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Hello, everyone.

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We are gathered for another episode of the Drivechain discussion series, hosted by me, Henry, of LayerTwo Labs.

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Thanks for joining. And welcome.

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There's been a lot of chatter on Twitter lately about Drivechain.

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Things are really getting exciting.

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With almost every passing day, the excitement level rises.

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Interest is increasing.

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A number of highly technical and experienced Bitcoiners have lately been writing outstanding essays, posts, and other comments about Drivechain,

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about its strengths, about its interesting features, about its viable economic design, about the potential for Drivechain to improve and strengthen aspects of Bitcoin

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related to everything from miner revenue to enabling experimentation and innovation in a partitioned context.

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So it can enhance and brighten optionality for developers who want to do interesting things within Bitcoin.

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You know, if people do a million interesting things, one of them can be enormously successful and transformative.

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And that's what innovation is all about.

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It's about experimenting in an intelligent and appropriate manner, and Drivechain enables that kind of experimentation.

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So it's very interesting to people of all different backgrounds and perspectives.

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And we've had a bunch of people join the room.

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Any of them are welcome to come up and talk about their thoughts related to Drivechain these days.

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What are you thinking about?

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What part of it excites you?

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What part of it interests you?

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Did you come into Drivechain because of an interest in a security budget?

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And you want to see miners get funded as the Coinbase has in the future.

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You want to see higher fees on layer one.

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You want to see a very economically strong amount of security for UTXOs.

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Or did you come into Drivechain because you want to see more experimentation and development?

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You want to see more brainy people building new cool stuff on blockchain.

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You don't want to see the brain drain occur.

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You want to see Bitcoin be the place where people come to innovate, develop and create valuable code on blockchain.

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So what aspect of Drivechain interests you?

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That's what is always fun to hear about.

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So anyone who's joined is welcome to raise their hand.

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Come on up and chat.

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It's really amazing how many people have lately been just pouring into the space and writing essays.

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We had a lot of that this week.

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So I've enjoyed reading essays on Drivechain.

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They've been posted on Twitter and I've retweeted them.

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So if you just go to like my Twitter and review them, you'll see these retweets.

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We have a lot of very good tweets by Fiatjaf.

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We have a lot of very insightful critiques and questions by Moon Settler and other Drivechain focused thinkers.

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Paul, welcome to the stage.

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I just thought since there's only seven people, I just come up and hang out.

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I'm going to write something.

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I'm hopefully going to finish it today about it's about the large block sidechain and it's about how small can you theoretically shrink Bitcoin transactions.

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So I hope that people enjoy reading it because I've enjoyed writing it.

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And it's very interesting.

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You can learn a lot about Bitcoin transactions and how much how much wasted buyback you can get.

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And it's very interesting.

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You can learn a lot about Bitcoin transactions and how much how much wasted bytes and stuff there are in the ones that Satoshi designed.

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For example, every transaction has four bytes at the beginning, which is a version number.

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But there's only ever been three versions and four bytes can count to like four billion or something.

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So that's certainly at least three wasted bytes in every single Bitcoin transaction.

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That's just one example among many.

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Paul, could you talk about the tweet that I've put in the nest where Fiatjaf has written, by the way, if we had BIP300 activated, ordinals would never have happened because the ugly NFT pictures would all be done on a proper sidechain.

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What do you think he means there?

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Could you elaborate on that tweet?

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Yeah, I think he's 100 percent correct.

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We have the BIP assets sidechain already.

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That's what people would want.

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They would want it to be organized.

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They would not want to do they want their BIP assets to all be in the same place as everyone else's BIP assets.

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So I think he's right.

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Probably it's also possible that it's possible that taproot wouldn't have happened on layer one.

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That's also possible, in which case the ordinal thing also wouldn't happen because you'd have instead of waiting.

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So it's quite possible that if things had gone differently where that came up in November 2015, the post for drivechain, if people had focused on that instead and maybe we could have launched it in 2017 or something, many things would have been different.

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And it's possible that we would have gotten.

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By deprioritizing taproot, we may have gotten it sooner because maybe people wouldn't have started it until after Stegwit, it laid in 2017, 2018, but there would be no like bike shedding, there'd be no politics, there'd be no activation drama because they just do it on a sidechain.

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So it's possible that we'd have it on the sidechain before November 2021.

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Which is when we got it in this universe.

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I see, Paul, I've shared the nest, a tweet of yours where you are pointing your followers to a recent essay by Super Testnet, one of our favorite thinkers who writes about drivechain.

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And I have in recent reviews of his tweets and conversations in the drivechain talk, Telegram group and elsewhere have developed some questions that I would like, maybe if you're interested, you and Super to discuss since he's on stage as well.

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Welcome, Super Testnet.

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And I think these could be very interesting.

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They're fundamental questions about drivechain and related matters.

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So one of them is, I would like you two to discuss, is drivechain, is the two-way peg and drivechain peer to peer?

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And is that a fundamental advantage or a positive attribute of the two-way peg and drivechain that differentiates it from a federation?

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And secondly, would it be right to say that a drivechain is a layer two and that other arrangements that offer, you know, or that try to offer what drivechain offers would not be a layer two, like a federated sidechain?

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And also just most fundamentally, that first question is, what is the difference between a federated peg and a peer to peer peg?

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So I would say, or I do say that drivechains are not peer to peer, because the typical way that, or the way they're expected to be used is that there's going to be a group of 51% of miners who control, who control the funds on the sidechain and allow, allow withdrawals.

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And so the users of the sidechain typically have a client relationship to those, to those miners.

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And if you're in a client relationship where you're not, where you have someone standing between you and your peer, which is the miners, and basically you're passing around IOUs to your peers, which then they can redeem on the base layer by, you know, doing a peg out.

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That's not a peer to peer system by my definition of the term.

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I still like it. Not everything has to be peer to peer, but yeah, that's, that's my stance.

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I think that the peer to peer idea runs in conflict with the sidechain idea that people are different, and some people will opt in to running the sidechain node.

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And then the question is, aren't those people in a different category than the people who only run the layer one node?

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I think that the answer is yes.

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So I don't know. It depends on what exactly people are driving at.

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But I think that the, the Federation, like it would be very interesting if the Federation tried to do something that really leaned on the decentralization property, such as, you know, something illegal or something really taboo.

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And I can, I think we can all agree that probably they would not be willing to do that.

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But someone should. It would be great if Liquid did like whatever super taboo thing.

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The issue of definitions, I wanted to clarify if we could.

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So the property of peer to peer is one which is made complicated by the fact that there's like different sets of people running different sets of nodes in the drivechain arrangement.

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Right. There's those people who are the set of people running the drivechain node.

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There's those people who are the set of people running only the layer one node.

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And there's also the set of people who are running Bitcoin mining, who are doing that.

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But all of the, but the critical thing, Super Testnet, is that all of those sets of people could be one in the same.

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And the only barriers to entry in a peer to peer system are economic.

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And that's why Satoshi titled the Bitcoin white paper a peer-to-peer electronic cash system.

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It's not because there would be different sets of people.

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It's that any person can join any set.

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And there's only an economic barrier to entry to participate.

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You have to be able to buy an ASIC, right, or, you know, buy a computer to have a node.

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But there's no social barrier to entry.

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And when there's a social barrier to entry in a system, that is what makes a person privileged in a political or social sense, not an economic sense.

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And that's what we mean.

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Like, what is a coherent definition of the term peer to peer, if not the one I'm giving?

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Which is that people can participate in any aspect of the system without the need for social approval and admission.

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Like, if you want to be part of the functionaries of Liquid.

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You must be approved by the people who are in charge.

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Right. There's only like 15 or 16 people who are the functionaries and or entities that are the functionaries.

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No one knows who they are. And also that.

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But that isn't the point, because like in Bitcoin, no one knows who anyone is, you know, unless they reveal themselves.

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But do you see my point that the difference between social and economic?

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I'd like to ask Paul, do you agree with the way I've elaborated it?

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And I wanted to have you kind of press against Supertestnet's definition if you don't agree with it.

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Because he was saying that like like some people have said in Twitter recently, well, a large federation is the same thing as a drivechain miner control.

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Like if there's let's say we have many people who control a federation.

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But then, Paul, you know, but then you've said, Paul, that like, well, the critical thing is that they can be replaced in a drivechain arrangement.

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They're all replaceable miners. The miners are in control, but they're a replaceable set.

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They can be completely changed over through economic forces over time.

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It's it's highly dynamic. Anyone can join or leave the set of parties that are doing Bitcoin mining.

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Whereas in a federation, it's fixed. It's like an elected president.

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He's in office for, you know, for four years. Right.

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Does that all make sense? I think it makes some sense.

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Yes, I think one that the like there's a lot of challenges that come with the.

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Federated sidechain, which is that someone has to choose the federation members.

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So how you know by what criterion do they pick those people and how does how does the.

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If you are a regular user, how do you know that the 15 people they said they picked us, who they really picked?

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And how do you know that those 15 are a good 15? And what do you do if those 15 turn out not to be working?

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So the the BIP300 uses the mining process and the mining process is a pretty good one because the miners are only ever paid via Bitcoin.

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They have to be paid in Bitcoin as we paid in Bitcoin transaction fees.

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So they have a natural interest in the network doing well.

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And so also all the 100 percent of the current miners could could die in an accident tomorrow.

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But new miners would take their place and the process would move on.

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And so this is these are big differences, whereas the Federation, it's not the case.

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Paul, would you say that the drivechain peg or that drivechains generally are peer to peer?

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I guess I would, but really, this is all it depends on the audience.

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So unfortunately, people have been trained to think of like something like liquid as a sidechain when really I don't think it ever was intended to be.

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Overlapping with that definition of that word. So I think when in that in that context, you have something where people.

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People are not like I want to differentiate drivechain from that.

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So that's my thought when I say that. But I don't know if like everyone who runs a sidechain node is an equal peer.

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But if some people don't run the sidechain node, they only run a main chain node.

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Those people are all equal peers of each other, but not to the other people.

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So I think I would use it that way, but I don't have a problem with it.

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The motivation I have to think that drivechains will see enormously higher adoption than federated sidechains, which right now have only about 100 million dollars of adoption.

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Right. So if we want to think that drivechain will have billions of dollars of a job of adoption,

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then one of the ways of understanding that is to understand that both in terms of narrative and in terms of fundamental strength, the drivechain is a superior design.

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And what is the way that we crystallize that difference in vocabulary?

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I think the difference is that a federated sidechain is weak because a limited set of people control a multisig address.

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And there's the possibility, as you say, that they could either, you know, sadly die or be arrested.

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And then the Bitcoin would be at risk that's locked in the multisig.

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But in a drivechain, the entire mammoth, massive amount of power of the entire Bitcoin mining industry is controlling the peg and therefore it's nearly as strong as Bitcoin itself.

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And therefore, you know, and the reason for that is that it's peer to peer because that's the strength of Bitcoin.

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It's a peer-to-peer electronic cash system.

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When people had eagled, it got shut down and died. But because it wasn't peer to peer, it was like federated.

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A company controlled it, a board of directors or whatever.

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So isn't peer to peer the ultimate attribute of Bitcoin and of drivechain that makes them viable?

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I don't know, I suppose. I'm not sure.

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I think the peer to peer, Satoshi's peer to peer thing, he was referring to, of course, like you were saying, Liberty Reserve, eagled, etc.

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Because they had one server. So he was referring to the nodes.

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In his day, almost every node could also CPU mine.

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But I think it's clear that he was referring to the nodes.

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The title of the white paper is a peer-to-peer electronic cash system.

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And what he meant there, in my understanding, is that there isn't a trusted third party involved.

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Now, in a federation, there is a third party.

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Now, the key here, it's legal that the notion of a third party is someone other than the set of users.

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There isn't an identity between the users and the controllers.

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But in Bitcoin, it is possible for everyone to have a full node if they wanted to and mine as well.

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So everyone is a peer in that sense.

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It's like equality under the law, which is a goal of modern democracies, some of them, where anyone has equal opportunity, not equality in outcome, but equal opportunity.

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Similarly, in Bitcoin, anyone can try to be a big miner, can compete in there, can try to be a full node.

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Economically, there's no barrier other than an economic one.

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So I think that's what Satoshi meant.

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Whereas in Eagle, you couldn't become the owner of the corporation that ran it, if there was one, or whatever sort of federation controlled it.

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But in Bitcoin, everyone's a peer in this sense that I'm elaborating.

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Super, what's your thought? Please go ahead.

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Yeah, the sense in which you're elaborating on it is true.

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Anyone in Bitcoin can run a node.

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And therefore, in that sense, they're all equals.

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They're all peers.

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That's not the way I typically use the term peer to peer.

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I typically when I speak about it, it's like, is there someone standing between you and your peer when you interact with them?

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And the way most people use Bitcoin is not to run a node.

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And therefore, it's not peer to peer.

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They are, in fact, sending their transactions to the set of miners and relying on those miners to mine the transaction.

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That's a client relationship.

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They're paying them for a service.

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And if they don't do that service, the task won't get done.

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And then if the miners do their task, then the interaction with the peer happens.

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So the way most people use Bitcoin is not peer to peer, even though they have that option.

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And I suspect that the same thing is going to be true in drivechain, that most people won't run a node.

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They're not going to run a drivechain node or a sidechain node.

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And so they're not going to use this peer to peer system, even though they can.

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But in drivechain, it's somewhat different because.

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The barrier to entry to becoming among the top 51 percent of miners is a lot higher than the barrier to entry to becoming just any old miner.

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So in Bitcoin, still today, you can mine your own transactions.

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Yeah, you'll probably have to buy an ASIC, Greg, and it'll probably cost you ten thousand dollars to do that.

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It's but that, you know, that's what people do.

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They mine their own transactions.

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But you're not in a different situation in Bitcoin than you are with drivechain with respect to the miner control, because as we've known from the beginning of Bitcoin, the 51 percent hostile attack is always a possibility.

200
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So when you talk just now about like someone standing in the way.

201
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In some situations, and that if you if you're if you're mine yourself, then you can mine your own transaction, it's not true in the sense that you were putting forth, because it's still the case that there's the possibility of a hostile attacker who would reorg, block your transaction forever and ultimately render your coin worthless.

202
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So my definition, which is peer to peer, Satoshi was right to say it's peer to peer, and it's always peer to peer.

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And I think drivechain is in the same sense.

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And the definition that you're offering or the line of the line of reasoning that you're offering is that, well, it ceases to be peer to peer when people choose not to place themselves in the orientation that makes it peer to peer.

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I think that is a misuse of the term.

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I think that the best understanding, the only coherent understanding is that Satoshi was right.

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There was not because he's right.

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I don't think that's why it's right.

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I think he happens to have been right that when he titled the white paper a peer to peer system, he was correct.

210
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It's always been peer to peer because.

211
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Well, I think, again, that's talking about the nodes, though.

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I have a very weird view on mining, I think.

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I actually almost see it as a kind of layer two in itself, where in order to mine, you need a full node.

214
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But if you want to run a full node, you don't need to mine.

215
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So actually, the mining is a layer two.

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And then funnily enough, kind of like a lightning channel, when you do a lot of mining, you can periodically write the channel closed, which is, in this case, finding the next block.

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You can write something that layer one will understand, which is a new block that meets the difficulty requirement.

218
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And so something happens that's unobserved by layer one, a bunch of stuff, hashing, etc.

219
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And then the net effect of that is recorded to layer one, which is the finding of the next block.

220
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So I kind of have this weird view, not a lot of people share, where mining is itself a layer two of the node backbone of Bitcoin.

221
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That is a very interesting view.

222
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A lot of that is very familiar to me.

223
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But ordinarily, if someone asked me, what's the layer one of Bitcoin, I would probably say it's mining.

224
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And then nodes are sort of a layer on top of that, that listen to certain miners or listen to certain blocks and expect certain data to be in them.

225
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That's interesting that you put nodes as layer one and then mining as layer two.

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Yes, because the layer one nodes can ignore a lot of the intermediate steps of mining.

227
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And of course, if you want to run a layer one node, you don't need to mine.

228
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But if you want to mine, you really do need a layer one node because you have to assemble a valid block.

229
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So it seems like mining is the core.

230
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Well, you can take guess and check to a much greater example, I suppose, and just throw data out there and see if it sticks.

231
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You can, but you could also do that.

232
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You could describe lightning that way.

233
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You could say lightning is actually the layer one and Bitcoin Core is the layer two.

234
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And then lightning is just trying random data and just hoping to get something that ends up being a valid transaction.

235
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The special theory of relative layers.

236
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Well, it sounds like we didn't achieve the unanimity I was hoping for regarding whether Bitcoin is peer to peer and whether drivechain is also, with respect to its peg, peer to peer.

237
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It sounds like there was different opinions on all sides, which is typical of an intellectual conversation.

238
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Not everyone sees things exactly the same way and not everyone has the same even fundamental understanding in terms of how they articulate it.

239
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So I appreciate those different views.

240
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Especially with people as technical as you two.

241
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I feel like rhetorical differences in definitions are very often quite important, especially when you have a disagreement with someone.

242
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But when like Paul and I agree on pretty much on most important things and there are differences of opinion on the definitions, I don't think it matters as much in our case.

243
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Right.

244
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Right.

245
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Although I think it would be great if it would have been great to have agreement on that question of, you know, is Bitcoin peer to peer?

246
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And you were saying super that it's it can be, but people can opt out of that.

247
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And then even Paul didn't exactly support entirely my view, my articulation of the whole thing about the peg.

248
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But to me, I do feel like maybe it's just being a lawyer and not a programmer.

249
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You know, to me, when when Satoshi wrote about peer to peer, it really had to do with something that's always present in the system, even if people are making choices that.

250
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Result in their orientation in the system being different than others or, you know, them being a certain set of parties within the system that not everyone is in.

251
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So not everyone is generating coins, receiving fees.

252
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Right. But even so, it's peer to peer nonetheless.

253
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And I feel that drivechain has that strength that everyone, as Paul pointed out, everyone could, you know, that we could change over the set of parties who are doing mining overnight in theory.

254
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And that's not true of federations necessarily.

255
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And and that's the strength.

256
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I mean, because a lot of the reason why drivechains might see enormous adoption in the future if they're implemented on Bitcoin is the narrative difference.

257
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What's the people question?

258
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Maybe. I don't know. I kind of find this topic to be pretty boring.

259
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I can science. There's a phrase that says.

260
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It doesn't matter. Definitions could be anything as long as they're consistent.

261
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A definition can never be invalid.

262
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An easy way to see that is that in different languages.

263
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The Spanish definition of something.

264
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Is a different thing than the English definition of, you know, the Spanish definition of Casa is different than the English definition of house is ones in Spanish.

265
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There's an English so people can have different definitions.

266
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And actually, that's completely.

267
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Harmless.

268
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OK, Paul, can you say then briefly, why is it you feel that drivechain sidechains will see much greater adoption than federated sidechains?

269
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I think the federated sidechains really underestimate the user.

270
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The user wants to know.

271
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What the situation is and under the hood, it's just the software's closed source.

272
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No one knows who the 15 key holders are.

273
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Even if you did know where they were, you can't prove that they were the only ones to have the keys.

274
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So I think that people actually see through it and they know that when push comes to shove, they could not do whatever Silk Road drug dark market transactions or Z cash mixer or something else.

275
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Understood. So to clarify that, is it that people, users would be users of federations?

276
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Users would be users of federations.

277
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No, that federation is insecure.

278
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The peg that the Bitcoin in the peg would be what they want, what they want to know what they're getting into, so.

279
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You need someone to be the early adopter, so someone to do like the Ross Albright and take Bitcoin to Silk Road.

280
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And then other people will maybe follow on.

281
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But I think the federation underestimates the audience, the audience is, the audience actually is smart enough to to want to know exactly what are they signing up for?

282
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I think the other as well, like if you have a new idea and big 300, you can just spin up the sidechain.

283
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And big 300, you can just spin up the sidechain, you have to get the miners to act.

284
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But the miners should mostly agree to act because they can always turn it off later, which limits the damage they can do by adding a new sidechain.

285
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And the sidechain has upside potential.

286
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So but if you want to start a new custodial federated sidechain, you need to find a new 15 people.

287
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I think that alone is, will be prohibitive.

288
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One thing that strikes me is a common thing I notice.

289
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I do this.

290
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If someone recommends a new system to me, or I see a post online about it or something, I'll often dip my toe in.

291
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Maybe like if it's RoboSats, for example, I might put a $20 trade on RoboSats and see if it works.

292
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And if it works, and if I see some method in which it can benefit my life, I'll do that more often.

293
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Like I'll, maybe I'll put higher amounts in or maybe I'll just do it once a week instead of instead of just once in my life.

294
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And I think people tend to do that without much concern for, there's some concern for what's how does how does the system work?

295
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It's part of the risk assessment.

296
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But they use systems that are insecure, if they if they haven't heard them yet.

297
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All the time, people think people do.

298
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But I think like this, what I was trying to say about the Ross Albright is not going to want to build Silk Road on top of the custodial Blockstream sidechain where Blockstream has shares of the corporation and has a CEO that can be arrested.

299
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And that's my thought.

300
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Yeah, that's up.

301
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That rings true.

302
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We have Joe to the stage.

303
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Hi, Joe.

304
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What's your question?

305
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Thanks for joining.

306
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Hey, by the way, I have a lot of.

307
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Yes, I'm sure you're sounding good.

308
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Great.

309
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Cool, cool.

310
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Yes, just the one thing, maybe a little bit self-serving, but I threw in the telegram, I thought it might be helpful for education purposes.

311
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But so I would think of opening up new sidechains as like that franchise owner opening up new franchises of restaurants where like they can't control how many hamburgers each restaurant sells, which would be analogous to transactions.

312
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I think that's just the marginal economics of blockchains.

313
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Blocks will always be full, but they can maximize revenue by deciding whether a new franchise that you could open in some region.

314
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So I think maybe it'll help for the explanation of how you can maximize fee revenue, why the marginal economics of large blocks are bad and so on.

315
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So that's just one comment I wanted to make.

316
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But another topic, too, if you want to get to it later.

317
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I think that question kind of touched on Paul's last point.

318
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Paul, to make sure I understood your point correctly, were you saying, among other things, that one advantage of drivechain is that the set of people who are responsible for the proper administration of the two-way peg in a drivechain format is made efficient by that set of people being responsible?

319
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For the peg in every case, whereas in a federated design, each time a new federated sidechain is to be created, a new set of people would be needed to be tasked with managing that new peg.

320
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And you have to convince the audience why those 15 people and not 15 other people.

321
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I see.

322
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Right.

323
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So I think that's a pretty big difference.

324
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Right.

325
00:34:13,682 --> 00:34:23,401
So for example, right now there's about $50 million, last time I checked, $50 million worth of Bitcoin locked in a two-way peg on RSK, Rootstock.

326
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And there's about $50 million locked in the two-way peg on Blockstream's Liquid sidechain.

327
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So those are the two largest sidechains on Bitcoin.

328
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And 100% of the sidechains on Bitcoin today are federated, without exception.

329
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All of them are federated and they always will be until drivechain is adopted or something else is invented.

330
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Now, some of these federations are talking about advanced features and upgrades, and that's something maybe we could prepare to discuss in the future on a chat, unless you're ready now.

331
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But Blockstream talks about the possibility of a dynamic federation, and RSK talks about the possibility of hash rate secured, so-called proof of work peg mechanisms.

332
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So these federations do speak about improvements to their design, and perhaps those improvements are motivated by awareness of drivechain and awareness of the possibility of a fundamental improvement.

333
00:35:30,401 --> 00:35:55,641
And of course, in the case of RSK, they are explicit in their support of drivechain, and the lead designer and creator of the RSK sidechain explicitly supports drivechain adoption, and states that the RSK sidechain will, as written in its own white paper, migrate to a drivechain as soon as that's possible on Bitcoin.

334
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So it's interesting to note that these federated sidechains are attuned to the potential of drivechain, and in some cases are very much supportive of adopting drivechain entirely as soon as it's possible.

335
00:36:12,161 --> 00:36:18,562
But I was trying to get out – I think we've gotten slightly away from Joe's question. I can't quite remember what it was.

336
00:36:19,081 --> 00:36:27,081
Oh, hey. Yeah, guys. No, that was, I think, an interesting point Henry brought up.

337
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Like, another way to put it, I guess, is if anybody is allowed to make custodial sidechains, then I think there is a race to the bottom in terms of fees.

338
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So miners get none of it. So I think there needs to be the entity – think of miners as just one entity – that they have to have some power to decide what the total block space is in the entire network.

339
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So I think that's just another benefit that I'd like people to flesh out a little bit.

340
00:37:02,802 --> 00:37:10,401
And I just thought the franchisee-franchisor analogy was pretty good. That came up, I think, in your last spaces when I was listening to it.

341
00:37:11,002 --> 00:37:13,521
But let me know if I'm not being clear, please.

342
00:37:14,761 --> 00:37:21,562
One thing you mentioned was how there could be a race to the bottom if there are a lot of federated sidechains, if I heard you correctly.

343
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But as Paul mentioned, the federated sidechains have fundamental weaknesses.

344
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In some cases, they're closed source. In some cases, no one knows who holds the keys to control the Bitcoin that's in the peg.

345
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So it is not depriving Bitcoin of a whole lot of transaction fee revenue for Bitcoin miners when people use a federated sidechain because there's so little use of federated sidechains.

346
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There's only like $100 million in these federated sidechains.

347
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Their transaction activity, therefore, is quite low in terms of real value of the fees being paid.

348
00:37:59,682 --> 00:38:06,042
And in the case of RSK, I believe it's merge-mined with Bitcoin, unlike Liquid.

349
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So in RSK's case, they're actually paying an amount of money to the Bitcoin miners as part of their structure, whereas in Liquid's case, they're not.

350
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And fees are paid to the parties that are involved in administrating Liquid.

351
00:38:20,881 --> 00:38:28,001
So it's not exactly catabolizing Bitcoin's block space value to have these sidechains.

352
00:38:28,481 --> 00:38:43,922
Indeed, especially in the drivechain arrangement, the value of Bitcoin's layer one block space would enormously increase potentially because and this is one reason why I got so interested in drivechain is the way that it solves the security budget concerns that some have.

353
00:38:44,761 --> 00:39:03,802
And we see recently that in the Ethereum community, some of the leading influencers on Twitter who have over 100000 followers are constantly talking about Bitcoin's security budget problem and the possibility of the Bitcoin community, you know, resorting to inflation in the future.

354
00:39:04,121 --> 00:39:10,761
And I think that the one thing that these critics underestimate about Bitcoin is.

355
00:39:11,962 --> 00:39:25,881
Or at least one of the things they underestimate is that they're not attuned to the growing interest in drivechain and the ways in which drivechain would potentially greatly strengthen the the miner revenue going forward.

356
00:39:25,881 --> 00:39:44,602
Yeah, I am just about RSK, so they're merge mined, but they don't have to be like nothing stopping me and my friends from making our own sidechain, which could cannibalize these.

357
00:39:44,602 --> 00:39:52,001
But, yeah, I take it that they're definitely inferior to drivechain or just layer ones, at least in some way.

358
00:39:53,001 --> 00:40:07,842
But just another way to make the point maybe is that I worry in a serious case with roll ups, if anybody can start a roll up and have their own L2, then that they don't have to give the keys to validators.

359
00:40:07,842 --> 00:40:25,682
So I think there's a similar kind of problem where there basically needs to be, as far as I see it, the one entity controlling that whose incentives are aligned, but controlling the total block size because partial costs are zero miners are going to include all transactions.

360
00:40:25,682 --> 00:40:32,481
And if block size is infinite, the transaction fee is going to go down to zero, basically.

361
00:40:34,199 --> 00:40:51,199
You mentioned a lot of interesting things there, Joe. It sounds like you're following the entire crypto space with a intelligent focus on the economics of the fee revenues to those involved in validating the blockchains.

362
00:40:51,199 --> 00:41:19,199
In my view, one of the amazing things about drivechain is that in the most optimistic scenario, drivechain leads to a return to 100% Bitcoin dominance. And people might say I'm a dreamer, but I'm not the only one. And if we had that return to 100% dominance, then all blockchain revenue in terms of transaction fees would be paid to Bitcoin miners.

363
00:41:19,199 --> 00:41:39,199
Right now, as I love to mention, one thing I learned from listening to Paul and reading his posts on truthcoin.info is there are about roughly 15 times more transaction fees paid to all blockchain than to Bitcoin.

364
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So if Bitcoin had 100% dominance, we could expect a much higher level of revenue to the miners from transaction fees. Now, of course, it wouldn't be exactly 15 times as much because when the world changes, a lot of things change. We can't just assume one variable alone would evolve.

365
00:41:57,199 --> 00:42:18,199
But I think there would be an astronomical gain to the revenue of Bitcoin miners if we had 100% dominance. And how do we do that? We have an economic incentive, right? Nothing motivates people quite like profit. People want to use a product that has a high value and a low cost. And that's what drivechain offers, I believe.

366
00:42:19,199 --> 00:42:44,199
It offers an infinite amount of software variety and features, potentially, to the Bitcoin developers and users. Whatever people would need on Bitcoin could be built on Bitcoin with low friction. So right now there's a lot of people who like big block Bitcoin, and they all left Bitcoin and went to Bitcoin Cash and BSV.

367
00:42:45,199 --> 00:43:01,199
Imagine if we could instead attract them back to BTC Bitcoin by having drivechains that have big blocks. And everyone could opt into that if they wanted to. And if they don't want to do that, they don't have to.

368
00:43:01,199 --> 00:43:23,199
They could instead use Layer 1 Bitcoin alone, or they could opt into a drivechain that has strong privacy, or they could opt into a drivechain that has Turing-complete smart contracts. And each of these drivechains is a sidechain. It's federated. I'm sorry, it's partitioned so that if it doesn't work out, no one's affected on the other drivechains and no one's affected on Layer 1.

369
00:43:24,199 --> 00:43:44,199
It's just an amazing system to have multiple blockchains, all as sidechains of Bitcoin, and each paying fees to Layer 1. It's a collaborative, synergistic, mutually beneficial arrangement, just like capitalism itself, where one person is running a restaurant, the other person is running a shoe store.

370
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And they're both paying into the same court system and police force so that they're sharing these common resources. So I see the future as one in which drivechains adopted, hopefully. And then there's all these different, amazing, interesting sidechains on Bitcoin that are very large, and they're all paying tons of fees to Layer 1 Bitcoin.

371
00:44:07,199 --> 00:44:22,199
So the whole privacy community might come back to Bitcoin and use the Z-side sidechain, which would be an extremely private, cutting-edge sidechain, very innovative, high-tech, offering the best possible privacy.

372
00:44:22,199 --> 00:44:39,199
And unlike the privacy altcoins of Monero and Zcash, this drivechain would have Bitcoin's indomitable hashrate security. So it's going to be a better product, and therefore people who really want the best possible thing will use the drivechain.

373
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There may be some loyalists who are like, oh, I just love Monero, I love Zcash, I want to use my altcoin forever. But what they're going to see is that there's this drivechain version that has the exact same software with a million times as much hashrate security. Not a million, but like a thousand times as much hashrate security.

374
00:44:59,199 --> 00:45:27,199
So it's going to be a much stronger product at the same price. So people are going to choose the better thing, right? So I feel like drivechain, once it's adopted, people will just flow over to it. The same way that people ditch their dollars and choose Bitcoin. The same mechanism. People want to have the best thing. People are very good at sniffing out, like when something's much better than something else, they just go for it.

375
00:45:27,199 --> 00:45:53,199
So what we're going to see is altcoins, one by one, migrating from their altcoin to their drivechain clone. And I think the communities that will come over first will be the privacy community. And then the big blockers who left Bitcoin years ago to have their own big block version, they'll come back to use big block drivechains.

376
00:45:54,199 --> 00:46:17,199
And those two communities together are worth a few billion dollars of value. So that'll send Bitcoin's price up and its dominance up as those altcoins devalue. And then eventually the Turing complete smart contracting platform of Ethereum, I think, could entirely migrate over to drivechain. And then we'll be at 100% dominance, more or less.

377
00:46:17,199 --> 00:46:35,199
It's a pretty exciting and dramatic vision. Like it's extremely dramatic. And when you really grok it, it becomes almost like emotional because there's all this contention and acrimony in the crypto world right now.

378
00:46:35,199 --> 00:46:57,199
As Paul likes to point out, there's this great blog post by Guern about protocol wars and how people have this very visceral opposition to each other when one group wants to use Bitcoin, the other group wants to use Ethereum, and whoever wins gets rich. So there's a lot of opposition in certain parts of economics where there's protocols that are competing.

379
00:46:57,199 --> 00:47:17,199
It creates a kind of opposition and emotional reaction that isn't present in other parts of economics. Like I wouldn't care what brand of toothbrush you use, but I might care what protocol you're using, because toothbrushes aren't a protocol, but blockchains are. Every blockchain is a protocol. And money moves to one, as the Maxis like to say.

380
00:47:17,199 --> 00:47:33,199
So whether they're Bitcoin Maxis or Ethereum Maxis, they all believe the same thing, which is that whoever becomes the biggest and the strongest will eventually be the only one left standing because money moves to one. So things converge because of network effects.

381
00:47:33,199 --> 00:48:01,199
And for these reasons, I think that if drivechain is adopted, while Bitcoin is still the market cap leader, I'm optimistic that it'll actually lead to a reversal of the recent trend of falling Bitcoin dominance. And Bitcoin dominance will climb back towards 100 and actually reach 100%. And the entire altcoin speculative mania bubble of the last 10 roughly years will be a thing of the past.

382
00:48:02,199 --> 00:48:17,199
Anyone's free to jump in here and tell me I'm crazy. I probably am. Also, if you're in the audience and you have a question, a comment or rant, please come on up. We've got 45 minutes left in today's episode.

383
00:48:17,199 --> 00:48:42,199
Please join us coming up to the stage. Otherwise, I'm gonna keep on going. That might be painful. Thanks for those who are doing the emojis of applause. Supertestnet, I really love your contributions to this space. If you're in a place where you can speak without too much noise, I'd welcome you to share your thoughts at length.

384
00:48:42,199 --> 00:49:09,199
And everyone listening now or whether you're following the recording, I want to remind you that in the nest right now is a tweet from Supertestnet from one day ago, in which he shares a link to a essay that he wrote an excellent essay in which he addresses frequent criticisms of drivechain, and he explains his view on why they are not correct.

385
00:49:13,199 --> 00:49:14,199
So everyone should take a look at that.

386
00:49:15,199 --> 00:49:19,199
I'm just finishing up lunch. I'll be able to speak in about another five minutes.

387
00:49:19,199 --> 00:49:28,199
Cool. So yeah, I enjoyed reading the essay. It's a great essay, and everyone should check it out.

388
00:49:28,199 --> 00:49:36,199
Other good resources are Fiatjaf's website. If you go to fiatjaf.com, F-I-A-T-J-A-F.com,

389
00:49:36,199 --> 00:49:42,199
click on Bitcoin, then click on Drivechain, you'll see Fiatjaf's essay in support of Drivechain.

390
00:49:42,199 --> 00:49:47,199
He is an emphatic supporter and a famous Bitcoiner who is the creator of Bitcoin.

391
00:49:48,199 --> 00:49:50,199
He is a supporter of Drivechain.

392
00:49:50,199 --> 00:49:58,199
Other people who speak very favorably about Drivechain include Blockstream's chief executive officer and co-founder, Dr. Adam Back.

393
00:49:58,199 --> 00:50:05,199
If you're listening, we love everything you say about Drivechain. Thank you so much for your favorable comments.

394
00:50:06,199 --> 00:50:30,199
Hey, so just before Supertestnet comes back, but, uh, and I'm curious to hear Paul's thoughts too on this, but, uh, I think a big problem with a lot of the people who oppose drivechain is that there's this equivocation over what kind of security might be threatened by it.

395
00:50:31,199 --> 00:50:44,199
And I think I mentioned this in the telegram, but I think it'd be really helpful if I can assign some writing to Paul to elaborate on this kind of topic.

396
00:50:45,199 --> 00:51:00,199
Like, um, like just for example, um, I've been saying for a while in the telegram and I've heard this expressed before, but, um, the block subsidy doesn't, you know, that could go up or down. It changes with the Bitcoin price all the time.

397
00:51:01,199 --> 00:51:09,199
Um, in the dollar amount, at least. Um, but it doesn't make miners less willing to censor your transactions. They get it anyway.

398
00:51:10,199 --> 00:51:16,199
So if it'd be nice, if there were some last word on Bitcoin security, that could be written.

399
00:51:17,199 --> 00:51:28,199
And I'm just curious if, uh, Paul had any thoughts about this or if you guys have any, you know, if anybody has any thoughts on this kind of thing, but I just think it would really clarify, help people understand.

400
00:51:28,199 --> 00:51:39,199
I mean, it's not right when somebody gets to say drivechain messes up miner incentives, but then never talk about what service the miners are providing and what specifically is interrupted.

401
00:51:41,199 --> 00:51:44,199
So, yeah, just curious if you guys have thoughts about that.

402
00:51:48,199 --> 00:51:51,199
Um, I could maybe address that or Paul, you can go for it.

403
00:51:52,199 --> 00:51:54,199
Well, I mean, I thought, I think you're right.

404
00:51:55,199 --> 00:52:06,199
People are talking about miners being affected, which puts me in a bind because of course I don't want to say something false, which is to say that they're completely unaffected at all in every way.

405
00:52:07,199 --> 00:52:16,199
But my defense is always that it's no different than inventing a new, more efficient type of ASIC or a new source of power or new whatever.

406
00:52:16,199 --> 00:52:21,199
So, I planned it out with that being the only effect, something that was already affecting everything.

407
00:52:22,199 --> 00:52:28,199
And that's something that the Supertestnet article from yesterday, I think, hits the nail on the head.

408
00:52:29,199 --> 00:52:34,199
Um, I don't know, I don't really remember the thrust of the question.

409
00:52:35,199 --> 00:52:48,199
I think he was saying it'd be good if you could respond to the criticism that the introduction of drivechain would diminish miner decentralization.

410
00:52:49,199 --> 00:52:52,199
And is that a fair rephrasing of it, Joe?

411
00:52:53,199 --> 00:52:59,199
Um, I think that's okay, but we can also try. Paul can respond to however he likes.

412
00:53:00,199 --> 00:53:05,199
But it's just, people talk about security, but there's a lot of types of security.

413
00:53:06,199 --> 00:53:11,199
Like, I would argue Bitcoin's decentralization provides some security to Bitcoin holders.

414
00:53:12,199 --> 00:53:15,199
And the transaction fee you pay provides security.

415
00:53:15,199 --> 00:53:25,199
And the subsidy, which miners get anyway, provides some kind of security because it increases the value of ASICs and the energy contracts that mining companies own.

416
00:53:26,199 --> 00:53:28,199
So it gives them some stake. But these are all different.

417
00:53:29,199 --> 00:53:36,199
So, I just think it'd be nice if Paul could write an essay about the last word on Bitcoin security or something.

418
00:53:37,199 --> 00:53:39,199
Or at least just push forward the discussion a little bit.

419
00:53:39,199 --> 00:53:44,199
Because it's frustrating to me when people just say security, and it's an equivocation.

420
00:53:45,199 --> 00:53:48,199
And I think there are different aspects to it.

421
00:53:49,199 --> 00:53:51,199
And I think it's a problem in the blockchain space in general.

422
00:53:56,199 --> 00:53:58,199
I mean, I think I agree. What was the question again?

423
00:53:59,199 --> 00:54:01,199
I didn't hear it again. I'm sorry.

424
00:54:02,199 --> 00:54:03,199
What is it?

425
00:54:04,199 --> 00:54:06,199
He said write an essay on security.

426
00:54:07,199 --> 00:54:11,199
Oh, yeah. Like, should there be a new last word on...

427
00:54:14,199 --> 00:54:17,199
I don't know. I see it very differently. Like, I wrote an essay on security.

428
00:54:18,199 --> 00:54:22,199
Oh, yeah. Like, should there be a new last word on...

429
00:54:25,199 --> 00:54:30,199
I don't know. I see it very differently. Like, I wrote my security budget posts. I wrote two of those.

430
00:54:31,199 --> 00:54:34,199
And then I wrote measuring decentralization, which is about the node costs.

431
00:54:35,199 --> 00:54:41,199
So I think between those, it does span everything, is my hope.

432
00:54:42,199 --> 00:54:48,199
I think in a way, it does. Maybe it requires too much reading between the lines.

433
00:54:49,199 --> 00:54:56,199
But I just think if the Bitcoin influencers on Twitter are talking about security,

434
00:54:57,199 --> 00:55:02,199
but not distinguishing between fees that miners get, which prevents double spends,

435
00:55:03,199 --> 00:55:05,199
and the subsidy, which doesn't prevent double spends,

436
00:55:06,199 --> 00:55:08,199
then I just think there's a lot more education that has to happen.

437
00:55:08,199 --> 00:55:10,199
And I could be wrong again, so I don't want to presume.

438
00:55:11,199 --> 00:55:12,199
I definitely agree.

439
00:55:13,199 --> 00:55:16,199
Well, I think one disappointing thing is in the second security budget post,

440
00:55:17,199 --> 00:55:21,199
I wrote about five... right at the beginning, I wrote about five misconceptions that people have.

441
00:55:22,199 --> 00:55:29,199
And 99% of the criticism of that post has just been people who obviously didn't read it at all.

442
00:55:30,199 --> 00:55:34,199
And they do one of the five that I preemptively said,

443
00:55:34,199 --> 00:55:39,199
preemptively warned the reader against making.

444
00:55:40,199 --> 00:55:41,199
But yeah, I agree. I don't know.

445
00:55:42,199 --> 00:55:47,199
It's very hard to handle the education question because people don't want to read.

446
00:55:48,199 --> 00:55:52,199
There are two kinds of security in Bitcoin, in my understanding.

447
00:55:53,199 --> 00:55:58,199
One is the security of the signatures, which refers to the cryptographic security.

448
00:55:58,199 --> 00:56:03,199
And that is asymmetrically secure, which is attractive from a cyberpunk perspective.

449
00:56:04,199 --> 00:56:05,199
We have asymmetric security.

450
00:56:06,199 --> 00:56:07,199
So it's extremely possible.

451
00:56:08,199 --> 00:56:14,199
It's extremely difficult, rather, to break the security of the signatures.

452
00:56:15,199 --> 00:56:18,199
Even if you have a supercomputer, it's probably impossible.

453
00:56:19,199 --> 00:56:25,199
But the other kind of security that is distinct from cryptographic security is economic security.

454
00:56:25,199 --> 00:56:32,199
Economic security is a balance of economic forces.

455
00:56:33,199 --> 00:56:39,199
Meaning, are there honest miners who are greater in hash rate than dishonest miners?

456
00:56:40,199 --> 00:56:43,199
And there's a tweet from Adam Back that's perfect on this topic.

457
00:56:44,199 --> 00:56:45,199
I'll try to find it and put it in the nest.

458
00:56:46,199 --> 00:56:53,199
But he basically says cryptographic security in Bitcoin is asymmetric, is asymmetrically strong.

459
00:56:53,199 --> 00:56:57,199
But transaction finality is unfortunately not.

460
00:56:58,199 --> 00:56:59,199
And he uses that word, unfortunately.

461
00:57:00,199 --> 00:57:01,199
And I thought that was interesting.

462
00:57:02,199 --> 00:57:03,199
It's a 2019 tweet.

463
00:57:04,199 --> 00:57:05,199
I'll find it and put it in the nest.

464
00:57:06,199 --> 00:57:07,199
But basically, those are the two kinds of security in my understanding.

465
00:57:08,199 --> 00:57:13,199
And the fact that there's two different definitions leads to some confusion sometimes.

466
00:57:14,199 --> 00:57:18,199
Just like with inflation, people are sometimes referring to monetary supply growth as inflation.

467
00:57:18,199 --> 00:57:24,199
And other people are referring to the nominal rise in the prices of an index.

468
00:57:25,199 --> 00:57:29,199
So it's confusing because you could have the money supply growing while the prices are falling.

469
00:57:30,199 --> 00:57:31,199
So is inflation occurring or not?

470
00:57:32,199 --> 00:57:33,199
It depends on which definition we're talking about.

471
00:57:34,199 --> 00:57:35,199
Same thing with Bitcoin security.

472
00:57:36,199 --> 00:57:38,199
Are we talking about the cryptographic security of the signatures?

473
00:57:39,199 --> 00:57:42,199
Or are we talking about the transaction finality of the transactions?

474
00:57:43,199 --> 00:57:47,199
They're entirely distinct subjects with the same word security used.

475
00:57:48,199 --> 00:57:58,199
Maybe, Paul, a good thing would be if your website could include a lexicon or an index post

476
00:57:59,199 --> 00:58:04,199
where you provide a very succinct, maybe three-sentence definition of key terms in Bitcoin

477
00:58:05,199 --> 00:58:08,199
and then a link to the article that you've written in the past,

478
00:58:09,199 --> 00:58:10,199
which discusses that topic at great length.

479
00:58:11,199 --> 00:58:14,199
Maybe that is the kind of thing that Joe would like to see.

480
00:58:15,199 --> 00:58:23,199
That way, people could read this article and enhance the clarity of their usage of terms in Bitcoin discourse.

481
00:58:24,199 --> 00:58:26,199
Like, basically, what is decentralization?

482
00:58:27,199 --> 00:58:31,199
Well, Paul, you have a famous post on that from 2015, measuring decentralization,

483
00:58:32,199 --> 00:58:41,199
where you crystallize the idea that decentralization is measured by the cost of the option to run a full node.

484
00:58:42,199 --> 00:58:46,199
So as Bitcoin full nodes get cheaper, decentralization increases.

485
00:58:47,199 --> 00:58:50,199
And you could maybe summarize that in a few sentences,

486
00:58:51,199 --> 00:58:54,199
along with a few sentence definitions for other key things like security.

487
00:59:00,199 --> 00:59:05,199
I have just another couple of things to throw out there on this topic.

488
00:59:06,199 --> 00:59:12,199
Like, for me, if my transaction is censored by the miners,

489
00:59:13,199 --> 00:59:20,199
if it's censored in total, so they've made my coins unspendable,

490
00:59:21,199 --> 00:59:24,199
that's like giving purchasing power to everybody else in some kind of long run.

491
00:59:25,199 --> 00:59:30,199
If they take my transaction and redirect it somehow to somebody else,

492
00:59:31,199 --> 00:59:33,199
it's a different kind of threat.

493
00:59:33,199 --> 00:59:37,199
If the miners inflate, that's a different kind of threat.

494
00:59:38,199 --> 00:59:39,199
It steals from everybody.

495
00:59:40,199 --> 00:59:46,199
But I would just like to see an enumeration of these kinds of threats,

496
00:59:47,199 --> 00:59:53,199
and how and why miners don't or do do this kind of thing.

497
00:59:54,199 --> 00:59:59,199
So another kind of hot take is, I don't think finality is really possible,

498
01:00:00,199 --> 01:00:02,199
because anybody can fork at any time.

499
01:00:03,199 --> 01:00:06,199
So I just think, I haven't seen an Ethereum community,

500
01:00:07,199 --> 01:00:09,199
I haven't seen it from smart Bitcoiners,

501
01:00:10,199 --> 01:00:13,199
I haven't seen these kinds of topics addressed very well.

502
01:00:14,199 --> 01:00:18,199
So I think it's kind of a research project a little bit.

503
01:00:19,199 --> 01:00:21,199
But yeah, just throwing that out there.

504
01:00:22,199 --> 01:00:24,199
Thank you. Thank you for those thoughts.

505
01:00:25,199 --> 01:00:30,199
Super, Testnet, are you ready to share your ideas?

506
01:00:32,318 --> 01:00:53,318
On Drivechain? It'd be maybe great for our listeners who don't have the ability to conveniently read your whole essay. If you would like to, you could talk about your view of Drivechain, maybe introduce your background just briefly and what your essay was about. What's on your mind regarding Drivechain these days?

507
01:00:54,318 --> 01:01:21,318
Sure. I'm Super Testnet, a Bitcoin developer, Lightning developer, and Muster developer. I work on a freelance basis. I've been programming since 2017. I've also held Bitcoin since 2017. And I love this stuff. Recently, since about the time, probably 2018 or so, I've read about Drivechain and thought they were cool.

508
01:01:22,318 --> 01:01:41,318
So I've been interested in that space for a while. But recently, some of my posts on the subject got the attention of Paul and Mike, or actually, I forget, what's your first name? Magrum?

509
01:01:42,318 --> 01:01:43,318
Henry.

510
01:01:43,318 --> 01:01:44,318
Henry, yeah.

511
01:01:45,318 --> 01:02:07,318
So yeah, they asked me to write an essay about objections to Drivechain, which I did, and put that on Stacker News. And it's gotten pretty good attention. I go over five objections. One of them is about what happens if this introduces new costs to miners, and then you get fewer miners as a result.

512
01:02:08,318 --> 01:02:21,318
I talk about the reverse problem. What if it brings too much revenue to miners? And then those who are doing Drivechain stuff get so much revenue that they outcompete all the other miners, and then we have a smaller pool of miners because the other ones just can't keep up.

513
01:02:22,318 --> 01:02:42,318
I talk about what about the problem with miners could steal. I forget what the other two things I cover in the essay are. But yeah, that's kind of, that's just answering some common questions I've heard from people about why they think Drivechains are bad, and telling them why I think that it's good. That's basically it.

514
01:02:42,318 --> 01:02:44,318
Awesome.

515
01:02:47,554 --> 01:02:52,374
One of the most interesting and complicated parts about Drivechain is the objections

516
01:02:52,374 --> 01:02:56,014
some people have, which we've touched on in this conversation a little bit.

517
01:02:56,354 --> 01:03:00,934
An objection that I think is erroneous, that some people have, which is that

518
01:03:00,934 --> 01:03:04,074
Drivechains will become so big

519
01:03:12,318 --> 01:03:38,318
The way in which this objection goes, as I understand it, is people say, well, although Drivechain includes blind merge mining, blind merge mining in which the miners don't have to have the full node of the sidechain, these people say that, well, the miners will be able to make a little bit extra money if they do run the sidechain nodes, the Drivechain nodes.

520
01:03:38,318 --> 01:04:00,318
And therefore, let's say there are 10 Drivechains in the future and each have a billion dollars of value and the fees on them are voluminous, that large miners will be able to run these 10 extra nodes aside from Bitcoin layer one, and they'll be able to make some extra profit because they're running those nodes. They're not blind to the Drivechain.

521
01:04:01,318 --> 01:04:16,318
And because of this, they'll be more competitive, and this will make them have a higher amount of the hash rate than they otherwise would, because they're getting more revenue, and therefore they're able to invest more and be more profitable and larger in terms of hash rate.

522
01:04:17,318 --> 01:04:38,318
So this objection that I think is erroneous holds that there won't be much blind merge mining by these larger miners, and therefore there'll be less people mining at home because the home miner will be unable to, at the margin, run the sidechain nodes.

523
01:04:39,318 --> 01:05:03,318
So the objection, which I think is erroneous, holds that because of Drivechain, there will be an undue influence causing less small mining, and there'll be more large mining, which the critics would call a reduction in miner decentralization, or as some people would rather refer to it as an increase in the concentration within the mining industry.

524
01:05:04,318 --> 01:05:23,318
Now, the reason why this objection is erroneous, as I understand, is that the miners are doing thousands of things to be as efficient and profitable as possible, such as creating companies and raising money and doing economies of scale as much as possible.

525
01:05:24,318 --> 01:05:50,318
So there are some miners who have tons of hash rate, and they're locating their operations in places that have the best possible temperature and lowest cost of electricity, and in some cases even electricity that might even at times be negative in cost because some large power plant needs to get rid of electricity and give it to someone so they can send it to the Bitcoin mining operation so that the power station can be running at a high rate all the time.

526
01:05:51,318 --> 01:05:57,318
So this load balancing or grid balancing activity, which isn't available to the home miner, is available to the industrial operator.

527
01:05:58,318 --> 01:06:17,318
So there are a thousand and one things that are causing greater concentration in the mining market, and only one of them, or rather one of them, is involving running some nodes, which would, as far as I can tell, which would mean like a few extra laptops at the mining operation that are running these nodes.

528
01:06:18,318 --> 01:06:28,318
So what the objectors have is an irrational, arbitrary prejudice against profitable software.

529
01:06:29,318 --> 01:06:42,318
In other words, they're saying that, well, if miners do locating of their operations, if they locate their operations in places with cheap energy, good temperature, etc., that's fine.

530
01:06:43,318 --> 01:06:50,318
We don't care about that, even though that's not available to the home miners to move to Norway, unless they're already there.

531
01:06:51,318 --> 01:06:56,318
But these objectors say that's OK, cheap energy is OK, forming a company is OK.

532
01:06:57,318 --> 01:06:59,318
Even Satoshi said in the future there'll be large server farms.

533
01:07:00,318 --> 01:07:01,318
He used the phrase server farms.

534
01:07:01,318 --> 01:07:02,318
He wasn't talking about home miners.

535
01:07:03,318 --> 01:07:10,318
He talked about ordinary users being distinct from industrial players in the mining space, which he called network nodes.

536
01:07:11,318 --> 01:07:22,318
But these objectors today who don't care for drivechain, they have concocted, and I think in some cases they sincerely believe, that it would lead to greater concentration in the mining sector.

537
01:07:22,318 --> 01:07:34,318
But their problem, in my view, is that they have an irrational prejudice against productive software being used for the profit of miners as the miners attempt to compete as much as possible.

538
01:07:34,318 --> 01:07:39,318
It's fine if they run some extra software to do merged mining more profitably.

539
01:07:40,318 --> 01:08:00,318
And the fact that this increases costs for home miners is an arbitrary point, because the same people making this point do not object to miners doing grid balancing, to miners locating in places that have stranded energy, to miners doing flare gas energy harvesting, or any of the thousands and one things that miners are doing.

540
01:08:01,318 --> 01:08:06,318
There's this one arbitrary objection to productive software in the case of merged mining.

541
01:08:07,318 --> 01:08:08,318
So that's my understanding.

542
01:08:09,318 --> 01:08:11,318
I would love to hear from Paul or Super.

543
01:08:12,318 --> 01:08:19,318
Do you have a view on this that's different from mine or that you would say it differently?

544
01:08:20,318 --> 01:08:42,318
Yesterday I talked to a gentleman who argued that, or I hate saying what other people argued, because I always feel that I'm going to mess it up, but that what they actually said got changed when it entered my head, and then now it's not the same anymore than what they said.

545
01:08:43,318 --> 01:08:53,318
What would you say if someone said, the problem with merged mining sidechains is that you don't have to do any work.

546
01:08:54,318 --> 01:08:58,318
You're not actually doing any work and you are getting revenue without doing any work.

547
01:08:59,318 --> 01:09:08,318
You don't have to validate the sidechain because the guys on the sidechain are doing that and they're just paying you to include their transactions in their whatever.

548
01:09:09,318 --> 01:09:18,318
Or maybe you're just part of a pool and you're not validating anything, like the pool is running a node that validates.

549
01:09:19,318 --> 01:09:23,318
There's just all these ways to escape having to do the work, but still accrue the revenue.

550
01:09:24,318 --> 01:09:32,318
And that's just not it. The idea of gain without work, gain without effort, is just a bad thing.

551
01:09:33,318 --> 01:09:36,318
What do you think of that objection to this all?

552
01:09:36,318 --> 01:09:42,318
I think that mindset, that whole framework of ideas is anti-capitalistic.

553
01:09:43,318 --> 01:09:55,318
It is the same framework of ideas that leads some people to say that Bitcoin is unethical and unproductive, and that those who have held it and achieved a real return from holding it haven't contributed anything to society.

554
01:09:56,318 --> 01:10:07,318
That view is wrong because it misunderstands the process of wealth creation that arises from the competitive entrepreneurial marketplace.

555
01:10:08,318 --> 01:10:21,318
If a Bitcoin miner does something that is in consensus that increases that miner's profit in a manner that is not malfeasant mining, that is okay.

556
01:10:21,318 --> 01:10:31,318
And that's how capitalism works. If the Bitcoin miner moves from America to Norway for cheaper energy and lower temperatures, that's fine.

557
01:10:32,318 --> 01:10:41,318
That's not unethical or problematic. Similarly, if a Bitcoin miner engages in merged mining, that's not problematic. That's capitalism.

558
01:10:42,318 --> 01:11:00,318
And therefore, it's not surprising to me that Satoshi Nakamoto himself explicitly countenanced merged mining and said that it would increase the strength of the network and that in the future, every network in the world would be merge-mined with Bitcoin.

559
01:11:01,318 --> 01:11:23,318
I view that sentence as extremely harmonious with the vision of drivechain, and it's really astonishing that some people would say that merged mining is a problem in Bitcoin when it's been around since the very beginning of Bitcoin.

560
01:11:23,318 --> 01:11:37,318
It's been around since August of 2010 when Satoshi was commenting on BitDNS and basically helping to architect that project, which has existed until today under different names, Namecoin, etc.

561
01:11:38,318 --> 01:11:48,318
And so these people are saying that merged mining is a problem, even though it's always been around. It's been around for an entire decade. No one's ever said it's created a problem.

562
01:11:48,318 --> 01:12:00,318
If anything, it's just paid more revenue to the Bitcoin miners, helping to fund security in the future as the Coinbase has, and it has kept people within the Bitcoin system.

563
01:12:01,318 --> 01:12:09,318
People who are doing RSK and people who are doing other merged mine sidechains have remained on top of Bitcoin rather than doing altcoins.

564
01:12:10,318 --> 01:12:21,318
I think it's just people, they don't have a very strong grasp of the issues. So they think like it's you're getting something for nothing and they think there must be a catch there.

565
01:12:22,318 --> 01:12:29,318
And people don't have it organized the right way. The right way is the node costs. That's the important thing for the end user.

566
01:12:30,318 --> 01:12:37,318
We want the node costs to be low, and we actually want the cost of finding a block to be high. That's the security budget.

567
01:12:38,318 --> 01:12:47,318
So it's weird because those two things are kind of opposites, but if you just have it straightened out, then it's a lot less mysterious.

568
01:12:47,318 --> 01:12:55,318
Why merged mining means more revenues for miners, and it doesn't change the node costs at all.

569
01:12:56,318 --> 01:13:05,318
And sidechains mean the sidechain nodes are optional. So if you want the feature, you pay the node cost. If you don't want the feature, then you don't pay.

570
01:13:06,318 --> 01:13:15,318
And I think people just, you know, it just triggers people's suspicions. They just think, well, how are we getting something for nothing?

571
01:13:16,318 --> 01:13:23,318
Doesn't someone have to do the work? And the answer is yes. But people are just skeptical. They just don't believe that it all works out.

572
01:13:24,318 --> 01:13:26,318
Which, you know, good for them.

573
01:13:27,318 --> 01:13:37,318
Well, we're getting close to the end of our space. We'll end at 11 o'clock Pacific, which is in 15 minutes. Thank you, everyone, for being here.

574
01:13:38,318 --> 01:13:48,318
We're going to talk for until the end of the hour, so another 15 minutes, but I wanted to take a moment to say that there are a number of ways you can get more involved in this exciting project of Drivechain.

575
01:13:49,318 --> 01:14:01,318
One of them is going to the Drivechain Talk Telegram group, where everyone talks about Drivechain all the time. 24-7, 365. Drivechain, Drivechain, Drivechain. I can't get enough.

576
01:14:02,318 --> 01:14:08,318
I'm in there all the time, reading what others are saying, and it's the coolest place in the entire world.

577
01:14:09,318 --> 01:14:15,318
That tweet bot is super addicting. I just find myself going in there to see who I can argue with online, find out who's wrong on the internet.

578
01:14:16,318 --> 01:14:27,318
Yeah, so what Super is talking about there is there are different topics within the Drivechain group on Telegram, and each topic has a different purpose.

579
01:14:28,318 --> 01:14:42,318
So one of the topics is general chat. Another topic is off topic. And then another topic is the Drivechain tweet bot, which just, it's a topic, it's a thread in which all it is, it's just a bot tweeting every tweet on Drivechain.

580
01:14:42,318 --> 01:14:49,318
So you can look into that topic and see what's going on on Twitter. It's just a convenient tool.

581
01:14:50,318 --> 01:14:58,318
So everyone can join that. It has hundreds of members. It has almost 1,000 people in it. Everyone should join who's listening and write your questions in there, get involved.

582
01:14:59,318 --> 01:15:12,318
Also, if you go to a local club for Bitcoin, then reach out to me, if you'd like, or anyone for links and resources that you can use to share, if you'd like, ideas about Drivechain.

583
01:15:13,318 --> 01:15:25,318
The main website is drivechain.info. But another great one is the Fiatjaf website that I mentioned earlier, fiatjaf.com. Go to click on Bitcoin, then click on Drivechain to see his website.

584
01:15:25,318 --> 01:15:45,318
There's also two outstanding posts by John Light of Sovereign, who's here in the audience. And if you go to his website, which is light, L-I-G-H-T-C-O dot I-N. So that's L-I-G-H-T-C-O dot I-N.

585
01:15:46,318 --> 01:15:52,318
Go to that website, go to his blog within that website, and then you'll see two posts on Drivechain.

586
01:15:52,318 --> 01:16:21,318
These are very sophisticated posts for advanced learners interested in Drivechain about the viability of Drivechain's economic design from a perspective involving sophisticated questions related to miner incentives and a compare and contrast on the differences between rollups and Drivechain and things like that.

587
01:16:22,318 --> 01:16:25,318
So that's a great resource. Super, go ahead.

588
01:16:26,318 --> 01:16:34,318
Yeah, one of the things that I would like to promote is the use of workshops as an educational tool about Drivechains.

589
01:16:35,318 --> 01:16:46,318
When I was in Austin, Texas, we had these workshops that we did every week where we would bring in a local Bitcoin developer to show us what he was working on or how to do something in programming.

590
01:16:47,318 --> 01:17:01,318
And one thing we haven't done there and that I'd like to start doing all over the country is Drivechain workshops, where if you have a Bitcoin meetup and you'd like to have a developer come and talk to your meetup about, let's try out Drivechain.

591
01:17:02,318 --> 01:17:08,318
Let's get it installed and then install zside and see what it looks like to move your coins to and from a sidechain.

592
01:17:09,318 --> 01:17:12,318
I would love to do that. I would love to come to your meetup and do that.

593
01:17:13,318 --> 01:17:20,318
So if anyone thinks that sounds cool and you have a meetup or you know of one where the people would be interested in trying out this cool software, I think that'd be great.

594
01:17:21,318 --> 01:17:25,318
And it would get people trying it out and then interested in asking questions. So yeah, there's that.

595
01:17:26,318 --> 01:17:41,318
And then also, Paul, if you're still here and listening, yesterday I finished an essay on a proposal I made about a way to do something that's kind of, sort of BIP300-ish-y without a soft fork.

596
01:17:42,318 --> 01:17:46,318
And I'm looking for feedback on that. I asked Ruben Somsen about it and he liked it.

597
01:17:47,318 --> 01:17:52,318
If you could take a look at it at any time and then let me know what you think, that'd be great.

598
01:17:53,318 --> 01:17:56,318
Yeah, it was very interesting.

599
01:17:59,318 --> 01:18:00,318
Thank you.

600
01:18:10,318 --> 01:18:16,318
And my DMs on Twitter are open if anyone does have a meetup where they'd like to, you know, bring Drivechain to your meetup.

601
01:18:17,318 --> 01:18:24,318
Awesome. Super, TestNet. We love that you're here. I think you're a great resource to the Bitcoin community.

602
01:18:25,318 --> 01:18:36,318
You explain ideas very clearly. And, you know, as I've gotten interested in you, I mentioned you to other people like who I chat with in CafeBitcoin and they're like, oh, yeah, he's great.

603
01:18:37,318 --> 01:18:43,318
So I'm learning that you're well-known and appreciated across different circles.

604
01:18:43,318 --> 01:18:50,318
So thanks for taking time out of your day. I'm sure you're very busy to be here. Thanks for writing your essay on Drivechain.

605
01:18:51,318 --> 01:18:57,318
I have put in the nest for our listeners a list of links.

606
01:18:58,318 --> 01:19:06,318
So if you go to the nest, click there. There's a tweet that has project website, Drivechain.info, videos on Drivechain.

607
01:19:07,318 --> 01:19:18,318
There are many of them that have been created by the Drivechain BIP co-author, Paul Sztorc, and his YouTube channel has like 50 videos.

608
01:19:19,318 --> 01:19:27,318
Some of them are very advanced. So if you're interested in complex ideas about how sidechains work, you'll find plenty of content on that YouTube channel.

609
01:19:27,318 --> 01:19:37,318
If you're a programmer, check out the Drivechain GitHub repository. And if you want to read some very easy to read stuff, check out the fan pages.

610
01:19:38,318 --> 01:19:43,318
The fan pages are very useful. They're listed in that tweet. Lots of good stuff to read.

611
01:19:44,318 --> 01:19:50,318
And I totally echo what Super said. The best way to learn about Bitcoin is to get involved in the community.

612
01:19:51,318 --> 01:19:55,318
And that means the local people in your town or city who are interested in Bitcoin.

613
01:19:56,318 --> 01:20:04,318
You can go there. You can talk about Drivechain with them, hear their views, and then share what they think here or bring them here to join us in these spaces.

614
01:20:05,318 --> 01:20:14,318
We run twice a week, every Monday, 9.30am on Mondays and Thursdays. And that's 12.30pm Pacific.

615
01:20:15,318 --> 01:20:20,318
We're going to be hosting them under the LayerTwo Labs handle, which I'm using right now.

616
01:20:21,318 --> 01:20:31,318
And so if you can give me a follow here at LayerTwo Labs on Twitter, you'll be attuned to future spaces if you're interested. I hope you've enjoyed it.

617
01:20:32,318 --> 01:20:36,318
I guess we'll wrap unless we have final thoughts to share, and I'll see everyone again on Thursday.

618
01:20:37,318 --> 01:20:50,318
These are recorded spaces, so you can listen on demand. And we're working on making a RSS feed for a podcast so people can get it on Spotify and Apple and whatnot.

619
01:20:51,318 --> 01:20:53,318
Any final thoughts from our stage?

620
01:20:54,318 --> 01:21:00,318
I guess I had billed this Drivechain episode as one that was going to be about the actual Drivechains.

621
01:21:01,318 --> 01:21:19,318
People have been telling me, hey, Henry, why are you talking about Drivechain architecture when you could be talking about the actual specific sidechains that would be created, like Thunder and zSide and ethSide, BitAssets, BitNames.

622
01:21:20,318 --> 01:21:25,318
So next time, I think we could get into those, and that would be exciting.

623
01:21:29,318 --> 01:21:30,318
Sounds great.

624
01:21:31,318 --> 01:21:34,318
Cool. All right. Thanks, everyone. Catch you on Thursday.