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Welcome to Drivechain Twitter Spaces.

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This is Henry of LayerTwo Labs.

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Everyone is welcome to raise your hand and come up to the stage to ask a question or share a comment.

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Today is Monday, March 27th.

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We've had another exciting week of Drivechain discourse on Twitter.

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Great conversations in the Drivechain Telegram group.

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Over 700 people are in the Drivechain Telegram group.

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Many of them observe and others write and chat about Drivechain and related topics.

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There's a number of different topics people talk about,

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including...

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Oh, welcome to the stage.

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Good evening.

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Good evening, yes.

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Wow, we are so early in this.

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So, what brings you here today?

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No, nothing. I see the title and that is up my alley.

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Very interested in these things.

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Cool.

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So, you're in a part of the world where it's evening?

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Yeah.

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Are you in Switzerland?

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Where are you?

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Southeast Asia, Bangkok, actually.

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All right.

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I just saw The Hangover Part 2, so I'm familiar with Bangkok.

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That's great.

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It looks like, just a little bit off-topic, but everyone is probably in those other countries.

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It looks like, just a little bit off-topic, but everyone is probably in those other Twitter spaces where people are talking about Binance and all that bullshit.

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Yeah, there's a lot of news that occurs in crypto and people are very interested in the day-to-day news.

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For me personally, I used to be like that, so I understand and I sympathize.

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I used to follow the day-to-day crypto news, the latest headline, but then I discovered Drivechain.

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And ever since then, I've understood that this upgrade could be transformative for Bitcoin and would potentially eclipse all the news of the last few years in importance.

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Because if Drivechain is adopted on the Bitcoin network, and if it is very successful, that would mean, potentially, that a large amount of technology that's so far been only available on altcoins would become available in a peer-to-peer arrangement on Bitcoin.

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And that might bring a lot of the users, developers, and value from the altcoins to Bitcoin.

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And there also are some technologies that have never been built because of the lack of Drivechain.

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For example, HiveMind. HiveMind is the sidechain developed by Paul Sztorc, one of the co-authors of the Drivechain Bips, and he's never launched HiveMind.

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Yeah, that's BIP300, right?

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Yeah, BIP300 and BIP301. Those are the two. Drivechain refers to those two BIPs, and Drivechains refers to the sidechains that would be enabled through Drivechain adoption.

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So, as I was saying, there's a huge amount of growth, innovation, and exciting progress that could be achieved for Bitcoin, potentially, through this upgrade. So much more important than everything else that's going on, I think, out there.

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I agree. I could not agree more.

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On that note, leading up to Drivechains, and something that we already have had for quite some time, the Liquid Network.

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Just as an example, I could never store USDT on any other chain besides Liquid, because the rest of them are just not secure. Liquid's interesting, and I believe, and I can begin to imagine that Drivechains would be ever more interesting.

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Yeah, the Liquid Network is great. It's an achievement of Blockstream and a number of other collaborators who are serving in different roles.

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So, there's a bunch of members of Liquid Network, and then there is the functionaries who operate the security model of Liquid, which is a federation with 15 participants.

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Liquid is not merged-mined, so in that way it's different from Drivechains, and it's different from federated, merged-mined sidechains like Rootstock.

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So, I think Liquid is great for a few reasons. Well, for one, I think Adam Back does a really great job running Blockstream, and he is an advocate for Drivechain.

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So, he's said a whole number of different times in the last few years that Drivechain is pretty cool, and it could have been even more useful and important than Taproot.

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And because he's involved in Liquid and Drivechain in those ways I just described, through his comments and activities, I think he does a great job of bringing these projects into alignment.

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So, Liquid is a sidechain. Drivechain is an upgrade which would strengthen all of the work that everyone's doing related to sidechains, because it would make sidechains more prominent and important for Bitcoin's future, which I think is essential.

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So, some Drivechain supporters don't think it's essential, but I think it is essential because we want Bitcoin to become multi-chain, so multiple blockchains, and we want all of those blockchains to be designed in a way that accrues value to Bitcoin, the token, and Bitcoin's block space.

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So, that's what Drivechain is all about. It's the idea that we should have a whole bunch of sidechains on Bitcoin, meaning blockchains where the native asset of the sidechain is a synthetic Bitcoin that's redeemable for Bitcoin, and that is issued only in proportion to the collection of actual Layer 1 Bitcoin in the hashrate escrow of the sidechain.

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And then the transaction fees paid on the sidechain are almost entirely paid to Bitcoin Layer 1 miners. So, this boosts Bitcoin's security budget in exactly the way that Satoshi himself, for what it's worth, envisioned and supported.

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He supported there being a multitude of blockchains that are merged-mined with Bitcoin. In fact, he wanted every single blockchain ever created to be a merged-mined Bitcoin blockchain, meaning a blockchain that's merged-mined, where the transaction fees are paid to Bitcoin miners.

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Now, I should concede that when he was speaking about that, he thought they would be altcoins that are merged-mined. So, he was referring to BitDNS, which later became known as Namecoin. So, he had in mind a merged-mined altcoin, where the native token has a value that has a freely floating exchange rate with Bitcoin's token, BTC.

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However, the Drivechain vision is an improvement upon that. So, Drivechain envisions that all of these multitudinous blockchains that are merged-mined with Bitcoin would not be altcoin blockchains with a free floating native token. Instead, they would be sidechains.

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So, the main difference there is that instead of there being an altcoin that has its own value separate from BTC, instead, there's a synthetic Bitcoin on the sidechain.

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This is good for everyone involved because you have no money issuance. The 21 million cap stays the same because the only way you generate tokens on the sidechain is by locking up Bitcoin on the mainchain.

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Right, right. So, similar in the multi-sig peg-in, peg-out of Liquid in that sense, right?

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Yes.

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Alright.

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Yeah.

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So, this would be a BIP. Excuse my ignorance, but this would be a BIP which would have to be adopted in the source code, right? In core.

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Yes.

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Alright.

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Yeah, there are two BIPs. BIP300 and BIP301. And what would be necessary is for the community to be so interested in Drivechain that there is apparent consensus.

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For example, right now there are a number of people who support it, but there are some who are vocally opposed.

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If the majority of people, or even a super majority of people in Bitcoin who are public intellectuals, were saying, we all want Drivechain, let's do it, then people would say there is consensus, let's go forward.

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And then the maintainers of Bitcoin Core, who are right now five or so people, four or five, they would feel comfortable merging the code into Bitcoin Core and then everyone would upgrade their nodes on the same day.

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And then there would be the adoption of a soft fork as there was with Taproot and SegWit. SegWit 2017, Taproot 2021, Drivechain 2023 or 2024.

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If we had consensus right now, then it would take maybe a few months or more to get ready to go forward.

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So in the best possible case, which I'm optimistic about, we could see in the next few months a substantial acknowledgement throughout the community that Drivechain is the way to go.

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And then I think it would take maybe half a year to sort of plan and get ready.

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And lots of people would come over the code, maybe find a few things to tweak and optimize, dot the I's, cross the T's.

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And then maybe in 12 months from now we could have activation day or that sort of thing.

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And there would be, you know, in the time between now and then, you know, lots of use of testnet, signet, that sort of thing to like, you know, iron everything out beforehand.

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And I think that what would be necessary for us to achieve that kind of adoption and progress would be that some of the more influential Bitcoiners out there, it would be very helpful if they would come forward and express clear support for this.

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So right now we have a lot of support, but I would describe it in my personal opinion as about roughly half.

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So about roughly half of the very influential big names in Bitcoin are either favorable or neutral on Drivechain.

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And I would say roughly half of the others are either unsure, negative or have never expressed an opinion.

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So it's an idea which is on its way towards consensus.

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And it's been seven years.

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And in the last 12 months, there's been what some have described as a significant uptick in interest and understanding.

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So it's moved from sort of the fringe to sort of the forefront.

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But now it's at the beginning of its sort of wide.

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Because, like, for example, one key issue is that, you know, the supporters who are vocal and public about it.

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In the recent year, you know, Adam Back joined that group where, you know, every couple of months he puts out like a statement on stage at a conference saying that he supports.

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He thinks Drivechain is pretty cool.

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You know, and then things like that.

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So there's a bunch of people who are vocal like that, who have in the last year kind of come forward.

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I made a list of them.

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If you go to Drivechain.info forward slash friends.

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So that's Drivechain.info forward slash friends.

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You can see a list I made that has his statements and the statements of others.

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So we have a lot of really key supporters like Adam Back, Fiatjaf, the creator of Nostr.

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He's one of the most famous people in crypto now because he created Nostr, which is so popular.

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And I think he was the sole author of that project.

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Although I've also heard people say that...

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Yeah, and then there's others.

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Yeah, if I may ask, do I remember correctly that Adam and Paul were talking about this last time at Honeybadger, right?

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Yeah, that's right.

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Yeah.

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And then on to just something which, you know, not so much about the process of consensus, but more on what is possible on a drivechain.

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Could I...

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Could we have...

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Okay, so we could have stable coins.

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We could have asset issuance, tokenized securities, limit orders.

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All of those things, right?

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You can have literally anything.

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Anything, okay.

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Right. There's an unlimited amount of expressive, programmable extensibility that's possible for a drivechain.

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I believe it's infinite.

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Now, I think that there are certain sort of basic assumptions that attend the drivechain inspiration, the design.

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Like, for example, if a person has swallowed the ESG narrative and thinks that proof of work is evil, then probably they're not a good candidate for drivechain, you know, support.

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Because they're going to be on some altcoin that is, you know, purporting to be energy efficient and entirely software based with no mining.

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So they're going to be over there doing Tezos or Ethereum or something.

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But if a person wants the smart contracting of Ethereum, for example, then 100% of that Ethereum smart contracting capability.

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So basically everything going on in Ethereum can be done as a drivechain.

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I believe that's something that the designers and other people would say.

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Same thing with Zcash, very sophisticated privacy technology.

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You could have a drivechain that does that.

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So the word that I've heard the designers speak of is cloning.

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So we can clone the software of an altcoin into a drivechain.

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And therefore what you get is the ability.

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This is my personal interpretation is that the essential gain there is you develop an implementation of that software that is economically harmonious with Bitcoin.

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Meaning that all demand for that sidechain flows into Bitcoin's value as well as Bitcoin's fees.

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So you get, you're basically taking the altcoin community, trying to migrate them into an arrangement which is the same experience for them or better.

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And it's accruing value to Bitcoin and Bitcoin's block space.

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So Bitcoin goes up and Bitcoin's miners get more revenue.

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And bringing the altcoiners over isn't even really the main idea.

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It's more about making Bitcoiners have more options and capabilities.

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So there's a lot of Bitcoiners right now who are just hodling.

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But if drivechain is created, simply hodling will no longer be the main thing you do with your Bitcoin.

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You can send your Bitcoin into a sidechain and do cool stuff.

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So instead of Bitcoin just being digital gold, Bitcoin would have hive mind, the prediction market where people can bet on an unlimited number of interesting events in the future and then make money.

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And there's a peer to peer Oracle network which overcomes the Oracle problem.

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And it's unstoppable and permissionless and might even improve society by enabling markets to signal what would happen if certain politicians were elected.

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What would the effect be on employment, on prosperity, on war?

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So this prediction market could have benefits to society by existing.

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And there's greater privacy that's possible for Bitcoiners when they are using the latest technology on Monero or Zcash.

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So those altcoins could be cloned into drivechains, enabling Bitcoiners to have greater privacy, which is part of the ethos of Bitcoin.

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It's the cypherpunk anonymous private benefits.

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And it also benefits Bitcoin main chain because when Bitcoiners have these sidechains, it enables a live testing ground for value to be at risk in very cutting edge technology on Bitcoin.

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And over time, as those drivechains grow and as Bitcoiners become more comfortable in understanding them and using them, this can accelerate and improve the process by which layer one is improved.

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So once drivechain is adopted, probably never again would there be a change to layer one that isn't first tested in a drivechain.

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So drivechain fundamentally enhances the process by which Bitcoin layer one is upgraded.

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Public intellectuals deliberate on Twitter and Reddit about and back rooms at conferences about

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which upgrade is good. Instead, each upgrade can be tested in a drivechain with billions of dollars

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at risk. And if it's successful and sustainable and stable, then everyone will say, hey, look,

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this drivechain is working so well. Let's bring that technology down to layer one.

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So anyone who wants there to be certain changes made to layer one might advocate for drivechain

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and then use the drivechain that they like. And then it would help demonstrate its operation

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and viability as a layer one potential upgrade. So drivechain is an upgrade for upgrades. It

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upgrades the entire process by which Bitcoin changes. Things like taproot might have come

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faster to Bitcoin if drivechain had been adopted. Maybe taproot wouldn't have taken as long as it

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did. And in addition, maybe the issues like ordinals and inscriptions that taproot enabled,

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whether unwittingly or intentionally, those things might have been more understood in advance

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before taproot activation on layer one occurred had it been first tested in a drivechain

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with real money at stake. So in summary, drivechain improves the upgrade consensus problem

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by enhancing the process by which changes are made to layer one. Instead of it being purely

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deliberative, it would become competitive. In other words, people would look at the different

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sidechains on Bitcoin, the different drivechains, and say, hey, look, this one's

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10 times larger than that one. And therefore, it appears that people want this upgrade more

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than that one. And then they can use that information to help them think about

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which changes should be made to layer one, if any.

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That makes sense. It has an added benefit. It offers a perfect testing ground

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and its merged mind. And it helps with what you mentioned earlier about the security model,

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which plays out far into the future. Question. So if BIP-30301 is passed through

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and then drivechains are activated,

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how do you see the drivechain, let's call it, yeah, so the ecosystems that get built up

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on the drivechains, how do you vision it or imagine it or picture it in a couple of years,

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let's say three years after BIP-30301? Would you see a couple of drivechains

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with different teams building on each one, for example? Maybe different chains have got different

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added functionalities in, let's call it, I mean, you said like anything is possible. So

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maybe that drivechain would have much more, like they'll be focusing on inscriptions.

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Another drivechain would be focusing on maybe limit orders and on-chain derivatives and

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things like that. So would you see different drivechains with different people building

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different things and kind of just going at it all simultaneously?

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Yeah, there would be a number of very interesting developments once drivechain is adopted.

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People would be very excited to see which sidechains are launched and how they do.

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The process by which sidechains are launched is articulated in the BIPs and the miners are

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are playing an important role in that process. So there wouldn't be a thousand new sidechains

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launched the day of drivechain activation, unlike the way that things are launched in Ethereum.

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In drivechain, the community and the miners have a say and the number of drivechains would be

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not extremely high at first. There would probably be, in the months after drivechain activation,

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a number of drivechains launched. Some of them are written at drivechain.info. If you click on

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drivechain.info and then click on sidechain projects, there's a list of six or ten or more

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or more drivechains that are envisioned. Some of the basic ones that will make a lot of sense to

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a lot of people without much explanation are a privacy drivechain, a big block drivechain,

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so that's more or less roughly described as a clone of Bitcoin but with larger blocks.

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And that way there can be a ton more transactions with much lower fees,

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so instead of one or two dollars per transaction it might be less than a penny.

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And this enables people to opt in to scalability and lower decentralization. And on the privacy

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drivechain they can opt in to higher fungibility and lower auditability. If I'm not mistaken,

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I think auditability would be the thing which is on the other side of the trade-off when you get

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higher privacy. It tends to lead to a lower degree of a certain dimension of stability or auditability.

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So the key here is that you're opting in to trade-offs, so Bitcoiners would have more options,

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kind of like going into a store that all of a sudden has more products to buy. You don't have

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to buy any of them, but you have more options, so you're benefited that way. So Bitcoiners would

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get scalability on the big blocks, they would get privacy with the Zcash technology, and there'd be

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others that are really exciting like BitNames, which is a DNS-focused sidechain. In fact,

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that was one of the ideas for blockchain applications other than money that Satoshi

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himself thought was cool. He wrote favorably about DNS on blockchain, giving you a self-sovereign

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property right over the website domain technology. So that's a cool idea that never has taken off

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as big as it might if it's on Bitcoin. It might be very popular and successful that way,

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altering the course of social media and website domains forever. There's also BitAssets. That's

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one of the planned drivechains, which would be focused on NFTs and related things. So a lot of

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this Ordinals stuff, inscriptions, NFTs, there's a lot of fees and value that go into those markets,

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which ideally would be on top of Bitcoin. In fact, Bitcoin was the original place for such things.

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So it would be great to develop Bitcoin's technological capabilities to include

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a sidechain that is oriented towards facilitating those kinds of markets,

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making sure Bitcoin gets that value instead of altcoins.

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And there's more. There's, of course, the HiveMind

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drivechain, which is a peer-to-peer Oracle network.

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So it would be awesome to have each of these really cool cutting-edge things on a Bitcoin

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sidechain. Right now, every Bitcoin sidechain is federated. So if drivechain is adopted, then

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probably all of the Bitcoin sidechains, or most of them by value at least, will be peer-to-peer.

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So another question. A drivechain does not need that federated model

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because of it being directly merge-mined with the layer 1, right?

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The merge-mining is not part of the hashrate escrow. They're separate.

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So, of course, there are connections, but there are two different BIPs.

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The more important one is BIP300. And for that reason, people sometimes refer to drivechain as

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BIP300. But precisely, drivechain refers to BIP300 and BIP301. So BIP300 is hashrate escrows

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and BIP301 is blind merged mining. And they're two separate technologies.

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Now, of course, most drivechain supporters, probably 99% of them, are in favor of both.

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And most people who oppose drivechain are probably against both of these BIPs. So they tend to come

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as a package. But the designers separated them to enable the community to understand them distinctly

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because they are separate technologies. So the hashrate escrow is a miner-controlled two-way peg

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for Bitcoin to be sent to a sidechain and for the sidechain to issue a token. And then when the

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user is finished, then they want to get rid of their sidechain token, go back to layer 1 Bitcoin.

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That's what the hashrate escrow facilitates. So it's a two-way peg that's miner-controlled

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instead of federation-controlled. So because it's miner-controlled, it's peer-to-peer

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in my view. And a federation is not peer-to-peer in my view because in a federation,

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there are 15 people who control the federation. So if you want to become one of those people,

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they'd have to fire one and then give you the keys. So with a miner-controlled peg,

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anyone without social permission from anyone else can participate because anyone can mine.

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All you have to do is get some mining equipment. So it's more capitalistic. It's more dynamic.

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The set of parties who are participating in Bitcoin mining changes every day.

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Whereas the set of people who control the 15 sets of keys for a multi-sig, they might be

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fixed in nature. And the companies involved might not be changing dynamically as a result

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of market forces, the way that Bitcoin miners are highly dynamic as a set of parties. And they're

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global. And there's a ton of money at stake. And there's no elections involved. It's just

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the market for Bitcoin mining. So it's a superior system because it's peer-to-peer.

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Because Bitcoin is peer-to-peer and therefore Bitcoin mining is peer-to-peer.

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And therefore the hash rate escrow is peer-to-peer. And therefore drivechains are

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peer-to-peer. And this is why Adam Back refers to drivechains as peer-to-peer sidechains

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in distinction from federated sidechains. So his analysis is one I think is correct.

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I think he's totally correct. Drivechains are all about peer-to-peer sidechains.

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And the blind merge mining is an extra enhancement to the overall approach where BIP301 enables all

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the Bitcoin miners to receive a portion of the fees from the sidechains without necessarily

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running the sidechain nodes. So it makes it better for Bitcoin miners because they all get

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a chance to receive fees from these sidechains even if the miner doesn't run the node of the

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sidechain. Some of them might run the nodes because they choose to. Just like some Bitcoiners today

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run nodes even though they don't need to. So it makes the node running optional.

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And that way they don't have to necessarily run them.

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One more question and then I got to bounce. Sure. Your questions have been great.

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Thanks for elaborating. My question is, do you think drivechains will have any

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implications for Lightning?

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What I've heard from the drivechain thinkers and writers is that there could be a great

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harmony between Lightning and drivechain because there could be a sidechain where Lightning is

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conducted at a great scale. There could be a sidechain that is designed specifically to

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facilitate Lightning transactions. So the big block scaling sidechain called Funder

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is a complement to Lightning. So they're not in competition, they're complementary.

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And that's how we see it. So Lightning is part of the scaling vision for Bitcoin

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and big block sidechains are another way of doing that and there probably will be

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some harmonies there where they can be done together and as complements.

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I think drivechains will, like you mentioned earlier, be immensely positive.

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It will be a great positive driving force for everything. All the different scaling solutions and

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technologies they've tried right now. Liquid, Lightning, scalability and also four layer one.

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It's great. Thanks a lot. Cool. That was cool. Thank you. Yeah, all right. Have a good evening.

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Have a good evening. Well, everybody, welcome to Drivechain Twitter Spaces.

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We chat every Monday and Thursday about drivechain here on Twitter.

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We review the latest news and updates.

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Everyone is welcome to come on up to the stage and share your thoughts and questions,

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comments and rants.

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Don't be shy. Come on up. Share your opinion.

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Be heard by the world.

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We have some of the usual suspects in the audience.

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All are welcome to come on up and ask a question. I shared in the nest here a tweet from Troy Cross.

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There has been a lot of conversation in the last couple of days about the Bitcoin security budget.

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It all started when Michael Saylor tweeted that he thinks Bitcoin is secure because of higher

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hash rate. And Eric Wall corrected him and explained that higher hash rate does not imply

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higher security. And then, unfortunately, Michael Saylor dug in and elaborated

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on his own inaccurate understanding. And since then, there's been a lot of tweets about how

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Bitcoin's security model works. One of the achievements of the drivechain community

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is maintaining a correct understanding of the Bitcoin security budget.

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Drive chainers know that it's important that fees rise in the long term on Bitcoin layer one.

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And if the fees do not rise, then Bitcoin will not be secure.

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Or to state it more precisely, if fees don't rise on Bitcoin layer one as the Coinbase declines in

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the years to come, then it is very possible, according to our understanding of Bitcoin's

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security model, that there might be a problem. I don't want to say there will be a problem because

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things could evolve. Bitcoin could be altered in some new way that's ingenious, that somehow

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secures the blockchain asymmetrically, regardless of the fee revenue. But the understanding we've

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always had for a long time is well expressed in certain tweets by Adam Back, as is often the case.

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He has a tweet from 2019 that I recall, where he said in a conversation, in a thread with other

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people that he wrote that Bitcoin has signatures, which are, you know, a lot of people don't know

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which are asymmetrically secure. But transaction finality is not asymmetrically secure. Transaction

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finality is a balance of the economics of mining. So by that, in that statement, which I'm not

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saying I quoted it word for word, but I think that's pretty close. What he's saying there is that

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when you sign a Bitcoin transaction, it's like using a password on your computer.

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It's asymmetrically secure, meaning a little bit of effort on your part to create the password

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results in a very large amount of protection and security, because the effort to break the

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password is extraordinarily large, even though the effort to create it is low. But when it comes to

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the hashing, what's called economic security, which is, you know, the difficulty that would

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be involved in trying to attack Bitcoin as a hostile miner that has a majority of the hash rate,

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that is the economic security or the security budget or the cost of attack. And that is not

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asymmetrically secure. Rather, that security arises by nature of the cost of being a 51 percent miner,

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which is not an asymmetric matter, but rather a question of majority or minority.

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So Michael Saylor said some things in his tweets like something about the honest miners are the ones who would have the ASICs and the dishonest miners are the ones who would just be using their computers.

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So he unfortunately doesn't know at all what he's talking about, I believe. However, he's a very smart person, and I'm sure in the near future he will rephrase what he's said in a way that's more accurate.

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And I look forward to that.

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Because there's no real problem here. The right understanding is that Bitcoin's fees have to rise and that Bitcoin's economic security is a question of rising fees over time.

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There are some people who like to talk about, well, maybe there'll be a whole lot of ideological mining. And even though there's no fees, there'll just be people out of the love of their hearts for Bitcoin mining.

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Or maybe a whole country will decide they love Bitcoin so much that they'll have, you know, Jason Lowery and others set up a government taxpayer funded mining operation to defend Bitcoin at the Department of Defense.

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And maybe that'll occur too. However, my view is, and I think this is kind of like the drivechain view, probably, just roughly speaking, is that what we need is rising fees over time.

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And it would be great if Bitcoin's fees right now were at $25, $50, $100 per layer one transaction. And then we would see a very large amount of fees being paid to the miners every day, millions of dollars of fees.

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And then there would be no cause for concern about perpetually low fees and declining security.

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It's very interesting to observe the intellectual community in crypto and how some people have left Bitcoin because of the problem of low fees and the possibility of continued low fees.

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For example, Vitalik and others in Ethereum have from time to time pointed out that Bitcoin's fee reliant long term security model is potentially unstable.

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And there are certain Ethereum influencers on Twitter with over 100,000 followers who write almost every day to their following that Bitcoin will eventually need to adopt inflation.

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And there are some within the Bitcoin community who support inflation and they're public about it. And there's others who support it who aren't public about it, but who still support it.

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So these people are not confident that Bitcoin will achieve a high enough rate of fees to support the economic security model.

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But of course, if drivechain is adopted and if it's very successful, then the growth of fee revenue on Bitcoin could be very significant.

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And the most optimistic vision of drivechain is that once drivechain is adopted, then in the years to come, Bitcoin's dominance would climb not only in terms of market cap, but also in terms of block space.

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So the block space dominance would mean that Bitcoin would have a higher share of transaction fees paid on blockchains.

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Right now, about 1 15th of all fees paid on all blockchains are paid to Bitcoin.

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But let's assume in the future, if drivechain is very successful, what if Bitcoin had 95% of all of the fees paid on all blockchains?

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In that optimistic hypothetical future, then Bitcoin would have 15 times more fees if we may project and presume.

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Of course, in reality, any transformation like that would not result in a simple 15 multiple, but instead could be very different from 15 times because of the way that things would evolve.

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But roughly speaking, we could have much more, such as 10 times more or higher fees for Bitcoin if drivechain is maximally successful.

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And that would be great. And then there wouldn't be these constant calls for inflation from Bitcoin's enemies, as well as those within Bitcoin who publicly support inflation like Peter Todd.

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So it's interesting how there are some people who don't like drivechain, but who still understand that Bitcoin needs more revenue for miners.

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And instead of embracing merged mining, they prefer to embrace inflation.

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And then there are others who don't really understand the problem at all and who think that nothing will be necessary.

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They think that we don't need inflation and we don't need drivechain.

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They think that things are fine as they are, and that would probably include Michael Saylor.

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But as we've seen in the recent tweets, that understanding is not so coherent and it's kind of uninformed about how the whole system works.

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Welcome to the room, everyone who's joined. All are welcome to come on up to the stage and chat, vibe, hang out.

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One of the complexities in this realm of the security budget is the view that some people have that the security budget is really all about energy.

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It's not about fees. And this is a view that I heard.

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I saw Shinobi write recently yesterday on Twitter. It's all about fees. I'm sorry. He wrote it's all about energy, which is incorrect.

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It's ultimately about fees. So even those who think that Saylor was incorrect have their own view sometimes, which isn't quite right.

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I think Eric Wall understands it completely. And I think the drive chainers and he's one.

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But people who understand drivechain tend to understand well that we need more fees.

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Ultimately, the energy that's purchased by the Bitcoin miners and used is not their only input.

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There's also machines. There's also labor. And the most important fundamental factor for understanding the cost of an attack is going to be an economic phenomenon, which is the fees.

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It's per unit of time, not energy. Welcome to the stage, Sahil. How are you?

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Hey, can you hear me?

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Yes, I can. What is up?

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Nothing much. I'm actually pretty new to drivechains and just came here to learn a little bit.

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I just heard you talking about why fees are important. Could you brief a little bit of why exactly we need high fees for Bitcoin?

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I'm a little bit confused. I'm a bit noob here. If you don't mind. Thank you.

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Sure. So high fees are important because the cost to be 51 percent of Bitcoin's hash rate is determined by the economic activity in the mining space.

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And the economic activity in the mining space is going to decline unless fees rise because the on-chain income to miners has two components.

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One is fees and the other is coinbase. The coinbase is often referred to as the subsidy or the inflation.

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But I'm saying coinbase so as to be less provocative.

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Some people don't like calling it subsidy, even though Satoshi himself wrote the word subsidy in the code.

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But nevertheless, I say coinbase and the coinbase declines programmatically every four years.

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There's a quadrennial halvening. So every time we have the halvening, we go down in the number of Bitcoin that are included in the coinbase.

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So if fees don't rise, then the miner revenue will decline.

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So right now, in a typical Bitcoin block, there are 6.25 coinbase Bitcoin.

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And then there are fees, which might be less than a Bitcoin or more than a Bitcoin.

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So right now, the total number of Bitcoin that are received every day from coinbase is 900.

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Because there are 900 times divided by 6.25 Bitcoin per day in each block.

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Let me rephrase that. 900 Bitcoin a day are issued in the coinbase.

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So if you were to divide 900 by 6.25, you would get the number of blocks per day.

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And the number of fees that are paid in all those blocks together right now is about one million dollars of fees per day, approximately.

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And it's up a little bit from where it used to be.

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Over the last year, the average is probably $500,000 worth of fees per day.

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But with the taproot and ordinals and the bull market in Bitcoin picking up a little bit, there's been an uptick in the number of fees that are paid each day.

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So it's about a million dollars per day.

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And many people are curious to see if that rises or falls over the next few months.

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Will we come back down to the base or will we stay elevated for a long time?

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Does that answer your question?

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Basically, fees have to rise because the coinbase is being cut in half every four years.

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Eventually, there'll be no more coinbase in 100 years or so, 120 years.

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There'll only be fees paying the miners on chain.

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So, you know, if there's very little payment, then there'll be very little mining.

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So the cost that a person would have to incur to be over half of all the hash rate would therefore fall over time unless the fees grow.

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Thanks.

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I'm still, you know, a little bit less technically sound, but I'll surely be, you know, diving deep into the technicalities of why, you know, deflation and the fees, everything matters.

381
00:51:05,603 --> 00:51:06,603
But thanks.

382
00:51:06,603 --> 00:51:08,603
Thanks for the answer.

383
00:51:09,603 --> 00:51:10,603
Appreciate it.

384
00:51:15,603 --> 00:51:16,603
Sure.

385
00:51:21,603 --> 00:51:26,603
There's a great article by Lynn Alden that you might enjoy if you're interested in the topic of fees.

386
00:51:27,603 --> 00:51:34,603
So you can find it if you go to Google and type in Lynn Alden Bitcoin fee modeling.

387
00:51:34,603 --> 00:51:41,603
So this this article she wrote is called Bitcoin fee based security modeling written in March 2021.

388
00:51:42,603 --> 00:51:45,603
I like to recommend this article to people who are interested in this.

389
00:51:47,603 --> 00:51:48,603
It's a great article.

390
00:51:48,603 --> 00:51:49,603
It's very detailed.

391
00:51:50,603 --> 00:51:56,603
And she explains how over the long haul, it's important that the fees rise.

392
00:51:57,603 --> 00:51:59,603
She's not an alarmist on this issue.

393
00:51:59,603 --> 00:52:01,603
She doesn't want to get into too much detail.

394
00:52:01,603 --> 00:52:03,603
She's not an alarmist on this issue.

395
00:52:03,603 --> 00:52:05,603
She doesn't say that there's a problem.

396
00:52:08,603 --> 00:52:15,603
So it's not too provocative, although buried in the article are some important acknowledgements.

397
00:52:16,603 --> 00:52:17,603
So I think she does understand this.

398
00:52:18,603 --> 00:52:21,603
And I'm personally looking forward to when she eventually writes about drivechain.

399
00:52:22,603 --> 00:52:27,603
I think she's the kind of person who probably knows about it because she's very detailed and careful.

400
00:52:27,603 --> 00:52:41,603
So she probably is aware of each Bitcoin improvement proposal and is under and understands the concepts of how Bitcoin can have a deficiency, which is addressed through an improvement proposal.

401
00:52:42,603 --> 00:52:53,603
She probably under she probably understands how merged mining is potentially a source of more income for Bitcoin, even though I think she's never once ever written about merged mining.

402
00:52:54,603 --> 00:52:59,603
So I'm looking forward to when she eventually does come out on the issue of merged mining and drivechain.

403
00:52:59,603 --> 00:53:03,603
And maybe she'll come out as a supporter of drivechain.

404
00:53:05,603 --> 00:53:06,603
Or maybe maybe not.

405
00:53:08,603 --> 00:53:11,603
She probably wants to be considered to be a mainstream Bitcoin.

406
00:53:11,603 --> 00:53:15,603
And if she were to come out in favor of drivechain, that would create a little bit of controversy.

407
00:53:16,603 --> 00:53:23,603
So I'm looking forward to when she takes the plunge and announces support for drivechain if she is a supporter.

408
00:53:23,603 --> 00:53:24,603
So we'll find out.

409
00:53:27,603 --> 00:53:29,603
We'll find out in the coming months, maybe.

410
00:53:29,603 --> 00:53:32,603
Maybe she'll announce an opinion.

411
00:53:38,603 --> 00:53:39,603
Welcome to the room, everyone.

412
00:53:41,603 --> 00:53:43,603
This is drivechain Twitter spaces.

413
00:53:43,603 --> 00:53:47,603
Everyone's welcome to come on up, chat about anything you'd like.

414
00:53:47,603 --> 00:53:48,603
Chat about anything you'd like.

415
00:54:12,603 --> 00:54:14,603
Anyone have any questions or comments?

416
00:54:15,603 --> 00:54:16,603
Don't be shy.

417
00:54:36,603 --> 00:54:37,603
Welcome to the stage.

418
00:54:45,603 --> 00:54:47,603
Welcome to the stage, Roz.

419
00:54:51,603 --> 00:54:52,603
Hey, Henry.

420
00:54:53,603 --> 00:54:54,603
Hey, everyone.

421
00:54:54,603 --> 00:54:55,603
Thanks for bringing me up.

422
00:55:02,603 --> 00:55:12,603
I was also listening in, but I just joined, so I don't want to totally pivot the flow of where you're going.

423
00:55:13,603 --> 00:55:18,603
I have a couple of things to announce, but we can do it at the end of the drivechain discussion.

424
00:55:21,603 --> 00:55:22,603
Sure.

425
00:55:22,603 --> 00:55:23,603
Now is also fine.

426
00:55:24,603 --> 00:55:25,603
It's very free form.

427
00:55:26,603 --> 00:55:33,603
We don't have too many people lined up right now to speak, so all are welcome to share anything.

428
00:55:35,603 --> 00:55:36,603
Cool, cool.

429
00:55:36,603 --> 00:55:44,603
I was just going to mention about the Discord, of course, our second layer Discord, which is a couple weeks ago.

430
00:55:45,603 --> 00:55:54,603
Sergio, author of the Rootstock paper, had a good tweet about potentially bringing a bunch of the layer to the different projects.

431
00:55:55,603 --> 00:56:07,603
Assembling, trying to scale this and have a shared community where they all have kind of open space to talk about ideas,

432
00:56:07,603 --> 00:56:13,603
maybe do some debate series on the VC about some of the more contentious ideas and different concepts.

433
00:56:13,603 --> 00:56:19,603
We all are trying to, I think, achieve a lot of the same things, so doing that on Discord.

434
00:56:19,603 --> 00:56:25,603
And at some point this week, probably Friday, it's not nailed down yet, but we'll have Paul, Sergio,

435
00:56:25,603 --> 00:56:35,603
hopefully some other people from some other projects, other layer twos in there to kind of talk about a shared vision

436
00:56:35,603 --> 00:56:42,603
for what a better ecosystem around Bitcoin innovation looks like and try to make it happen on that second layer Discord server.

437
00:56:42,603 --> 00:56:45,603
So if you're not in there already, I encourage you to join.

438
00:56:45,603 --> 00:56:52,603
It's a very small crew, but we'll be consistently using the voice channel on there to kind of do Twitter spaces type stuff,

439
00:56:52,603 --> 00:56:57,603
but just more casual, you know, more of a hangout vibe on Discord.

440
00:56:57,603 --> 00:57:00,603
So I encourage everybody to find second layer.

441
00:57:00,603 --> 00:57:02,603
I'll tweet again the invite link.

442
00:57:02,603 --> 00:57:04,603
But yeah, that was my main thing.

443
00:57:04,603 --> 00:57:05,603
So thank you.

444
00:57:13,603 --> 00:57:14,603
Awesome.

445
00:57:18,603 --> 00:57:19,603
Thank you.

446
00:57:20,603 --> 00:57:21,603
That was great.

447
00:57:22,603 --> 00:57:25,603
Well, we've been going for about an hour now.

448
00:57:25,603 --> 00:57:33,603
Everyone is welcome to come on up and share more thoughts and questions, comments.

449
00:57:34,603 --> 00:57:39,603
I'm glad that there's been a bunch of interesting discussions in Bitcoin in recent months.

450
00:57:39,603 --> 00:57:48,603
First, we had the ordinals and inscriptions debate, which highlighted to people the value of small blocks.

451
00:57:48,603 --> 00:58:00,603
And once the blocks started very frequently being four megabytes, which is the maximum, some people started wondering if maybe the block

452
00:58:01,603 --> 00:58:04,603
size should be reduced.

453
00:58:04,603 --> 00:58:11,603
Among many drivechain thinkers, a block size reduction would be a good thing.

454
00:58:11,603 --> 00:58:17,603
And there are some people who don't even support drivechain who like the idea of smaller blocks.

455
00:58:17,603 --> 00:58:26,603
So I think it's great for Bitcoin's community to be discussing the possibility of a block size limit reduction.

456
00:58:26,603 --> 00:58:39,603
And that's what that ordinals and inscriptions episode in Bitcoin generated was interest in discussion of that possibility, the benefits of doing that.

457
00:58:39,603 --> 00:58:52,603
And then now with Michael Saylor's tweets about hash rate, there is a different kind of conversation happening, which is also good for drivechain understanding.

458
00:58:53,603 --> 00:59:07,603
So just like drivechain is all about small blocks on layer one and making larger blocks optional, drivechain is also about getting higher fees for Bitcoin layer one.

459
00:59:07,603 --> 00:59:12,603
And that's one of the ways a person can appreciate drivechain.

460
00:59:12,603 --> 00:59:14,603
Not all drive trainers are focused on fees.

461
00:59:14,603 --> 00:59:19,603
Some are focused purely on the idea of just making Bitcoin have more innovation and extensibility.

462
00:59:20,603 --> 00:59:27,603
For example, when Adam Back talks about drivechain, it's usually about innovation and extensibility, bringing more privacy to Bitcoin.

463
00:59:27,603 --> 00:59:33,603
So he's mentioned in recent months the privacy sidechain and the big block sidechain.

464
00:59:33,603 --> 00:59:35,603
Those are the two sidechains I've heard him tweet about.

465
00:59:35,603 --> 00:59:38,603
I've seen him tweet about.

466
00:59:38,603 --> 00:59:41,603
So some Bitcoiners talk about innovation.

467
00:59:41,603 --> 00:59:46,603
Other other Bitcoiners who are interested in drivechain don't just talk about innovation and talk about fees.

468
00:59:46,603 --> 00:59:49,603
So what we're getting right now is a conversation on fees.

469
00:59:50,840 --> 00:59:56,920
Because of Michael Saylor's tweets. And it's great to have people discussing this, to have people

470
00:59:56,920 --> 01:00:04,680
discussing the fact that higher hash rate is not an indication of higher security. The hash rate can

471
01:00:04,680 --> 01:00:13,720
rise while the security is going down. What's necessary to achieve higher security is higher

472
01:00:13,720 --> 01:00:23,159
miner revenue. Higher miner revenue causes the mining industry to expand and that puts upward

473
01:00:23,159 --> 01:00:29,400
pressure on hash rate. However, other things can cause hash rate to go up, such as better ASICs or

474
01:00:29,400 --> 01:00:39,240
lower energy cost. Hash rate has multiple variables that constitute it, and therefore hash rate alone

475
01:00:39,880 --> 01:00:45,799
is not an indication of anything that is important with respect to Bitcoin.

476
01:00:45,799 --> 01:00:52,920
The hash rate in 100 years might be 1 million times higher than it is today.

477
01:00:54,920 --> 01:01:03,719
Even while Bitcoin has almost no use. So if Bitcoin completely fails,

478
01:01:04,680 --> 01:01:11,159
and in 100 years no one knows what Bitcoin is and only three people are using it, it still might be

479
01:01:11,159 --> 01:01:16,840
the case that in 100 years computers are so much more powerful that the hash rate is a million

480
01:01:16,840 --> 01:01:23,399
times what it is today. And therefore hash rate alone does not indicate or imply higher security.

481
01:01:26,200 --> 01:01:31,079
Hello and welcome to the stage, memetic money. How's it going?

482
01:01:34,359 --> 01:01:35,960
Please chime in with your comment.

483
01:01:36,680 --> 01:01:39,000
What's up, Layer 2? I just like talking about mining.

484
01:01:39,000 --> 01:01:39,320
Hello.

485
01:01:43,560 --> 01:01:47,079
Thanks. Welcome. What is your question or comment?

486
01:01:49,159 --> 01:01:54,520
Maybe a smaller comment. I mean, I think there is overt value in the hash rate metric of Bitcoin

487
01:01:54,520 --> 01:01:59,159
in and of itself. I think merge mining, sidechains and that stuff does have promise, but

488
01:02:00,040 --> 01:02:02,999
in and of itself, its purpose is to secure the Bitcoin network.

489
01:02:04,120 --> 01:02:08,600
So there is value just in the metric of hash rate alone. I mean, it's serving a purpose.

490
01:02:08,600 --> 01:02:09,159
That makes sense.

491
01:02:11,159 --> 01:02:18,040
It doesn't, because as I explained, the hash rate can go up a lot without any increase

492
01:02:18,040 --> 01:02:23,880
in security. And in fact, over any period of time, whether a day or a century,

493
01:02:23,880 --> 01:02:29,559
if the hash rate has increased, that doesn't tell you necessarily that security increased.

494
01:02:29,559 --> 01:02:36,439
Security could go down by 10 times while hash rate increases by 10 times over any time period.

495
01:02:36,439 --> 01:02:39,639
And because that's true, the hash rate tells you nothing.

496
01:02:40,279 --> 01:02:46,439
But hash rate is proportional to security. You could have a non-hash rate vector attack on

497
01:02:46,439 --> 01:02:51,639
Bitcoin. Bitcoin's hash rate is the amount of power that is competing to write the next block.

498
01:02:52,199 --> 01:02:56,680
So if you want to double spend a Bitcoin, you have to overpower that.

499
01:02:56,680 --> 01:03:01,480
So it is a measure of Bitcoin's overt security level in and of itself.

500
01:03:02,680 --> 01:03:08,840
The opposite is true for the reason I explained. So let me explain it one more time and then you

501
01:03:08,840 --> 01:03:13,079
let me know if you think that what I've said either is wrong or doesn't make sense.

502
01:03:14,680 --> 01:03:20,840
Okay. So here's the explanation again. And by the way, when I explain things,

503
01:03:20,840 --> 01:03:26,439
people often don't agree with me. So feel free to say that you don't understand what I'm saying

504
01:03:26,439 --> 01:03:30,919
or that you think it's wrong, but just try to let me know why exactly. So what I said is

505
01:03:31,559 --> 01:03:38,999
that over any period of time, whether a day or a century or a decade, if the hash rate has gone up,

506
01:03:40,600 --> 01:03:48,279
it is possible that security has gone down. Security defined as the cost to be a 51% miner.

507
01:03:49,240 --> 01:03:57,320
So do you agree that rising hash rate does not imply rising cost of attack?

508
01:03:58,040 --> 01:04:03,639
No, not at all. I think it does imply a rising cost of attack. It might not do that over short

509
01:04:03,639 --> 01:04:09,240
time periods of a week, but when you take the broader increase scale on its exponential curve,

510
01:04:09,240 --> 01:04:13,000
it absolutely means it's more expensive to attack Bitcoin's blockchain.

511
01:04:13,799 --> 01:04:16,919
That's why difficulty is often a better measurement than hash rate.

512
01:04:19,160 --> 01:04:27,079
Rising difficulty or rising hash rate, neither one indicates rising economic security because

513
01:04:27,879 --> 01:04:33,479
over, let's just take a realistic example of over the next 10 years, Bitcoin's hash rate might

514
01:04:33,479 --> 01:04:41,879
increase 10X because of better machines or cheaper energy. So if energy becomes more plentiful,

515
01:04:42,759 --> 01:04:49,079
hash rate will tend to rise as a result. If machines such as ASICs become more efficient

516
01:04:49,079 --> 01:04:57,479
and productive, hash rate will tend to rise as a result. Therefore, when we see rising hash rate,

517
01:04:57,479 --> 01:05:03,639
there are multiple factors that can cause it. And not all of those factors have anything to

518
01:05:03,639 --> 01:05:10,359
do with economic security because the cost of energy is the same for the attacker and the

519
01:05:10,359 --> 01:05:13,479
defender. And so is the hardware. I mean, I get what you're saying. The

520
01:05:14,599 --> 01:05:21,000
hash rate and difficulty will vary according to economic incentives, but that does not imply that

521
01:05:21,000 --> 01:05:26,599
if hash rate goes up, it's less secure. If hash rate goes up, it's more secure. That is more

522
01:05:26,599 --> 01:05:32,440
cooperative power on the Bitcoin network. Thus, by definition, you have to have more cooperative

523
01:05:32,440 --> 01:05:38,440
power to overpower it. It's a direct measurement. Economic incentives, I get. It'll go up and down

524
01:05:38,440 --> 01:05:45,479
depending on the incentives to make money at mining. But the profitability of mining does

525
01:05:45,479 --> 01:05:49,000
not have to do with security of the Bitcoin network. They're two different things.

526
01:05:53,560 --> 01:05:54,919
Do you see the tweet in the Nest?

527
01:05:56,440 --> 01:05:57,079
I do, yeah.

528
01:05:58,759 --> 01:06:06,680
Okay. So this is a tweet that I agree with. And what he's doing here is he's responding to,

529
01:06:07,560 --> 01:06:13,879
without mentioning him, Michael Saylor's and other people's recent tweets where they express

530
01:06:13,879 --> 01:06:21,479
the view consistent with yours, which is that as hash rate goes up, Bitcoin is more secure,

531
01:06:21,479 --> 01:06:32,359
which is not correct because hash rate represents a multi-factor pattern of activity

532
01:06:33,240 --> 01:06:39,479
and increased economic security for Bitcoin is only one of those factors.

533
01:06:40,440 --> 01:06:43,160
So you shouldn't assume when hash rate goes up.

534
01:06:43,160 --> 01:06:46,120
You're conflating the economic security with double spin.

535
01:06:47,000 --> 01:06:53,400
Hash rate is a very predictable, repeatable SHA-256 double hash of the mempool, period.

536
01:06:54,199 --> 01:07:00,359
There are long-term economic incentives like one pool gaining too much power over the network that

537
01:07:00,359 --> 01:07:05,799
could lead to an attack on Bitcoin. That is a different type of attack than a double spending

538
01:07:05,799 --> 01:07:12,280
attack. Hash rate is a measure of Bitcoin's firewall, for lack of a better term. It's the

539
01:07:12,280 --> 01:07:19,960
amount of power it takes to write the next block in the chain. The higher that number is, the more

540
01:07:19,960 --> 01:07:26,120
secure Bitcoin is. All right. Well, I tried to explain it. I feel like we're not on the same

541
01:07:26,120 --> 01:07:31,160
page, but let me try a different way. If in five years from now, Bitcoin has a higher hash rate

542
01:07:31,160 --> 01:07:36,680
than it does today, do you feel that that necessarily means that Bitcoin is more secure?

543
01:07:36,680 --> 01:07:48,280
Or do you know, as you should, that if ASICs improve, then the amount of economic activity

544
01:07:48,280 --> 01:07:55,319
in the Bitcoin mining space could decline even while hash rate goes up because although there

545
01:07:55,319 --> 01:08:01,799
are fewer miners expending less economic resources, hash rate could rise simply because

546
01:08:02,359 --> 01:08:10,039
a newer edition of ASICs that's more productive and efficient has been released, sending hash rate

547
01:08:10,039 --> 01:08:15,479
higher even while the income to miners has fallen. Yeah, that could very happen. Satoshi described

548
01:08:15,479 --> 01:08:21,560
this in his white paper, but this was his genius. If that happens, Bitcoin is more secure.

549
01:08:22,520 --> 01:08:28,920
Ashes are what secure Bitcoin. You are correct that we could have less miners with a higher

550
01:08:28,920 --> 01:08:35,160
hash rate. And what Satoshi said is because the hash rate is higher, Bitcoin is more secure.

551
01:08:37,239 --> 01:08:41,800
He didn't ever say that. I've read every word he's ever written. He never said the words.

552
01:08:41,800 --> 01:08:46,199
He didn't say that exactly, but that's the point of many of his Bitcoin talk forms. He talked about

553
01:08:46,679 --> 01:08:51,960
this is how he solved the Byzantine generals problem. As long as I incentivize them to

554
01:08:51,960 --> 01:08:59,879
cooperate, Bitcoin benefits. If they're an dishonest actor, but they still run the hashing

555
01:08:59,879 --> 01:09:04,840
algorithm the way it should be, it still benefits Bitcoin. I'm not disagreeing with you that there

556
01:09:04,840 --> 01:09:11,720
are economic hacks to Bitcoin that you could do. What I'm saying is that hash rate is the measure

557
01:09:11,720 --> 01:09:16,280
of Bitcoin security protocol. The higher it is, the more secure Bitcoin is. Arguably,

558
01:09:16,280 --> 01:09:20,520
it's oversecured today. We're wasting hashes. It's extremely secure.

559
01:09:25,319 --> 01:09:32,439
It's a truism to say that it's potentially oversecured because if it weren't secured enough,

560
01:09:33,079 --> 01:09:40,439
then it would be destroyed by a hostile miner, mining in perpetuity and censoring all transactions.

561
01:09:41,400 --> 01:09:47,319
Bitcoin is a truism to say that it hasn't yet been attacked or that it's oversecured.

562
01:09:49,960 --> 01:09:55,720
That's my opinion. It's oversecured. It is extremely profitable to mine right now,

563
01:09:55,720 --> 01:09:59,960
especially when you have low power rates. If you look at the original white paper,

564
01:09:59,960 --> 01:10:06,280
it estimates the last Bitcoin being mined in 2140. We brought that forward north of 20 years already.

565
01:10:07,079 --> 01:10:12,199
We are doing 10 minute block times routinely because mining is so profitable right now.

566
01:10:13,319 --> 01:10:17,319
I want to drill down to the first principles that we're trying to discuss

567
01:10:18,360 --> 01:10:25,239
so we can connect on our understanding. You've said that, if I understand you correctly,

568
01:10:25,239 --> 01:10:31,319
you've said that higher hash rate means Bitcoin is more secure. But I think that's exactly wrong.

569
01:10:31,319 --> 01:10:36,920
Higher hash rate doesn't imply more security. You're going to see, always and forever,

570
01:10:37,800 --> 01:10:44,119
because of the nature of technological progress, people don't forget how to build ASICs. There's

571
01:10:44,119 --> 01:10:48,600
always going to be improvements to ASICs. There's never going to be a step backwards.

572
01:10:48,600 --> 01:10:53,720
There's never going to be a new line of ASICs that are invented where they're less productive.

573
01:10:54,360 --> 01:10:56,119
The same is true for all computer chips. Yes.

574
01:10:57,480 --> 01:11:02,439
Let me just elaborate. It sounds like you're sort of understanding what I'm saying,

575
01:11:02,439 --> 01:11:06,840
which is that better ASICs will be invented forever, sending Bitcoin's

576
01:11:07,639 --> 01:11:14,600
hash rate higher and higher, even while if we assume that there's declining

577
01:11:14,600 --> 01:11:20,119
miner income in the future, because let's assume hypothetically that fees don't rise

578
01:11:20,119 --> 01:11:24,920
and that the Coinbase is halved, as it is programmatically every four years.

579
01:11:27,800 --> 01:11:32,439
Let's just focus on one question. Do you understand that if fees don't rise,

580
01:11:33,319 --> 01:11:38,199
then as a result of halvings of the Coinbase, miner income on-chain will decline?

581
01:11:38,199 --> 01:11:41,720
That is completely wrong unless you factor in Bitcoin price.

582
01:11:41,720 --> 01:11:46,840
If Bitcoin price goes up and transaction fees go to zero, you can still make money mining, period.

583
01:11:47,160 --> 01:11:53,239
Well, in the long run, if there are no transaction fees and the Coinbase is halved to zero,

584
01:11:53,239 --> 01:11:54,999
what would the profit for mining be?

585
01:11:54,999 --> 01:11:58,920
We're not talking long run. We're talking exactly what you said around the bounds of that problem.

586
01:11:58,920 --> 01:12:02,999
If transaction fees were zero and Bitcoin price went to 40k,

587
01:12:02,999 --> 01:12:05,160
you would see everybody turn their miners on.

588
01:12:08,119 --> 01:12:12,119
Because the majority of income to miners on-chain right now is from the Coinbase.

589
01:12:12,119 --> 01:12:15,879
Clearly, yes. It's always been that way, but Bitcoin price has always been that way.

590
01:12:16,280 --> 01:12:21,720
But Bitcoin, since it started, that is part of Satoshi's longer experiment,

591
01:12:21,720 --> 01:12:27,720
is given enough time, can I bootstrap the network to where fees are self-sustaining and not

592
01:12:28,280 --> 01:12:31,800
my incentive block reward? That's his whole experiment.

593
01:12:31,800 --> 01:12:33,879
That's probably going to take 100 years to figure out.

594
01:12:35,480 --> 01:12:40,679
I get your point about ASICs getting better. I don't think what you're seeing is that if ASICs

595
01:12:40,679 --> 01:12:46,920
get better and they get stronger, and we approach 7nm chips and 6nm chips just like they do

596
01:12:47,559 --> 01:12:51,319
in Intel and TSMC, the ASICs become more expensive.

597
01:12:52,040 --> 01:12:55,480
You don't get the latest, greatest ASIC with the latest, greatest hashing for cheap.

598
01:12:56,280 --> 01:13:00,199
That puts positive pressure on the entry price to mine in Bitcoin,

599
01:13:00,199 --> 01:13:01,960
thus making the network more secure.

600
01:13:03,960 --> 01:13:08,280
Ashes on the network secure Bitcoin. That's part of the design.

601
01:13:10,679 --> 01:13:25,639
So, you understood that the on-chain revenue, which is the Coinbase and the fees,

602
01:13:27,079 --> 01:13:33,960
are important, but you have a view that in the years to come, in the next few years,

603
01:13:33,960 --> 01:13:40,439
we still have a lot of Coinbase left, where there's 6.25 and then 3.125 for the next four

604
01:13:40,439 --> 01:13:46,520
years. So, you made a point that I agree with, which is that if Bitcoin's price rose tomorrow

605
01:13:47,639 --> 01:13:53,800
to $40K, then a lot of Bitcoin miners would increase their operations because of that higher

606
01:13:53,800 --> 01:14:03,400
revenue for the next year. However, do you agree with this statement that in the long run,

607
01:14:03,480 --> 01:14:10,119
in the long term, higher fees are necessary for Bitcoin's security because

608
01:14:12,600 --> 01:14:16,119
the Coinbase is halved towards zero in the long term?

609
01:14:18,119 --> 01:14:23,480
I mean, in a roundabout way, I do, because you have to incentivize miners to mine.

610
01:14:23,480 --> 01:14:31,559
Miners provide security. In 2140 or 2138, when the block subsidy goes to zero, of course,

611
01:14:31,559 --> 01:14:36,199
there's going to have to be a subsidy to attract miners. If there's not, if there's

612
01:14:36,199 --> 01:14:41,960
no profit in mining, people don't mine. When you say subsidy, do you mean the Coinbase or

613
01:14:41,960 --> 01:14:43,559
do you mean the block reward? I mean the Coinbase block reward,

614
01:14:43,559 --> 01:14:48,280
that is Satoshi's subsidy that halves every four years.

615
01:14:50,040 --> 01:14:56,199
People refer to the Coinbase, so there's two components to the on-chain income. There's

616
01:14:56,199 --> 01:15:01,559
the Coinbase and there's the fees. The word subsidy in these kinds of conversations

617
01:15:02,360 --> 01:15:04,360
usually refers to the Coinbase. Of course, yes.

618
01:15:04,360 --> 01:15:05,160
People don't- It is.

619
01:15:06,360 --> 01:15:10,199
Okay, I was just clarifying. So you're not referring to the entire block reward-

620
01:15:10,199 --> 01:15:15,800
No, I'm talking to the Coinbase refers to the Coinbase transaction, which pays the miners.

621
01:15:16,679 --> 01:15:23,960
Satoshi referred to the mining block reward as a subsidy to bootstrap the network until fees

622
01:15:24,040 --> 01:15:29,559
could provide the income that miners need. That Coinbase transaction is where the subsidy is

623
01:15:29,559 --> 01:15:36,199
distributed to the person who solved the block reward, the block equation that found that

624
01:15:36,199 --> 01:15:42,520
particular nonce and wrote the next block. Well, we've tried to-

625
01:15:42,520 --> 01:15:43,639
Well, hey now. Sup, Seton.

626
01:15:43,639 --> 01:15:49,720
Hi there, Seton. Hi there. Seton, what's your question?

627
01:15:50,040 --> 01:15:54,360
Haha. Well, I just came in to say hi, so I don't have a question.

628
01:15:54,360 --> 01:15:57,400
Give me a moment to get acclimatized and then I'll probably have a question.

629
01:16:00,199 --> 01:16:05,800
All right. You don't have any question to ask? You're sure?

630
01:16:08,199 --> 01:16:15,639
Well, other than, you know, is there more coffee? I need to get some coffee in my system.

631
01:16:15,800 --> 01:16:23,400
All right. All right. You can come back when he has a productive question to share.

632
01:16:25,400 --> 01:16:32,920
So, memetic money. Let's try to drill down to this topic we're discussing. I think that right

633
01:16:32,920 --> 01:16:39,800
now in a lot of spaces and in a lot of conversations at local Bitcoin meetups and on forums, people are

634
01:16:39,800 --> 01:16:46,040
getting interested in this topic. I think that it's a great topic to get into. And I think the

635
01:16:46,040 --> 01:16:51,400
conversation we're having right now is one that's been had thousands of times all over the world as

636
01:16:51,400 --> 01:16:57,400
people grapple with how Bitcoin works and what it means for the fees to go up or the hash rate to go

637
01:16:57,400 --> 01:17:04,759
up. So I think the questions you've asked and statements you've made are ones which a lot of

638
01:17:04,759 --> 01:17:12,839
people have heard or said. So I just want to make that clear. I do think that we have.

639
01:17:13,719 --> 01:17:14,359
I love money.

640
01:17:14,359 --> 01:17:20,280
Yeah, that's cool. And I think a lot of Bitcoin miners, some of them understand things the way

641
01:17:20,280 --> 01:17:26,280
I'm sharing and some of them probably understand things the way you're sharing. I feel confident

642
01:17:27,400 --> 01:17:34,440
that certain statements you've made are not correct in my view, which is that you seem to say

643
01:17:34,440 --> 01:17:45,719
that the essence of Bitcoin's security in terms of its defense from attacks in mining is determined

644
01:17:45,719 --> 01:17:50,119
by the height of the hash rate. And if the hash rate increases, Bitcoin is more secure.

645
01:17:51,400 --> 01:17:58,119
Just to clarify, I'm saying that is true for a double spend attack. Bitcoin hash rate does not

646
01:17:58,119 --> 01:18:04,200
prevent miner centralization. There are other hacks. You could talk about the user assisted

647
01:18:04,200 --> 01:18:09,639
soft fork that we did back in 2018 in the big block wars. That could be considered a Bitcoin

648
01:18:09,639 --> 01:18:16,680
hack when you change the source code. Those are all hacks. What I'm saying is that hash rate

649
01:18:16,680 --> 01:18:23,479
specifically prevents a double spend of Bitcoin. This was the solution to the Byzantine General's

650
01:18:23,479 --> 01:18:23,800
problem.

651
01:18:24,759 --> 01:18:29,719
Yeah, what I'm saying is, though, that if you look at hash rate going up, I'm making a precise

652
01:18:29,719 --> 01:18:35,719
claim that higher hash rate over any period of time. So if hash rate doubles, for example, over a

653
01:18:35,719 --> 01:18:41,400
day or over a month or a year or a decade or a century, the fact that hash rate has gone up in

654
01:18:41,400 --> 01:18:47,320
absolute terms in terms of numbers of hash per second, the fact that hash rate has increased

655
01:18:47,320 --> 01:18:53,560
over any period of time tells you nothing about whether Bitcoin is becoming more secure or

656
01:18:53,879 --> 01:18:54,040
not.

657
01:18:56,040 --> 01:19:02,599
Generally, what I'm saying is it does mean against a double spend attack. If hash rate

658
01:19:02,599 --> 01:19:07,479
doubles, you are twice as secure against a double spend. You might not be twice as secure against

659
01:19:07,479 --> 01:19:14,280
an economic hack, but it is unquestionable fact in the code you are twice as protected

660
01:19:14,280 --> 01:19:15,160
against a double spend.

661
01:19:16,119 --> 01:19:23,080
Okay, so here's my question to you then. Suppose over the next three years, the hash rate goes up

662
01:19:23,080 --> 01:19:28,280
five times because over the next three years, the.

663
01:19:28,792 --> 01:19:40,432
Cost of energy around the world falls because people adopt more nuclear power stations, that there's some kind of invention, people discover fracking and stuff like that.

664
01:19:40,432 --> 01:19:55,112
So imagine over the next three years, energy costs go down and imagine hypothetically that the whole world starts using a different blockchain because they decide they don't like Bitcoin.

665
01:19:55,112 --> 01:19:56,872
So Bitcoin's price goes down a lot.

666
01:19:57,312 --> 01:20:00,872
And however, the energy costs have gone down.

667
01:20:01,352 --> 01:20:12,032
And imagine the ASIC manufacturers come out with a much more powerful ASIC that produces 100 times more hash rate per second with the same amount of electricity.

668
01:20:12,032 --> 01:20:22,832
So imagine in my hypothetical, imagine that hash rate has gone up even while all of the economic activity associated with Bitcoin has gone down.

669
01:20:23,032 --> 01:20:24,512
So the number of people use…

670
01:20:24,512 --> 01:20:26,512
That hypothetical doesn't make any sense.

671
01:20:26,512 --> 01:20:35,031
If energy was super cheap and you didn't make any money mining at Bitcoin, then hash rate would not go up.

672
01:20:35,031 --> 01:20:39,512
The miners wouldn't go there. Miners only mine when it's profitable.

673
01:20:39,512 --> 01:20:43,512
Bitcoin's security is proof of work.

674
01:20:43,512 --> 01:20:46,112
It doesn't matter how you get that work.

675
01:20:46,112 --> 01:20:51,991
If ASICs come out and ASICs are 20 times as efficient, they're gonna cost more.

676
01:20:52,071 --> 01:20:54,912
You still have to compete on the open market to obtain that.

677
01:20:55,351 --> 01:21:01,751
If power drops five times and it's super cheap, you still have to compete with people that have the good tech.

678
01:21:02,351 --> 01:21:04,192
Miners won't mine unless it's profitable.

679
01:21:07,351 --> 01:21:08,872
Well, what I'm trying to say is…

680
01:21:08,872 --> 01:21:12,272
You're not gonna see hash rate explode when there's no profits in Bitcoin.

681
01:21:12,552 --> 01:21:13,431
That will never happen.

682
01:21:13,512 --> 01:21:19,112
The whole point of my hypothetical is not that it's likely.

683
01:21:19,872 --> 01:21:34,232
The whole point of my hypothetical is to illustrate to you the logical possibility of hash rate rising during a period of time when the cost to attack Bitcoin as a majority miner declined.

684
01:21:35,071 --> 01:21:40,431
You see, you're looking at hash rate as an indication of the cost of…

685
01:21:40,431 --> 01:21:43,312
If the hash rate goes up, it's by definition more expensive.

686
01:21:43,512 --> 01:21:46,952
You cannot have hash rate go up and have it be less expensive.

687
01:21:47,952 --> 01:21:51,952
That doesn't make any sense.

688
01:21:51,952 --> 01:21:54,471
If power gets cheaper, more people mine.

689
01:21:54,471 --> 01:22:14,952
I think what you're saying is exactly wrong, but I'm trying to explain it with hypotheticals so you can grok where I'm coming from, which is that the cost to be 51% of Bitcoin's hash rate can go down while the hash rate is increasing.

690
01:22:14,952 --> 01:22:15,952
How?

691
01:22:16,952 --> 01:22:20,952
Because the improvements in ASICs…

692
01:22:20,952 --> 01:22:23,952
Why don't we use the example you gave where power is cheaper?

693
01:22:23,952 --> 01:22:28,952
If we just stick with that, say ASIC technology stays the same and power gets much cheaper.

694
01:22:29,952 --> 01:22:31,952
More people are gonna mine then.

695
01:22:32,952 --> 01:22:38,952
When more people mine and you wanna hack, then you have to overpower even more people.

696
01:22:39,952 --> 01:22:43,952
So the notion that energy going down is gonna make it easier to hack is poppycock.

697
01:22:43,952 --> 01:22:45,952
That doesn't make any sense, bro.

698
01:22:45,952 --> 01:22:46,952
More people mine.

699
01:22:46,952 --> 01:22:49,952
That means you need more power to overpower them.

700
01:22:51,952 --> 01:22:53,952
The same thing holds true for ASICs.

701
01:22:53,952 --> 01:22:57,952
If ASICs go up in tech, people are gonna buy that and mine with it.

702
01:22:57,952 --> 01:23:00,952
And if you wanna attack them, you have to buy the ASICs over them.

703
01:23:01,952 --> 01:23:08,952
Okay, let's look at a hypothetical where the only thing that changes in the world is the cost of energy.

704
01:23:09,952 --> 01:23:12,952
So let's look at two points in time.

705
01:23:12,952 --> 01:23:14,952
One point in time is today, right now.

706
01:23:15,952 --> 01:23:20,952
And then the next point in time is a year from now.

707
01:23:20,952 --> 01:23:27,952
So let's imagine, hypothetically, the only thing that changes between now and a year from now is that energy prices go down.

708
01:23:27,952 --> 01:23:30,952
So Bitcoin adoption doesn't change.

709
01:23:30,952 --> 01:23:33,952
Got it. So Bitcoin energy goes down, that means more people will mine.

710
01:23:33,952 --> 01:23:34,952
You agree?

711
01:23:36,952 --> 01:23:40,952
It's easier to turn a profit, so if more people mine, it's harder to attack.

712
01:23:40,952 --> 01:23:41,952
You just proved my point.

713
01:23:41,952 --> 01:23:48,952
Well, because of the difficulty adjustment, I don't think the profitability of Bitcoin mining increases when energy costs go down.

714
01:23:48,952 --> 01:23:50,952
It does. What are you talking about?

715
01:23:50,952 --> 01:23:54,952
If it costs you less to produce the hash, you make more money.

716
01:23:54,952 --> 01:23:59,952
A decrease in energy prices means an increase in the profitability of Bitcoin.

717
01:24:02,952 --> 01:24:04,952
Of Bitcoin mining or Bitcoin?

718
01:24:04,952 --> 01:24:08,952
Of Bitcoin mining. If you pay less for your utility, you will have more profit.

719
01:24:08,952 --> 01:24:13,952
The problem you're talking about is when power gets cheaper, more people mine.

720
01:24:13,952 --> 01:24:22,952
That makes Bitcoin more secure, and that means you need more power to overpower those new miners if you want a 51% attack.

721
01:24:22,952 --> 01:24:26,952
The only way Bitcoin becomes less secure is if less people mine.

722
01:24:26,952 --> 01:24:35,952
I know, but because we assumed that the cost of energy goes down, that's the one thing we're assuming, therefore the cost to get that additional power is…

723
01:24:39,952 --> 01:24:40,952
Do you follow what I'm saying?

724
01:24:40,952 --> 01:24:45,952
I don't, you're wrong. If power is cheaper, more people mine.

725
01:24:48,952 --> 01:24:50,952
That means the network's stronger.

726
01:24:51,952 --> 01:24:59,952
Yeah, but the amount of energy that it takes to be a majority of the hash rate is lower, but it's lower proportionally to the reduction in the cost of energy.

727
01:24:59,952 --> 01:25:08,952
So actually the economic cost of being 51% of the miners hasn't changed when the cost of electricity falls.

728
01:25:08,952 --> 01:25:12,952
Yes, it has. You're assuming that difficulty doesn't change when energy drops.

729
01:25:12,952 --> 01:25:16,952
If energy drops, more people mine, which is why difficulty goes up.

730
01:25:16,952 --> 01:25:19,952
That is the algorithm adjusting to be self-secure.

731
01:25:20,952 --> 01:25:26,952
Every time I say that hash rate is going up, I'm assuming difficulty is rising too, so I'm not assuming what you said.

732
01:25:26,952 --> 01:25:31,952
Right, so difficulty goes up. It's called difficulty because it's more difficult to mine.

733
01:25:34,952 --> 01:25:38,952
Energy price goes down, difficulty goes up, network more secure.

734
01:25:39,952 --> 01:25:43,952
I get that when it's cheaper power, you can buy more power.

735
01:25:43,952 --> 01:25:49,952
The point is you have to buy even more power than the more power because everybody else is mining.

736
01:25:49,952 --> 01:25:51,952
That's why it's a cooperative network.

737
01:25:52,952 --> 01:26:04,952
If we assume in our hypothetical the only thing that's changing is that energy prices fall, then we can conclude from that fall in energy prices that hash rate will go up.

738
01:26:04,952 --> 01:26:05,952
Yep.

739
01:26:05,952 --> 01:26:24,952
However, the cost to be a 51% miner will not have changed because although more energy would be required to be a 51% miner, that more energy is cheaper per unit of energy because of the fall in energy prices, which we initially assumed.

740
01:26:24,952 --> 01:26:32,952
Completely true, but difficulty is not. Difficulty in that scenario is higher. It's self-adjust.

741
01:26:33,952 --> 01:26:39,952
I know. I told you that every time I assume a higher hash rate, I'm assuming a higher difficulty because they're causally linked.

742
01:26:39,952 --> 01:26:46,952
How can you say the network's less secure? They have to purchase more hash rate if it's a higher difficulty to 51% attack.

743
01:26:46,952 --> 01:26:56,952
Here's why. They have to purchase more hash rate, but the hash rate is cheaper because, as I told you, energy prices have fallen.

744
01:26:57,952 --> 01:27:03,952
I know, but if energy prices fall and they have to buy more, this is not going to lead to a decrease in security.

745
01:27:03,952 --> 01:27:07,952
You're making up a hypothetical that doesn't even work as a hypothetical.

746
01:27:08,952 --> 01:27:13,952
Why would it not work to assume that energy prices go down? That's the only thing I'm assuming.

747
01:27:14,952 --> 01:27:19,952
You just said that energy prices are going down, and I assume difficulty is going to go up because more people will hack.

748
01:27:19,952 --> 01:27:20,952
Yes.

749
01:27:20,952 --> 01:27:26,952
You are by definition saying that it is harder to hack the Bitcoin network when energy prices go down.

750
01:27:28,952 --> 01:27:30,952
No, that's what you're saying.

751
01:27:31,952 --> 01:27:38,952
That's what the math is saying. It's been an awesome debate. I've got to jump for a two o'clock. I'll try to hop back into space.

752
01:27:38,952 --> 01:27:41,952
It's good debates like this. I think they help educate people about Bitcoin.

753
01:27:41,952 --> 01:27:42,952
It was a pleasure.

754
01:27:43,952 --> 01:27:44,952
It was a pleasure.

755
01:27:44,952 --> 01:27:45,952
It's a good one.

756
01:27:45,952 --> 01:27:46,952
Yes.

757
01:27:47,952 --> 01:27:50,952
Partly, too. And we've got topside chains, too, and dropchains.

758
01:27:51,952 --> 01:27:53,952
That'd be great. Come on back any time.

759
01:27:53,952 --> 01:27:54,952
All right, brother. Peace.

760
01:27:55,952 --> 01:27:56,952
Peace.

761
01:27:57,952 --> 01:28:14,951
Well, in that conversation, I think that he got a little bit into an erroneous view, in my opinion, where he thought that it's harder to be a 51 percent miner because difficulty rises.

762
01:28:14,951 --> 01:28:20,951
I think he's focused there on the word difficulty, which has a special meaning within Bitcoin.

763
01:28:21,951 --> 01:28:30,951
When difficulty is increasing, it's not the difficulty to be an attacker or it's not economic difficulty.

764
01:28:30,951 --> 01:28:38,951
So I think that was the core of his misunderstanding is he thinks that it's harder to be a miner when difficulty rises.

765
01:28:38,951 --> 01:28:41,951
And he thinks it's harder economically. In other words, higher cost.

766
01:28:42,951 --> 01:28:43,951
But it's certainly not the case.

767
01:28:43,951 --> 01:29:00,951
It is certainly not the case that rising hash rate or rising difficulty on Bitcoin's blockchain means that the economic cost in terms of purchasing power or value is higher to be a majority of the hash rate.

768
01:29:01,951 --> 01:29:02,951
So that was an interesting example.

769
01:29:02,951 --> 01:29:12,951
That conversation sort of illustrated what Michael Saylor would have said or others would have said, who have this view that Bitcoin's hash rate going up means Bitcoin is more secure and they celebrate higher hash rate.

770
01:29:13,951 --> 01:29:16,951
It's an illusory and incorrect view.

771
01:29:16,951 --> 01:29:25,951
I think it's like saying that when GDP hits all time highs, America is richer when, of course, the government is inflating the money.

772
01:29:25,951 --> 01:29:27,951
So there's multiple variables here.

773
01:29:28,951 --> 01:29:36,951
People shouldn't look at one variable and assume that it means something different than it means.

774
01:29:37,951 --> 01:29:41,951
Just like the price of Bitcoin in dollars, it can rise for multiple reasons.

775
01:29:42,951 --> 01:29:51,951
If the price is at all time high, it could be because Bitcoin is demanded more or it could be because the U.S. government has printed more money.

776
01:29:52,951 --> 01:30:02,951
If the U.S. government tomorrow issues $100 trillion and airdrops it to everyone who has a bank account in America, I guarantee you the price of Bitcoin will be much higher.

777
01:30:03,951 --> 01:30:11,951
But will it have risen because of Bitcoin demand going up or will it have risen simply because of money printing?

778
01:30:12,951 --> 01:30:17,951
So when we're looking at a variable, we have to understand all the factors that go into it.

779
01:30:18,951 --> 01:30:28,951
So that prior speaker, I think he would have a different view on what hash rate means if he were to read a whole bunch of articles on it.

780
01:30:29,951 --> 01:30:30,951
So there are some great articles.

781
01:30:31,951 --> 01:30:42,951
I'll just mention once again, the best one in my view as an introduction to the topic is by Lynn Alden called Bitcoin Fee Modeling, written in March 2021.

782
01:30:43,951 --> 01:30:58,951
And if a person's interested in a more comprehensive kind of Ph.D. level discussion, then a good place to go is Truthcoin.info, where Drivechain co-author Paul Sztorc has written two articles on that topic.

783
01:30:59,951 --> 01:31:10,951
One is called Bitcoin Security Budget in the Long Run, is the first one.

784
01:31:10,951 --> 01:31:11,951
Welcome back, Roz.

785
01:31:12,951 --> 01:31:13,951
What's up?

786
01:31:14,951 --> 01:31:18,951
Hey, thanks. I think that was a really enjoyable back and forth with MMT.

787
01:31:19,951 --> 01:31:20,951
Respectful debate is always nice.

788
01:31:21,951 --> 01:31:26,951
And I am looking forward to listening in on the resolution for some of the other topics.

789
01:31:27,951 --> 01:31:31,951
I think, yeah, keeping the space going twice a week, right?

790
01:31:32,951 --> 01:31:43,951
That door stays open for the dissenting opinions and trying to find the concepts where our consensus is missing.

791
01:31:44,951 --> 01:31:46,951
So that's a beautiful thing.

792
01:31:47,951 --> 01:31:52,951
I'm just smashing the thumbs up on keeping it rolling.

793
01:31:53,951 --> 01:31:54,951
But jump back to you.

794
01:31:55,951 --> 01:31:58,951
So I just wanted to bring some more than just the thumb emoji, I guess.

795
01:32:02,951 --> 01:32:03,951
Cool.

796
01:32:04,951 --> 01:32:08,951
Yeah, I mean, I appreciated his efforts and he is a Bitcoin miner, so he has knowledge and passion.

797
01:32:09,951 --> 01:32:10,951
I think he's definitely wrong.

798
01:32:11,951 --> 01:32:12,951
And I'm sure of it.

799
01:32:13,951 --> 01:32:16,951
And almost all of the intellectuals in Bitcoin would agree.

800
01:32:17,951 --> 01:32:20,951
However, it's fine that he thinks what he thinks.

801
01:32:21,951 --> 01:32:22,951
And, you know, it's not harmful.

802
01:32:23,951 --> 01:32:26,951
And I'm confident that in more conversations, he would understand what I think.

803
01:32:26,951 --> 01:32:31,951
And then he would simply update his mental model and his vocabulary on the subject.

804
01:32:32,951 --> 01:32:38,951
The truth is that everyone in Bitcoin is going to learn one way or another in the long run.

805
01:32:39,951 --> 01:32:44,951
That what matters for Bitcoin's economic security model is rising fees, not rising hash rate.

806
01:32:45,951 --> 01:32:47,951
Understanding that is complicated and not everyone understands it.

807
01:32:48,951 --> 01:32:50,951
Not even Michael Saylor, a great person.

808
01:32:50,951 --> 01:32:57,951
And, you know, he has a PhD in engineering, but he thinks that higher hash rate makes Bitcoin more secure.

809
01:32:58,951 --> 01:33:06,951
He even wrote publicly on Twitter yesterday that the honest miners are the ones with the ASICs and the dishonest miners don't have the ASICs, which is, of course, wrong.

810
01:33:07,951 --> 01:33:19,951
And the reason why people are talking about this is that in the last couple of days, there have been a number of Bitcoiners who have written on Twitter that the hash rate is high.

811
01:33:20,951 --> 01:33:26,951
And it looks like it's so high that maybe the explanation is something surprising.

812
01:33:27,951 --> 01:33:32,951
And I guess we'll find out in the future what's going on.

813
01:33:33,951 --> 01:33:35,951
For example, I'm looking at it right now.

814
01:33:36,951 --> 01:33:40,951
The hash rate is hitting an all time high as of this week.

815
01:33:41,951 --> 01:33:44,951
On March 22nd, it hit the all time high.

816
01:33:45,951 --> 01:33:47,951
So people are wondering, why is this?

817
01:33:48,951 --> 01:33:49,951
Why is hash rate so high?

818
01:33:50,951 --> 01:33:56,951
And Shinobi tweeted that he's, you know, maybe people should be suspicious.

819
01:33:57,951 --> 01:33:58,951
He used that word suspicion.

820
01:33:58,951 --> 01:34:05,951
And then today I saw Hodlenot, another notable Bitcoiner, write something similar.

821
01:34:06,951 --> 01:34:17,951
So some Bitcoiners are even wondering if in the worst case scenario, they're not putting it explicitly, but in the worst case scenario is something going on that's not good.

822
01:34:18,951 --> 01:34:26,951
Like, could this be an attack on Bitcoin where someone is preparing a massive reorg that would then hit the blockchain?

823
01:34:26,951 --> 01:34:44,951
So my understanding of the crypto economics of this is that hypothetically, suppose the U.S. government were trying to destroy Bitcoin right now by mining in secret a chain which double spends like all of the transactions on chain.

824
01:34:45,951 --> 01:34:46,951
And they do this.

825
01:34:46,951 --> 01:35:00,951
If they were to do that for half a year as a majority of the hash rate, then they would be able to in that time probably collect all of the circulating Bitcoin, like all the Bitcoin that moves.

826
01:35:00,951 --> 01:35:02,951
They could double spend because they're the majority.

827
01:35:02,951 --> 01:35:12,951
And then do a massive reorg where all of that Bitcoin is moved to their ownership.

828
01:35:12,951 --> 01:35:17,951
So they would have stolen all the Bitcoin from everyone who had moved Bitcoin over the course of half a year.

829
01:35:18,951 --> 01:35:33,951
Because I think that the rate at which Bitcoin circulates is high enough that if you were to double spend for a half year in secret on the longest chain, then you could announce it and release that long chain.

830
01:35:33,951 --> 01:35:37,951
Then all the nodes would think that that's the right, the heaviest chain.

831
01:35:37,951 --> 01:35:41,951
So there'd be a huge reorg of over 10,000 blocks.

832
01:35:41,951 --> 01:35:48,951
It would be the most unprecedented and surprising thing in the history of Bitcoin probably.

833
01:35:48,951 --> 01:35:55,951
And of course, this is a theoretical hypothetical thought experiment and not realistic.

834
01:35:56,951 --> 01:36:08,951
Although if it were going on, I think that the way we would perceive it is that we would see hash rate very high without explanation for a while.

835
01:36:08,951 --> 01:36:15,951
And then the reorg would be revealed to the world after it had been going on for a while.

836
01:36:16,951 --> 01:36:20,951
So I think that's what Shinobi, Hadalnaut and others are wondering.

837
01:36:20,951 --> 01:36:24,951
Is something going on of that nature?

838
01:36:24,951 --> 01:36:30,951
So they're attuned to the importance of these things.

839
01:36:39,952 --> 01:36:42,952
I can't hear you. I think you're in the meeting.

840
01:36:42,952 --> 01:36:48,952
My initial reaction, despite the whole debate earlier, was, oh, Bitcoin is more secure.

841
01:36:48,952 --> 01:36:52,952
It's in the sake of hash rate. So it was a positive, less suspicious.

842
01:36:58,952 --> 01:37:03,952
Yeah, people think hash rate going higher is better and they celebrate milestones in the hash rate.

843
01:37:03,952 --> 01:37:08,952
But the truth is that actually higher hash rate doesn't tell us anything.

844
01:37:08,952 --> 01:37:18,952
And what we want to see is higher fees because eventually there'll be no more Coinbase and we'll need high fees.

845
01:37:18,952 --> 01:37:24,952
Otherwise, Bitcoin will have to resort to inflation or accept low security.

846
01:37:24,952 --> 01:37:30,952
And low security would reverse the value accrual to Bitcoin's native token.

847
01:37:30,952 --> 01:37:39,952
Because if transactions have low finality assurances, then people wouldn't want to store their money in Bitcoin's blockchain.

848
01:37:42,952 --> 01:37:46,952
It's all pretty complicated. I had to read a whole bunch of articles to understand it.

849
01:37:51,952 --> 01:37:56,952
You should tweet those articles. Do you have those? How many articles does it fit in a tweet?

850
01:37:56,952 --> 01:37:58,952
I guess tweets can be really long now, actually.

851
01:37:59,952 --> 01:38:03,952
My favorite one is Lyn Alden's Bitcoin Fee Modeling.

852
01:38:07,952 --> 01:38:11,952
I can try to find a tweet of it.

853
01:38:11,952 --> 01:38:17,952
But if you just Google Bitcoin Fee Modeling Lyn Alden, you'll find it immediately.

854
01:38:17,952 --> 01:38:22,952
Well, it's 11 o'clock now. I think we should adjourn until Thursday.

855
01:38:22,952 --> 01:38:26,952
Thanks, everyone, for being here. I'll see you all on Thursday.

856
01:38:26,952 --> 01:38:31,952
Bring your friends and family so we can talk more about Drivechain, get more questions and comments.

857
01:38:31,952 --> 01:38:36,952
Hopefully we'll have more debate. And this is the way things will grow over time.

858
01:38:36,952 --> 01:38:40,952
So I'm excited that you're all here.

859
01:38:40,952 --> 01:38:44,952
And sometimes these spaces get really big. Sometimes they're kind of small.

860
01:38:44,952 --> 01:38:48,952
So that gives everyone an opportunity to experience both.

861
01:38:48,952 --> 01:38:52,952
All right. Thank you, Raz and our other speakers.

862
01:38:52,952 --> 01:38:54,952
Thanks, Henry.