:45,460 --> 02:28:47,420
I think that the number of payments

2677
02:28:47,420 --> 02:28:49,180
has been growing pretty steadily.

2678
02:28:49,180 --> 02:28:51,180
The amount of money that is being sent

2679
02:28:51,180 --> 02:28:53,020
has been growing pretty steadily.

2680
02:28:53,020 --> 02:28:56,460
And what led to this congestion in the last year

2681
02:28:56,500 --> 02:28:59,180
was that there were just more

2682
02:28:59,180 --> 02:29:01,860
and more transaction happening, transactions.

2683
02:29:01,860 --> 02:29:06,860
And eventually, the block space

2684
02:29:07,220 --> 02:29:09,600
was completely getting used.

2685
02:29:09,600 --> 02:29:13,380
And the block space supply is pretty inelastic.

2686
02:29:13,380 --> 02:29:14,860
While you're slightly below it,

2687
02:29:14,860 --> 02:29:18,060
it will clear every night or at least every weekend.

2688
02:29:18,060 --> 02:29:22,460
And the fees will calm down again.

2689
02:29:22,460 --> 02:29:24,260
As soon as you overshoot a little bit

2690
02:29:24,260 --> 02:29:26,340
and the number of transactions

2691
02:29:26,340 --> 02:29:27,780
that get submitted to the network

2692
02:29:27,780 --> 02:29:29,860
exceed the available block space,

2693
02:29:29,860 --> 02:29:31,340
it'll just continue growing, right?

2694
02:29:31,340 --> 02:29:35,660
Because there's not enough new block space to clear it out.

2695
02:29:35,660 --> 02:29:40,660
And so we had a bit of a demand shock after.

2696
02:29:41,380 --> 02:29:43,220
Well, first we had a supply shock

2697
02:29:43,220 --> 02:29:44,420
and then we had a demand shock.

2698
02:29:44,420 --> 02:29:46,520
First, China kicked out their miners

2699
02:29:46,520 --> 02:29:51,380
and the hash rate went down by 47%, I think, at the peak.

2700
02:29:51,380 --> 02:29:56,380
And then just around the same time,

2701
02:29:56,940 --> 02:29:58,740
blockchain.com, who is responsible

2702
02:29:58,740 --> 02:30:01,060
for about 30% of all transactions,

2703
02:30:01,060 --> 02:30:04,140
finally updated from pay-to-public-key hash

2704
02:30:04,140 --> 02:30:06,580
addresses to pay-to-witness-public-key hash.

2705
02:30:06,580 --> 02:30:10,340
So the inputs went from 148 bytes

2706
02:30:10,340 --> 02:30:13,020
to 68 vbytes on each input.

2707
02:30:13,020 --> 02:30:15,820
So they were less than half the size.

2708
02:30:15,820 --> 02:30:17,860
And suddenly, this being slightly

2709
02:30:17,860 --> 02:30:20,340
over the block space demand went to,

2710
02:30:20,340 --> 02:30:23,420
oh, we're like at 90-ish percent

2711
02:30:23,420 --> 02:30:25,100
of the block space being used

2712
02:30:25,100 --> 02:30:26,798
and fees dropped through the floor.

2713
02:30:26,798 --> 02:30:28,798
And then the hash rate regenerated maybe even faster than some people expected.

2714
02:30:28,798 --> 02:30:32,798
Some people were like, it'll take a year for all these companies to resettle.

2715
02:30:32,798 --> 02:30:36,798
They were heavily incentivized to get those miners as soon as possible.

2716
02:30:36,798 --> 02:30:42,798
So blocks were coming faster and transactions were smaller, at least, you know,
blockchain.com.

2717
02:30:42,798 --> 02:30:48,798
So in a way, I think we'll see a couple more demand shocks, for example, with
pay-to-tab root.

2718
02:30:48,798 --> 02:30:52,798
It took now almost five years, but we're at 83% SegWit transactions now.

2719
02:30:52,798 --> 02:30:55,798
And with tab root, I assume a similar pattern.

2720
02:30:55,798 --> 02:30:58,798
It will take a few years for use cases to come up.

2721
02:30:58,798 --> 02:31:02,798
But then especially for multi-sig, multi-sig will be a lot cheaper to do

2722
02:31:02,798 --> 02:31:05,798
with key path spends on pay-to-tab root.

2723
02:31:05,798 --> 02:31:09,798
And a key path spend in pay-to-tab root is only 58 vbytes,

2724
02:31:09,798 --> 02:31:13,798
whereas, for example, at 203 multi-sig, even with native SegWit right now,

2725
02:31:13,798 --> 02:31:16,798
it's 105.

2726
02:31:16,798 --> 02:31:19,798
Or older formats are 140 or 297 for legacy, even.

2727
02:31:19,798 --> 02:31:22,798
So the demand from multi-sig transactions will go down a bunch.

2728
02:31:22,798 --> 02:31:25,798
And then Lightning is actually maturing maybe a little quicker than...

2729
02:31:25,798 --> 02:31:28,798
So, for example, Rusty said, building Lightning will be a 20-year effort.

2730
02:31:28,798 --> 02:31:31,798
And now people are replying to Rusty,

2731
02:31:31,798 --> 02:31:34,798
and they're like, oh, that's great.

2732
02:31:34,798 --> 02:31:37,798
That's great.

2733
02:31:37,798 --> 02:31:40,798
That's great.

2734
02:31:40,798 --> 02:31:43,798
That's a 20-year effort.

2735
02:31:43,798 --> 02:31:46,798
And now people are reporting that they're routing thousands of transactions

2736
02:31:46,798 --> 02:31:49,798
only through their own node that they're administering from home.

2737
02:31:49,798 --> 02:31:52,798
So I think that the smaller payments will be pushed out

2738
02:31:52,798 --> 02:31:55,798
to the payment layer, to Lightning.

2739
02:31:55,798 --> 02:31:58,798
The multi-sig transactions will move

2740
02:31:58,798 --> 02:32:01,798
to these more efficient formats.

2741
02:32:01,798 --> 02:32:04,798
So for the middle term,

2742
02:32:04,798 --> 02:32:07,798
probably block space will remain relatively abundant.

2743
02:32:08,798 --> 02:32:11,798
But if payments continue to grow,

2744
02:32:11,798 --> 02:32:14,798
and conferences certainly seem to grow,

2745
02:32:14,798 --> 02:32:17,798
then we will always have some demand.

2746
02:32:17,798 --> 02:32:20,798
And what last year showed, I think,

2747
02:32:20,798 --> 02:32:23,798
is that transacting on Bitcoin

2748
02:32:23,798 --> 02:32:26,798
is valuable enough for a lot of people

2749
02:32:26,798 --> 02:32:29,798
that they were willing to pay significant fees.

2750
02:32:29,798 --> 02:32:32,798
And we have at least two more halvings or so

2751
02:32:32,798 --> 02:32:35,798
until the subsidy is going to start to be released.

2752
02:32:36,798 --> 02:32:39,798
It sounds like a typical free market economy

2753
02:32:39,798 --> 02:32:42,798
where you have limited supply,

2754
02:32:42,798 --> 02:32:45,798
or I guess maybe a variable supply and a variable demand.

2755
02:32:45,798 --> 02:32:48,798
And if the demand ever exceeds the supply,

2756
02:32:48,798 --> 02:32:51,798
then sure, the prices go up.

2757
02:32:51,798 --> 02:32:54,798
This is just basic economics.

2758
02:32:54,798 --> 02:32:57,798
But will we ever see a time where the demand

2759
02:32:57,798 --> 02:33:00,798
constantly exceeds the supply and the mempool is just constantly full

2760
02:33:00,798 --> 02:33:03,798
and transactions are getting priced out, essentially?

2761
02:33:04,798 --> 02:33:07,798
Well, one thing I want to add,

2762
02:33:07,798 --> 02:33:10,798
sorry to steal a bit,

2763
02:33:10,798 --> 02:33:13,798
is demand is not just comprised of how many people

2764
02:33:13,798 --> 02:33:16,798
are using Bitcoin to send money.

2765
02:33:16,798 --> 02:33:19,798
And this goes further than just,

2766
02:33:19,798 --> 02:33:22,798
oh, some of it's happening on Lightning, which we don't see on Chain.

2767
02:33:22,798 --> 02:33:25,798
A lot of it is happening on Lightning, actually.

2768
02:33:25,798 --> 02:33:28,798
And as you alluded to,

2769
02:33:28,798 --> 02:33:31,798
there's plenty of ways that wallet developers

2770
02:33:31,798 --> 02:33:34,798
can save users' money simply by making smaller transactions.

2771
02:33:34,798 --> 02:33:37,798
There are so many advancements,

2772
02:33:37,798 --> 02:33:40,798
at least that I know that exist in the Bitcoin Core wallet

2773
02:33:40,798 --> 02:33:43,798
and can be used to save users' money.

2774
02:33:43,798 --> 02:33:46,798
And in the enterprise world as well,

2775
02:33:46,798 --> 02:33:49,798
to batch payments or fee bump

2776
02:33:49,798 --> 02:33:52,798
in a more smart way.

2777
02:33:52,798 --> 02:33:55,798
Shout out to CardCoins for doing batched RBF payments

2778
02:33:55,798 --> 02:33:58,798
that save users' money.

2779
02:33:58,798 --> 02:34:01,798
So I don't think block space

2780
02:34:01,798 --> 02:34:04,798
or demand for block space necessarily

2781
02:34:04,798 --> 02:34:07,798
shows you how many people are transacting with Bitcoin.

2782
02:34:07,798 --> 02:34:10,798
That's my main point.

2783
02:34:10,798 --> 02:34:13,798
Because I think when people see empty blocks

2784
02:34:13,798 --> 02:34:16,798
or when they see an empty mempool, they're like,

2785
02:34:16,798 --> 02:34:19,798
oh, nobody's using Bitcoin. And that's just not true.

2786
02:34:19,798 --> 02:34:22,798
But also to elaborate on that is that, again,

2787
02:34:22,798 --> 02:34:25,798
when block space is cheap, people will use it.

2788
02:34:25,798 --> 02:34:28,798
When it's very, very expensive, people feel pain

2789
02:34:28,798 --> 02:34:31,798
and they try to solve it in different ways.

2790
02:34:31,798 --> 02:34:34,798
And we talked about that.

2791
02:34:34,798 --> 02:34:37,798
There's a ton of optimizations.

2792
02:34:37,798 --> 02:34:40,798
We've seen massive improvements in optimizations

2793
02:34:40,798 --> 02:34:43,798
in the mempool over the past four years.

2794
02:34:43,798 --> 02:34:46,798
It was originally interesting because it was so hilariously bad.

2795
02:34:46,798 --> 02:34:49,798
And now nobody's doing any hilariously bad stuff.

2796
02:34:49,798 --> 02:34:52,798
It was funny how batched transactions

2797
02:34:52,798 --> 02:34:55,798
were sort of starting mid-2017.

2798
02:34:55,798 --> 02:34:58,798
And then after that huge spike in 2017,

2799
02:34:58,798 --> 02:35:01,798
a lot of people very quickly started rolling that out.

2800
02:35:01,798 --> 02:35:04,798
And that's, of course, because users are heavily incentivized

2801
02:35:04,798 --> 02:35:07,798
to optimize their use of Bitcoin's blockchain space.

2802
02:35:07,798 --> 02:35:10,798
Once those fees spike up,

2803
02:35:10,798 --> 02:35:13,798
yeah, let's prioritize that SegWit implementation.

2804
02:35:13,798 --> 02:35:16,798
Or let's move our low-value transactions

2805
02:35:16,798 --> 02:35:19,798
to Layer 2s.

2806
02:35:19,798 --> 02:35:22,798
And that's when we saw a huge lightning adoption, too.

2807
02:35:22,798 --> 02:35:25,798
So there's an upwards pressure,

2808
02:35:25,798 --> 02:35:28,798
which is Bitcoin is growing and there is more of everything.

2809
02:35:28,798 --> 02:35:31,798
But there are downwards pressures. There are optimizations.

2810
02:35:31,798 --> 02:35:34,798
There's other solutions.

2811
02:35:34,798 --> 02:35:37,798
Someone might say, you know what, we can actually solve this particular thing

2812
02:35:37,798 --> 02:35:40,798
in a centralized way and it moves off of there.

2813
02:35:40,798 --> 02:35:43,798
There's a lot of different ways of achieving the same goal.

2814
02:35:43,798 --> 02:35:46,798
And so when the price is high, that creates an incentive

2815
02:35:46,798 --> 02:35:49,798
for someone to rethink of it.

2816
02:35:49,798 --> 02:35:52,798
I mean, I've always expected there to be

2817
02:35:52,798 --> 02:35:55,798
a Bitcoin payment service provider at some point

2818
02:35:55,798 --> 02:35:58,798
that just takes Bitcoin here, completely centralized.

2819
02:35:58,798 --> 02:36:01,798
It takes some Bitcoin here, sends the Bitcoin there, and just does it all on-chain.

2820
02:36:01,798 --> 02:36:04,798
But it still hasn't happened.

2821
02:36:04,798 --> 02:36:07,798
So, I mean, these things

2822
02:36:07,798 --> 02:36:10,798
will probably start happening

2823
02:36:10,798 --> 02:36:13,798
especially during this,

2824
02:36:13,798 --> 02:36:16,798
because the mempool moves, it doesn't grow nice and steady.

2825
02:36:16,798 --> 02:36:19,798
It moves in extreme spikes.

2826
02:36:19,798 --> 02:36:22,798
Yeah, when the market's pumping hard, everyone wants to move their money

2827
02:36:22,798 --> 02:36:25,798
to exchange and withdraw.

2828
02:36:25,798 --> 02:36:28,798
And there's a lot of stuff that's algorithmic here in terms of fee estimation

2829
02:36:28,798 --> 02:36:31,798
and a bunch of other things. Oftentimes it's not even a human.

2830
02:36:31,798 --> 02:36:34,798
There's bots that will send from one exchange to another exchange.

2831
02:36:34,798 --> 02:36:37,798
And I think the coffee transactions are getting pushed out,

2832
02:36:37,798 --> 02:36:40,798
priced out of Bitcoin, right?

2833
02:36:40,798 --> 02:36:43,798
The future of Bitcoin is that we migrate to this multilayer ecosystem

2834
02:36:43,798 --> 02:36:46,798
where sometimes you use Lightning or Liquid

2835
02:36:46,798 --> 02:36:49,798
or some custodial service, right?

2836
02:36:49,798 --> 02:36:52,798
Well, it might. I mean, you'd be surprised with how many really small transactions

2837
02:36:52,798 --> 02:36:55,798
there are still happening on-chain. I mean, I agree.

2838
02:36:55,798 --> 02:36:58,798
I'm a mega Lightning fan. I want to move it to Lightning.

2839
02:36:58,798 --> 02:37:01,798
But a lot of people use on-chain Bitcoin

2840
02:37:01,798 --> 02:37:04,798
for really small transactions.

2841
02:37:04,798 --> 02:37:07,798
Even at one saturbite, they pay a pretty high percent of the value

2842
02:37:07,798 --> 02:37:10,798
to make that transaction.

2843
02:37:10,798 --> 02:37:13,798
All right, guys. I guess we're out of time for our panel.

2844
02:37:13,798 --> 02:37:16,798
But thanks for sharing your very passionate opinions

2845
02:37:16,798 --> 02:37:19,798
on the state of the mempool and the future of the mempool.

2846
02:37:19,798 --> 02:37:22,798
I guess that's it. Thanks.

2847
02:37:22,798 --> 02:37:25,798
Thank you. And glory to Ukraine.

2848
02:37:38,798 --> 02:37:41,798
Uh-oh.

2849
02:37:55,798 --> 02:37:58,798
Well, hello.

2850
02:37:58,798 --> 02:38:01,798
We're here to talk about

2851
02:38:01,798 --> 02:38:04,798
why Lightning is not private.

2852
02:38:04,798 --> 02:38:07,798
It's, you know, as the B-cashers would say, doomed to failure.

2853
02:38:07,798 --> 02:38:10,798
It's never going to work. All that.

2854
02:38:10,798 --> 02:38:13,798
So, welcome.

2855
02:38:13,798 --> 02:38:16,798
Evan Kaloudis from Zeus Lightning.

2856
02:38:16,798 --> 02:38:19,798
Anthony Ronning from Impervious.

2857
02:38:19,798 --> 02:38:22,798
Nifty Nye from Blockstream.

2858
02:38:22,798 --> 02:38:25,798
And, yeah, in all seriousness,

2859
02:38:25,798 --> 02:38:28,798
Lightning is kind of pitched as a magic privacy solution.

2860
02:38:28,798 --> 02:38:31,798
You hop on Lightning.

2861
02:38:31,798 --> 02:38:34,798
You change your money over Lightning, and there's nothing to worry about.

2862
02:38:34,798 --> 02:38:37,798
No information leaking. It fixed

2863
02:38:37,798 --> 02:38:40,798
the privacy issue.

2864
02:38:40,798 --> 02:38:43,798
And the technical reality of that is

2865
02:38:43,798 --> 02:38:46,798
not quite.

2866
02:38:46,798 --> 02:38:49,798
So, I guess to start,

2867
02:38:49,798 --> 02:38:52,798
the whole issue between sending and receiving there.

2868
02:38:52,798 --> 02:38:55,798
I guess wildcard.

2869
02:38:55,798 --> 02:38:58,798
Anybody want to talk about the issues

2870
02:38:58,798 --> 02:39:01,798
in terms of when you receive money?

2871
02:39:01,798 --> 02:39:04,798
All the information that just leaks out into the world

2872
02:39:04,798 --> 02:39:07,798
that a lot of users might not be aware of?

2873
02:39:07,798 --> 02:39:10,798
Yeah, I think to start off,

2874
02:39:10,798 --> 02:39:13,798
senders have amazing privacy on Lightning

2875
02:39:13,798 --> 02:39:16,798
from a general level. There's some trade-offs there,

2876
02:39:16,798 --> 02:39:19,798
and you can get into the weeds on that, but when you're sending payments,

2877
02:39:19,798 --> 02:39:22,798
you have onion routing messages going across the network.

2878
02:39:22,798 --> 02:39:25,798
So, you don't really know where it actually came from.

2879
02:39:25,798 --> 02:39:28,798
You don't even know if the previous hop that a Lightning payment

2880
02:39:28,798 --> 02:39:31,798
is going through is actually who it is.

2881
02:39:31,798 --> 02:39:34,798
But like you said, receivers, on the other hand,

2882
02:39:34,798 --> 02:39:37,798
it's a little bit of a different story.

2883
02:39:37,798 --> 02:39:40,798
You have to give information out to another person

2884
02:39:40,798 --> 02:39:43,798
in order to get paid, to actually receive money.

2885
02:39:43,798 --> 02:39:46,798
So, some of that information that's leaked is alias names,

2886
02:39:46,798 --> 02:39:49,798
IP addresses, if you have any unannounced channels,

2887
02:39:49,798 --> 02:39:52,798
you may leak those as well

2888
02:39:52,798 --> 02:39:55,798
in order to get paid down those channels.

2889
02:39:55,798 --> 02:39:58,798
So, there's a lot of areas

2890
02:39:58,798 --> 02:40:01,798
where receivers need to be a little bit careful,

2891
02:40:01,798 --> 02:40:04,798
especially if someone is just posting invoices

2892
02:40:04,798 --> 02:40:07,798
onto Twitter or something,

2893
02:40:07,798 --> 02:40:10,798
and it's just completely doxing all that information to the open world.

2894
02:40:10,798 --> 02:40:13,798
So, I think there is

2895
02:40:13,798 --> 02:40:16,798
a lot of privacy gains that we can get on Lightning.

2896
02:40:16,798 --> 02:40:19,798
I think it comes down to the users not shooting themselves in the foot

2897
02:40:20,798 --> 02:40:23,798
and having a little bit more education on what to do and what not to do,

2898
02:40:23,798 --> 02:40:26,798
especially when it comes to receiving on Lightning.

2899
02:40:26,798 --> 02:40:29,798
We're sort of multifaceted, though.

2900
02:40:29,798 --> 02:40:32,798
Application developers, they need to give users the tools

2901
02:40:32,798 --> 02:40:35,798
to be able to not shoot themselves in the foot,

2902
02:40:35,798 --> 02:40:38,798
but we also need to see some changes at a protocol level, I believe,

2903
02:40:38,798 --> 02:40:41,798
to really get to where we want to be.

2904
02:40:41,798 --> 02:40:44,798
So, one thing maybe that's kind of interesting

2905
02:40:44,798 --> 02:40:47,798
to ask about Lightning privacy, too, is

2906
02:40:47,798 --> 02:40:50,798
it's more private than being on-chain, right?

2907
02:40:50,798 --> 02:40:53,798
When you sit down and look at it,

2908
02:40:53,798 --> 02:40:56,798
transacting on Lightning is a step-change function

2909
02:40:56,798 --> 02:40:59,798
in how private your actual transactions are.

2910
02:40:59,798 --> 02:41:02,798
So, just when you're making transactions,

2911
02:41:02,798 --> 02:41:05,798
if you're going to make a transaction with Bitcoin,

2912
02:41:05,798 --> 02:41:08,798
I think it's true that it's more private

2913
02:41:08,798 --> 02:41:11,798
if you're doing it on Lightning.

2914
02:41:11,798 --> 02:41:14,798
So, if you had to pick on-chain versus Lightning and you're concerned about privacy,

2915
02:41:14,798 --> 02:41:17,798
it's definitely the right choice, right?

2916
02:41:17,798 --> 02:41:20,798
Especially if you're sending.

2917
02:41:20,798 --> 02:41:23,798
It's definitely more private,

2918
02:41:23,798 --> 02:41:26,798
but it's not quite the perfect solution

2919
02:41:26,798 --> 02:41:29,798
that it kind of gets generalized about.

2920
02:41:29,798 --> 02:41:32,798
Speaking of solutions

2921
02:41:32,798 --> 02:41:35,798
to receiver-side privacy,

2922
02:41:35,798 --> 02:41:38,798
there's a number of protocol proposals,

2923
02:41:38,798 --> 02:41:41,798
rendezvous routing, route blinding,

2924
02:41:41,798 --> 02:41:44,798
trampoline routing that could potentially level that

2925
02:41:44,798 --> 02:41:47,798
to the point where receivers are

2926
02:41:47,798 --> 02:41:50,798
at least more private than they are now,

2927
02:41:50,798 --> 02:41:53,798
if not on par with senders.

2928
02:41:53,798 --> 02:41:56,798
You guys have any favorites there in terms of which one to go with?

2929
02:41:56,798 --> 02:41:59,798
Yeah.

2930
02:41:59,798 --> 02:42:02,798
From the protocol level,

2931
02:42:02,798 --> 02:42:05,798
I haven't read a lot of the specs,

2932
02:42:05,798 --> 02:42:08,798
but I think in general, just speaking at a high level,

2933
02:42:08,798 --> 02:42:11,798
receivers need to give out some information to get paid.

2934
02:42:11,798 --> 02:42:14,798
Ideally, that information doesn't reveal

2935
02:42:14,798 --> 02:42:17,798
anything about them.

2936
02:42:17,798 --> 02:42:20,798
It could have a lot of maybe fake hops.

2937
02:42:20,798 --> 02:42:23,798
Maybe it's with rendezvous or route blinding

2938
02:42:23,798 --> 02:42:26,798
and it's like, get your payment to this location

2939
02:42:26,798 --> 02:42:29,798
and then that location will get the payment to me.

2940
02:42:29,798 --> 02:42:32,798
Kind of the gist of that.

2941
02:42:32,798 --> 02:42:35,798
It kind of cuts that separation where,

2942
02:42:35,798 --> 02:42:38,798
everything previously, we don't know where it came from

2943
02:42:38,798 --> 02:42:41,798
and then everything after, we don't know where it's going either.

2944
02:42:41,798 --> 02:42:44,798
I think there's a lot of protocol advancements that could happen,

2945
02:42:44,798 --> 02:42:47,798
especially for receivers.

2946
02:42:47,798 --> 02:42:50,798
I'd be curious if you looked at

2947
02:42:50,798 --> 02:42:53,798
where we are at with being able to implement

2948
02:42:53,798 --> 02:42:56,798
some of that on the protocol level.

2949
02:42:56,798 --> 02:42:59,798
There's a couple different proposals.

2950
02:42:59,798 --> 02:43:02,798
When you send a payment right now,

2951
02:43:03,798 --> 02:43:06,798
if you want to receive a payment on Lightning,

2952
02:43:06,798 --> 02:43:09,798
you create something called an invoice, you give it to someone.

2953
02:43:09,798 --> 02:43:12,798
Invoice has a bunch of information in it.

2954
02:43:12,798 --> 02:43:15,798
It tells you who you're paying, how much you're paying.

2955
02:43:15,798 --> 02:43:18,798
Usually there's a description of what you're buying, etc.

2956
02:43:18,798 --> 02:43:21,798
Invoices themselves leak basically all of your transaction data.

2957
02:43:21,798 --> 02:43:24,798
That's the whole payment.

2958
02:43:24,798 --> 02:43:27,798
That's the whole transaction is in the invoice.

2959
02:43:27,798 --> 02:43:30,798
There's some questions about,

2960
02:43:30,798 --> 02:43:33,798
is there a way we can produce an invoice that doesn't tell you exactly

2961
02:43:33,798 --> 02:43:36,798
which node on the network you're paying,

2962
02:43:36,798 --> 02:43:39,798
but can pay to some intermediate node

2963
02:43:39,798 --> 02:43:42,798
and then that intermediate node will be able to figure out

2964
02:43:42,798 --> 02:43:45,798
how to get to the person who actually wants to receive the payment.

2965
02:43:45,798 --> 02:43:48,798
I guess we call those proxies

2966
02:43:48,798 --> 02:43:51,798
in normal networking stuff, right?

2967
02:43:51,798 --> 02:43:54,798
Yeah, and it's interesting because a lot of the proposals,

2968
02:43:54,798 --> 02:43:57,798
it's not really just making the data go away.

2969
02:43:57,798 --> 02:44:00,798
It's deferring to which parties are privy to who the receiver is.

2970
02:44:00,798 --> 02:44:03,798
Privacy is not just about

2971
02:44:03,798 --> 02:44:06,798
flicking a switch on or off.

2972
02:44:06,798 --> 02:44:09,798
It's about selectively deciding who you want to know that information.

2973
02:44:09,798 --> 02:44:12,798
When it comes to

2974
02:44:12,798 --> 02:44:15,798
the three proposals

2975
02:44:15,798 --> 02:44:18,798
where we're discussing rendezvous routing,

2976
02:44:18,798 --> 02:44:21,798
route blinding, trampoline routing,

2977
02:44:21,798 --> 02:44:24,798
they're all kind of, in a way,

2978
02:44:24,798 --> 02:44:27,798
doing the same thing,

2979
02:44:27,798 --> 02:44:30,798
just little subtle differences.

2980
02:44:30,798 --> 02:44:33,798
Evan or Lisa,

2981
02:44:33,798 --> 02:44:36,798
do you guys have any kind of thoughts

2982
02:44:36,798 --> 02:44:39,798
in terms of the privacy trade-offs

2983
02:44:39,798 --> 02:44:42,798
between the three of them?

2984
02:44:42,798 --> 02:44:45,798
The benefits you can get out of rendezvous versus route blinding

2985
02:44:45,798 --> 02:44:48,798
versus trampoline and potential negative sides to that,

2986
02:44:48,798 --> 02:44:51,798
depending on which one gets implemented.

2987
02:44:51,798 --> 02:44:54,798
I'm going to be honest.

2988
02:44:54,798 --> 02:44:57,798
I'm not as familiar with all the differences between all three of them.

2989
02:44:57,798 --> 02:45:00,798
All of these are ways

2990
02:45:00,798 --> 02:45:03,798
that you basically can find another node

2991
02:45:03,798 --> 02:45:06,798
to finish the payment for you to the actual destination.

2992
02:45:06,798 --> 02:45:09,798
In terms of what's being worked on currently,

2993
02:45:09,798 --> 02:45:12,798
I know that the route blinding thing is currently implemented

2994
02:45:12,798 --> 02:45:15,798
in Core Lightning, which is a project I work on.

2995
02:45:15,798 --> 02:45:18,798
There's a few other teams that are working on

2996
02:45:18,798 --> 02:45:21,798
route blinding currently.

2997
02:45:21,798 --> 02:45:24,798
In terms of out of these three things,

2998
02:45:24,798 --> 02:45:27,798
which is the most likely to get over the line first

2999
02:45:27,798 --> 02:45:30,798
in terms of being accessible to the most people

3000
02:45:30,798 --> 02:45:33,798
who are running Lightning, it'll definitely be route blinding.

3001
02:45:33,798 --> 02:45:36,798
I was just talking to one of the maintainers

3002
02:45:36,798 --> 02:45:39,798
of the Async project.

3003
02:45:39,798 --> 02:45:42,798
They're working on the route blinding stuff.

3004
02:45:42,798 --> 02:45:45,798
I think trampoline routing is the one that we're supposed to be doing

3005
02:45:46,798 --> 02:45:49,798
Maybe that'll be there soon.

3006
02:45:49,798 --> 02:45:52,798
These things are currently in progress.

3007
02:45:52,798 --> 02:45:55,798
I've been tasked with asking if you're a developer

3008
02:45:55,798 --> 02:45:58,798
and you want to get involved in improving

3009
02:45:58,798 --> 02:46:01,798
some of the payment routing privacy on Lightning,

3010
02:46:01,798 --> 02:46:04,798
we could definitely use some help reviewing the route blinding PR,

3011
02:46:04,798 --> 02:46:07,798
which I think is number 765 on the bolts repository.

3012
02:46:07,798 --> 02:46:10,798
Evan?

3013
02:46:10,798 --> 02:46:13,798
Any thoughts on which path we should take here?

3014
02:46:13,798 --> 02:46:16,798
Route blinding is exciting

3015
02:46:16,798 --> 02:46:19,798
because we have the most tangible stuff.

3016
02:46:19,798 --> 02:46:22,798
Really, I don't think we're going to

3017
02:46:22,798 --> 02:46:25,798
really get a full understanding

3018
02:46:25,798 --> 02:46:28,798
of what all the implications and limits are

3019
02:46:28,798 --> 02:46:31,798
until we're testing it out in the wild.

3020
02:46:31,798 --> 02:46:34,798
I'm very excited to see that tooling

3021
02:46:34,798 --> 02:46:37,798
out in various Node projects out in the wild

3022
02:46:37,798 --> 02:46:40,798
and people just trying it and figuring out

3023
02:46:40,798 --> 02:46:43,798
where they get caught up and whatnot.

3024
02:46:43,798 --> 02:46:46,798
Wherever I can, either 3 of these methods,

3025
02:46:46,798 --> 02:46:49,798
I would love to get them in Zeus

3026
02:46:49,798 --> 02:46:52,798
so people can try them on the go

3027
02:46:52,798 --> 02:46:55,798
and just give it a shot.

3028
02:46:55,798 --> 02:46:58,798
Since all these methods are really just about

3029
02:46:58,798 --> 02:47:01,798
changing up how the routing goes

3030
02:47:02,798 --> 02:47:05,798
instead of just having the sender

3031
02:47:05,798 --> 02:47:08,798
figuring out the path to it,

3032
02:47:08,798 --> 02:47:11,798
it's going to be interesting to see if people also have

3033
02:47:11,798 --> 02:47:14,798
any pains with being unable to find a path

3034
02:47:14,798 --> 02:47:17,798
to make their payment.

3035
02:47:17,798 --> 02:47:20,798
That's the tradeoff with a lot of these proposals.

3036
02:47:20,798 --> 02:47:23,798
You're going to be able to get selective privacy in a lot of ways,

3037
02:47:23,798 --> 02:47:26,798
but it may make for a worse UX

3038
02:47:26,798 --> 02:47:29,798
in terms of actually completing that payment.

3039
02:47:30,798 --> 02:47:33,798
Anthony, which one should we go with?

3040
02:47:33,798 --> 02:47:36,798
What's the perfect solution?

3041
02:47:36,798 --> 02:47:39,798
I don't even think it's mutually exclusive either.

3042
02:47:39,798 --> 02:47:42,798
I think the Electrum Lightning implementation

3043
02:47:42,798 --> 02:47:45,798
was the first to implement trampoline routing,

3044
02:47:45,798 --> 02:47:48,798
which was kind of cool.

3045
02:47:48,798 --> 02:47:51,798
I don't know anyone using that Python Node.

3046
02:47:51,798 --> 02:47:54,798
I don't know if you should.

3047
02:47:54,798 --> 02:47:57,798
It's awesome to be able to innovate

3048
02:47:57,798 --> 02:48:00,798
independently in all the different Node implementations,

3049
02:48:00,798 --> 02:48:03,798
experimenting with different things

3050
02:48:03,798 --> 02:48:06,798
and hopefully contributing back to the specification process

3051
02:48:06,798 --> 02:48:09,798
so we can all benefit from it.

3052
02:48:09,798 --> 02:48:12,798
Async has also implemented trampoline routing themselves.

3053
02:48:12,798 --> 02:48:15,798
I think there's combinations of things

3054
02:48:15,798 --> 02:48:18,798
that we could all use.

3055
02:48:18,798 --> 02:48:21,798
Maybe it's possible to use trampoline routing

3056
02:48:21,798 --> 02:48:24,798
with route blinding in a way or vice versa.

3057
02:48:25,798 --> 02:48:28,798
I would really just like to have the most amount of privacy options

3058
02:48:28,798 --> 02:48:31,798
for users on Lightning.

3059
02:48:31,798 --> 02:48:34,798
But again, I do agree with everyone here

3060
02:48:34,798 --> 02:48:37,798
that probably route blinding.

3061
02:48:37,798 --> 02:48:40,798
I haven't looked at it deeply enough to see any connotations with it,

3062
02:48:40,798 --> 02:48:43,798
so I think in general

3063
02:48:43,798 --> 02:48:46,798
it's pretty well supported

3064
02:48:46,798 --> 02:48:49,798
as far as we should probably do route blinding.

3065
02:48:49,798 --> 02:48:52,798
It's really just the nitty-gritty, getting into the details

3066
02:48:52,798 --> 02:48:55,798
and finishing the spec off.

3067
02:48:55,798 --> 02:48:58,798
More experimentation, yeah.

3068
02:48:58,798 --> 02:49:01,798
I've been trying to keep my mouth sipped a little more

3069
02:49:01,798 --> 02:49:04,798
than I've had on the first day.

3070
02:49:04,798 --> 02:49:07,798
Trampoline routing.

3071
02:49:07,798 --> 02:49:10,798
I kind of have an issue

3072
02:49:10,798 --> 02:49:13,798
at a high level

3073
02:49:13,798 --> 02:49:16,798
with the idea of outsourcing

3074
02:49:16,798 --> 02:49:19,798
the route construction to a third party

3075
02:49:19,798 --> 02:49:22,798
because in theory you can just kind of

3076
02:49:22,798 --> 02:49:25,798
mess different trampoline nodes together

3077
02:49:25,798 --> 02:49:28,798
and then have the first one just get the route from you

3078
02:49:28,798 --> 02:49:31,798
and then go on to the next one and the next one.

3079
02:49:31,798 --> 02:49:34,798
And like any onion routed system

3080
02:49:34,798 --> 02:49:37,798
you don't know if this is the final destination

3081
02:49:37,798 --> 02:49:40,798
I'm routing to or another trampoline node.

3082
02:49:40,798 --> 02:49:43,798
But in practice

3083
02:49:43,798 --> 02:49:46,798
a node doing trampoline routing and route selection

3084
02:49:47,798 --> 02:49:50,798
is probably going to be very publicly visible and known.

3085
02:49:50,798 --> 02:49:53,798
And you still have information

3086
02:49:53,798 --> 02:49:56,798
like the time step for the refund path

3087
02:49:56,798 --> 02:49:59,798
in an HTLC to look at

3088
02:49:59,798 --> 02:50:02,798
with the maximum length that can have.

3089
02:50:02,798 --> 02:50:05,798
And all the little metadata that kind of piles up

3090
02:50:05,798 --> 02:50:08,798
where it's like, well in theory

3091
02:50:08,798 --> 02:50:11,798
you can just link the different trampoline nodes together

3092
02:50:11,798 --> 02:50:14,798
and they don't know what the final destination is.

3093
02:50:14,798 --> 02:50:17,798
But in practice

3094
02:50:17,798 --> 02:50:20,798
there's probably going to be some things you can suss out.

3095
02:50:20,798 --> 02:50:23,798
Like the length of the route.

3096
02:50:23,798 --> 02:50:26,798
Let's say Blockstream had a trampoline node

3097
02:50:26,798 --> 02:50:29,798
and I go there first but then route to Asynx

3098
02:50:29,798 --> 02:50:32,798
well Blockstream's node is going to see

3099
02:50:32,798 --> 02:50:35,798
oh that's Asynx's node.

3100
02:50:35,798 --> 02:50:38,798
That's just another trampoline hub.

3101
02:50:38,798 --> 02:50:41,798
So is maybe

3102
02:50:41,798 --> 02:50:44,798
pitching that as a privacy solution kind of

3103
02:50:44,798 --> 02:50:47,798
a misnomer? Is that not more of just a scaling

3104
02:50:47,798 --> 02:50:50,798
solution for light wallets?

3105
02:50:50,798 --> 02:50:53,798
I haven't looked at it closely

3106
02:50:53,798 --> 02:50:56,798
I would probably need to go back but I think that intuition is probably

3107
02:50:56,798 --> 02:50:59,798
pretty good.

3108
02:50:59,798 --> 02:51:02,798
Basically the idea with a trampoline route is that

3109
02:51:02,798 --> 02:51:05,798
if you're using a trampoline route

3110
02:51:05,798 --> 02:51:08,798
you don't have to understand how to get to every node

3111
02:51:08,798 --> 02:51:11,798
on the network. So it saves you a lot of data as a node

3112
02:51:11,798 --> 02:51:14,798
because you can offload the pathfinding

3113
02:51:14,798 --> 02:51:17,798
responsibility to someone else in the network.

3114
02:51:17,798 --> 02:51:20,798
I think it's for a fee.

3115
02:51:20,798 --> 02:51:23,798
I think you get paid if you do. I think there's some little

3116
02:51:23,798 --> 02:51:26,798
earn some money by doing a trampoline route thing in there.

3117
02:51:26,798 --> 02:51:29,798
So you get an extra fee for constructing a route for someone, a personal route I
should say.

3118
02:51:29,798 --> 02:51:32,798
So then the idea is that if you have

3119
02:51:32,798 --> 02:51:35,798
a mobile phone and a wallet and you wanted to send a payment from there

3120
02:51:35,798 --> 02:51:38,798
you only need to know how to construct a route to get to a trampoline node

3121
02:51:38,798 --> 02:51:41,798
and then you can get your payment sent from there

3122
02:51:41,798 --> 02:51:44,798
and then the trampoline node will figure out

3123
02:51:44,798 --> 02:51:47,798
how to send it to anyone else on the network.

3124
02:51:47,798 --> 02:51:50,798
I think all of these things

3125
02:51:50,798 --> 02:51:53,798
these are routing level stuff

3126
02:51:53,798 --> 02:51:56,798
so I think it's kind of interesting to talk about

3127
02:51:56,798 --> 02:51:59,798
what sort of data are you leaking when you're routing a payment.

3128
02:51:59,798 --> 02:52:02,798
We talked a little bit earlier about when you have an invoice

3129
02:52:03,798 --> 02:52:06,798
Invoice is basically the part of

3130
02:52:06,798 --> 02:52:09,798
figuring out who to pay

3131
02:52:09,798 --> 02:52:12,798
and how much to pay them and for what.

3132
02:52:12,798 --> 02:52:15,798
So it's like invoice level.

3133
02:52:15,798 --> 02:52:18,798
You use the invoice to figure out the route you're going to take for your payment

3134
02:52:18,798 --> 02:52:21,798
and then once you've figured out

3135
02:52:21,798 --> 02:52:24,798
this whole routefinding thing, maybe you're using trampoline

3136
02:52:24,798 --> 02:52:27,798
and someone else is finding out the route for you

3137
02:52:27,798 --> 02:52:30,798
what data is in this routefinding thing

3138
02:52:30,798 --> 02:52:33,798
it's going to be the amount of money that you're sending

3139
02:52:36,798 --> 02:52:39,798
it's going to be the amount of money that you're sending

3140
02:52:39,798 --> 02:52:42,798
so someone will know how much money you're sending

3141
02:52:42,798 --> 02:52:45,798
and depending on where they are in your route

3142
02:52:45,798 --> 02:52:48,798
maybe who you're sending it to

3143
02:52:54,798 --> 02:52:57,798
The level of information that you've got is different

3144
02:52:57,798 --> 02:53:00,798
depending on where in the payment process

3145
02:53:00,798 --> 02:53:03,798
that you find yourselves

3146
02:53:03,798 --> 02:53:06,798
One thing that's kind of interesting is talking to Matt Corallo

3147
02:53:06,798 --> 02:53:09,798
who works on Spiral, they do LDK stuff

3148
02:53:09,798 --> 02:53:12,798
One of the current issues with these payments

3149
02:53:12,798 --> 02:53:15,798
so when you send a payment across the network

3150
02:53:15,798 --> 02:53:18,798
usually they're wrapped up in things called onions

3151
02:53:18,798 --> 02:53:21,798
so you do onion routing which means that when you get a payment

3152
02:53:21,798 --> 02:53:24,798
you can see who sent it to you and you can see where it's headed

3153
02:53:24,798 --> 02:53:27,798
You as the person in the middle of this route

3154
02:53:27,798 --> 02:53:30,798
have no idea where it came from before it got to you

3155
02:53:30,798 --> 02:53:33,798
and where it's going after the next hop

3156
02:53:33,798 --> 02:53:36,798
We already have that level of privacy in Lightning that already exists

3157
02:53:36,798 --> 02:53:39,798
We're talking about

3158
02:53:39,798 --> 02:53:42,798
different levels of ways that you can make those routes

3159
02:53:42,798 --> 02:53:45,798
those onions and how do you make sure

3160
02:53:45,798 --> 02:53:48,798
that maybe you don't know exactly who the last person is

3161
02:53:48,798 --> 02:53:51,798
when you're constructing the onion

3162
02:53:51,798 --> 02:53:54,798
That's what trampoline does in some sense

3163
02:53:54,798 --> 02:53:57,798
One of the things with this routing data

3164
02:53:57,798 --> 02:54:00,798
is you want to be able to hide

3165
02:54:00,798 --> 02:54:03,798
how far you've gone from the start point

3166
02:54:03,798 --> 02:54:06,798
and how far you are from the finish

3167
02:54:06,798 --> 02:54:09,798
There's kind of a tension here between that

3168
02:54:09,798 --> 02:54:12,798
and this other parameter that we send in these packets

3169
02:54:12,798 --> 02:54:15,798
called the CTLV lock time

3170
02:54:15,798 --> 02:54:18,798
I think there are researchers

3171
02:54:19,798 --> 02:54:22,798
that have done analysis on the CTLV lock

3172
02:54:22,798 --> 02:54:25,798
It tells you how far you are in that path

3173
02:54:25,798 --> 02:54:28,798
If someone knows how many hops away you are

3174
02:54:28,798 --> 02:54:31,798
they can look back and figure out where you came from

3175
02:54:31,798 --> 02:54:34,798
and where it's going

3176
02:54:34,798 --> 02:54:37,798
Those kinds of questions

3177
02:54:37,798 --> 02:54:40,798
How do you de-anonymize

3178
02:54:40,798 --> 02:54:43,798
or figure out where a payment is going

3179
02:54:43,798 --> 02:54:46,798
given that you didn't see the invoice

3180
02:54:46,798 --> 02:54:49,798
We're trying to fix this with the Bolt 12 stuff

3181
02:54:49,798 --> 02:54:52,798
Bolt 12s use blinded paths

3182
02:54:52,798 --> 02:54:55,798
so you'll be able to, as a receiver

3183
02:54:55,798 --> 02:54:58,798
not tell people that you're the node being paid

3184
02:54:58,798 --> 02:55:01,798
You can instead provide a little bit of a route

3185
02:55:01,798 --> 02:55:04,798
of how to get to you

3186
02:55:04,798 --> 02:55:07,798
You send that with the request to be paid

3187
02:55:07,798 --> 02:55:10,798
The person who gets the request to be paid

3188
02:55:10,798 --> 02:55:13,798
will pay to the beginning of this path that you've constructed

3189
02:55:13,798 --> 02:55:16,798
That's the payment level stuff

3190
02:55:20,169 --> 02:55:47,169
Along the same lines, with analyzing the time lock you can even analyze the timing
too If a payment normally takes a certain amount per hop and you can even analyze
how long each hop has a certain network latency You can even try to figure out where
in the network a node may have been sending from There's been some research on that
level

3191
02:55:47,169 --> 02:56:17,169
There's been a lot of research or at least one paper into how we can actually
construct routes at the sender level to take paths that are not the traditional path
That way, if I'm always going through a couple of different nodes maybe they can
analyze that Oh well, it's probably coming from this location over here They may not
know exactly who's making the payment but they can make some educated guesses

3192
02:56:18,169 --> 02:56:24,169
Maybe that goes along the lines of maybe we shouldn't just hand it off to
trampolines to construct the routes ourselves

3193
02:56:24,169 --> 02:56:31,169
But if individuals are able to do these non-traditional routing algorithms, pathing
algorithms

3194
02:56:31,169 --> 02:56:37,169
Then we can actually try to attempt to get better privacy and better heuristics
there

3195
02:56:37,169 --> 02:56:44,169
I think CoreLightning by default will choose a more random path than just the
cheapest or most direct route

3196
02:56:44,169 --> 02:56:48,169
I think we use a fee budget, so we give you a budget to try and get to there

3197
02:56:48,169 --> 02:56:55,169
That way, trying to use not necessarily the most obvious way to make your payment
happen

3198
02:56:55,169 --> 02:57:07,169
That's just a massive issue that I think is really, are we going to be able to solve
that one?

3199
02:57:07,169 --> 02:57:11,169
Because what that really boils down to is timing analysis

3200
02:57:12,169 --> 02:57:19,169
If you zoom out and say the NSA gets really interested in what's happening on the
Lightning Network

3201
02:57:19,169 --> 02:57:22,169
Well, they can just watch everybody's nodes

3202
02:57:22,169 --> 02:57:29,169
And oh, that string of packets, that's exactly the size that proposing an HTLC
message is

3203
02:57:29,169 --> 02:57:32,169
Oh, and then something zipped back the other way?

3204
02:57:32,169 --> 02:57:35,169
Oh, okay, did that confirm or refund?

3205
02:57:36,169 --> 02:57:41,169
And just watch the packets and go, well, the whole protocol is specced out

3206
02:57:41,169 --> 02:57:46,169
You know exactly what the size of adding an HTLC is, removing it

3207
02:57:46,169 --> 02:57:49,169
Like a pre-image flowing back through the route

3208
02:57:49,169 --> 02:57:54,169
And okay, oopsies

3209
02:57:54,169 --> 02:57:57,169
Yeah, it's a major problem

3210
02:57:57,169 --> 02:58:01,169
A nation-state actor with that God-level view of the network

3211
02:58:01,169 --> 02:58:04,169
And ascertain some serious information

3212
02:58:04,169 --> 02:58:11,169
And there's been some ideas as to how to throw some extra noise into the network

3213
02:58:11,169 --> 02:58:14,169
To obfuscate what's actually happening

3214
02:58:14,169 --> 02:58:18,169
But that all comes with additional costs, right?

3215
02:58:18,169 --> 02:58:22,169
It's already tricky to run a node, it's processing a lot of packets

3216
02:58:22,169 --> 02:58:25,169
If you're moving a lot of stats around too, especially

3217
02:58:25,169 --> 02:58:31,169
And we need to acknowledge that with these ideas that are being proposed

3218
02:58:31,169 --> 02:58:36,169
It's going to increase the cost of node operation

3219
02:58:36,169 --> 02:58:41,169
Well, I guess, not to put you on the spot, Anthony

3220
02:58:41,169 --> 02:58:45,169
But I hear you have a little project going on

3221
02:58:45,169 --> 02:58:52,169
In regards to testing the privacy in effect of unannounced channels

3222
02:58:52,169 --> 02:58:56,169
Yeah, so about a year ago I wrote a paper on Lightning Privacy

3223
02:58:56,169 --> 02:59:00,169
And as I was really just documenting what I knew about it

3224
02:59:00,169 --> 02:59:03,169
I learned quite a lot doing that

3225
02:59:03,169 --> 02:59:07,169
And one of the things is we call private channels private

3226
02:59:07,169 --> 02:59:10,169
But they're really not

3227
02:59:10,169 --> 02:59:13,169
They're more along the lines of unannounced channels

3228
02:59:13,169 --> 02:59:16,169
So whenever I'm a node and let's say I have all private channels

3229
02:59:16,169 --> 02:59:19,169
If I want to receive down them, I create an invoice

3230
02:59:19,169 --> 02:59:22,169
And I give that invoice to other people to pay me

3231
02:59:22,169 --> 02:59:25,169
I basically have to dox my unannounced channel

3232
02:59:25,169 --> 02:59:28,169
So with that unannounced channel

3233
02:59:28,169 --> 02:59:31,169
They can see the UTXO, the unspent transaction output

3234
02:59:31,169 --> 02:59:34,169
That went into that channel

3235
02:59:34,169 --> 02:59:37,169
And then from there you kind of have the leakage

3236
02:59:37,169 --> 02:59:40,169
Of all the things that can be leaked on Bitcoin privacy

3237
02:59:40,169 --> 02:59:43,169
Like on-chain

3238
02:59:43,169 --> 02:59:46,169
Some of that flows into the Lightning Network

3239
02:59:46,169 --> 02:59:49,169
And that's an inherent problem for privacy as well

3240
02:59:49,169 --> 02:59:52,169
So one of the things you can actually do is

3241
02:59:52,169 --> 02:59:55,169
Probing on the Lightning Network

3242
02:59:55,169 --> 02:59:58,169
Because actually I consider it kind of a big problem in the space

3243
02:59:58,169 --> 03:00:01,169
I don't like that probing happens

3244
03:00:01,169 --> 03:00:04,169
I don't like that

3245
03:00:04,169 --> 03:00:07,169
It kind of allows that

3246
03:00:07,169 --> 03:00:10,169
But probing is basically sending a whole bunch of fake information

3247
03:00:10,169 --> 03:00:13,169
And finding information that is not traditionally public

3248
03:00:13,169 --> 03:00:16,169
In my case, what I'm trying to do right now

3249
03:00:16,169 --> 03:00:19,169
And I did a hackathon with Paul Miller in Austin a few weeks ago

3250
03:00:19,169 --> 03:00:22,169
Where we're kind of proving this out with the LDK Toolkit

3251
03:00:22,169 --> 03:00:25,169
You can actually probe four private channels

3252
03:00:25,169 --> 03:00:28,169
To see if they exist between two nodes

3253
03:00:28,169 --> 03:00:31,169
If me and Evan here have a private channel

3254
03:00:31,169 --> 03:00:34,169
You weren't supposed to tell them about that

3255
03:00:34,169 --> 03:00:37,169
If we have an unannounced channel together

3256
03:00:37,169 --> 03:00:40,169
And say it's for like 10 Bitcoin

3257
03:00:41,169 --> 03:00:44,169
Let's say it's for a huge amount

3258
03:00:44,169 --> 03:00:47,169
It's all on his side

3259
03:00:47,169 --> 03:00:50,169
You can actually

3260
03:00:50,169 --> 03:00:53,169
If I'm connected to the general Lightning Graph

3261
03:00:53,169 --> 03:00:56,169
You can actually try to probe through my channel

3262
03:00:56,169 --> 03:00:59,169
And try to attempt to guess the UTXO that is between us

3263
03:00:59,169 --> 03:01:02,169
And if you're able to guess the UTXO between us

3264
03:01:02,169 --> 03:01:05,169
There's a different error message that gets sent backwards

3265
03:01:05,169 --> 03:01:08,169
So you kind of get into a situation

3266
03:01:08,169 --> 03:01:11,169
Where once it proves it out

3267
03:01:11,169 --> 03:01:14,169
Once you actually probe all the way through

3268
03:01:14,169 --> 03:01:17,169
You create this fake payment in a way

3269
03:01:17,169 --> 03:01:20,169
Where Evan basically has to come back

3270
03:01:20,169 --> 03:01:23,169
His node will come back and say give it an error message

3271
03:01:23,169 --> 03:01:26,169
Like I can't redeem this fake payment that you made

3272
03:01:26,169 --> 03:01:29,169
But the fact that he is the one that gave that error message

3273
03:01:29,169 --> 03:01:32,169
Proves out that there is this unannounced channel between us

3274
03:01:32,169 --> 03:01:35,169
And from there you know the amount

3275
03:01:35,169 --> 03:01:38,169
Of UTXO, the addresses it's associated with

3276
03:01:38,169 --> 03:01:41,169
And all of that is possible today

3277
03:01:41,169 --> 03:01:44,169
And me and Paul finally took the time to actually

3278
03:01:44,169 --> 03:01:47,169
Create a proof of concept of doing that

3279
03:01:47,169 --> 03:01:50,169
And I'm hoping to run that over the next couple of months

3280
03:01:50,169 --> 03:01:53,169
And release my findings there

3281
03:01:53,169 --> 03:01:56,169
Because we love Lightning

3282
03:01:56,169 --> 03:01:59,169
I think a lot of us here

3283
03:01:59,169 --> 03:02:02,169
Really love some of this stuff

3284
03:02:02,169 --> 03:02:05,169
And if it's possible I want it to be revealed

3285
03:02:05,169 --> 03:02:08,169
If I can do this

3286
03:02:08,169 --> 03:02:11,169
Multi-billion dollar firms can do this

3287
03:02:11,169 --> 03:02:14,169
Triple letter agencies can do this

3288
03:02:14,169 --> 03:02:17,169
So I would rather us do this and find this information out

3289
03:02:17,169 --> 03:02:20,169
And try to make the Lightning Network better

3290
03:02:20,169 --> 03:02:23,169
There's no security in this security theater

3291
03:02:24,169 --> 03:02:27,169
But yeah, I mean

3292
03:02:27,169 --> 03:02:30,169
Yeah, if it breaks, let's break it now

3293
03:02:30,169 --> 03:02:33,169
While things can still be fixed

3294
03:02:33,169 --> 03:02:36,169
Instead of five years from now

3295
03:02:36,169 --> 03:02:39,169
When who knows how many countries

3296
03:02:39,169 --> 03:02:42,169
Are trying to plug into Lightning and use that as payment rails

3297
03:02:42,169 --> 03:02:45,169
But kind of a related

3298
03:02:45,169 --> 03:02:48,169
But little hard shift here

3299
03:02:48,169 --> 03:02:51,169
Who wants to talk about the gossip

3300
03:02:52,169 --> 03:02:55,169
Protocol and routing tables

3301
03:02:55,169 --> 03:02:58,169
And figure out why we still

3302
03:02:58,169 --> 03:03:01,169
Explicitly dox the UTXO

3303
03:03:01,169 --> 03:03:04,169
Associated with a public channel

3304
03:03:04,169 --> 03:03:07,169
So that the whole world can just follow where those coins go

3305
03:03:07,169 --> 03:03:10,169
After channels close

3306
03:03:10,169 --> 03:03:13,169
So I would call this a different level of privacy

3307
03:03:13,169 --> 03:03:16,169
So what we've been talking about beforehand

3308
03:03:16,169 --> 03:03:19,169
Is payment level privacy

3309
03:03:19,169 --> 03:03:22,169
I don't want to make a transaction on Lightning

3310
03:03:22,169 --> 03:03:25,169
And so we've been talking about some of the pros and cons

3311
03:03:25,169 --> 03:03:28,169
And sending invoices to people

3312
03:03:28,169 --> 03:03:31,169
And then sending payments, etc

3313
03:03:31,169 --> 03:03:34,169
So this level of privacy that we're talking about

3314
03:03:34,169 --> 03:03:37,169
Is the gossip network

3315
03:03:37,169 --> 03:03:40,169
And UTXO level is more like

3316
03:03:40,169 --> 03:03:43,169
So the information that you are leaking or finding out

3317
03:03:43,169 --> 03:03:46,169
The privacy here is which UTXOs

3318
03:03:46,169 --> 03:03:49,169
Belong to which nodes

3319
03:03:49,169 --> 03:03:52,169
So it's tying on-chain outputs and balances

3320
03:03:52,169 --> 03:03:55,169
To the account balance

3321
03:03:55,169 --> 03:03:58,169
Of any one Lightning node

3322
03:03:58,169 --> 03:04:01,169
How easy is that to figure out

3323
03:04:01,169 --> 03:04:04,169
What kind of implications does that have

3324
03:04:04,169 --> 03:04:07,169
So I think it's kind of interesting

3325
03:04:07,169 --> 03:04:10,169
That this information is completely separated

3326
03:04:10,169 --> 03:04:13,169
To a large extent from your transaction data

3327
03:04:13,169 --> 03:04:16,169
On-chain

3328
03:04:16,169 --> 03:04:19,169
When you make payments using on-chain Bitcoin

3329
03:04:19,169 --> 03:04:22,169
That becomes public record for everyone

3330
03:04:22,169 --> 03:04:25,169
Whereas when you're transacting on Lightning

3331
03:04:25,169 --> 03:04:28,169
It's ephemeral, people kind of have to be watching

3332
03:04:28,169 --> 03:04:31,169
For your stuff to go through

3333
03:04:31,169 --> 03:04:34,169
Or constantly monitoring balances, etc

3334
03:04:34,169 --> 03:04:37,169
Anyway, it's just like gossip stuff

3335
03:04:37,169 --> 03:04:40,169
The way that Lightning works

3336
03:04:41,169 --> 03:04:44,169
When you make a Lightning channel

3337
03:04:44,169 --> 03:04:47,169
You're creating an on-chain transaction

3338
03:04:47,169 --> 03:04:50,169
That creates a UTXO output

3339
03:04:50,169 --> 03:04:53,169
That UTXO output contains the balance of the channel

3340
03:04:53,169 --> 03:04:56,169
So there's two parties in a Lightning channel

3341
03:04:56,169 --> 03:04:59,169
Who owns what amount of that total balance

3342
03:04:59,169 --> 03:05:02,169
Is kind of an open question

3343
03:05:02,169 --> 03:05:05,169
That's what you might use the probing stuff

3344
03:05:05,169 --> 03:05:08,169
That we were talking about earlier to figure out

3345
03:05:08,169 --> 03:05:11,169
With an on-chain transaction

3346
03:05:11,169 --> 03:05:14,169
Typically, if you're using the version 1 of Channel Opens

3347
03:05:14,169 --> 03:05:17,169
Usually that balance is all on one side

3348
03:05:17,169 --> 03:05:20,169
To start with, generically speaking

3349
03:05:20,169 --> 03:05:23,169
So you have these UTXOs

3350
03:05:23,169 --> 03:05:26,169
It would be all great and good if you didn't have to tell

3351
03:05:26,169 --> 03:05:29,169
You could open a channel and you don't tell anyone

3352
03:05:29,169 --> 03:05:32,169
That you made a UTXO on the main chain

3353
03:05:32,169 --> 03:05:35,169
That's what an unannounced channel is

3354
03:05:35,169 --> 03:05:38,169
If you don't tell them about it

3355
03:05:38,169 --> 03:05:41,169
So if you were trying to start up a Lightning node

3356
03:05:41,169 --> 03:05:44,169
And earn money routing payment traffic from your node to someone else's

3357
03:05:44,169 --> 03:05:47,169
You would need to publicly announce them

3358
03:05:47,169 --> 03:05:50,169
The way that you publicly announce them is via something called the gossip network

3359
03:05:50,169 --> 03:05:53,169
Or is it gossip network?

3360
03:05:53,169 --> 03:05:56,169
Well, we don't want to conflate people

3361
03:05:56,169 --> 03:05:59,169
With Lightning network

3362
03:05:59,169 --> 03:06:02,169
But yeah, it's definitely a distinct part of the system

3363
03:06:03,169 --> 03:06:06,169
Where basically you make a message and you say

3364
03:06:06,169 --> 03:06:09,169
Hey, this is me, this is my channel buddy

3365
03:06:09,169 --> 03:06:12,169
Here's our pubkeys that we put into this on-chain transaction

3366
03:06:12,169 --> 03:06:15,169
Somewhere

3367
03:06:15,169 --> 03:06:18,169
Here's where you can find it on-chain

3368
03:06:18,169 --> 03:06:21,169
Go verify it before you use this as a route

3369
03:06:21,169 --> 03:06:24,169
So this is what we're talking about, routing table

3370
03:06:24,169 --> 03:06:27,169
The routing table is basically a list of all of these on-chain transactions

3371
03:06:27,169 --> 03:06:30,169
And the total balance of the channel

3372
03:06:31,169 --> 03:06:34,169
And who is party to that

3373
03:06:34,169 --> 03:06:37,169
So if you have all these balances and all these node connections

3374
03:06:37,169 --> 03:06:40,169
You can build a connected graph with balances

3375
03:06:40,169 --> 03:06:43,169
And then if you want to send a payment

3376
03:06:43,169 --> 03:06:46,169
You can look at this graph of data and figure out how to get

3377
03:06:46,169 --> 03:06:49,169
From Tony's node to that guy's node

3378
03:06:49,169 --> 03:06:52,169
And go through the graph that way

3379
03:06:52,169 --> 03:06:55,169
But the downside to that

3380
03:06:55,169 --> 03:06:58,169
Is that you're telling people where your on-chain transactions are

3381
03:06:58,169 --> 03:07:01,169
And you're associating them with your node ID

3382
03:07:01,169 --> 03:07:04,169
And this is public data

3383
03:07:04,169 --> 03:07:07,169
That everyone running a Lightning Node is hopefully getting

3384
03:07:07,169 --> 03:07:10,169
So if you're an organization

3385
03:07:10,169 --> 03:07:13,169
Like Chainalysis or some other such organization

3386
03:07:13,169 --> 03:07:16,169
That has a large body of output data

3387
03:07:16,169 --> 03:07:19,169
Like on-chain data

3388
03:07:19,169 --> 03:07:22,169
And they've been working really hard to tie identities

3389
03:07:22,169 --> 03:07:25,169
To those on-chain payments

3390
03:07:25,169 --> 03:07:28,169
Now if they already know what some of your transaction history had been

3391
03:07:28,169 --> 03:07:31,169
And then you put it on a Lightning Node

3392
03:07:31,169 --> 03:07:34,169
And then you use that to open a channel

3393
03:07:34,169 --> 03:07:37,169
All of a sudden someone who's managed to figure out your identity

3394
03:07:37,169 --> 03:07:40,169
In another arena

3395
03:07:40,169 --> 03:07:43,169
Now knows which Lightning Node is yours

3396
03:07:43,169 --> 03:07:46,169
And what your balances are in the network

3397
03:07:46,169 --> 03:07:49,169
So that's a little further out

3398
03:07:49,169 --> 03:07:52,169
So Gossip is really bad for on-chain privacy

3399
03:07:53,169 --> 03:07:56,169
Yeah and Rusty

3400
03:07:56,169 --> 03:07:59,169
Your coworker actually has a new proposal

3401
03:07:59,169 --> 03:08:02,169
To kind of fix that

3402
03:08:02,169 --> 03:08:05,169
Where instead of explicitly doxing the channel UTXO

3403
03:08:05,169 --> 03:08:08,169
And associating it to a specific channel

3404
03:08:08,169 --> 03:08:11,169
A node can just take one UTXO

3405
03:08:11,169 --> 03:08:14,169
And prove like I'm a node

3406
03:08:14,169 --> 03:08:17,169
I have real Bitcoin

3407
03:08:17,169 --> 03:08:20,169
And then not have to specifically connect it to their channels

3408
03:08:21,169 --> 03:08:24,169
So that opening and closing

3409
03:08:24,169 --> 03:08:27,169
That's not leaked

3410
03:08:27,169 --> 03:08:30,169
They just have their one little bit of Bitcoin to prove

3411
03:08:30,169 --> 03:08:33,169
Like I actually have money to route

3412
03:08:33,169 --> 03:08:36,169
But I'm not going to tell you the UTXOs to my actual channels

3413
03:08:36,169 --> 03:08:39,169
Yeah and so this is the kind of thing

3414
03:08:39,169 --> 03:08:42,169
I think Rusty's proposal is the sort of thing

3415
03:08:42,169 --> 03:08:45,169
That we would also need to adopt

3416
03:08:45,169 --> 03:08:48,169
Before you get any privacy improvements for Taproot

3417
03:08:49,169 --> 03:08:52,169
It basically makes it such that a Lightning Channel

3418
03:08:52,169 --> 03:08:55,169
Goes from having a very specific on-chain footprint

3419
03:08:55,169 --> 03:08:58,169
To being a single signature

3420
03:08:58,169 --> 03:09:01,169
And looking like any other output on-chain

3421
03:09:01,169 --> 03:09:04,169
But without changing the way that our Gossip

3422
03:09:04,169 --> 03:09:07,169
And our route table building stuff works

3423
03:09:07,169 --> 03:09:10,169
It's going to be very difficult to

3424
03:09:10,169 --> 03:09:13,169
Stop publishing that information

3425
03:09:13,169 --> 03:09:16,169
So Rusty's proposal

3426
03:09:16,169 --> 03:09:19,169
Because you use Gossip

3427
03:09:19,169 --> 03:09:22,169
The reason you do the Gossip stuff

3428
03:09:22,169 --> 03:09:25,169
Is so that you can build the route to send the payments

3429
03:09:25,169 --> 03:09:28,169
If we move away from publishing exactly how much money exists

3430
03:09:28,169 --> 03:09:31,169
Between two parties

3431
03:09:31,169 --> 03:09:34,169
How are you supposed to figure out where you can send payments

3432
03:09:34,169 --> 03:09:37,169
Or where there's capacity to send your payments

3433
03:09:37,169 --> 03:09:40,169
Route finding becomes very difficult

3434
03:09:40,169 --> 03:09:43,169
Well I think that Rusty's proposal has a pretty elegant solution

3435
03:09:43,169 --> 03:09:46,169
You have an amount for the UTXO you're tying to your node

3436
03:09:46,169 --> 03:09:49,169
And then some multiple of that

3437
03:09:49,169 --> 03:09:52,169
Is how much you're allowed to advertise in terms of channels

3438
03:09:52,169 --> 03:09:55,169
It's like you have one Bitcoin locked up

3439
03:09:55,169 --> 03:09:58,169
Maybe you can advertise 10 Bitcoin

3440
03:09:58,169 --> 03:10:01,169
As channels

3441
03:10:01,169 --> 03:10:04,169
That sounds like Fractional Reserve Lightning to me

3442
03:10:04,169 --> 03:10:07,169
I don't want that

3443
03:10:07,169 --> 03:10:10,169
Seriously, I think that is an elegant solution

3444
03:10:10,169 --> 03:10:13,169
Because the reality of

3445
03:10:13,169 --> 03:10:16,169
Why you dox these UTXOs in the first place

3446
03:10:16,169 --> 03:10:19,169
Is literally just to prove

3447
03:10:19,169 --> 03:10:22,169
You actually have control of Bitcoin

3448
03:10:22,169 --> 03:10:25,169
So that my wallet isn't spinning the wheel all day

3449
03:10:25,169 --> 03:10:28,169
Trying to route payments through people who don't actually have channels

3450
03:10:28,169 --> 03:10:31,169
That there's no way to route a payment through

3451
03:10:31,169 --> 03:10:34,169
And I think that this would work

3452
03:10:34,169 --> 03:10:37,169
And people concerned about denial of service

3453
03:10:37,169 --> 03:10:40,169
Or the multiple being way overblown

3454
03:10:40,169 --> 03:10:43,169
Well, just set it up as a curve

3455
03:10:43,169 --> 03:10:46,169
Maybe you toss 0.1 Bitcoin on there

3456
03:10:46,169 --> 03:10:49,169
Okay, maybe you can only advertise 0.2

3457
03:10:49,169 --> 03:10:52,169
But if you get up to throwing a whole Bitcoin on there

3458
03:10:52,169 --> 03:10:55,169
Maybe 5

3459
03:10:55,169 --> 03:10:58,169
Just adjust that curve

3460
03:10:58,169 --> 03:11:01,169
To prevent being able to just pretend you have

3461
03:11:01,169 --> 03:11:04,169
1000 Bitcoin when you just have 1

3462
03:11:04,169 --> 03:11:07,169
So what tier you are in the federal banking system

3463
03:11:07,169 --> 03:11:10,169
Depends on how much capital you have on chain

3464
03:11:10,169 --> 03:11:13,169
It sounds like it will trend towards centralization

3465
03:11:13,169 --> 03:11:16,169
Almost at that point where we have major hubs

3466
03:11:16,169 --> 03:11:19,169
And we're not really locking up at the other layers

3467
03:11:19,169 --> 03:11:22,169
So I don't know

3468
03:11:22,169 --> 03:11:25,169
It is a potential solution

3469
03:11:25,169 --> 03:11:28,169
So we're talking about

3470
03:11:28,169 --> 03:11:31,169
How to do this for public channels

3471
03:11:31,169 --> 03:11:34,169
I think there is one thing to maybe explain here

3472
03:11:34,169 --> 03:11:37,169
Is that there is some work right now

3473
03:11:37,169 --> 03:11:40,169
On actually untying the unannounced channels from the UTXO right now

3474
03:11:40,169 --> 03:11:43,169
So there's a short channel ID aliases

3475
03:11:43,169 --> 03:11:46,169
That is being worked on

3476
03:11:46,169 --> 03:11:49,169
By a few different teams I believe

3477
03:11:49,169 --> 03:11:52,169
Where you can actually

3478
03:11:52,169 --> 03:11:55,169
Between me and my channel partner

3479
03:11:55,169 --> 03:11:58,169
We come up with this scheme where we make a fake alias

3480
03:11:58,169 --> 03:12:01,169
That is not directly derived from the UTXO information

3481
03:12:01,169 --> 03:12:04,169
And then if we do that

3482
03:12:04,169 --> 03:12:07,169
We are the ones that are aware of this

3483
03:12:07,169 --> 03:12:10,169
So I share an invoice with my routing hints in there

3484
03:12:10,169 --> 03:12:13,169
It gets to Evan

3485
03:12:13,169 --> 03:12:16,169
And then from there Evan knows this fake channel ID

3486
03:12:16,169 --> 03:12:19,169
Between us

3487
03:12:19,169 --> 03:12:22,169
So he just goes ahead and sends it to me

3488
03:12:22,169 --> 03:12:25,169
And then from there it becomes exponentially harder

3489
03:12:25,169 --> 03:12:28,169
And even if you guessed the fact that me and Evan had a channel together

3490
03:12:28,169 --> 03:12:31,169
You wouldn't necessarily

3491
03:12:31,169 --> 03:12:34,169
Or you wouldn't even be able to get the UTXO amount

3492
03:12:34,169 --> 03:12:37,169
Or the other information associated with UTXO

3493
03:12:37,169 --> 03:12:40,169
So I think there's some great privacy improvements

3494
03:12:40,169 --> 03:12:43,169
For short channel alias IDs

3495
03:12:43,169 --> 03:12:46,169
That I'm excited about

3496
03:12:46,169 --> 03:12:49,169
But I mean

3497
03:12:49,169 --> 03:12:52,169
The public channel still needs to be addressed

3498
03:12:52,169 --> 03:12:55,169
One of the key points in that massive

3499
03:12:55,169 --> 03:12:58,169
Privacy article you wrote

3500
03:12:58,169 --> 03:13:01,169
Is if you have a private channel

3501
03:13:01,169 --> 03:13:04,169
You're receiving money through it

3502
03:13:04,169 --> 03:13:07,169
So whoever you open that channel with

3503
03:13:07,169 --> 03:13:10,169
Probably has a bunch of public channels

3504
03:13:10,169 --> 03:13:13,169
And eventually that's going to close

3505
03:13:13,169 --> 03:13:16,169
So if that private channel closes

3506
03:13:16,169 --> 03:13:19,169
And they still have a balance on their side

3507
03:13:19,169 --> 03:13:22,169
You can very easily deduce

3508
03:13:22,169 --> 03:13:25,169
That last transaction was a private channel closing

3509
03:13:25,169 --> 03:13:28,169
And now your UTXO with that balance can be followed on-chain

3510
03:13:28,169 --> 03:13:31,169
And it's okay, this is probably involved in Lightning

3511
03:13:31,169 --> 03:13:34,169
Yeah, exactly

3512
03:13:34,169 --> 03:13:37,169
And then on that node

3513
03:13:37,169 --> 03:13:40,169
It even works both ways

3514
03:13:40,169 --> 03:13:43,169
If that private channel gets closed

3515
03:13:43,169 --> 03:13:46,169
And there's some on one end and some on the other

3516
03:13:46,169 --> 03:13:49,169
You can tell between the two nodes

3517
03:13:49,169 --> 03:13:52,169
That there was probably a private channel between

3518
03:13:52,169 --> 03:13:55,169
So there's all kinds of on-chain analytics

3519
03:13:55,169 --> 03:13:58,169
And that's one of the things I want to eventually do

3520
03:13:58,169 --> 03:14:01,169
With this project I'm working on right now

3521
03:14:01,169 --> 03:14:04,169
Where I actually try to analyze all the possible UTXOs

3522
03:14:04,169 --> 03:14:07,169
That may be associated with a node

3523
03:14:07,169 --> 03:14:10,169
And start at that point instead of just brute forcing

3524
03:14:10,169 --> 03:14:13,169
Through every pay-to-public script hash on the network

3525
03:14:13,169 --> 03:14:16,169
So there's all kinds of weird on-chain analytics

3526
03:14:16,169 --> 03:14:19,169
That you can link back to a specific node

3527
03:14:19,169 --> 03:14:22,169
And that's one of them

3528
03:14:22,169 --> 03:14:25,169
Will Taproot help with that?

3529
03:14:25,169 --> 03:14:28,169
I think Taproot

3530
03:14:28,169 --> 03:14:31,169
I think there will still be that UTXO

3531
03:14:31,169 --> 03:14:34,169
That could end up in public channels

3532
03:14:34,169 --> 03:14:37,169
And if Taproot can't help with the public channel aspect of it

3533
03:14:37,169 --> 03:14:40,169
Then that's still a vulnerability

3534
03:14:40,169 --> 03:14:43,169
The other thing I'm slowly incrementing towards

3535
03:14:43,169 --> 03:14:46,169
Is the ability to

3536
03:14:46,169 --> 03:14:49,169
Right now I can look at all the pay-to-public script hash

3537
03:14:49,169 --> 03:14:52,169
Am I saying that correctly?

3538
03:14:52,169 --> 03:14:55,169
I always screw up the initials there

3539
03:14:55,169 --> 03:14:58,169
Pay-to-witness script hash

3540
03:14:58,169 --> 03:15:01,169
I can look at all the pay-to-witness script hashes

3541
03:15:01,169 --> 03:15:04,169
And try to use that as my baseline

3542
03:15:04,169 --> 03:15:07,169
For brute forcing all these unannounced channels

3543
03:15:07,169 --> 03:15:10,169
So if Taproot can't handle the normal spend

3544
03:15:10,169 --> 03:15:13,169
Even channel openings and cooperative channel closings

3545
03:15:13,169 --> 03:15:16,169
Then it makes it a lot harder

3546
03:15:16,169 --> 03:15:19,169
It's a bigger set that I have to brute force

3547
03:15:19,169 --> 03:15:22,169
Or anyone has to brute force

3548
03:15:22,169 --> 03:15:25,169
In general if the Bitcoin space starts adopting Taproot even more

3549
03:15:25,169 --> 03:15:28,169
Yeah, it's going to be a great step in the right direction

3550
03:15:28,169 --> 03:15:31,169
To get Taproot channels

3551
03:15:31,169 --> 03:15:34,169
I feel like we'll get them this year

3552
03:15:34,169 --> 03:15:37,169
Any wild card topics in the last two minutes?

3553
03:15:37,169 --> 03:15:40,169
I just want to make a public service announcement

3554
03:15:40,169 --> 03:15:43,169
That if you are paying an invoice with Lightning

3555
03:15:43,169 --> 03:15:46,169
And you're using a centralized service

3556
03:15:46,169 --> 03:15:49,169
That's not your node

3557
03:15:49,169 --> 03:15:52,169
You are leaking your payment data

3558
03:15:52,169 --> 03:15:55,169
So none of the stuff we talked about

3559
03:15:55,169 --> 03:15:58,169
About timing analysis

3560
03:15:58,169 --> 03:16:01,169
Or looking at payment traffic flow

3561
03:16:01,169 --> 03:16:04,169
Or probing is going to matter

3562
03:16:04,169 --> 03:16:07,169
Because you've just told someone

3563
03:16:07,169 --> 03:16:10,169
Who you're paying and how much and why

3564
03:16:10,169 --> 03:16:13,169
So this is why we're really excited

3565
03:16:13,169 --> 03:16:16,169
On Core Lightning about Bolt 12

3566
03:16:16,169 --> 03:16:19,169
Is that it makes it possible

3567
03:16:19,169 --> 03:16:22,169
To hide a lot of that information

3568
03:16:22,169 --> 03:16:25,169
And still have someone else make a payment on your behalf

3569
03:16:25,169 --> 03:16:28,169
That is actually a really good point

3570
03:16:29,169 --> 03:16:32,169
When you're using the Lightning network yourself

3571
03:16:32,169 --> 03:16:35,169
Like your own node, your own channels

3572
03:16:35,169 --> 03:16:38,169
There's that asymmetry where the sender is extremely private

3573
03:16:38,169 --> 03:16:41,169
Like that whole dynamic is very private

3574
03:16:41,169 --> 03:16:44,169
And receiving is not

3575
03:16:44,169 --> 03:16:47,169
And when you're dealing with a custodial wallet

3576
03:16:47,169 --> 03:16:50,169
It's almost the inverse

3577
03:16:50,169 --> 03:16:53,169
Like you're leaking everything about who you're paying to that custodian

3578
03:16:53,169 --> 03:16:56,169
But when you hand out an invoice

3579
03:16:57,169 --> 03:17:00,169
Yeah, and to even further expand on that

3580
03:17:00,169 --> 03:17:03,169
I could have my own node not using any custodial services

3581
03:17:03,169 --> 03:17:06,169
Or anything

3582
03:17:06,169 --> 03:17:09,169
And if I put in my invoice, like this is for drugs

3583
03:17:09,169 --> 03:17:12,169
And I give that to a Strike user

3584
03:17:12,169 --> 03:17:15,169
Strike can associate my public key with drugs

3585
03:17:15,169 --> 03:17:18,169
And that could put me on a blacklist to some extent

3586
03:17:18,169 --> 03:17:21,169
And I give an invoice, I don't know how they're going to pay me

3587
03:17:21,169 --> 03:17:24,169
So they may pay with their node or they pay with Strike

3588
03:17:25,169 --> 03:17:28,169
Now they link me to drugs and that's no bueno

3589
03:17:31,169 --> 03:17:34,169
Yeah, I guess last note

3590
03:17:34,169 --> 03:17:37,169
Don't use custodial wallets to take your personal identifying information

3591
03:17:37,169 --> 03:17:40,169
And buy drugs on the internet

3592
03:17:40,169 --> 03:17:43,169
We're out of time

3593
03:17:43,169 --> 03:17:46,169
Thanks everybody for doing this

3594
03:17:46,169 --> 03:17:49,169
This was a blast

3595
03:17:55,169 --> 03:17:58,169
Some friends in the audience

3596
03:17:58,169 --> 03:18:01,169
Okay, cool

3597
03:18:01,169 --> 03:18:04,169
So sidechains

3598
03:18:04,169 --> 03:18:07,169
Tremendous potential for this panel

3599
03:18:07,169 --> 03:18:10,169
It could be the best, most important talk in the whole conference

3600
03:18:10,169 --> 03:18:13,169
Will we live up to that potential? I don't know

3601
03:18:13,169 --> 03:18:16,169
But we're going to give it a try

3602
03:18:16,169 --> 03:18:19,169
First, before anything happens at all

3603
03:18:19,169 --> 03:18:22,169
I'm going to go on a little spiel here

3604
03:18:22,169 --> 03:18:25,169
The idea is no altcoin needed ever

3605
03:18:25,169 --> 03:18:28,169
It doesn't matter the excuse or the use case

3606
03:18:28,169 --> 03:18:31,169
Or how fringe or whatever it is

3607
03:18:31,169 --> 03:18:34,169
No altcoin, so you can have a different chain

3608
03:18:34,169 --> 03:18:37,169
You can go multi-chain

3609
03:18:37,169 --> 03:18:40,169
You can hard fork the rules, you can go proof of stake

3610
03:18:40,169 --> 03:18:43,169
You can do merge mining, whatever

3611
03:18:43,169 --> 03:18:46,169
But there's no altcoin, there's just 21 million coins

3612
03:18:46,169 --> 03:18:49,169
21 million BTC that travel among the chains

3613
03:18:49,169 --> 03:18:52,169
And all kinds of other concepts have hovered around it for years

3614
03:18:52,169 --> 03:18:55,169
But that is the sidechain concept

3615
03:18:55,169 --> 03:18:58,169
I do want to hasten to add one thing though

3616
03:18:58,169 --> 03:19:01,169
Which is that you can have other things on the blockchain

3617
03:19:01,169 --> 03:19:04,169
Like stocks, bonds, NFTs, whatever

3618
03:19:04,169 --> 03:19:07,169
And sometimes people use that for collateral

3619
03:19:07,169 --> 03:19:10,169
Or to do other complicated things

3620
03:19:10,169 --> 03:19:13,169
But the point is there's no altcoin as money

3621
03:19:13,169 --> 03:19:16,169
As a rival investment or rival network

3622
03:19:16,169 --> 03:19:19,169
It's all on Bitcoin

3623
03:19:19,169 --> 03:19:22,169
So that's the concept

3624
03:19:22,169 --> 03:19:25,169
You guys want to comment on what is a sidechain, sidechains, etc?

3625
03:19:25,169 --> 03:19:28,169
Oh yeah, let me first of all

3626
03:19:28,169 --> 03:19:31,169
Let me introduce myself first

3627
03:19:31,169 --> 03:19:34,169
My name is Borak, I'm a Bitcoiner, a Bitcoin dev

3628
03:19:34,169 --> 03:19:37,169
And a Bitmetrics founder, which is a covenant-based automated market maker on Liquid

3629
03:19:37,169 --> 03:19:40,169
So to give some color on sidechains and Liquid overall

3630
03:19:40,169 --> 03:19:43,169
A sidechain is by definition a separate blockchain

3631
03:19:43,169 --> 03:19:46,169
With no shitcoin

3632
03:19:46,169 --> 03:19:49,169
Bitcoin is the underlying asset

3633
03:19:49,169 --> 03:19:52,169
This is really cool because you can experiment with new things like confidential
transactions

3634
03:19:52,169 --> 03:19:55,169
And some advanced scripting primitives

3635
03:19:55,169 --> 03:19:58,169
Without introducing any market, any asset class

3636
03:19:58,169 --> 03:20:01,169
For obvious reasons

3637
03:20:01,169 --> 03:20:04,169
I think it's interesting

3638
03:20:04,169 --> 03:20:07,169
Because the original paper for a sidechain

3639
03:20:07,169 --> 03:20:10,169
Was issued at the end of 2014 by Blockstrip

3640
03:20:10,169 --> 03:20:12,169
That was the original idea

3641
03:20:12,277 --> 03:20:14,277
And the concept is like the native asset of the secondary chain is Bitcoin

3642
03:20:14,277 --> 03:20:19,277
That is because there are other assets issued

3643
03:20:19,277 --> 03:20:24,277
Now Lightning is doing it, Liquid has been doing it, Rootstock is doing it

3644
03:20:24,277 --> 03:20:29,277
So you can have other assets, but the importance is what is the native asset

3645
03:20:29,277 --> 03:20:34,277
The asset that is used to pay for the fees of the network

3646
03:20:34,277 --> 03:20:39,277
So that creates a level of alignment between the secondary network

3647
03:20:39,277 --> 03:20:44,277
And the Bitcoin network that is very unique

3648
03:20:44,277 --> 03:20:49,277
Because in decentralized economies, economic alignment is key

3649
03:20:49,277 --> 03:20:54,277
It's what makes you an adversary or makes you a collaborator

3650
03:20:54,277 --> 03:20:59,277
And I think that's why the concept of a sidechain is so important

3651
03:20:59,277 --> 03:21:04,277
Because it's about extending Bitcoin but avoiding creating adversary networks to
Bitcoin

3652
03:21:04,277 --> 03:21:09,277
Creating full alignment in the economic level with Bitcoin

3653
03:21:09,277 --> 03:21:14,277
Yes, everyone in the same group and everyone on the same team

3654
03:21:14,277 --> 03:21:19,277
But also freedom to develop your own software

3655
03:21:19,277 --> 03:21:24,277
It's kind of funny because the idea of sidechains and L2s and these terms we've come
up with

3656
03:21:24,277 --> 03:21:29,277
Become kind of blurred over the years, like things have expanded in terms of what
can and cannot happen

3657
03:21:29,277 --> 03:21:34,277
So to me it becomes more complicated to kind of put these things in boxes

3658
03:21:34,277 --> 03:21:39,277
But in my view, anything is a sidechain that contributes a significant value

3659
03:21:39,277 --> 03:21:44,277
To the underlying asset or the underlying chain, that's how I view it

3660
03:21:44,277 --> 03:21:49,277
Okay great, I have a proposal

3661
03:21:49,277 --> 03:21:54,277
This guy right here, Barack is the representative of sort of the liquid network

3662
03:21:54,277 --> 03:21:59,277
Roughly speaking, he's the liquid show I guess

3663
03:21:59,277 --> 03:22:04,277
And then we have RSK, and then we have a Thor chain over here

3664
03:22:04,277 --> 03:22:09,277
And then I have a proposal for Bitcoin, BIP300, to bring sidechains to Bitcoin on
layer 1

3665
03:22:09,277 --> 03:22:14,277
So you can look that up, BIP300, or you can go to drivechain.info

3666
03:22:14,277 --> 03:22:19,277
Separately, I wrote long ago, I wrote a sidechain, what was supposed to be a
sidechain for Bitcoin

3667
03:22:19,277 --> 03:22:24,277
But this was before sidechains even existed, called Truthcoin, which is a
peer-to-peer Oracle thing

3668
03:22:24,277 --> 03:22:29,277
So that's kind of what I'm particularly interested in

3669
03:22:29,277 --> 03:22:34,277
So now we're going to have to talk about the difference between all of these
different things

3670
03:22:34,277 --> 03:22:39,277
Because there's a big spectrum of what is called a sidechain now

3671
03:22:39,277 --> 03:22:44,277
This is what happened to the word blockchain, where a bunch of people started to
change it around

3672
03:22:44,277 --> 03:22:49,277
So I really feel like I have the oldest and most pure original definition

3673
03:22:49,277 --> 03:22:54,277
But then we have some other, so now liquid is basically a multi-sig output on
Bitcoin

3674
03:22:54,277 --> 03:22:59,277
With none of the sidechain logic necessarily

3675
03:22:59,277 --> 03:23:04,277
Well there's nothing, I guess maybe you would agree or disagree

3676
03:23:04,277 --> 03:23:09,277
I could generate an 11 or 15 multi-sig for liquid

3677
03:23:09,277 --> 03:23:14,277
From one that I could just make an 11 or 15 multi-sig tomorrow

3678
03:23:14,277 --> 03:23:19,277
I could generate 15 keys and make one, and then there's no real fundamental
difference

3679
03:23:19,277 --> 03:23:24,277
Or maybe you would disagree, I don't know

3680
03:23:24,277 --> 03:23:29,277
I think from an on-chain standpoint, yeah, Bitcoin funds, yeah, living in on-chain,
11 out of 15

3681
03:23:29,277 --> 03:23:34,277
Every year it tries to get 32 bytes from the external world

3682
03:23:34,277 --> 03:23:39,277
So like from the sidechain or altcoin world

3683
03:23:39,277 --> 03:23:44,277
And those 32 bytes are, speaking very generally, the TXID of a withdrawal
transaction

3684
03:23:44,277 --> 03:23:49,277
So getting the money over is very easy, getting the money moving up from layer 1 to
layer 2

3685
03:23:49,277 --> 03:23:54,277
Into the sidechain is very easy, but having it come back is only 4 times a year

3686
03:23:54,277 --> 03:23:59,277
One transaction, where many people can ride along in that transaction

3687
03:23:59,277 --> 03:24:04,277
But this is like the one kind of connecting tissue

3688
03:24:04,277 --> 03:24:09,277
That's not supposed to be any inconvenience to the user

3689
03:24:09,277 --> 03:24:14,277
Because they can swap the assets using some kind of HTLC or using an exchange or
something like that

3690
03:24:14,277 --> 03:24:19,277
So then we have, let's go to RSK, you guys have used a hybrid model in the past

3691
03:24:19,277 --> 03:24:24,277
You guys want to maybe use BIP300 someday

3692
03:24:24,277 --> 03:24:29,277
And then Sergio has this sort of alternate proposal that's very similar

3693
03:24:29,277 --> 03:24:34,277
Yes, I think the hybrid, because also in the implementation details of this multisig

3694
03:24:34,277 --> 03:24:39,277
That you are creating, there are a lot of important things

3695
03:24:39,277 --> 03:24:44,277
Because one thing is like if the pegnatories or the people signing the transactions

3696
03:24:44,277 --> 03:24:49,277
To get back from the sidechain into Bitcoin have access to the keys, to the private
keys

3697
03:24:49,277 --> 03:24:54,277
It's very different if they don't have access and they are only providing like the
machine

3698
03:24:54,277 --> 03:24:59,277
And the connectivity to the network, and I think both Liquid and Rootstock in that
sense

3699
03:24:59,277 --> 03:25:04,277
Choose to have HSMs, to have hardware security modules

3700
03:25:04,277 --> 03:25:09,277
So the pegnatories cannot have access to the security keys directly

3701
03:25:09,277 --> 03:25:14,277
They can only unplug the keys, but they cannot really steal the funds

3702
03:25:14,277 --> 03:25:19,277
So that limits their action a lot, so that's one thing that is important

3703
03:25:19,277 --> 03:25:24,277
But again, I think this is just a temporary system that we have

3704
03:25:24,277 --> 03:25:29,277
Because we don't have something like Drivechain in place

3705
03:25:29,277 --> 03:25:34,277
Where if you really want to have a trustless or trust-minimized interaction between
two blockchains

3706
03:25:34,277 --> 03:25:39,277
There has to be a way for one blockchain to understand the SPV, the simple payment
verifications

3707
03:25:39,277 --> 03:25:44,277
Of the other blockchain, and in the case for example of Rootstock

3708
03:25:44,277 --> 03:25:49,277
Rootstock can understand the SPVs from Bitcoin, so it can create the Bitcoins on
Rootstock

3709
03:25:49,277 --> 03:25:54,277
Based on the Bitcoin transaction coming into the pool of resources for the sidechain

3710
03:25:54,277 --> 03:25:59,277
But on the other way, Bitcoin cannot understand a transaction from Rootstock

3711
03:26:00,277 --> 03:26:05,277
And this is a little bit of what we are trying to sort out with Drivechain

3712
03:26:05,277 --> 03:26:10,277
It's how we make Bitcoin understand the sidechain to make actions based on something
that happened on another blockchain

3713
03:26:10,277 --> 03:26:15,277
Once you have that, you don't need any pegnatories or signatories

3714
03:26:15,277 --> 03:26:20,277
You can really do blockchain to blockchain

3715
03:26:20,277 --> 03:26:25,277
Much like Sergio back in 2012 proposed with the B2Pool protocol

3716
03:26:25,277 --> 03:26:30,277
And I think we are in a process

3717
03:26:30,277 --> 03:26:35,277
Bitcoin is hard to change, and it's good that it's like that

3718
03:26:35,277 --> 03:26:40,277
But I think eventually we will get there

3719
03:26:40,277 --> 03:26:45,277
So it will take between 4 and 5 million years

3720
03:26:45,277 --> 03:26:50,277
Maybe I should have made this clear, for anyone who doesn't know, Rootstock is like
Ethereum on Bitcoin

3721
03:26:50,277 --> 03:26:55,277
Anyone who wants to try out anything in the EVM, anything that Ethereum does

3722
03:26:55,277 --> 03:27:00,277
You just do it on Bitcoin, no need for ETH

3723
03:27:00,277 --> 03:27:05,277
And they are doing it already

3724
03:27:05,277 --> 03:27:10,277
They have been doing it for years

3725
03:27:10,277 --> 03:27:15,277
Everything is secured by the Bitcoin miners

3726
03:27:15,277 --> 03:27:20,277
Rootstock is secured by the Bitcoin miners

3727
03:27:20,277 --> 03:27:25,277
The network is run by the Bitcoin miners

3728
03:27:25,277 --> 03:27:30,277
So 50% of the Bitcoin miners of the world are protecting Rootstock now

3729
03:27:30,277 --> 03:27:35,277
So you have smart contracts with EVM, but secured by the Bitcoin miners

3730
03:27:35,277 --> 03:27:40,277
Paid with Bitcoin

3731
03:27:40,277 --> 03:27:45,277
We are not only using Bitcoin as an asset, as a time-stamping system

3732
03:27:45,277 --> 03:27:50,277
To settle the state of the network

3733
03:27:50,277 --> 03:27:55,277
But also contributing to the Bitcoin securities

3734
03:27:55,277 --> 03:28:00,277
It's like the most energetic sidechain you have

3735
03:28:00,277 --> 03:28:05,277
I was going to get to that later

3736
03:28:05,277 --> 03:28:10,277
By the way, compared to sidechains

3737
03:28:10,277 --> 03:28:15,277
From the sidechain definition, it's a blockchain with no shitcoin

3738
03:28:15,277 --> 03:28:20,277
And by that definition, we have only two sidechains to my knowledge, and that is
Liquid and RSK

3739
03:28:20,277 --> 03:28:25,277
I don't know any third option to my knowledge

3740
03:28:25,277 --> 03:28:30,277
So things like Thorchain, Stacks, DeFi, all this crap, these are not sidechains

3741
03:28:30,277 --> 03:28:35,277
By that definition, these are just centrally heavily pre-mined Ponzi schemes

3742
03:28:35,277 --> 03:28:40,277
Coined by the insiders

3743
03:28:40,277 --> 03:28:45,277
If that's okay

3744
03:28:45,277 --> 03:28:50,277
So I think fundamentally, you might call Thorchain shit, as you just did

3745
03:28:50,277 --> 03:28:55,277
But fundamentally, what Thorchain is doing is actually changing the fundamentals of
Bitcoin itself

3746
03:28:55,277 --> 03:29:00,277
You need a decentralized exchange to do that

3747
03:29:00,277 --> 03:29:05,277
And you cannot use a multisig to do it

3748
03:29:05,277 --> 03:29:10,277
Because you're going to require up to 15 or 20 people to be part of that process

3749
03:29:10,277 --> 03:29:15,277
You have to use threshold signatures, because you can have more or less money as you
want

3750
03:29:15,277 --> 03:29:20,277
In Thorchain's case, up to 250 theoretically

3751
03:29:20,277 --> 03:29:25,277
If you have a mechanism to move in and out of Bitcoin in a decentralized way

3752
03:29:25,277 --> 03:29:30,277
Without using KYC or anybody giving you permission to do so, or being censored

3753
03:29:30,277 --> 03:29:35,277
To not just Bitcoin, to other really important networks, like Monero for example

3754
03:29:35,277 --> 03:29:40,277
That is a game-changing concept

3755
03:29:40,277 --> 03:29:45,277
So to call it a shitcoin, a bit weak

3756
03:29:45,277 --> 03:29:50,277
I don't think we really define it

3757
03:29:50,277 --> 03:29:55,277
Thorchain, as I understand it, is sort of a helpful way of swapping different assets

3758
03:29:55,277 --> 03:30:00,277
Thorchain is building a DeFi network that is agnostic to chain

3759
03:30:00,277 --> 03:30:05,277
And it treats every chain available to the really important DeFi protocols

3760
03:30:05,277 --> 03:30:10,277
With the AMMs, lending, interest accounts, all sorts of things we have planned as a
project

3761
03:30:10,277 --> 03:30:15,277
Because every system today appeals to a particular ecosystem

3762
03:30:15,277 --> 03:30:20,277
Which kind of sucks fundamentally

3763
03:30:20,277 --> 03:30:25,277
The idea that the Ethereum network produces DeFi protocols and treats Bitcoin as a
second-class citizen

3764
03:30:25,277 --> 03:30:30,277
Because you have to take on additional risk by using wrapped assets

3765
03:30:30,277 --> 03:30:35,277
That's fucking stupid. We should be able to have DeFi available to everybody in the
industry

3766
03:30:35,277 --> 03:30:40,277
I don't care if it's Doge, I don't care what it is

3767
03:30:40,277 --> 03:30:45,277
Giving people the freedom of choice to choose what they want to earn yield on, or
get in and out of

3768
03:30:45,277 --> 03:30:50,277
That's what freedom is all about, that's what Bitcoin is fighting for, freedom

3769
03:30:50,277 --> 03:30:55,277
As a sidechain proponent, I agree with you

3770
03:30:55,277 --> 03:31:00,277
Choice is not only the best way of doing things, it's also a moral issue

3771
03:31:00,277 --> 03:31:05,277
If someone is allowed to sell their Bitcoin for stuff, or sell it for US dollars

3772
03:31:05,277 --> 03:31:10,277
Or swap it, they should be able to spend it to a weird script or whatever

3773
03:31:10,277 --> 03:31:15,277
I have some Thorchain questions

3774
03:31:15,277 --> 03:31:20,277
Maybe you can clarify on that a bit, Thorchain

3775
03:31:20,277 --> 03:31:25,277
The idea of Thorchain is to have a separate network where you can swap cross-chain
assets

3776
03:31:25,277 --> 03:31:30,277
In a cross-chain interoperable way, supposedly

3777
03:31:30,277 --> 03:31:35,277
When you look at Bitcoin, the Bitcoin that lives on Thorchain is on a multisig

3778
03:31:35,277 --> 03:31:40,277
And that lives on a multisig, right?

3779
03:31:40,277 --> 03:31:45,277
Where do Bitcoin funds live in that?

3780
03:31:45,277 --> 03:31:50,277
This is a threshold signature, that's very different than a multisig

3781
03:31:50,277 --> 03:31:55,277
Bitcoin funds are randomly picked by a subset of Thorchain validators

3782
03:31:55,277 --> 03:32:00,277
And I think you have around 100 or less validators right now

3783
03:32:00,277 --> 03:32:05,277
And in order to become a validator, you have to sort of log in

3784
03:32:05,277 --> 03:32:10,277
Or like 2x rune, 2x value, 2x more collateral than the actual asset

3785
03:32:10,277 --> 03:32:15,277
So you have a security assumption here, a serious security assumption

3786
03:32:15,277 --> 03:32:20,277
So it is a threshold scheme, right?

3787
03:32:20,277 --> 03:32:25,277
Bitcoin funds live on a threshold scheme

3788
03:32:25,277 --> 03:32:30,277
And the majority signatories can steal from that

3789
03:32:30,277 --> 03:32:35,277
If incentives are misaligned

3790
03:32:35,277 --> 03:32:40,277
And the security assumption of Thorchain heavily relies on the tokenomics of
Thorchain

3791
03:32:40,277 --> 03:32:45,277
It relies on the economics in the sense of people are self-interested

3792
03:32:45,277 --> 03:32:50,277
And they don't want to burn a bunch of money

3793
03:32:50,277 --> 03:32:55,277
Because it relies on the tokenomics, the economics of Thorchain to run the shitcoin

3794
03:32:55,277 --> 03:33:00,277
But not only that, it doesn't also scale

3795
03:33:00,277 --> 03:33:05,277
Imagine Bitcoin being the global reserve currency at some point

3796
03:33:05,277 --> 03:33:10,277
Which will hopefully happen

3797
03:33:10,277 --> 03:33:15,277
But in that case, you cannot really collateralize Bitcoin with a superior asset

3798
03:33:15,277 --> 03:33:20,277
It's not collateralizing Bitcoin

3799
03:33:20,277 --> 03:33:25,277
It's ensuring that from a monetary perspective, anybody who is a part of the network

3800
03:33:25,277 --> 03:33:30,277
Is incentivized to do the right thing

3801
03:33:30,277 --> 03:33:35,277
Because if they don't, they will lose far more than they actually hold

3802
03:33:35,277 --> 03:33:40,277
But there's a previous question in my view

3803
03:33:40,277 --> 03:33:45,277
Because I don't think Thorchain is not posing itself as a Bitcoin sidechain

3804
03:33:45,277 --> 03:33:50,277
It's more of a DeFi platform, inter-blockchain

3805
03:33:50,277 --> 03:33:55,277
Because at the end, it's about the intellectual honesty

3806
03:33:55,277 --> 03:34:00,277
As long as you don't pose yourself as a Bitcoin sidechain

3807
03:34:00,277 --> 03:34:05,277
Because most of your concerns are about creating a proper Bitcoin sidechain

3808
03:34:05,277 --> 03:34:10,277
And I agree, if you only timestamp the state of your network on the Bitcoin
blockchain

3809
03:34:10,277 --> 03:34:15,277
Then that's not necessarily a sidechain if the native currency of the sidechain is
not Bitcoin

3810
03:34:15,277 --> 03:34:20,277
So I agree with that, but that's not actually how Thorchain has positioned
themselves

3811
03:34:20,277 --> 03:34:25,277
So it's more about an interoperability system

3812
03:34:25,277 --> 03:34:30,277
To address your concern, in most cases and scenarios where people hold Bitcoin in
one form or another

3813
03:34:30,277 --> 03:34:35,277
In almost all cases it requires trust

3814
03:34:35,277 --> 03:34:40,277
Of a few people running a multisig somewhere in the world

3815
03:34:40,277 --> 03:34:45,277
Of course, pretty much anything relies on trust

3816
03:34:45,277 --> 03:34:50,277
I mean, Liquid does not claim to be decentralized, it is federated

3817
03:34:50,277 --> 03:34:55,277
It is what it is, and it's honest

3818
03:34:55,277 --> 03:35:00,277
But wouldn't it be better if it was?

3819
03:35:00,277 --> 03:35:05,277
Don't we want to have decentralization?

3820
03:35:05,277 --> 03:35:10,277
So we need to stop thinking of decentralization as a Boolean thing

3821
03:35:10,277 --> 03:35:15,277
It's decentralized or not decentralized. Actually, decentralization is a process

3822
03:35:15,277 --> 03:35:20,277
And I think the important thing is that we keep decentralizing things and hardening
things

3823
03:35:20,277 --> 03:35:25,277
So they can become a public good and they are for the service of humanity

3824
03:35:25,277 --> 03:35:30,277
So it's not about saying this is decentralized

3825
03:35:30,277 --> 03:35:35,277
I don't know if it was smart because they took a kind of like, what you may call

3826
03:35:35,277 --> 03:35:40,277
The purist approach

3827
03:35:40,277 --> 03:35:45,277
But it was very smart because they were able to actually do something where they
have this multisig output that is supposedly controlled by a federation

3828
03:35:45,277 --> 03:35:50,277
And supposedly there are hardware security modules

3829
03:35:50,277 --> 03:35:55,277
But there's no real way of anyone knowing whether or not there are

3830
03:35:55,277 --> 03:36:00,277
So there's no way to...

3831
03:36:00,277 --> 03:36:05,277
When you run a Thor chain, you have to run a node of every subsidiary

3832
03:36:05,277 --> 03:36:10,277
Of every altcoin and bitcoin and probably have to do all these things

3833
03:36:10,277 --> 03:36:15,277
I think that the way sidechains really should work is sort of the opposite

3834
03:36:15,277 --> 03:36:20,277
Where your full node should be ignoring everything else as much as possible

3835
03:36:20,277 --> 03:36:25,277
And that is what makes it so nothing on those other networks can become your problem

3836
03:36:25,277 --> 03:36:30,277
So I don't know if you have a comment on that

3837
03:36:30,277 --> 03:36:35,277
But we have one distinction we can draw is that in BIP300

3838
03:36:35,277 --> 03:36:40,277
In Liquid and in Rootstock right now

3839
03:36:40,277 --> 03:36:45,277
We have this situation where there's an 11 of 15 kind of committee that controls
where the bitcoin go

3840
03:36:45,277 --> 03:36:50,277
And in BIP300 it would be basically the miners or the mining process

3841
03:36:50,277 --> 03:36:55,277
And in Thor chain there's this sort of competitive struggle where you stake, ruin

3842
03:36:55,277 --> 03:37:00,277
And then you get locked into a...

3843
03:37:00,277 --> 03:37:05,277
So that's one difference along this spectrum that I guess we can...

3844
03:37:05,277 --> 03:37:10,277
But we were discussing something before getting involved

3845
03:37:10,277 --> 03:37:15,277
We are monitoring value on a certain period of time

3846
03:37:15,277 --> 03:37:20,277
So the backing collateral is mostly an insurance spot

3847
03:37:20,277 --> 03:37:25,277
So basically once the transaction is settled they can replenish the insurance spot

3848
03:37:25,277 --> 03:37:30,277
So that's good for managing flows but in the case of Liquid and Rootstock

3849
03:37:30,277 --> 03:37:35,277
You are managing in stock because you are actually locking large amounts of bitcoin
for a long period of time

3850
03:37:35,277 --> 03:37:40,277
Oh, you do that on Thor chain too though

3851
03:37:40,277 --> 03:37:45,277
No, but imagine if you have 3,000 on a validator

3852
03:37:45,277 --> 03:37:50,277
I mean you have to spread among multiple validators but again from a working capital
efficiency

3853
03:37:50,277 --> 03:37:55,277
Which was your point there, it's like it's very inefficient

3854
03:37:55,277 --> 03:38:00,277
But you would end up having double the working capital

3855
03:38:00,277 --> 03:38:05,277
Insurance for 3,000 bitcoins in your model

3856
03:38:05,277 --> 03:38:10,277
So it works very well when you are swapping assets and having flows

3857
03:38:10,277 --> 03:38:15,277
But not when you want to custody or lock value as you do on a sidechain

3858
03:38:15,277 --> 03:38:20,277
But people do

3859
03:38:20,277 --> 03:38:25,277
Let's move on to something else which is that sometimes I ask as a kind of joke

3860
03:38:25,277 --> 03:38:30,277
I think I know who they are but they don't

3861
03:38:30,277 --> 03:38:35,277
Do you think that's an unfair question or how is the key ceremony performed

3862
03:38:35,277 --> 03:38:40,277
As someone who has proposed something where there is a decentralized process
involved

3863
03:38:40,277 --> 03:38:45,277
I sometimes think it's a little bit funny

3864
03:38:45,277 --> 03:38:50,277
I can certainly empathize with their desire to get something working in the real
world

3865
03:38:50,277 --> 03:38:55,277
You give the bitcoin to these 15 people and you just hope that they give it back to
you basically

3866
03:38:55,277 --> 03:39:00,277
And so the question is who are these 15 people and I ask that question sometimes on
Twitter

3867
03:39:00,277 --> 03:39:05,277
Yeah, so I don't know, I think that could be

3868
03:39:05,277 --> 03:39:10,277
Also an internal objection to liquid maybe and maybe not, this is the way this is
set up

3869
03:39:10,277 --> 03:39:15,277
But there is a saying, you know, liquid is a dynafed and ethereum is a static fed

3870
03:39:15,277 --> 03:39:20,277
With the proof of stake transition 2.0 we also don't know who these validators are

3871
03:39:20,277 --> 03:39:25,277
Or who are the initial 70% pre-mined holders are essentially

3872
03:39:25,277 --> 03:39:30,277
It's really important though if you want to stop collusion of any kind

3873
03:39:30,277 --> 03:39:35,277
Is that everybody who is holding part of the multi-asset in this case, that they
don't know who each other are

3874
03:39:35,277 --> 03:39:40,277
Everybody has to be anon, I don't know who runs the validators of fortune

3875
03:39:40,277 --> 03:39:45,277
And they don't know who is running the validators either, so if they wanted to
collude they have no mechanism to do so

3876
03:39:45,277 --> 03:39:50,277
But in a multi-asset commonly in a lot of designs and implementations

3877
03:39:50,277 --> 03:39:55,277
It's publicly known who they are or if it's not publicly known in your case they
know each other in most cases

3878
03:39:55,277 --> 03:40:00,277
Well the thing is in order to be privileged to run a fortune validator node you need
to post as bonds

3879
03:40:00,277 --> 03:40:05,277
The token and that is 100% pre-mined shitcoin, right?

3880
03:40:05,277 --> 03:40:10,277
It's 100% pre-mined shitcoin, right?

3881
03:40:10,277 --> 03:40:15,277
It's 100% shitcoin? It's pre-mined shitcoin

3882
03:40:15,277 --> 03:40:20,277
I think I should go there and slap his ass like Will Smith style, right?

3883
03:40:20,277 --> 03:40:25,277
You think so? Just kidding, I'm just kidding

3884
03:40:25,277 --> 03:40:30,277
You guys the foundation whatever the team can easily run a validator node because
you guys have the stake

3885
03:40:30,277 --> 03:40:35,277
The nodes and the people who are running it are anonymous, if they're not they can
collude and steal the funds

3886
03:40:35,277 --> 03:40:40,277
So you can go ahead and say it's a shitcoin if you want, but the network is
fundamentally designed in a much more secure way than the way liquid is

3887
03:40:40,277 --> 03:40:45,277
But we don't know how the distribution, the run distribution is like

3888
03:40:45,277 --> 03:40:50,277
But I don't know who the 15 validators of the liquid network are

3889
03:40:50,277 --> 03:40:55,277
But it is centrally pre-mined, the foundation, the team can easily run all these 100
validator nodes

3890
03:40:55,277 --> 03:41:00,277
Because they have the stake

3891
03:41:00,277 --> 03:41:05,277
Because I don't know the names and addresses of everybody who holds the RUNE token,
it's a security issue?

3892
03:41:05,277 --> 03:41:10,277
No, but I think the point is if you have enough resources, you can run all the nodes
yourself

3893
03:41:10,277 --> 03:41:15,277
I'll tell you this right now, the team does not run any nodes

3894
03:41:15,277 --> 03:41:20,277
Verify it

3895
03:41:20,277 --> 03:41:25,277
It's the same concept that you raised before, which is the security budget merge
mining fees concept

3896
03:41:25,277 --> 03:41:30,277
Which is that security budget is the total amount of money that we pay to miners

3897
03:41:30,277 --> 03:41:35,277
And we want that to go up because that is the cost of an endless 51% attack

3898
03:41:35,277 --> 03:41:40,277
And in sidechains if they are merge mined, all of that money goes to the layer 1
miners

3899
03:41:40,277 --> 03:41:45,277
So that seems like an easy slam dunk win

3900
03:41:45,277 --> 03:41:50,277
But in Liquid, all the money, the transaction fees go to a wall controlled by
Blockstream

3901
03:41:50,277 --> 03:41:55,277
But that's a disadvantage I guess of that

3902
03:41:55,277 --> 03:42:00,277
Right now it's the way it's set up, but this might change of course

3903
03:42:00,277 --> 03:42:05,277
They could put it in some kind of optru or something where miners can just steal it
and take it immediately

3904
03:42:05,277 --> 03:42:10,277
That would be kind of interesting

3905
03:42:10,277 --> 03:42:15,277
RSK started with 5% of the hashing power of Bitcoin

3906
03:42:15,277 --> 03:42:20,277
January 2018

3907
03:42:20,277 --> 03:42:25,277
So it's actually the first productive sidechain in the world

3908
03:42:25,277 --> 03:42:30,277
And was launched in January 2018 with 5% of the hashing power of Bitcoin

3909
03:42:30,277 --> 03:42:35,277
And since then now we have between 40 and 60% of the hashing power of Bitcoin

3910
03:42:35,277 --> 03:42:40,277
Securing rootstock

3911
03:42:40,277 --> 03:42:45,277
And how it works is like 80% of the funds go to the miners, to the Bitcoin miners

3912
03:42:45,277 --> 03:42:50,277
And 20% goes to the other key actors

3913
03:42:50,277 --> 03:42:55,277
Indeed the Federation is one of them, software development is the other

3914
03:42:55,277 --> 03:43:00,277
So we have this model where the fees of the network go to fund the key elements of
the network

3915
03:43:00,277 --> 03:43:05,277
What we were calling not sidechains

3916
03:43:05,277 --> 03:43:10,277
They don't have Bitcoin as their native currency

3917
03:43:10,277 --> 03:43:15,277
But you have networks that timestamp on Bitcoin, that's one thing

3918
03:43:15,277 --> 03:43:20,277
So in a way timestamping the state of the network, like stacks or the other ones

3919
03:43:20,277 --> 03:43:25,277
So that's timestamping. The following stage is like having Bitcoin as a native asset

3920
03:43:25,277 --> 03:43:30,277
And on the following stage is Rootstock where it does the three things

3921
03:43:30,277 --> 03:43:35,277
It's like timestamping the state of the network using Bitcoin as a native currency

3922
03:43:35,277 --> 03:43:40,277
And also contributing to the security of the Bitcoin network

3923
03:43:40,277 --> 03:43:45,277
But I'm not saying anything is bad, it's just what it is

3924
03:43:45,277 --> 03:43:50,277
And I think all sidechains are good because for me extending Bitcoin is protecting
an asset for humanity

3925
03:43:50,277 --> 03:43:55,277
It's very important that it's having a neutral reserve of value asset

3926
03:43:55,277 --> 03:44:00,277
That can remove most of the wars we have in the world

3927
03:44:00,277 --> 03:44:05,277
So it's like the level of peace that Bitcoin can bring to humanity deserves our
devotion

3928
03:44:05,277 --> 03:44:10,277
In terms of creating value on top of Bitcoin, however we can

3929
03:44:10,277 --> 03:44:15,277
But then of course we have always our aspirations, but I agree with you, what you're
contributing is very valuable as well

3930
03:44:15,277 --> 03:44:20,277
Then time will tell if your model can be a civil attack or not

3931
03:44:20,277 --> 03:44:25,277
Or your intentions, I think at the end that's the only thing that matters

3932
03:44:25,277 --> 03:44:30,277
At the beginning people were very suspicious of the Rootstock team as well

3933
03:44:30,277 --> 03:44:35,277
But now six years after, I think people have a clear understanding that we keep
going in the direction of decentralizing everything

3934
03:44:35,277 --> 03:44:40,277
Like being true and honest to the Bitcoin ethos

3935
03:44:40,277 --> 03:44:45,277
Again, this is not only technology, this is a human thing as well

3936
03:44:45,277 --> 03:44:50,277
I think you're raising a good point there, because I think we should encourage the
general market to experiment, try new things

3937
03:44:50,277 --> 03:44:55,277
Be creative, be innovative, and we shouldn't shit on people because they're doing it
a different way than what you might do

3938
03:44:55,277 --> 03:45:00,277
I agree with that mentality

3939
03:45:00,277 --> 03:45:05,277
We should encourage creativity, yes, but it's not necessarily the case that there's
no neutral idea, right?

3940
03:45:05,277 --> 03:45:10,277
You can't just be open-minded to an unlimited extent, that's exactly the same as
being open-minded

3941
03:45:13,742 --> 03:45:16,142
to an unlimited extent, that's exactly the same as being closed-minded to an
unlimited extent, in my opinion

3942
03:45:16,142 --> 03:45:26,042
But, let's move on to maybe ossifying Bitcoin and other things, maybe shrinking the
layer one block size

3943
03:45:26,042 --> 03:45:32,242
or some of these crazy ideas that have been tossed around where sidechains enable
all this kind of freewheeling

3944
03:45:32,242 --> 03:45:34,542
But let's put Drivechain in and then ossify it

3945
03:45:34,542 --> 03:45:41,042
Yeah, exactly, that's what I think, that's my opinion, because every change is a
potential problem

3946
03:45:41,042 --> 03:45:46,642
And there have been controversial changes in the past, and there's been a lot of
controversy

3947
03:45:46,642 --> 03:45:54,342
But one thing that I wanted to mention though, on this exact point that you two were
just talking about

3948
03:45:54,342 --> 03:46:00,042
It's very unlikely, in Bitcoin, everyone has to agree on what the protocol rules are

3949
03:46:00,042 --> 03:46:05,142
And this is very unlikely that this is going to, the controversy has just gotten
worse and worse

3950
03:46:05,142 --> 03:46:08,942
And as the community grows, I just think it will not possibly get any better

3951
03:46:08,942 --> 03:46:13,542
So, I think that the ossification, we have to do something other than what we're
currently doing

3952
03:46:13,542 --> 03:46:16,742
Which is this kind of weird committee or something

3953
03:46:16,742 --> 03:46:22,542
Yeah, we have to definitely do something, yeah, I think we'll definitely get there,
right?

3954
03:46:22,542 --> 03:46:27,942
I think we'll definitely have some, probably actually, trustless SPV sidechains at
some point

3955
03:46:27,942 --> 03:46:33,842
I think simplicity could help in this, given the extensibility and expressivity

3956
03:46:33,842 --> 03:46:39,742
You know, maybe in 20 years from now, who knows, but I think we should definitely
work on towards that

3957
03:46:39,742 --> 03:46:45,342
I think ossification or crystallization of decentralized protocols is part of the
process

3958
03:46:45,342 --> 03:46:50,942
It's like, you know, you want it, the more decentralized the protocol it is, the
tougher it is to change it

3959
03:46:50,942 --> 03:46:53,442
And that's part of the process, and you want that

3960
03:46:53,442 --> 03:47:01,142
Because the more decentralized it is, the less prone to attacks or concerted efforts
to manipulate the protocol can happen

3961
03:47:01,142 --> 03:47:05,642
So, I think for me, ossification is a feature, not a bug

3962
03:47:05,642 --> 03:47:10,742
That's why I say, you know, let's bring, like, Drivechains or ways for Bitcoin to
expand

3963
03:47:10,742 --> 03:47:13,442
And then let's freeze it in a vault forever

3964
03:47:13,442 --> 03:47:20,642
It's like, yeah, we want Bitcoin to be ossified, to be as immutable as possible

3965
03:47:20,642 --> 03:47:27,342
But we want also, because it's protecting, as I said, the more valuable asset for
humanity today, that is Bitcoin, no?

3966
03:47:27,342 --> 03:47:29,342
So, we want that to happen

3967
03:47:29,342 --> 03:47:34,342
It's the only kind of sustainable way to actually achieve the goal of ossification,
I think

3968
03:47:34,342 --> 03:47:37,042
For those of you who don't know, ossification means, like, we just stop changing the
protocol

3969
03:47:37,042 --> 03:47:42,342
And we don't, you know, we don't make any changes, arguably including, like,
improvements

3970
03:47:42,342 --> 03:47:48,242
We just say, like, it is what it is, it's like long division or something, we're not
going to change it

3971
03:47:48,942 --> 03:47:50,942
Because every change is kind of a risk

3972
03:47:50,942 --> 03:47:51,942
Yeah

3973
03:47:51,942 --> 03:48:01,442
And so, I think the only real way to actually do that, to achieve the ossification,
is to make sure that there is some kind of safety valve or something

3974
03:48:01,442 --> 03:48:10,742
For someone out there with a very good idea or a very fringe idea or some kind of
experimental idea that might succeed but sort of probably won't

3975
03:48:10,942 --> 03:48:19,942
You need to have something where that can get into Bitcoin without it bothering
everyone else who, other people who may hate the idea and not want it running on
their computer at all

3976
03:48:19,942 --> 03:48:26,942
Yes, and also by creating these expansion channels or paths for Bitcoin

3977
03:48:26,942 --> 03:48:32,942
Also, we can think that Bitcoin will be the future, the core infrastructure of the
whole financial system of the world

3978
03:48:33,142 --> 03:48:43,142
So, not only the reserve of value of the world, but also will enable, you know, the
local currencies, everything to be issued and handled by the same security network

3979
03:48:43,142 --> 03:48:48,142
In different chains that will expand the core, like the bottom layer, the Bitcoin
layer on top

3980
03:48:48,142 --> 03:48:52,142
And then, you know, nobody can question Bitcoin itself

3981
03:48:52,142 --> 03:48:55,142
It's like, you know, there's all this discussion about energy

3982
03:48:55,142 --> 03:49:01,142
Okay, but if with 5% we can serve any human being, the financial needs of any human
being in the world

3983
03:49:01,342 --> 03:49:07,342
That's nothing. I mean, come in, I want to put 5% of the energy of the world to the
service of humanity

3984
03:49:07,342 --> 03:49:16,342
So, the question shouldn't be how much energy Bitcoin gets, but how much value we
get from that energy

3985
03:49:16,342 --> 03:49:20,342
And if we are really serving every human being in the world

3986
03:49:20,342 --> 03:49:22,342
And I think that's why we need to extend Bitcoin

3987
03:49:22,342 --> 03:49:29,342
Because otherwise, it's only a store of value, it's only for the 20% of the
population who can store value for 2-3 years

3988
03:49:29,542 --> 03:49:32,542
At least for now, of course, if Bitcoin goes down in volatility

3989
03:49:32,542 --> 03:49:38,542
But hyper-Bitcoinization is not going to happen in the next decade or in two decades

3990
03:49:38,542 --> 03:49:43,542
So, we need to, like, if we want to get to that hyper-Bitcoinization

3991
03:49:43,542 --> 03:49:49,542
We need to create the path forward and serve the whole humanity in between

3992
03:49:51,542 --> 03:49:58,542
So, one thing, like, it's kind of universally endorsed that Bitcoin should scale in
layers

3993
03:49:58,742 --> 03:50:01,742
And the traditional financial system also scales in layers

3994
03:50:01,742 --> 03:50:06,742
But there's, like, commercial banks and there's, like, the Fed, the US Fed, European
Central Bank

3995
03:50:06,742 --> 03:50:10,742
And then there's, like, the Bank of International Settlements selling, like, a big
tree

3996
03:50:10,742 --> 03:50:12,742
And so, I just kind of wanted to throw out the idea that

3997
03:50:12,742 --> 03:50:18,742
Sidechain is very fully consistent with this idea of scaling in layers

3998
03:50:18,742 --> 03:50:20,742
And I think it's actually the best realization of the idea

3999
03:50:20,742 --> 03:50:22,742
But I don't know if other people agree with that or not

4000
03:50:22,742 --> 03:50:25,742
I don't know, what do you think about that? Do you think that that makes any sense?

4001
03:50:25,942 --> 03:50:29,942
Yeah, maybe, yeah, it probably makes sense, yeah

4002
03:50:29,942 --> 03:50:32,942
One note I had here that I wanted to just throw out

4003
03:50:32,942 --> 03:50:34,942
It's kind of an interesting thing, it's very different

4004
03:50:34,942 --> 03:50:37,942
But the idea of fun, of people having fun

4005
03:50:37,942 --> 03:50:39,942
I remember Bitcoin, you know, when it was a smaller group

4006
03:50:39,942 --> 03:50:41,942
It was a little easier to have fun

4007
03:50:41,942 --> 03:50:43,942
Now everyone has to agree on all these things

4008
03:50:43,942 --> 03:50:48,942
I think that sidechains might restore a sense of fun

4009
03:50:48,942 --> 03:50:51,942
Because people are free to do their own weird idea

4010
03:50:52,142 --> 03:50:55,142
And people don't have to agree in, like, the Bitcoin development process

4011
03:50:55,142 --> 03:50:56,142
That it's a good idea

4012
03:50:56,142 --> 03:50:58,142
And maybe you can have an idea that's just good

4013
03:50:58,142 --> 03:51:01,142
And you don't have to justify it or explain it to other people

4014
03:51:01,142 --> 03:51:02,142
You can just do it, right?

4015
03:51:02,142 --> 03:51:04,142
And then you can just try and get customers

4016
03:51:04,142 --> 03:51:07,142
And I was just wondering if you have any thoughts on this

4017
03:51:07,142 --> 03:51:09,142
This is kind of a weird little note that I had to throw out there

4018
03:51:09,142 --> 03:51:12,142
Like, this idea of sidechains and fun

4019
03:51:12,142 --> 03:51:14,142
Does this make any sense to you at all, or is this just crazy?

4020
03:51:14,142 --> 03:51:16,142
Yeah, I think, yeah

4021
03:51:16,142 --> 03:51:18,142
You know, bringing some new stuff to Bitcoin is really hard

4022
03:51:18,342 --> 03:51:22,342
I think most people are taking the more conservative side on this

4023
03:51:22,342 --> 03:51:26,342
And I think we've seen some competing proposals so far

4024
03:51:26,342 --> 03:51:28,342
On covenants and sidechains

4025
03:51:28,342 --> 03:51:30,342
I haven't had a chance to read out BIP300

4026
03:51:30,342 --> 03:51:34,342
So it's really hard for me to, you know, add some comment on this

4027
03:51:34,342 --> 03:51:36,342
But I think I remember back on Twitter

4028
03:51:36,342 --> 03:51:38,342
In this space

4029
03:51:38,342 --> 03:51:41,342
The main objection was the majority hashrate can steal from the Drivechain

4030
03:51:41,342 --> 03:51:42,342
Maybe

4031
03:51:42,342 --> 03:51:43,342
Yes

4032
03:51:43,342 --> 03:51:45,342
Yeah, that was the common objection I remember

4033
03:51:45,342 --> 03:51:47,342
But hopefully we'll get there

4034
03:51:47,542 --> 03:51:49,542
Yeah, we'll hopefully get trusted sidechains

4035
03:51:49,542 --> 03:51:51,542
But in the meantime, let's experiment

4036
03:51:51,542 --> 03:51:53,542
You know, with federated sidechains

4037
03:51:53,542 --> 03:51:55,542
Think of that as the testnet of Bitcoin

4038
03:51:55,542 --> 03:51:59,542
And you can build, you know, smart contract primitives

4039
03:51:59,542 --> 03:52:01,542
And with some, you know, advanced scripting primitives

4040
03:52:01,542 --> 03:52:05,542
And whether it's Liquid and RSK

4041
03:52:05,542 --> 03:52:07,542
You can, you know, try to build things on Bitcoin

4042
03:52:07,542 --> 03:52:09,542
On layers of Bitcoin

4043
03:52:09,542 --> 03:52:10,542
Yes, I do

4044
03:52:10,542 --> 03:52:12,542
You know, to just defend BIP300 for a second

4045
03:52:12,542 --> 03:52:16,542
It is true that the majority hashrate can steal all the coins

4046
03:52:16,742 --> 03:52:18,742
But it takes them three months to do that

4047
03:52:18,742 --> 03:52:20,742
Or six months

4048
03:52:20,742 --> 03:52:22,742
Best case scenario, it takes three months

4049
03:52:22,742 --> 03:52:24,742
So it's deliberately designed with that reality in mind

4050
03:52:24,742 --> 03:52:26,742
And, in fact, there's very little

4051
03:52:26,742 --> 03:52:28,742
If 51% of the hashrate is against you

4052
03:52:28,742 --> 03:52:30,742
There's very little that they cannot steal from

4053
03:52:30,742 --> 03:52:32,742
So, for example

4054
03:52:32,742 --> 03:52:34,742
They could steal from the Lightning Network

4055
03:52:34,742 --> 03:52:36,742
By just censoring the justice transaction

4056
03:52:36,742 --> 03:52:40,742
So I'm not saying that to spread any fear of the Lightning Network

4057
03:52:40,742 --> 03:52:42,742
I really just think the whole criterion of the 51%

4058
03:52:42,742 --> 03:52:44,742
When I designed it

4059
03:52:44,942 --> 03:52:46,942
I literally had in mind

4060
03:52:46,942 --> 03:52:48,942
If 51% are against you

4061
03:52:48,942 --> 03:52:50,942
Then you're probably screwed no matter what

4062
03:52:50,942 --> 03:52:52,942
And so with that

4063
03:52:52,942 --> 03:52:54,942
That kind of open concept

4064
03:52:54,942 --> 03:52:56,942
Of them being able to pull any 32 bytes they like

4065
03:52:56,942 --> 03:52:58,942
Out of the world

4066
03:52:58,942 --> 03:53:00,942
It's deliberately

4067
03:53:00,942 --> 03:53:02,942
The slow three month withdrawal

4068
03:53:02,942 --> 03:53:04,942
Is deliberately designed to address that

4069
03:53:04,942 --> 03:53:06,942
But I think it is fundamental

4070
03:53:06,942 --> 03:53:08,942
There's nothing you can do

4071
03:53:08,942 --> 03:53:10,942
Like if you had a sidechain based on ZK-SNARK

4072
03:53:10,942 --> 03:53:12,942
51% of the hashrate could simply censor out

4073
03:53:13,142 --> 03:53:15,142
Messages

4074
03:53:15,142 --> 03:53:17,142
And then you would never know anything

4075
03:53:17,142 --> 03:53:19,142
So I think it's a fundamental limitation

4076
03:53:19,142 --> 03:53:21,142
That absolutely nothing can improve on

4077
03:53:21,142 --> 03:53:23,142
So I sort of took that as a kind of

4078
03:53:23,142 --> 03:53:25,142
Minimal assumption

4079
03:53:25,142 --> 03:53:27,142
And tried to push it all the way through

4080
03:53:27,142 --> 03:53:29,142
But I think people should read

4081
03:53:29,142 --> 03:53:31,142
Give BIP300 a read

4082
03:53:31,142 --> 03:53:33,142
And decide what you think for yourself

4083
03:53:33,142 --> 03:53:35,142
So, yes

4084
03:53:35,142 --> 03:53:37,142
Regarding your question

4085
03:53:37,142 --> 03:53:39,142
I think sidechains are fun

4086
03:53:39,142 --> 03:53:41,142
I mean

4087
03:53:41,342 --> 03:53:43,342
We have in Rootstock

4088
03:53:43,342 --> 03:53:45,342
NFT marketplaces

4089
03:53:45,342 --> 03:53:47,342
For art, for example

4090
03:53:47,342 --> 03:53:49,342
Curated art

4091
03:53:49,342 --> 03:53:51,342
Instead of just JPEGs

4092
03:53:51,342 --> 03:53:53,342
Like real artists

4093
03:53:53,342 --> 03:53:55,342
Publishing their ownership rights

4094
03:53:55,342 --> 03:53:57,342
And certifying those

4095
03:53:57,342 --> 03:53:59,342
On Rootstock with the hashing power of Bitcoin

4096
03:53:59,342 --> 03:54:01,342
Paying with Bitcoin for the art

4097
03:54:01,342 --> 03:54:03,342
So it's a lot of fun

4098
03:54:03,342 --> 03:54:05,342
Then you have DeFi

4099
03:54:05,342 --> 03:54:07,342
You have lending protocols being used in Latin America

4100
03:54:07,342 --> 03:54:09,342
Thanks to this

4101
03:54:09,542 --> 03:54:11,542
You have a P2P monetary system

4102
03:54:11,542 --> 03:54:13,542
Backed by Bitcoin running on Rootstock

4103
03:54:13,542 --> 03:54:15,542
So you have a dollar backed by Bitcoin

4104
03:54:15,542 --> 03:54:17,542
Thanks to a sidechain

4105
03:54:17,542 --> 03:54:19,542
Which I think is the best

4106
03:54:19,542 --> 03:54:21,542
Stable asset in the world

4107
03:54:21,542 --> 03:54:23,542
Because it's basically

4108
03:54:23,542 --> 03:54:25,542
You don't have to rely on a third party

4109
03:54:25,542 --> 03:54:27,542
It's called money on chain

4110
03:54:27,542 --> 03:54:29,542
It's the protocol

4111
03:54:29,542 --> 03:54:31,542
So, yeah

4112
03:54:31,542 --> 03:54:33,542
So you have all these things

4113
03:54:33,542 --> 03:54:35,542
That are happening thanks to

4114
03:54:35,542 --> 03:54:37,542
Sidechain

4115
03:54:37,742 --> 03:54:39,742
All the transactions and operations

4116
03:54:39,742 --> 03:54:41,742
Are paid with Bitcoin

4117
03:54:41,742 --> 03:54:43,742
So

4118
03:54:43,742 --> 03:54:45,742
I mean

4119
03:54:45,742 --> 03:54:47,742
If that's not fun

4120
03:54:47,742 --> 03:54:49,742
I don't know what it is

4121
03:54:49,742 --> 03:54:51,742
Speaking personally

4122
03:54:51,742 --> 03:54:53,742
I had a lot of fun

4123
03:54:53,742 --> 03:54:55,742
Thinking up and innovating

4124
03:54:55,742 --> 03:54:57,742
Doing something completely novel

4125
03:54:57,742 --> 03:54:59,742
That for most people

4126
03:54:59,742 --> 03:55:01,742
Wrote it off as if it's not possible

4127
03:55:01,742 --> 03:55:03,742
Including Eric Voorhees

4128
03:55:03,742 --> 03:55:05,742
He's one of the biggest advocates of the project

4129
03:55:05,942 --> 03:55:07,942
I love innovating

4130
03:55:07,942 --> 03:55:09,942
I've been doing it for a very long period of time

4131
03:55:09,942 --> 03:55:11,942
I like to challenge myself

4132
03:55:11,942 --> 03:55:13,942
I even spent 6 months working on a project

4133
03:55:13,942 --> 03:55:15,942
That was mathematically impossible to work on

4134
03:55:15,942 --> 03:55:17,942
Just because it was so fun

4135
03:55:17,942 --> 03:55:19,942
So I love this area of innovating

4136
03:55:19,942 --> 03:55:21,942
Sidechains or blockchains

4137
03:55:21,942 --> 03:55:23,942
Because there's so much to be done here

4138
03:55:23,942 --> 03:55:25,942
This industry is like a little infant baby

4139
03:55:25,942 --> 03:55:27,942
That needs to be matured

4140
03:55:27,942 --> 03:55:29,942
And I decided to devote myself to this idea

4141
03:55:29,942 --> 03:55:31,942
So I have so much fun every day

4142
03:55:31,942 --> 03:55:33,942
Other than the stress of course

4143
03:55:34,142 --> 03:55:36,142
It's really fun

4144
03:55:36,142 --> 03:55:38,142
With Taproot

4145
03:55:38,142 --> 03:55:40,142
We had a set of new additional opcodes

4146
03:55:40,142 --> 03:55:42,142
Bundled with Taproot

4147
03:55:42,142 --> 03:55:44,142
So you can build around

4148
03:55:44,142 --> 03:55:46,142
Covenants and smart contracts already on Liquid

4149
03:55:46,142 --> 03:55:48,142
It's really fun

4150
03:55:48,142 --> 03:55:50,142
I worry that

4151
03:55:50,142 --> 03:55:52,142
If we don't have sidechains

4152
03:55:52,142 --> 03:55:54,142
We'll have a lot of people show up

4153
03:55:54,142 --> 03:55:56,142
They'll be really excited

4154
03:55:56,142 --> 03:55:58,142
Then they'll try to get involved with Bitcoin core development

4155
03:55:58,142 --> 03:56:00,142
And they'll get really discouraged

4156
03:56:00,142 --> 03:56:02,142
We see a big proliferation

4157
03:56:02,342 --> 03:56:04,342
Everyone's doing altcoins

4158
03:56:04,342 --> 03:56:06,342
I think it's partly because

4159
03:56:06,342 --> 03:56:08,342
It's so easy to do an altcoin

4160
03:56:08,342 --> 03:56:10,342
It's so difficult to do something in Bitcoin

4161
03:56:10,342 --> 03:56:12,342
The idea is to sort of

4162
03:56:12,342 --> 03:56:14,342
Maybe address that

4163
03:56:14,342 --> 03:56:16,342
Problem

4164
03:56:16,342 --> 03:56:18,342
So now we're running low on time

4165
03:56:18,342 --> 03:56:20,342
Does everyone want to shill something

4166
03:56:20,342 --> 03:56:22,342
And make a final point

4167
03:56:22,342 --> 03:56:24,342
Tell people where to find you

4168
03:56:24,342 --> 03:56:26,342
We want to go back in reverse order maybe

4169
03:56:26,342 --> 03:56:28,342
I'll make myself available

4170
03:56:28,342 --> 03:56:30,342
On the other side of these doors

4171
03:56:30,342 --> 03:56:32,342
You can ask questions or whatever

4172
03:56:32,342 --> 03:56:34,342
Or go deeper into detail

4173
03:56:34,342 --> 03:56:36,342
I'm sure we don't have enough time here

4174
03:56:36,342 --> 03:56:38,342
Which is perfectly fine

4175
03:56:38,342 --> 03:56:40,342
I'll be on the other side of those doors

4176
03:56:40,342 --> 03:56:42,342
You're welcome to come up and ask me questions

4177
03:56:42,342 --> 03:56:44,342
But this world is just starting

4178
03:56:44,342 --> 03:56:46,342
And I'm so excited to be a part of it

4179
03:56:46,342 --> 03:56:48,342
I think you have to stay wild

4180
03:56:48,342 --> 03:56:50,342
Stay curious

4181
03:56:50,342 --> 03:56:52,342
I think this is a brand new world

4182
03:56:52,342 --> 03:56:54,342
I disagree with him

4183
03:56:54,342 --> 03:56:56,342
He's not a baby

4184
03:56:56,342 --> 03:56:58,342
He's a toddler

4185
03:56:58,342 --> 03:57:00,342
He's in his infancy

4186
03:57:00,342 --> 03:57:02,342
And everything is there to be built

4187
03:57:02,342 --> 03:57:04,342
And we are like

4188
03:57:04,342 --> 03:57:06,342
Really starting to

4189
03:57:06,342 --> 03:57:08,342
Meet the real people

4190
03:57:08,342 --> 03:57:10,342
So of course if you want to go

4191
03:57:10,342 --> 03:57:12,342
To the Rootstock stand here

4192
03:57:12,342 --> 03:57:14,342
The whole Rootstock community is there

4193
03:57:14,342 --> 03:57:16,342
People building on Rootstock

4194
03:57:16,342 --> 03:57:18,342
And I'll be there

4195
03:57:18,342 --> 03:57:20,342
And my Twitter is Dieguito

4196
03:57:20,342 --> 03:57:22,342
Like Diego in Spanish

4197
03:57:22,342 --> 03:57:24,342
So I'm happy to talk to you as well

4198
03:57:24,342 --> 03:57:26,342
If you're willing to

4199
03:57:26,342 --> 03:57:28,342
Only small countries use Liquid

4200
03:57:30,342 --> 03:57:32,342
That's it

4201
03:57:32,342 --> 03:57:34,342
Only small countries use Liquid

4202
03:57:34,342 --> 03:57:36,342
Because of El Salvador

4203
03:57:36,342 --> 03:57:38,342
I think we'll be seeing

4204
03:57:38,342 --> 03:57:40,342
A continuous trend towards that

4205
03:57:40,342 --> 03:57:42,342
I think Samsung has been doing a great job

4206
03:57:42,342 --> 03:57:44,342
Bitcoin pulling and Liquid pulling countries

4207
03:57:44,342 --> 03:57:46,342
We'll be seeing interesting stuff happening

4208
03:57:46,342 --> 03:57:48,342
On Liquid in terms of security tokens

4209
03:57:48,342 --> 03:57:50,342
And all other stuff

4210
03:57:50,342 --> 03:57:52,342
That's awesome

4211
03:57:52,342 --> 03:57:54,342
What's happening there is almost surreal

4212
03:57:54,342 --> 03:57:56,342
All of us in El Salvador

4213
03:57:56,342 --> 03:57:58,342
After so many years

4214
03:57:58,342 --> 03:58:00,342
Pushing for Bitcoin

4215
03:58:00,342 --> 03:58:02,342
And seeing it being used

4216
03:58:02,342 --> 03:58:04,342
In real life

4217
03:58:04,342 --> 03:58:06,342
It's almost magical

4218
03:58:06,342 --> 03:58:08,342
I'm very happy that

4219
03:58:08,342 --> 03:58:10,342
Liquid is helping on the bonds

4220
03:58:10,342 --> 03:58:12,342
And the tokenization of assets

4221
03:58:12,342 --> 03:58:14,342
For the government

4222
03:58:14,342 --> 03:58:16,342
That's great

4223
03:58:16,342 --> 03:58:18,342
Again I'm Paul Sztorc

4224
03:58:18,342 --> 03:58:20,342
I've been researching sidechains for a very long time

4225
03:58:20,342 --> 03:58:22,342
So you can read about my proposal, BIP300

4226
03:58:22,342 --> 03:58:24,342
You can read on my blog

4227
03:58:24,342 --> 03:58:26,342
Truthcoin.info

4228
03:58:26,342 --> 03:58:28,342
I have many other sidechain designs and commentary

4229
03:58:28,342 --> 03:58:30,342
So that's it I guess

4230
03:58:30,342 --> 03:58:32,342
Thank you very much

4231
03:58:32,342 --> 03:58:34,342
Right

4232
03:58:52,342 --> 03:58:54,342
Thank you very much for coming

4233
03:58:54,342 --> 03:58:56,342
I am going to

4234
03:58:56,342 --> 03:58:58,342
Talk to you about the very

4235
03:58:58,342 --> 03:59:00,342
Exciting subject of federated

4236
03:59:00,342 --> 03:59:02,342
Chowmian Mint

4237
03:59:02,342 --> 03:59:04,342
Or what I believe

4238
03:59:04,342 --> 03:59:06,342
Is effectively

4239
03:59:06,342 --> 03:59:08,342
The third pillar of the Bitcoin

4240
03:59:08,342 --> 03:59:10,342
Open source ecosystem

4241
03:59:10,342 --> 03:59:12,342
Now

4242
03:59:12,342 --> 03:59:14,342
When making this

4243
03:59:14,342 --> 03:59:16,342
Talk I wanted to think

4244
03:59:16,342 --> 03:59:18,342
About and reflect on

4245
03:59:18,342 --> 03:59:20,342
Why we are here

4246
03:59:20,342 --> 03:59:22,342
And I don't mean

4247
03:59:22,342 --> 03:59:24,342
In the existential sense

4248
03:59:24,342 --> 03:59:26,342
And I don't mean why we are here at Bitcoin 2022

4249
03:59:26,342 --> 03:59:28,342
I mean

4250
03:59:28,342 --> 03:59:30,342
Why are we here at the open source

4251
03:59:30,342 --> 03:59:32,342
Stage

4252
03:59:32,342 --> 03:59:34,342
I think the reason we are here

4253
03:59:34,342 --> 03:59:36,342
Is because

4254
03:59:36,342 --> 03:59:38,342
We understand how vital

4255
03:59:38,342 --> 03:59:40,342
Open source

4256
03:59:40,342 --> 03:59:42,342
Software is

4257
03:59:42,342 --> 03:59:44,342
To the Bitcoin ecosystem

4258
03:59:44,342 --> 03:59:46,342
And ensuring that

4259
03:59:46,342 --> 03:59:48,342
Bitcoin achieves its ultimate objective

4260
03:59:48,342 --> 03:59:50,342
Of separating money

4261
03:59:50,342 --> 03:59:52,342
From state

4262
03:59:52,342 --> 03:59:54,342
Now

4263
03:59:54,342 --> 03:59:56,342
We understand that

4264
03:59:56,342 --> 03:59:58,342
Bitcoin is a global scale

4265
03:59:58,342 --> 04:00:00,342
Decentralized

4266
04:00:00,342 --> 04:00:02,342
Decentralized spelled in the UK way by the way

4267
04:00:02,342 --> 04:00:04,342
Not the US way

4268
04:00:04,342 --> 04:00:06,342
Censorship resistant money

4269
04:00:06,342 --> 04:00:08,342
Now core to that

4270
04:00:08,342 --> 04:00:10,342
And no pun intended

4271
04:00:10,342 --> 04:00:12,342
Is Bitcoin core

4272
04:00:12,342 --> 04:00:14,342
Which is a global scale

4273
04:00:14,342 --> 04:00:16,342
Decentralized censorship resistant

4274
04:00:16,342 --> 04:00:18,342
Platform of money and store of value

4275
04:00:18,342 --> 04:00:20,342
Now over the last

4276
04:00:20,342 --> 04:00:22,342
Few years

4277
04:00:22,342 --> 04:00:24,342
We've seen the second pillar

4278
04:00:24,342 --> 04:00:26,342
Appear

4279
04:00:26,342 --> 04:00:28,342
Which is lightning

4280
04:00:28,342 --> 04:00:30,342
Which again is a censorship resistant

4281
04:00:30,342 --> 04:00:32,342
Decentralized

4282
04:00:32,342 --> 04:00:34,342
Global scale

4283
04:00:34,342 --> 04:00:36,342
Payment network

4284
04:00:36,342 --> 04:00:38,342
But I believe we are missing

4285
04:00:38,342 --> 04:00:40,342
A pillar

4286
04:00:40,342 --> 04:00:42,342
What we do not have and what we need

4287
04:00:42,342 --> 04:00:44,342
Is a censorship resistant

4288
04:00:44,342 --> 04:00:46,342
Decentralized global scale

4289
04:00:46,342 --> 04:00:48,342
Form of Bitcoin custody

4290
04:00:48,342 --> 04:00:50,342
Well at least

4291
04:00:50,342 --> 04:00:52,342
Until FediMint

4292
04:00:52,342 --> 04:00:54,342
Came along

4293
04:00:54,342 --> 04:00:56,342
Now before I go into

4294
04:00:56,342 --> 04:00:58,342
Details as to or give you an overview

4295
04:00:58,342 --> 04:01:00,342
Of what FediMint is

4296
04:01:00,342 --> 04:01:02,342
I think it's important to understand

4297
04:01:02,342 --> 04:01:04,342
Why

4298
04:01:04,342 --> 04:01:06,342
A decentralized

4299
04:01:06,342 --> 04:01:08,342
Bitcoin custody system is so

4300
04:01:08,342 --> 04:01:10,342
Vital

4301
04:01:10,342 --> 04:01:12,342
And to understand that

4302
04:01:12,342 --> 04:01:14,342
We need to understand what are the current options

4303
04:01:14,342 --> 04:01:16,342
If you want to custody your Bitcoin

4304
04:01:16,342 --> 04:01:18,342
Now the first option

4305
04:01:18,342 --> 04:01:20,342
Funnily enough

4306
04:01:20,342 --> 04:01:22,342
Is third party custody

4307
04:01:22,342 --> 04:01:24,342
Or with a non Cockney accent

4308
04:01:24,342 --> 04:01:26,342
Third party custody

4309
04:01:26,342 --> 04:01:28,342
Now this is where

4310
04:01:28,342 --> 04:01:30,342
You entrust your Bitcoin

4311
04:01:30,342 --> 04:01:32,342
Not to yourself, not to a friend

4312
04:01:32,342 --> 04:01:34,342
But to a third party

4313
04:01:34,342 --> 04:01:36,342
Someone who you don't know

4314
04:01:36,342 --> 04:01:38,342
I.e. a stranger

4315
04:01:38,342 --> 04:01:40,342
Now

4316
04:01:40,342 --> 04:01:42,342
Way back when

4317
04:01:42,342 --> 04:01:44,342
We would trust our Bitcoin

4318
04:01:44,342 --> 04:01:46,342
To unregulated

4319
04:01:46,342 --> 04:01:48,342
Exchanges

4320
04:01:48,342 --> 04:01:50,342
Such as MTGox

4321
04:01:50,342 --> 04:01:52,342
And as we all hopefully know

4322
04:01:52,342 --> 04:01:54,342
That didn't end well

4323
04:01:54,342 --> 04:01:56,342
What would happen is

4324
04:01:56,342 --> 04:01:58,342
If you trust your Bitcoin to someone

4325
04:01:58,342 --> 04:02:00,342
Who doesn't know you

4326
04:02:00,342 --> 04:02:02,342
They would either not look after it properly

4327
04:02:02,342 --> 04:02:04,342
And it would get stolen or lost

4328
04:02:04,342 --> 04:02:06,342
Or they themselves would run off with your Bitcoin

4329
04:02:06,342 --> 04:02:08,342
So

4330
04:02:08,342 --> 04:02:10,342
In response to this

4331
04:02:10,342 --> 04:02:12,342
A number of people tried to set up regulated

4332
04:02:12,342 --> 04:02:14,342
Exchanges

4333
04:02:14,342 --> 04:02:16,342
I was one of these

4334
04:02:16,342 --> 04:02:18,342
Eight years ago

4335
04:02:18,342 --> 04:02:20,342
I set up a Bitcoin exchange

4336
04:02:20,342 --> 04:02:22,342
Now

4337
04:02:22,342 --> 04:02:24,342
The intent was good

4338
04:02:24,342 --> 04:02:26,342
I wanted to and all the others

4339
04:02:26,342 --> 04:02:28,342
Wanted to set up exchanges

4340
04:02:28,342 --> 04:02:30,342
To resolve these problems

4341
04:02:30,342 --> 04:02:32,342
But

4342
04:02:32,342 --> 04:02:34,342
We resolved one and created a new

4343
04:02:34,342 --> 04:02:36,342
Problem

4344
04:02:36,342 --> 04:02:38,342
Basically

4345
04:02:38,342 --> 04:02:40,342
What we were asking people to do

4346
04:02:40,342 --> 04:02:42,342
And we educated them to do

4347
04:02:42,342 --> 04:02:44,342
Is to take their fiat

4348
04:02:44,342 --> 04:02:46,342
And use it to buy

4349
04:02:46,342 --> 04:02:48,342
A censorship resistant money

4350
04:02:48,342 --> 04:02:50,342
And then put it on an exchange

4351
04:02:50,342 --> 04:02:52,342
Which was regulated by a regulator

4352
04:02:52,342 --> 04:02:54,342
Regulators

4353
04:02:54,342 --> 04:02:56,342
Exist to regulate

4354
04:02:56,342 --> 04:02:58,342
Another word for regulation is censorship

4355
04:02:58,342 --> 04:03:00,342
So

4356
04:03:00,342 --> 04:03:02,342
You don't have to be a genius to realise

4357
04:03:02,342 --> 04:03:04,342
That's also in time

4358
04:03:04,342 --> 04:03:06,342
It's going to end well

4359
04:03:06,342 --> 04:03:08,342
Now this is not hyperbole

4360
04:03:08,342 --> 04:03:10,342
I over eight years

4361
04:03:10,342 --> 04:03:12,342
Saw increasing level of regulation

4362
04:03:12,342 --> 04:03:14,342
Coming down the line

4363
04:03:14,342 --> 04:03:16,342
And now today we are seeing

4364
04:03:16,342 --> 04:03:18,342
Whatever your view

4365
04:03:18,342 --> 04:03:20,342
We're seeing Ukraine, Russia

4366
04:03:20,342 --> 04:03:22,342
Where innocent Russians around the world

4367
04:03:22,342 --> 04:03:24,342
Are losing their access to their

4368
04:03:24,342 --> 04:03:26,342
Bitcoin

4369
04:03:26,342 --> 04:03:28,342
In the European Union

4370
04:03:28,342 --> 04:03:30,342
We're seeing

4371
04:03:30,342 --> 04:03:32,342
New regulations come into place

4372
04:03:32,342 --> 04:03:34,342
Which effectively

4373
04:03:34,342 --> 04:03:36,342
Prevent or make it very

4374
04:03:36,342 --> 04:03:38,342
Difficult for people to gain personal

4375
04:03:38,342 --> 04:03:40,342
Custody of their Bitcoin

4376
04:03:42,342 --> 04:03:44,342
So what was the solution to this

4377
04:03:44,342 --> 04:03:46,342
We advise and educate people

4378
04:03:46,342 --> 04:03:48,342
To use first party custody

4379
04:03:50,342 --> 04:03:52,342
This is where you are

4380
04:03:52,342 --> 04:03:54,342
Taking full personal responsibility

4381
04:03:54,342 --> 04:03:56,342
For your Bitcoin

4382
04:03:58,342 --> 04:04:00,342
Now

4383
04:04:00,342 --> 04:04:02,342
From a censorship resistant point of view

4384
04:04:02,342 --> 04:04:04,342
This is the gold standard

4385
04:04:04,342 --> 04:04:06,342
But the reality is

4386
04:04:06,342 --> 04:04:08,342
That

4387
04:04:08,342 --> 04:04:10,342
After eight years of running a Bitcoin

4388
04:04:10,342 --> 04:04:12,342
Only exchange

4389
04:04:12,342 --> 04:04:14,342
I had to come to the conclusion

4390
04:04:14,342 --> 04:04:16,342
That maybe we can get

4391
04:04:16,342 --> 04:04:18,342
5%, maybe 10, maybe even 20%

4392
04:04:18,342 --> 04:04:20,342
Of people

4393
04:04:20,342 --> 04:04:22,342
To self custody

4394
04:04:22,342 --> 04:04:24,342
But 80-90% are never going to get there

4395
04:04:24,342 --> 04:04:26,342
And the reasons

4396
04:04:26,342 --> 04:04:28,342
Are simple

4397
04:04:28,342 --> 04:04:30,342
For many people

4398
04:04:30,342 --> 04:04:32,342
It was just

4399
04:04:32,342 --> 04:04:34,342
Too technically complex

4400
04:04:34,342 --> 04:04:36,342
They

4401
04:04:36,342 --> 04:04:38,342
Did not feel comfortable

4402
04:04:38,342 --> 04:04:40,342
With the technical sophistication needed

4403
04:04:40,342 --> 04:04:42,342
To self custody

4404
04:04:42,342 --> 04:04:44,342
For others

4405
04:04:44,342 --> 04:04:46,342
They just

4406
04:04:46,342 --> 04:04:48,342
Couldn't afford it

4407
04:04:48,342 --> 04:04:50,342
Especially in the global self

4408
04:04:50,342 --> 04:04:52,342
I'm a board member for B-Trust

4409
04:04:52,342 --> 04:04:54,342
And I understand that many people around the world

4410
04:04:54,342 --> 04:04:56,342
Do not

4411
04:04:56,342 --> 04:04:58,342
Would not be able to afford

4412
04:04:58,342 --> 04:05:00,342
The cost for a hardware wallet

4413
04:05:00,342 --> 04:05:02,342
Or if they could

4414
04:05:02,342 --> 04:05:04,342
It was better given their total volume of Bitcoin

4415
04:05:04,342 --> 04:05:06,342
To buy more Bitcoin

4416
04:05:06,342 --> 04:05:08,342
Than to buy a hardware wallet

4417
04:05:08,342 --> 04:05:10,342
And third

4418
04:05:10,342 --> 04:05:12,342
For a lot of people

4419
04:05:12,342 --> 04:05:14,342
They were just too afraid

4420
04:05:14,342 --> 04:05:16,342
They just did not feel comfortable with

4421
04:05:16,342 --> 04:05:18,342
Custodying Bitcoin themselves

4422
04:05:18,342 --> 04:05:20,342
And they preferred to trust someone else

4423
04:05:20,342 --> 04:05:22,342
Other than themselves

4424
04:05:22,342 --> 04:05:24,342
So

4425
04:05:24,342 --> 04:05:26,342
In this arena

4426
04:05:26,342 --> 04:05:28,342
FediMint appears

4427
04:05:28,342 --> 04:05:30,342
And FediMint is a portmanteau

4428
04:05:30,342 --> 04:05:32,342
A mashup of the words

4429
04:05:32,342 --> 04:05:34,342
Federated Chaumian Mint

4430
04:05:34,342 --> 04:05:36,342
Now

4431
04:05:36,342 --> 04:05:38,342
FediMint

4432
04:05:38,342 --> 04:05:40,342
Contains

4433
04:05:40,342 --> 04:05:42,342
Three key innovations

4434
04:05:42,342 --> 04:05:44,342
One is philosophical

4435
04:05:44,342 --> 04:05:46,342
The second

4436
04:05:46,342 --> 04:05:48,342
Is structural

4437
04:05:48,342 --> 04:05:50,342
And the third

4438
04:05:50,342 --> 04:05:52,342
Are technical

4439
04:05:52,342 --> 04:05:54,342
First

4440
04:05:54,342 --> 04:05:56,342
The philosophical is

4441
04:05:56,342 --> 04:05:58,342
Instead of using third party

4442
04:05:58,342 --> 04:06:00,342
Stranger custody

4443
04:06:00,342 --> 04:06:02,342
Or first party

4444
04:06:02,342 --> 04:06:04,342
Do-it-all-yourself custody

4445
04:06:04,342 --> 04:06:06,342
You use third

4446
04:06:06,342 --> 04:06:08,342
Second party

4447
04:06:08,342 --> 04:06:10,342
Community custody

4448
04:06:10,342 --> 04:06:12,342
I.e. you take a community

4449
04:06:12,342 --> 04:06:14,342
Of close friends

4450
04:06:14,342 --> 04:06:16,342
Close family

4451
04:06:16,342 --> 04:06:18,342
Close work colleagues

4452
04:06:18,342 --> 04:06:20,342
And they form a community wallet together

4453
04:06:20,342 --> 04:06:22,342
In Bitcoin Beach

4454
04:06:22,342 --> 04:06:24,342
I was there last year

4455
04:06:24,342 --> 04:06:26,342
In El Salvador

4456
04:06:26,342 --> 04:06:28,342
This idea

4457
04:06:28,342 --> 04:06:30,342
Is strange

4458
04:06:30,342 --> 04:06:32,342
Potentially to people in the west

4459
04:06:32,342 --> 04:06:34,342
But in the global south

4460
04:06:34,342 --> 04:06:36,342
This is very common

4461
04:06:36,342 --> 04:06:38,342
For people to trust their friends and family

4462
04:06:38,342 --> 04:06:40,342
The second

4463
04:06:40,342 --> 04:06:42,342
Is structural

4464
04:06:42,342 --> 04:06:44,342
The FediMint protocol

4465
04:06:44,342 --> 04:06:46,342
Recognizes that not all people

4466
04:06:46,342 --> 04:06:48,342
In a community

4467
04:06:48,342 --> 04:06:50,342
So

4468
04:06:50,342 --> 04:06:52,342
Just like in days of yore

4469
04:06:52,342 --> 04:06:54,342
Where the strongest

4470
04:06:54,342 --> 04:06:56,342
In the tribe would look after the tribe

4471
04:06:56,342 --> 04:06:58,342
The technically strongest

4472
04:06:58,342 --> 04:07:00,342
In the FediMint community

4473
04:07:00,342 --> 04:07:02,342
Do the heavy lifting

4474
04:07:02,342 --> 04:07:04,342
Of running

4475
04:07:04,342 --> 04:07:06,342
The community wallet

4476
04:07:06,342 --> 04:07:08,342
The FediMint community wallet

4477
04:07:08,342 --> 04:07:10,342
On behalf of the tribe

4478
04:07:10,342 --> 04:07:12,342
Now

4479
04:07:12,342 --> 04:07:14,342
Clearly in that scenario

4480
04:07:14,342 --> 04:07:16,342
The guardians

4481
04:07:16,342 --> 04:07:18,342
Would I like to call guardians

4482
04:07:18,342 --> 04:07:20,342
Have a level of influence

4483
04:07:20,342 --> 04:07:22,342
On the Bitcoin

4484
04:07:22,342 --> 04:07:24,342
That normal members don't have

4485
04:07:24,342 --> 04:07:26,342
And in order to sort of

4486
04:07:26,342 --> 04:07:28,342
Effectively create guardrails around that

4487
04:07:28,342 --> 04:07:30,342
And limitations on that

4488
04:07:30,342 --> 04:07:32,342
Two technologies are put into place

4489
04:07:32,342 --> 04:07:34,342
The technologies that give FediMint its name

4490
04:07:34,342 --> 04:07:36,342
The first

4491
04:07:36,342 --> 04:07:38,342
Is the use of federations

4492
04:07:38,342 --> 04:07:40,342
And you can think about these

4493
04:07:40,342 --> 04:07:42,342
Simply as multi-signature wallets

4494
04:07:42,342 --> 04:07:44,342
So that

4495
04:07:44,342 --> 04:07:46,342
No one guardian

4496
04:07:46,342 --> 04:07:48,342
And in large federations

4497
04:07:48,342 --> 04:07:50,342
Several guardians can act together

4498
04:07:50,342 --> 04:07:52,342
To be able to create a transaction

4499
04:07:52,342 --> 04:07:54,342
To take money out of the wallet

4500
04:07:54,342 --> 04:07:56,342
So you avoid

4501
04:07:56,342 --> 04:07:58,342
Key man's single point of contact risk

4502
04:07:58,342 --> 04:08:00,342
The second

4503
04:08:00,342 --> 04:08:02,342
Is the use of

4504
04:08:02,342 --> 04:08:04,342
Xiaomi and Mintz

4505
04:08:04,342 --> 04:08:06,342
And this is quite key

4506
04:08:06,342 --> 04:08:08,342
Because Xiaomi and Mintz

4507
04:08:08,342 --> 04:08:10,342
Is a privacy protocol

4508
04:08:10,342 --> 04:08:12,342
Which means that

4509
04:08:12,342 --> 04:08:14,342
Guardians can work to manage

4510
04:08:14,342 --> 04:08:16,342
The communal or community wallet

4511
04:08:16,342 --> 04:08:18,342
But

4512
04:08:18,342 --> 04:08:20,342
They do not know the individual

4513
04:08:20,342 --> 04:08:22,342
Balances of community members

4514
04:08:22,342 --> 04:08:24,342
Furthermore

4515
04:08:24,342 --> 04:08:26,342
If a deposit comes into the wallet

4516
04:08:26,342 --> 04:08:28,342
Or a request for withdrawal

4517
04:08:28,342 --> 04:08:30,342
Goes out of the wallet

4518
04:08:30,342 --> 04:08:32,342
The guardians

4519
04:08:32,342 --> 04:08:34,342
Don't know who the money

4520
04:08:34,342 --> 04:08:36,342
Bitcoin coming in is for

4521
04:08:36,342 --> 04:08:38,342
Or who

4522
04:08:38,342 --> 04:08:40,342
The request to go out of the wallet

4523
04:08:40,342 --> 04:08:42,342
Now this provides

4524
04:08:42,342 --> 04:08:44,342
A level of privacy

4525
04:08:44,342 --> 04:08:46,342
Which is not only better than third party custody

4526
04:08:46,342 --> 04:08:48,342
Where the exchange

4527
04:08:48,342 --> 04:08:50,342
The stranger knows everything about

4528
04:08:50,342 --> 04:08:52,342
Your usage and all of their users

4529
04:08:52,342 --> 04:08:54,342
But it's actually better than

4530
04:08:54,342 --> 04:08:56,342
First party custody as well

4531
04:08:56,342 --> 04:08:58,342
Because blockchain analytics companies

4532
04:08:58,342 --> 04:09:00,342
Or blockchain monitoring companies

4533
04:09:00,342 --> 04:09:02,342
Are not able to determine

4534
04:09:02,342 --> 04:09:04,342
The difference between a federated

4535
04:09:04,342 --> 04:09:06,342
FediMint wallet

4536
04:09:06,342 --> 04:09:08,342
And a normal first party wallet

4537
04:09:08,342 --> 04:09:10,342
So from their point of view

4538
04:09:10,342 --> 04:09:12,342
It's all one user

4539
04:09:12,342 --> 04:09:14,342
They can know the total amount

4540
04:09:14,342 --> 04:09:16,342
Of balance but they don't know

4541
04:09:16,342 --> 04:09:18,342
Which person within that community

4542
04:09:18,342 --> 04:09:20,342
Including the guardians

4543
04:09:20,342 --> 04:09:22,342
Are doing what

4544
04:09:22,342 --> 04:09:24,342
So taken together

4545
04:09:24,342 --> 04:09:26,342
This means

4546
04:09:26,342 --> 04:09:28,342
That FediMint

4547
04:09:28,342 --> 04:09:30,342
Is global scale

4548
04:09:30,342 --> 04:09:32,342
Because

4549
04:09:32,342 --> 04:09:34,342
We are able to get

4550
04:09:34,342 --> 04:09:36,342
Not only the most technically sophisticated

4551
04:09:36,342 --> 04:09:38,342
Out from a regulated

4552
04:09:38,342 --> 04:09:40,342
Regime

4553
04:09:40,342 --> 04:09:42,342
But also their close friends

4554
04:09:42,342 --> 04:09:44,342
And family and work colleagues as well

4555
04:09:44,342 --> 04:09:46,342
Wherever they may be in the world

4556
04:09:46,342 --> 04:09:48,342
It's decentralized

4557
04:09:48,342 --> 04:09:50,342
Because you can

4558
04:09:50,342 --> 04:09:52,342
Envision a future where there are

4559
04:09:52,342 --> 04:09:54,342
10,000 to 100,000

4560
04:09:54,342 --> 04:09:56,342
FediMint communities

4561
04:09:56,342 --> 04:09:58,342
Around the world

4562
04:09:58,342 --> 04:10:00,342
Not the few dozen hyper large

4563
04:10:00,342 --> 04:10:02,342
Exchanges

4564
04:10:02,342 --> 04:10:04,342
Or regulated exchanges

4565
04:10:04,342 --> 04:10:06,342
That we are quickly heading towards

4566
04:10:06,342 --> 04:10:08,342
And it is censorship resistant

4567
04:10:08,342 --> 04:10:10,342
Because

4568
04:10:10,342 --> 04:10:12,342
If you are providing

4569
04:10:12,342 --> 04:10:14,342
This service as a guardian

4570
04:10:14,342 --> 04:10:15,009
And you are not

4571
04:10:15,009 --> 04:10:16,009
Then in most jurisdictions around the world

4572
04:10:16,009 --> 04:10:18,009
Most reasonable jurisdictions

4573
04:10:18,009 --> 04:10:20,009
That is exempt from regulation

4574
04:10:20,009 --> 04:10:22,009
Because you are not carrying out the task

4575
04:10:22,009 --> 04:10:24,009
By way of business

4576
04:10:24,009 --> 04:10:26,009
And therefore

4577
04:10:26,009 --> 04:10:28,009
You do not need to be regulated

4578
04:10:28,009 --> 04:10:30,009
Like hardware wallets

4579
04:10:30,009 --> 04:10:32,009
Taken together

4580
04:10:32,009 --> 04:10:34,009
I believe

4581
04:10:34,009 --> 04:10:36,009
And when I heard about this a year ago

4582
04:10:36,009 --> 04:10:38,009
I believe

4583
04:10:38,009 --> 04:10:40,009
That FediMint

4584
04:10:40,009 --> 04:10:42,009
Has the potential

4585
04:10:42,009 --> 04:10:44,009
To be the third key pillar

4586
04:10:44,009 --> 04:10:46,009
Of the Bitcoin

4587
04:10:46,009 --> 04:10:48,009
Open source ecosystem

4588
04:10:48,009 --> 04:10:50,009
A global scale

4589
04:10:50,009 --> 04:10:52,009
Decentralized

4590
04:10:52,009 --> 04:10:54,009
Censorship resistant

4591
04:10:54,009 --> 04:10:56,009
Form of Bitcoin custody

4592
04:10:56,009 --> 04:10:58,009
Now

4593
04:10:58,009 --> 04:11:00,009
What do you do next

4594
04:11:00,009 --> 04:11:02,009
You can't see the URL

4595
04:11:02,009 --> 04:11:04,009
Hopefully you can

4596
04:11:04,009 --> 04:11:06,009
The first thing

4597
04:11:06,009 --> 04:11:08,009
Is to

4598
04:11:08,009 --> 04:11:10,009
The first thing

4599
04:11:10,009 --> 04:11:12,009
Is please wait

4600
04:11:12,009 --> 04:11:14,009
And listen to the next talk

4601
04:11:14,009 --> 04:11:16,009
This is about

4602
04:11:16,009 --> 04:11:18,009
The future of Bitcoin privacy

4603
04:11:18,009 --> 04:11:20,009
I urge you all to listen to it

4604
04:11:20,009 --> 04:11:22,009
Because it is a really interesting talk

4605
04:11:22,009 --> 04:11:24,009
But also you have El Sirian

4606
04:11:24,009 --> 04:11:26,009
Who is the inventor of the

4607
04:11:26,009 --> 04:11:28,009
FediMint protocol

4608
04:11:28,009 --> 04:11:30,009
And also the main contributor

4609
04:11:30,009 --> 04:11:32,009
To the

4610
04:11:32,009 --> 04:11:34,009
Minimint reference implementation

4611
04:11:34,009 --> 04:11:36,009
Of the FediMint protocol

4612
04:11:36,009 --> 04:11:38,009
Two

4613
04:11:38,009 --> 04:11:40,009
And I'm sure he will go into more detail

4614
04:11:40,009 --> 04:11:42,009
As to some aspects of FediMint

4615
04:11:42,009 --> 04:11:44,009
Two

4616
04:11:44,009 --> 04:11:46,009
It doesn't appear clearly here

4617
04:11:46,009 --> 04:11:48,009
But you should go to

4618
04:11:48,009 --> 04:11:50,009
FediMint.org

4619
04:11:50,009 --> 04:11:52,009
Where you can find out more

4620
04:11:52,009 --> 04:11:54,009
About FediMint

4621
04:11:54,009 --> 04:11:56,009
And understanding of how it works

4622
04:11:56,009 --> 04:11:58,009
And the reasons behind it

4623
04:11:58,009 --> 04:12:00,009
And three and most important

4624
04:12:00,009 --> 04:12:02,009
If

4625
04:12:02,009 --> 04:12:04,009
You are a

4626
04:12:04,009 --> 04:12:06,009
Bitcoin open source engineer

4627
04:12:06,009 --> 04:12:08,009
Or developer

4628
04:12:08,009 --> 04:12:10,009
Or if you are someone who just wants to

4629
04:12:10,009 --> 04:12:12,009
Contribute to open source technology

4630
04:12:12,009 --> 04:12:14,009
I urge you to go to

4631
04:12:14,009 --> 04:12:16,009
GitHub and the FediMint project

4632
04:12:16,009 --> 04:12:18,009
On GitHub and consider

4633
04:12:18,009 --> 04:12:20,009
Investing your time and contributing

4634
04:12:20,009 --> 04:12:22,009
To the project

4635
04:12:22,009 --> 04:12:24,009
If you choose to do so

4636
04:12:24,009 --> 04:12:26,009
You will be helping

4637
04:12:26,009 --> 04:12:28,009
Ensure that Bitcoin

4638
04:12:28,009 --> 04:12:30,009
Achieves its ultimate objective

4639
04:12:30,009 --> 04:12:32,009
Which is the separation

4640
04:12:32,009 --> 04:12:34,009
Of money from state

4641
04:12:34,009 --> 04:12:36,009
Thank you very much

4642
04:12:36,009 --> 04:12:38,009
Applause

4643
04:12:38,009 --> 04:12:40,009
Music

4644
04:12:40,009 --> 04:12:42,009
Music

4645
04:12:42,009 --> 04:12:44,009
Music

4646
04:12:44,009 --> 04:12:46,009
Music

4647
04:12:46,009 --> 04:12:48,009
Music

4648
04:12:48,009 --> 04:12:50,009
Music

4649
04:12:50,009 --> 04:12:52,009
Music

4650
04:12:52,009 --> 04:12:54,009
Hello, hello everyone

4651
04:12:54,009 --> 04:12:56,009
Welcome to this panel

4652
04:12:56,009 --> 04:12:58,009
Obi, thanks a lot, that was the best intro we could have hoped for

4653
04:12:58,009 --> 04:13:00,009
Obi

4654
04:13:00,009 --> 04:13:02,009
Gave the general idea

4655
04:13:02,009 --> 04:13:04,009
Of what we are going to be talking about on this panel

4656
04:13:04,009 --> 04:13:06,009
So that's Federated eCash

4657
04:13:06,009 --> 04:13:08,009
My name is Arno van Wittem

4658
04:13:08,009 --> 04:13:10,009
I work at Bitcoin Magazine

4659
04:13:10,009 --> 04:13:12,009
I'm joined by Casey Rodenmoor

4660
04:13:12,009 --> 04:13:14,009
To the right, to the left for you

4661
04:13:14,009 --> 04:13:16,009
Of course

4662
04:13:16,009 --> 04:13:18,009
Applause

4663
04:13:18,009 --> 04:13:20,009
And Eric Sirian

4664
04:13:20,009 --> 04:13:22,009
I'll let you guys introduce

4665
04:13:22,009 --> 04:13:24,009
Applause

4666
04:13:24,009 --> 04:13:26,009
I'll let you guys introduce yourself briefly

4667
04:13:26,009 --> 04:13:28,009
Just explain who you are

4668
04:13:28,009 --> 04:13:30,009
Sure, yeah, my name is Casey Rodenmoor

4669
04:13:30,009 --> 04:13:32,009
I'm a long time

4670
04:13:32,009 --> 04:13:34,009
Sort of minor Bitcoin developer

4671
04:13:34,009 --> 04:13:36,009
You know, hanging out in the shadows, doing random things

4672
04:13:36,009 --> 04:13:38,009
I have a bunch of preposterous ideas

4673
04:13:38,009 --> 04:13:40,009
That I work on

4674
04:13:40,009 --> 04:13:42,009
But I'm very interested in Bitcoin privacy

4675
04:13:42,009 --> 04:13:44,009
And I got interested

4676
04:13:44,009 --> 04:13:46,009
In Charmian eCash

4677
04:13:46,009 --> 04:13:48,009
On top of Lightning

4678
04:13:48,009 --> 04:13:50,009
Around the same time that Eric started to work on it

4679
04:13:50,009 --> 04:13:52,009
Yeah, and that's why I'm here

4680
04:13:52,009 --> 04:13:54,009
Eric?

4681
04:13:54,009 --> 04:13:56,009
Yeah, hey, I'm Eric, I'm a crypto-anarchist

4682
04:13:56,009 --> 04:13:58,009
And aspiring cypherpunk

4683
04:13:58,009 --> 04:14:00,009
I have a background in

4684
04:14:00,009 --> 04:14:02,009
Distributed systems, cryptography

4685
04:14:02,009 --> 04:14:04,009
I'm a Rust programmer

4686
04:14:04,009 --> 04:14:06,009
And yeah, around the time

4687
04:14:06,009 --> 04:14:08,009
Of last year, I think

4688
04:14:08,009 --> 04:14:10,009
We were talking

4689
04:14:10,009 --> 04:14:12,009
At the Miami conference, actually

4690
04:14:12,009 --> 04:14:14,009
About a new project of mine, Minimint

4691
04:14:14,009 --> 04:14:16,009
And that's how we got together

4692
04:14:16,009 --> 04:14:18,009
And that's how the project

4693
04:14:18,009 --> 04:14:20,009
When the project

4694
04:14:20,009 --> 04:14:22,009
Got started

4695
04:14:22,009 --> 04:14:24,009
Yeah, so let's talk about a little bit of the history

4696
04:14:24,009 --> 04:14:26,009
And we'll go back further than one year

4697
04:14:26,009 --> 04:14:28,009
Yep

4698
04:14:28,009 --> 04:14:30,009
So, Charmian eCash has a long history

4699
04:14:30,009 --> 04:14:32,009
Very long

4700
04:14:32,009 --> 04:14:34,009
Yeah, Casey, where does it come from?

4701
04:14:34,009 --> 04:14:36,009
Yeah, so the concept behind

4702
04:14:36,009 --> 04:14:38,009
Charmian eCash

4703
04:14:38,009 --> 04:14:40,009
Charmian eCash, okay, I did not get into what

4704
04:14:40,009 --> 04:14:42,009
Charmian eCash is yet

4705
04:14:42,009 --> 04:14:44,009
But it's based on something called blind signatures

4706
04:14:44,009 --> 04:14:46,009
Which were invented by Charm

4707
04:14:46,009 --> 04:14:48,009
In 1982

4708
04:14:48,009 --> 04:14:50,009
And then in 1989

4709
04:14:50,009 --> 04:14:52,009
He actually started a company

4710
04:14:52,009 --> 04:14:54,009
To try to commercialize that technology

4711
04:14:54,009 --> 04:14:56,009
And provide a

4712
04:14:56,009 --> 04:14:58,009
Sort of private digital bank

4713
04:14:58,009 --> 04:15:00,009
A fully centralized private digital bank

4714
04:15:00,009 --> 04:15:02,009
Using blind signatures

4715
04:15:02,009 --> 04:15:04,009
And never really successfully

4716
04:15:04,009 --> 04:15:06,009
Commercialized it, but it's kind of

4717
04:15:06,009 --> 04:15:08,009
An idea that's been there

4718
04:15:08,009 --> 04:15:10,009
In the background for a long time

4719
04:15:10,009 --> 04:15:12,009
And one thing I recommend for people

4720
04:15:12,009 --> 04:15:14,009
Is look into the

4721
04:15:14,009 --> 04:15:16,009
Pre-Bitcoin history

4722
04:15:16,009 --> 04:15:18,009
Of digital privacy

4723
04:15:18,009 --> 04:15:20,009
And digital cash technologies

4724
04:15:20,009 --> 04:15:22,009
And see things like eCash in the past

4725
04:15:22,009 --> 04:15:24,009
That are interesting ideas

4726
04:15:24,009 --> 04:15:26,009
Weird takes, so it's definitely

4727
04:15:26,009 --> 04:15:28,009
Like fertile ground to explore further

4728
04:15:28,009 --> 04:15:30,009
Yeah, well, Charm

4729
04:15:30,009 --> 04:15:32,009
So David Charm who invented it

4730
04:15:32,009 --> 04:15:34,009
He was basically the first person ever

4731
04:15:34,009 --> 04:15:36,009
To

4732
04:15:36,009 --> 04:15:38,009
Consider, you know, if money is going

4733
04:15:38,009 --> 04:15:40,009
Digital, that could actually be

4734
04:15:40,009 --> 04:15:42,009
Very bad news

4735
04:15:42,009 --> 04:15:44,009
If there's a central party that's tracking

4736
04:15:44,009 --> 04:15:46,009
Everyone's transactions

4737
04:15:46,009 --> 04:15:48,009
It's a nightmare, really

4738
04:15:48,009 --> 04:15:50,009
And he started to think about ways to make

4739
04:15:50,009 --> 04:15:52,009
That private, so he's the first person

4740
04:15:52,009 --> 04:15:54,009
That started to think about digital cash, really

4741
04:15:54,009 --> 04:15:56,009
So the first, yeah, predecessor

4742
04:15:56,009 --> 04:15:58,009
To Bitcoin or the first, you know

4743
04:15:58,009 --> 04:16:00,009
He's sort of the founding, how do you call it

4744
04:16:00,009 --> 04:16:02,009
Like the granddaddy

4745
04:16:02,009 --> 04:16:04,009
Of the whole movement, I would say

4746
04:16:06,009 --> 04:16:08,009
Yes, his first paper

4747
04:16:08,009 --> 04:16:10,009
Was called Transaction Systems

4748
04:16:10,009 --> 04:16:12,009
To Make Big Brother Obsolete, so that sort of says it all

4749
04:16:12,009 --> 04:16:14,009
Yeah

4750
04:16:14,009 --> 04:16:16,009
So let's get into then

4751
04:16:16,009 --> 04:16:18,009
The technical explanation, so how does this work

4752
04:16:18,009 --> 04:16:20,009
Do you want to take this, Erik?

4753
04:16:20,009 --> 04:16:22,009
Yeah, sure, sure

4754
04:16:22,009 --> 04:16:24,009
Like, Charmin eCash is based

4755
04:16:24,009 --> 04:16:26,009
On a super interesting technique

4756
04:16:26,009 --> 04:16:28,009
Called blind signatures

4757
04:16:28,009 --> 04:16:30,009
And what blind signatures allow you

4758
04:16:30,009 --> 04:16:32,009
Is as a user, you can acquire

4759
04:16:32,009 --> 04:16:34,009
A signature on a piece of data

4760
04:16:34,009 --> 04:16:36,009
Without showing this piece of data to the signer

4761
04:16:36,009 --> 04:16:38,009
Which might sound a little bit weird in the beginning

4762
04:16:38,009 --> 04:16:40,009
But we'll get to it in a minute

4763
04:16:40,009 --> 04:16:42,009
Why this is so important

4764
04:16:42,009 --> 04:16:44,009
Like if you

4765
04:16:44,009 --> 04:16:46,009
If you still remember carbon copy paper

4766
04:16:46,009 --> 04:16:48,009
You can imagine it as follows

4767
04:16:48,009 --> 04:16:50,009
You put your message

4768
04:16:50,009 --> 04:16:52,009
Your note into

4769
04:16:52,009 --> 04:16:54,009
An envelope made out of carbon copy paper

4770
04:16:54,009 --> 04:16:56,009
You close the envelope

4771
04:16:56,009 --> 04:16:58,009
Give it to the signer

4772
04:16:58,009 --> 04:17:00,009
They sign on the envelope, it pushes through

4773
04:17:00,009 --> 04:17:02,009
They give back the envelope

4774
04:17:02,009 --> 04:17:04,009
And you can open it, taking out the message

4775
04:17:04,009 --> 04:17:06,009
With the valid signature

4776
04:17:06,009 --> 04:17:08,009
But the signer never saw the message

4777
04:17:08,009 --> 04:17:10,009
And how we construct eCash from that

4778
04:17:10,009 --> 04:17:12,009
Is by simply taking

4779
04:17:12,009 --> 04:17:14,009
A random message, you just choose it randomly

4780
04:17:14,009 --> 04:17:16,009
Some big number

4781
04:17:16,009 --> 04:17:18,009
And also take a dollar, let's say

4782
04:17:18,009 --> 04:17:20,009
Or a bitcoin, we were at a bitcoin conference

4783
04:17:20,009 --> 04:17:22,009
I mean, so back in the day

4784
04:17:22,009 --> 04:17:24,009
Charmin was using actual bank accounts

4785
04:17:24,009 --> 04:17:26,009
Back then, so that's why that example

4786
04:17:26,009 --> 04:17:28,009
Also makes sense

4787
04:17:28,009 --> 04:17:30,009
You take any amount of money

4788
04:17:30,009 --> 04:17:32,009
You also take

4789
04:17:32,009 --> 04:17:34,009
This random number, put it in the envelope

4790
04:17:34,009 --> 04:17:36,009
Give both to the signer

4791
04:17:36,009 --> 04:17:38,009
To the bank

4792
04:17:38,009 --> 04:17:40,009
And they would keep the money

4793
04:17:40,009 --> 04:17:42,009
They would sign the envelope and give it back to you

4794
04:17:42,009 --> 04:17:44,009
And the signature would mean

4795
04:17:44,009 --> 04:17:46,009
This is worth, let's say, one dollar

4796
04:17:46,009 --> 04:17:48,009
Or one bitcoin, or one satoshi

4797
04:17:48,009 --> 04:17:50,009
And later on you could go back to the bank

4798
04:17:50,009 --> 04:17:52,009
Show to them that you have the signed piece of data

4799
04:17:52,009 --> 04:17:54,009
And they would give you back

4800
04:17:54,009 --> 04:17:56,009
The amount of money you deposited

4801
04:17:56,009 --> 04:17:58,009
And that's how you can also build

4802
04:17:58,009 --> 04:18:00,009
A transaction system from that

4803
04:18:00,009 --> 04:18:02,009
So the practical effect is

4804
04:18:02,009 --> 04:18:04,009
You have a bank where you deposit

4805
04:18:04,009 --> 04:18:06,009
And later you can withdraw

4806
04:18:06,009 --> 04:18:08,009
And the deposit is totally unlinked

4807
04:18:08,009 --> 04:18:10,009
The withdrawal is totally unlinked

4808
04:18:10,009 --> 04:18:12,009
From the deposit

4809
04:18:12,009 --> 04:18:14,009
Customers show up, they have this message

4810
04:18:14,009 --> 04:18:16,009
That proves that they deposited funds

4811
04:18:16,009 --> 04:18:18,009
But not who they are, when they deposited, whatever

4812
04:18:18,009 --> 04:18:20,009
The bank can verify its own signature

4813
04:18:20,009 --> 04:18:22,009
Give them the funds

4814
04:18:22,009 --> 04:18:24,009
And has no idea, any details of

4815
04:18:24,009 --> 04:18:26,009
The customers

4816
04:18:26,009 --> 04:18:28,009
Yeah, they know they really minted the cash

4817
04:18:28,009 --> 04:18:30,009
But they don't know

4818
04:18:30,009 --> 04:18:32,009
Which note they're getting back

4819
04:18:32,009 --> 04:18:34,009
Right

4820
04:18:34,009 --> 04:18:36,009
Exactly

4821
04:18:36,009 --> 04:18:38,009
And the way you pay

4822
04:18:38,009 --> 04:18:40,009
Is you literally send

4823
04:18:40,009 --> 04:18:42,009
The number to someone else, right?

4824
04:18:42,009 --> 04:18:44,009
And then that person will check immediately

4825
04:18:44,009 --> 04:18:46,009
Essentially with the bank in that case

4826
04:18:46,009 --> 04:18:48,009
That's right

4827
04:18:48,009 --> 04:18:50,009
They'll essentially send the number to the bank

4828
04:18:50,009 --> 04:18:52,009
And get it reissued

4829
04:18:52,009 --> 04:18:54,009
So then they get their own number

4830
04:18:54,009 --> 04:18:56,009
That the payer doesn't know

4831
04:18:56,009 --> 04:18:58,009
So now the funds are in their control

4832
04:18:58,009 --> 04:19:00,009
Yeah, that's how double spending back then was solved

4833
04:19:00,009 --> 04:19:02,009
You just check it immediately

4834
04:19:02,009 --> 04:19:04,009
With the bank that's issuing this

4835
04:19:04,009 --> 04:19:06,009
Now we're applying this

4836
04:19:06,009 --> 04:19:08,009
Same trick essentially to Bitcoin

4837
04:19:08,009 --> 04:19:10,009
So one way

4838
04:19:10,009 --> 04:19:12,009
You can do that is

4839
04:19:12,009 --> 04:19:14,009
You basically have a Bitcoin bank

4840
04:19:14,009 --> 04:19:16,009
You have someone that's

4841
04:19:16,009 --> 04:19:18,009
Customizing the Bitcoin

4842
04:19:18,009 --> 04:19:20,009
And you get the federated

4843
04:19:20,009 --> 04:19:22,009
Sorry, you get

4844
04:19:22,009 --> 04:19:24,009
We'll get to the federated part

4845
04:19:24,009 --> 04:19:26,009
Building up very, very simply

4846
04:19:26,009 --> 04:19:28,009
So the first thing you can do

4847
04:19:28,009 --> 04:19:30,009
Is you can just build a very simple Bitcoin bank

4848
04:19:30,009 --> 04:19:32,009
With this system

4849
04:19:32,009 --> 04:19:34,009
And somebody

4850
04:19:34,009 --> 04:19:36,009
You do this blind signature magic

4851
04:19:36,009 --> 04:19:38,009
You put the person who deposited it

4852
04:19:38,009 --> 04:19:40,009
You give them back some sort of token

4853
04:19:40,009 --> 04:19:42,009
A blinded token

4854
04:19:42,009 --> 04:19:44,009
And later they can withdraw it

4855
04:19:44,009 --> 04:19:46,009
So this is a nice one improvement

4856
04:19:46,009 --> 04:19:48,009
On a fully centralized

4857
04:19:48,009 --> 04:19:50,009
Fully non-private system

4858
04:19:50,009 --> 04:19:52,009
Now you have a centralized system

4859
04:19:52,009 --> 04:19:54,009
But now it's private

4860
04:19:54,009 --> 04:19:56,009
People can deposit and withdraw Bitcoin

4861
04:19:56,009 --> 04:19:58,009
Without the service knowing anything about the customers

4862
04:19:58,009 --> 04:20:00,009
Right

4863
04:20:00,009 --> 04:20:02,009
So we're not completely happy with this

4864
04:20:02,009 --> 04:20:04,009
No

4865
04:20:04,009 --> 04:20:06,009
A lot of trust

4866
04:20:06,009 --> 04:20:08,009
And it's not decentralized

4867
04:20:08,009 --> 04:20:10,009
You have a lot of trust in a single entity

4868
04:20:10,009 --> 04:20:12,009
That's running it

4869
04:20:12,009 --> 04:20:14,009
So we can do better with the magic of federation

4870
04:20:14,009 --> 04:20:16,009
Yeah, exactly

4871
04:20:16,009 --> 04:20:18,009
Especially, you have to imagine

4872
04:20:18,009 --> 04:20:20,009
If you're running such a Bitcoin bank

4873
04:20:20,009 --> 04:20:22,009
You'd probably want to do this

4874
04:20:22,009 --> 04:20:24,009
As a noob today

4875
04:20:24,009 --> 04:20:26,009
Because the regulations around banking

4876
04:20:26,009 --> 04:20:28,009
Are very unfavorable to privacy

4877
04:20:28,009 --> 04:20:30,009
So you probably couldn't run an eCash bank

4878
04:20:30,009 --> 04:20:32,009
In the open

4879
04:20:32,009 --> 04:20:34,009
So instead

4880
04:20:34,009 --> 04:20:36,009
You need to do it as a noob

4881
04:20:36,009 --> 04:20:38,009
And it's really easy to exit scam

4882
04:20:38,009 --> 04:20:40,009
So to solve this problem

4883
04:20:40,009 --> 04:20:42,009
Essentially, we can split the trust

4884
04:20:42,009 --> 04:20:44,009
Over multiple people

4885
04:20:44,009 --> 04:20:46,009
Like there is this technology called federations

4886
04:20:46,009 --> 04:20:48,009
Like you might have heard of it

4887
04:20:48,009 --> 04:20:50,009
There is the liquid federation

4888
04:20:50,009 --> 04:20:52,009
Which creates a sidechain

4889
04:20:52,009 --> 04:20:54,009
But you can also use federations

4890
04:20:54,009 --> 04:20:56,009
For other things

4891
04:20:56,009 --> 04:20:58,009
And the concept behind it

4892
04:20:58,009 --> 04:21:00,009
Is instead of holding all the Bitcoin

4893
04:21:00,009 --> 04:21:02,009
In one wallet

4894
04:21:02,009 --> 04:21:04,009
That is centrally controlled by one party

4895
04:21:04,009 --> 04:21:06,009
You can hold it in a multisig wallet

4896
04:21:06,009 --> 04:21:08,009
For example

4897
04:21:08,009 --> 04:21:10,009
There are 11 people

4898
04:21:10,009 --> 04:21:12,009
That you need 11 people out of 15

4899
04:21:12,009 --> 04:21:14,009
To actually move the funds

4900
04:21:14,009 --> 04:21:16,009
And that way it becomes much more secure

4901
04:21:16,009 --> 04:21:18,009
Because now 11 out of 15 people

4902
04:21:18,009 --> 04:21:20,009
Have to collude against you

4903
04:21:20,009 --> 04:21:22,009
To steal your money

4904
04:21:22,009 --> 04:21:24,009
And you can do the same thing

4905
04:21:24,009 --> 04:21:26,009
With the signing process

4906
04:21:26,009 --> 04:21:28,009
Like to the plain signature algorithm

4907
04:21:28,009 --> 04:21:30,009
There are special plain signature algorithms

4908
04:21:30,009 --> 04:21:32,009
For which you need 11

4909
04:21:32,009 --> 04:21:34,009
For example 11 out of 15 members

4910
04:21:34,009 --> 04:21:36,009
To collaborate to create these plain signatures

4911
04:21:36,009 --> 04:21:38,009
And to sign your eCash tokens

4912
04:21:38,009 --> 04:21:40,009
And that way

4913
04:21:40,009 --> 04:21:42,009
We successfully split the trust

4914
04:21:42,009 --> 04:21:44,009
Over multiple people

4915
04:21:44,009 --> 04:21:46,009
And as Obi said

4916
04:21:46,009 --> 04:21:48,009
You probably have some people in your life

4917
04:21:48,009 --> 04:21:50,009
That you cannot trust

4918
04:21:50,009 --> 04:21:52,009
Maybe not fully

4919
04:21:52,009 --> 04:21:54,009
But if you have

4920
04:21:54,009 --> 04:21:56,009
Sufficiently many of these

4921
04:21:56,009 --> 04:21:58,009
Then you could construct such a community bank

4922
04:21:58,009 --> 04:22:00,009
Yeah and

4923
04:22:00,009 --> 04:22:02,009
As Obi indeed mentioned

4924
04:22:02,009 --> 04:22:04,009
It is happening already

4925
04:22:04,009 --> 04:22:06,009
The Bitcoin beach wallet would be a good example of that

4926
04:22:06,009 --> 04:22:08,009
Where they have this distributed trust

4927
04:22:08,009 --> 04:22:10,009
Model

4928
04:22:10,009 --> 04:22:12,009
So there is a very good argument to be made

4929
04:22:12,009 --> 04:22:14,009
I think for a system like this

4930
04:22:14,009 --> 04:22:16,009
If people are already doing this

4931
04:22:16,009 --> 04:22:18,009
If they are already

4932
04:22:18,009 --> 04:22:20,009
Custodating Bitcoin in this sense

4933
04:22:20,009 --> 04:22:22,009
For convenience sake

4934
04:22:22,009 --> 04:22:24,009
Well it would be great

4935
04:22:24,009 --> 04:22:26,009
If we can add a privacy layer to that

4936
04:22:26,009 --> 04:22:28,009
With a system like this

4937
04:22:28,009 --> 04:22:30,009
Right and you could have all sorts of arrangements

4938
04:22:30,009 --> 04:22:32,009
You could imagine this being friends and family

4939
04:22:32,009 --> 04:22:34,009
You could imagine in jurisdictions

4940
04:22:34,009 --> 04:22:36,009
With favorable regulations

4941
04:22:36,009 --> 04:22:38,009
Where it is possible to do this

4942
04:22:38,009 --> 04:22:40,009
Public people doing this

4943
04:22:40,009 --> 04:22:42,009
You could imagine

4944
04:22:42,009 --> 04:22:44,009
Darknet markets or any wild people you want

4945
04:22:44,009 --> 04:22:46,009
Running this for profit

4946
04:22:46,009 --> 04:22:48,009
Or as like an adjunct to the existing services

4947
04:22:48,009 --> 04:22:50,009
And maybe you don't trust any one entity

4948
04:22:50,009 --> 04:22:52,009
But you trust them a little bit

4949
04:22:52,009 --> 04:22:54,009
And you add up a little bit of trust

4950
04:22:54,009 --> 04:22:56,009
And you get something that you feel comfortable

4951
04:22:56,009 --> 04:22:58,009
Putting some amount of funds into

4952
04:22:58,009 --> 04:23:00,009
Maybe even better

4953
04:23:00,009 --> 04:23:02,009
Like in the case of darknet markets

4954
04:23:02,009 --> 04:23:04,009
They might be fierce competitors

4955
04:23:04,009 --> 04:23:06,009
And you just trust that they hate each other enough

4956
04:23:06,009 --> 04:23:08,009
To not collaborate

4957
04:23:08,009 --> 04:23:10,009
Like with Bitcoin

4958
04:23:10,009 --> 04:23:12,009
We essentially trust that the miners

4959
04:23:12,009 --> 04:23:14,009
Are in a fierce competition

4960
04:23:14,009 --> 04:23:16,009
And don't collude against us

4961
04:23:16,009 --> 04:23:18,009
With some economic incentives

4962
04:23:18,009 --> 04:23:20,009
But essentially yeah

4963
04:23:20,009 --> 04:23:22,009
As long as they don't have incentives to collude

4964
04:23:22,009 --> 04:23:24,009
It works

4965
04:23:24,009 --> 04:23:26,009
We had a discussion about this earlier

4966
04:23:26,009 --> 04:23:28,009
So I want to

4967
04:23:28,009 --> 04:23:30,009
See Eric

4968
04:23:30,009 --> 04:23:32,009
Do you think that these banks

4969
04:23:32,009 --> 04:23:34,009
Need to be anons or not

4970
04:23:36,009 --> 04:23:38,009
If you're using a federated system

4971
04:23:38,009 --> 04:23:40,009
At least some form of identity

4972
04:23:40,009 --> 04:23:42,009
Kind of matters to

4973
04:23:42,009 --> 04:23:44,009
Make sure that they're not the same

4974
04:23:44,009 --> 04:23:46,009
Individual right

4975
04:23:46,009 --> 04:23:48,009
What are your thoughts there

4976
04:23:48,009 --> 04:23:50,009
Is there something that's compatible with complete anonymity

4977
04:23:50,009 --> 04:23:52,009
In that sense or

4978
04:23:52,009 --> 04:23:54,009
It's definitely not compatible

4979
04:23:54,009 --> 04:23:56,009
With complete anonymity

4980
04:23:56,009 --> 04:23:58,009
But let's say you have twitter nooms

4981
04:23:58,009 --> 04:24:00,009
That have a reputation

4982
04:24:00,009 --> 04:24:02,009
That they built over years

4983
04:24:02,009 --> 04:24:04,009
And it's hard

4984
04:24:04,009 --> 04:24:06,009
To have multiple nooms

4985
04:24:06,009 --> 04:24:08,009
That have high engagement let's say

4986
04:24:08,009 --> 04:24:10,009
And I pretty much trust that Shinobi

4987
04:24:10,009 --> 04:24:12,009
He is

4988
04:24:12,009 --> 04:24:14,009
That's probably his main noom

4989
04:24:14,009 --> 04:24:16,009
He probably can't run multiple

4990
04:24:16,009 --> 04:24:18,009
Accounts shitposting that much

4991
04:24:18,009 --> 04:24:20,009
So

4992
04:24:20,009 --> 04:24:22,009
I would totally trust him being a member

4993
04:24:22,009 --> 04:24:24,009
Of a federation and if there are multiple

4994
04:24:24,009 --> 04:24:26,009
Such people then I could totally imagine

4995
04:24:26,009 --> 04:24:28,009
A federation of nooms and

4996
04:24:28,009 --> 04:24:30,009
I really want to see this like a cypherpunk federation

4997
04:24:30,009 --> 04:24:32,009
Which is global

4998
04:24:32,009 --> 04:24:34,009
Where you don't have these second party trust relationships

4999
04:24:34,009 --> 04:24:36,009
But it's still good enough

5000
04:24:36,009 --> 04:24:38,009
It gives you a lot of privacy

5001
04:24:38,009 --> 04:24:40,009
And hopefully they won't exit scam

5002
04:24:40,009 --> 04:24:42,009
But on the other hand

5003
04:24:42,009 --> 04:24:44,009
There is this

5004
04:24:44,009 --> 04:24:46,009
Need for community banking

5005
04:24:46,009 --> 04:24:48,009
Which Obi described and I think

5006
04:24:48,009 --> 04:24:50,009
Their federated eCash can also play an important role

5007
04:24:50,009 --> 04:24:52,009
In local communities

5008
04:24:52,009 --> 04:24:54,009
Because currently

5009
04:24:54,009 --> 04:24:56,009
What you're seeing with

5010
04:24:56,009 --> 04:24:58,009
Bitcoin beach wallet

5011
04:24:58,009 --> 04:25:00,009
It's super cool

5012
04:25:00,009 --> 04:25:02,009
I love it

5013
04:25:02,009 --> 04:25:04,009
But ideally if we want to deploy this at a scale

5014
04:25:04,009 --> 04:25:06,009
You don't want your neighbor to know

5015
04:25:06,009 --> 04:25:08,009
What you're spending your money on

5016
04:25:08,009 --> 04:25:10,009
And that's also a problem federated eCash is solving

5017
04:25:10,009 --> 04:25:12,009
Okay so did you want to add something

5018
04:25:12,009 --> 04:25:14,009
Who would be the ideal federation members

5019
04:25:14,009 --> 04:25:16,009
Or how do you envision this

5020
04:25:16,009 --> 04:25:18,009
Who's going to adopt this in your view

5021
04:25:18,009 --> 04:25:20,009
Right

5022
04:25:20,009 --> 04:25:22,009
The ideal federation members

5023
04:25:22,009 --> 04:25:24,009
Are just people who have something to lose

5024
04:25:24,009 --> 04:25:26,009
If they collude against the federation

5025
04:25:26,009 --> 04:25:28,009
And that can be anybody

5026
04:25:28,009 --> 04:25:30,009
That can be twitter nooms, that can be people who run businesses

5027
04:25:30,009 --> 04:25:32,009
People you know personally

5028
04:25:32,009 --> 04:25:34,009
Yeah and I was just going to say

5029
04:25:34,009 --> 04:25:36,009
It isn't compatible with full anonymity

5030
04:25:36,009 --> 04:25:38,009
But it is compatible with pseudonymity

5031
04:25:40,009 --> 04:25:42,009
Do we agree by the way

5032
04:25:42,009 --> 04:25:44,009
This is probably the most important tradeoff

5033
04:25:44,009 --> 04:25:46,009
For systems like this

5034
04:25:46,009 --> 04:25:48,009
So we're getting great privacy

5035
04:25:48,009 --> 04:25:50,009
But regardless of your setup

5036
04:25:50,009 --> 04:25:52,009
There is some level of trust involved

5037
04:25:52,009 --> 04:25:54,009
One way or another

5038
04:25:54,009 --> 04:25:56,009
Is this the main tradeoff in your view

5039
04:25:56,009 --> 04:25:58,009
Definitely

5040
04:25:58,009 --> 04:26:00,009
You're trading trust for privacy in that sense

5041
04:26:00,009 --> 04:26:02,009
But you're not only trading it for privacy

5042
04:26:02,009 --> 04:26:04,009
You're also trading it for convenience

5043
04:26:04,009 --> 04:26:06,009
Yeah

5044
04:26:06,009 --> 04:26:08,009
That's the other thing

5045
04:26:08,009 --> 04:26:10,009
When you use somebody else's computer

5046
04:26:10,009 --> 04:26:12,009
You don't have to set it up yourself

5047
04:26:12,009 --> 04:26:14,009
So that's another tradeoff

5048
04:26:14,009 --> 04:26:16,009
You're trusting people

5049
04:26:16,009 --> 04:26:18,009
But you're also trading off

5050
04:26:18,009 --> 04:26:20,009
Technical difficulty versus trust

5051
04:26:20,009 --> 04:26:22,009
That's how I see it

5052
04:26:22,009 --> 04:26:24,009
We essentially trojan horse

5053
04:26:24,009 --> 04:26:26,009
Privacy into bitcoin that way

5054
04:26:26,009 --> 04:26:28,009
If we can make this so convenient

5055
04:26:28,009 --> 04:26:30,009
That everyone wants to use it

5056
04:26:30,009 --> 04:26:32,009
It will automatically give people

5057
04:26:32,009 --> 04:26:34,009
More privacy

5058
04:26:34,009 --> 04:26:36,009
And will also

5059
04:26:36,009 --> 04:26:38,009
Make it the natural thing to do

5060
04:26:38,009 --> 04:26:40,009
Not only criminals use the private bitcoin technology

5061
04:26:40,009 --> 04:26:42,009
Because currently

5062
04:26:42,009 --> 04:26:44,009
If you're using coinjoins

5063
04:26:44,009 --> 04:26:46,009
Then you have the big problem

5064
04:26:46,009 --> 04:26:48,009
All exchanges will flag you

5065
04:26:48,009 --> 04:26:50,009
And will freeze your funds

5066
04:26:50,009 --> 04:26:52,009
But if everyone is using this out of convenience

5067
04:26:52,009 --> 04:26:54,009
There's no reason to do this

5068
04:26:54,009 --> 04:26:56,009
They can't

5069
04:26:56,009 --> 04:26:58,009
You have strengths in numbers

5070
04:26:58,009 --> 04:27:00,009
Erik, is this system

5071
04:27:00,009 --> 04:27:02,009
At least auditable?

5072
04:27:02,009 --> 04:27:04,009
Can you know for sure

5073
04:27:04,009 --> 04:27:06,009
That there's not more

5074
04:27:06,009 --> 04:27:08,009
eCash issued than

5075
04:27:08,009 --> 04:27:10,009
The federation has

5076
04:27:10,009 --> 04:27:12,009
Bitcoin in reserve?

5077
04:27:12,009 --> 04:27:14,009
That's the one big problem

5078
04:27:14,009 --> 04:27:16,009
You can't audit such a system

5079
04:27:16,009 --> 04:27:18,009
Because it provides such great anonymity

5080
04:27:18,009 --> 04:27:20,009
That the federation

5081
04:27:20,009 --> 04:27:22,009
Never knows which tokens

5082
04:27:22,009 --> 04:27:24,009
Are always banned

5083
04:27:24,009 --> 04:27:26,009
You have all the tokens in your anonymity set

5084
04:27:26,009 --> 04:27:28,009
It also means you cannot generate

5085
04:27:28,009 --> 04:27:30,009
Proof that you have

5086
04:27:30,009 --> 04:27:32,009
A certain amount of funds for the issued

5087
04:27:32,009 --> 04:27:34,009
eCash tokens

5088
04:27:34,009 --> 04:27:36,009
Because you could not tell which ones to remove from the proof

5089
04:27:36,009 --> 04:27:38,009
If you were doing something

5090
04:27:38,009 --> 04:27:40,009
Like the exchanges do

5091
04:27:40,009 --> 04:27:42,009
Like proof of funds

5092
04:27:42,009 --> 04:27:44,009
You fully trust the federation

5093
04:27:44,009 --> 04:27:46,009
In that sense

5094
04:27:46,009 --> 04:27:48,009
I know we can't peer into the future

5095
04:27:48,009 --> 04:27:50,009
And we can't

5096
04:27:50,009 --> 04:27:52,009
Figure out what people

5097
04:27:52,009 --> 04:27:54,009
Will figure out later

5098
04:27:54,009 --> 04:27:56,009
I'm still going to ask

5099
04:27:56,009 --> 04:27:58,009
Is there any sort of plausible scenario

5100
04:27:58,009 --> 04:28:00,009
That in the future it might be audible

5101
04:28:00,009 --> 04:28:02,009
In one way or another

5102
04:28:02,009 --> 04:28:04,009
Or is this just completely off the table in your view?

5103
04:28:04,009 --> 04:28:06,009
I mean, I thought about this for a long time

5104
04:28:06,009 --> 04:28:08,009
And what I came up with

5105
04:28:08,009 --> 04:28:10,009
In the end was really close

5106
04:28:10,009 --> 04:28:12,009
To the Zerocoin design

5107
04:28:12,009 --> 04:28:14,009
And I think

5108
04:28:14,009 --> 04:28:16,009
In any design where you have auditability

5109
04:28:16,009 --> 04:28:18,009
You require the users that want to spend money

5110
04:28:18,009 --> 04:28:20,009
To sync some sort of blockchain

5111
04:28:20,009 --> 04:28:22,009
Or to sync some sort of global state

5112
04:28:22,009 --> 04:28:24,009
To hide in

5113
04:28:24,009 --> 04:28:26,009
And that makes it not as convenient

5114
04:28:26,009 --> 04:28:28,009
Like with the current

5115
04:28:28,009 --> 04:28:30,009
Federated eCash system

5116
04:28:30,009 --> 04:28:32,009
You only need to care about your own eCash tokens

5117
04:28:32,009 --> 04:28:34,009
Which is like small pieces of data

5118
04:28:34,009 --> 04:28:36,009
Which fits onto any phone

5119
04:28:36,009 --> 04:28:38,009
But as soon as you add the auditability

5120
04:28:38,009 --> 04:28:40,009
It becomes much more cumbersome to run a node

5121
04:28:40,009 --> 04:28:42,009
And then we probably can't

5122
04:28:42,009 --> 04:28:44,009
Roach and host privacy into Bitcoin

5123
04:28:44,009 --> 04:28:46,009
Because people won't run it

5124
04:28:46,009 --> 04:28:48,009
One topic we haven't

5125
04:28:48,009 --> 04:28:50,009
Mentioned yet is the vision

5126
04:28:50,009 --> 04:28:52,009
For integrating these kinds of systems

5127
04:28:52,009 --> 04:28:54,009
The federated Xiaomi systems

5128
04:28:54,009 --> 04:28:56,009
With Lightning

5129
04:28:56,009 --> 04:28:58,009
That's part of

5130
04:28:58,009 --> 04:29:00,009
Your project, right, Eric?

5131
04:29:00,009 --> 04:29:02,009
You seem eager to say something

5132
04:29:02,009 --> 04:29:04,009
Yeah, I just wanted to say

5133
04:29:04,009 --> 04:29:06,009
We touched on the privacy

5134
04:29:06,009 --> 04:29:08,009
Of the

5135
04:29:08,009 --> 04:29:10,009
Depositors

5136
04:29:10,009 --> 04:29:12,009
Have from the people

5137
04:29:12,009 --> 04:29:14,009
Running the federation

5138
04:29:14,009 --> 04:29:16,009
Don't know anything about the depositors

5139
04:29:16,009 --> 04:29:18,009
The nice thing is that when you pair the system

5140
04:29:18,009 --> 04:29:20,009
With Lightning

5141
04:29:20,009 --> 04:29:22,009
When users are depositing via Lightning

5142
04:29:22,009 --> 04:29:24,009
And making payments

5143
04:29:24,009 --> 04:29:26,009
And withdrawing via Lightning

5144
04:29:26,009 --> 04:29:28,009
You get very good privacy

5145
04:29:28,009 --> 04:29:30,009
From outside observers

5146
04:29:30,009 --> 04:29:32,009
So to the point of view of an outside observer

5147
04:29:32,009 --> 04:29:34,009
Somebody who's trying to surveil the Lightning network

5148
04:29:34,009 --> 04:29:36,009
And surveil the chain

5149
04:29:36,009 --> 04:29:38,009
One of these

5150
04:29:38,009 --> 04:29:40,009
Xiaomi and federated mints

5151
04:29:40,009 --> 04:29:42,009
Has a bunch of channels

5152
04:29:42,009 --> 04:29:44,009
And maybe you can observe

5153
04:29:44,009 --> 04:29:46,009
Through analysis

5154
04:29:46,009 --> 04:29:48,009
You can see how the balances are changing

5155
04:29:48,009 --> 04:29:50,009
Maybe get some ideas of payments that are being made

5156
04:29:50,009 --> 04:29:52,009
Or whatever

5157
04:29:52,009 --> 04:29:54,009
But because so many users

5158
04:29:54,009 --> 04:29:56,009
Are using this one Lightning node

5159
04:29:56,009 --> 04:29:58,009
And are essentially sharing all of these channels

5160
04:29:58,009 --> 04:30:00,009
An outside observer gets very little information

5161
04:30:00,009 --> 04:30:02,009
About the actual activities or identity

5162
04:30:02,009 --> 04:30:04,009
Of the customers

5163
04:30:04,009 --> 04:30:06,009
It's essentially like one big giant coin join

5164
04:30:06,009 --> 04:30:08,009
With this big shared Lightning node

5165
04:30:08,009 --> 04:30:10,009
That is very hard to surveil

5166
04:30:10,009 --> 04:30:12,009
And draw any conclusions about

5167
04:30:12,009 --> 04:30:14,009
So that's an important part

5168
04:30:14,009 --> 04:30:16,009
And that's its sort of external privacy

5169
04:30:16,009 --> 04:30:18,009
I'd definitely say that's part of it

5170
04:30:18,009 --> 04:30:20,009
But the original intent

5171
04:30:20,009 --> 04:30:22,009
For integrating Lightning

5172
04:30:22,009 --> 04:30:24,009
Was actually to not make this

5173
04:30:24,009 --> 04:30:26,009
Like one federation to rule them all

5174
04:30:26,009 --> 04:30:28,009
Because that would be enormously

5175
04:30:28,009 --> 04:30:30,009
A centralizing force

5176
04:30:30,009 --> 04:30:32,009
Because only people inside a federation

5177
04:30:32,009 --> 04:30:34,009
Can page other with eCash tokens

5178
04:30:34,009 --> 04:30:36,009
So if you don't have the Lightning integration

5179
04:30:36,009 --> 04:30:38,009
Everyone would want to be in the same

5180
04:30:38,009 --> 04:30:40,009
One big eCash federation

5181
04:30:40,009 --> 04:30:42,009
And that might become a systemic risk to Bitcoin

5182
04:30:42,009 --> 04:30:44,009
But if you can integrate Lightning

5183
04:30:44,009 --> 04:30:46,009
And I'm currently working on this

5184
04:30:46,009 --> 04:30:48,009
And I already have the outgoing Lightning integration

5185
04:30:48,009 --> 04:30:50,009
The incoming is currently being worked on

5186
04:30:50,009 --> 04:30:52,009
Then

5187
04:30:52,009 --> 04:30:54,009
You suddenly just have a Lightning wallet

5188
04:30:54,009 --> 04:30:56,009
Like a really private federated Lightning wallet

5189
04:30:56,009 --> 04:30:58,009
And can interact with any other Lightning service

5190
04:30:58,009 --> 04:31:00,009
May it be another federated eCash mint

5191
04:31:00,009 --> 04:31:02,009
Or like someone running their own Lightning node

5192
04:31:02,009 --> 04:31:04,009
Or even like centralized services

5193
04:31:04,009 --> 04:31:06,009
Like Wallet of Satoshi

5194
04:31:06,009 --> 04:31:08,009
Like you're fully interoperable

5195
04:31:08,009 --> 04:31:10,009
With the whole ecosystem

5196
04:31:10,009 --> 04:31:12,009
So you can think of these federated mints

5197
04:31:12,009 --> 04:31:14,009
As being sort of functionally equivalent to banks

5198
04:31:14,009 --> 04:31:16,009
And then Lightning being the settlement network

5199
04:31:16,009 --> 04:31:18,009
Which makes it very easy to move

5200
04:31:18,009 --> 04:31:20,009
Between them very quickly

5201
04:31:20,009 --> 04:31:22,009
And instantly

5202
04:31:22,009 --> 04:31:24,009
This does seem to bring

5203
04:31:24,009 --> 04:31:26,009
For me, this does seem to bring up

5204
04:31:26,009 --> 04:31:28,009
Like a bit of a tension maybe

5205
04:31:28,009 --> 04:31:30,009
So you're basically suggesting that you would prefer

5206
04:31:30,009 --> 04:31:32,009
These federated mints

5207
04:31:32,009 --> 04:31:34,009
To not be too large

5208
04:31:34,009 --> 04:31:36,009
And I guess the main risk of that

5209
04:31:36,009 --> 04:31:38,009
Is the custodial risk again?

5210
04:31:38,009 --> 04:31:40,009
Yeah, yeah, exactly

5211
04:31:40,009 --> 04:31:42,009
But then the trade-off there is

5212
04:31:42,009 --> 04:31:44,009
I think for optimal privacy

5213
04:31:44,009 --> 04:31:46,009
You actually want very large

5214
04:31:46,009 --> 04:31:48,009
You know

5215
04:31:48,009 --> 04:31:50,009
That's right, to increase the size of the anonymity set

5216
04:31:50,009 --> 04:31:52,009
So there seems to be some kind of tension there

5217
04:31:52,009 --> 04:31:54,009
Absolutely

5218
04:31:54,009 --> 04:31:56,009
And you just want, like, everybody has some price

5219
04:31:56,009 --> 04:31:58,009
At which they will defect

5220
04:31:58,009 --> 04:32:00,009
I don't know, maybe not everybody

5221
04:32:00,009 --> 04:32:02,009
And you just don't want to hit that price

5222
04:32:02,009 --> 04:32:04,009
With like a single federation

5223
04:32:04,009 --> 04:32:06,009
With like a giant, giant pot of gold

5224
04:32:06,009 --> 04:32:08,009
So yeah, there's tension

5225
04:32:08,009 --> 04:32:10,009
But yeah, the more people you have on the federation

5226
04:32:10,009 --> 04:32:12,009
The more transactions you have, the better privacy you get

5227
04:32:12,009 --> 04:32:14,009
But probably you don't need to have that many users

5228
04:32:14,009 --> 04:32:16,009
To have very good privacy

5229
04:32:16,009 --> 04:32:18,009
Like if it's reasonably popular

5230
04:32:18,009 --> 04:32:20,009
If it's making lots of transactions pretty much continuously

5231
04:32:20,009 --> 04:32:22,009
You're going to get pretty good privacy

5232
04:32:22,009 --> 04:32:24,009
And there can probably be

5233
04:32:24,009 --> 04:32:26,009
That might require a lot of users, right?

5234
04:32:26,009 --> 04:32:28,009
Do you have any ballpark?

5235
04:32:28,009 --> 04:32:30,009
Like at what point

5236
04:32:30,009 --> 04:32:32,009
Do you have

5237
04:32:32,009 --> 04:32:34,009
A big enough privacy pool?

5238
04:32:34,009 --> 04:32:36,009
Anonymity set

5239
04:32:36,009 --> 04:32:38,009
I have no idea

5240
04:32:38,009 --> 04:32:40,009
You kind of want there to be

5241
04:32:40,009 --> 04:32:42,009
Constant transactions

5242
04:32:42,009 --> 04:32:44,009
As long as there's a constant transaction

5243
04:32:44,009 --> 04:32:46,009
And you have a hard time doing any sort of

5244
04:32:46,009 --> 04:32:48,009
Timing attack, and I don't know

5245
04:32:48,009 --> 04:32:50,009
How many users that is

5246
04:32:50,009 --> 04:32:52,009
If Lightning is broadly adopted, maybe you don't need that many users at all

5247
04:32:52,009 --> 04:32:54,009
This ties into our next subject

5248
04:32:54,009 --> 04:32:56,009
And maybe we're sort of skipping ahead

5249
04:32:56,009 --> 04:32:58,009
What are the weaknesses

5250
04:32:58,009 --> 04:33:00,009
From a privacy perspective?

5251
04:33:00,009 --> 04:33:02,009
So you mentioned timing attack

5252
04:33:02,009 --> 04:33:04,009
Maybe there's someone in the room that doesn't know what it is

5253
04:33:04,009 --> 04:33:06,009
I doubt it in this room

5254
04:33:06,009 --> 04:33:08,009
Okay, very quickly explain what a timing attack is

5255
04:33:08,009 --> 04:33:10,009
A timing attack would be

5256
04:33:10,009 --> 04:33:12,009
Maybe you observe an on-chain deposit

5257
04:33:12,009 --> 04:33:14,009
And then you're also surveilling

5258
04:33:14,009 --> 04:33:16,009
The Lightning network

5259
04:33:16,009 --> 04:33:18,009
And so you, through watching changing channel balances

5260
04:33:18,009 --> 04:33:20,009
You see an outgoing payment from the federation

5261
04:33:20,009 --> 04:33:22,009
You see deposit on-chain to the federation

5262
04:33:22,009 --> 04:33:24,009
Then you see an outgoing deposit

5263
04:33:24,009 --> 04:33:26,009
Or an outgoing Lightning transaction from the federation

5264
04:33:26,009 --> 04:33:28,009
So then from that you might surmise

5265
04:33:28,009 --> 04:33:30,009
That the deposit

5266
04:33:30,009 --> 04:33:32,009
Was the same person who made the

5267
04:33:32,009 --> 04:33:34,009
Outgoing payment, right?

5268
04:33:34,009 --> 04:33:36,009
That's especially a problem if you want to use such a federation

5269
04:33:36,009 --> 04:33:38,009
For tumbling, because we didn't go into this yet

5270
04:33:38,009 --> 04:33:40,009
We mainly presented this as a way

5271
04:33:40,009 --> 04:33:42,009
To make payments

5272
04:33:42,009 --> 04:33:44,009
But you can also use it to tumble bitcoins

5273
04:33:44,009 --> 04:33:46,009
And for example to recycle

5274
04:33:46,009 --> 04:33:48,009
Toxic change you got from coin joins

5275
04:33:48,009 --> 04:33:50,009
There are so many possibilities to use this technology

5276
04:33:50,009 --> 04:33:52,009
And for that you'd have to wait

5277
04:33:52,009 --> 04:33:54,009
For a reasonable period of time

5278
04:33:54,009 --> 04:33:56,009
That other operations happen

5279
04:33:56,009 --> 04:33:58,009
And have some anonymity set

5280
04:33:58,009 --> 04:34:00,009
And a second weakness

5281
04:34:00,009 --> 04:34:02,009
I'd say is in the current implementation

5282
04:34:02,009 --> 04:34:04,009
It's not a theoretical weakness, more a practical one

5283
04:34:04,009 --> 04:34:06,009
To make the system efficient

5284
04:34:06,009 --> 04:34:08,009
We're using multiple amount

5285
04:34:08,009 --> 04:34:10,009
Denominations

5286
04:34:10,009 --> 04:34:12,009
Let's imagine we had only

5287
04:34:12,009 --> 04:34:14,009
One Satoshi tokens

5288
04:34:14,009 --> 04:34:16,009
And wanted to send the whole bitcoin

5289
04:34:16,009 --> 04:34:18,009
Then we'd have to assign

5290
04:34:18,009 --> 04:34:20,009
100 million random

5291
04:34:20,009 --> 04:34:22,009
Data strings

5292
04:34:22,009 --> 04:34:24,009
And that would take a long time

5293
04:34:24,009 --> 04:34:26,009
Even on modern computers

5294
04:34:26,009 --> 04:34:28,009
What we do instead is we introduce tokens

5295
04:34:28,009 --> 04:34:30,009
That are worth 1 Satoshi, 10 Satoshi, 100 Satoshi

5296
04:34:30,009 --> 04:34:32,009
And so on

5297
04:34:32,009 --> 04:34:34,009
That reduces our anonymity set

5298
04:34:34,009 --> 04:34:36,009
Per denomination

5299
04:34:36,009 --> 04:34:38,009
But in the end I believe

5300
04:34:38,009 --> 04:34:40,009
If all the users of the federation

5301
04:34:40,009 --> 04:34:42,009
Have roughly the same amount of money

5302
04:34:42,009 --> 04:34:44,009
Then it's still good enough

5303
04:34:44,009 --> 04:34:46,009
The problem is if you're the rich dude

5304
04:34:46,009 --> 04:34:48,009
In the federation and the only one owning

5305
04:34:48,009 --> 04:34:50,009
The one bitcoin tokens

5306
04:34:50,009 --> 04:34:52,009
That would be problematic

5307
04:34:52,009 --> 04:34:54,009
But you can see this

5308
04:34:54,009 --> 04:34:56,009
You can go to the federation and ask

5309
04:34:56,009 --> 04:34:58,009
How many tokens did you issue of this denomination

5310
04:34:58,009 --> 04:35:00,009
And if you see there's no one issuing

5311
04:35:00,009 --> 04:35:02,009
One bitcoin token

5312
04:35:02,009 --> 04:35:04,009
Then you just take the 0.01 bitcoin tokens

5313
04:35:04,009 --> 04:35:06,009
And issue 100 of them

5314
04:35:06,009 --> 04:35:08,009
And then you got your privacy back

5315
04:35:08,009 --> 04:35:10,009
So Erik, your specific project

5316
04:35:10,009 --> 04:35:12,009
Is called Minimint

5317
04:35:12,009 --> 04:35:14,009
What's the status of that?

5318
04:35:14,009 --> 04:35:16,009
How far are you with that?

5319
04:35:16,009 --> 04:35:18,009
It's currently a research project

5320
04:35:18,009 --> 04:35:20,009
I tested on rec tests

5321
04:35:20,009 --> 04:35:22,009
I definitely wouldn't put any mainchain funds on it yet

5322
04:35:22,009 --> 04:35:24,009
But I'm planning to have it ready

5323
04:35:24,009 --> 04:35:26,009
For like an early alpha release

5324
04:35:26,009 --> 04:35:28,009
In October for Hacker's Congress

5325
04:35:28,009 --> 04:35:30,009
I want to pay my coffee with it

5326
04:35:30,009 --> 04:35:32,009
And I did this last year

5327
04:35:32,009 --> 04:35:34,009
But it was kind of a hack

5328
04:35:34,009 --> 04:35:36,009
Because I used the rec test bitcoin

5329
04:35:36,009 --> 04:35:38,009
In the federation to

5330
04:35:38,009 --> 04:35:40,009
Trigger a payment from a lightning node

5331
04:35:40,009 --> 04:35:42,009
Which was operating on mainnet

5332
04:35:42,009 --> 04:35:44,009
So that's kind of cheating

5333
04:35:44,009 --> 04:35:46,009
But this year I want to have real bitcoin in there

5334
04:35:46,009 --> 04:35:48,009
And I have to put my skin into the game

5335
04:35:48,009 --> 04:35:50,009
Dogfood this and then it will become awesome

5336
04:35:50,009 --> 04:35:52,009
Has there been any interest

5337
04:35:52,009 --> 04:35:54,009
From other projects

5338
04:35:54,009 --> 04:35:56,009
To integrate this or not yet?

5339
04:35:56,009 --> 04:35:58,009
I mean

5340
04:35:58,009 --> 04:36:00,009
Not really yet

5341
04:36:00,009 --> 04:36:02,009
I mean it's in the early stages

5342
04:36:02,009 --> 04:36:04,009
I got a lot of support

5343
04:36:04,009 --> 04:36:06,009
Definitely I got a lot of support

5344
04:36:06,009 --> 04:36:08,009
From Wasabi people

5345
04:36:08,009 --> 04:36:10,009
We were discussing the crypto behind it

5346
04:36:10,009 --> 04:36:12,009
A lot of outreach

5347
04:36:12,009 --> 04:36:14,009
But from a more user-facing point of view

5348
04:36:14,009 --> 04:36:16,009
Not really yet

5349
04:36:16,009 --> 04:36:18,009
Because it doesn't make sense

5350
04:36:18,009 --> 04:36:20,009
I'm working on the deep tech behind it

5351
04:36:20,009 --> 04:36:22,009
And not on any user-facing apps

5352
04:36:22,009 --> 04:36:24,009
But this time will definitely come

5353
04:36:24,009 --> 04:36:26,009
One thing to mention is that it's written in Rust

5354
04:36:26,009 --> 04:36:28,009
So if you like Rust you're looking for a Rust bitcoin project

5355
04:36:28,009 --> 04:36:30,009
To contribute to

5356
04:36:30,009 --> 04:36:32,009
Selling point, you know

5357
04:36:32,009 --> 04:36:34,009
I was just going to say what do you need

5358
04:36:34,009 --> 04:36:36,009
At this point? Developers?

5359
04:36:36,009 --> 04:36:38,009
Yeah definitely

5360
04:36:38,009 --> 04:36:40,009
I need Rust developers to build the main thing

5361
04:36:40,009 --> 04:36:42,009
Like the server component

5362
04:36:42,009 --> 04:36:44,009
And also the client library

5363
04:36:44,009 --> 04:36:46,009
And what I'm currently planning on

5364
04:36:46,009 --> 04:36:48,009
Is building a WebAssembly based client

5365
04:36:48,009 --> 04:36:50,009
Where I compile the client library

5366
04:36:50,009 --> 04:36:52,009
For federated e-cache

5367
04:36:52,009 --> 04:36:54,009
Into WebAssembly

5368
04:36:54,009 --> 04:36:56,009
And then someone could build a React interface

5369
04:36:56,009 --> 04:36:58,009
To it

5370
04:36:58,009 --> 04:37:00,009
So it's easier to use

5371
04:37:00,009 --> 04:37:02,009
Just put it on your phone, scan QR codes

5372
04:37:02,009 --> 04:37:04,009
And it would be awesome

5373
04:37:04,009 --> 04:37:06,009
So if anyone has any knowledge about this stuff

5374
04:37:06,009 --> 04:37:08,009
I don't, I'm really a back-end guy

5375
04:37:08,009 --> 04:37:10,009
I'm a Rust developer

5376
04:37:10,009 --> 04:37:12,009
But I'd love to cooperate

5377
04:37:12,009 --> 04:37:14,009
We've hinted at it

5378
04:37:14,009 --> 04:37:16,009
A couple points throughout this panel

5379
04:37:16,009 --> 04:37:18,009
But

5380
04:37:18,009 --> 04:37:20,009
E-cache is of course not the only privacy

5381
04:37:20,009 --> 04:37:22,009
Tool for bitcoin

5382
04:37:22,009 --> 04:37:24,009
People are working on different solutions

5383
04:37:24,009 --> 04:37:26,009
To increase privacy

5384
04:37:26,009 --> 04:37:28,009
What's the vision for how does federated e-cache

5385
04:37:28,009 --> 04:37:30,009
Fit into a broader picture

5386
04:37:30,009 --> 04:37:32,009
Yeah I mean

5387
04:37:32,009 --> 04:37:34,009
So the ideal world would be one

5388
04:37:34,009 --> 04:37:36,009
Where lots of people use

5389
04:37:36,009 --> 04:37:38,009
Solutions like federated e-cache

5390
04:37:38,009 --> 04:37:40,009
To do these private L2 payments

5391
04:37:40,009 --> 04:37:42,009
And then all of the

5392
04:37:42,009 --> 04:37:44,009
On-chain payments, all of the L1

5393
04:37:44,009 --> 04:37:46,009
Or a lot of the L1 activity

5394
04:37:46,009 --> 04:37:48,009
Is just massive coin joins

5395
04:37:48,009 --> 04:37:50,009
It's just massive

5396
04:37:50,009 --> 04:37:52,009
Like the

5397
04:37:52,009 --> 04:37:54,009
Federation needs to get some coins

5398
04:37:54,009 --> 04:37:56,009
And send it to another federation

5399
04:37:56,009 --> 04:37:58,009
Or somebody needs to make an off-chain

5400
04:37:58,009 --> 04:38:00,009
Or an on-chain withdrawal

5401
04:38:00,009 --> 04:38:02,009
And they just all do it through giant coin joins

5402
04:38:02,009 --> 04:38:04,009
And sort of like non-settlement payments

5403
04:38:04,009 --> 04:38:06,009
All happen through these private L2 mechanisms

5404
04:38:06,009 --> 04:38:08,009
Maybe one thing to add there

5405
04:38:08,009 --> 04:38:10,009
Coin joins

5406
04:38:10,009 --> 04:38:12,009
Are currently

5407
04:38:12,009 --> 04:38:14,009
Not great because you have all these different

5408
04:38:14,009 --> 04:38:16,009
Denominations and if you want to pay a certain

5409
04:38:16,009 --> 04:38:18,009
Amount then it's a really weird

5410
04:38:18,009 --> 04:38:20,009
Amount and this will stick out

5411
04:38:20,009 --> 04:38:22,009
But if we were doing

5412
04:38:22,009 --> 04:38:24,009
All the commerce on layer 2 then we could have

5413
04:38:24,009 --> 04:38:26,009
Common denominations or like

5414
04:38:26,009 --> 04:38:28,009
On the base layer and that makes

5415
04:38:28,009 --> 04:38:30,009
Coin joins so much more efficient

5416
04:38:30,009 --> 04:38:32,009
And I can imagine a future where

5417
04:38:32,009 --> 04:38:34,009
Every spend is a coin join

5418
04:38:34,009 --> 04:38:36,009
That's the future I'm working for

5419
04:38:36,009 --> 04:38:38,009
I want to see this

5420
04:38:38,009 --> 04:38:40,009
Alright, well guys we're out of time

5421
04:38:40,009 --> 04:38:42,009
So thanks a lot for doing this with me

5422
04:38:42,009 --> 04:38:44,009
Thank you everyone for coming

5423
04:38:44,009 --> 04:38:46,009
This is the last talk

5424
04:38:46,009 --> 04:38:48,009
Here so this room

5425
04:38:48,009 --> 04:38:50,009
That was it, thanks