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Hello and welcome to Drivechain Twitter Spaces.

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Today, May 4th, 2023, we are gathered to chat once again about BIP300 and BIP301, what

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we believe is a transformative upgrade for Bitcoin, an important soft fork that could

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be, maybe, Bitcoin's last major change. A change that would introduce extensibility

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of a high degree for Bitcoin, enabling all kinds of new protocols and applications, features,

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and capabilities for Bitcoiners, on Bitcoin, by Bitcoiners, for Bitcoiners, with a goal

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towards internalizing all of the innovation that is possible on blockchain to Bitcoin,

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instead of that innovation with its value and people flowing to altcoins. In the very

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long run, by the power of network effects, one layer one will accrue almost all the value

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in the blockchain marketplace. By the power of network effects, a single unit of account

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will become used across the globe. That's what we believe. We believe the blockchain

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revolution is going to be transformative for the global economy, and we want Bitcoin

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to be the one and only unit of account used. We believe that if Bitcoin becomes the layer

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one for every blockchain application, then Bitcoin is without competition, and it would

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have indomitable network effect, indomitable hash rate security, and it would be more successful

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than we can possibly imagine. So, what Drivechain is all about is making Bitcoin the platform

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for a wide variety of technological innovation and experimentation, and it uses an architecture

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which features partitioned venues for this innovation and experimentation. Partitioned

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meaning if one of the sidechains fails, then that doesn't harm the mainchain, and it doesn't

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harm the people who didn't opt in to the sidechain. So, that's what Drivechain is all about. It's

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about enabling peer-to-peer, two-way pegged sidechains where people can build on a new

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blockchain that has no native token other than Bitcoin. So, the goal here is to maintain

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Bitcoin's monetary policy while radically expanding the technological capabilities of

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one can do with that monetary unit. So, instead of just having Bitcoin for payments,

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we would also have built-on Bitcoin ultra-private protocols such as Zcash and Monero,

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but using the Bitcoin unit of account. Highly scalable, low decentralization,

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high throughput, large block Bitcoin sidechain called Thunder using one gigabyte blocks

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for global cash at a massive scale with billions of transactions a day.

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And that would be the world's cash for small, casual transactions and microtransactions,

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something Satoshi himself was excited about. Satoshi was excited about these microtransactions

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and while the Lightning Network is an excellent and exciting part of this story,

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we would like to see more experimentation and a wider variety of technology

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oriented towards meeting the world's needs for small, casual transactions and microtransactions.

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And a large block version of Bitcoin is the solution for that as a complement to Lightning.

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And there could even be a sidechain focused on facilitating Lightning. So, there is a synergy.

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There is a synergy between Lightning and sidechains. They're not in competition.

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They are synergistic technologies. The introduction of peer-to-peer sidechains would

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facilitate the continued growth of Lightning and other technologies that would be possible

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on Bitcoin sidechains that aren't possible in the mainchain are sophisticated DeFi such as

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peer-to-peer oracles, so prediction markets. So, in addition to privacy and high throughput,

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large block sidechains, we could also have oracles as well as DNS. DNS, in fact, was

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the application that Satoshi himself countenanced as a potentially valuable

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blockchain-based application that isn't money. So, Satoshi explicitly talked about the first altcoin

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and he said that it was great and you can read about what he thought. You can read what he

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thought if you go to the archives of the forum that he posted on in August of 2010.

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The exact name of the thread includes the word BitDNS. That was the name of the altcoin at the

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time. It later became known as Namecoin. And as a Bitcoin sidechain after drivechain is adopted,

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this idea might take root in a way that is much more successful than it has so far. So far,

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DNS on blockchain hasn't taken off. The world is not embracing that yet.

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I think there's some of it going on in Ethereum, but what we want to do is bring all of that and

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much more to Bitcoin. And then we will fulfill Satoshi's view that DNS and blockchain, there's

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a harmony there technologically. People should have a ability to self-sovereign custody,

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custody, this website domain technology that DNS facilitates.

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And there's all kinds of other applications, tools and features that can be built on top

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of blockchain to facilitate the sovereign individual cypherpunk vision of how cryptography

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and blockchain and encryption can enable the human society to have more

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autonomy and independence and freedom through the internet electronically on blockchain.

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There's a big story here that's much bigger than Bitcoin for just money.

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Probably about half of the value in the future in the world, half of the value that's on blockchain

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will not just be Bitcoin layer one. It'll be these sidechains. As I said,

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the Oracle sidechain called Hivemind, the large block sidechain called Thunder,

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as well as a sidechain for privacy called Zside, which is using the Zcash privacy technology,

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but on a Bitcoin sidechain so that you're using the technology of the altcoin Zcash,

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but you're not using their token. You're not using their altcoin. You're not using their

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unit of account. Instead, you're using one of the 21 million Bitcoins. So this is all about using

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Bitcoin's monetary policy, but the technology that currently is only available in altcoins.

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But once drivechain is adopted by the Bitcoin community, then that technology can be cloned

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into a Bitcoin sidechain that will be peer to peer. Right now, every Bitcoin sidechain

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is federated. That's no good. That's why the Bitcoin sidechains aren't successful,

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we believe. We believe that the reason why Bitcoin sidechains aren't successful now

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is that they're still using these training wheels of federations, which is a 15-party

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multisig that controls all of the value of the Bitcoin in the sidechain. And if those parties

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are unfortunately arrested, or something happens to them, or if they collude, there is potential

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risk to that value. So why would anyone put money in a sidechain that uses a 15-person federation?

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In the case of these federations, typically, no one even knows who controls the money unless

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they're inside the clique that set it up. So the goal here is not to have these anonymous

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small groups control things. That's pretty fiat in its mentality and nature. What's much better

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is to have the dynamic global multitude of Bitcoin miners in control. Drivechain places the miners

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in an important role in terms of the security model for the Bitcoin sent to the sidechain.

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Bitcoin already places a similar dynamic of control in the miners, in that if over half of

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all Bitcoin miners decide to attack Bitcoin, Bitcoin would stop working. So drivechain

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doesn't really increase the risk profile for Bitcoin at all, because that risk is already there.

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We're already trusting the miners, in a sense. What drivechain does is it makes use of that

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risk model in a dynamic way to enable these sidechains. It gives the miners the ability to

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handle the security model of these merge mine sidechains, and it enables Bitcoin to have peer

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to peer sidechains instead of federated. That's really the change. As Adam Back would say,

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he's tweeted this, with drivechain, Bitcoin's sidechains become more peer to peer.

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More peer to peer is the key phrase there. One might argue that the federation with 15 people

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is categorically similar to the dynamic federation of thousands of miners around the world. I would

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say they're completely different, but some would say that they're similar and just debatably

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different. But we can at least say that it's better for Bitcoiners to have the option,

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to have the option of using a peer to peer sidechain rather than a federated one.

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I think that once drivechains adopted, if it ever is, then people will only use BIP300 and

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BIP301 sidechains. They won't use federated sidechains anymore, probably. And people will

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use the word sidechain to refer to a drivechain sidechain once drivechain is adopted.

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People will dispense with this practice of using federated sidechains. Currently, there are two

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large Bitcoin sidechains in existence. One is Blockstream's Liquid Network, which is an

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outstanding project created by brilliant people at Blockstream. In collaboration with 60 other

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companies, they operate a network that facilitates confidential transactions and issued assets and

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other kinds of features and tools. However, it only has accrued about $50 million of value last

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time I checked. And the other big sidechain is Rootstock, which is merge mined. So it's closer

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to what a drivechain would be. Liquid is not merged mined. Rootstock also has, last time I

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checked, about $50 million of value. So these two sidechains are like tiny little additions to

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Bitcoin's market cap. Bitcoin has a market cap, last time I checked, around $400 billion.

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So the inclusion of these $100 million sidechain projects isn't so significant economically for

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Bitcoin. But they do increase the narratives that Bitcoin has around technological innovation.

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However, if drivechain is adopted, maybe we would have billions of dollars, tens and hundreds of

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billions of dollars of value in sidechains on Bitcoin, greatly increasing Bitcoin's technological

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narratives as well as its price. And also, drivechain sidechains are merged mined,

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meaning that all of the transaction fees, approximately all of them,

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are sent to Bitcoin miners, strengthening Bitcoin's security, solving, as some would say,

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solving Bitcoin's security budget. So we at LayerTwo Labs, in concert with a global network of drive

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chain supporters and builders, think that a great change for Bitcoin could come from the adoption

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of BIP300 and BIP301. And that's why we meet every Monday and Thursday on Twitter to chat

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about this topic, to explain what it is and how it's cool, and to discuss the criticisms

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that have been made and the very clear and logical arguments against those.

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And we think this is essential for Bitcoin. Some drivechain supporters,

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some drivechain supporters think it's essential for Bitcoin to have the drivechain upgrade. For

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example, Fiatjaf, who created Nostr, the creator of Nostr, has tweeted that it is

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important, very important that drivechain is adopted. And if it isn't adopted, then all of

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the work of thousands of people for 13 years will have been in vain. Those are his words in a tweet.

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So he's basically saying that Bitcoin will fail if drivechain isn't adopted. And some drive

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chain supporters agree with that. Other drivechain supporters would say that drivechain

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is important and that something else like it could be just as good. However, it's the best

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available proposal right now. It could be a stepping stone to other great things and that

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it's appropriate and best that it be adopted, but it's not life or death. So some drivechain

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supporters have a milder approach to their support. And then there are others who are kind of neutral,

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who would say drivechain is interesting and good. The community can go for it or the community could

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decide not to go for it. So there's a whole spectrum of different opinions and styles of

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advocacy for this project. Among those who think that it's essential and urgent,

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they would point to the fact that if Bitcoin were to lose its market cap crown and become

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one of the blockchains that by market cap are not number one, that would be damaging to Bitcoin's

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narratives of network effects, of number go up, of global monetization, etc. I hold that view.

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I think it's vital that Bitcoin stay number one and not just stay number one, but grow. We need

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to grow so that Bitcoin is 100% of market cap. That is really the goal. We used to be there

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back in the day. So it would be great to see a return to unparalleled dominance and the absence

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of any competition for layer one, while on layer two, there would be a huge galaxy of different

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applications and protocols and tools and features. In other words, all of the innovation and growth

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and dynamism of the entire crypto ecosystem could be built on top of Bitcoin if drivechain

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is adopted. That is the vision. It can't be a promise. The future is uncertain. Nothing is

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perfect. But that is the drivechain vision. It's an optimistic vision for Bitcoin becoming

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the base layer protocol of the entire blockchain market.

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For anyone in the audience, if you'd like to come up and chat,

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you could share a question or a comment. You're welcome to raise your hand and come on up.

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Again, this is drivechain Twitter spaces. We chat every Monday and Thursday on Twitter spaces.

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LayerTwo Labs is hosting this. And as you all know from reading Bitcoin,

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is hosting this. And as you all know from reading Bitcoin magazine, LayerTwo Labs

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raised millions of dollars from angel investors to develop technology,

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to promote drivechain and related technology. And it's an exciting time in Bitcoin.

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There is renewed attention. There is a renewal of attention towards layer twos and scaling and

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development and innovation. People would like something to boost the Bitcoin narratives and

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momentum and discourse. So this is an exciting time for that kind of innovation and growth.

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Among the drivechain supporters are some of the most well-known names in all of Bitcoin,

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as well as many people who are just plebs and ordinary Bitcoiners who like drivechain.

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The drivechain telegram group has 700 members. And the videos on drivechain have been viewed

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thousands of times on YouTube. And the founder and CEO of Blockstream, Adam Back,

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whose name is the only name that appears in the body of the Bitcoin white paper. Adam Back

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is a drivechain advocate who has appeared last year two times on stage at Bitcoin conferences

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alongside the lead designer of drivechain, Paul Sztorc. Paul and Adam spoke about drive

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chain at those conferences at Bitcoin Amsterdam and Baltic Honey Badger. And both times Adam

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talked about his interest and support for drivechain and how he likes that it's all about innovation

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and making Bitcoin able to platform more technology and experimentation in a way that is safe,

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that doesn't risk harm to the main chain. The technologies that Dr. Back likes include

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Zcash technology for privacy, as well as the large block technology of Thunder.

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Those two sidechains are sidechains that he's talked about in favorable terms in tweets and

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speeches as technologies that are potentially valuable for Bitcoiners. And he would like to

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see Bitcoin have this playground for innovation. That's a phrase he used in the recent podcast

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that he recorded, hosted by Brad Mills and featuring fellow guests, Jameson Lopp and

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LayerTwo Labs co-founder Austin Alexander. I recommend that podcast. It's really great.

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If you go to Brad Mills' website, which is Magic Internet Money Podcast. Again,

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that's the Magic Internet Money Podcast. You can listen to Dr. Back speak with Jameson Lopp,

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Austin Alexander, and Brad Mills.

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About drivechain and related topics and the history of Bitcoin and the history of Blockstream's efforts,

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great efforts to build out sidechains. They wrote a 2014 white paper on sidechains and then another

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one in 2020 on Liquid. So Blockstream has put out two papers on sidechains and have done a lot of

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great work in building sidechains on Bitcoin. Drivechain would be another step forward for the

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Bitcoin community in the realm of sidechains and innovation. All right, we've got a bunch of people

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in the audience. We always have listeners who also join afterwards to listen on demand. These

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are recorded spaces. I encourage you to raise your hand and come on up if you have a question

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about it, if you're interested in knowing what it's all about, or if you're an expert and have

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a comment or you want to share your personal take. Come on up and chat. We run usually for

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about an hour and a half, so we go from 9.30 to 11 Pacific in the morning here on Twitter Spaces.

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Don't be shy. Come on up.

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Maybe to get the conversation going, I'll find a good tweet to post in the Nest.

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All right, we've got some tweets.

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One of these... Ah, we have a speaker.

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What's up? Welcome to the stage.

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Can you hear me?

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Yes, very well. What's up?

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Awesome.

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How's it going?

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Hi there. Yeah, I just recently was watching some of the interviews done. I especially

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liked the one done with... What was his name? Kevin Rook, I think, just three months ago.

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Yeah, that was great.

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Yeah, it was very insightful. First, when I started to investigate into drivechains,

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I have to confess the topic is a little bit confusing. It's hard to see that it's basically

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all about the standardization of a process, of a sidechain process, and not about a specific

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sidechain at all. I think it would be great if you link the interview with Kevin Rook

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into the LayerTwo Labs playlist on YouTube. I think this would be a good starter.

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Cool. Yeah, it's there.

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Okay, I just started with the one with Adam Beck, and it was a little bit thin, let's say,

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in terms of information. But yeah, that last one really opened my eyes what it's all about.

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I see it. It's on there. If you look at the LayerTwo Labs YouTube channel,

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then you'll see it. I'll post the link, but continue.

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Yeah, maybe I just skipped it in the first go. Okay, thanks. I also had a look at the

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BIPs, the BIP300 and the BIP301. Also, I checked about the process of BIPs.

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Maybe you can explain a little bit where in this BIP process drivechains are currently.

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I saw they are in draft still, and I think the ideas are pretty settled. I heard that,

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apparently, the duration of the lock of the funds in the sidechain actually changed

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as one of the last things in the proposal. But apart from that, it's obviously pretty stable.

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So my question would be, why are the BIPs still in draft, especially

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since you obviously came up with a lot of proof of concepts? And maybe as a deeper

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question regarding the BIP300, I was interested about your thinking and reasoning behind

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how can, let's say, a sidechain that helps onboarding people with Bitcoin or Lightning

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with respect to limited block sizes and full mempools, how can this help if, in the end,

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the people want to own Bitcoin as an asset? Those are awesome questions. So you asked,

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what stage are the BIPs in, why are they in draft, and how does drivechain help with onboarding

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Bitcoiners to Lightning and getting people to own actual Bitcoin?

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Exactly. Because if drivechain takes pressure out of the main chain, the layer one,

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I think it pretty much depends on the wish of people to stay in the sidechain.

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Because if everybody wants to return to layer one, to the main chain,

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I think nothing is solved with respect to congestion in the main chain.

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Yeah. Would be interested in your thoughts. Thanks.

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So the BIPs are in a stage where if we were to try to bring them to activation readiness,

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it would probably take about a year. If the community right now, if everyone were saying,

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let's do this, probably it would take a year. And that's because the BIPs are currently being

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rebased. I'm not a developer, but rebasing the BIPs, as you may know, involves making the code

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ready to be merged into the current version of Bitcoin Core. Drivechain has been around for

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years and it's important for a lot of work to be done to make those BIPs totally cleaned up

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and ready for merging so that there's no inconsistency between the code for the BIPs

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and the code that's already in Bitcoin. So making them merge together perfectly requires rebasing.

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LayerTwo Labs has hired an extremely experienced Bitcoiner to handle that work. And

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once that is done, I think it'll be something that people become aware of, like it'll become

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public, like the drivechain BIPs are totally rebased. The code is ready for review. I think

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that news event will be something that not the general public will understand, but the

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intelligentsia within the Bitcoin community. For example, the people at the Blockstream

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research team, people like that, who are very deeply aware of the code of Bitcoin and its

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specifics, thousands of lines of code, they will be interested in the fact that drivechain has

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been rebased. So that's one matter that's going on right now. That will be resolved in the coming

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months, I think. And then the BIPs will be in draft form until the community decides to finalize

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them and adopt them. Although I think that the fact they're listed in draft form, I'm not sure

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when exactly that would change. It would require someone who's a maintainer of the Bitcoin GitHub

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repo to go in there and edit that page that says that they're in draft. If I'm not mistaken,

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the taproot BIPs were listed in draft even after activation. So sometimes whether something's

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listed as draft is a little bit stale information. But yeah, drivechain is currently draft because

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there hasn't been a complete rebasing completed and other tasks and reviews.

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And there could be people who suggest changes so that it's still in a stage where you could,

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one could suggest a change. And it's all public, open source information. So that's why they're

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in draft. And that's the stage that they're in. And then you asked, how does the drivechain

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process assist with onboarding and lightening? So one of the things that Adam Back and others

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have talked about is that a large block Bitcoin sidechain could bring people into Bitcoin

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at a scale and speed not possible with Bitcoin main chain alone. If we were to have the entire

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world use Bitcoin, it would mean that 8 billion people would have to do a self-custody transaction

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to buy Bitcoin and bring it into their ownership or open a lightening channel.

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And 8 billion transactions wouldn't fit in Bitcoin's block space in terms of those transactions

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and channel openings unless we were to wait decades, like 40 years of waiting. And that's

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with assumptions such as every single block is completely full of only channel openings

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and that sort of thing. So it would take like 100 years for the whole world to come onto Bitcoin,

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which is not acceptable. And some other technology would win instead, unless everyone

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just onboards to custody at Coinbase, which isn't a good plan, because if everyone's using custody,

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then what was the point of the peer to peer system when most people are not peer to peer,

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but instead peer to custodian? So the large block Bitcoin sidechain, as Adam Back would say,

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I believe, is a layer of Bitcoin once it exists as a drivechain that enables people to onboard

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to Bitcoin in a manner that's cheaper and more efficient. And if they want to buy a billion

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dollars worth of Bitcoin, they would do it on layer one. But if they want to buy 50 dollars

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of Bitcoin, they don't want to spend, you know, two bucks for a transaction, which is what it

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currently costs. It costs like a dollar or two to do a Bitcoin transaction last time I checked.

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So there's a need for Bitcoin to have a layer which is more efficient, higher throughput,

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higher scalability, lower fee, lower decentralization. That's the goal there

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is to make there be an optional, an opt in layer on Bitcoin that's cheaper and easier.

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It's kind of like this. If you want to go out to eat and you want to get breakfast,

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you can go to the restaurant in the Four Seasons, some fancy hotel, and you can spend

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80 dollars for breakfast. Or you can go to McDonald's and you can get breakfast for eight

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dollars. So do you want to spend 80 dollars for the highest quality breakfast or do you want to

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spend eight dollars for the cheapest breakfast? So what we want to do with Bitcoin is give people

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that option of McDonald's. The large block Bitcoin sidechain will be the McDonald's

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of Bitcoin. It's cheap and it's fast and it's easy. It's still food, but it's cheap, low quality,

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but it's something. It's much better than just having everyone use Coinbase because Coinbase

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is free and easy, but then you're trusting the government not to take your money because the

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government controls every company. May I just interrupt you here because that's exactly where

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I got stuck with my thinking process. So let's assume there's this sidechain. I don't especially

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call it a big blockchain. It's just a sidechain and it helps with scaling. And people

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obtain the coins there and want to use it in, let's say, for lightning transactions.

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These coins they obtain in the sidechain, they are not Bitcoin, but they are rather packed

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to Bitcoin. So in order for them to actually use lightning then, they would have to change

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it back to Bitcoin. Or as an alternative, there would be a different kind of lightning network

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which uses the other coin or the sidechain coin. To my understanding, whenever there's

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a BIP300 transaction towards the sidechain, this is basically someone who provides liquidity

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for the sidechain, right? But this is not meant to be the average Joe who wants to

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obtain coins of the sidechain, the packed coins, right? Yes. The two-way peg will be for professional

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arbitrageurs in the same way that the futures market, people who trade futures on gold and

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silver and lumber and timber, are mostly professionals and large players. The ordinary

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person doesn't ever buy a timber or coal futures contract. There will be lightning and HTLC and

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swapping instantly for the consumer. They will instantly be able to swap between the main chain

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and the sidechain or the sidechain and other sidechains instantly at almost zero fee. And

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there are technologies that are prepared for that. For example, sideshift. Sideshift is a

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technology, I think, which is designed to facilitate this. It will be very cheap and easy for someone

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to move their money. It'll be as easy as changing your dollars into quarters. Everyone's willing to

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just change from dollars to quarters at almost zero or zero cost. But wouldn't this need a

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transaction on layer one? If you have this sidechain coin and now you want to have lightning

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and maybe you want to... I mean, when you want to use this sidechain coin, I don't know how

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be it C coin or this sidechain Bitcoin, it doesn't matter. But if I want to use it as a lightning

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liquidity or... There needs to be some transaction somewhere, right? And to be... Doesn't?

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No, I don't think so. Not necessarily, at least. So there are multiple ways to do this, I guess.

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But if you check out how Fedimint and Cashu works, then you quickly see that this model

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is actually fully interoperable with just about any chain. So not only you could easily

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create lightning, interoperable lightning-connected wallets with pretty trustless

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LSPs providing a lightning bridge, basically, and you could spend a native balance from a

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sidechain and you could basically either by creating a lightning channel to this LM bridge

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on the sidechain, if it's available, or maybe entering a more primitive

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escrow, time-locked refund escrow transaction on the sidechain with this LM bridge,

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if you want it to be trustless. Or maybe if the LM bridge is willing to take a risk

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because of how the sidechain works, you know, like a federated sidechain

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or something where there is more control over transaction ordering and stuff like that,

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maybe the double spend risk is non-existent, he may actually accept zero-conf transactions.

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And so not only you can do this with this model with sidechains and basically have something like

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MoonWallet. You use MoonWallet, you have an on-chain balance and you use it through lightning

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and you don't even realize you are using it. So basically, it's almost like you have a lightning

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wallet but you don't have a lightning wallet. And that's what this concept really feels like,

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UX way. And not only you can do this with sidechains, but you can actually do this for

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altcoins too, if you really want to. And basically, that way you can have seamless integration to

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lightning payments on a sidechain like this. And there are other ways as well. So in theory,

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you can create a lightning network that spans across blockchains and you can bridge them with

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having nodes that exist on separate networks and are owned by the same

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entity. And these nodes could have uncommitted virtual channels between them and then

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someone just has to figure out the routing between different lightning networks. So it's

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entirely possible that you could have a lightning node, an actual bona fide lightning node on a

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sidechain, and you could still pay an on-chain invoice without doing an on-chain transaction. So

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I just wanted to mention that there are possibilities to get around this and some of

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them are very easy and trivial. Yeah, thanks for the explanation. So what I take away from this

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is that people who are on board on the sidechain will most likely stay on the sidechain, right?

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And from there on, they still can, with all this wizardry, refill their lightning balance,

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but they wouldn't ever need or want to go to the layer one, right?

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They can avoid going to the layer one, yes.

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So like I said, if you know how MoonWallet works,

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you understand that being able to transact,

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send and receive on the lightning network

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does not mean you have to actually be part

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of the lightning network.

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And there are ways to do this rather trustlessly

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if some rudimentary smart contract capability

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is present on the sidechain.

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If, say you have something like Monero, right?

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So Monero has no script.

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It's very dumb in this regard,

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so it can do time of refund contracts.

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It can do some very bad multisig currently

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and with the Seraphis upgrade,

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I think they want to be able to do

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better multisig escrow type contracts.

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But still in a multisig escrow,

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you have a trusted arbitrator, right?

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So you have a counterpart

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and you have a trusted arbitrator.

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And if your counterpart calls you the trusted arbitrator

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or they are the same behind the scenes,

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then you are kind of screwed.

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And so it's not really as trustless or trust minimized

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as you can do with script capable blockchain.

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But even with Monero, it is possible to do,

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to create a wallet that you can use

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as a Lightning wallet basically,

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and have the native asset.

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And there are multiple ways to do this.

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Like I said, the Lightning bridge provider

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can accept zero-coin transactions

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if he is willing to shoulder that risk.

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Or maybe you can put into an escrow contract

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with an amount with it,

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and that is your limit of outstanding

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non-confirmed transactions

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that you are spending over Lightning.

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And as these transactions confirm,

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you can spend again and again,

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because you have sort of this safety deposit

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with a multisig, right?

377
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So you can't just run away.

378
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After the Lightning invoice is immutably paid,

379
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you can just double spend or something like that,

380
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because you are basically logged in

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with this safety deposit.

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So you can do that.

383
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And you can also do eCash.

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So eCash can be denominated in anything,

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and the Lightning bridge provider

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may ask you to deposit a certain amount of Monero

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into eCash.

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And that eCash you can spend immediately over Lightning.

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So like I said, even with something as incapable as Monero,

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you can do it multiple ways.

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So with a Bitcoin clone sidechain,

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there is even more options you have.

393
00:43:04,178 --> 00:43:05,738
All right, thanks a lot.

394
00:43:05,738 --> 00:43:07,938
A lot of technologies to research for me now.

395
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Thanks, Yves.

396
00:43:12,098 --> 00:43:13,259
Thank you for your questions.

397
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You had said that you don't wanna call

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the large block sidechain a large block sidechain.

399
00:43:17,098 --> 00:43:18,898
Could you say why?

400
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Because what it is is just the clone of Bitcoin,

401
00:43:22,938 --> 00:43:26,298
except that it's a large block instead of a small one.

402
00:43:26,298 --> 00:43:29,898
So one gigabyte instead of one megabyte.

403
00:43:32,579 --> 00:43:37,579
Yeah, I share your thinking that it's silly

404
00:43:42,419 --> 00:43:45,139
that these terms are tainted, let's say.

405
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And I don't necessarily think that

406
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that it's good to never rethink options,

407
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especially if the context changes.

408
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However, I also think that,

409
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well, to my understanding,

410
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the way this so-called block size war turned out

411
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is actually a favorable outcome for node operators

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or private node operators.

413
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I mean, the other day I just read

414
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absolutely enormous amounts of storage you need

415
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in order to run an Ethereum node and so on.

416
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And also other big block blockchains

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00:44:47,098 --> 00:44:52,098
they suffer from getting too enterprisey.

418
00:44:54,699 --> 00:44:59,699
And I think when you use the term big blocks

419
00:45:03,419 --> 00:45:06,699
in conjunction with drivechain,

420
00:45:06,699 --> 00:45:09,579
I think you always have to make clear

421
00:45:09,579 --> 00:45:13,558
in the second sentence that drivechain

422
00:45:13,558 --> 00:45:17,359
allows you to erase a history to a certain degree

423
00:45:17,359 --> 00:45:22,359
that this big block sidechain is or can be run

424
00:45:23,998 --> 00:45:26,998
by private enthusiasts.

425
00:45:31,359 --> 00:45:36,359
And this is not comparable to the blockchain war ideas.

426
00:45:39,278 --> 00:45:43,239
I think that's pretty important to distinct.

427
00:45:43,919 --> 00:45:44,759
And if you only say,

428
00:45:44,759 --> 00:45:47,639
oh, this is a chain with a big block,

429
00:45:47,639 --> 00:45:49,318
people are misled.

430
00:45:51,799 --> 00:45:56,799
Yes, many people are scared by the idea of big blocks

431
00:45:57,038 --> 00:45:59,079
and they think that big blocks are bad.

432
00:45:59,079 --> 00:46:03,058
But the truth is that they're completely wrong.

433
00:46:03,058 --> 00:46:06,318
There is a very valuable potential use case

434
00:46:06,318 --> 00:46:08,679
for large blocks as a layer two

435
00:46:08,679 --> 00:46:13,038
as an optional way of using Bitcoin

436
00:46:13,878 --> 00:46:16,318
that no one has to use, but everyone can use.

437
00:46:17,318 --> 00:46:22,318
It's like, some people like gold bars

438
00:46:22,598 --> 00:46:25,479
and some people like gold coins.

439
00:46:25,479 --> 00:46:28,679
And the gold coins are easier to move around

440
00:46:28,679 --> 00:46:32,479
and you can deal with them in smaller amounts.

441
00:46:32,479 --> 00:46:34,998
So there's no reason to be prejudiced

442
00:46:34,998 --> 00:46:37,038
against the small coins.

443
00:46:37,038 --> 00:46:41,558
The large gold bars are nice for a large transaction

444
00:46:42,558 --> 00:46:45,818
and the coins are useful for smaller transactions.

445
00:46:45,818 --> 00:46:50,199
The block size war was decided correctly.

446
00:46:50,199 --> 00:46:54,239
It was good that Bitcoin's layer one has small blocks,

447
00:46:54,239 --> 00:46:57,278
but it is a mistake completely

448
00:46:57,278 --> 00:46:59,679
to think that there is no value proposition

449
00:46:59,679 --> 00:47:03,479
to large blocks as a sidechain, as a layer two.

450
00:47:04,318 --> 00:47:07,959
And there is in the very long run

451
00:47:07,959 --> 00:47:11,359
going to be a complete victory

452
00:47:11,359 --> 00:47:15,919
by a blockchain that has a multi-layered design.

453
00:47:15,919 --> 00:47:19,959
And if Bitcoin never achieves that multi-layered design,

454
00:47:19,959 --> 00:47:22,679
then it is at risk in the long run

455
00:47:23,558 --> 00:47:28,438
because it must achieve this layered architecture

456
00:47:28,438 --> 00:47:32,199
where there is an optional venue

457
00:47:32,199 --> 00:47:35,799
for highly scalable, low fee,

458
00:47:35,799 --> 00:47:39,639
low decentralization transactions.

459
00:47:39,639 --> 00:47:42,038
What small blocks achieve on layer one

460
00:47:42,038 --> 00:47:43,838
is high decentralization,

461
00:47:45,359 --> 00:47:50,359
meaning that the small block lowers the amount of data

462
00:47:50,598 --> 00:47:53,919
involved in downloading a full copy of the blockchain.

463
00:47:53,919 --> 00:47:58,919
And therefore it literally decentralizes the blockchain

464
00:47:59,158 --> 00:48:04,079
by localizing the activity of validation to the individual.

465
00:48:04,079 --> 00:48:07,158
So an individual, if he wants to, can validate,

466
00:48:07,158 --> 00:48:11,359
doesn't have to go to some other place or some other person.

467
00:48:11,359 --> 00:48:14,878
Instead, at the individual level, validation is possible.

468
00:48:14,878 --> 00:48:17,359
So that is the definition of decentralization.

469
00:48:17,359 --> 00:48:19,438
It geographically, it spatially

470
00:48:19,438 --> 00:48:21,278
decentralizes the blockchain.

471
00:48:22,199 --> 00:48:25,438
And you're right that large block,

472
00:48:25,438 --> 00:48:27,199
it's harder to have a full node.

473
00:48:27,199 --> 00:48:29,759
So there'll be lower decentralization

474
00:48:29,759 --> 00:48:31,679
in the large block sidechain,

475
00:48:31,679 --> 00:48:34,158
but it must be available.

476
00:48:34,158 --> 00:48:36,759
It's kind of like, again, the McDonald's analogy.

477
00:48:36,759 --> 00:48:40,318
Not everyone wants to eat at the Four Seasons

478
00:48:40,318 --> 00:48:43,318
and pay $80 a person for breakfast.

479
00:48:43,318 --> 00:48:46,318
So if Bitcoin only offers that,

480
00:48:47,639 --> 00:48:52,519
then it's not a system that can scale to billions of people.

481
00:48:52,519 --> 00:48:55,918
The fees will rise and it'll be unaffordable

482
00:48:55,918 --> 00:48:58,599
for the average person to do a channel opening.

483
00:48:58,599 --> 00:49:02,918
If it costs $50 to open a lightning channel,

484
00:49:02,918 --> 00:49:05,199
no one's gonna do it except the rich people.

485
00:49:05,199 --> 00:49:07,039
And then Bitcoin will be only for rich people.

486
00:49:07,039 --> 00:49:08,759
It won't work that way.

487
00:49:08,759 --> 00:49:11,039
It'll lose its network effect.

488
00:49:11,039 --> 00:49:13,159
And that's the bad case.

489
00:49:13,159 --> 00:49:15,358
But with drivechain, all of that is fixed.

490
00:49:15,358 --> 00:49:17,279
With drivechain, people who want

491
00:49:17,279 --> 00:49:19,159
extremely private transactions

492
00:49:19,159 --> 00:49:21,558
can use the Z-side sidechain.

493
00:49:21,558 --> 00:49:23,639
And the people who want cheap transactions

494
00:49:23,639 --> 00:49:26,399
can use the funder sidechain for large blocks.

495
00:49:26,399 --> 00:49:27,959
And those who want layer one

496
00:49:28,318 --> 00:49:30,199
and not to use any sidechains can do that.

497
00:49:30,199 --> 00:49:31,678
It's all optional.

498
00:49:31,678 --> 00:49:34,118
And all of the fees from all of these sidechains

499
00:49:34,118 --> 00:49:35,798
are paid to layer one miners.

500
00:49:35,798 --> 00:49:39,998
So layer one has a massive security budget with drivechain.

501
00:49:39,998 --> 00:49:43,998
We can say optimistically that it'll all work.

502
00:49:45,238 --> 00:49:46,998
And you mentioned Ethereum

503
00:49:46,998 --> 00:49:49,238
and how it's expensive to validate.

504
00:49:49,238 --> 00:49:51,399
You should be aware, as I'm sure you are,

505
00:49:51,399 --> 00:49:53,318
that the Ethereum roadmap

506
00:49:53,318 --> 00:49:56,918
is headed towards eventual ossification.

507
00:49:56,918 --> 00:49:58,478
But before they do that,

508
00:49:58,478 --> 00:50:01,438
one of the steps in their roadmap is called the purge,

509
00:50:01,438 --> 00:50:03,878
where they're going to wipe out all of the past data.

510
00:50:03,878 --> 00:50:07,558
In other words, the drivechain advocates

511
00:50:07,558 --> 00:50:10,918
believe that Ethereum is targeting

512
00:50:10,918 --> 00:50:14,358
a design very similar to drivechain.

513
00:50:14,358 --> 00:50:17,719
And what they're targeting in the long run

514
00:50:17,719 --> 00:50:21,599
is a small block size ossified layer one

515
00:50:21,599 --> 00:50:23,639
with a high degree of extensibility

516
00:50:23,678 --> 00:50:27,478
for peer-to-peer protocols to exist as layer twos.

517
00:50:27,478 --> 00:50:31,759
In other words, they are targeting a drivechain design.

518
00:50:31,759 --> 00:50:35,118
And Bitcoin should do it first.

519
00:50:35,118 --> 00:50:40,118
And Bitcoin should do it as soon as possible.

520
00:50:41,238 --> 00:50:44,199
That's what we believe as drivechain advocates.

521
00:50:45,798 --> 00:50:48,039
Because Bitcoin currently has the market cap crown.

522
00:50:48,039 --> 00:50:49,358
So it has the network effect.

523
00:50:49,358 --> 00:50:50,599
It has the value.

524
00:50:50,599 --> 00:50:52,599
If it launches drivechain now,

525
00:50:52,599 --> 00:50:53,678
then it will win.

526
00:50:53,678 --> 00:50:57,918
It'll begin to absorb all the technology of Ethereum.

527
00:50:57,918 --> 00:51:02,318
The drivechain testnet has a copy of Ethereum

528
00:51:02,318 --> 00:51:05,798
as a sidechain and a copy of Zcash as a sidechain.

529
00:51:05,798 --> 00:51:10,798
So those are the first two that the designers pursued

530
00:51:11,318 --> 00:51:14,839
in terms of building out the actual implementation.

531
00:51:14,839 --> 00:51:17,959
And pretty much all of the good altcoins,

532
00:51:17,959 --> 00:51:20,199
all the ones that really have any value

533
00:51:20,199 --> 00:51:22,678
will be copied into sidechains on Bitcoin

534
00:51:22,678 --> 00:51:24,279
once drivechain's adopted.

535
00:51:24,279 --> 00:51:26,759
And then those altcoin tokens will go to zero.

536
00:51:26,759 --> 00:51:28,959
That's the drivechain vision.

537
00:51:31,719 --> 00:51:34,159
And then Bitcoin's price will absorb

538
00:51:34,159 --> 00:51:36,438
all of the value from those altcoins.

539
00:51:36,438 --> 00:51:40,678
Because the only way to create the token on the sidechain

540
00:51:40,678 --> 00:51:42,998
is to send Bitcoin to it.

541
00:51:42,998 --> 00:51:46,039
So as the altcoin prices fall,

542
00:51:46,039 --> 00:51:50,159
Bitcoin's price will go up concomitantly.

543
00:51:50,998 --> 00:51:54,079
And as a result, it could even happen dramatically.

544
00:51:54,079 --> 00:51:58,478
There could be a tidal wave of migration of users and value

545
00:51:58,478 --> 00:51:59,839
because of game theory.

546
00:51:59,839 --> 00:52:02,719
As soon as anyone in the altcoin community

547
00:52:02,719 --> 00:52:06,639
sells his token, such as Zcash,

548
00:52:06,639 --> 00:52:10,519
to buy the Zcash token on the Bitcoin sidechain,

549
00:52:10,519 --> 00:52:12,318
which is really Bitcoin,

550
00:52:12,318 --> 00:52:14,678
it causes Bitcoin's price to rise

551
00:52:14,678 --> 00:52:17,118
and the Zcash token to go down.

552
00:52:17,118 --> 00:52:20,159
So that exchange rate could actually go all the way to zero

553
00:52:20,159 --> 00:52:23,639
where the token on the altcoin is worth nothing.

554
00:52:23,639 --> 00:52:27,279
And the exact same technology is available on Bitcoin

555
00:52:27,279 --> 00:52:29,039
because then you have Bitcoin's network effect.

556
00:52:29,039 --> 00:52:30,558
It's such a better product

557
00:52:30,558 --> 00:52:32,759
to have the technology of the altcoin,

558
00:52:32,759 --> 00:52:34,678
but with the unit of account of Bitcoin

559
00:52:34,678 --> 00:52:38,159
because Bitcoin has the lowest volatility

560
00:52:38,159 --> 00:52:39,399
of purchasing power.

561
00:52:42,599 --> 00:52:44,079
Moonsettler, please chime in.

562
00:52:45,079 --> 00:52:47,839
Yeah, I just wanted to comment

563
00:52:47,839 --> 00:52:50,678
on this big block, small block thing.

564
00:52:52,199 --> 00:52:56,878
So the interesting thing about that whole bait

565
00:52:56,878 --> 00:52:59,438
is actually both sides were wrong.

566
00:53:00,839 --> 00:53:04,238
They were both wrong and they did a lot of damage

567
00:53:04,238 --> 00:53:07,318
that should have been avoided really.

568
00:53:07,318 --> 00:53:12,318
And it's not so clear cut

569
00:53:12,678 --> 00:53:14,678
that it's impossible.

570
00:53:14,678 --> 00:53:15,878
Why is my hand up?

571
00:53:17,719 --> 00:53:20,039
So it's not so clear cut

572
00:53:22,678 --> 00:53:27,039
that you necessarily lose the properties

573
00:53:27,039 --> 00:53:31,118
that we cherish in Bitcoin if you increase the block size.

574
00:53:31,118 --> 00:53:35,238
This is not actually a necessary consequence.

575
00:53:35,238 --> 00:53:40,238
We already know multiple ways to solve the EBD problem,

576
00:53:40,878 --> 00:53:43,358
the initial block download problem.

577
00:53:43,358 --> 00:53:45,798
We know how to get rid of all junk.

578
00:53:46,639 --> 00:53:51,639
And really, it's getting supercharged

579
00:53:52,079 --> 00:53:54,478
with zero sync research right now.

580
00:53:54,478 --> 00:53:59,478
So eventually, full validating nodes

581
00:53:59,678 --> 00:54:02,438
could join the network in seconds.

582
00:54:02,438 --> 00:54:04,599
They can just download the chain state,

583
00:54:05,478 --> 00:54:10,478
verify the ZK proof that proves the computation

584
00:54:10,519 --> 00:54:13,719
that was done by someone

585
00:54:13,719 --> 00:54:18,719
and know that the state of the UTXO set is correct

586
00:54:20,558 --> 00:54:25,279
and then verify the proof of work on the header chain.

587
00:54:25,279 --> 00:54:28,798
Basically, you have a very, very, very high probability,

588
00:54:28,798 --> 00:54:32,719
very high confidence that you are on the right chain.

589
00:54:32,719 --> 00:54:34,438
You can do this.

590
00:54:35,279 --> 00:54:39,878
And this would work with pretty much any block size

591
00:54:39,878 --> 00:54:42,318
that is not completely unreasonable.

592
00:54:42,318 --> 00:54:45,719
So I'm not talking about BSV level of delusions.

593
00:54:47,039 --> 00:54:50,959
So I don't think that these fears are well-founded

594
00:54:50,959 --> 00:54:54,639
that you hear and this PTSD is reasonable that you hear,

595
00:54:54,639 --> 00:54:58,599
but I understand the concern that if you go around

596
00:54:58,599 --> 00:55:00,318
and say you want big blocks,

597
00:55:00,358 --> 00:55:03,358
then people will just revert to this 2017

598
00:55:07,759 --> 00:55:12,759
war state of mind and whatever.

599
00:55:13,599 --> 00:55:16,079
So I just wanted to mention this.

600
00:55:16,079 --> 00:55:18,279
It's not that small blockers were right.

601
00:55:18,279 --> 00:55:21,159
They were wrong, of course, as well.

602
00:55:23,959 --> 00:55:25,918
Interesting to hear you say that.

603
00:55:25,918 --> 00:55:28,238
I've heard Paul Sztorc speak about this.

604
00:55:28,238 --> 00:55:30,039
He would say that the block size war

605
00:55:30,039 --> 00:55:31,959
was won by the right side,

606
00:55:31,959 --> 00:55:36,959
but that victory led to complacency.

607
00:55:38,399 --> 00:55:42,159
So because those small blockers won,

608
00:55:42,998 --> 00:55:47,998
they didn't embrace sidechains as much as they should have.

609
00:55:49,878 --> 00:55:51,238
Why is your view?

610
00:55:51,238 --> 00:55:52,639
So do you agree?

611
00:55:52,639 --> 00:55:55,279
What part of his argument, if you're familiar with it,

612
00:55:55,279 --> 00:55:56,839
do you disagree with where he writes?

613
00:55:56,839 --> 00:56:00,759
No, I disagree that there were winners in that war.

614
00:56:00,759 --> 00:56:04,599
Like, do you agree that small blocks

615
00:56:04,599 --> 00:56:07,599
are the definition of decentralization, as he claimed?

616
00:56:07,599 --> 00:56:11,039
Yeah, yeah, that's nonsense to me, technically.

617
00:56:11,039 --> 00:56:13,998
And also, like I said,

618
00:56:13,998 --> 00:56:16,039
I don't believe there were winners in that war.

619
00:56:16,039 --> 00:56:17,759
There were only losers in that war

620
00:56:17,759 --> 00:56:22,759
and it should not have happened, but it is what it is.

621
00:56:23,039 --> 00:56:28,039
So, yeah, I think Bitcoin lost big time in that war

622
00:56:28,558 --> 00:56:32,399
and small blockers were just as strong as large blockers, so.

623
00:56:34,519 --> 00:56:37,959
Well, what exactly should the block size be,

624
00:56:37,959 --> 00:56:38,918
in your opinion?

625
00:56:39,959 --> 00:56:41,199
What size should it be?

626
00:56:43,839 --> 00:56:48,039
I don't think that an idea of block size exists, right?

627
00:56:48,039 --> 00:56:53,039
So you can't tell me that there is a fixed block size

628
00:56:53,039 --> 00:56:55,519
that will just sweep Bitcoin indefinitely,

629
00:56:55,519 --> 00:56:57,358
and I will agree to that.

630
00:56:57,358 --> 00:56:58,519
This does not exist.

631
00:56:58,519 --> 00:57:00,399
It's impossible that such a thing would exist.

632
00:57:00,399 --> 00:57:03,878
Is it currently, is the limit too high or too low,

633
00:57:03,878 --> 00:57:04,719
in your view?

634
00:57:05,918 --> 00:57:07,399
It depends.

635
00:57:07,399 --> 00:57:12,399
So it depends on how many people need to use Bitcoin

636
00:57:12,878 --> 00:57:16,439
in a self-serving way and what way they can do it.

637
00:57:16,439 --> 00:57:20,118
And it also depends on what we have.

638
00:57:20,118 --> 00:57:23,039
You know, currently, we don't really have

639
00:57:26,039 --> 00:57:30,478
a true trustless and self-custodial way

640
00:57:30,478 --> 00:57:34,478
to multiply UTX ownership.

641
00:57:34,478 --> 00:57:37,118
Right in this moment, we do not have that.

642
00:57:37,118 --> 00:57:39,399
Right in this moment, if a lot of people

643
00:57:39,399 --> 00:57:41,679
would try to come to Bitcoin,

644
00:57:41,679 --> 00:57:44,439
they would not be able to self-custody.

645
00:57:44,439 --> 00:57:47,118
They would have to be banked, basically.

646
00:57:47,118 --> 00:57:49,478
You know, this whole thing,

647
00:57:49,478 --> 00:57:51,519
we just had a little fun with it today,

648
00:57:51,519 --> 00:57:53,639
that Bitcoin is going to bank the unbanked,

649
00:57:53,639 --> 00:57:58,078
and I wrote that it was supposed to be unbanking the bank.

650
00:57:58,078 --> 00:58:00,559
Right, it was supposed to be the other way around.

651
00:58:00,559 --> 00:58:05,559
So the UTXO ownership is a serious limitation

652
00:58:07,039 --> 00:58:09,519
that right now stems from the block size.

653
00:58:10,279 --> 00:58:15,279
And of course, sidechains are supposed to offer

654
00:58:17,919 --> 00:58:20,159
one way to sidestep this issue.

655
00:58:22,159 --> 00:58:25,039
But there are all sorts of caveats to this

656
00:58:25,039 --> 00:58:27,718
that we are constantly talking about.

657
00:58:27,718 --> 00:58:29,279
So it's not the same.

658
00:58:29,279 --> 00:58:32,159
Owning a UTXO on a sidechain is not the same

659
00:58:32,159 --> 00:58:34,039
as owning it on the mainchain.

660
00:58:35,039 --> 00:58:40,039
And the other thing is that we don't know exactly

661
00:58:42,238 --> 00:58:46,039
what sort of L2s we can unlock

662
00:58:46,039 --> 00:58:49,279
that can actually multiply this UTXO ownership

663
00:58:49,279 --> 00:58:53,919
with some livable compromises.

664
00:58:53,919 --> 00:58:54,919
And that is why I say,

665
00:58:54,919 --> 00:58:57,358
I don't know what the ideal block size is.

666
00:58:57,358 --> 00:59:00,078
I know that if nothing changes significantly,

667
00:59:00,078 --> 00:59:02,679
and we just have Lightning as L2,

668
00:59:02,759 --> 00:59:04,598
then the blocks are too small today

669
00:59:04,598 --> 00:59:08,238
to accept a larger cohort of people,

670
00:59:08,238 --> 00:59:10,159
or sell certain users.

671
00:59:10,159 --> 00:59:13,159
If the number of users never grows,

672
00:59:13,159 --> 00:59:14,679
if this is peak adoption,

673
00:59:14,679 --> 00:59:16,319
then the block size is just fine,

674
00:59:16,319 --> 00:59:17,439
probably too big,

675
00:59:17,439 --> 00:59:21,679
because we see all this bullshit spam onchain, you know.

676
00:59:21,679 --> 00:59:23,198
I don't like, sorry,

677
00:59:23,198 --> 00:59:26,399
I don't like JPEGs on Bitcoin blockchain.

678
00:59:27,358 --> 00:59:32,358
I think it's not a sensible way to use our shared resources.

679
00:59:32,759 --> 00:59:37,759
So blocks can both be too big, too large, and too small.

680
00:59:37,958 --> 00:59:41,799
And it all depends on the demand for that block space

681
00:59:41,799 --> 00:59:45,399
and the economic need that Bitcoin should serve

682
00:59:45,399 --> 00:59:48,598
and the available technology that we can use.

683
00:59:48,598 --> 00:59:51,878
And I also don't agree with that.

684
00:59:52,858 --> 01:00:03,858
That people would not be able to use Bitcoin or would abandon Bitcoin necessarily, if they are not able to own an onchain UTXO.

685
01:00:03,858 --> 01:00:10,858
Because I think what we actually see is that like 1% of Bitcoiners self-custody roughly.

686
01:00:10,858 --> 01:00:15,858
So, or maybe 10, 10 tops, 1 to 10%, let's say.

687
01:00:15,858 --> 01:00:22,858
So 1 to 10% Bitcoiners self-custody, Bitcoin owners self-custody, and the rest is just perfectly fine in custody.

688
01:00:22,858 --> 01:00:29,858
And these are the early adopters, right? So these are the more cypherpunk-leaning people, not the normies.

689
01:00:29,858 --> 01:00:39,858
So all the mass adoption and all the normies, and what you will get is that likely less than 1% will want to self-custody.

690
01:00:39,858 --> 01:00:49,858
So this is the sad truth, and it's very likely that people would be perfectly fine with certain sorts of custodial solutions instead.

691
01:00:49,858 --> 01:01:06,858
Instead of whatever sidechains or altcoins, if the, how to say this, if the price action validates their thesis or basically forces them.

692
01:01:06,858 --> 01:01:18,858
Because altcoins have practically infinite competition, and what we see is that altcoins don't actually tend to keep up with Bitcoin.

693
01:01:18,858 --> 01:01:22,858
Most of them long-term loses against Bitcoin.

694
01:01:22,858 --> 01:01:34,858
And so people notice this, even people who are hardcore believers of Ethereum hold Bitcoin, just in case, as they say, for short- to middle-term madness or whatever.

695
01:01:34,858 --> 01:01:38,858
But if this madness continues, then they will continue to own Bitcoin.

696
01:01:38,858 --> 01:01:50,858
And this is why I'm a bit skeptical about the necessity of defection.

697
01:01:50,858 --> 01:01:58,858
I also see it as a possibility, so I'm not saying it's impossible that people will be fed up with high fees and just defect Bitcoin.

698
01:01:58,858 --> 01:02:02,858
I'm just saying it's most likely they will first defect to custody.

699
01:02:02,858 --> 01:02:09,858
And that's actually pretty anti-ethical, anti-ethos to Bitcoin, in my opinion, and I don't actually like that.

700
01:02:09,858 --> 01:02:14,858
I'm just saying that it's not necessary that they will go to altcoins.

701
01:02:14,858 --> 01:02:17,858
That's about it.

702
01:02:17,858 --> 01:02:22,858
All right.

703
01:02:22,858 --> 01:02:37,858
If I understood you correctly, your view is that drivechain adoption wouldn't necessarily lead to the devaluation of all altcoins.

704
01:02:37,858 --> 01:02:38,858
Is that right?

705
01:02:38,858 --> 01:02:41,858
I'm not sure.

706
01:02:41,858 --> 01:02:42,858
I don't know.

707
01:02:42,858 --> 01:02:45,858
I think it's a dubious claim that it has to.

708
01:02:46,858 --> 01:02:48,858
I think it remains to be seen.

709
01:02:48,858 --> 01:02:54,858
So like I said to you before, if drivechain was activated, I think it would take a decade to see how it plays out.

710
01:02:54,858 --> 01:03:02,858
At least one or two decades to see how it transforms this whole ecosystem to have a full effect.

711
01:03:02,858 --> 01:03:05,858
It will not have an effect immediately, I think.

712
01:03:06,858 --> 01:03:17,858
And I'm not sure it actually gives people what they want from altcoins.

713
01:03:17,858 --> 01:03:21,858
I don't think it actually gives what people want from altcoins.

714
01:03:21,858 --> 01:03:24,858
I think it serves an entirely different need.

715
01:03:24,858 --> 01:03:53,858
And when I hear you say, and I was especially pleased to hear this new narrative gaining more prevalence or being brought forward, that you said the love for innovation, the love for permissionless innovation, and letting this more free is the primary reason.

716
01:03:53,858 --> 01:03:55,858
To activate drivechains.

717
01:03:55,858 --> 01:04:03,858
I think this is the narrative that I don't want to pick a fight with.

718
01:04:03,858 --> 01:04:09,858
I think that is a perfectly fine reason to advocate for drivechain activation.

719
01:04:09,858 --> 01:04:13,858
As opposed to other narratives that I just completely disagree with.

720
01:04:13,858 --> 01:04:15,858
Yes, I understand what you're saying.

721
01:04:15,858 --> 01:04:19,858
So I agree with you because I know what you mean.

722
01:04:20,858 --> 01:04:26,858
I understand you to be, having spoken to you a number of times, I think you're someone interested in technology.

723
01:04:26,858 --> 01:04:31,858
You are not, as a Bitcoiner, primarily interested in its price.

724
01:04:32,858 --> 01:04:42,858
However, I think that drivechain could have a very big effect on Bitcoin's narratives and price.

725
01:04:42,858 --> 01:04:58,858
Because the technological change of enabling peer-to-peer sidechains, of enabling every altcoin to be cloned into a Bitcoin sidechain, that could send all of the altcoins to zero quickly.

726
01:04:58,858 --> 01:05:01,858
I don't think it necessarily will, but it could happen.

727
01:05:01,858 --> 01:05:17,858
And in fact, in the conversation that Brad Mills had on his most recent podcast episode, recorded at Satoshi Roundtable in Dubai with Adam Back, Jameson Lopp, and Austin Alexander,

728
01:05:17,858 --> 01:05:26,858
Dr. Back said that in 2014, when the sidechain's white paper came out from Blockstream, the altcoins went down in price.

729
01:05:26,858 --> 01:05:38,858
That there was a moment in Bitcoin's history where people thought, wow, everything will be built on Bitcoin, all of the altcoins will go to zero.

730
01:05:38,858 --> 01:05:47,858
And I think maybe if drivechain is adopted, that will happen again, but this time it'll happen in a bigger way.

731
01:05:48,858 --> 01:05:56,858
The reason why anything can happen, so I agree with you that it can, I appreciate you acknowledging that.

732
01:05:56,858 --> 01:06:03,858
But I also know that you like the narrative that drivechain should be done for love of innovation.

733
01:06:03,858 --> 01:06:11,858
That is something that I say because Mike Tidwell, the organizer of TabConf, he wrote that in a tweet.

734
01:06:11,858 --> 01:06:21,858
And I feel that is the best tweet I've ever seen on drivechain, where he wrote, I would like to see it done for love of innovation, and I think it would be a bad thing.

735
01:06:21,858 --> 01:06:30,858
And a sad day, he wrote, if drivechain is adopted merely to try to steal value from altcoins.

736
01:06:31,858 --> 01:06:39,858
But in my opinion, and this has been said to me by some people who are more interested in Bitcoin's narratives and price than in its technology.

737
01:06:39,858 --> 01:06:46,858
There are plenty of Bitcoin people who mainly are concerned with its price and narratives and not actually the technology.

738
01:06:46,858 --> 01:06:55,858
They don't really care about privacy, they don't really care about the security budget, they don't really care about peer-to-peer.

739
01:06:55,858 --> 01:06:59,858
They just want the number to go up and, you know, get rich and sound money.

740
01:06:59,858 --> 01:07:09,858
So those people, I think, they will probably get interested in things like drivechain if the flippening comes.

741
01:07:09,858 --> 01:07:17,858
So I think that Mike Tidwell will eventually be disappointed because drivechain will be adopted but not for the reasons that he wants.

742
01:07:17,858 --> 01:07:28,858
It'll be adopted because of the flippening threatening the Bitcoin community with the humiliation and the possibility of the loss of the narratives.

743
01:07:28,858 --> 01:07:38,858
Like if the flippening happens, then narratives are lost, like number go up, global monetization, you know, money moves to one, network effects.

744
01:07:38,858 --> 01:07:41,858
All of these things you can't say anymore.

745
01:07:41,858 --> 01:07:44,858
If Bitcoin isn't number one, you can't say, oh, we have the biggest network effect.

746
01:07:45,858 --> 01:07:49,858
So I'm worried that we'll get drivechain but not for the right reasons.

747
01:07:49,858 --> 01:07:51,858
I know it's a cynical view.

748
01:07:51,858 --> 01:07:55,858
I've been saying more recently innovation is the best.

749
01:07:55,858 --> 01:07:57,858
Because that's what Adam Back says.

750
01:07:57,858 --> 01:07:58,858
He talks about innovation.

751
01:07:58,858 --> 01:08:00,858
He doesn't talk about it doing stuff for price.

752
01:08:00,858 --> 01:08:02,858
Paul Sztorc is the one who does both.

753
01:08:02,858 --> 01:08:04,858
And that's what I like.

754
01:08:04,858 --> 01:08:06,858
Like I agree with his view.

755
01:08:06,858 --> 01:08:13,858
He says that it's good for security budget and for price and for devaluing altcoins and for the innovation.

756
01:08:14,858 --> 01:08:15,858
I agree with that.

757
01:08:15,858 --> 01:08:17,858
Look, I agree with that, basically.

758
01:08:17,858 --> 01:08:27,858
So I think most likely activating drivechains would increase the valuation of Bitcoin, the total value that the network provides.

759
01:08:27,858 --> 01:08:35,858
And I think it would poke a hole in a lot of, I'm sorry, I will call them shitcoins, narratives.

760
01:08:36,858 --> 01:08:45,858
So it just makes it harder to sell a shitcoin with these promises that it will do something that Bitcoin can't.

761
01:08:47,858 --> 01:08:52,858
But I'm also cynical about the reasons why people buy altcoins for real.

762
01:08:52,858 --> 01:08:58,858
So there are sheer narratives and people are buying into these narratives.

763
01:08:58,858 --> 01:09:02,858
Not because they actually want to use that utility or because they believe in it.

764
01:09:02,858 --> 01:09:03,858
No.

765
01:09:03,858 --> 01:09:05,858
They actually just want to be early.

766
01:09:05,858 --> 01:09:08,858
That's what everyone wants from altcoins.

767
01:09:08,858 --> 01:09:11,858
They want to speculate on number go up.

768
01:09:11,858 --> 01:09:17,858
If you can't speculate on number go up in relation to Bitcoin, then it will make no sense to them.

769
01:09:17,858 --> 01:09:28,858
So that is why I say I find the claims that drivechain will kill altcoins in this sense, you know, the speculation sense, dubious.

770
01:09:28,858 --> 01:09:31,858
Because I know that's not what motivates people.

771
01:09:31,858 --> 01:09:33,858
It's not the supposed utility.

772
01:09:33,858 --> 01:09:36,858
In most cases, there might be exceptions.

773
01:09:36,858 --> 01:09:40,858
I acknowledge that some of the altcoins might be exceptions.

774
01:09:40,858 --> 01:09:49,858
They might have an actual hardcore cruel crowd that actually wants to use that utility and that actually is excited about it.

775
01:09:49,858 --> 01:09:53,858
But the vast majority of them is just speculation.

776
01:09:54,858 --> 01:09:57,858
And you actually remove this speculation.

777
01:09:57,858 --> 01:10:01,858
The very thing that most people are interested in with drivechains.

778
01:10:01,858 --> 01:10:07,858
And that's just the one thing I wanted to note because I basically agree with the other stuff.

779
01:10:07,858 --> 01:10:17,858
So like I said, I agree that it will probably increase Bitcoin's value and it will make the creation of new shitcoins a harder sell.

780
01:10:17,858 --> 01:10:21,858
And it might decrease the valuation of some of them.

781
01:10:21,858 --> 01:10:25,858
But I don't think it will remove the speculation from the picture.

782
01:10:25,858 --> 01:10:30,858
Well, almost all of the value of Bitcoin is speculation.

783
01:10:30,858 --> 01:10:38,858
So speculation is everywhere and there's nothing at all wrong with speculation.

784
01:10:38,858 --> 01:10:46,858
Speculation is perfectly legitimate and completely to be expected.

785
01:10:46,858 --> 01:10:56,858
And what the speculation is predicated on is the speculation is all about the expectation of future demand.

786
01:10:56,858 --> 01:11:03,858
So all of the value, I think this is a Fiatjaf tweet that I'm thinking of that I'm getting this from.

787
01:11:03,858 --> 01:11:13,858
That the value of Bitcoin, the value of Ethereum, the value of Dogecoin, it's all people thinking that in the future other people will want this.

788
01:11:13,858 --> 01:11:21,858
But I believe, I think people would say that they believe that ultimately the technology is what really matters.

789
01:11:21,858 --> 01:11:29,858
So at the base of everything is Bitcoin's peer-to-peer design, monetary policy and other fundamentals.

790
01:11:29,858 --> 01:11:33,858
And Ethereum has slightly different fundamentals.

791
01:11:33,858 --> 01:11:44,858
That's one of the drivechain community's insights is that the difference between Bitcoin and Ethereum is much smaller than the toxic maximalist Bitcoiners think.

792
01:11:44,858 --> 01:11:47,858
They think Bitcoin is one thing and everything else is totally different.

793
01:11:47,858 --> 01:11:51,858
But actually, technologically, they're very similar.

794
01:11:51,858 --> 01:12:00,858
And, you know, the toxic maximalists even have a sophistry sort of religion of saying that, well, there's only one real blockchain and it's Bitcoin.

795
01:12:00,858 --> 01:12:04,858
Like, no, Bitcoin is almost the same as Ethereum in many ways.

796
01:12:04,858 --> 01:12:13,858
And in the very long run, these technological differences and their narratives will lead to value accrual.

797
01:12:14,858 --> 01:12:35,858
So, for example, if we look at the Ethereum white paper, the Ethereum white paper on the very at the very beginning in paragraphs, probably paragraph approximately 15, Vitalik wrote, building a new blockchain allows for unlimited freedom in building a feature set.

798
01:12:36,858 --> 01:12:44,858
So when he talks about freedom there, I think what he's really saying is something that he couldn't have said if drivechain were available.

799
01:12:44,858 --> 01:12:53,858
If drivechain had been invented by Satoshi and had been around from the very beginning, Vitalik never would have been able to write that sentence.

800
01:12:53,858 --> 01:12:56,858
And I think he probably would have never launched Ethereum.

801
01:12:56,858 --> 01:13:05,858
So I think that the whole toxic maximalist view that the altcoins are all about speculation and money grab, it's not true.

802
01:13:05,858 --> 01:13:16,858
And as long as Bitcoin lacks drivechain or something like it, this freedom sentence is going to be driving the value accrual of altcoins.

803
01:13:16,858 --> 01:13:25,858
The way I see it is Ethereum is the only threat to Bitcoin in terms of Bitcoin's narratives and market cap.

804
01:13:25,858 --> 01:13:35,858
Like that's Paul Sztorc's view that there's only two blockchains in the world that are genuinely trying to become the layer one for everything else.

805
01:13:35,858 --> 01:13:50,858
So eventually things like Zcash will go away and Zcash will be a sidechain of Bitcoin or it'll be a roll up on Ethereum and there'll be no more Zcash altcoin.

806
01:13:50,858 --> 01:13:57,858
It'll just be a privacy technology that was copied into Bitcoin or Ethereum and then the altcoin will go away.

807
01:13:57,858 --> 01:14:02,858
So that's Paul's view is that there's Bitcoin and Ethereum. It's like the Republicans and Democrats.

808
01:14:02,858 --> 01:14:07,858
Every other party is kind of irrelevant. They're never going to win the presidency probably.

809
01:14:07,858 --> 01:14:15,858
I understand why Paul would say that, but I think there are a lot of people that wouldn't even look at Ethereum.

810
01:14:15,858 --> 01:14:29,858
So if Bitcoin, let's say something happened to it, like it became captured in some way, which most maximalists find unthinkable and impossible,

811
01:14:29,858 --> 01:14:34,858
but I think that's just because they don't actually understand Bitcoin.

812
01:14:35,858 --> 01:14:43,858
And some of the people, a lot of people that are currently Bitcoiners would probably not even look at Ethereum.

813
01:14:43,858 --> 01:14:57,858
So I don't think it's just between the two, but when you are talking about capitalization and network effects and stuff like that,

814
01:14:57,858 --> 01:15:03,858
I can see why someone would come to this conclusion that these are the two that matter.

815
01:15:03,858 --> 01:15:13,858
So what I wanted to mention is not this, this is just a side remark, that freedom is not just measured in features.

816
01:15:13,858 --> 01:15:16,858
So freedom is actually freedom.

817
01:15:16,858 --> 01:15:24,858
There will be altcoins that value their independence from Bitcoin, the Bitcoin consensus,

818
01:15:24,858 --> 01:15:30,858
because they don't think the Bitcoin consensus is resilient enough for what we are trying to do.

819
01:15:30,858 --> 01:15:36,858
And those people will never become Bitcoin sidechains, their crowd will never consent to this,

820
01:15:36,858 --> 01:15:45,858
unless Bitcoin proves it beyond doubt that it is the most resilient and the most censorship-resistant thing ever invented.

821
01:15:45,858 --> 01:15:53,858
In that case, in that far future revelation, they might actually find it a reasonable trade-off,

822
01:15:53,858 --> 01:15:56,858
but I'm not sure if that day will ever come.

823
01:15:56,858 --> 01:16:01,858
I think there will always be an excuse, there will always be a narrative to throw around,

824
01:16:01,858 --> 01:16:13,858
because deep down for an altcoiner to basically come to a Bitcoin sidechain, it means they have to sell their bags.

825
01:16:13,858 --> 01:16:21,858
So they have to dump their bags and try to be the first to dump their bags, because the last one gets nothing.

826
01:16:21,858 --> 01:16:29,858
Basically, the price collapses if there is a consensus on that narrative that they are better off as a sidechain.

827
01:16:29,858 --> 01:16:35,858
So they can transfer their holdings, their bags, their hopes for the future to a Bitcoin sidechain,

828
01:16:35,858 --> 01:16:40,858
it just doesn't work because you can't do that.

829
01:16:40,858 --> 01:16:43,858
You can only sell and buy Bitcoin.

830
01:16:44,858 --> 01:16:56,858
So these are multiple reasons, I think, why it's not preordained and not necessary that everything will become a Bitcoin sidechain

831
01:16:56,858 --> 01:17:01,858
or subordinate to the Bitcoin consensus, especially not in the near future.

832
01:17:01,858 --> 01:17:06,858
So if you are talking about the next decade where this fight may be decided,

833
01:17:06,858 --> 01:17:13,858
if Bitcoin will be able to remain free and will be able to remain number one,

834
01:17:13,858 --> 01:17:22,858
this next decade I don't see a lot of altcoins making this choice or finding it acceptable or alluring.

835
01:17:22,858 --> 01:17:30,858
Just talk to a monetary fund for five minutes and just mention to him that there could be a sidechain on Bitcoin

836
01:17:30,858 --> 01:17:39,858
and there is no need to create a separate asset and then listen to him and you will understand what I'm talking about.

837
01:17:39,858 --> 01:17:51,858
But the one thing I would add to your outlook is it's not that each altcoin community would choose independently

838
01:17:51,858 --> 01:17:53,858
whether or not to migrate to a sidechain.

839
01:17:53,858 --> 01:18:04,858
If one altcoin migrates to a sidechain, every other one is necessarily at risk for the same dynamic.

840
01:18:04,858 --> 01:18:14,858
So as soon as the very first person in any altcoin sells his altcoin to use the Bitcoin sidechain version of his altcoin,

841
01:18:14,858 --> 01:18:21,858
every single altcoin in existence is at risk for the same thing. Do you agree?

842
01:18:21,858 --> 01:18:31,858
I think that's a stretch, so I could probably poke holes into it, but I understand what you are saying.

843
01:18:31,858 --> 01:18:39,858
On the other hand, when I look at concrete examples, so let's say you move a privacy coin to a sidechain.

844
01:18:39,858 --> 01:18:47,858
So what happens is that you have a network, you have people who are fiercely loyal to their bags and their narratives and their community

845
01:18:47,858 --> 01:18:55,858
and they have a great anonymity set and you are starting a new, much weaker consensus as a sidechain

846
01:18:55,858 --> 01:19:03,858
that does not have the anonymity set, that does not have all the infrastructure and markets that they built around it.

847
01:19:03,858 --> 01:19:11,858
And you are expecting them to find that immediately more valuable than where they are and I don't see how that could possibly be.

848
01:19:11,858 --> 01:19:23,858
So let's consider this example. Imagine that Bitcoin launches drivechain and then the Zcash sidechain is created.

849
01:19:23,858 --> 01:19:31,858
Imagine if 1% of Bitcoiners send their Bitcoin to the Zcash sidechain.

850
01:19:31,858 --> 01:19:41,858
Bitcoin has a market cap of $400 billion.

851
01:19:41,858 --> 01:19:50,858
So if 1% of Bitcoiners send their Bitcoin to the Zcash sidechain, the Zcash sidechain has a market cap of $4 billion.

852
01:19:50,858 --> 01:19:53,858
Right there, from Bitcoiners.

853
01:19:53,664 --> 01:20:07,984
So already Bitcoiners alone have created a software with a native token of Bitcoin, but the software is identical in technology, in code, to the Zcash altcoin.

854
01:20:07,984 --> 01:20:18,144
So the Zcash sidechain now is $4 billion of market cap and the Zcash altcoin has a market cap of like $1 billion.

855
01:20:18,303 --> 01:20:29,664
So I know that the Zcash altcoin has a security model of issuance maybe and it has a different economic security model.

856
01:20:29,664 --> 01:20:42,864
But let's just suppose for the sake of simplicity that the transaction fees on the Zcash sidechain are greater than all of the miner revenue on the Zcash altcoin.

857
01:20:43,184 --> 01:20:49,904
So let's just suppose that the security of the Zcash sidechain is greater than on the altcoin.

858
01:20:50,224 --> 01:21:01,104
So you're saying that they're loyal to their bags, but these privacy people, they want privacy and they also probably want utility of a stable purchasing power.

859
01:21:01,104 --> 01:21:02,704
So I think they would all go over.

860
01:21:02,824 --> 01:21:06,223
The only person who's loyal to Zcash might be the founders.

861
01:21:06,583 --> 01:21:11,784
That's one of the things Paul always emphasizes is that there are different groups of people in an altcoin.

862
01:21:11,784 --> 01:21:19,704
There are the founders, there are the investors, and then there are their actual technology users, people who really want the privacy.

863
01:21:20,104 --> 01:21:22,424
And those people, they're what matter.

864
01:21:22,784 --> 01:21:28,863
And if they're going to come to whatever blockchain is best, it's like Fiatjaf, he's an actual Bitcoin user.

865
01:21:29,064 --> 01:21:35,943
He has tweeted, if another blockchain comes along that's better than Bitcoin, I would be there already.

866
01:21:36,384 --> 01:21:39,984
In other words, he's saying, I am not loyal to Bitcoin.

867
01:21:40,503 --> 01:21:44,024
I'm not a Bitcoin forever person.

868
01:21:44,384 --> 01:21:46,424
He wants to use the best technology.

869
01:21:46,863 --> 01:22:05,703
So I think one day, you know, either Drivechain will be adopted or maybe he'll say, I've decided like Hasu and, you know, Eric Wall and all these other people, I've decided just to kind of orient myself towards Ethereum because Bitcoin has these problems, doesn't adopt Drivechain.

870
01:22:05,984 --> 01:22:08,104
It doesn't have peer to peer sidechain.

871
01:22:08,143 --> 01:22:10,984
So it's going to eventually fail like that.

872
01:22:11,024 --> 01:22:32,063
So I think I think you should maybe talk to some of these people because, for example, let's say they even believe that they would have the same set of anonymity set on a sidechain to Bitcoin.

873
01:22:32,184 --> 01:22:44,343
Let's say they somehow you could convince them that Bitcoin not having a tail emission does not jeopardize the long term security budget.

874
01:22:44,343 --> 01:22:48,223
Let's say you could move all these aside.

875
01:22:48,783 --> 01:23:13,264
They would still they would still think that the way ASICs and the whole energy market relations that are that Bitcoin is working so hard to build with the states and the energy grids, they are still a strong force for basically pushing Bitcoin towards full capture.

876
01:23:13,343 --> 01:23:26,824
And the full case EML enforced on chain and and everything becoming fully, you know, controlled and surveilled that is going on Bitcoin.

877
01:23:27,703 --> 01:23:40,104
Even if all the rest is out of the way, they will still believe this and they will still be fiercely loyal to their independence for their consensus from Bitcoin and its ASIC fleet.

878
01:23:40,464 --> 01:23:55,303
So that's why I'm saying it's not as simple, I think, but it's also not impossible that that 18,000 of the 10,000 shitcoins just cease to exist.

879
01:23:55,423 --> 01:23:56,303
I don't know.

880
01:23:56,783 --> 01:24:03,384
I'm just saying that there might be a few exceptions that will not be so easy to pursue.

881
01:24:03,783 --> 01:24:10,984
Of course, of course, there will always be something being done for whatever reason.

882
01:24:10,984 --> 01:24:16,943
But in the in the market for money, there are there are powerful network effects.

883
01:24:17,144 --> 01:24:20,783
The network effect power is stronger in money than any other market.

884
01:24:21,903 --> 01:24:31,984
So. I think the Zcash people, they want to move their money around in a way that is as private as possible.

885
01:24:31,984 --> 01:24:34,223
So if the privacy guarantees are strong.

886
01:24:35,424 --> 01:24:39,104
Then they'll move over to the more stable unit of account, which is Bitcoin.

887
01:24:39,343 --> 01:24:49,864
Now, I agree with you that if they have concerns about the mining and if they think that the Zcash, if the Monero people think that the Monero mining technology is better.

888
01:24:50,864 --> 01:25:18,864
They might use that or if they or, you know, people believe proof of stake is actually more secure than proof of work, especially long term, that it is it is something that is more in line with the ethos that the holders and the users should be able to deal with a hostile attacker than proof of work.

889
01:25:19,343 --> 01:25:38,503
There are people out there, not not a few people that firmly believe this, and you will not be able to convince them to come to a sidechain where they are ultimately not only they are subservient to Bitcoin's proof of work and be able to deny service or get captured through that.

890
01:25:38,783 --> 01:25:44,223
You know, if everything is a Bitcoin sidechain, then someone only needs to capture Bitcoin to capture everything.

891
01:25:44,664 --> 01:25:59,264
That's what I meant when I said the freedom part is not just the freedom of innovation and the freedom of doing new cool stuff, that the freedom might be literally freedom from Bitcoin and Bitcoin's consensus and then the Nakamoto consensus.

892
01:25:59,264 --> 01:26:23,023
And this weird, weird world, this weird fiat world we live in, where basically cheap manufacturer energy production on the massive scale and the financial markets are all in control of our fiat overloads and Bitcoin is basically betting everything on that, that making it expensive.

893
01:26:23,023 --> 01:26:47,023
In, I don't know, kindergarten terms, making it expensive to capture Bitcoin will be a victory over the very people who basically create this money for free and who already control everything that Bitcoin depends on for its, you know, consensus and a lot of people out there don't agree with this.

894
01:26:47,023 --> 01:27:00,023
That's why I said some time has to pass, the Bitcoin narrative has to be validated by real world events and a test of battle probably.

895
01:27:00,023 --> 01:27:11,023
And before that happens, I think a lot of people will simply not be convinced that this is a good idea to bet everything on Bitcoin and then be subservient to its consensus.

896
01:27:17,023 --> 01:27:20,023
Well said.

897
01:27:20,023 --> 01:27:24,023
Well said.

898
01:27:25,023 --> 01:27:40,023
Could you say a little bit more about your perspective or comments on claims that proof of stake is long term superior than Bitcoin?

899
01:27:40,023 --> 01:27:42,023
What were you referencing there?

900
01:27:42,023 --> 01:27:50,023
And also, could you comment on the Monero claims about Monero's mining being not captured in comparison?

901
01:27:51,023 --> 01:28:00,023
I'm not sure I can advocate for that very strongly because I'm not sure that is actually correct, but they firmly believe so.

902
01:28:00,023 --> 01:28:24,023
So they think that ASIC resistance is the key to ensure that this industrial scale mining centralization that Bitcoin enjoys does not happen because they believe that if you concentrate the hash power, especially so much integrated into the energy infrastructure, then it's impossible to hide it.

903
01:28:24,023 --> 01:28:36,023
If the state wants, then it can capture it and it can control it. It can coerce it into compliance and therefore they can remove all privacy and self sovereignty from the chain.

904
01:28:36,023 --> 01:28:38,023
That's the thesis they have.

905
01:28:38,023 --> 01:28:49,023
I'm not sure if using general purpose hardware is a guaranteed way here, but I don't want to get too much into this.

906
01:28:49,023 --> 01:29:00,023
So basically they have this thesis. They have not been dissuaded from this thesis since 2015, so it's unlikely they will be dissuaded until something breaks.

907
01:29:01,023 --> 01:29:10,023
And what I wanted to mention, because I have to go soon, is the way I see proof of stake and proof of work.

908
01:29:10,023 --> 01:29:26,023
The most important distinction between the two is what can the community do if there is a super majority attack, if there is a super majority cartel collusion and censorship happening.

909
01:29:27,023 --> 01:29:37,023
And basically stakes have identity. From the purposes of computer code, the client we run, stakes have identity.

910
01:29:37,023 --> 01:29:50,023
We can target the bad actors, we can write a few lines of code and we can basically eradicate them in a targeted way.

911
01:29:50,023 --> 01:29:53,023
You can do the same thing with proof of work.

912
01:29:53,023 --> 01:30:05,023
So I have done some calculations on this and it comes out and this does not mention the host of other properties that are different and why I think proof of work is superior.

913
01:30:05,023 --> 01:30:16,023
This just deals with the very specific cost, the probabilistic cost of an attack and the likelihood of failure of said attack.

914
01:30:17,023 --> 01:30:30,023
And I think there is a good argument to be made that proof of stake actually might be, from this perspective alone, superior to proof of work where hash power does not have identity.

915
01:30:30,023 --> 01:30:38,023
So you can target miners, you can target the attacker miners specifically in the Nakamoto consensus, you can just fold them off.

916
01:30:38,023 --> 01:30:44,023
You can punish all the miners collectively and you can reset your network security.

917
01:30:44,023 --> 01:30:52,023
And you can basically eliminate the cost to a new attack with a different hashing algorithm that is totally retarded.

918
01:30:53,023 --> 01:31:11,023
Or you can devolve from a decentralized consensus to a more centralized one by some signing committee of Bitcoin greybergs or developers, well-trusted personals who would try to coordinate an effort.

919
01:31:11,023 --> 01:31:16,023
But this would be completely anti-ethos to Bitcoin again.

920
01:31:16,023 --> 01:31:18,023
So it would be a loss again.

921
01:31:18,023 --> 01:31:22,023
So it's very hard, very difficult to deal with 51% protection.

922
01:31:22,023 --> 01:31:31,023
It's not that expensive to get it together, especially if basically the miners are doing the heavy lifting and they are concentrating themselves.

923
01:31:31,023 --> 01:31:34,023
So I'm very much in favor of proof of work.

924
01:31:34,023 --> 01:31:37,023
I love Bitcoin. I want it to work.

925
01:31:37,023 --> 01:31:46,023
But I acknowledge that the people who say that proof of stake actually has a higher cost and a lower probability for capture,

926
01:31:46,023 --> 01:31:52,023
assuming assumptions about how the community behaves and how they can reach consensus,

927
01:31:52,023 --> 01:31:55,023
I think there is something there.

928
01:31:55,023 --> 01:31:59,023
And I think it remains to be seen which one will actually work.

929
01:32:00,023 --> 01:32:05,023
And we will never know if no one ever moves with the capability to capture Bitcoin.

930
01:32:05,023 --> 01:32:07,023
No one ever moves to actually capture Bitcoin.

931
01:32:07,023 --> 01:32:12,023
Then we will never sadly learn which one is the superior.

932
01:32:13,023 --> 01:32:17,023
And also, if no one tries to capture Ethereum, right,

933
01:32:17,023 --> 01:32:28,023
Ethereum already shows serious problems with this whole concept of staking pools and centralization and the map boost and whatever.

934
01:32:28,023 --> 01:32:30,023
I don't want to get into too deep.

935
01:32:30,023 --> 01:32:39,023
But the point is both can fail and we don't know which one will prevail or maybe a hybrid will be in the future.

936
01:32:40,023 --> 01:32:43,023
We don't know. And I'm trying to keep an open mind.

937
01:32:43,023 --> 01:32:49,023
But I love proof of work more and I wish that it will succeed.

938
01:32:49,023 --> 01:32:53,023
So I'm sorry I have to go. But it was a nice talk. Thank you.

939
01:32:53,023 --> 01:32:55,023
It was great talking to you as always. Thank you.

940
01:32:55,023 --> 01:32:58,023
Well, this is the end of our chat today.

941
01:32:58,023 --> 01:33:01,023
Thanks to everyone who spoke. It was a fun episode.

942
01:33:01,023 --> 01:33:03,023
We'll be back on Monday.

943
01:33:04,023 --> 01:33:08,023
This has been Drivechain Twitter Spaces hosted by LayerTwo Labs.

944
01:33:09,023 --> 01:33:10,023
See you all next time.

945
01:33:12,023 --> 01:33:13,023
Thanks to those who spoke.