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Welcome back to the Mining Pod. On today's show, we're joined by Paul Sztorc and
James

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00:00:03,040 --> 00:00:08,480
McAvity of LayerTwo Labs and Cormint, respectively. In this show, we talk about
Bitcoin mining fees,

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00:00:08,480 --> 00:00:13,200
design space for L2s, and why Bitcoin miners are not very involved in today's
Bitcoin governance

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conversations. As an editorial note, LayerTwo Labs is currently a sponsor of the
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Welcome back to the MiningPod, joined today by James and Paul,

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welcome both to the show. We've been looking forward to this conversation for quite
a bit,

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talking about Bitcoin mining, BIP300, 301, aka Drivechains, and really what's going
to happen

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with all these Bitcoin fees in an emergent L2 world on top of Bitcoin. But again,
welcome to

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the show. Hey, thanks for having me. Thanks. Okay, we'll start off talking about
fees,

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because I think that's really just the key part here is like, do we want fees on top
of Bitcoin?

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And if so, where do we want those fees to go? And I think that really is like the
nexus,

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if you will, of like BIP300, 301, and all these other protocols we're seeing pop up,

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whether it be ARK, or BTM, or Lightning, things like that. Paul, I want to throw it
over to you

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first, just to sort of lay out the groundwork for that argument, and including some
like

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information about sort of like the TAM for this market. Yeah, well, we currently,
the Bitcoin

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network collects around 500,000 a day, US, in fee revenue. And yeah, so look at
that. Okay,

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I'm glad that you put that up. And I just, that was a shot in the dark on my part,
but it starts

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with a five, so I'm happy about that. And then yeah, Ethereum sometimes can do 10
times as much

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or even more. Today, they're doing not quite 10 times as much, but they're doing
much more. And

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then you have to, you know, you factor in just basically all the other transaction
fees that

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are out there, everything, all of Visa's fees, everything for like registering a
domain name,

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all kinds of other things that we could have fees do. This is a huge amount. It
could be 100x,

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1,000x, or even 10,000. 10,000x is certainly possible, because Visa alone is like
collecting

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something like 100, not sure exactly, but it's like 120 million or something like
that.

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Not sure exactly, but it's like 120 million per day. So that's a lot of money. And
we have,

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you know, you imagine a big pie chart where we have crypto is only a tiny slice, and
we have

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fiat, and we have what you might be end up being something like a CBDC fee, like a
WeChat pay where

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it's subsidized by the government. They've got their thumb on the scale, trying to
get everyone

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to use WeChat pay because of, you know, surveillance reasons or just political
reasons.

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So we have this huge slice of money, and all of that could be Bitcoin transactions
that Bitcoin

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miners collect. But it seems as though that that is now very uncertain. So I guess
that's the

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thought. It's definitely uncertain. I think the question comes down to like, do you
want Bitcoin

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to be a multi-asset protocol of sorts with sidechains where you're able to issue
other

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tokens or other like assets on top of it? And where do you want those fees to
settle? So there's

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lots of different emergent ideas around this. We mentioned ARK already. There's this
idea with

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Covenant and CTV that could play into it somewhat. And then there's more emergent
things like BitVM.

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James, I want to throw this one over to you. I think like the interesting thing that
we're

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kind of leaning into here is like, why shouldn't miners get these fees? And

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like, yeah, again, just why shouldn't miners get these fees?

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No, I think it's a great question. And I think there's probably a couple of
different reasons

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why people think that miners not getting those fees or not prioritizing miners
getting those fees

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is okay. The first one is some people contend that the security budget is a myth and
that

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having a strong mining incentive to ensure fast confirmation times is not an
important feature

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of Bitcoin. I violently disagree with that. And I think it's a really kind of a
preposterous

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statement to make because we have no way of knowing what Bitcoin's value will be in
that

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environment. Bitcoin is valuable right now with a healthy $5 billion a year mining
incentive,

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mining revenue is about $5 billion a year, and the protocol market cap is $500
billion. So,

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you know, it's about 1%, 1.5%, I believe is the exact number heading into the

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halving. Obviously, that'll drop. And, you know, that school of thought, I think it
assumes a

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future state. The kind of second school of thought would be that users shouldn't
have to pay high

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fees. And so scaling solutions like Lightning that allow smaller transactions to
avoid high fees

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are obviously good for users. I think that's a healthy debate where you kind of move
along the

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lines of healthy push and pull between miners and users where users don't want to
pay high

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transaction fees. And miners need to somehow have sufficient revenue to incentivize
them to,

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you know, mine blocks with valid transactions, valid blocks with valid transactions
quickly.

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And so that third parties who look at that, whether it's, you know, Lightning
channels or

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exchanges or merchants who are doing transactions that are settling on Bitcoin, they
feel that

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there's a strong assurance there. But generally speaking, I think that this issue
has been

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de-emphasized. And there's a lot of dismissing it and saying, you know, this is FUD,
miners are

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greedy, you're all terrible people, all you care about are profits. And that comes
from certain

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very loud users who will only say positive things about Bitcoin, they will never
talk about a

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potential flaw or vulnerability, you know, security issue, fragility in Bitcoin in
the future. And so

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I'm glad to see that there's some momentum pushing against that attitude. And yeah,
I think

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miners are not bad people. Talking about increasing mining revenue is an important

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part of keeping Bitcoin the same. You know, the metric that I like to look at is
what is mining

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revenue versus the total market cap of Bitcoin. And right now it's around one, one
and a half

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percent. You want it to stay in a healthy range there. If that drops down to say 20
basis points,

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10 basis points, maybe even lower, or if there's tremendous volatility in how miners
are in

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revenue when fees spike, potentially for some periods of the day, but then the rest
of the day,

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they're relatively low. It's just a different system. It's a different protocol. And
so

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we got to keep Bitcoin the same by ensuring that fees are consistent, and there's a
healthy mining

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incentive. I want to go over and talk about the idea of like a novel build on top of
Bitcoin or

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soft fork, just racing towards a world where there's more than just lightning. And
if there

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is just lightning, what are the catastrophic scenarios with that? What are the
scenarios

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where we just like don't have the ability to scale with it? Paul, we were talking a
little

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bit earlier about this. And in a world where there is L2s, there's multiple L2s,
that's a world where

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a lot of these Bitcoin miners are just going to be outcompeted by an L2. And then in
a lightning

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based world, it doesn't seem like miners can compete either. They're sort of like in
this

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worst case scenario on either pathway at this point, where they're not going to get
the

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fees if we're doing like an arc build setup or an L1 setup, and we can't get enough
momentum to

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diverge from a pathway where miners can get fees. What are your thoughts on how
we're going to move

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forward with an L2 setup? Well, I think an interesting thing is that I see it in
kind of

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an, the miners can always, what they can always do is actually just attack the L2s.
But that's

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sort of a mean thing to say out loud. I mean, I don't want to give anyone any ideas.
But like,

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you know, the L2s, they all rely on something happening on L1 periodically in order
for the

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coins to even enter the L2. So there's no way you can have an L2 that someone can
use. For example,

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with the lightning network, you must do the funding transaction. That has to happen
on L1.

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So, you know, a super extreme, insane thing to do, but theoretically possible,

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is it would be that the miners can just refuse to mine transactions that pay.

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If this is somehow in their interest, they can refuse to mine anything that pays
into a multi-sig

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output, and they would lose the transaction fee from that. But if there's some kind
of decision

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calculus where that encourages them to use something else, you know, the user to use

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something else the way they do get the fee. But that's a crazy idea. But I think the
key is that

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there's this huge pile of fees. And if the L2s get, there's L2s can get some of
that, and then

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the miners won't. And so the question is, will there be just one arc super node that
collects

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this hundred million dollars a day or a billion dollars a day of fees? And if so,
see, but this

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is where I flip the question back around because I say, now, isn't this a problem
for the arc

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super node that it relies crucially on L1? All the L2s rely on L1. So they all
crucially rely on L1.

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So this idea that it doesn't matter how low the miner revenues get, I don't know,
like sometimes

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I've asked people like, okay, is, you know, you disagree on where the line should be
drawn and

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they say, oh no, it never matters. And then I say, what does it, what if they get
paid 10 cents a year?

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You know, won't they just be, it'd be so easy to just bully around an industry that
has such a tiny

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amount of money coming in and a tiny amount of loyalty really to the actual end
Bitcoin user.

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So this amount is real. People can argue about what is the significance of the
security budget,

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but the security budget is normal thing to want. And it's, there is certainly some
tension between,

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so like if all the transaction fees are happening on an L2 that does not pay the
miners anything.

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So if everything happened on liquid, for example, then maybe like if it could happen
in the miner

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centric L2, or it could happen in liquid and they're all in liquid and it's really,
it really

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is $500 million a day in revenue versus on the L1, you know, nothing, $1 a day.
Well, in that case,

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you kind of could imagine where a miner's all getting together and saying, well,
listen,

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we'll just pull the plug on all multi-sync transactions in the hopes of moving. I
mean,

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how could you not? And so, so that's just kind of, I bring that up not to be too
much of a

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doom and gloomer, but just to say, actually, this is something that people have to
think about

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when we imagine like what kind of future is sustainable for Bitcoin.

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The health of the L1 mining network is a prerequisite for anything being viable on

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L2s on top of it. Yeah. That's exactly what it is. It is that you can't just
disregard

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the existing, the existing mining network, the existing mining participants. And I
know it's,

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it feels weird to say it because I'm a miner. Obviously I'm speaking to my
interests, but

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you know, when I feel weird saying that, I'm like, I'm supposed to say that. I
should say that

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because we, this whole system works based on the conditions that we understand it
operating under

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today. And if all of a sudden we're going to hypothesize about these future states
where the

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system still works, but somehow this core component of it no longer has an
incentive,

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you know, and nobody is investing the, the hundreds of thousands, millions,

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tens of millions of dollars into building data centers, buying mining equipment,

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you know, staffing their, their buildings, doing all these, these upfront heavy
CapEx things for

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the certainty or for the promise of future Bitcoin denominated revenues, it's just
going to,

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it's going to change a lot of stuff. I mean, we might as well just say, let's switch
to proof

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of stake then because the holders have all the power and, and they've been, you
know,

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they've had their foot on the head of the miners for the better part of, of a
decade. And, you

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know, eventually we're just going to switch to proof of stake because the holders
are, are what,

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what, you know, where all the power resides. Well, it happens to be the case, like
exactly

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the case that the amount of proof of work there is in Bitcoin equals the security
budget. Like

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if you measure them both in dollars, it is the same thing because the mining total
amount of

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money paid to miners in transaction fees, that is the total amount of revenue
collected by miners.

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And then because the difficulty adjustment makes it an equilibrium, the total amount
of money spent

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by miners on all the hashing activity has to also equal that number. So, so the, the
security budget

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is the proof of work. That's why if it drops to like 10% or 10 cents a year, it
will, that would

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be a tiny amount of money that will basically won't be proof of work. Bitcoin is a,
is a $10

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trillion protocol and mining revenue is $500 million a year. Show me where the
incentive

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is aligned there. I just don't see it. And, you know, I'm not a miner at all, but I
feel

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the exact same way that it's very rational to advocate for more mining revenue. The,
the,

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the miners are the ones who, there's actually a theorem in economics about a
separation of

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ownership and control about that usually being a disaster. The miners are the ones
who, who put

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the transactions in, they control which transactions make it into a block. And so in
that sense,

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they're kind of the owners of the block space. They sell the block space. So if
there's a

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scenario where someone else is, someone else is making money off of this and they're
not cut in,

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then it's just a misaligned incentive, I think. You guys pulled on a few things I
want to unpack

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it really quickly. First, Jamie, your notion of like governance is sort of brought
up here

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where like Bitcoin miners in the past have been a part of governance. And then after
2017,

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four quarters, they kind of sidestepped out of it. And now Bitcoin miners need to be
acknowledged

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as probably the most long Bitcoin, right? Like they have these huge facilities,
they're

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planning years into the future. They're making easy purchases. Extremely liquid. And
then the

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most long Bitcoin, yet they're not allowed to have a conversation around like what
Bitcoin should

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look like. Where do you think that comes from? And how do you think that changes in
the next

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few years? Like how do miners push back on that notion? Yeah, it's a great question.
I think it

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comes from a clearly antagonistic actor being on the opposite side of those, those
debates in

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the 2017 four quarters, as you mentioned. At that time, I think Bitmain's monopoly
on

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ASIC supply was viewed as an existential threat to Bitcoin. They were, it was known
that they did

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nefarious practices, whether it was Amplead running their machines, shipping busted
machines

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like the S17, you know, they just, they seem to really be very self-interested and

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potentially thinking about only short term incentives. And I think it was an
appropriate

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immune response to get all the users together and to make a demonstration of user
power.

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And that, it's obviously part of what has made Bitcoin great over the years, but

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you know, now I think it's different. We have diversity of ASIC manufacturers,

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the price that you can sell a brand new ASIC for is orders of magnitude lower than
it was during

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that era, which was the era of the S9. And actually, I think, you know, ASIC
manufacturers

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are, they're hurting right now because mining revenues are pretty low. I mean,
mining break,

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even on the old gen equipment is like 70 bucks a megawatt hour and the new stuff is
right around

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a hundred. And then, you know, during periods like that, especially with a lot of
competition,

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they can't make a ton of money. So I think mining is more made up of Bitcoin
interested firms now

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and Bitcoin oriented firms and people who are reasonable. It has a much, much larger
North

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American footprint. So there's no longer this state divide, you know, during the
2017 fork wars,

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I think over 60% of the hash rate was in China. Now the US has a lead in hash rate.
And so

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the users and miners are speaking the same language. They're in Western democracies.
And

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I just think, you know, we could settle this up if we all got together and had
dinner,

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broke some bread and discussed some of these ideas and implementations where

200
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valid security concerns were brought up and discussed openly. Obviously we can't
tweet it,

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you know, because then the plebs will not buy Bitcoin. But, you know, we could have

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these conversations behind closed doors. Yeah, just zagging there on you for a
second. I want

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to move back over to the technical discussion now that we got that governance
question there,

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which I think is really important. And one thing you brought up really quickly is
like the China

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ban that brought on like a very different constituency of Bitcoin miners. And
oftentimes

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we see like these Bitcoin miners in the same bit devs meetups in Austin and Houston
and Nashville.

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And yet, for some reason, they're not allowed to have like a governance conversation
together.

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It's just really odd to me. Going back to what Paul was talking about, the L2 and
L1's relationship

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in Ethereum land, which I know a lot of people don't like to talk about, but I think
is pretty

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instructive when it comes to designing protocols. L2's in Ethereum typically use
rollups and all

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these rollup designs are purpose built so to be secure from the base layer so that a
user has the

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ability to off port safely with their funds so that the L2 can't harm the L1 and
then vice versa,

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the L1 can't harm the L2. There's a lot of nuance on this whole thing. But Paul,

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I want to throw it over to when you're designing BIP300 or 301 or when you're
talking about the

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relationship between any L2 and any L1 out there, what are some things that you're
thinking about

216
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that make it important? Well, that's a very interesting question. I mean, I designed
this

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BIP300 thing a long time ago in November 2015. I just want to briefly mention on the
previous

218
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topic, I don't understand, what do people have in mind? Bitcoin users and Bitcoin
miners are

219
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going to just hate each other forever and mistrust each other? That's the plan
forever?

220
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But this was before that it happened. I had this type of L2 in mind and it was very

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experimental. It wasn't as popular among the technical intelligentsia and it still
is not

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because it is more loose. It is not as secure. And in particular, this one thing you
mentioned,

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the ability to always, you're on the L2 and you always be able to be given something
that

224
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you can broadcast on L1 and retreat back to L1 unilaterally. That is something that
BIP300

225
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does not have. And for a while, I thought, you know, there are pros and cons. But
now,

226
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actually, I think it was a con, but now I actually think it is a pro because

227
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this is something the Lightning Network and ARK always has this, but it turns out
that this is not

228
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as useful as it might first appear. So, for example, we first take the case that not
8

229
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billion people in the world, 8 billion people cannot use L1 and get like a UTXO on
L1 and

230
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broadcast into the block space of L1. There's just not enough space. Now, with that
in mind,

231
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what's the sense of having the ability to go from L2 to L1 whenever you want?
Because if you have

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8 billion people, for example, on one L2, this is just a hypothetical simplification
to just make

233
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this point. Well, they can't all use the escape hatch. It's the same thing as them
all using L1

234
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in the first place. So, actually, I now think that that is not even really a good
thing for

235
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the L2 because it actually sacrifices a lot to make that happen. And I think
instead,

236
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the best bet is having L2 where the coins move over there and then they can expand
out to new

237
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users and then contract to a user who moves them back down to L1. Don't always
insist that

238
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you can redeem on L1 because that's not possible anyway. And so, actually, now I
think that that is

239
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too much of a disadvantage because the upkeep required to support that type of thing
is too

240
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much. But I think we should try all the L2s. We should try L2s of every shape and
size and we

241
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should see what works. What I certainly object to is this idea that we should not
have, I get this

242
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critique of BIP300 that it affects mining incentives. What they mean by that is it

243
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pays miners. Miners get the money instead of the ARK Supernode or whatever. I got
nothing

244
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against the ARK Supernode either. I think that the ARK Supernode is fine. I just
think it's an

245
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irrational criterion. We shouldn't be in the business of picking who gets the fee.
That

246
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should be the end user should pick whatever they like. And we certainly shouldn't be
in the business

247
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of tweaking it away from, you know, we want to avoid changing the miners incentives.
But what

248
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people mean in practice is this whole ecosystem is supposed to be growing
geometrically forever,

249
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but the miners stay exactly where they are. That doesn't really make any sense.

250
00:24:00,880 --> 00:24:05,920
Yeah, I think you actually bring up an interesting point, which there could be a
situation where

251
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if some new L2 sprouts up that offers an amazing user experience and it's leaps and
bounds away,

252
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you know, the far best product in terms of offering fast settlement, quick
transactions,

253
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whatever the features, composability, for example, that users demand on L2, there
could be a tragedy

254
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of the commons situation where that product is not designed in such a way that it
maintains

255
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healthy L1 incentives and it keeps all those transactions happening in its little
Supernode

256
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bubble. You know, ultimately that would be a design flaw from the original product
designer

257
00:24:49,600 --> 00:24:55,920
of that L2 to not be mindful of the L1 incentive as something that would be in their
long-term

258
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best interest to retain the viability of their product.

259
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But there could be a little tragedy of the commons scenario, which I don't think is
widely acknowledged now where we are tinkering with the incentive model and the
commons in this case is the proof of work that is hashing with a healthy mining
incentive and nobody really owns that on the L2, although they do, just like the
environment is tragedy of the commons, you know, it's earth, if earth, if it's the
earth, it's the earth.

260
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It becomes uninhabitable, we're all going to die, but, you know, it's not exactly my
backyard because it's co-owned, because the hashing power is technically co-owned by
all the protocol users, there's nobody really directly responsible for that, except
for the miners, which is, you know, to your point, Will, why I think paying
attention to the miner voices is actually some good signal to listen to.

261
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Yeah, we, I think we have to go back to that because it's this, the SegWit2x story,
I'm not sure how many people know.

262
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I mean, I don't want to bore everyone with a really, really long historical thing,
as I often do, but it's like it really affected the technical community a lot where
it has permanently altered what directions of research people go into, where before,
like now things that touch a soft fork are not done, even there are things such as
uTreeXO, these are very helpful things.

263
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They help increase security, they help people, they make it so you can run a full
node on your cell phone. It's a certain type of full node.

264
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But people say, oh, we want everyone should run a node, whatever. And then, you
know, we pitched these normal people and then they download Bitcoin Core and it says
we will need, you know, like 650 gigabytes of disk space or something.

265
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And most people are like, wait a minute, like what, like what is this thing doing?
And so the node thing is not, you know, I don't know how many people are deterred
marginally by each thing, but there's this uTreeXO idea.

266
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It's not required, it doesn't require a soft fork because they invented this hack
around it, these bridge nodes. The bridge nodes are this awkward, annoying hack.

267
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But if instead we just had, we just made it a requirement in the protocol that there
be included this uTreeXO commitment, this tiny little, tiny little thing in one out
of every thousand Coinbases like once a week.

268
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So we're talking like a tiny, tiny, tiny, tiny thing for something that the software
is already doing automatically.

269
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So it just says the software is already going to compute this hash, but we're just
going to put it in the same spot each time so that the small nodes always know where
to find.

270
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But this idea, this idea, people won't touch this idea because of the fear of the
soft fork or even talking about it. People wouldn't touch activation of Taproot.

271
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They would, they would work on Taproot and then it just, it was idle for months
because people didn't even want to bring it up because of what had happened with
SegWit.

272
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And SegWit is weird. I'm not sure, I don't want to ramble on and on about this, but
I think it's in everyone's best interest to educate themselves on just, it's just a
litany of tragedies.

273
00:28:03,404 --> 00:28:15,404
You know, like it was like this SegWit was, it was promised, like someone, someone
made, Scaling 2 was in 2015 and someone shouted out this date of April 1st.

274
00:28:15,404 --> 00:28:26,404
And then there was some people took that as a promise and then it was, wasn't
shipped to the hackathon after Scaling 3 and a dissatisfied miner had left Signal
with BU and this held it up.

275
00:28:26,404 --> 00:28:37,404
And then this whole holdup was the SegWit drama and the UASF drama and then the
SegWit2x drama and then SegWit2x ended exactly when the BCH split off occurred.

276
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So we have had a lot of people who I really think were trying to help, but they
really, they really messed everything up.

277
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And there was, Jamie mentioned one, and there are many people who they didn't have
the right idea about how to build consensus among humans.

278
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But it's the point I'm trying to make is because how does it affect us today?

279
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It affects us today where, yeah, there is this attitude that the miners should
never, ever do anything.

280
00:29:09,404 --> 00:29:29,404
But since really every soft fork is activated with the participation of the miners
and there's so many things that could be done, the development could have gone in a
very different direction where if the miners are making money off of each
transaction fee on a sidechain, for example.

281
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Well, now the miners are cheering on this side. Everyone's on the same team again.

282
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In the past, we had something like a tug of war.

283
00:29:36,404 --> 00:29:43,404
And the better thing than making sure that you always win the tug of war is just to
get everyone on the same side of the tug of war.

284
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And then you always win and you also have teamwork.

285
00:29:46,404 --> 00:29:48,404
I mean, think about the equity side of it, right?

286
00:29:48,404 --> 00:29:51,404
Think about all this North American hash rate.

287
00:29:51,404 --> 00:30:05,404
There's an R&D side of these companies that's building payments technology, building
the actual ultra fast tech enabled payment solution of the future on top of this
decentralized money platform.

288
00:30:05,404 --> 00:30:07,404
They're earning those incremental fees.

289
00:30:07,404 --> 00:30:10,404
They're getting an EBITDA multiple on that.

290
00:30:10,404 --> 00:30:16,404
I mean, I can't think of a more powerful incentive because some of these miners
traded 10, 15, 20 times EBITDA.

291
00:30:17,404 --> 00:30:40,404
And so if their R&D teams are working on building really competitive layer two
scaling technologies and all of those fees come back proportionally to the existing
hash that's installed, that market multiple for the North American capital markets,
the strongest and most robust pool of capital in the entire world and most liquid.

292
00:30:41,404 --> 00:31:00,404
That could be this huge renaissance where all of a sudden there's real R&D dollars
flowing in from the North American hash rate onto these layer twos because there's a
direct line of sight for how those fees are going to come back to the miners and how
the vision of fees being the mining incentive is really going to develop.

293
00:31:01,404 --> 00:31:09,404
The problem I have with the lightning assumptions is that we're assuming that some
user is going to pay a very high fee.

294
00:31:10,404 --> 00:31:15,404
Each marginal user will regularly pay a very high fee at some point in the future.

295
00:31:16,404 --> 00:31:19,404
I just think that that vision is tough.

296
00:31:19,404 --> 00:31:25,404
I'd rather see users pay lower fees, but have lots and lots of users doing so.

297
00:31:26,404 --> 00:31:27,404
Yeah, absolutely.

298
00:31:27,404 --> 00:31:34,404
It's much easier to have 10 cents on many, many, many, many people paying 10 cents
versus a few people paying a huge amount.

299
00:31:35,404 --> 00:31:43,404
Maybe we should talk about, Paul, what do you think about the fungibility criticisms
for sidechains?

300
00:31:44,404 --> 00:31:47,404
Sorry to hijack the question, Will.

301
00:31:47,404 --> 00:31:49,404
You may have had a good one.

302
00:31:49,404 --> 00:32:00,404
Because I do think we could use some of this time to talk about some of the
criticisms where lightning theoretically is the most fungible layer two version of
Bitcoin because it's opening and closing directly via the channel.

303
00:32:01,404 --> 00:32:03,404
Well, what do people mean?

304
00:32:03,404 --> 00:32:06,404
They mean that it's very private, the lightning network?

305
00:32:06,404 --> 00:32:07,404
Is that what you're saying?

306
00:32:07,404 --> 00:32:22,404
No, just that because all of the transactions come up and down from L1 to L2 and
there's kind of, I wouldn't say mutually assured destruction, but there's good
security guarantees.

307
00:32:22,404 --> 00:32:30,404
It's pretty simple calculation versus the pegging out a Bitcoin-dominated unit to a
sidechain.

308
00:32:31,404 --> 00:32:33,404
It becomes less fungible.

309
00:32:33,404 --> 00:32:34,404
It's harder to move that back.

310
00:32:34,404 --> 00:32:36,404
You can't just yank it back quickly.

311
00:32:39,404 --> 00:32:50,404
I was trying to mention before that the ability to yank it back is kind of actually,
for a while I agreed with those people, but now I kind of just, I've seen the light
maybe.

312
00:32:50,404 --> 00:32:53,404
Because remember, 8 billion people can't yank it back.

313
00:32:53,404 --> 00:32:57,404
So the ability to yank it back is always kind of like some kind of conditional
thing.

314
00:32:57,404 --> 00:32:59,404
It's inescapable.

315
00:33:00,404 --> 00:33:02,404
Meaning that in the event of a violence.

316
00:33:02,404 --> 00:33:04,404
8 billion people using lightning.

317
00:33:04,404 --> 00:33:10,404
No, I'm just saying if for any reason, if they're all on some like lightning,
there's 8 billion people.

318
00:33:10,404 --> 00:33:18,404
If there's one lightning channel is open today and then we wait 8 billion days and
this, I know the scenario doesn't make any sense, but we have 8 billion days.

319
00:33:18,404 --> 00:33:20,404
Now we have 8 billion channels that are open.

320
00:33:20,404 --> 00:33:27,404
They can't all go back from L2 to L1 on a random Tuesday because L1 doesn't have
space for 8 billion people.

321
00:33:27,404 --> 00:33:41,404
So again, it's unfortunate that I think there's a lot of emotional, because this
sounds a lot like I'm advocating for like naive large blockism or something, which I
think is the problem.

322
00:33:41,404 --> 00:33:46,404
That it sounds a lot like that, but the, I don't know.

323
00:33:46,404 --> 00:33:50,404
I'm going to try to just say something and see if any of this is making any sense or
answering any questions.

324
00:33:50,404 --> 00:33:52,404
But the most fungible, I don't know what that means.

325
00:33:52,404 --> 00:33:54,404
I'd like to talk to whoever told you that.

326
00:33:54,404 --> 00:33:58,404
I'd like to figure out what they were really trying to say, because I don't
understand what they.

327
00:33:58,404 --> 00:34:00,404
It was Parker Lewis.

328
00:34:00,404 --> 00:34:06,404
That seems like he's talking about like in a sidechain world, you're issuing a
token, right?

329
00:34:06,404 --> 00:34:09,404
So like Bitco issues WBTC.

330
00:34:09,404 --> 00:34:12,404
The lightning software also issues the token in its own network.

331
00:34:12,404 --> 00:34:18,404
It's just, they're all denominated in BTC and they both have, it's very similar.

332
00:34:19,404 --> 00:34:21,404
Yeah, but I want to go back.

333
00:34:21,404 --> 00:34:27,404
It is just BTC instead of this like half rate escrowed BTC.

334
00:34:27,404 --> 00:34:29,404
You know, it could be.

335
00:34:29,404 --> 00:34:32,404
Again, the lightning is always conditional, be able to come down because.

336
00:34:32,404 --> 00:34:35,404
So let me give you two more examples.

337
00:34:35,404 --> 00:34:43,404
One is what you were saying before was someone has to pay high L1 fees if there's
going to be proof of work on this network that has the lightning network on top of
it.

338
00:34:43,404 --> 00:34:46,404
So someone's got to be paying this marginal L1 fee.

339
00:34:46,404 --> 00:34:52,404
Well, actually, if the L1 fee rates rise, or even if they're just volatile, they
rise temporarily and go back down.

340
00:34:52,404 --> 00:35:02,404
Even if the two lightning nodes disagree on what the prevailing L1 fee rate is, or
if it climbs too high, then it must uncooperative close.

341
00:35:02,404 --> 00:35:05,404
So the lightning, and we saw this with Ordinals.

342
00:35:05,404 --> 00:35:07,404
This is, I think, this is my guess.

343
00:35:07,404 --> 00:35:08,404
I have no idea.

344
00:35:08,404 --> 00:35:12,404
It's hard to say how much of this is cultural nonsense.

345
00:35:13,404 --> 00:35:15,404
When the Ordinals fee spike happened, it broke lightning.

346
00:35:15,404 --> 00:35:17,404
It broke lightning somewhat.

347
00:35:17,404 --> 00:35:20,404
So that I think is, we'll see that also happen more.

348
00:35:20,404 --> 00:35:26,404
So this, again, shows you that stuff that happens on L1 will affect whether or not
L2 is viable.

349
00:35:26,404 --> 00:35:36,404
And in particular, this idea of, I'm not sure, like this idea that you can always
come back, you're on L2 and you can always come back to L1 is like.

350
00:35:36,404 --> 00:35:37,404
Got it.

351
00:35:37,404 --> 00:35:41,404
So you would say that the fungibility claims are probably overstated there.

352
00:35:41,404 --> 00:35:49,404
Yeah, I think one thing that I wish, I think it would be better if, it would be
better.

353
00:35:49,404 --> 00:35:52,404
A lot of this stuff, I think people should use it with their own two hands.

354
00:35:52,404 --> 00:35:56,404
I think back to my own experience when I first read about Bitcoin.

355
00:35:56,404 --> 00:36:01,404
It took me a really long time to have some vague understanding of it.

356
00:36:01,404 --> 00:36:06,404
And then I used it for the first time and I realized that about half of what I
thought I understood was not correct.

357
00:36:06,404 --> 00:36:09,404
In particular, I didn't realize I had the software open.

358
00:36:09,404 --> 00:36:13,404
I waited for six confirmations and then I went, I was like, okay, I've collected
six.

359
00:36:13,404 --> 00:36:17,404
And then I went to sleep and then I woke up the next day and I was like, why do I,
why am I getting more?

360
00:36:17,404 --> 00:36:19,404
You know, I didn't, I really didn't understand it at all.

361
00:36:19,404 --> 00:36:31,404
So I think a lot of people will, it'd be this, it's the same way where I think
people have to use, the stuff should be in use somewhere, maybe before.

362
00:36:31,404 --> 00:36:35,404
We have testnet software that I wish people would run.

363
00:36:35,404 --> 00:36:41,404
I have to, I'm trying to speak to the fact that there's anxiety over, okay.

364
00:36:41,404 --> 00:36:50,404
I want to go back to what I think is the most important thing, which is the idea of
the block size war was this tug of war between two people who wanted something.

365
00:36:50,404 --> 00:36:55,404
Some people wanted a large block version of Bitcoin and some people wanted a small
block version.

366
00:36:55,404 --> 00:37:01,404
The reason they wanted a large block was because they wanted to keep the cost of
running a node.

367
00:37:01,404 --> 00:37:06,404
The nuance of that debate was people wanted small blocks so that the cost of running
a node would remain low.

368
00:37:06,404 --> 00:37:07,404
Isn't that correct?

369
00:37:07,404 --> 00:37:08,404
Yes, yes.

370
00:37:08,404 --> 00:37:12,404
The cost of running the node is the cost of seeing the blockchain, checking the
rules.

371
00:37:12,404 --> 00:37:16,404
If the blockchain becomes dark, the more expensive it is to run a node.

372
00:37:16,404 --> 00:37:19,404
What is the objection to having that happen on a layer two?

373
00:37:19,404 --> 00:37:28,404
That's what I'm trying to say is the correct solution was not to, I think, you know,
I mean, what can I, whether everyone believes me or not.

374
00:37:28,404 --> 00:37:38,404
But there's a question of should one side win or, you know, like when two people
disagree, there's always like one, they can just fight it out and one can win.

375
00:37:38,404 --> 00:37:44,404
Or you could try to find some way of giving people what they want in a way that does
not.

376
00:37:44,404 --> 00:37:48,404
Expressivity on this L2 would be key here.

377
00:37:48,404 --> 00:37:51,404
I think that's a big design function that you've come up with.

378
00:37:52,404 --> 00:38:00,404
The key idea of BIP300 is about those people would get what they want, but the L1
people would also get what they want.

379
00:38:00,404 --> 00:38:03,404
And that's this idea of people being on the same side.

380
00:38:03,404 --> 00:38:12,404
And that's why it's dicey because you always wonder, are people going to think that
this is just SegWit2x or the block size war all over again?

381
00:38:12,404 --> 00:38:14,404
But it's not.

382
00:38:14,404 --> 00:38:20,404
This is the key point about it's much easier to just have everyone on the same team.

383
00:38:20,404 --> 00:38:32,404
And that's the tragedy is that the miners, this vision you pitched is the same one
that I think would be great of miners making a ton of money, new bull market.

384
00:38:32,404 --> 00:38:44,404
And then each transaction collected is like, you know, this is a world of very
aligned incentives.

385
00:38:44,404 --> 00:38:49,404
And it was thrown off a little by the block size debate.

386
00:38:49,404 --> 00:38:51,404
And I was a small blocker.

387
00:38:51,404 --> 00:38:57,404
That debate is that large blocks are OK as long as it doesn't impact the L1 node.

388
00:38:57,404 --> 00:39:03,404
Yeah. The idea is that, yeah, see, this is what a lot of people don't get.

389
00:39:03,404 --> 00:39:06,404
But you get it, though, which is that there was a point.

390
00:39:06,404 --> 00:39:09,404
It was they had benefits and drawbacks.

391
00:39:09,404 --> 00:39:13,404
So if we all we do is we say, OK, we like the benefits.

392
00:39:13,404 --> 00:39:15,404
But what was the key drawback?

393
00:39:15,404 --> 00:39:17,404
It made the L1 node more expensive to run.

394
00:39:17,404 --> 00:39:20,404
But with BIP300, it doesn't happen.

395
00:39:20,404 --> 00:39:23,404
You have its own L2, which is its own piece of software.

396
00:39:23,404 --> 00:39:25,404
And that's the thing that's difficult to run.

397
00:39:25,404 --> 00:39:30,404
But that's also the thing that all these other people, Roger Ver and whatever, they
said they would be happy to run all by themselves.

398
00:39:30,404 --> 00:39:35,404
And they said they were happy to have SPV security anyway, so they wouldn't even
care about the different tradeoffs.

399
00:39:35,404 --> 00:39:37,404
So I was giving them what they wanted.

400
00:39:37,404 --> 00:39:48,404
The idea that Peter Todd brings up where he says, well, that's going to make mining
more expensive because then miners are going to have to add all this incremental
hardware.

401
00:39:48,404 --> 00:39:55,404
Peter Todd, you agree, Paul, that Peter Todd is rooted in sort of a 2012 version of
mining.

402
00:39:55,404 --> 00:40:03,404
I've got my laptop and I'm mining from a hut in the middle of the Sahara.

403
00:40:03,404 --> 00:40:06,404
And I have a $40 computer.

404
00:40:06,404 --> 00:40:08,404
These are not mining firms today.

405
00:40:08,404 --> 00:40:15,404
Mining firms today, you have to have 50 megawatts in order to be operating like a
good viable business at scale.

406
00:40:15,404 --> 00:40:29,404
Yeah, well, the idea that he thinks that the sidechain L2 node software would affect
which scales of mining are profitable or viable or like leading or something, I
think that's really absurd.

407
00:40:29,404 --> 00:40:33,404
And it's also it's like this pre.

408
00:40:33,404 --> 00:40:38,404
I think it's simply it actually boils down to just a mistake, though, which is that
we want everyone to be able to run a node.

409
00:40:38,404 --> 00:40:40,404
We want the node costs to be cheap.

410
00:40:40,404 --> 00:40:46,404
We want cheaper nodes is always good, but it just can't be the case that cheaper
mining is always good.

411
00:40:46,404 --> 00:40:48,404
That's the security budget going down.

412
00:40:48,404 --> 00:40:50,404
So this is a situation where it actually has flipped around.

413
00:40:50,404 --> 00:40:53,404
And so this is a misgeneralization on his part.

414
00:40:53,404 --> 00:40:56,404
I've tried very hard to get him to come around on this.

415
00:40:56,404 --> 00:41:00,404
I think most people have come around on it, but he's he's absolutely.

416
00:41:00,404 --> 00:41:02,404
Yeah.

417
00:41:02,404 --> 00:41:04,404
Who's the smartest Drivechain hater?

418
00:41:04,404 --> 00:41:07,404
Who is who is the adversary?

419
00:41:07,404 --> 00:41:12,404
Because, you know, you're fighting a thousand wars on Twitter and, you know,
everybody's following along.

420
00:41:12,404 --> 00:41:17,404
The weird thing is, I think they would follow Peter if he flipped.

421
00:41:17,404 --> 00:41:20,404
But Peter has just he's just decided that he's not going to believe this.

422
00:41:20,404 --> 00:41:21,404
He thinks like any amount.

423
00:41:21,404 --> 00:41:32,404
He really thinks this affects like the scale economies of mining, which is very,
really bizarre thing to even think out loud because the L2 software, it just cannot
be significantly.

424
00:41:32,404 --> 00:41:37,404
It can cost anywhere near one tenth of what a I don't know what the smallest block
miner.

425
00:41:37,404 --> 00:41:40,404
Maybe if you could find this to have block eruptors.

426
00:41:40,404 --> 00:41:41,404
I don't know.

427
00:41:41,404 --> 00:41:47,404
My mining knowledge is is very, very, very amateur about what is the cheapest miner
you could buy.

428
00:41:47,404 --> 00:41:50,404
But I don't know what it would be, but it has nothing to do with.

429
00:41:50,404 --> 00:41:53,404
So there's and there's many other things I could get into the theory.

430
00:41:53,404 --> 00:41:58,404
But like, I don't think the miners, their job is to hash.

431
00:41:58,404 --> 00:42:00,404
It's each user who runs the node.

432
00:42:00,404 --> 00:42:03,404
And so the miners have done and they should do.

433
00:42:03,404 --> 00:42:09,404
They have many clever ways of shirking the cost of running the full node and they
push it to the pool.

434
00:42:09,404 --> 00:42:12,404
And they should do that because they are they should be aiming for efficiency.

435
00:42:12,404 --> 00:42:17,404
So you run a node when you get paid by the pool, you should run a node and make sure
they're really paying you.

436
00:42:17,404 --> 00:42:23,404
But as and as an operation, the miner should only be focused on efficiency.

437
00:42:23,404 --> 00:42:28,404
So there are no smart Drivechain haters.

438
00:42:28,404 --> 00:42:37,404
Well, I mean, I think Peter has demonstrated many times that he refuses to really
risk, even though we've literally paid him money to research the idea.

439
00:42:37,404 --> 00:42:43,404
He just does not he isn't his heart is not actually into looking into the idea at
all.

440
00:42:43,404 --> 00:42:51,404
At Baltic County Badger this year, he said no one has written code for to do any of
this, even though we had lots of had lots of code years ago.

441
00:42:51,404 --> 00:42:56,404
We had the Zcash sidechain two and a half years before he said that.

442
00:42:56,404 --> 00:42:58,404
So he's something about it.

443
00:42:58,404 --> 00:43:00,404
He's just really not interested in it.

444
00:43:00,404 --> 00:43:02,404
And maybe this conflict of interest with RGB or something.

445
00:43:02,404 --> 00:43:03,404
I don't know.

446
00:43:03,404 --> 00:43:07,404
But whatever it is, he he's just not he's really not into this idea.

447
00:43:07,404 --> 00:43:13,404
And he had an idea that was the truth, which is that it's more expensive.

448
00:43:13,404 --> 00:43:19,404
Nodes is harms decentralization, but it only harms node decentralization.

449
00:43:19,404 --> 00:43:22,404
It does not harm minor decentralization or anything like that.

450
00:43:22,404 --> 00:43:24,404
So we can get into this boring theory.

451
00:43:24,404 --> 00:43:26,404
But I don't know who it would really be.

452
00:43:26,404 --> 00:43:28,404
I think that we need to know.

453
00:43:28,404 --> 00:43:29,404
He's got to know.

454
00:43:29,404 --> 00:43:30,404
He has eyes.

455
00:43:30,404 --> 00:43:31,404
Ironically, should know.

456
00:43:31,404 --> 00:43:32,404
He has.

457
00:43:32,404 --> 00:43:35,404
I think he has researched it more.

458
00:43:35,404 --> 00:43:43,404
He wrote a nice, a relatively nice article that had only like one mistake a few like
a year and a half ago or something.

459
00:43:43,404 --> 00:43:46,404
But Shinobi is just I think with Shinobi.

460
00:43:46,404 --> 00:43:53,404
And I don't know what could be done with Shinobi because I think he has been anti
Drivechain for so long.

461
00:43:53,404 --> 00:43:57,404
It's just become part of his personality and that there's literally nothing at all
at this point.

462
00:43:57,404 --> 00:43:58,404
He's just determined.

463
00:43:58,404 --> 00:44:01,404
He just comes up with these strange.

464
00:44:01,404 --> 00:44:03,404
He's just like really.

465
00:44:03,404 --> 00:44:04,404
I mean, he is Shinobi.

466
00:44:04,404 --> 00:44:05,404
I really think.

467
00:44:05,404 --> 00:44:09,404
And, you know, for the audience to judge whether or not this is fair for me to say
or not.

468
00:44:09,404 --> 00:44:11,404
But I think he takes out a piece of paper.

469
00:44:11,404 --> 00:44:13,404
And he takes out a pen at the very bottom.

470
00:44:13,404 --> 00:44:14,404
He writes.

471
00:44:14,404 --> 00:44:18,404
That's why Drivechains are a bad, bad, bad idea.

472
00:44:18,404 --> 00:44:20,404
And then he tries to figure out like, what?

473
00:44:20,404 --> 00:44:21,404
What can I find?

474
00:44:21,404 --> 00:44:22,404
What does it find?

475
00:44:22,404 --> 00:44:23,404
He says, oh, maybe.

476
00:44:23,404 --> 00:44:24,404
Yeah.

477
00:44:24,404 --> 00:44:26,404
He says these very, very obscure.

478
00:44:26,404 --> 00:44:28,404
Maybe they give the answer first.

479
00:44:28,404 --> 00:44:30,404
And then, yeah.

480
00:44:30,404 --> 00:44:32,404
And it's like for Blind Merged Mining.

481
00:44:32,404 --> 00:44:33,404
Maybe.

482
00:44:33,404 --> 00:44:35,404
Maybe the.

483
00:44:35,404 --> 00:44:38,404
Maybe one of the nodes will shortchange the minor.

484
00:44:38,404 --> 00:44:40,404
And then the minor is tired of getting shortchanged.

485
00:44:40,404 --> 00:44:42,404
And so they run their own node.

486
00:44:42,404 --> 00:44:43,404
It's all like.

487
00:44:43,404 --> 00:44:45,404
None of that stuff really makes any difference.

488
00:44:45,404 --> 00:44:47,404
All the sidechain nodes compete.

489
00:44:47,404 --> 00:44:50,404
I'm just picking out one of his recent points that Peter copied.

490
00:44:50,404 --> 00:44:52,404
He just kind of copied and pasted it into his.

491
00:44:52,404 --> 00:44:55,404
This thing that we paid him to write his review.

492
00:44:55,404 --> 00:44:58,404
And but these are.

493
00:44:58,404 --> 00:45:02,404
They're just like weird points where.

494
00:45:02,404 --> 00:45:05,404
I just don't think that they don't have an actual.

495
00:45:05,404 --> 00:45:07,404
Like if you sit down and talk to these people.

496
00:45:07,404 --> 00:45:10,404
I don't think they have an actual empathy for the problem.

497
00:45:10,404 --> 00:45:13,404
Even they don't even sit down and say, well, it would be nice if we could do.

498
00:45:13,404 --> 00:45:16,404
Trustless peer to peer sidechains.

499
00:45:16,404 --> 00:45:18,404
But we have the such and such problem.

500
00:45:18,404 --> 00:45:22,404
You know, that's actually a good point to jump in there and talk about.

501
00:45:22,404 --> 00:45:25,404
Like what happens on the other side of this world when things go bad.

502
00:45:25,404 --> 00:45:26,404
So we've established that.

503
00:45:26,404 --> 00:45:30,404
There's more fees coming to Bitcoin or Bitcoin is going to pass on more fees.

504
00:45:30,404 --> 00:45:31,404
They're going to go to visa.

505
00:45:31,404 --> 00:45:33,404
They're going to go with your worst case.

506
00:45:33,404 --> 00:45:34,404
They go to Tron.

507
00:45:34,404 --> 00:45:35,404
That could happen.

508
00:45:35,404 --> 00:45:36,404
Yeah.

509
00:45:36,404 --> 00:45:37,404
Right now.

510
00:45:37,404 --> 00:45:40,404
People use Tron because it has low fees.

511
00:45:40,404 --> 00:45:41,404
Yeah.

512
00:45:41,404 --> 00:45:42,404
I'd love USDT.

513
00:45:42,404 --> 00:45:43,404
Of course.

514
00:45:43,404 --> 00:45:45,404
That's the other weird thing is we have.

515
00:45:45,404 --> 00:45:47,404
And it's cheap to move it on Tron.

516
00:45:47,404 --> 00:45:53,404
Are we going to continue to pretend like the end users desires don't matter.

517
00:45:53,404 --> 00:45:56,404
Like do we care about the customer also or do we want.

518
00:45:56,404 --> 00:46:01,404
We have many people take this attitude of just those people all come crawling

519
00:46:01,404 --> 00:46:04,404
back or whatever and they'll need to buy Bitcoin to eat or something.

520
00:46:04,404 --> 00:46:05,404
And it's like, well, maybe.

521
00:46:05,404 --> 00:46:06,404
You know, that might be the.

522
00:46:06,404 --> 00:46:08,404
That might be the last 10 percent.

523
00:46:08,404 --> 00:46:13,404
The last 800 million people on the planet are that we've converted 90 percent.

524
00:46:13,404 --> 00:46:17,404
But I don't think that's working great in 2023 from where I'm standing.

525
00:46:17,404 --> 00:46:18,404
I just think.

526
00:46:18,404 --> 00:46:21,404
Can we care a little bit about send user.

527
00:46:21,404 --> 00:46:26,404
So just my question there is like, what is there to lose in this situation?

528
00:46:26,404 --> 00:46:29,404
James, I know we've talked a little bit from the mining side.

529
00:46:29,404 --> 00:46:33,404
There could be a lot of different attack scenarios with mining pools or miners

530
00:46:33,404 --> 00:46:36,404
themselves when they're looking at a world where all these fees are going to

531
00:46:36,404 --> 00:46:40,404
different chains and they're getting starved of mining fees.

532
00:46:40,404 --> 00:46:42,404
Paul, we talk about that as well.

533
00:46:42,404 --> 00:46:45,404
And then there's also just like the fact that Bitcoin get lapped and everyone

534
00:46:45,404 --> 00:46:49,404
goes to a different chain because they know that Bitcoin only offers like one

535
00:46:49,404 --> 00:46:55,404
product that isn't as sexy or useful as another product like Tron at this point.

536
00:46:55,404 --> 00:46:56,404
Jamie, I'll throw it to you first.

537
00:46:56,404 --> 00:46:59,404
I'm curious if you have any thoughts about like from a miners perspective,

538
00:46:59,404 --> 00:47:02,404
like what is there to lose here?

539
00:47:02,404 --> 00:47:04,404
Yeah, I mean, well, it's a great question.

540
00:47:04,404 --> 00:47:10,404
And I mean, I think that sort of characterizes the whole debate, which is,

541
00:47:10,404 --> 00:47:12,404
hey, be patient.

542
00:47:12,404 --> 00:47:13,404
Chill out.

543
00:47:13,404 --> 00:47:15,404
I got my mug here.

544
00:47:15,404 --> 00:47:16,404
Slow yourself down.

545
00:47:16,404 --> 00:47:20,404
That's the user's mantra to the miners is, hey, it's still your role, homie.

546
00:47:20,404 --> 00:47:21,404
It's going to be OK.

547
00:47:21,404 --> 00:47:22,404
We're going to make it.

548
00:47:22,404 --> 00:47:24,404
A hybrid Bitcoinization is coming.

549
00:47:24,404 --> 00:47:26,404
Increasing monetary utility is the roadmap.

550
00:47:26,404 --> 00:47:29,404
That's all there is.

551
00:47:29,404 --> 00:47:35,404
I think, you know, if you were an average person who's in the Bitcoin

552
00:47:35,404 --> 00:47:42,404
conservatism camp, we'll call them and you listen to the intro segment to this

553
00:47:42,404 --> 00:47:48,404
question where we talked about USDT on Tron, you know, that's like a shit

554
00:47:48,404 --> 00:47:51,404
coin scammers, all you can eat buffet there.

555
00:47:51,404 --> 00:47:57,404
And they'll say, you know, USDT is this potentially loosely backed euro dollar

556
00:47:57,404 --> 00:48:03,404
thing. And Tron is, you know, God knows what Tron is and what's even going on

557
00:48:03,404 --> 00:48:04,404
on the inside there.

558
00:48:04,404 --> 00:48:09,404
And so I do think there is a question of how much we pay attention to the

559
00:48:09,404 --> 00:48:15,404
market and how much we should look at use cases that are exploding in growth

560
00:48:15,404 --> 00:48:23,404
in the market and really attribute those as a valid signal for us to go after.

561
00:48:23,404 --> 00:48:31,404
But, you know, let's set that issue aside and say there is clearly some demand

562
00:48:31,404 --> 00:48:36,404
to settle different types of cryptocurrencies against stable assets.

563
00:48:36,404 --> 00:48:38,404
And there always will be.

564
00:48:38,404 --> 00:48:43,404
People will always want to on ramp a some kind of stable coin or stable fiat,

565
00:48:43,404 --> 00:48:47,404
whatever, into a crypto asset and trade those kind of things.

566
00:48:47,404 --> 00:48:53,404
And stable coins are dominating Bitcoin in terms of being used as a means of

567
00:48:53,404 --> 00:48:58,404
settlement and the networks that are making it easy and cheap for stable coins

568
00:48:58,404 --> 00:49:02,404
to settle are attracting users because of that.

569
00:49:02,404 --> 00:49:09,404
So I do think at some point we'll need to think about composability and the

570
00:49:09,404 --> 00:49:15,404
ability for Bitcoin or somewhat native Bitcoin to interact with these other

571
00:49:15,404 --> 00:49:20,404
types of digital assets in a way that benefits Bitcoin.

572
00:49:20,404 --> 00:49:23,404
That certainly makes sense.

573
00:49:23,404 --> 00:49:27,404
You can see the way that Ethereum has designed itself is kind of interesting

574
00:49:27,404 --> 00:49:30,404
because it's a lot of shit coin trading happening on Ethereum.

575
00:49:30,404 --> 00:49:34,404
And when people trade lots of shit coins on Ethereum,

576
00:49:34,404 --> 00:49:38,404
Ethereum stakers earn the most revenue.

577
00:49:38,404 --> 00:49:41,404
And previously, you know, that was Ethereum miners.

578
00:49:41,404 --> 00:49:44,404
During the DeFi summer of 2020,

579
00:49:44,404 --> 00:49:48,404
Ethereum miners had an absolute field day and had just absolutely tremendous

580
00:49:48,404 --> 00:49:52,404
revenues because fees were through the roof because everybody was yield

581
00:49:52,404 --> 00:49:55,404
farming some XYZ scam food coin.

582
00:49:55,404 --> 00:49:59,404
And I do think there is an elegance to that, which is that.

583
00:50:00,138 --> 00:50:21,138
Humans are going to be degenerate gamblers, they're going to do silly things with
their money, they're going to chase scams, they're going to participate in scams,
they're going to, you know, invest in dubious things and at its heart, like that's
just core human behavior and everything that was once a successful investment was
probably at some point, a dubious thing, a dubious prospect.

584
00:50:22,138 --> 00:50:49,138
So creating a mechanism by which people are free to speculate on those things and
capital formation can occur on Bitcoin, or people can at least trade Bitcoin
natively with other types of stable coins or whatever it might be, as long as that
is done in a way where it strengthens mining incentives and strengthens the security
guarantees of Bitcoin, I'm not really morally opposed to it.

585
00:50:50,138 --> 00:50:55,138
I don't think that morality should come into where Bitcoin finds its product market
fit.

586
00:50:56,138 --> 00:50:59,138
You shouldn't be telling people, don't do that, that's not safe.

587
00:51:00,138 --> 00:51:02,138
You should allow people to do what they want with their money.

588
00:51:03,138 --> 00:51:15,138
And certainly people told me, many people have told me and early Bitcoiners, you
know, that like about Bitcoin itself, they said, you can't possibly be serious
about, you haven't put money into that, have you?

589
00:51:16,138 --> 00:51:29,138
So if we respect consumer, the investor's sovereignty, then yeah, I mean, it's not
really about like, I think it's so unfortunate that this point is misunderstood when
I make it a lot.

590
00:51:30,138 --> 00:51:33,138
I think you made it very well there, but it's like I said, we don't want people to
do like certain things.

591
00:51:34,138 --> 00:51:37,138
It's not about wanting people to do certain things or not do certain things.

592
00:51:39,138 --> 00:51:42,138
It's just someone out there like Tron, like what is going on with Tron?

593
00:51:42,138 --> 00:51:43,138
What is going on with Tron?

594
00:51:44,138 --> 00:51:47,138
No one really knows for sure, but it's like someone is willing to make that
software.

595
00:51:48,138 --> 00:51:49,138
Someone is willing to run the software.

596
00:51:50,138 --> 00:51:54,138
Someone is willing to transact and pay the fee and someone is willing to collect the
fee.

597
00:51:55,138 --> 00:51:57,138
So that thing exists now.

598
00:51:58,138 --> 00:52:00,138
It has some market niche.

599
00:52:01,138 --> 00:52:17,138
There's literally no reason at all why that can't be a merge mine sidechain of BTC
and have all the revenue go to the Bitcoin miners and have all of the transactions
be transactions that pay BTC in fee, just thus making it more desirable to own
Bitcoin for everyone involved.

600
00:52:18,138 --> 00:52:22,138
I really hope the people you mentioned, the people you mentioned earlier about like,
oh, we don't need to do anything.

601
00:52:23,138 --> 00:52:25,138
Bitcoin is already going to succeed.

602
00:52:26,138 --> 00:52:28,138
Again, it's not that I disagree with those people.

603
00:52:28,138 --> 00:52:34,138
I mean, I kind of I sort of do a little bit, but that's not the point where it's
like, I mean, I hope that those people are right.

604
00:52:35,138 --> 00:52:39,138
That would be great if it's really the case that we just need to do absolutely
nothing whatsoever.

605
00:52:40,138 --> 00:52:42,138
And we just need to literally do nothing.

606
00:52:43,138 --> 00:52:50,138
And it will Bitcoin will go, you know, whatever to the moon and it will become five
hundred million dollars a coin and everyone will willingly pay.

607
00:52:51,138 --> 00:52:58,138
It will live in a world where it costs a chicken sandwich, costs fifteen dollars or
whatever the equivalent percentage of that of BTC.

608
00:52:59,138 --> 00:53:05,138
And yet people are willing to pay a transaction fee that is five hundred dollars or
whatever the equivalent is in that future world.

609
00:53:06,138 --> 00:53:16,138
You know, you know, for two thousand for every L1 transaction, two thousand five
hundred maybe per every ten minutes, twenty four, seven, three sixty five.

610
00:53:17,138 --> 00:53:32,138
Like even at 2 a.m. on the East Coast, we're going to be people are going to be
filling up the blocks with five hundred dollar transaction fees or a thousand dollar
transaction fees because this is the best way to whatever you're going to do when
your child turns 16.

611
00:53:32,138 --> 00:53:40,138
You give them their you spend a thousand dollars and you give them your you buy them
a car and you buy you open their one lightning channel that they'll need for the
rest of their lives.

612
00:53:41,138 --> 00:53:47,138
I mean, OK, whatever. Like, you know, I that if this is all really figured out,
everything's one hundred percent figured out.

613
00:53:48,138 --> 00:53:50,138
Then I think that would just be great.

614
00:53:51,138 --> 00:53:56,138
But unfortunately, I you know, I work in this industry and I go to all the
conferences and I talk to all these people.

615
00:53:56,138 --> 00:54:03,138
And it doesn't you know, like you can search on you could just go into YouTube and
find a search for the phrase lightning limitations.

616
00:54:04,138 --> 00:54:06,138
It's now a very popular panel.

617
00:54:07,138 --> 00:54:08,138
We had one at Bitcoin Amsterdam.

618
00:54:09,138 --> 00:54:10,138
There's very popular.

619
00:54:11,138 --> 00:54:12,138
So just don't take it from me.

620
00:54:13,138 --> 00:54:14,138
Take it from them. That's where I got it.

621
00:54:15,138 --> 00:54:19,138
I got it from them. And they have they say, you know, privacy is five years away on
lightning.

622
00:54:20,138 --> 00:54:26,138
They say certain things are no it'll never be possible for everyone to open a
channel.

623
00:54:27,138 --> 00:54:28,138
That's that's part of how ARC was invented.

624
00:54:29,138 --> 00:54:39,138
So so it's kind of like, you know, I that would just be great if everything is a
million percent fine and we don't need to talk about any bitcoins problems because
it doesn't have any at all.

625
00:54:40,138 --> 00:54:41,138
Then I think that would be great.

626
00:54:41,138 --> 00:54:49,138
But I just think on the off chance there are some maybe we can just could just shed
a tiny bit of light on those.

627
00:54:50,138 --> 00:54:51,138
That would be you know, they said what was that?

628
00:54:52,138 --> 00:54:57,138
They had that bumper sticker or whatever, like I don't remember exactly what it was,
but it was like dissent is patriotism or something like that.

629
00:54:58,138 --> 00:55:00,138
In America, dissent is patriotism or something.

630
00:55:01,138 --> 00:55:02,138
So I think the similar thing for Bitcoin.

631
00:55:03,138 --> 00:55:04,138
I hope so, man.

632
00:55:04,138 --> 00:55:12,138
I mean, it does feel I talked about this a little bit of pub key a couple weeks ago
where I said, you know, it does feel weird.

633
00:55:13,138 --> 00:55:24,138
There is a natural aversion to openly talking about Bitcoin's flaws because it
doesn't represent it's not consistent with my investment views, not consistent with
my portfolio.

634
00:55:24,138 --> 00:55:38,138
Like I'm all in to Bitcoin in so many ways, vocationally, investment, you know,
ideologically, my credibility amongst my entire network of friends and investors, my
professional reputation.

635
00:55:39,138 --> 00:55:46,138
You know, I'm all in in so many ways, but I just know I've been a part of startups
my entire life and every startup on the outside, it feels great.

636
00:55:47,138 --> 00:55:50,138
And everybody's like, wow, this thing is so, so amazing.

637
00:55:51,138 --> 00:55:55,138
And your customers are excited if it's going well and you're doing a good job, you
know, it's going great.

638
00:55:56,138 --> 00:55:58,138
And on the inside, it feels like the fucking world is ending.

639
00:55:59,138 --> 00:56:01,138
You know, it's like, oh, man, this thing's broken and we got to worry about this.

640
00:56:02,138 --> 00:56:03,138
And that dichotomy always exists.

641
00:56:04,138 --> 00:56:17,138
And I just want if there's some secret meeting or some like secret crew where people
get around and they are obsessively paranoid about the future of Bitcoin and its
roadmap and how to make it absolutely bulletproof.

642
00:56:18,138 --> 00:56:21,138
And, you know, I can get invited to that meeting.

643
00:56:22,138 --> 00:56:31,138
I want to go. I want to be a part of that group where we think about every possible
issue that could arise and try and make Bitcoin as bulletproof as possible.

644
00:56:32,138 --> 00:56:37,138
Not because we don't think that it's great right now, but because we want to keep it
great in the future.

645
00:56:38,138 --> 00:56:39,138
Yeah, it's really strange.

646
00:56:40,138 --> 00:56:47,138
The soft fork thing, I think, is something that every miner must – someone has to do
something about this.

647
00:56:48,138 --> 00:56:52,138
Because we had many – because first of all, people don't understand a soft fork is
an opt in change.

648
00:56:53,138 --> 00:56:55,138
So it's not a change like in the traditional sense.

649
00:56:56,138 --> 00:57:00,138
You can keep running the old version of the software where literally everything is
the same.

650
00:57:01,138 --> 00:57:02,138
And so it's not quite a change.

651
00:57:03,138 --> 00:57:04,138
It's this new magical thing.

652
00:57:05,138 --> 00:57:07,138
The fact that it's even possible is kind of amazing, honestly.

653
00:57:08,138 --> 00:57:09,138
But there used to be many of these.

654
00:57:10,138 --> 00:57:12,138
Sixteen in the first seven years, there were 16.

655
00:57:13,138 --> 00:57:18,138
And then that was it because then we had SegWit and then Taproot.

656
00:57:19,138 --> 00:57:23,138
And SegWit took 20 months from when it was coded and when it finally activated.

657
00:57:24,138 --> 00:57:27,138
And there was an adversarial activation of many months.

658
00:57:27,138 --> 00:57:30,138
But then Taproot took 46 months, much longer.

659
00:57:31,138 --> 00:57:36,138
And it was self-inflicted that time, the anxiety over activating it.

660
00:57:37,138 --> 00:57:42,138
And in fact, we had something weird happen where a lot of people cheered it on and
activated it without really even knowing.

661
00:57:43,138 --> 00:57:44,138
They didn't really know anything about it.

662
00:57:45,138 --> 00:57:46,138
The pendulum swung the other way.

663
00:57:47,138 --> 00:57:54,138
But what I'm trying to say is I think the key about the inability to discuss the
flaws is a very, very bad sign, actually.

664
00:57:55,138 --> 00:57:56,138
It's the worst flaw of them all.

665
00:57:57,138 --> 00:57:58,138
A lot of people will say stuff like this.

666
00:57:59,138 --> 00:58:04,138
The worst problem in any organization is the one that people are unwilling to talk
about.

667
00:58:05,138 --> 00:58:09,138
And what I think has happened to some people is they got involved with Bitcoin.

668
00:58:10,138 --> 00:58:14,138
They were sold on the big, big, big idea of this hyper-Bitcoinization.

669
00:58:15,138 --> 00:58:16,138
This will take over the world.

670
00:58:17,138 --> 00:58:18,138
And then they encounter a couple of the flaws.

671
00:58:19,138 --> 00:58:23,138
And then I actually think some people have experienced this.

672
00:58:23,138 --> 00:58:26,138
Because similarly, I'm kind of all in on Bitcoin.

673
00:58:27,138 --> 00:58:30,138
I don't want to know how super clear.

674
00:58:31,138 --> 00:58:33,138
It's not a great OPSEC to be super clear about that.

675
00:58:34,138 --> 00:58:38,138
But I think what some people, the newer people, they get involved.

676
00:58:39,138 --> 00:58:40,138
They're sold this big vision.

677
00:58:41,138 --> 00:58:42,138
They realize it's flawed.

678
00:58:43,138 --> 00:58:50,138
And now they think, OK, I need to just meme the big vision a lot and maybe meme the
vision and then sell or something.

679
00:58:51,138 --> 00:58:52,138
They're not actually real Bitcoiners.

680
00:58:53,138 --> 00:58:54,138
And they're not as voices, too.

681
00:58:55,138 --> 00:58:58,138
Those are the people who have the largest online followings.

682
00:58:59,138 --> 00:59:04,138
And nobody wants to listen to someone who's going to say, like, well, we got to
think about all of these problems.

683
00:59:05,138 --> 00:59:07,138
I think it's because it's hard enough as it is, right?

684
00:59:08,138 --> 00:59:10,138
Like holding Bitcoin through all the tremendous market volatility.

685
00:59:11,138 --> 00:59:15,138
You know, it's an over 100 implied volatility asset historically for some periods of
time.

686
00:59:16,138 --> 00:59:17,138
It's not right now, but it has been.

687
00:59:17,138 --> 00:59:18,138
And it's just it's hard.

688
00:59:19,138 --> 00:59:25,138
And you need like cheerleading and psychological reinforcement in these online
communities.

689
00:59:26,138 --> 00:59:34,138
And so the group, I think miners are just such a good group to actually provide that
because we're fucked.

690
00:59:35,138 --> 00:59:45,138
I mean, and when I say fucked, I mean, if something were if a vulnerability were to
be disclosed today in Bitcoin, we would have the least liquidity.

691
00:59:45,138 --> 00:59:49,138
Everyone else X, Y, Z, HODL 69 to the moon infinity.

692
00:59:50,138 --> 00:59:54,138
You can dump and be like, well, that was an interesting part of my, you know, my
20s.

693
00:59:55,138 --> 00:59:57,138
And I'm out of that thing now. I'm going to go work at Microsoft.

694
00:59:58,138 --> 01:00:03,138
But like we've got, you know, tens of millions of dollars in the ground out there in
the middle of the West Texas desert.

695
01:00:04,138 --> 01:00:06,138
And it's like we cannot get liquidity on that.

696
01:00:07,138 --> 01:00:10,138
No one's going to pay me for my S-19s or my M-30s.

697
01:00:11,138 --> 01:00:12,138
What is this? Cool.

698
01:00:13,138 --> 01:00:14,138
This is a doorstop.

699
01:00:15,138 --> 01:00:27,138
When you are a miner, the illiquidity of your position puts you in that camp where
it's like you are stuck in this and you're always going to be three years away, two,
three years away.

700
01:00:28,138 --> 01:00:29,138
Your revenue stream is always going to be in the future.

701
01:00:30,138 --> 01:00:34,138
I mean, you can hedge it, I guess, by being short all your future production.

702
01:00:35,138 --> 01:00:37,138
But mechanically, like it's just financially difficult to even do that.

703
01:00:37,138 --> 01:00:47,138
So it's there's something about the nature of that relationship, you know, the
illiquidity of it that I think predisposes miners to being good long term thinkers
about Bitcoin.

704
01:00:48,138 --> 01:00:51,138
Yeah, we need that to happen.

705
01:00:52,138 --> 01:01:00,138
Unfortunately, what is happening now is I think unintentionally there in the
technical community, there is a fear of involving miners too much.

706
01:01:00,138 --> 01:01:05,138
And I think among the miners, there is a fear of doing something the technical
community might not like.

707
01:01:06,138 --> 01:01:14,138
And among the grassroots Bitcoiners, there is a fear of doing anything that either
group doesn't like.

708
01:01:15,138 --> 01:01:19,138
So we have three groups that are each afraid.

709
01:01:20,138 --> 01:01:21,138
They don't know what to do next.

710
01:01:22,138 --> 01:01:24,138
There is definitely a status quo bias.

711
01:01:24,138 --> 01:01:29,138
And I think the status quo is, again, I hope the people who say status quo is going
to be great.

712
01:01:30,138 --> 01:01:32,138
I hope they're right. I think that they are not right.

713
01:01:33,138 --> 01:01:38,138
I think that how did we get to $20,000 a coin in 2017?

714
01:01:39,138 --> 01:01:40,138
It definitely was not by not changing Bitcoin.

715
01:01:41,138 --> 01:01:43,138
There was all the cool stuff that was being invented that time.

716
01:01:44,138 --> 01:01:51,138
You know, multisig, BIP39 seed phrases, the fact that we have HD wallets at all that
can be linked to one seed phrase.

717
01:01:51,138 --> 01:01:54,138
Like that's relatively new from my point of view.

718
01:01:55,138 --> 01:01:58,138
Like imagine how much everything would suck if we didn't have all that.

719
01:01:59,138 --> 01:02:07,138
So I think though, related to your point about the miners are the least liquid, why
do people doubt the miners?

720
01:02:08,138 --> 01:02:16,138
I think there's something else going on where a lot of it was just accidental
cultural mistakes and bad luck.

721
01:02:16,138 --> 01:02:21,138
But I do think a lot of people have an interest in amplifying certain narratives.

722
01:02:22,138 --> 01:02:24,138
Something is going on.

723
01:02:25,138 --> 01:02:27,138
I'm not going to say like the sabotage, but there's something weird is going on.

724
01:02:28,138 --> 01:02:29,138
And I think that there's a lot of...

725
01:02:30,138 --> 01:02:31,138
I don't think it's deliberate.

726
01:02:32,138 --> 01:02:33,138
I don't think it's deliberate at all.

727
01:02:34,138 --> 01:02:35,138
I think it's just an accident.

728
01:02:36,138 --> 01:02:41,138
Well, I think a lot of it's that HODL69 character that we love to talk about on
Bitcoin Twitter.

729
01:02:41,138 --> 01:02:46,138
They come in, they learn about Bitcoin's history from their favorite podcast or
whoever.

730
01:02:47,138 --> 01:02:48,138
They have bits and pieces.

731
01:02:49,138 --> 01:02:52,138
And the thing they pick up on is that miners are always against the network and you
need to vote against them.

732
01:02:53,138 --> 01:02:56,138
When in reality, most Bitcoin miners are actually like your neighbors now.

733
01:02:57,138 --> 01:02:58,138
Like they go to BitDevs, they live in Austin.

734
01:02:59,138 --> 01:03:00,138
And that's a sizable percentage of the community now.

735
01:03:01,138 --> 01:03:02,138
And they're also Bitcoin participants.

736
01:03:03,138 --> 01:03:07,138
Paul, I want to throw it over to you and talk about like what miners can do in terms
of activating SoftWorks.

737
01:03:08,138 --> 01:03:09,138
What does that look like?

738
01:03:09,138 --> 01:03:11,138
Because I think a lot of Bitcoin miners don't even know.

739
01:03:12,138 --> 01:03:14,138
Every SoftWork has been activated by the miners.

740
01:03:15,138 --> 01:03:16,138
And this is, I don't know, maybe we should...

741
01:03:17,138 --> 01:03:23,138
I don't know how much time if people have time for Paul's blah, blah, blah theory or
historical situation or something.

742
01:03:24,138 --> 01:03:27,138
But it's like the...

743
01:03:28,138 --> 01:03:34,138
The SoftWork is this idea that you can have a new set of rules that's compatible
with the old set.

744
01:03:35,138 --> 01:03:45,138
And if 51% of the hash rate are using that version of the software, then the old
people who don't upgrade will also be dragged onto the same network.

745
01:03:46,138 --> 01:03:48,138
Because they'll be finding rule blocks that are valid on both.

746
01:03:49,138 --> 01:03:52,138
But every block will be following the new rules.

747
01:03:53,138 --> 01:03:57,138
So the whole reason this was invented was because it's much too difficult to get
everyone to upgrade their software.

748
01:03:58,138 --> 01:04:05,138
And also that leads to a horrible incentive of whoever's releasing the software can
be like, you know, you can hold a gun to that person's head.

749
01:04:06,138 --> 01:04:09,138
And have them release a version of the software that's very, very, very different,
very incompatible.

750
01:04:10,138 --> 01:04:12,138
Like, you know, this has 22 million coins or something.

751
01:04:13,138 --> 01:04:14,138
So the SoftWork thing is great.

752
01:04:15,138 --> 01:04:17,138
Every SoftWork has been activated by miners.

753
01:04:18,138 --> 01:04:20,138
It's true that SegWit, it was...

754
01:04:21,138 --> 01:04:23,138
There was the UASF kind of holding a gun to the miners' heads.

755
01:04:24,138 --> 01:04:28,138
But that one also activated before the UASF would have kicked in.

756
01:04:29,138 --> 01:04:30,138
The miner kind of folded in that.

757
01:04:31,138 --> 01:04:37,138
This whole thing about miners versus other Bitcoiners, this is all related to SegWit
activation.

758
01:04:38,138 --> 01:04:39,138
This one fluke case.

759
01:04:40,138 --> 01:04:44,138
And the case was mostly just miners thought...

760
01:04:45,138 --> 01:04:46,138
This is my guess. I don't really...

761
01:04:47,138 --> 01:04:48,138
No one knows for sure what happened.

762
01:04:49,138 --> 01:04:52,138
But, you know, some people at Bitmain and others.

763
01:04:53,138 --> 01:04:56,138
They thought that if they could persuade...

764
01:04:57,138 --> 01:04:59,138
It was the Mexican standoff with the two guns pointed at each other.

765
01:05:00,138 --> 01:05:04,138
And they thought, OK, we'll give them SegWit.

766
01:05:05,138 --> 01:05:08,138
And in return, we want this 2x block size increase.

767
01:05:09,138 --> 01:05:13,138
It's a very, very long story that everyone should impact.

768
01:05:14,138 --> 01:05:22,138
What happens is miners activate a SoftWork if 51% of the hash rate run the new
version of the software.

769
01:05:23,138 --> 01:05:31,138
So this is why I find it very disturbing that SoftWorks have become such a big
political deal.

770
01:05:32,138 --> 01:05:35,138
Because the actual ask is very, very small.

771
01:05:36,138 --> 01:05:38,138
It's really not that big. It's really nothing.

772
01:05:39,138 --> 01:05:40,138
And it's something we used to do all the time.

773
01:05:41,138 --> 01:05:42,138
And we have enormous potential.

774
01:05:43,138 --> 01:05:49,138
Even for those of you who don't want to do any SoftWorks, I have many messages for
you.

775
01:05:49,138 --> 01:05:53,138
One of them is, you know, with BIP300, we just don't...

776
01:05:54,138 --> 01:06:00,138
With BIP300, we wouldn't need any more soft or hard forks, potentially.

777
01:06:01,138 --> 01:06:02,138
So that's a SoftWork to end all SoftWorks.

778
01:06:03,138 --> 01:06:05,138
The idea...

779
01:06:06,138 --> 01:06:10,138
Like, the idea that the upgrade might be bad.

780
01:06:11,138 --> 01:06:13,138
I don't know what planet these people are living on.

781
01:06:14,138 --> 01:06:15,138
Because we released new versions...

782
01:06:16,138 --> 01:06:17,138
Bitcoin Core releases new versions of the software often.

783
01:06:17,138 --> 01:06:19,138
Can we talk about this a little bit, Will?

784
01:06:20,138 --> 01:06:21,138
You know, can you...

785
01:06:22,138 --> 01:06:23,138
Paul, can you talk us through this?

786
01:06:24,138 --> 01:06:26,138
Because when I first looked at this, this was very confusing for me as well.

787
01:06:27,138 --> 01:06:28,138
The...

788
01:06:29,138 --> 01:06:32,138
When Will was just showing that activation.watch graphic.

789
01:06:33,138 --> 01:06:34,138
Who is signaling there?

790
01:06:35,138 --> 01:06:36,138
What do those numbers mean?

791
01:06:37,138 --> 01:06:38,138
Just talk us through what that all means.

792
01:06:39,138 --> 01:06:40,138
Well, activation.watch is a site.

793
01:06:41,138 --> 01:06:42,138
It's similar to taproot.watch where there are bits.

794
01:06:43,138 --> 01:06:44,138
There's version bits.

795
01:06:45,138 --> 01:06:46,138
Each block is a version number.

796
01:06:47,138 --> 01:06:50,138
So people set those bits to a certain thing.

797
01:06:51,138 --> 01:06:52,138
And this is something that really...

798
01:06:53,138 --> 01:06:54,138
It doesn't affect the block.

799
01:06:55,138 --> 01:06:56,138
It's like a cosmetic writing on the block.

800
01:06:57,138 --> 01:06:58,138
So who is this 190?

801
01:06:59,138 --> 01:07:00,138
89 of 190.

802
01:07:01,138 --> 01:07:02,138
190 what?

803
01:07:03,138 --> 01:07:04,138
What is that?

804
01:07:05,138 --> 01:07:09,138
Well, the 190 is counting up from the amount of block,

805
01:07:10,138 --> 01:07:12,138
like the 2016 block window.

806
01:07:13,138 --> 01:07:14,138
And then it counts over again.

807
01:07:15,138 --> 01:07:16,138
Got it.

808
01:07:17,138 --> 01:07:19,138
These, I think, are all just bits that are randomly flipping.

809
01:07:20,138 --> 01:07:24,138
So I don't think anyone is actually signaling using this yet

810
01:07:25,138 --> 01:07:27,138
because the version bits are unclaimed.

811
01:07:28,138 --> 01:07:29,138
They are...

812
01:07:30,138 --> 01:07:31,138
So they're used for randomness.

813
01:07:32,138 --> 01:07:34,138
But when soft forks are ready to be activated,

814
01:07:35,138 --> 01:07:36,138
they...

815
01:07:37,138 --> 01:07:38,138
Someone claims a bit.

816
01:07:39,138 --> 01:07:41,138
And they say, we will always set this bit to one.

817
01:07:42,138 --> 01:07:45,138
And so every time we find a block, this bit is found.

818
01:07:45,138 --> 01:07:46,138
And so...

819
01:07:47,138 --> 01:07:50,138
So what is this bit 118, 89 out of 190?

820
01:07:51,138 --> 01:07:53,138
I think it means mostly nothing now

821
01:07:54,138 --> 01:07:55,138
because I think it's about half.

822
01:07:56,138 --> 01:07:59,138
And so I'm not sure if I'm explaining this very well,

823
01:08:00,138 --> 01:08:03,138
but the miners have the total ability to set these bits.

824
01:08:04,138 --> 01:08:06,138
And this is a cool way of getting messages from miners,

825
01:08:07,138 --> 01:08:09,138
even in a way that maybe is like a secret ballot,

826
01:08:10,138 --> 01:08:11,138
like it protects your anonymity.

827
01:08:12,138 --> 01:08:13,138
Maybe you don't want to...

828
01:08:13,138 --> 01:08:16,138
And is this a pool or is this an individual miner or...

829
01:08:17,138 --> 01:08:18,138
This...

830
01:08:19,138 --> 01:08:20,138
No, it shouldn't matter,

831
01:08:21,138 --> 01:08:23,138
but the pool is probably the one who would construct the block,

832
01:08:24,138 --> 01:08:25,138
I would imagine.

833
01:08:26,138 --> 01:08:28,138
The pool would probably be the one to do this.

834
01:08:29,138 --> 01:08:31,138
They would set the bits,

835
01:08:32,138 --> 01:08:35,138
which you could either set them directly or you can...

836
01:08:36,138 --> 01:08:37,138
I'm not exactly...

837
01:08:38,138 --> 01:08:40,138
There's several different ways to set these bits.

838
01:08:40,138 --> 01:08:43,138
But this is what used to be done routinely

839
01:08:44,138 --> 01:08:45,138
in BIP-9 soft fork activation.

840
01:08:46,138 --> 01:08:47,138
So could this...

841
01:08:48,138 --> 01:08:49,138
What could be interesting here is that

842
01:08:50,138 --> 01:08:54,138
you have an issue where I think Marathon was

843
01:08:56,138 --> 01:08:58,138
historically a group who attempted...

844
01:08:59,138 --> 01:09:00,138
I don't know the exact story.

845
01:09:01,138 --> 01:09:03,138
They tried to do some changes or signals for some changes

846
01:09:04,138 --> 01:09:08,138
and there was a strong market reaction against them.

847
01:09:08,138 --> 01:09:10,138
And because they put their name on it,

848
01:09:11,138 --> 01:09:14,138
obviously the boardroom of Marathon there probably said,

849
01:09:15,138 --> 01:09:16,138
hey, let's not do that again.

850
01:09:17,138 --> 01:09:18,138
We got a nice business here.

851
01:09:19,138 --> 01:09:20,138
We want to be a good actor on the network.

852
01:09:21,138 --> 01:09:22,138
So we're not going to go out and be publicly

853
01:09:23,138 --> 01:09:26,138
proclaiming to try or to lead changes for Bitcoin,

854
01:09:27,138 --> 01:09:28,138
but it might be controversial, yada, yada, yada.

855
01:09:29,138 --> 01:09:31,138
This is anonymous, right?

856
01:09:32,138 --> 01:09:33,138
This could be...

857
01:09:34,138 --> 01:09:36,138
So the CEO of the mining company says,

858
01:09:36,138 --> 01:09:39,138
look, we've discussed this strategically

859
01:09:40,138 --> 01:09:41,138
and says to the lead developer,

860
01:09:42,138 --> 01:09:43,138
I want to be signaling this.

861
01:09:44,138 --> 01:09:45,138
Or says even to the pool,

862
01:09:46,138 --> 01:09:47,138
hey pool, I want you to signal this for me.

863
01:09:48,138 --> 01:09:49,138
And there's no...

864
01:09:50,138 --> 01:09:51,138
It doesn't get connected back to that firm in any way.

865
01:09:52,138 --> 01:09:53,138
Is that correct?

866
01:09:54,138 --> 01:09:55,138
I think it would inevitably be connected to the pool.

867
01:09:56,138 --> 01:09:57,138
But of course the pool can always say,

868
01:09:58,138 --> 01:09:59,138
we let our...

869
01:10:00,138 --> 01:10:01,138
We let our members decide.

870
01:10:02,138 --> 01:10:03,138
And then the members...

871
01:10:04,138 --> 01:10:05,138
So you would have two layers of obfuscation there theoretically.

872
01:10:06,138 --> 01:10:08,138
The miner communicating to the pool

873
01:10:09,138 --> 01:10:11,138
and then the pool signaling to the broader mining,

874
01:10:12,138 --> 01:10:14,138
I guess Bitcoin ecosystem in its entirety.

875
01:10:15,138 --> 01:10:16,138
We support these changes.

876
01:10:17,138 --> 01:10:18,138
I mean, I think everyone...

877
01:10:19,138 --> 01:10:20,138
If anyone...

878
01:10:21,138 --> 01:10:22,138
If there are miners out there who believe my story

879
01:10:23,138 --> 01:10:24,138
about there's this one fluke event

880
01:10:25,138 --> 01:10:26,138
and it created this rift in the community

881
01:10:27,138 --> 01:10:28,138
and that this tug of war became

882
01:10:29,138 --> 01:10:32,138
something worse almost than the block size debate

883
01:10:33,138 --> 01:10:34,138
because it's now become something where

884
01:10:34,138 --> 01:10:36,138
miners not only...

885
01:10:37,138 --> 01:10:39,138
Miners are seen as the enemy,

886
01:10:40,138 --> 01:10:41,138
but also we're denied the world you described before

887
01:10:42,138 --> 01:10:43,138
where the incentives are aligned

888
01:10:44,138 --> 01:10:46,138
and the miners are collecting more money

889
01:10:47,138 --> 01:10:48,138
as the network gets used

890
01:10:49,138 --> 01:10:50,138
and they have an incentive to show adoption

891
01:10:51,138 --> 01:10:53,138
and says every transaction fee that's collected anywhere

892
01:10:54,138 --> 01:10:55,138
is going to them

893
01:10:56,138 --> 01:10:57,138
and they would...

894
01:10:58,138 --> 01:10:59,138
And they could then pass it on

895
01:11:00,138 --> 01:11:01,138
and they could exercise their own judgment

896
01:11:01,138 --> 01:11:02,138
rationally in saying,

897
01:11:03,138 --> 01:11:04,138
what do we actually need to build?

898
01:11:05,138 --> 01:11:06,138
Do we need yet another address format?

899
01:11:07,138 --> 01:11:08,138
What do we need?

900
01:11:09,138 --> 01:11:10,138
Or do we need something else?

901
01:11:11,138 --> 01:11:12,138
Or should we do a Canadian truckers war games

902
01:11:13,138 --> 01:11:14,138
which I thought we really dropped the ball on.

903
01:11:15,138 --> 01:11:16,138
It was really bizarre that we screwed that up.

904
01:11:17,138 --> 01:11:18,138
So if you believe my story,

905
01:11:19,138 --> 01:11:21,138
I think miners should signal

906
01:11:22,138 --> 01:11:23,138
on all five of those bits

907
01:11:24,138 --> 01:11:25,138
on activation.watch

908
01:11:26,138 --> 01:11:27,138
because the language leaves...

909
01:11:28,138 --> 01:11:29,138
It says if there's no objections

910
01:11:29,138 --> 01:11:30,138
because it's just signaling...

911
01:11:31,138 --> 01:11:33,138
It's trying to bring this back of saying

912
01:11:34,138 --> 01:11:35,138
the idea that this soft fork

913
01:11:36,138 --> 01:11:38,138
is an insurmountable ask

914
01:11:39,138 --> 01:11:43,138
that no one could ever possibly achieve.

915
01:11:44,138 --> 01:11:45,138
If we just bring that to an end,

916
01:11:46,138 --> 01:11:47,138
it's so easy to actually achieve

917
01:11:48,138 --> 01:11:50,138
and yet it's created this tension

918
01:11:51,138 --> 01:11:52,138
and it's not good

919
01:11:53,138 --> 01:11:54,138
and we could have everyone on the same team.

920
01:11:55,138 --> 01:11:56,138
I think that is what everyone should do

921
01:11:57,138 --> 01:11:58,138
is try to signal for all five of them

922
01:11:59,138 --> 01:12:00,138
on all five of those.

923
01:12:01,138 --> 01:12:02,138
Even stuff like BIF 345

924
01:12:03,138 --> 01:12:05,138
is not totally finished per se.

925
01:12:06,138 --> 01:12:07,138
But it just says

926
01:12:08,138 --> 01:12:09,138
the mining community is interested

927
01:12:10,138 --> 01:12:12,138
in going back to what it did before

928
01:12:13,138 --> 01:12:15,138
in basically the whole era

929
01:12:16,138 --> 01:12:18,138
of the enormous bull market

930
01:12:19,138 --> 01:12:22,138
which was the 2009 to 2017 era.

931
01:12:23,138 --> 01:12:24,138
And what has followed instead

932
01:12:25,138 --> 01:12:27,138
is an era of mistrust and suspicion

933
01:12:27,138 --> 01:12:28,138
and just kind of like hand-wringing

934
01:12:29,138 --> 01:12:30,138
over whether or not Bitcoin...

935
01:12:31,138 --> 01:12:32,138
We even want people to use Bitcoin

936
01:12:33,138 --> 01:12:34,138
and weird stuff like that.

937
01:12:35,138 --> 01:12:36,138
So I think you can draw...

938
01:12:37,138 --> 01:12:38,138
I think it's all connected.

939
01:12:39,138 --> 01:12:40,138
It's not a coincidence in the slightest.

940
01:12:41,138 --> 01:12:42,138
This is all the...

941
01:12:43,138 --> 01:12:44,138
We want to get back to a world

942
01:12:45,138 --> 01:12:46,138
where there's more collaboration

943
01:12:47,138 --> 01:12:49,138
and I think that is the thing to do

944
01:12:50,138 --> 01:12:51,138
is just signal interest

945
01:12:52,138 --> 01:12:53,138
and just signal that it's like...

946
01:12:54,138 --> 01:12:55,138
Let's talk really quickly

947
01:12:55,138 --> 01:12:56,138
just about what you guys think

948
01:12:57,138 --> 01:12:58,138
is going to happen next year.

949
01:12:59,138 --> 01:13:00,138
So I do think there's a lot of interest

950
01:13:01,138 --> 01:13:02,138
right now in Bitcoin Season 2

951
01:13:03,138 --> 01:13:04,138
or Bitcoin Renaissance, if you will.

952
01:13:05,138 --> 01:13:06,138
And there's BitDM,

953
01:13:07,138 --> 01:13:08,138
there's Taproot Wizards,

954
01:13:09,138 --> 01:13:10,138
there's Drivechains.

955
01:13:11,138 --> 01:13:12,138
There's a lot of people competing

956
01:13:13,138 --> 01:13:14,138
for mine space right now

957
01:13:15,138 --> 01:13:16,138
or mine share in this topic.

958
01:13:17,138 --> 01:13:18,138
What are you guys excited about?

959
01:13:19,138 --> 01:13:20,138
What's getting you up in the morning

960
01:13:21,138 --> 01:13:22,138
to think about this stuff

961
01:13:23,138 --> 01:13:24,138
and where do you think it goes

962
01:13:25,138 --> 01:13:26,138
in the future?

963
01:13:27,138 --> 01:13:28,138
I mentioned this earlier,

964
01:13:29,138 --> 01:13:30,138
but I think that a lot of the hash rate

965
01:13:31,138 --> 01:13:32,138
being in North America now

966
01:13:33,138 --> 01:13:35,138
and the user base of Bitcoin

967
01:13:36,138 --> 01:13:37,138
being Western democracies as well,

968
01:13:38,138 --> 01:13:40,138
I think that that's now hopefully...

969
01:13:41,138 --> 01:13:42,138
I don't want to say healing,

970
01:13:43,138 --> 01:13:44,138
but maybe that's the right way to say it.

971
01:13:45,138 --> 01:13:46,138
I'd like to see more collaboration

972
01:13:47,138 --> 01:13:49,138
between miners and users,

973
01:13:50,138 --> 01:13:52,138
less division amongst Bitcoin.

974
01:13:53,138 --> 01:13:54,138
That's what I hope to see.

975
01:13:55,138 --> 01:13:58,138
I think that after the halving next year,

976
01:13:59,138 --> 01:14:01,138
if there is a Bitcoin ETF

977
01:14:02,138 --> 01:14:04,138
and the halving occurs in April,

978
01:14:05,138 --> 01:14:06,138
I think that Bitcoin could really

979
01:14:07,138 --> 01:14:08,138
explode in value next year.

980
01:14:09,138 --> 01:14:11,138
Historically, it typically does that.

981
01:14:12,138 --> 01:14:13,138
And I know the number one reason

982
01:14:14,138 --> 01:14:15,138
why people use Bitcoin

983
01:14:16,138 --> 01:14:17,138
is for speculation and investment purposes.

984
01:14:18,138 --> 01:14:19,138
And so I'm going to give the people

985
01:14:20,138 --> 01:14:21,138
what they want to hear.

986
01:14:22,138 --> 01:14:23,138
I think 2024 is going to be

987
01:14:23,138 --> 01:14:24,138
the moon, bull market.

988
01:14:25,138 --> 01:14:26,138
Everyone's got our halving party, right?

989
01:14:27,138 --> 01:14:28,138
That's what we have.

990
01:14:29,138 --> 01:14:32,138
Blah, blah, blah about Tron transaction fees,

991
01:14:33,138 --> 01:14:35,138
but then we got our halving party.

992
01:14:36,138 --> 01:14:37,138
Love it.

993
01:14:38,138 --> 01:14:39,138
Where can we follow you guys on Twitter?

994
01:14:40,138 --> 01:14:41,138
And let's close out from there.

995
01:14:42,138 --> 01:14:44,138
I'm Truthcoin on Twitter.

996
01:14:45,138 --> 01:14:46,138
T-R-U-T-H-C-O-I-N.

997
01:14:47,138 --> 01:14:49,138
Yep. And I'm at James McAvity.

998
01:14:50,138 --> 01:14:51,138
It's spelled M, cavity like the tooth.

999
01:14:51,138 --> 01:14:53,138
And my company is at Cormant Inc.

1000
01:14:54,138 --> 01:14:55,138
Awesome.

1001
01:14:56,138 --> 01:14:57,138
And we've definitely had Cormant on the show before.

1002
01:14:58,138 --> 01:14:59,138
So go check out that episode.

1003
01:15:00,138 --> 01:15:01,138
Have you guys on twice.

1004
01:15:02,138 --> 01:15:03,138
Paul, James, thank you so much for joining today.

1005
01:15:04,138 --> 01:15:05,138
You guys coming to Texas Blockchain?

1006
01:15:06,138 --> 01:15:07,138
Yes, sir. Dallas.

1007
01:15:08,138 --> 01:15:09,138
Paul?

1008
01:15:10,138 --> 01:15:11,138
I don't know.

1009
01:15:12,138 --> 01:15:13,138
I have to look at when it is.

1010
01:15:14,138 --> 01:15:15,138
I didn't know.

1011
01:15:16,138 --> 01:15:17,138
We'll have to do a BIP300 301.

1012
01:15:18,138 --> 01:15:19,138
November 15th through 17th.

1013
01:15:19,138 --> 01:15:21,138
And maybe we could record something in person.

1014
01:15:22,138 --> 01:15:23,138
That's a good idea. Let's do it.

1015
01:15:24,138 --> 01:15:25,138
Let me close out here.

1016
01:15:26,138 --> 01:15:27,138
Thanks, guys.

1017
01:15:28,138 --> 01:15:29,138
Thanks, James. Thanks, Paul. Talk soon.