Hello, and welcome to Drivechain Talk.
All are welcome to join the stage and share comments and questions.
We're here to chat about BIPs 300 and 301.
There have been a lot of interesting tweets lately about these ideas,
and we're seeing a huge increase in attention and study of Drivechain.
The economic design of Bitcoin is strengthened
when peer-to-peer sidechains are possible,
and that is what Drivechain would introduce to Bitcoin.
It would introduce peer-to-peer sidechains,
enabling protocols, that is blockchains,
to exist in partitioned environments on Bitcoin as layer twos.
The sidechain is the layer two.
The sidechain is the protocol that is different than Bitcoin.
It offers different software, different features,
and assurances, and guarantees, and vulnerabilities.
And this enables Bitcoiners with a desire
to create or use a protocol other than Bitcoin
to do so in a manner that is harmonious economically with Bitcoin.
So let's say you're a Bitcoiner, but you like extreme privacy.
You want to have a peer-to-peer protocol that has extreme privacy.
Maybe it would have less auditability.
So you're interested in Monero or Zcash.
Instead of using those altcoins, it would be favorable
if you could use a Bitcoin sidechain,
and then you'd be able to use your preferred protocol
without leaving Bitcoin.
And this way, you'd be able to remain a Bitcoiner
while using this alternative protocol.
So privacy protocols are one of the envisioned sidechains on Bitcoin.
Hello, Moon Settler. Welcome to the stage.
Moon Settler, I'd like to ask you if you agree with
one of the ways that I see drivechain,
which is drivechain fundamentally enables peer-to-peer sidechains.
This would enable the sidechains to be peer-to-peer instead of federated.
And this might lead to a much higher use of sidechains.
What do you think?
Do you think that if we get drivechain tomorrow,
we would see potentially much higher utilization of Bitcoin sidechains?
Do you think that would occur?
I think yes.
I'm less sure about saying it is peer-to-peer.
So that is where I would be more careful to frame it that way.
But I think we would see more of sidechain utilization, I believe.
So I like calling it peer-to-peer because
Bitcoin is peer-to-peer.
Mining, therefore, in Bitcoin is peer-to-peer.
And therefore, a hashrate escrow is peer-to-peer.
What do you think about that chain of reasoning?
Yeah, I think mining is peer-to-peer between the miners.
So they even have their special high-speed relay network.
So they are not even really dependent on the peer-to-peer messaging mesh network that labs use.
So they are definitely peer-to-peer among each other.
But of course, not all peers are made equal.
And yes, the Bitcoin messaging network for bulk and transaction propagation is also a peer-to-peer network.
But that peer-to-peer network does not really work peer-to-peer for getting changes to the ledger.
So I think it's more nuanced than to just blanketly say that Bitcoin is a peer-to-peer system.
It has peer-to-peer elements, at least.
What do you think would be the reason why the use of Bitcoin sidechains would grow if Drivechain is enabled?
Would it be the narrative or do you think it would be the technology or both?
I think a lot of Bitcoiners don't like well-defined federations.
So obviously there are a few that say it's better to have a well-defined federation.
But I think the majority does not like them.
And I think it would simply get people to rush to experiment with a lot of things.
And especially I'm interested in how this ThunderL2 could work with Lightning, you know, as an L3.
That is something that I think would see some interest.
But it's really hard to predict, you know.
I don't think we will ever know what the effects of Drivechains would be without activating them.
And it's not even just activating them.
I think to build the ecosystem that has a significant impact would take like 10 years at least.
So that's a lot of development that needs to happen.
And just simply activating and trying to reason about it, what the net effects are after 1-2 years, that would be silly, I believe.
Okay, so in your view, it would take 10 years after Drivechain is on Bitcoin to see the full adoption of the sidechains?
No, not the full adoption.
To decide if it really solves all the most important problems or will solve them, I think I would phrase it that way.
So basically that it was worth it.
I think we would know in about 10 years if it was really worth it to activate Drivechains.
I don't think we would know it in a year or two.
And I don't think we will ever know it without activating it.
Interesting. I shared in the nest here in our Twitter spaces Adam Back's tweet from a year ago.
He referred to the sidechains as peer-to-peer in a thread with Eden Yago.
So I think they're talking about Drivechain.
So I do like that people call it that.
Because even though the complexities you mentioned are accurate, there is truth to the notion that Bitcoin is peer-to-peer, generally speaking.
And a miner-controlled sidechain would be peer-to-peer because part of Bitcoin is mining.
Therefore, mining is peer-to-peer if Bitcoin is peer-to-peer.
And therefore, a miner-controlled sidechain is peer-to-peer.
Peer-to-peer doesn't mean everyone is equal in every way.
Peer-to-peer means that everyone has the power to become equal without socially approved permission.
Yes. So basically, you have no governance.
So in a Drivechain world, you don't have governance.
And if you have a federated network, maybe the federation members are peer-to-peer with each other.
And as you said, not everyone is equal.
And the sidechain users and participants are also peer-to-peer among each other.
So it's a bit similar to everything, but it has a governance structure.
And inevitably, I think most people suspect that inevitably a governance structure will develop in a setting like that.
And in an extremely dynamic federation of sorts, I think it's not a good analogy to call miners a federation in this regard.
But they kind of could be modeled as such.
So it's more likely that it will follow the general non-governance state of Bitcoin, right?
I see. I have a question for you.
I have read a lot of your tweets, and I've never seen you write unambiguously that you support Drivechain.
Is that true? Is that your view?
Yes. I have been very dissatisfied with Drivechains early on.
So I would have liked to see the concept improved.
But hearing what the opponents of Drivechains say, I kind of realized that the things that I perceived as weaknesses in the whole trust model
actually serve a purpose that is not entirely bad.
And therefore, I'm now more of the opinion that Drivechains are good enough to try.
And I don't think that it will work out like Paul thinks it will work out.
I wouldn't go as far as to say that we need to do this, right?
But I think overall, it is good enough to try or nearly good enough to try.
And I'm really more interested in the talk about what types of L2 chains should we allow on top of Bitcoin.
And what are the conditions that ensure that this whole system does not become completely centralized for L2 block creation, right?
So I'm less interested in the basic economic and trust concepts of Drivechains.
And more interested in the less obvious and less instant implications of activating Drivechains.
Because a lot of critics don't phrase it very well, but most of them seem to have a feeling, a suspicion that activating Drivechains could somehow centralize block production of L2 chains.
And that in effect, if the fees become much, much higher, the collective fees from L2 chains become much higher than the miner revenue from L1 chain,
that could basically pervert the decentralization of the miners, right?
And it's a very interesting problem to prove or disprove this, because it can play out so many ways.
And I'm more interested in finding the edge cases and edge conditions that determine what is necessary for this to happen.
And what are the conditions under which it can't really happen or unlikely to be sustained.
To what extent do you feel that the inspiration for Drivechain is much more compelling than the concerns that you just talked about?
For example, the risk of disputes, well, the risk of disputes within the Bitcoin community over what the protocol should be.
In other words, the disputes over soft forks and hard forks.
Do you think that those disputes will continue?
And if Drivechain is adopted, it's much less likely that there would be a major dispute because people who want to do something different, like large blocks, could simply do a sidechain.
And it would be not an altcoin.
So they wouldn't be leaving Bitcoin.
They would just be doing a sidechain.
So that was the inspiration originally for Drivechain.
But there are other justifications and rationales for Drivechain, such as the security budget.
And, you know, also there are others.
So I feel that the justification for Drivechain is very compelling.
And the concern that the, you know, so-called miner centralization concern is not as compelling.
So I think that what a person needs to become a Drivechain advocate is they need to feel that Bitcoin is under threat from its own internal problems and from the external problem of altcoins and their growing network effect, specifically Ethereum mainly.
So if a person feels like, well, Bitcoin is the best.
Bitcoin is the only project that matters.
Bitcoin is number one.
It'll always be number one because it was first, because it had an ethical, you know, origin, because it has 13 years of being number one.
It'll always be number one.
If a person thinks that, then the person can be satisfied, complacent and conservative.
But if a person doesn't feel that way, like, you know, me or, you know, Eric Wall or many other people who think that Drivechain would be good.
And if Bitcoin doesn't do Drivechain, then altcoins will just continue to grow and grow and grow and grow until an altcoin is number one and until the altcoin has a design that is like Drivechain.
And then the altcoin will eventually have a layer one that is ossified and bigger than Bitcoin.
And then it'll have more or less everything Bitcoin has except the history of being number one and the history of a perfect foundation of how it was created.
So which do you have?
Do you feel like Bitcoin is by far, you know, superior and everlasting or do you feel like it's quite the opposite?
And, you know, if we don't work hard to optimize the design to increase extensibility, then Bitcoin might continue to diminish in its central role within the crypto economy.
Yeah, so I'm definitely in the latter camp, you know, so I think Bitcoin needs to evolve.
The direction is a big question.
Like, I'm not really that set on any direction.
I know which properties I value most for Bitcoin.
So I want the system to be as trustless, permissionless, as secure as possible.
And we have a huge problem regarding the two chains in this, you know, three lemma, if you like.
So we can't really make sidechains without trust right now.
And that's a problem.
And that is basically, I believe, suffocating Bitcoin right now.
And a lot of people have this criticism for drivechains that they don't really remove trust, they just shift it to an undetermined, unspecified group that can, you know, change.
And that is both good and bad, depending on what assumptions someone comes into this.
But that's not really what I wanted to get in.
That was not the more interesting.
So, basically, you, wait a minute.
So, I'm not sure if this, I forgot what I wanted to say because you have said a lot of stuff.
And so I had multiple thoughts I wanted to, you know, chime in with, but I just forgot them.
That's okay.
It happens to me all the time.
I'd like to share a list of five justifications for drivechain.
And I'd like to know what you think of them.
Oh, do you want to continue with your thought?
No, no.
The justifications, I think.
So, here they are.
I'll list all five of them.
They're very quick.
And then we'll go through them one by one and get your thoughts on them.
So, first, the five justifications are, number one, the desire for freedom and creativity.
So, number two, the latent expressiveness of Bitcoin, meaning things like we just found out that taproot allows for ordinals and maybe ordinals and inscriptions allows for other things.
So, that would be latent expressivity, latent meaning hidden and then later revealed.
So, number one was the desire for more freedom and creativity on Bitcoin.
Number two is latent expressiveness of Bitcoin.
Number three is, and these are, I should have said, these are five things that make drivechain or something like it very likely in the future.
So, the five things that make drivechain or something like it very likely in the future are the desire for freedom and creativity, the latent expressiveness of Bitcoin, the consensus upgrade ossification problem.
Meaning, you know, disputes about should we change, should we not change?
And the fact that, as Paul says, we need to ossify eventually.
And then fourth, the security budget problem of low fees.
And fifth, the threat of altcoins growing.
So, those are the five.
What do you think, like, number one, like, just not a concern about altcoins or security budget or ossification, but purely.
And I think this is the best and most positive and enjoyable, emotionally, the best argument for drivechain, which is freedom.
And Mike Tidwell talks about this, the organizer of TabCom.
He says he hopes that if drivechain is adopted, it's adopted because of a love of innovation.
So, what do you think about that? Is love of innovation and freedom and creativity a good reason to do drivechain?
Is that compelling to you?
Not really. So, the problem with this is going to be a hard sell for Bitcoiners because they have been completely brainfucked and psyched against, you know, features that altcoins try to bring to the table.
So, I think generally this is not going to lead anywhere.
Obviously, there are a few people who would like, you know, more freedom to do this with, to do special things with Bitcoin.
Kind of like, you know, having special economic zones.
This is probably the equivalent.
So, sidechain could be a special economic zone for Bitcoin with different rules.
And that's not a bad thing in my book. I just think it's a hard sell because, you know, the mainstream Bitcoin narrative is that, as you said, Bitcoin is perfect and you don't touch perfection.
And everything can be done on higher layers, but it's completely undefined in their minds what these higher layers are.
They just understand that they don't want forks and fork wars.
And don't really comprehend the technical systemic limitations of Bitcoin and how it could scale and how it could be sustained in the future.
So, I'm really more interested in those directions.
I'm not so much interested in EVM sidechains and what they could do or, you know, any of that stuff.
I think that's just not interesting compared to what Bitcoin was made for.
And I'm actually, I understand the people that say, wait a minute.
So, you want Bitcoin to be money. That's the primary purpose of Bitcoin, to be money.
Okay, but, you know, payments are not a large market.
So, finance is a hundred to a thousand times larger market than payments, at least, even in crypto.
And in traditional finance, it's probably incomparable, right?
So, derivative markets and financial products are practically incomparable to payments as a service.
So, the revenue, the fees, the money that is in, it's just not on the same scale.
And by limiting ourselves to payments, and I understand this critique, we are basically cutting off a few magnitudes of security.
And if someone likes Bitcoin for, you know, scaling the energy, I find it very fascinating.
The whole idea that Bitcoin miners are basically these batteries with infinite capacity.
And you can just basically up the base load and curtail them as you need and stuff like that.
I really find this fascinating.
I would like to see this play out at a global scale and see how it transforms civilization and society and human welfare, right?
So, in that regard, I would like Bitcoin to consume as much energy as possible, as it can.
And for Bitcoin to consume as much energy as possible, it needs, basically, miners need more revenue.
And we don't really know how this will turn out in the future.
And some people think that this will naturally be solved by the price going parabolic, absolutely parabolic.
You know, the hyper-Bitcoinization argument.
They think it will happen and basically just the subsidy-wide loss will, you know, solve this issue.
I don't believe that.
I think the subsidy in two halvings will be low enough that fees should become a significant portion of miner revenue already.
We don't have 100 years to figure this out, in my opinion.
And I'm also skeptical that, you know, messing with the issuance, adding inflation to Bitcoin, would actually help maximize this miner revenue.
So, I have a lot of skepticism about this.
And I think it's probably the least intrusive and least invasive and least anti-ethos way to help miners to get as much revenue as possible is blind bench mining.
That's how I see it right now.
So, these things are interesting to me.
The security budget problem.
What secures the chain at all?
What are the real pressures?
Where do they come from?
And how do sidechains fit into all this?
And how big do we expect them to grow?
And how fast do we expect them to grow?
And what decentralization do we expect from the economic activity among drivechains?
And stuff like that is more interesting than the exact utility that they could unlock.
I couldn't care less about that.
The Thunder sidechain is more interesting to me than anything else that you could list.
I see. So, you like the BigBlock sidechain.
And the BigBlock sidechain is the drivechain that interests you the most of the various proposed...
Because I think it's very important for people to be able to hold their own keys.
In us peer-to-peer setting as humanly possible.
And we know that going BigBlocks with Bitcoin would present a lot of problems.
We already know that.
And there are reasons why we probably should be careful with block size increases on L1.
And in theory, if we could have a trustless escrow.
A perfectly trustless escrow that miners can steal from and they can't really mess with in any way.
So, this magical escrow, if you had it, then I would absolutely be in the camp to reduce the block size for Bitcoin.
And just have these sidechains.
These regionally localized sidechains that would even function just fine if the Internet got partitioned.
So, if some natural disaster or war or cyber or whatever just partitions the Internet.
Like Russia gets separated from the US and China.
And economic and political power blocks would get a separate Internet with very little crossing between them.
In a world like that, I think it would be very functional to have larger block sidechains within those zones.
And a very small, well-propagating main block.
And we know that with atomic swaps and cross-chain lightning, we could just have very good connectivity between them.
When there are no problems.
And the whole system would work and it would be auditable.
And it would help to compartmentalize the concerns of local people.
So, why do I need to validate someone's bubblegum purchase in Brazil when I don't live in Brazil?
I don't care about that.
I only really care about how many bitcoins have been created.
And that nobody creates new bitcoins.
And that my transactions are sufficiently final and my coins are secure.
Those are the things I care about.
I don't really want to validate everyone's transactions.
So, it doesn't make sense to me to layer these things.
How large the blocks need to be if we have a sidechain for every country, I don't know.
Maybe you don't even need large blocks.
Maybe most sidechains will be smaller than Bitcoin mainchain today.
Right.
So, we talked about the love of innovation, which Mike Tidwell enjoys as the rationale for Drivechain.
This means increasing the extensibility of Bitcoin by enabling peer-to-peer sidechains that allow for different experimental partitioned sidechains.
Like for privacy, for smart contracts, big blocks, HiveMind.
Fiatjaf has said in some tweets that HiveMind is so interesting and potentially valuable that it alone is a good reason to do Drivechain.
And he doesn't buy into the argument that Drivechain might eliminate all altcoins.
So, each person has a different justification or rationale for Drivechain and I appreciate that.
So, I appreciate how the love of innovation isn't for you a very strong argument for Drivechain.
What do you think?
Yeah, let's make something clear.
So, the thing is I don't consider the security model of Drivechain perfect.
So, it's not the ideal security model.
The ideal security model would be that you have the same trustless, permissionless and secure transactions on sidechain than you would have on mainchain.
Or very close to it. So close to it that for most people it's basically a perfect tradeoff.
But you don't really have that. It's not like that.
If you activated Drivechain right now, they would basically have no security whatsoever.
You would put your coins into a weird custodial construct and nobody would give a damn if you lost them.
So, this is a process.
I see a potential history that can unfold that makes Drivechain approximate an ideal state so closely that we say, yeah, it was worth it.
But it's not a certainty.
I think it has about 1% chance for that to happen and it's much more likely that we would have a much different result.
And I think the most likely scenario is that we are too late with Drivechains.
So, it's simply too late.
Bitcoin is never going to catch up to everything that is happening in altcoin land.
And the people who became backholders of altcoins are never coming back to Bitcoin.
So, even if you offer the exact same functionality as they get on an altcoin, they just won't come back.
They are basically captured by the bags that they hold.
If you made a big block sidechain and you said to the big cash people that you can transact in Bitcoin and you can have big blocks and you can basically have everything that you built on BCH, right?
And all you have to do is dump your BCH and buy Bitcoin and transfer this to this sidechain.
They won't be interested.
They simply won't be interested.
First of all, if they start doing that, then the price will collapse and most of them will not get their money out.
So, it's not even viable to do it.
And second of all, they are just not interested and that's not why they hold BCH really.
So, that's not the real reason why they hold BCH.
It's a completely different thing.
And that's why I don't believe at all in this narrative that sidechains somehow solve the altcoin problem whatsoever.
And we are not even talking about the whole funding dynamic and how basically a lot of these coins are just unregistered security offerings and people are basically buying stocks.
And you can't really do this with drivechains.
You can't really just create tokens out of nothing and ascribe value to them.
So, I mean, obviously you could have the equivalent of an ERC20 token on an EVM sidechain.
But what I mean is the native asset.
You can't just make up native assets.
And I think that just removes the motivation of the altcoin developers to start working or do anything.
Yes, we could just steal working systems, but nobody will be interested in them because the people who are interested in that utility are in that altcoin and captured by the bags.
So, this whole notion that we could somehow substitute good things that we want to do on Bitcoin mainchain and ways we want Bitcoin to be able to have more trustless primitives that can construct more trustless layer 2 solutions.
So that we can have those on a drivechain and that will be enough and we don't need to change mainchain anymore.
That just basically assumes a very specific 10-20 year history to play out exactly as PowerVault have liked and I'm not sure it will play out.
So, to me this is a huge gamble and I don't really believe in it, but I see the potential and I think it's worth the risk because the most likely thing if you activate drivechains is that nothing happens.
They won't see any significant option and that's it.
That's the most likely thing the way I see it.
So, they won't do any harm, they won't do any good and just nothing happens.
But in the off chance that this thing really takes off and really develops in a good way and it really solves the security budget and the block space issue in a way that suits basically everyone.
I think that long shot is actually maybe worth it.
I see. Maybe worth it.
Well, that's pretty good.
I read probably every tweet you've ever written in the last few months and I identified one of them which was the most favorable about drivechain and I included it in my spreadsheet as you probably have noticed.
That spreadsheet is available at drivechain.info forward slash friends.
That's drivechain.info forward slash friends.
And the tweet is you wrote just a few weeks ago.
It's entirely possible that drivechains could provide tremendous value with not a single current adopter using them even once.
So, that's not an argument as far as I'm concerned.
I would probably not use them either.
Hard to tell without seeing the utility in action.
So, if I understand you correctly, in that tweet you're saying that drivechain could provide value without being used, you must be referring to, I assume, the argument that drivechain would deprive altcoin founders of their rationale.
No, no, no.
I meant the current bitcoin adopters are maybe a different breed than the people who come after us.
So, just because the current bitcoin adopters don't see any value in drivechains and don't see why this could be valuable and maybe they plan on becoming future billionaires and trillionaires and they just don't give a damn about fees.
And everyone that is smart enough to not buy into this early enough.
I think there is a bunch among the laser eyes that actually don't just want to succeed but want most of mankind to fail.
So, they want their superiority secured and they don't give a damn about others.
That's the feeling I get sometimes.
I'm not sure of it and maybe it's not fair to say this but I don't give a damn.
That's how I feel when these people talk about these things and just ignore the sheer reality of the problems that bitcoin faces with scaling.
To provide the same trustless, permissionless and secure experience to generations after us at a much higher adoption rate.
And that's what I meant.
If not a single one of the early adopters will ever use drivechains it can still be tremendously valuable for those that come after us.
That's what I meant.
Understood.
Understood.
Alright.
Why don't we continue through the list of five things.
I tweeted it a moment ago so I can, for your convenience, put it in the nest here so we can all refer to it.
So, there it is.
The five things.
I put it in the nest.
The five things that make drivechain or something like it likely for bitcoin.
So, we talked about love of innovation.
The next one is the latent expressiveness of bitcoin.
Meaning drivechain similar technology without a soft fork.
So, maybe Casey Rodhamore has opened the door to greater expressiveness for bitcoin and will get drivechain through a backdoor without a soft fork.
And therefore will get something like drivechain.
What do you think of that possibility?
I don't see it.
So, basically I believe if it was possible to have it all without a fork, you know, to forego trust.
Because basically you can do anything on bitcoin right now if you involve a trusted third-party oracle.
You can execute any contract of any complexity, include real-world data, do whatever you want so long you have a trusted oracle.
And that has always been the case. And I don't think that just dumping unverifiable data on
bitcoin changes any of that. What it could change in theory is be part of a solution for the data
availability problem for zero knowledge stuff. But there are several issues why I don't believe
the current way of doing it is a good idea or how it should be done. And it would still
require probably two, three soft forks to even talk about, you know, ZKey validity roll-ups.
Because you would probably need a covenant structure anyhow.
You would need a covenant primitive anyhow to create these contracts. And you would need
for withdrawal, you would need some ZKey StarCop code. And then you would need to make sure somehow
that the data regarding for the data that people can use to construct their withdrawal transaction
unilaterally. So, without anyone's permission or intervention or help. The data needs to be
available at least for a short while. So, it needs to be atomic that how you update the state
of such an escrow and how the data is available. And that data availability problem is where I see
that what inscriptions do could possibly have a way of doing that in a suboptimal way that really
shouldn't be done that way. Because witness data needs to be kept for a much longer period of time
than this roll-up data would need to be kept. So, if Bitcoin had an extension block,
another extension block similar to SegWit. And that extension block would be ultimately much
sooner prunable and discardable by nodes. Then that would be a much better situation for that
whole thing. So, I'm personally in the opinion right now that this thing is overblown. So, there
is no revolution happening right now in this regard. And we are going to need soft forks.
If we ever want to do more with Bitcoin than to allow a few million people to hold their own keys
and dig around on lightning and everyone else can just be, you know, shit out of luck and in custody
basically. If you do something, if you want something more fair than that, then we need to do
soft forks. And we potentially going to need to do hard forks as well. At least one, we're going to
need to do at least one hard fork. But there might be hard forks that make sense. So, one example,
I don't know if you know about, I think Stacks. Stacks is burning Bitcoin into an address that
they constructed in a way that basically we can safely assume that it is completely unspendable.
The hash of the pubkey is an all-zero hash. So, to get a pubkey for an all-zero hash that has a
private key that they have, that is just almost, it is a completely negligible chance.
And so, they are burning Bitcoin into this address and it is bloating the UTXO set.
It is bloating the UTXO set and other people are worried about the miners are going to run
out of single satoshis and are thinking about having bigger divisibility on Bitcoin to solve
the problem that miners are running out of block rewards and stuff like that. So,
in my mind, it would make much more sense if we simply remove this null address UTXOs from
the UTXO set. That would decrease everyone's burden. And then we would simply distribute
100 million satoshis of what's in that to every miner in every block. This requires a hard fork,
by the way. And that would basically mean that Bitcoin block reward would never fall below a
few hundred satoshis or maybe a few thousand satoshis. We don't know how much Bitcoin will
be burned. We could all agree that whenever we burn Bitcoins for whatever, you know, space
chains or whatever, we are just going to distinguish the use case with the OPRETURN and we are going to
burn into this one. It would not bloat the UTXO set. It could use the 450 BTC that is already
burned into it. And it looks a perfectly fine address for this reason. And we could just,
you know, redistribute it to miners. And in my mind, this makes perfect sense. It does not
inflate Bitcoin. It removes a lot of the FUD and potential for, you know, simply completely running
out of block rewards. We don't know how much Bitcoin will be worth, but it's entirely possible
that it will be a couple of thousand, a couple of ten thousand dollars when we get there,
you know, when the block reward goes into that range. So in my mind, it makes perfect sense to
do a hard fork like that, but it may be controversial to others, you know, but I think
we are going to have to do something. Could you tell me what are your thoughts on the third
item in the tweet, in the nest, which is the value of ossifying layer one?
So do you think that, like, when we, if we ossify layer one, what we do is we then avoid
the risk of ongoing changes, such as a change that is made too hastily, that opens up an unexpected
result. And also the problem of the community having to spend a lot of effort deliberating
over the changes. So what Drivechain aspires to do is enable layer one to be stable and
conservative, while the layer twos are experimental and innovative in a way that doesn't harm layer
one. Do you feel that we should try to ossify? No, no, no, no, no. I very strongly
feel that we should not ever try to ossify for various reasons, but basically the way I see it,
and I use this, you know, imagery a few times, is we are basically some
little kid with a baseball bat, and we are facing down Godzilla, and we are taunting Godzilla,
and that Godzilla is the traditional financial system, right? And we are the little kid and we
have this baseball bat in our hand, that is the Nakamoto consensus, and that's the situation,
that's the reality of the situation that we are in. And the only thing that we can do if Godzilla
decides to just fucking sit on us is to just decide that Godzilla doesn't exist, just completely
magically decide it's not real. That's what we can do. We can decide our own reality, we can
collectively decide our own reality, but this means that we need to break our own rules, we need
to change our own rules, we need to be nimble to avoid capture. That's what I believe, and I don't
think we can ever give that up. So maybe in a hundred years, I don't know, I will not be alive,
maybe in a hundred years people will say Bitcoin is just too big to fail now, like it consumes 80%
of the world's energy, of the solar system's energy, I don't know. So maybe at one point it can be
too big, but we are the farthest from that as far as I'm concerned, so no, it's a joke. And
the other reason is, like I said, we don't have solutions that make it possible to provide the
same experience to the people that come after us as we had. We just don't have the
tools, don't have the way, and the third one is software. There is no such thing as perfect
software. That's bullshit. So I just can't see that Bitcoin can ever be in a state where it can
be improved, like that's nonsense to me as a developer, and I don't understand how can anyone
think that. And yes, I understand that the consensus rule set is separating from everything
else, but actually the limitations all come from the consensus rule set. So what you can do with
Bitcoin is mainly limited by the consensus rule set, and I just don't see how ossification
is a single at all. On the other hand, making these changes less controversial by having a good
economic trial, so not just a testnet, not just a signal that a few dev is dicking around on,
and it doesn't really prove that an economically motivated attacker can't get his way.
Let's say we are talking about APO, AnyPreval. So you start to make new
lightning channel constructs, and people are saying yes, yes, they are good enough,
but it would be much better if you could actually have that active on a network where
people are economically motivated to attack it. And if you have that on active
with sufficient, like multiple thousand Satoshis could be stolen if it was possible, that is a very
good indication that something is good enough for mainchain. So I'm not saying it's completely
worthless in this regard, or I don't see value in trialing technologies for mainchain on a sidechain,
I'm not saying that. But I don't think that not improving mainchain is ever a sane
and desirable goal. Okay, I think I should stop using the word ossification and instead talk
about it this way, as you did, which is, and let me know if this is what you meant,
we're not trying to have L1 become permanently unchanged, but we are trying to have the process
for changes be improved. So instead of there being just arguing and deliberation about the
changes, if we had lots of sidechains, then people could see which sidechains are successful
and stable. And then that would indicate how to change L1, right? Like if we have a drivechain
that's very successful, then maybe that should become the new L1. We should bring that technology
down to L1. So is that what you're saying? Yes, not necessarily, right? So it all depends
how it plays out. Let's say most of the people will hold their keys on L2s in the future. And
really L1 is this settlement layer between L2s and gigawales and large financial institutions and
states. In that future, and I believe this is why Paul thinks that L1 should ossify, in that future
there is simply no reason to bring innovation to L1 that is specific to how the small people use
Bitcoin. Because some things make sense on L1, some things make sense on L2. And I believe that
engineers will be able to identify where something belongs and what are the trade-offs.
I just simply don't believe that we will run out of things to do on L1. But it's entirely possible
that we will not want to add features to L1 at a certain point. In a future where
let's say billions of people use L2 chains and the L3 constructs built on them,
like billions, and then like 10,000 people use L1 and mostly institutions use L1, then
what is the reason to bring new constructs when this already works just fine to L1? I don't see
it. But I also don't think that this will happen, right? So it doesn't seem like you can have the
same trust assumptions on an L2 chain as on L1. It is much more likely that we will have something
like where you can have a tiered fee system where everyone will pay for the highest fees
that they can afford because the fees that they can afford basically secure the chain that they
are on. So I can see how this naturally would result in a system where everyone will have block
space, everyone will have access to block space, but the security and the convenience, you know,
the finality assumptions and everything depends on the fees that they can afford. And some people
will want to use mainchain. I think there will always be people who want to use mainchain and
will be able to afford it. But it would be really unfortunate if only those very, very rich people
could use Bitcoin and only those very, very rich people could use their own keys. And that is why I
think I have not seen a better way that is ready to activate and be trialed. I have not seen
a better way that has a chance to solve this problem aside from blind merge sidechains, right?
All right. So we've talked about love of innovation. We've talked about latent
expressiveness of Bitcoin. We've talked about the consensus upgrade and ossification
problem. And it sounds like you like how drivechain improves the consensus and upgrade
topic. You know, it allows for people to experiment, demonstrate their new ideas.
If they're very successful, then maybe that should be part of Bitcoin layer one potentially.
And without all these sidechains, people have to just argue. Like, for example,
Paul has said that if we had drivechain, taproot would have come faster to layer one,
because there could have been a taproot sidechain that would have demonstrated taproot.
And then it might have, you know, if there's a good change, we want it as fast as possible.
And if there's a bad... Yeah, but wait a bit. So we have sidechains right now, and nobody is using
them. So there is an inherent problem right now that everyone on this world is feeling with
sidechains. And we don't actually know if drivechains are solving this problem. We will
only know if we activate it and try it out. We won't be able to figure out how people will perceive
the risks and benefits involved in a hash rate escrow. We simply... I think we can't predict
people. Everyone thinks they can, they have their assumptions on how things gonna play out or how
certain people will act, and they come to different conclusions about drivechains. But I believe the
objective reality is we don't know. We don't know and we will never know unless we try it out.
And again, maybe some people are going to say that do it on an altcoin or do it on a
testnet, but it's not the same. When you want to see what people will do with their Bitcoin,
you know, with a certain construct, it's not an adequate... Like Paul said that
CTV could have just been activated on a sidechain. But when I don't have the same
security assumptions on a sidechain than on mainchain, then I won't want to put my
Bitcoins into a sidechain where they are less secure to have them more secured on the sidechain
with a vault or some other construct. That just doesn't make sense. These things need to
develop organically. They don't happen overnight. It's not like you activate drivechains and
you magically just can do these things there and it means the same thing as if you have activated
one. That's just not how things are. But these things can shift over time.
So maybe if we let it, maybe in 10, 20, 30 years it will become true.
But if you ask me if I believe this is true today, I would say no. No, it's silly.
Okay. We have a standardized, you know, railroad with... We have a standardized
electronic plug connector in homes. So some things are ossified. Some things are fixed
and there's a lot of value in it being that way. So it would be good if Bitcoin
is perfected and ossified. But I also understand your developer mindset, which is that
we're still pretty early. Maybe there should be a number of more changes made to layer one.
We should not think... I think Paul thinks, this is just my speculation, but I think
it seems like in his writings, he indicates that if Bitcoin were to shrink the block size
and adopt drivechain, we would be good to go for maybe 50 or 100 years,
like no more changes would be needed ever. Yeah. Like I said, it can play out like that,
but it can play out 50 different ways and it can just result in a lot of defection from Bitcoin,
as it happened. You know, if you constrict the available block space for people,
then the immediate reaction is defection from using L1. And since L2 solutions also don't scale
without scaling L1 ownership right now, at least the trustless permissionless L2 solutions right
now do not scale. So basically, you can either push people out of Bitcoin if you do it wrong,
if you do it too suddenly, if you do it too aggressively. So like you shrink the block
size before a L2 ecosystem starts to build up and trust starts to build up in sidechains. You just
aggressively shrink the block size, it will just result in defection. That's what will happen. And
things will just get worse and you are giving fuel to the altcoins. So these things need to play out
organically and over time. And I think they would play out over decades. And Paul is assuming
something that is yet to come. And it doesn't really have a lot of likelihood of unfolding
the way he wants. But it can, I believe, I can see that it can result in a situation that he would
find favorable. And I think it's not a bad system. So in an engineering mindset, these trade-offs could be pretty damn good. But again, it just assumes a lot of things, a lot of events playing out one after the other, and the way people will perceive them. And it's a long shot. That's what I think.
All right. Well, we've talked about love of innovation, latent expressivity, and the consensus upgrade problem we just discussed. What about the final two, which are the security budget problem of low fees, and lastly, the growth of altcoins, the threat of Ethereum?
What do you think, Moon Settler, about the security budget problem of low fees and the growth of altcoins, those two issues? Do you think either of those will drive interest in drivechain?
Yes, so I'm not sure Bitcoin will acknowledge. Also, a large and diverse group, they will acknowledge the threat from an altcoin. And I think if Bitcoin gets stuck in a small market cap share forever, then they will just say the market cap is a bullshit measure, and they will come up with justifications, and it just doesn't work, I believe.
So I'm just going to ignore that, if you don't mind. But I have been pretty vocal about stuff regarding the security budget. I think it's greatly misunderstood, generally, among Bitcoiners.
Some even think the security budget is a made-up buzzword, and it's complete bullshit. And others think it is somehow related to the fiat price of Bitcoin, and it will just solve itself. So we have all sorts of misconceptions there, I believe, and I honestly did not see anything out there in the past two years.
I have searched very, very hard in the past two years and have not come across an idea that has a chance, at least a 1% chance, of fixing the security budget and this block space economic problem to avoid defection towards altcoins or towards custodial services. Both are bad in my mind.
And I have not seen anything other than drivechains. But again, this is just a chance I see, a low probability that it will play out perfectly and be just fine.
But I can see how it could play out and how it could be fine. And maybe we could actively shepherd and steward it and whatnot, if we had consensus on this part.
But basically, I think those are the most worthwhile aspects of drivechains. Solving the sustainability of Bitcoin and generally maximizing the miner revenue, ensuring that the revenue is flowing to the Bitcoin mainchain miners that is right now basically going everywhere.
Like, 10 to 100 times more fee revenue is going to altcoins than to Bitcoin miners in fees. So that's not a good thing.
And as I said, miners...
Excuse me?
I agree. I agree with that.
So it has a chance, right? Blind merge mining has a chance. But there are serious problems that we need to discuss, I think. And in the end, however, we can discuss it forever.
So I think the goal of discussion should not be to ensure that everything will play out perfectly and everything is guaranteed to play out. That's an unattainable goal. That's a time waster.
So if someone says we need to make sure that this change is the best possible change that we can mean, that means he doesn't want any change. That's what it actually means, what he's saying. He's a moron.
But we need to make sure that it can play out well. And if a change does not have a chance to have a solid game theoretical ground to retain decentralization, then probably we shouldn't have it.
And that's the direction I would like this discussion around drivechains going. I'm really not interested in the...
So I'm fine with people agreeing into a different set of rules and locking their bitcoins in and having that utility. I'm perfectly fine with that. I think that's great.
But it's just not interesting. Because if you don't do it in a trustless, permissionless and secure way, then these logged in coins will be of low value. And for low value, federations are probably perfectly all right.
Or even space chains. So low value utility use cases, space chains are probably perfectly fine. I think the whole idea of having a very slow leak back to main chain miners, a predetermined rate where the sidechain asset needs to be burned to make new blocks.
And basically, main chain miners get their fee paid each and every block, each and every consecutive block from the escrow. That is not really an escrow, but they are almost burned coins or just in this very long release schedule, long into this very long release schedule. That's fine, actually.
So if you have use cases where you really just have some utility and you can automatically swap in and out, that's okay. We don't need drivechains for that. We need drivechains for securing real value and we don't know if it's going to be used for that.
I'm not saying we don't know if it's fit for that, because some people dispute even that. I believe it's good enough to try. The game theory of it is solid enough to try. But if someone asked me to guarantee that it will be all right, I couldn't. So there is an element of uncertainty on all this.
But again, there is a chance that it will be okay. And I don't think we should be so afraid of taking chances. This is a complete psyop. The history of Bitcoin development shows that when we had a problem, a serious real problem, so devs broke Bitcoin, it got fixed and nobody really lost coins.
Which one? Which problem?
When devs broke Bitcoin, literally.
You mean the value overflow bug?
Yeah, yeah. We had a few bugs. Devs basically broke Bitcoin before. And it was fine. We had hard fork and it was fine.
So it sounds like your main concern in Bitcoin culture is an excessive expectation that Bitcoin will moon. And you think that too many people are betting that the value of Bitcoin will just go up astronomically, solving the security budget, crushing the altcoins, and making changes not needed, because what we have today is going to do so.
The Michael Saylor ideology of just Bitcoin, buy it, hold it, and you'll get rich and everything will be great.
Yeah, yeah. Complacency, as you said. This is the main problem, because I don't think in the past five to seven years we actually see this validated. So objectively, I don't think this is validated.
And I don't think that you can set up a system where basically all the promises that you make, you already know that they are not going to be fulfilled.
Because nobody is willing to take any risk, and nobody is willing to change any of the core trade-offs. And basically people are shit out of luck, and they are going to be in custody anyhow if they use Bitcoin.
And Bitcoin is having a decreasing upside potential to this. So we can observe, if you look at the pie chart, that Bitcoin is having a decreasing upside potential, seemingly.
And basically people's motivation to use Bitcoin instead of an altcoin don't really improve. They did not really improve. And the more people dogpile on this idea that we must not change anything, I think the more severe this problem will be.
I think we need to let people use Bitcoin, but in a way, in a certain way that does not completely ruin decentralization.
So may I wrap up our conversation? This has been so interesting. I feel like in this interview, I have gotten a sense from you that you're the kind of Bitcoiner who is very interested in the technology.
You are not excessively interested in the means of sound money, digital gold. You're not a Michael Saylor type of Bitcoiner. You're more of a technologist, and you're especially very knowledgeable about the crypto economic issues like security budget, which are unique to Bitcoin relative to gold, relative to fiat.
Those don't have crypto economic issues like fees paying for security. So transaction fees paying for security. So you're interested in making sure Bitcoin is viable. And it sounded like you appreciate the security budget problem to some extent.
You also appreciate the problem where upgrades don't happen unless the community agrees to them. So you're appreciative of Paul Sztorc and others who have the concern that it would be better for experimentation to occur in a marketplace where we can watch how big the drivechain gets.
And that would demonstrate the value of the software. And then maybe that would help signal that potentially the change could come down to layer one. So you're interested in that. But at the same time, you don't agree with everything he says. You don't agree that ossification is good in the near term.
And what would you say overall in closing about drivechain? Do you feel like it's likely to happen in the next few years or not? And if not, then because you've talked about how if it does happen, then maybe it'll take a long time to see how it plays out.
But do you think that if it doesn't happen, something else will come? Are you one of the Bitcoiners who thinks we should be optimistic about rollups? Or what is the big change for Bitcoin technologically that you would like to see? And does it involve a soft fork or will it involve a soft fork?
All right. So first question. I don't find it very likely that drivechains would activate, even though I think we should probably. Overall, I think we should try it out. But I don't think it will find consensus.
I have touched on the reasons. I think Bitcoiners have been psyched completely into fetishizing the wrong things and just lost their way. The cypherpunk origins of the things we want to solve have been kind of lost in translation. That's how I see it.
And I think we have to find some way to move forward. And the reason I would like drivechains to activate now is because, as I said, it's a 10 to 20 year plan to unfold.
So there's a timeframe where I think drivechains can become extremely valuable, but it won't happen overnight. It's going to take a decade. Bitcoin is like, you know, 14 years old, right? So another 14 years is a good target to see if an ecosystem of suitable size that is competitive with the altcoin ecosystem develops on top of Bitcoin.
And if it will change positively how the miners are sustained and how the security is and everything. It takes a lot of time and probably going to involve some serious fighting about certain stuff.
And we need a much shorter term improvement on Bitcoin. I believe in the coming years we need to activate a covenant proposal. People don't have consensus on what is most important.
So is it most important to improve on the lightning network? That has, by the way, fundamental issues. So we don't even know if lightning will work out in any other way than basically have a settlement layer between banks.
We know that Bitcoin can scale in a way that is basically custodial and these banks that pretty freely come and go because there is no real legal red tape to enter this business. That's the main value proposition of this whole L2 ecosystem is you don't need permission. You just need money. You need Bitcoin and you can do it.
So we know that we can scale with banks basically recreating the banking system. The big danger there is we are going to recreate the fractional reserve banking system almost completely that we seek to replace or displace or whatever.
So there is a huge danger there and I'm not sure how to stop that because no matter what people say about Bitcoin, it has very similar technological limitations to gold at scale.
So when 9 billion people will try to use Bitcoin, it will be slow and expensive to transact on Bitcoin. Same as it was with gold and dangerous as well. So you need to grab a cold storage key and bring it hot in a device and then you can be tempested and whatever.
So basically the same reason why banking developed on top of gold and later on the fiat system probably applies to Bitcoin to a great degree and to avoid that fate we need to do something. We need to make more people able to hold their keys even if those are keys that don't actually hit the main chain blocks but could potentially hit the main chain blocks.
So that's why I think covenants are a big thing because they make it possible in general to have UTXOs that don't exist on the blockchain history but potential UTXOs that could exist on the blockchain history but if the cooperation doesn't break down, they never have to happen.
And this will scale a lot in the short to medium term. A lot of use cases will get better. A lot of experience will get better. People holding their own keys is terrifying right now because one mistake and everything is gone. I think we need to change that. That is the most important thing that we need to change that people must not be afraid to hold their own keys.
There needs to be a way to undo mistakes at least for a certain period of time if we want people to really have custody instead of using custodians.
So I believe in a lot of things about this and it's entirely possible that Zk-Validity rollups will play a very significant role in scaling Bitcoin in this self-sovereign way.
So people can hold their own keys but these keys never have to hit mainchain, never need to be part of the UTXO set and never need to be part of the blockchain history. I believe that is generally a necessity if we don't want to abandon everything that we have worked for since Satoshi wrote the right paper. I think something like this needs to happen.
And the drivechain is basically one specific form of that. It's the same thing. You can hold your keys on a sidechain, it has different security tradeoffs. It's a more trustless and permissionless setup than being straight up in custody.
I think we all can agree on that. Holding your own keys on a sidechain is more trustless and permissionless than having an account with the wallet of Satoshi. That's a given.
And so that's what I generally think. We need covenants and we need them soon. We don't know which proposal is going to be the first. It's likely that it's going to be opposed simply because it is such a simple use case.
And like I said, it addresses the main issue with people holding their own keys. It addresses the fear. It gives them safety, gives them a safety margin and that's just a great thing.
It wouldn't be my choice for the first, but I think it's fine as a first covenant. I think we need to unfuck the lightning network and we're probably going to need channel factories to help people to hold lightning channels again that never hit the channel point, never hits the main chain.
So that is a huge scaling factor and if people can hold their own keys on lightning, we still have to solve the privacy aspects, but you know, eCash privacy layer, which is custodial by the way, so there's a problem there, but you only need to be in custody with your spending budget, right?
So you don't need to be in custody with your savings. You're only in custody with the amount that you would hold in your pockets. I think these things all need to happen and they need to happen much faster than how drivechains would blossom.
And that's why I think we shouldn't wait 10 years to activate drivechains, because by the time they would have a very significant positive effect, we'll be by the time we're going to need that significant positive effect if we activate them now, but I think probably we should have activated them a long time ago if we're ever going to do that, but that's my personal opinion.
At least based on what Adam Beck said, I think he's on the same opinion that we probably should have already done it.
Welcome back.
Hi there. Welcome back.
No problem. I just wanted to reiterate that it seems to me like you feel that it would have probably been good if drivechain had been adopted in the past, yet your concerns today at present about adoption remain, that you're not entirely convinced that the incentive structure with respect to miners is viable in terms of preserving the decentralization of miners, as you said.
Wait, wait, wait. Let me correct that. Let me correct that. So I see a lot of people have concerns there. I am pretty convinced that it's all right. It's all right. It's good enough to try, but I don't trust myself.
I don't trust myself to enact a change on Bitcoin that will affect everyone just based on my own brain and my own thinking process. So this needs to be a discussion with smarter and smarter people, verifying the claims we make and calling us out on our bullshit if we commit bullshit and cringe publicly.
So it doesn't mean I think drivechains are bad or going to have bad results necessarily, but I'm simply not qualified to decide in myself that it's good.
Understood, understood. Well, this has been a great conversation. We've talked for 90 minutes with you. Thank you very much, Moon Settler. I don't know where you are or what you do, but I love having your presence on Twitter in these conversations and your tweets.
Regarding Bitcoin and drivechain, I think you are one of the smartest people who I read on Twitter. I read every day as part of my hobby and now as part of my job, I read pretty much everything that's written on Twitter about drivechain and also all of the articles written in magazines about it.
And you seem like one of the smartest people in the entire space on the topic, on the complex topics of blind merged mining and related issues. So it's great to have you here. This is the first time we've done a interview for the entire Twitter spaces of LayerTwo Labs.
And I would love to do this again, maybe in a couple of months we can do another one. And maybe then I'll have studied up more on your ideas and be able to dig deeper into some of them to understand your view on the complex topics.
So please come back in the future and talk more. I guess now is a good time to wrap up. It's almost 11 o'clock here in Los Angeles. Once again, this has been I'm Henry of LayerTwo Labs, and this has been a drivechain Twitter spaces.
And we do this every Monday and Thursday. We talk about drivechain and Bitcoin and the huge, enormous, potentially very exciting value that drivechain can bring to Bitcoin.
All right. Thanks, everyone, for listening. See you next time.