1 00:00:00,000 --> 00:00:05,400 Hi everybody, welcome. This is the panel on transaction censorship. My name is 2 00:00:05,400 --> 00:00:10,480 Craig Deutsch. I am the editorial project lead at Bitcoin Magazine Pro, and I am 3 00:00:10,480 --> 00:00:15,760 joined by Nick Hansen, the CEO of Luxor Technologies. 4 00:00:22,560 --> 00:00:29,120 Also joining us is Udi Wertheimer, co-founder of Taproot Wizards. 5 00:00:29,120 --> 00:00:39,760 And Paul Sztorc, the founder and CEO of LayerTwo Labs. 6 00:00:51,800 --> 00:00:57,160 Thanks all for joining me. So this panel is about transaction censorship, but 7 00:00:57,160 --> 00:01:03,960 maybe it should be about wardrobe censorship. I do a little joking. 8 00:01:03,960 --> 00:01:09,640 So let's go ahead and just start about how blocks are constructed. Right now 9 00:01:09,640 --> 00:01:14,400 Stratum V1 is the main mining protocol for communication between miners and 10 00:01:14,400 --> 00:01:19,280 pools. Nick, as our resident mining expert, can you just talk about how blocks are 11 00:01:19,280 --> 00:01:23,840 constructed and some current limitations for individual miners who rely on the 12 00:01:23,840 --> 00:01:29,800 pools to build those blocks? So blocks are constructed by analyzing the mempool. 13 00:01:29,800 --> 00:01:34,880 So every node out in the world has a view of all the transactions that are 14 00:01:34,880 --> 00:01:38,440 pending. Basically the way it works is all the transactions that have the 15 00:01:38,440 --> 00:01:42,360 highest fee are filtered up to the top, and then we take that portion and create 16 00:01:42,360 --> 00:01:46,600 something called a block template. That block template will be the proposal that 17 00:01:46,600 --> 00:01:51,000 will submit to the network once the proof of work has been demonstrated. And 18 00:01:51,000 --> 00:01:54,840 then once that block has been solved, it's added to the chain. The rest of the 19 00:01:54,840 --> 00:01:57,960 nodes, you know, all of the nodes that I'm sure a lot of you are running, will 20 00:01:57,960 --> 00:02:02,120 actually get that block, validate that it's accurate, and then the mempool state 21 00:02:02,120 --> 00:02:09,520 will change. And then we just do that forever. So there was some criticism 22 00:02:09,520 --> 00:02:16,080 when Stratum V1 was implemented because it removed the get block 23 00:02:16,080 --> 00:02:21,840 template, which allowed miners to construct their own blocks. How does 24 00:02:21,840 --> 00:02:28,240 Stratum V2 solve this, or does it solve this? Can you talk a little bit more 25 00:02:28,240 --> 00:02:33,960 about how Stratum V2 changes the way that blocks are constructed? 26 00:02:33,960 --> 00:02:40,160 Okay, so Stratum V1, basically all of that stuff that we do to 27 00:02:40,160 --> 00:02:43,920 construct the block template, we send that out to the miners over a protocol 28 00:02:43,960 --> 00:02:49,120 called Stratum V1. They have no input into what goes into that block. Stratum V2 29 00:02:49,120 --> 00:02:53,960 implements something called job negotiation, where basically up front the 30 00:02:53,960 --> 00:02:58,760 miners and the pool agree what the transactions will be within that 31 00:02:58,760 --> 00:03:03,040 block. And if there is a transaction that isn't in the block at that time, the 32 00:03:03,040 --> 00:03:07,440 miner can propose it through a protocol called job negotiation. Stratum V2 33 00:03:07,440 --> 00:03:10,800 implements a lot of interesting things that I do think 34 00:03:10,800 --> 00:03:14,160 Stratum V2 is a meaningful and important improvement. But when people 35 00:03:14,160 --> 00:03:17,080 talk about Stratum V2, really the only thing that they're talking about is job 36 00:03:17,080 --> 00:03:22,500 negotiation, because that does introduce a way to reduce the censorability of the 37 00:03:22,500 --> 00:03:27,120 network and introduce transactions to the mempool that wouldn't have 38 00:03:27,120 --> 00:03:31,080 otherwise been there. Because for whatever reason, maybe the 39 00:03:31,080 --> 00:03:34,680 mining pool is censoring those transactions, either for regulatory 40 00:03:34,720 --> 00:03:40,240 reasons or otherwise, the miner can propose them and add them to the template. 41 00:03:40,240 --> 00:03:45,800 Thanks. So part of the idea for this panel came about in response to the 42 00:03:45,800 --> 00:03:50,720 ordinals and inscriptions craze and whether these transactions should be 43 00:03:50,720 --> 00:03:56,680 considered spam. From detractors there's been ideas for filtering transactions 44 00:03:56,680 --> 00:04:04,560 using node policy. Right now we already have some examples of filters. So one 45 00:04:04,560 --> 00:04:09,000 sat per vbyte as a minimum fee is a node policy. It's not a consensus rule. 46 00:04:09,000 --> 00:04:14,680 The dust limit is a node policy. And now there's been a recent node patch which 47 00:04:14,680 --> 00:04:20,120 is or disrespector. So similarly to the previous examples, it only prevents the 48 00:04:20,120 --> 00:04:24,200 relaying of those transactions. Udi, what are your thoughts on these types of 49 00:04:24,200 --> 00:04:31,880 filters? Would you consider this a type of censorship? I consider it role 50 00:04:32,240 --> 00:04:35,680 playing games that people like to play in their basements with their little 51 00:04:35,680 --> 00:04:39,880 Raspberry Pi nodes. I don't see how it relates to actual mining. 52 00:04:39,880 --> 00:04:43,040 I've never heard of a miner who's running or mining pool that's running or 53 00:04:43,040 --> 00:04:47,880 disrespector or a filtering patch like that. But of course if they 54 00:04:47,880 --> 00:04:51,880 want to, they're more than welcome to. But I think they'll find very quickly that 55 00:04:51,880 --> 00:04:58,000 it's not very profitable and fairly expensive for miners to try to censor 56 00:04:58,000 --> 00:05:00,600 these. So I don't expect that they'll want to. I've never heard of a miner who 57 00:05:00,600 --> 00:05:06,000 is interested in doing that. I have heard of a lot of Bitcoin enthusiasts 58 00:05:06,000 --> 00:05:11,840 who are not necessarily miners who want to run those on their own computers 59 00:05:11,840 --> 00:05:19,080 which is fine but doesn't seem to be really relevant for mining. And I guess 60 00:05:19,080 --> 00:05:27,200 the big question for miners is whether miners should be maximizing 61 00:05:27,200 --> 00:05:34,160 revenue at all costs. Like should that be their main goal? And if not, then what 62 00:05:34,160 --> 00:05:39,640 exactly should they be doing and why? Paul, can you speak to that? 63 00:05:39,640 --> 00:05:50,360 The answer is yes. The miners shouldn't revenue maximize, of 64 00:05:50,360 --> 00:05:55,120 course. Anything else has the feature that it would be contrary to 65 00:05:55,120 --> 00:05:58,680 what the miners want to do. So there's no reason why they would just, should 66 00:05:58,680 --> 00:06:04,720 miners just give away free money in the form of not taking the ordinal, the 67 00:06:04,720 --> 00:06:07,360 opportunity cost of not taking the ordinal transaction? So that's really 68 00:06:07,360 --> 00:06:11,360 what it all boils down to is will miners just give away their own money for free 69 00:06:11,360 --> 00:06:17,000 for no reason? And that is the whole transaction censorship question. I had a 70 00:06:17,000 --> 00:06:21,200 question about a stratum v2. I was going to ask Nick but now we have the two 71 00:06:21,200 --> 00:06:23,800 people with one microphone but we're gonna give it a try anyway I think it 72 00:06:23,800 --> 00:06:27,920 will be about, the question is stratum v2, the job negotiation. The whole point 73 00:06:27,920 --> 00:06:32,640 is the pool, the mean pool, the reason why everyone loves it is the mean pool 74 00:06:32,640 --> 00:06:39,120 censoring and the person, you know, some small miner can like propose, they can 75 00:06:39,120 --> 00:06:45,320 like trump the pool by getting the block template they want in anyway or something, 76 00:06:45,320 --> 00:06:50,000 they can work on their own thing. And the tiny miner, if the pool and the tiny 77 00:06:50,000 --> 00:06:57,920 miner disagree, the tiny client of the pool, they win. It seems to be how it 78 00:06:57,920 --> 00:07:01,280 must work or perhaps not. But if that's the case then the pool can of course 79 00:07:01,280 --> 00:07:05,280 just mine with 0.01% themselves and they can censor anyways and then they 80 00:07:05,280 --> 00:07:09,280 escape all the blame. So that is my question to you. 81 00:07:09,280 --> 00:07:13,400 Yeah, thanks for the question. I think there's actually a lot there. So actually in 82 00:07:13,400 --> 00:07:17,160 stratum v2 when you do job negotiation there will be multiple templates being 83 00:07:17,160 --> 00:07:21,840 delivered to each different miner. So, you know, the pool will deliver what it 84 00:07:21,840 --> 00:07:26,280 calls the default or de facto template which is delivered to every miner and 85 00:07:26,280 --> 00:07:29,600 then if you go through the job negotiation process, the miner that 86 00:07:29,600 --> 00:07:33,960 proposed that, that will not go to the rest of the, that will not go, most 87 00:07:33,960 --> 00:07:37,040 likely will not go to the rest of the miners. It will be that miner working on 88 00:07:37,040 --> 00:07:40,920 it. If they happen to hit the block then their transaction is included. The reason 89 00:07:40,920 --> 00:07:43,520 that I don't really think job negotiation is going to improve 90 00:07:43,520 --> 00:07:47,800 censorship at all and the reason being is that the censorship comes from a 91 00:07:47,800 --> 00:07:53,040 regulatory, most likely will come from a like a regulatory overstep, meaning 92 00:07:53,040 --> 00:07:56,160 you're in an environment, you know, you're in a country that wants you to sanction, 93 00:07:56,160 --> 00:07:59,200 let's just say OFAC transactions, you know, there's a whole 94 00:07:59,200 --> 00:08:04,200 list of addresses that are sanctioned by OFAC. If you send Bitcoin to them you're 95 00:08:04,200 --> 00:08:09,840 breaking US sanctions, which is a very bad thing to do. And so there's a proposal 96 00:08:10,000 --> 00:08:13,600 or there's been some thought around should we, you know, should mining pools 97 00:08:13,600 --> 00:08:18,120 censor those transactions if they see them in the US. Let's just say that they 98 00:08:18,120 --> 00:08:21,800 do. Most likely in the job negotiation protocol what's going to end up 99 00:08:21,800 --> 00:08:27,040 happening, even if the miner proposes one of these illicit transactions, we'll call 100 00:08:27,040 --> 00:08:31,560 them, most likely the pool will just reject it and say actually we're 101 00:08:31,560 --> 00:08:35,440 not going to accept that transaction anyway. And so what strategy two then 102 00:08:35,440 --> 00:08:39,200 introduces a very easy fall over so you can fail over to another pool, propose 103 00:08:39,200 --> 00:08:43,240 that transaction that way. But then in that way it becomes a little more overt 104 00:08:43,240 --> 00:08:47,080 that a mining pool is censoring. Right now it's not really possible to tell if 105 00:08:47,080 --> 00:08:51,440 a mining pool is censoring transactions because it's not overt. It could just be 106 00:08:51,440 --> 00:08:55,200 my node's not, that pool's node is not very well connected, that hasn't 107 00:08:55,200 --> 00:09:01,400 propagated yet. But most likely job negotiation, the portion of strategy two 108 00:09:01,400 --> 00:09:04,920 called job negotiation, is not really going to improve censorship at all 109 00:09:05,040 --> 00:09:10,480 because of the protocol effectively giving the pool the right to say 110 00:09:10,480 --> 00:09:19,440 no to those transactions. The pool always has the trump card, I would think. I mean that must 111 00:09:19,440 --> 00:09:23,200 be how it works. But then you have an intriguing situation where 112 00:09:23,200 --> 00:09:27,840 if anyone, if you have a full node and you have had a transaction in your own 113 00:09:27,840 --> 00:09:32,880 mempool that would have met the cutoff for inclusion as far as the fees. If 114 00:09:32,880 --> 00:09:37,840 you've had it for more than like 20 minutes say, you must know that it has 115 00:09:37,840 --> 00:09:41,440 reached every pool and that they have passed on it and in that way stratum v2 116 00:09:41,440 --> 00:09:45,200 doesn't seem to be an improvement. See what people are, you know, everyone, what people love 117 00:09:45,200 --> 00:09:48,840 about stratum, like as you and I agree that stratum v2 brings a lot of useful 118 00:09:48,840 --> 00:09:52,200 things, but the people who talk about it on Twitter they just really think it's 119 00:09:52,200 --> 00:09:57,880 about the mean pool is censoring and we get to do something about that. But it 120 00:09:57,880 --> 00:10:04,080 doesn't really improve that situation I think. Maybe you agree. So I guess since 121 00:10:04,080 --> 00:10:10,120 we're on this thread, yesterday mempool.space announced an accelerator 122 00:10:10,120 --> 00:10:16,880 and right now when you go to broadcast a transaction you look at fee 123 00:10:16,880 --> 00:10:21,680 estimation, you might check mempool.space or another block explorer to see the 124 00:10:21,680 --> 00:10:26,000 current fee rate to get into the next block. So how does this type of 125 00:10:26,000 --> 00:10:31,360 accelerator, which already exists with other mining pools, how does this 126 00:10:31,360 --> 00:10:38,320 type of accelerator impact fee estimation as well as like potential 127 00:10:38,320 --> 00:10:42,560 transaction censorship or does it? This is a very important just topic overall 128 00:10:42,560 --> 00:10:46,280 because it's kind of a canary in the coal mine as far as if people aren't 129 00:10:46,280 --> 00:10:51,120 getting what they want out of all the existing tech stack of Bitcoin like the 130 00:10:51,120 --> 00:10:55,800 mempool for example, they will just build some other thing that gives them what 131 00:10:55,800 --> 00:10:59,840 they want and that is why the whole idea of transaction censorship is very 132 00:10:59,840 --> 00:11:04,560 simple which is as to the miners will revenue maximize because that's their 133 00:11:04,560 --> 00:11:09,720 bread and butter and anything that tries to stop them. That needs to have a very, 134 00:11:09,720 --> 00:11:13,960 this is often, I think this is modeled because it's like SegWit2x and 135 00:11:13,960 --> 00:11:20,360 other things where the value of Bitcoin is maybe threatened by the 136 00:11:20,360 --> 00:11:23,960 protocol becoming less useful but the difference when it comes to this 137 00:11:24,000 --> 00:11:27,400 transaction censorship question is that the miners have the final say on what 138 00:11:27,400 --> 00:11:31,760 makes it into, what was seen by the network by a certain amount of time. So 139 00:11:31,760 --> 00:11:36,880 that is the whole game of mining and they have the final say on that and so 140 00:11:36,880 --> 00:11:40,120 they can always say that they just didn't get a message and censor it if 141 00:11:40,120 --> 00:11:44,960 they wish and they can also include anything, they can include a Bitcoin 142 00:11:44,960 --> 00:11:48,760 transaction so this is where we get into maybe stamps instead of ordinals but 143 00:11:48,760 --> 00:11:52,400 because of something called Alan Turing's universality of computation you 144 00:11:52,400 --> 00:11:55,480 can just reinterpret any data as something else so it's like if you have 145 00:11:55,480 --> 00:11:59,840 a JPEG file and you just, you're like on Windows and you change it to like a .txt 146 00:11:59,840 --> 00:12:03,600 file and then you open it in notepad, people will always be able to just 147 00:12:03,600 --> 00:12:08,200 transform anything they want, any kind of data, image, whatever into Bitcoin 148 00:12:08,200 --> 00:12:12,040 transactions and then just broadcast them on Bitcoin. So everyone who is 149 00:12:12,040 --> 00:12:16,600 trying to say that there is something other than a Bitcoin transaction in a 150 00:12:16,600 --> 00:12:21,440 Bitcoin block and anyone who is trying to stop the miners from profit 151 00:12:21,440 --> 00:12:25,880 maximizing or revenue maximizing, they're just asking miners to give away 152 00:12:25,880 --> 00:12:31,560 money for free and that's basically the whole story as I see it. I feel very 153 00:12:31,560 --> 00:12:34,120 unsportsmanlike holding the one microphone so I'm going to give it back. 154 00:12:34,120 --> 00:12:43,880 We can switch chairs and then it'll be easy for you too. Totally. You know 155 00:12:43,880 --> 00:12:51,000 on that point of should miners you know censor ordinal transactions or JPEG 156 00:12:51,040 --> 00:12:54,400 transactions or whatever, we talked about this before, I don't even think 157 00:12:54,400 --> 00:12:58,880 about it in the context of should or shouldn't. I think they cannot censor 158 00:12:58,880 --> 00:13:03,240 them because if they do, it hurts their profitability and eventually just they 159 00:13:03,240 --> 00:13:07,080 would be competitive. So mining pools cannot censor it or they're gonna lose 160 00:13:07,080 --> 00:13:11,040 in the competition to the miners who don't. So it's not even, there isn't 161 00:13:11,040 --> 00:13:17,320 really a choice. Mining pools have to include those things. Yeah exactly so 162 00:13:17,880 --> 00:13:21,000 I was on a Twitter space talking about you know the big wizard and other 163 00:13:21,000 --> 00:13:27,760 ordinal stuff and the very angry Bitcoin guy got on stage and asked me well why 164 00:13:27,760 --> 00:13:30,840 aren't you running or disrespect or you should turn that on you're attacking 165 00:13:30,840 --> 00:13:35,000 Bitcoin why would you turn that on? I said well I'm the only CEO of a mining 166 00:13:35,000 --> 00:13:38,440 pool that's here talking to you about this stuff. All the other ones are stoked 167 00:13:38,440 --> 00:13:40,800 that this is happening because they're making a ton of money and a ton of 168 00:13:40,800 --> 00:13:46,400 revenue for their miners. You're asking me for to effectively reduce the 169 00:13:46,400 --> 00:13:50,840 revenue of the customers that I have which are the miners. My job is to 170 00:13:50,840 --> 00:13:54,080 steward their hash rate and produce the most value for that hash rate as I can 171 00:13:54,080 --> 00:13:58,480 and by turning on or disrespect or I would be effectively you know doing a 172 00:13:58,480 --> 00:14:02,680 disservice to my miners and you know effectively my customers and that's 173 00:14:02,680 --> 00:14:05,680 gonna put me out of business because none of the other pools are going to do 174 00:14:05,680 --> 00:14:10,000 that either. So there is really like you know like Udi said you're effectively 175 00:14:10,000 --> 00:14:14,800 asking the mining pool to reduce their potential revenue and it's just not 176 00:14:14,800 --> 00:14:20,000 going to happen because that is I mean that's the way the consensus is built is 177 00:14:20,000 --> 00:14:25,600 to maximize revenue and to maximize profit from the network. So I'm gonna ask 178 00:14:25,600 --> 00:14:33,960 you a follow-up question on that. When Luxor mined the first taproot 179 00:14:33,960 --> 00:14:37,960 wizard, the very large one that got all of the Bitcoin maximalists up in arms 180 00:14:37,960 --> 00:14:43,680 part of what some of them at least were upset about was the fact that the fee 181 00:14:43,680 --> 00:14:51,080 was set at zero sat speed byte so it was an out-of-band transact payment. So I 182 00:14:51,080 --> 00:14:56,520 guess one of my in going back to the like the mempool.space example with 183 00:14:56,520 --> 00:15:01,760 the accelerator are those payments like made out of band is this a way that 184 00:15:01,760 --> 00:15:06,720 mining pools could be taking additional revenue without potentially having to 185 00:15:06,720 --> 00:15:13,200 disclose that publicly on the time chain and for people to for their miners to be 186 00:15:13,200 --> 00:15:17,760 receiving the fees from that? I think it's very straightforward that this is 187 00:15:17,760 --> 00:15:21,000 an example another example of what I mentioned before of the existing system 188 00:15:21,000 --> 00:15:25,680 doesn't work so if you have if people are paying out of band then miners want 189 00:15:25,680 --> 00:15:28,720 that miners control they have a certain amount of block space that they want to 190 00:15:28,720 --> 00:15:34,160 sell someone wants to buy it we had this public mempool but if it's not going to 191 00:15:34,160 --> 00:15:39,240 facilitate that transaction then they will just do the out-of-band payment so 192 00:15:39,280 --> 00:15:44,880 yeah I think if the you know if the laser a maxis want to have efficient 193 00:15:44,880 --> 00:15:50,200 transparent reporting of how transactions flow and you know fees and 194 00:15:50,200 --> 00:15:54,280 so on the mempool will have to become more useful right now you know there's a 195 00:15:54,280 --> 00:15:58,000 lot of people who want to you know for whatever reason they want to inscribe 196 00:15:58,000 --> 00:16:01,360 four megabyte transactions there's a bunch of them they cannot do that with 197 00:16:01,360 --> 00:16:04,640 the mempool so all of that you know that information will not be available in the 198 00:16:04,640 --> 00:16:08,880 mempool before it's mined after it's mined you're not gonna know for sure if 199 00:16:08,880 --> 00:16:11,960 the fee that you see is the fee was actually paid if you think that those 200 00:16:11,960 --> 00:16:14,960 are things that are valuable then the mempool is gonna need to you know be 201 00:16:14,960 --> 00:16:17,680 improved to accommodate for this because people are gonna keep doing that because 202 00:16:17,680 --> 00:16:21,600 they want to we can't stop them up the protocol allows for it so the question 203 00:16:21,600 --> 00:16:25,920 is are we gonna let are gonna have the mempool serve those people as well or 204 00:16:25,920 --> 00:16:30,280 we're gonna say that that they shouldn't be part of that mempool for whatever 205 00:16:30,280 --> 00:16:33,960 technical reason which is which is also okay but that would mean that they would 206 00:16:33,960 --> 00:16:38,000 have to bypass it because they're still gonna do it yeah transaction accelerators 207 00:16:38,000 --> 00:16:43,320 have been around for a long time but they were mostly for like a transaction 208 00:16:43,320 --> 00:16:46,120 you put you accidentally put one sap per V by and you know you need to get it 209 00:16:46,120 --> 00:16:49,160 through so you can go through and pay the pool out of band this has been 210 00:16:49,160 --> 00:16:53,880 around for a long time by BTC has it on their front page a lot of mining pools 211 00:16:53,880 --> 00:16:58,280 have done this throughout history now the problem is if it becomes prolific if 212 00:16:58,280 --> 00:17:02,760 that becomes the way that fees are paid to mining pools that starts to look kind 213 00:17:02,760 --> 00:17:06,920 of like an attack on Bitcoin the other pools so I don't know if people don't 214 00:17:06,920 --> 00:17:11,120 know the most pools now are paper share meaning you pay the expected value of 215 00:17:11,120 --> 00:17:13,600 every share that's submitted to the pool regardless of whether you find blocks or 216 00:17:13,600 --> 00:17:18,880 not it you know maybe 94 to 96 percent of all hash rate in the world flows to 217 00:17:18,880 --> 00:17:24,080 PPS based pools that PPS calculation includes transaction fees so if there's 218 00:17:24,080 --> 00:17:27,480 a mining pool that's taking a bunch of out-of-band transactions they're 219 00:17:27,480 --> 00:17:31,120 effectively reducing the PPS rate for the rest of the network and the rest of 220 00:17:31,120 --> 00:17:35,200 the pools which then will drive all of the hat all of the hash rate to the one 221 00:17:35,200 --> 00:17:39,680 pool that's doing all the transaction acceleration and so like with what men 222 00:17:39,680 --> 00:17:44,040 pool is do it men pool space is doing they're going to effectively make it way 223 00:17:44,040 --> 00:17:49,800 more centralized or they're going to put apply a centralizing force to the hash 224 00:17:49,800 --> 00:17:53,120 rate that exists today because they're going to make all the other pools less 225 00:17:53,120 --> 00:17:58,520 profitable now Luxor hasn't subscribed to the transaction acceleration program 226 00:17:58,520 --> 00:18:01,800 that men pool space has I believe they announced it was foundry I'm not sure 227 00:18:01,800 --> 00:18:07,760 but that's just going to continue to accelerate the decentralization of hash 228 00:18:07,760 --> 00:18:13,280 rate if that is the case if that becomes a very prolific way of doing you know 229 00:18:13,280 --> 00:18:18,160 transaction propagation and transaction fee payments so let's talk about the 230 00:18:18,160 --> 00:18:25,480 centralization of mining because it becomes more easy for transactions to be 231 00:18:25,480 --> 00:18:31,520 censored if miners are centralized and yes but what does it mean that what is 232 00:18:31,520 --> 00:18:36,040 the definition of minor centralization it's a good question it's a good 233 00:18:36,040 --> 00:18:41,120 question we right now we have three pools that have a significant share of 234 00:18:41,120 --> 00:18:45,800 hash rate and I don't know what the percentage of that is offhand but it's a 235 00:18:45,800 --> 00:18:48,880 it's a lot but does that is that because that's just a certain grouping you know 236 00:18:48,880 --> 00:18:54,480 there's just like maybe they have it's like just just because someone runs a 237 00:18:54,480 --> 00:18:57,720 pool like he just gave you a perfect example of someone who controls a pool 238 00:18:57,720 --> 00:19:00,760 they run they own a pool but they have very limited control over that because 239 00:19:00,760 --> 00:19:07,120 they have a they will lose clients immediately to a rival pool if they if 240 00:19:07,120 --> 00:19:11,240 the pool doesn't you know so what we want is it to be as cheap and easy as 241 00:19:11,240 --> 00:19:16,320 possible for someone to start a new pool new competing pool that stops the pools 242 00:19:16,320 --> 00:19:23,800 from misbehaving the same reason why we want miners to revenue maximize in 243 00:19:23,800 --> 00:19:29,240 contrast to an older dispute such as SegWit2x we want the software developers 244 00:19:29,240 --> 00:19:34,800 to write software code that maximizes the value of Bitcoin it's a very it's a 245 00:19:34,800 --> 00:19:39,400 parallel situation but I think it's the lesson of the SegWit2x era was that 246 00:19:39,400 --> 00:19:42,800 miners should like be very tame and just do whatever they're told or something 247 00:19:42,800 --> 00:19:47,120 like that there's still this cult lingering cultural baggage from SegWit2x 248 00:19:47,120 --> 00:19:52,800 that has carries through to the present day but the miners must at 249 00:19:52,800 --> 00:19:55,920 revenue maximizing we wanted it to be as cheap and easy as possible for someone 250 00:19:55,920 --> 00:20:01,040 to start a new pool I think sometimes people use a definition of minor 251 00:20:01,040 --> 00:20:05,160 centralization that goes something along the lines of if one minor becomes more 252 00:20:05,160 --> 00:20:09,520 profitable for any reason and puts another minor out of business then that 253 00:20:09,520 --> 00:20:13,560 is mining centralization which I think that that definition cannot possibly be 254 00:20:13,560 --> 00:20:17,560 useful because that is like just happening all the time every two weeks 255 00:20:17,560 --> 00:20:23,160 every time the difficulty resets it fires the bottom half of the mining 256 00:20:23,160 --> 00:20:30,000 performers so so I guess I guess my question stems from like a concern 257 00:20:30,000 --> 00:20:37,120 around that being so an accelerator being so successful that so much of the 258 00:20:37,120 --> 00:20:41,760 hash rate goes to one particular minor or a couple particular miners because 259 00:20:41,760 --> 00:20:47,000 then it opens up the network for potentially more censorship I think we 260 00:20:47,000 --> 00:20:50,120 should bet everything on the censorship question but isn't it interesting that 261 00:20:50,120 --> 00:20:54,800 the idea that if you revenue maximize you're going to include as many 262 00:20:54,800 --> 00:21:00,360 transactions as possible and if you can only include so many you'll put the ones 263 00:21:00,360 --> 00:21:06,840 that pay the higher fee first to me that seems to be the definition of not 264 00:21:06,840 --> 00:21:11,200 censoring so the the fact that someone would block a transaction for some kind 265 00:21:11,200 --> 00:21:15,600 of a political reason or that we give these other people influence over like 266 00:21:15,600 --> 00:21:21,000 someone in a bureaucrat in a different country influence over the Bitcoin 267 00:21:21,000 --> 00:21:24,360 protocol that would be like one kind of censorship but then also the or 268 00:21:24,360 --> 00:21:28,160 disrespectors you know we're doing a similar thing if you just say that or 269 00:21:28,160 --> 00:21:31,600 disrespectors are all from a different country and they're all lawmakers or 270 00:21:31,600 --> 00:21:35,040 something like that so the question of it's really all just about the revenue 271 00:21:35,040 --> 00:21:39,560 maximization of the miners which is why I think it's well I mean don't you think 272 00:21:39,560 --> 00:21:43,800 that like what do you think of like is it mining centralization when very many 273 00:21:43,880 --> 00:21:49,320 people join a few pools if all the other pools are irrational and if in 274 00:21:49,320 --> 00:21:53,160 particular if they censor what if all the other pools censor and there's only 275 00:21:53,160 --> 00:21:56,800 three that don't and everyone joins those three that's is that mining 276 00:21:56,800 --> 00:22:03,720 centralization I mean it can become mining centralization if them if it's an 277 00:22:03,720 --> 00:22:08,600 overwhelming majority but I think like it goes back to like is that are they 278 00:22:08,600 --> 00:22:13,520 acting in their own best interests and does that also act in the best interest 279 00:22:13,520 --> 00:22:16,120 of Bitcoin I mean one of the fascinating things about Bitcoin is it 280 00:22:16,120 --> 00:22:19,560 is economically you're economically incentivized to act in the best 281 00:22:19,560 --> 00:22:24,480 interest of the network at large so I want to I do want to go back to the the 282 00:22:24,480 --> 00:22:29,880 mempool and how that is specifically not able right now to function with like 283 00:22:29,880 --> 00:22:33,960 four megabyte blocks and things like that and can you just explain why that's 284 00:22:33,960 --> 00:22:39,360 the case because for people who might not understand right so so the way 285 00:22:39,360 --> 00:22:45,080 transaction propagation works by default in addition to you know 286 00:22:45,080 --> 00:22:49,400 validity rules that just check that a transaction is valid there's also what 287 00:22:49,400 --> 00:22:53,240 you know is called in the technical terms is a standardness rules and that's 288 00:22:53,240 --> 00:22:57,760 basically policy rules and they basically affect how transactions are 289 00:22:57,760 --> 00:23:02,440 allowed to be propagated through mempools of the Bitcoin network node 290 00:23:02,440 --> 00:23:07,960 Bitcoin no network into eventually a mining pool and that peer-to-peer 291 00:23:07,960 --> 00:23:13,480 network does not allow for propagation of transactions that are above 400 292 00:23:13,480 --> 00:23:18,160 kilobytes so again it's not because the transaction is invalid it is valid but 293 00:23:18,160 --> 00:23:23,080 the peer-to-peer network will not propagate it unless it gets into a block 294 00:23:23,080 --> 00:23:29,640 so that just means that if you do want to get a four megabyte transaction into 295 00:23:29,640 --> 00:23:33,560 the network like we did and like you know a bunch of others have done after 296 00:23:33,560 --> 00:23:38,680 us then you have to do it you basically have to contact the mining pool directly 297 00:23:38,680 --> 00:23:44,520 to do that and that kind of reduces the efficiency of the mempool yes it's just 298 00:23:44,520 --> 00:23:51,760 magic ignore it it's not it just it kind of it kind of makes the mempool a little 299 00:23:51,760 --> 00:23:56,320 less sufficient because it means that it doesn't serve everyone needs some you 300 00:23:56,320 --> 00:23:59,680 know some users of the Bitcoin network cannot use it and it doesn't fully 301 00:23:59,800 --> 00:24:06,000 reflect what the actual you know state of transactions that are waiting into 302 00:24:06,000 --> 00:24:11,160 inclusion into a block so it's it's inaccurate and it is also creating you 303 00:24:11,160 --> 00:24:17,800 know eventually I think for mining pools the the equilibrium they would probably 304 00:24:17,800 --> 00:24:22,360 want to strive for is that everyone gets an equal opportunity to mine those juicy 305 00:24:22,360 --> 00:24:27,160 forming about transactions and not just you know the the the pools that get 306 00:24:27,160 --> 00:24:34,640 those sent directly to them right so those kind of things clearly can hurt 307 00:24:34,640 --> 00:24:40,960 you know decentralization of mining but it's really up to mining pools to you 308 00:24:40,960 --> 00:24:45,400 know they could they could all connect in and decide to receive four megabytes 309 00:24:45,400 --> 00:24:48,800 transactions they could start their own alternative mempool there's a lot of 310 00:24:48,800 --> 00:24:54,000 things they could do I think that as Ornels become more popular as 311 00:24:54,000 --> 00:24:56,760 inscriptions become more popular and I fully believe that they will you know I 312 00:24:56,760 --> 00:25:00,480 it's funny I've heard a bunch of people saying on panels that oh this is a fad 313 00:25:00,480 --> 00:25:03,056 I've been hearing for three months that it's a fad 314 00:25:03,056 --> 00:25:30,056 I've been hearing for three months that it's a fad and the fad seems to keep growing I really think they're here to stay and I think that mining pools are gonna have to start thinking about this more seriously because again this isn't just I feel like right now people in the mining space that I've talked to seem to think of it as like just a juicy booster to their revenue which it is but also it kind of requires involvement because mining pools that will not optimize for this will 315 00:25:30,056 --> 00:25:36,296 end up being uncompetitive compared to the ones that do yeah the so the mempool policies there's 316 00:25:36,296 --> 00:25:41,336 actually an alternative implementation called Libitcoin by Eric Bosco they remove that entirely 317 00:25:41,336 --> 00:25:46,216 because they think that any any transaction that is that is valid and meets the consensus rules 318 00:25:46,216 --> 00:25:51,936 should be allowed to be propagated the reason that we don't propagate those now by default is 319 00:25:51,936 --> 00:25:57,896 because their DOS vectors DDoS vectors basically if you're spamming four megabyte transactions to 320 00:25:57,896 --> 00:26:03,896 everybody you know it takes a lot to propagate and validate those same with zero fee you know 321 00:26:03,896 --> 00:26:08,256 it's a very easy way for you to spam the network with zero fee transactions that's why those don't 322 00:26:08,256 --> 00:26:13,776 get propagated it is it those would be considered you know DOS vectors and that's why they remove 323 00:26:13,776 --> 00:26:23,136 those is it time for me to invoke MEV do we want to talk about MEV okay so MEV on Bitcoin that's you 324 00:26:23,136 --> 00:26:31,016 know MEV so from ETH they did they basically there's this huge business called flashbots that 325 00:26:31,016 --> 00:26:37,056 they actually integrated into ETH to help combat minor extractable value basically the idea is like 326 00:26:37,056 --> 00:26:44,496 in DeFi stuff you can add or remove liquidity let a trade occur absorb the ARB opportunity and then 327 00:26:44,496 --> 00:26:48,816 add liquidity back there's a bunch of different attacks and I don't know attack is the right term 328 00:26:48,816 --> 00:26:53,496 a bunch of different techniques that you can do generally it's up to the mining pools to do this 329 00:26:53,496 --> 00:26:58,056 because they're the ones that actually get to order the transactions now for BRC 20 and all 330 00:26:58,056 --> 00:27:03,736 these inscriptions coming mining pools are going to be incentivized to place those transactions in 331 00:27:03,736 --> 00:27:09,296 a particular order that could be considered a type of censorship I'm not sure if it's censorship in 332 00:27:09,296 --> 00:27:15,376 the classic sense of like binary but you are effectively modifying the consensus without 333 00:27:15,496 --> 00:27:21,816 outside of the standard rules of the fee you know the fee rate so that's a very interesting 334 00:27:21,816 --> 00:27:31,136 potential vector for for mining pools to become vastly more dynamic than they are today where 335 00:27:31,136 --> 00:27:36,176 generally a mining pool is plus or minus a few bips within all the other mining pools 336 00:27:36,176 --> 00:27:40,616 are deficiency and things like that but if MEV becomes a real thing that's a very meaningful 337 00:27:40,616 --> 00:27:45,016 like hundreds of millions of dollars of revenue have been generated by MEV and ETH and if that 338 00:27:45,056 --> 00:27:54,856 comes to Bitcoin the mining pool game is going to change very significantly so you know I think it 339 00:27:54,856 --> 00:28:01,656 was around when I think might have been before SegWit was introduced and adopt widely adopted 340 00:28:01,656 --> 00:28:09,536 there were consistently high fees and it seemed like it was coming from a mining pool who was 341 00:28:09,536 --> 00:28:17,136 just putting extra fees to drive up the fee market would you consider that like a form of MEV? 342 00:28:17,136 --> 00:28:27,536 I would I would say no I wouldn't say that's MEV. MEV is generally more transaction ordering I think 343 00:28:27,536 --> 00:28:31,776 with MEV it's kind of like you're doing something other than including the transaction so there's 344 00:28:31,776 --> 00:28:37,976 like there's some other thing going on and you the sum of all that equals more money for the 345 00:28:37,976 --> 00:28:42,976 miners I think it kind of cuts into a little bit about how easy it is to run a mining pool 346 00:28:42,976 --> 00:28:48,656 whereas how difficult is it to like check the transactions to make sure they're valid and then 347 00:28:48,656 --> 00:28:55,256 order them or something like that and then whereas with Ethereum they are doing many more steps and 348 00:28:55,256 --> 00:29:00,456 this I think makes I think the reason why it makes people uncomfortable sometimes is that it does cut 349 00:29:00,456 --> 00:29:06,616 into what I was saying about how it's you would want it to be very easy to run a mining pool and 350 00:29:06,616 --> 00:29:10,216 even to audit a mining pool to make sure that it's doing what we want it to do whereas with 351 00:29:10,216 --> 00:29:15,896 MEV it does seem to be it seems that there's like a victim with MEV you know there's like 352 00:29:15,896 --> 00:29:20,776 traders are trading and some they would have gotten a better deal but instead the miners get 353 00:29:20,776 --> 00:29:26,496 a better deal so it's a suddenly a very adversarial relationship between a miner and the end user but 354 00:29:26,496 --> 00:29:33,336 I do think that you know miners will revenue maximize which is the bottom line as always. 355 00:29:34,136 --> 00:29:41,656 It creates a very I think it makes mining into a very different type of business because either 356 00:29:41,656 --> 00:29:46,416 it might not be the miners themselves it might not even be the mining pools themselves that 357 00:29:46,416 --> 00:29:49,816 have to do this because maybe they outsource it but at some point someone has to be very 358 00:29:49,816 --> 00:29:55,056 intimately familiar with the way that users are using their network what their motivations are 359 00:29:55,056 --> 00:30:00,976 what are they trying to achieve and the miner kind of tries to extract value from that which 360 00:30:01,136 --> 00:30:05,696 has not been really happening in Bitcoin in the last few years maybe for the first time again sort 361 00:30:05,696 --> 00:30:13,016 of at some very specific points in the last three months and again yeah it's specifically about it 362 00:30:13,016 --> 00:30:17,736 usually comes down to ordering transactions right because it's not really about letting a 363 00:30:17,736 --> 00:30:22,736 transaction in or not letting it in you will eventually probably let it in happily but when 364 00:30:22,736 --> 00:30:30,376 there's like this added semantic to the point in time that the transaction appears relative to 365 00:30:30,376 --> 00:30:35,256 others then because miners are the ones that decide that then they might find that there's a 366 00:30:35,256 --> 00:30:41,736 you know that there's a way to extract value from that and just you know like as an idea as an 367 00:30:41,736 --> 00:30:51,696 example right if there's been this little race that ordinals people have been doing to get into 368 00:30:51,696 --> 00:30:57,536 the first you know 10,000 inscriptions for example right now if you because they have this number and 369 00:30:57,536 --> 00:31:03,696 some people had this added you know they value having a low number of an inscription so if you're 370 00:31:03,696 --> 00:31:09,016 a mining pool and you see 20,000 you know inscriptions coming in and you need to pick the 371 00:31:09,016 --> 00:31:14,776 first 10,000 then of course you know that might be very valuable for the for the people are creating 372 00:31:14,776 --> 00:31:19,856 those transactions it is nothing to it's very different from what usual Bitcoin transactions 373 00:31:19,856 --> 00:31:24,956 are where people do not necessarily care about urgency and or you take a little bribe on the 374 00:31:24,956 --> 00:31:30,476 side to get in the first 10,000 yeah listen I pay you a little extra yeah I'm gonna be there yeah 375 00:31:30,476 --> 00:31:35,916 so that the issue I mean I don't know if it's an issue but this this happens maybe happens when 376 00:31:35,916 --> 00:31:41,796 people ascribe meaning and semantics to the order of transactions and not just the existence of them 377 00:31:41,796 --> 00:31:47,876 yeah certainly I mean if you saw this burst of 10,000 transactions let's say we're minting a 378 00:31:47,876 --> 00:31:53,836 PRC 20 which what are you referencing here maybe the mining pool just swaps out 5,000 of those for 379 00:31:53,836 --> 00:31:58,316 their own because they know like wow there's a bunch of interest in value here that's it I would 380 00:31:58,316 --> 00:32:05,596 say that's MEV and potentially a censorship vector MEV is very centralizing that's a big problem you 381 00:32:05,596 --> 00:32:09,716 we talked about you know we're talking about mining centralization we can get into this you 382 00:32:09,716 --> 00:32:15,116 know we can get into the semantics or the minutia of what centralization is in my opinion it's one 383 00:32:15,116 --> 00:32:20,916 entity producing more blocks than the other that's kind of the way I would define it and in MEV is 384 00:32:20,916 --> 00:32:26,076 very centralizing the reason being is that it's highly it's highly technical and very difficult 385 00:32:26,076 --> 00:32:31,596 to do that's why flashbots was built flashbots was built to basically make it easy for everybody to 386 00:32:31,596 --> 00:32:37,116 do MEV but before that there was a huge centralizing force towards pools that were doing MEV because 387 00:32:37,116 --> 00:32:41,956 they were massively more profitable like to the tune of 20% when we negotiate fees with miners 388 00:32:41,956 --> 00:32:49,076 you're talking about like single bits you know the difference between 1.01 and 1.05 percent fee if 389 00:32:49,076 --> 00:32:54,476 you're talking about adding 20% more volume revenue that's you know 2,000 bips that is an 390 00:32:54,476 --> 00:33:01,836 incredible amount of revenue that could be added to pools which will certainly perturb the end and 391 00:33:01,836 --> 00:33:08,316 in cause centralization towards a pool that's able to do MEV effectively and I'll just add that when 392 00:33:08,316 --> 00:33:13,196 in this discussion about MEV there's kind of three groups that I see that are kind of playing that 393 00:33:13,196 --> 00:33:18,396 game there's end users there's application developers and then there's mining pools for 394 00:33:18,476 --> 00:33:24,876 end-users MEVs obviously end-users would prefer that MEV doesn't exist because MEV basically means 395 00:33:24,876 --> 00:33:29,276 that miners extract value that could otherwise have gone to the end-user so end-users would 396 00:33:29,276 --> 00:33:34,956 prefer MEV not to exist but there's not anything they can do immediately other than trying to pick 397 00:33:34,956 --> 00:33:43,556 applications that do not have excessive MEV so and that brings us to application developers they can 398 00:33:43,556 --> 00:33:47,676 try to design their applications and their you know protocols and you know BRC 20 for example 399 00:33:47,676 --> 00:33:53,276 is very MEV heavy but I wouldn't be surprised if BRC 20 will be you know over time adapted or 400 00:33:53,276 --> 00:34:01,556 replaced by protocol that is not as MEV heavy so application developers can help solve it in that 401 00:34:01,556 --> 00:34:09,916 way mining pools however will probably have to be on top of the MEV game you know from now on 402 00:34:09,916 --> 00:34:15,796 forever because even though I would expect application developers and users to push to a MEV 403 00:34:16,796 --> 00:34:24,156 light world there are always going to be these you know these temporary period of times like we 404 00:34:24,156 --> 00:34:29,556 have had in the last month where you see fees going up very high because basically of these 405 00:34:29,556 --> 00:34:36,796 MEV phenomenon phenomena so mining pools will have to be ready for it it is gonna happen even if it's 406 00:34:36,796 --> 00:34:41,316 not gonna stay you know gonna happen all the time it will happen sometimes and this is what we've 407 00:34:41,316 --> 00:34:47,396 seen in aetherium too it's not like you know flash bots is making buckets of money necessarily 408 00:34:47,396 --> 00:34:52,716 right now but if you look at a year ago when new protocols popped up on aetherium like every week 409 00:34:52,716 --> 00:34:58,156 and there's been like this entire defy conundrum and NFT and and and whatever then during those 410 00:34:58,156 --> 00:35:05,276 periods of heat MEV revenue goes up a lot so I think pools will have to kind of adapt to it 411 00:35:05,276 --> 00:35:10,676 this is all very healthy thing though I think that you think like because well for those of 412 00:35:10,676 --> 00:35:15,396 you don't know something weird happened at once at scaling three where a miner left scaling three 413 00:35:15,396 --> 00:35:20,116 early to signal for a bit kind of limited with nine percent of their hash rate and this was led 414 00:35:20,116 --> 00:35:26,916 to a kind of blockade of bit nine activation of SegWit and then it started this whole like miners 415 00:35:26,916 --> 00:35:32,996 versus developers like access or something but really the miners are just when the miners revenue 416 00:35:32,996 --> 00:35:39,756 maximize they are just trying to make it so that you know the customer is actually whoever's paying 417 00:35:39,876 --> 00:35:45,716 out there this money you're trying to maximize like the end users use of the the protocol they 418 00:35:45,716 --> 00:35:50,596 want the miners want the price of Bitcoin to be as high as possible miners want the transaction 419 00:35:50,596 --> 00:35:55,916 fees to be as high as possible so this has always been a kind of very healthy and very rational 420 00:35:55,916 --> 00:36:02,916 feedback loop that we sort of like we kind of like took a break from for like five years and 421 00:36:02,916 --> 00:36:08,436 now it's like returned so I don't know like that's just kind of like you know what do you think is 422 00:36:08,436 --> 00:36:13,316 like the next what's the next for what's where's organo's going to go we're going to go like how 423 00:36:13,316 --> 00:36:16,716 high are the feet see because the thing is the fees are very low that's part of the reason why 424 00:36:16,716 --> 00:36:21,156 ordinals could break in is it didn't really cost that much to actually fill up the block which in 425 00:36:21,156 --> 00:36:27,316 a way implies that the people were not people were not actually taking making use of the blocks right 426 00:36:27,316 --> 00:36:33,196 you know I would say the reason that inscription got popular and we're seen as so appealing to 427 00:36:33,196 --> 00:36:39,756 such a you know broad audience was because block space was underpriced for for a while 428 00:36:39,756 --> 00:36:47,036 artificially it's very cheap and then you know we see the fee rates fees per block like total 429 00:36:47,036 --> 00:36:53,716 US dollar fees per block that will go up sometimes like during these bubble periods but on the whole 430 00:36:53,716 --> 00:37:01,596 it then returns to a very very low rate only with the ordinals has it been anything above that right 431 00:37:01,596 --> 00:37:06,836 it may it may return back to its lower rate again or I may not but it's kind of interesting that the 432 00:37:06,836 --> 00:37:15,636 one time the fees have stayed slightly high has been because we've done a kind of kind of like 433 00:37:15,636 --> 00:37:24,476 non orthodontic non laser I type of yep do you think many pools will clear again it's a great 434 00:37:24,476 --> 00:37:29,916 question I would say yes I think I think the default answer needs to be yes but we're very 435 00:37:29,916 --> 00:37:35,316 far away from that there's like two days worth of transactions over 20 sats so and they keep 436 00:37:35,316 --> 00:37:41,916 coming by the day so the reason so early on inscriptions were driving fee volume a bit I 437 00:37:41,916 --> 00:37:46,436 mean blocks were all full but people were like oh wait why is it still only five sats per V bite 438 00:37:46,436 --> 00:37:51,636 that's only a little bit high the reason is because art inscriptions those type of inscriptions are 439 00:37:51,636 --> 00:37:55,036 what we would consider to be low time preference they don't really care when it gets in just as 440 00:37:55,036 --> 00:38:00,436 long as it does what drove the big volume last week like I don't know if you saw but like course 441 00:38:00,436 --> 00:38:07,396 I printed 64 Bitcoin in a day that's insane they usually do like 30 something the reason that there 442 00:38:07,396 --> 00:38:12,756 was so much fee volume during that time is because there was high time preference transactions coming 443 00:38:12,756 --> 00:38:17,716 into the mempool in the form of BRC 20s basically I need to mint faster than everybody else so I'm 444 00:38:17,716 --> 00:38:22,356 gonna set a thousand sats per V bite and it was really important to get those transactions in 445 00:38:22,356 --> 00:38:27,396 the top and basically get them included very quickly and that was that is what causes fees 446 00:38:27,396 --> 00:38:33,716 to go up the last time we saw a fee spike like that was during 2017 when everybody was trading 447 00:38:33,716 --> 00:38:39,356 shit coins around different exchanges and trying to get you know Bitcoin from Cryptopia to Bittrex 448 00:38:39,356 --> 00:38:45,036 and whatever so that he could buy Pepe whatever that was really and that was again another type 449 00:38:45,036 --> 00:38:50,116 of high time preference activity and that's what you need to see we need consistent high time 450 00:38:50,156 --> 00:38:56,516 preference activity on Bitcoin to continue driving fees and continue driving transaction 451 00:38:56,516 --> 00:39:02,756 fees up for for mining pools yeah but of course that's kind of a paradox because in the long run 452 00:39:02,756 --> 00:39:07,876 people are patient right so it's kind of like you need people to be panicked on a continuous basis 453 00:39:07,876 --> 00:39:11,876 I think and I think that's very good but I when I was talking about organo's I kind of just mean 454 00:39:11,876 --> 00:39:17,756 this more abstract like I kind of include BRC as ordinals is like ordinals is like the name of the 455 00:39:17,756 --> 00:39:29,116 technical 20s built on top of one and also yes so but they're like there are ostensibly not a 456 00:39:29,116 --> 00:39:36,076 Bitcoin transaction so like stamps would also be it's part of the ordinals movement the ordinals 457 00:39:36,076 --> 00:39:43,556 time I think we if the if the men pool does clear I think that's would spell the doom of the there 458 00:39:43,556 --> 00:39:48,956 was always a long you know this idea that over time transaction fees would replace the block 459 00:39:48,956 --> 00:39:55,476 subsidy so if the men pool will always eventually clear and that does seem to imply that the fee 460 00:39:55,476 --> 00:40:01,516 rates will never rise above a very small amount there always be a time when it's only $1 per 461 00:40:01,516 --> 00:40:07,476 transaction for like you know 2,500 transactions or whatever you can fit into a block so but that's 462 00:40:07,476 --> 00:40:13,476 using dollars as a unit of account yeah but I think we so it is should be like the the total 463 00:40:13,476 --> 00:40:17,516 amount of money paid by users you can use in whatever you like it's like it's the purchasing 464 00:40:17,516 --> 00:40:22,956 power of that unit that makes the difference so it's what did the users sacrifice an opportunity 465 00:40:22,956 --> 00:40:28,436 cost like how many how many hamburgers do they give up to broadcast a Bitcoin transaction you 466 00:40:28,436 --> 00:40:33,116 know but that's the however many hamburgers they give up is how many hamburgers the miners get to 467 00:40:33,116 --> 00:40:39,396 eat so it's the same number so that value in terms of its abstract purchasing power that value 468 00:40:39,396 --> 00:40:43,076 well you know though users want that to be low and they'll wait they get annoyed when the fees 469 00:40:43,076 --> 00:40:46,916 are high but the miners obviously want that value to be high but it is the same value and the blocks 470 00:40:46,916 --> 00:40:53,676 when the block subsidy goes away that is the same number but if if we're but if we believe in hyper 471 00:40:53,676 --> 00:40:59,916 Bitcoin ization which is a default assumption then Bitcoin will theoretically be worth a lot 472 00:40:59,916 --> 00:41:06,236 lot more so if the block subsidy goes away but the fees are still at 22 cents per V by that might 473 00:41:06,236 --> 00:41:13,196 actually still be a lot in terms of revenue the fee revenue is in purchasing power so it's 474 00:41:13,196 --> 00:41:18,316 independent of the Bitcoin exchange rate it's 100% independent the Bitcoin exchange rate could 475 00:41:18,316 --> 00:41:22,756 actually be increasing at an accelerating rate and that would make no difference when the block 476 00:41:22,756 --> 00:41:31,276 subsidy is zero in the interim the block subsidy gets halved every 48 four years famously but that 477 00:41:31,276 --> 00:41:37,796 would the Bitcoin price cannot actually double at a rate that would make up for that without it being 478 00:41:37,796 --> 00:41:41,716 the case that I mean this is like a spot I don't know if this is possible or not but one day like 479 00:41:41,716 --> 00:41:50,916 you know 99% of world GDP would just be like the value of Bitcoin I'm not sure you know maybe but 480 00:41:50,916 --> 00:41:55,716 I think yeah so that's an interesting question but my guess is that we want we want there to be 481 00:41:55,716 --> 00:42:03,236 we want miners to be allies of people who actually want to pay fees because they are the actual users 482 00:42:03,236 --> 00:42:09,916 and we want to be as respectful as possible of the actual end-user not necessarily someone on 483 00:42:09,916 --> 00:42:16,276 Twitter we want people who pay they really are they are the customer customer is always right 484 00:42:16,476 --> 00:42:22,356 with that from the point of view of the of the end-user who's creating their transaction the 485 00:42:22,356 --> 00:42:28,596 reason they would agree to pay you know whatever $20 per transaction is not related to how much 486 00:42:28,596 --> 00:42:33,916 it is in in SATs or how much what the Bitcoin price is it's just a question of do they get 487 00:42:33,916 --> 00:42:42,316 $20 of value out of creating that transaction and the the answer is we don't know and it's 488 00:42:42,316 --> 00:42:47,236 very hard to predict what if someone will be able to get $20 of value out of making a transaction 489 00:42:47,236 --> 00:42:52,036 tomorrow and it's definitely gonna be difficult to answer that question in you know 10 years into 490 00:42:52,036 --> 00:43:00,116 the future right and that's why people now are paying a lot in fees for a BRC20 token because 491 00:43:00,116 --> 00:43:04,436 they are they believe they are getting more value exactly these are currently worth so we're running 492 00:43:04,436 --> 00:43:11,556 out of time so I just want to do a quick run through of like for final thoughts do you feel 493 00:43:11,556 --> 00:43:20,756 like transaction censorship is a reasonable or like valid concern for Bitcoin no not at all all 494 00:43:20,756 --> 00:43:26,596 right the miners can and will maximize their revenue because of Alan Turing's computational 495 00:43:26,596 --> 00:43:33,316 universality among other reasons so I also say no but we should build something that checks to make 496 00:43:33,316 --> 00:43:37,716 sure that every there's no transactions that would have been in a maximized block revenue 497 00:43:37,716 --> 00:43:42,116 maximize block that are not that are being passed over so that we cannot be warned of that but it's 498 00:43:42,116 --> 00:43:50,636 very easy to be warned of that I think yeah I mean not only should miners optimize their revenue 499 00:43:50,636 --> 00:43:57,036 miners cannot not optimize their revenue and that's what makes Bitcoin work I'm not losing 500 00:43:57,036 --> 00:44:01,676 any sleep over this I know that it's gonna be fine of I've seen it work for 10 years and it's 501 00:44:01,676 --> 00:44:21,356 gonna continue to work thank you Miami for the last three years in this amazing city the whole 502 00:44:21,356 --> 00:44:28,796 world shut down but Miami welcomed us with open arms we want to show Bitcoin to the whole world 503 00:44:28,916 --> 00:44:36,076 we are taking the conference on the road to set the stage for Bitcoin in a new city 504 00:44:46,316 --> 00:44:56,436 Nashville Bitcoin 2024 is coming to Nashville in Tennessee a city that is known as a music 505 00:44:56,436 --> 00:45:02,396 and freedom city Bitcoin 2024 in Nashville from July 25th to 27th