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Hi, you're listening to Stefan Levera Podcast, a show about Bitcoin and Austrian
economics

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brought to you by swan.com.

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Today we're talking about Drivechains, we're having the great Drivechain debate.

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Now for those of you who are not familiar, Drivechain is a proposal from 2015
relating

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to hashrate escrow and creating sidechains, aka sidecoins.

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The basic mechanism is that people could peg in Bitcoin and withdrawals could be
done via

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peg out on a slow basis, escrowed by the miners, by the hash rate.

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Now this is a contentious topic, there's a lot of back and forth, so today's debate
is

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between the creator and the main proponent of this idea, Paul Sztorc, and the, on
the

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other side, one of the earliest and well-known critics of this idea is Peter Todd.

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Now there's a little bit of context required in this debate so I will just link the
earlier

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episode I did with Shinobi where you get a little bit of the context on some of the

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outlines of this debate.

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So that earlier episode is with Shinobi, it's episode 512, you can see that in the
show

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notes or we'll put a link here for those of you watching the video.

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So with that said, let's go on to the great Drivechain debate.

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Paul and Peter, welcome.

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We are going to do the great Drivechain debate, so welcome to the show both of you.

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Thanks for having me on.

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Thanks for having me.

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Great, okay, so let's, you know, we're just going to talk through a little bit
around

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the structure.

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So the topic is Drivechains should be implemented in Bitcoin, obviously Paul's
taking positive,

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Peter will be taking negative.

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We're going to start with some timed segments, so it'll be a 10 minute opening
argument from

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Paul, 10 minute opening argument against from Peter.

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We'll have a few rounds of rebuttals and then we'll have a segment where you can
both challenge

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each other.

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I may throw in some questions here and there, but I'm going to try to do my best to
be impartial

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and let the two debaters make their points.

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Listeners, you are big boys and girls, you can make up your own mind.

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And so that's the format.

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If we're all ready to go, I'm going to start my timer.

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When you start talking, Paul, you've got 10 minutes on your clock when you start.

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Okay, great.

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Thanks.

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I think, you know, this conversation has gone a long time, so I'll give a tiny
overview,

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but then we'll sprint right to the cutting edge because that's what people really
deserve

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is something they can't get anywhere else.

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And we want to, we want to be at that cutting edge.

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So this, this idea is very old.

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This is the origin of Blockstream and their fundraising is in this sidechain idea.

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And it has enormous potential because it allows, for example, 8 billion people to be

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onboarded to Bitcoin more or less immediately, and they can obtain Zcash level
privacy.

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And we can have, for example, an EVM chain and we can just, anything that an altcoin

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can do, we can just copy.

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So we no longer have to fight this kind of like media battle against which coin is
better.

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You just have everything at your disposal and then the user just chooses what they
want.

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And we have a competition for developers.

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So it's a very old idea.

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And Peter has always been like the chief critic of this idea, which has always
fascinated

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me.

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And long ago he did a Let's Talk Bitcoin podcast on his tree chains idea in which he
critiqued

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the sidechain idea.

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And so, so he's, he's always been kind of the chief critic of this idea, which has
always

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fascinated me.

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And I've always been trying to figure out what is it about this idea that Peter
doesn't like.

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And I have to say, and to some extent I still don't know, but we did, we hired Peter
in

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the summer to write it down.

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What is it that he doesn't like?

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And then he produced this piece of writing and I have replied to it in this giant
image,

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which is sort of an unconventional way to reply to something.

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But I go through like line by line and I just replied to the whole thing because I
didn't

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want anyone to say that I missed something or that something's more important than
somebody.

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And I just replied to the entire thing.

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And then at the bottom I have some questions.

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So I'm just going to read the questions and then that'll be the end of the opening
statement

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because the questions I think are just, that's the, that takes us to the cutting
edge that

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I mentioned before.

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So the question number one is a two-parter.

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I snuck two in at once.

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It's kind of unfair, but it's that on his two most important points, I think Peter
contradicts

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himself completely.

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So the first is that, can miners defer to someone else's full node?

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At first, Peter says that the answer is yes, and that there's a, the pool can pay
this

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fixed cost and then distribute the cost downstream to a number of different clients
who all reuse

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the same node.

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And so the cost is shared and divided among them.

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But then later he says that it's absolutely, he makes it, he has a whole section of
his

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piece where he makes a big deal about claiming that it's impossible and that
everyone needs

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their own full node.

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So can people defer to someone else's full node?

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I think the answer is clearly yes, but, but the point is he says both things.

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So we should just figure out which one, what he's trying to say.

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And then the second part of part one is that Peter gives, he makes a big deal about
mining

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centralization, which is the entire critique against this idea.

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But he proposes, as far as I could tell, eight different definitions and
measurements of

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this idea, none of which are that consistent with each other.

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Some of them overlap a little bit, but some have absolutely nothing to do with each
other

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at all.

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And more than half of those have nothing to do with what BIP300 does.

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So the things about like the distribution of heat or distribution of resources on
the

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geography of the planet earth that have nothing to do whatsoever with BIP300
activating.

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So we should just get, what is the actual definition of mining decentralization or
centralization?

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When does it go up and down?

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What are the examples?

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Section two is his section about how Drivechain affects Bitcoin, which would be the
only basis

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for rejecting it from Bitcoin, is it had a negative effect.

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He only mentioned miners costs.

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So my question is, is it really limited to that or intentionally, or is there
something

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else that's not in the piece of writing?

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Or is he tacitly agreeing with me that the regular user who doesn't mine and who
just

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runs a full node or is a Bitcoin user, they are not negatively affected by BIP300.

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He's only saying that it has some mysterious effect on minor costs.

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So that's question two.

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Question three at Baltic Honey Badger in September, Peter said, quote, no one has
written code

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unquote to do this, but the software, including a fully functional Zcash sidechain
has been

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on drivechain.info for more than two and a half years.

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So the download button is right at the top of drivechain.info.

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So the question is, Peter, have you actually visited the website drivechain.info
ever?

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And if not, isn't that sort of negligent to be commenting on it after we even hired
you

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to write this critique?

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You are on stage having not visited the website one time.

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Question number four, Peter complains that there's no math at the very end of his
post

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to make this complaint.

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But in the original 2015 article, there was an entire section labeled some math and
it

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contains mathematical arguments.

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So has Peter not read that or is he not interested in that or does he reject it for
some other

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reason?

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And question number five, Peter complains almost all of the complaint in his writing

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centers around the terms fixed costs and economies of scale.

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But Peter doesn't use these phrases the way they're correctly, because they always
are

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inherent to one single decision-making context and they're not something that you
just have.

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They depend on the time frame and they depend on the current scale and they depend
on sort

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of a given scenario.

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They're like choosing between A and B, but there's not something that you just have.

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And then question number six, I would like to know if Peter agrees with me that
miners'

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long-run total costs equal their long-run total revenues, which in the field of
economics

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is uncontroversial.

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So if Peter's complaining about fixed costs rising, which is most of the complaint,
then

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he's just complaining that Bitcoin is very successful and that the miners are
earning

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a lot of money in transaction fees and that the network is doing really well.

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And so shouldn't we just, isn't that an illegitimate complaint?

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And then question seven, I would like to know if Peter really doesn't understand why
he

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complains about this in his piece.

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Why does the sidechain kicks things off by committing to the hash or the full node
software?

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That is not that, it's not even that wasteful, all things considered, and it solves
an immensely

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important problem very easily.

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But he complains about it in the piece, I don't know why.

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He says it's like an amateur mistake or something like that.

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And then question eight, I'd just like to know if Peter actually believes that if
sidechains

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are a good idea, does he actually see any benefit on the other side of this?

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Does he agree about the planetary scale and does he agree of achieving Zcash-level
privacy

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and does he agree that we can just let people use different pieces of software where
we

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just have people competing over which software they run, and yet all of these
projects are

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Bitcoin projects that use the same 21 million coins.

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Like, does he actually believe that that has any benefit?

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Because mostly I would say probably a Blockstream type prototype of a person would
have said

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something like, this would have been amazing benefits if we had achieved this, but
we hadn't

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achieved it yet.

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But I don't, maybe Peter doesn't think that there is any point in pursuing this
goal.

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And nine, I'm actually, I'm curious, Peter is free not to answer this at all.

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I mean, it's free not to answer anything, of course, but I would like to know more
about,

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I just personally would like to know more about what, what the conver-, maybe
conversations

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Peter had with Blockstream in 2015, or if Peter just has any idea or any guess about

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why it is that, because he does talk about this in his piece, he talks about why it
is

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Blockstream has sort of abandoned the original sidechains idea and has kind of
retreated

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to liquid, which is a lot like, you know, Ethereum doing these L2s and retreating to

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just something, this is a multi-sig or something.

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This is a big regression in my view and a very significant event in Bitcoin's
history.

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So I'm just, honestly, I'm very curious to know what he's up with that.

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And then the question 10 is, you know, like, does Peter think that his own arguments
are

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what stalled the sidechain idea from moving forward?

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And does he think that as a result of what he said, we have had all these altcoins

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proliferate and we've had all these other things happening directly, such as the
rise

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of the exchanges and the rise in activation drama and the toxicity and the paralysis

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that has plagued our, our project.

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And I think set us back on the task of taking on all the banks.

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So I don't know how much time that was, but I just read my 10 questions.

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You've got one minute left, Paul, one minute left.

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Well, I think, you know, I don't, then I surrender the minute.

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OK, fair enough.

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But just say that that's just this conversation has been going on a long time and
that's just

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where it left off as far as I'm concerned.

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OK, well, thanks for that.

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And Peter, let's hear your, I guess you don't necessarily have to respond to all of
Paul's

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points here. I mean, you can make your own kind of opening argument.

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And then if you want to kind of have the rebuttal time afterwards where you guys are
going to

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go back and forth on this.

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So, Peter, I'll let you take, you know, go for your 10 minutes when you, I'll hit
start when

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you start talking. Yeah, let's go.

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So, you know, I think like the way I'll go and talk about this is, you know, start
at

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really the big picture, which really comes down to, you know, well, what kind of
thing

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does this really bring to Bitcoin?

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And I'll actually start at the very last thing Paul mentioned there, which was the
sort of

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idea of toxicity and, you know, figuring out how to go negotiate changes and all
this.

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I mean, in reality is like so much of this toxicity we go see is driven by financial

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motives. And this is not something that Drivechains can fix.

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I mean, the fact is that people create altcoins because they want to go make money.

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And how do you make money?

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Well, the easiest way to go do it in the crypto space seems to be creating a new

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currency, pre-mining that currency, or at least, you know, issuing it, investing it
and

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hoping the price goes up and then dumping it on other people.

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Like you just cannot get away from that.

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Nothing us Bitcoiners will ever be able to go do will go change that other than us
maybe

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like cozying up to the SEC and like giving them tips or something.

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I mean, you know, it's just inherent to the nature of cryptocurrency and it's, you
know,

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it's just not relevant to Bitcoin.

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Now, what is relevant to Bitcoin is, well, what do we use Bitcoin for?

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I mean, of course, some people use Bitcoin to go and upload JPEGs and, you know, go
trade

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them. But mostly what Bitcoin gets used for is sending and receiving money.

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And secondary to that, or potentially, you know, potentially on how you look at it,
first

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of that is just holding money.

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I mean, that's really what it comes down to.

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And the applications that have really caught on for that is good ways to send and
receive

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money. And, you know, that's all well and cool.

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So then the question is, well, what is a good way to go send and receive money?

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And, you know, I think there was this idea with Blockstream initially that
sidechains

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would be cool. We'd have all these interesting new features.

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And, you know, I can speak to that a couple of ways.

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But say like the number one thing that happened there was Lightning went in, like
killed

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all these ideas because it's just so incredibly effective.

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You know, Lightning isn't perfect, but like the fact that you could just send money

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around the Internet instantly really took the wind out of a lot of sails.

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I mean, that's that's just a fact.

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But then the bigger issue for like Blockstream was, well, what was the original
idea?

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Well, it was a fairly complex proposal of merge mine sidechains with some kind of

218
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undefined fraud proof, you know, some way of making that miners were not fully in

219
00:14:03,220 --> 00:14:05,940
control of the money on a on a sidechain.

220
00:14:06,380 --> 00:14:07,660
And they thought they could do this.

221
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And the fact is that they failed, you know, and eventually Blockstream realized, you

222
00:14:12,340 --> 00:14:16,580
know, institutionally as well as like individually, the people there that this idea
just

223
00:14:16,580 --> 00:14:22,060
didn't work. And that's why they abandoned it and gave up and decided to go do
liquid

224
00:14:22,060 --> 00:14:23,220
instead with functionaries.

225
00:14:23,780 --> 00:14:28,180
And, you know, liquid is a compromise between like what people wanted to do and
what's

226
00:14:28,180 --> 00:14:31,380
actually possible. But, you know, that's kind of how that ended up.

227
00:14:31,740 --> 00:14:35,340
Well, and then, of course, finally, you got to go out and go and talk about, well,
why

228
00:14:35,340 --> 00:14:37,620
is like why is this so hard?

229
00:14:37,620 --> 00:14:43,180
And what it really comes down to is in Bitcoin, full nodes are the things that
prevent

230
00:14:43,180 --> 00:14:44,300
money from being stolen.

231
00:14:44,460 --> 00:14:47,340
You know, miners go and create an ordering.

232
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Miners go and create some kind of consensus.

233
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But the most important thing is that.

234
00:14:59,860 --> 00:15:05,380
Your full node actually goes invalidate signatures, you know, once you have like
some

235
00:15:05,380 --> 00:15:08,940
kind of proof of work, that's really what keeps money from getting stolen.

236
00:15:09,260 --> 00:15:13,420
And a lot of people would love to go find clever ways to avoid that, you know,

237
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Drivechains is an example of someone trying to find a clever way to avoid that kind
of

238
00:15:17,900 --> 00:15:23,620
system. But, you know, there's no getting around the fact that you need, you know,
you

239
00:15:23,620 --> 00:15:28,860
need people validating signatures in some way to be able to go and pull off that
kind of

240
00:15:29,020 --> 00:15:33,580
independence. And then, you know, you can then get into the more technical weeds of,

241
00:15:33,580 --> 00:15:35,540
well, all right, how exactly does all this fail?

242
00:15:35,700 --> 00:15:39,860
All right. So what is this minor centralization thing we don't care about?

243
00:15:39,860 --> 00:15:43,060
I mean, you know, we can go back up and say, well, why don't we just increase the
block

244
00:15:43,060 --> 00:15:43,900
size? All right.

245
00:15:44,500 --> 00:15:47,700
That's an obvious thing to go do if you want more transactions per second.

246
00:15:47,900 --> 00:15:52,380
And, you know, that was really what the block size wars were all about and
increasing the

247
00:15:52,380 --> 00:15:53,620
block size. Oh, well, cool.

248
00:15:53,620 --> 00:15:58,620
But even if you ignore people's ability to run a full node, even if that's problem
is

249
00:15:58,620 --> 00:16:03,780
magically solved, you run into this issue that the more data miners have to go deal

250
00:16:03,780 --> 00:16:06,500
with, the harder it is to be a minor.

251
00:16:06,780 --> 00:16:12,980
And, you know, funny enough, like since we last started talking about this, Ocean is
a

252
00:16:12,980 --> 00:16:14,540
new mining pool now getting started.

253
00:16:14,980 --> 00:16:21,180
You know, unfortunately, Ocean just faces so many issues trying to get their mining
pool

254
00:16:22,060 --> 00:16:28,060
off the ground. And this is even when running a Bitcoin node is relatively simple
these

255
00:16:28,060 --> 00:16:31,700
days. You know, you can easily run one with high enough performance and so on.

256
00:16:32,100 --> 00:16:36,700
But the problem with things like Drivechains really comes down to the fact that they
make

257
00:16:36,700 --> 00:16:39,140
running mining more difficult.

258
00:16:39,460 --> 00:16:44,020
And, you know, I was taking some trying to take some notes earlier and, you know,
Paul

259
00:16:44,020 --> 00:16:47,580
went and mentioned, you know, fixed costs and overhead and so on.

260
00:16:47,580 --> 00:16:49,380
And this is really what it comes down to.

261
00:16:49,380 --> 00:16:53,660
It's like when you think of, you know, you try to run a mining pool, you have a
certain

262
00:16:53,740 --> 00:16:54,860
you've a budget, right?

263
00:16:55,020 --> 00:16:56,740
Some of that budget is going to go to fixed costs.

264
00:16:56,780 --> 00:17:03,220
The things that don't that, you know, more ties over how many hashers you have at
your

265
00:17:03,220 --> 00:17:07,580
mining pool, the higher those fixed costs are, the bigger barrier to entry it is to
run a

266
00:17:07,580 --> 00:17:09,900
mining pool at all. That's really as simple as that.

267
00:17:10,820 --> 00:17:14,900
And most of the things that I think Paul is going to talk about with mining costs
are

268
00:17:14,900 --> 00:17:16,060
things that are not like that.

269
00:17:16,900 --> 00:17:22,140
In fact, you know, mining is inherently decentralized at the hashing level for a lot
of

270
00:17:22,140 --> 00:17:25,980
reasons. And one of the big ones is that the access to cheap energy is inherently

271
00:17:25,980 --> 00:17:31,340
decentralized. You know, solar power, you know, flare gas, like all these things
that

272
00:17:31,340 --> 00:17:32,940
are cheap energy, stranded hydro.

273
00:17:33,340 --> 00:17:35,740
These are all things are not in one place in the world.

274
00:17:35,940 --> 00:17:38,380
They're inherently in many different places around the world.

275
00:17:38,540 --> 00:17:39,820
So we got very lucky with that.

276
00:17:40,540 --> 00:17:45,180
But the mining pool side of thing, everything we add to mining pools to make them
more

277
00:17:45,180 --> 00:17:48,700
complex to run, that increases fixed costs, makes it harder to get into the mining

278
00:17:48,700 --> 00:17:54,020
business. You know, if you don't like that, like, say, you know, F2 pool, as an
example,

279
00:17:54,020 --> 00:17:55,820
started censoring OFAC transactions.

280
00:17:56,140 --> 00:17:59,940
Well, one of the ways you respond to that is by spinning up a new mining pool and
not

281
00:17:59,940 --> 00:18:01,300
censoring those transactions.

282
00:18:01,420 --> 00:18:06,580
And the harder we make it spin up a new mining pool, the harder it is that we, you
know,

283
00:18:06,580 --> 00:18:09,380
the job that we have to go keep Bitcoin decentralized.

284
00:18:09,820 --> 00:18:11,180
That's really what it comes down to.

285
00:18:11,420 --> 00:18:16,780
And Drivechains, because they act like a block size increase, inherently they have
this

286
00:18:17,100 --> 00:18:20,420
problem of increasing the fixed costs for all miners.

287
00:18:20,700 --> 00:18:24,220
Of course, they're even worse than a block size increase because Drivechains are

288
00:18:24,220 --> 00:18:25,300
different pieces of software.

289
00:18:25,700 --> 00:18:29,180
Like at least with a block size increase, I can throw hardware at the problem.

290
00:18:29,540 --> 00:18:33,020
You know, I can get a faster computer, I can get a faster Internet connection.

291
00:18:33,460 --> 00:18:37,060
You know, it's not a great thing to go have, but at least it tends to be things
where, you

292
00:18:37,060 --> 00:18:38,620
know, money kind of solves the issue.

293
00:18:40,420 --> 00:18:43,700
But when you're talking about a Drivechain and now there could be like a hundred

294
00:18:43,700 --> 00:18:47,620
different Drivechains, well now I have to go and hire guys, go run a hundred
different

295
00:18:47,620 --> 00:18:52,940
pieces of software to try to eco profit, to make my mining pool competitive with a

296
00:18:52,940 --> 00:18:55,460
much bigger one that happens to be censoring transactions.

297
00:18:55,580 --> 00:18:57,300
You know, we don't want Bitcoin to be in that place.

298
00:18:57,300 --> 00:18:59,140
We want running new mining pools to be easy.

299
00:18:59,260 --> 00:19:04,260
You know, that's how we get ourselves in a position where the response to censorship

300
00:19:04,260 --> 00:19:05,580
can be, well, screw you.

301
00:19:05,580 --> 00:19:08,900
We're going to start up our own thing, not, well, oh shit, how am I going to get,
you

302
00:19:08,900 --> 00:19:10,980
know, $10 million to go set this up?

303
00:19:11,220 --> 00:19:15,420
And notably, I mean, Ocean, apparently the initial budget, including software

304
00:19:15,460 --> 00:19:18,620
development, was like a $6 million investment.

305
00:19:18,660 --> 00:19:20,300
You know, that's already kind of worrying.

306
00:19:20,300 --> 00:19:24,220
And hopefully that investment will actually get open sourced and it will be easier
for

307
00:19:24,220 --> 00:19:27,700
the next guy. But we'll see, you know, last thing we want to do is make this problem

308
00:19:27,700 --> 00:19:30,260
even harder. So, yeah, I think...

309
00:19:30,260 --> 00:19:31,460
One minute left, Peter.

310
00:19:32,660 --> 00:19:36,620
I think that kind of sums up my opening argument, if you will.

311
00:19:36,620 --> 00:19:39,620
Like, that's, I'd say, the most important thing.

312
00:19:40,020 --> 00:19:44,060
OK, so then that's the opening arguments from each side.

313
00:19:44,220 --> 00:19:49,460
So let's now have, we're going to do five minutes of rebuttals and we'll start with

314
00:19:49,460 --> 00:19:50,460
you, Paul.

315
00:19:51,420 --> 00:19:56,820
OK, sure. So he started by saying, like, Drivechain wouldn't necessarily stop people

316
00:19:56,820 --> 00:19:59,140
from issuing their own altcoin.

317
00:19:59,140 --> 00:20:03,340
And I agree with that, although I think it's a strong deterrence because it gives
you,

318
00:20:03,340 --> 00:20:07,780
it makes it so that the altcoin person isn't adding anything except their own

319
00:20:07,780 --> 00:20:09,540
investment. They're not adding any new ideas.

320
00:20:09,540 --> 00:20:12,860
So you see what I mean? Mostly what an altcoiner will say is, oh, I would have
wished, I

321
00:20:12,860 --> 00:20:15,700
would like to do this on BTC, but I couldn't because of such and such.

322
00:20:15,700 --> 00:20:20,420
So that's what, for example, Vitalik said, that is what, whatever, Roger Ver, all
these

323
00:20:20,420 --> 00:20:25,580
people, David Vork, Namecoin people, all the people with a good, the Monero people,

324
00:20:25,820 --> 00:20:27,100
often in writing, they'd say.

325
00:20:27,700 --> 00:20:29,740
So, but this is a very minor point.

326
00:20:30,060 --> 00:20:34,020
Really, the 10 questions were in order from sort of most important to least
important.

327
00:20:34,020 --> 00:20:40,620
So the mining centralization one, Peter did repeat that he was saying that sometimes

328
00:20:40,660 --> 00:20:44,900
it's energy costs distributed around the globe, and then sometimes it's the fixed
costs.

329
00:20:45,060 --> 00:20:49,660
The question of whether or not Drivechain significantly increases fixed costs or
makes

330
00:20:49,660 --> 00:20:54,380
it more difficult to start a pool, I think maybe we should just focus on that
because

331
00:20:54,380 --> 00:20:56,580
I'm absolutely certain that the answer is no.

332
00:20:56,580 --> 00:20:58,060
And in fact, it has a negative effect.

333
00:20:58,100 --> 00:21:04,260
So, for example, the pool operator, just as the individual clients would defer to
the

334
00:21:04,260 --> 00:21:07,420
pool's node, the pool can defer to someone else's node.

335
00:21:07,420 --> 00:21:09,940
And that is exactly what BIP301 does.

336
00:21:09,940 --> 00:21:14,500
And even without BIP301, BIP301 just makes this like a trustless relationship.

337
00:21:14,980 --> 00:21:18,700
Even if there was no BIP301, they would do that anyway, just for reasons of

338
00:21:18,700 --> 00:21:22,660
economics, for more or less the exact reasons that Peter has outlined just in

339
00:21:22,660 --> 00:21:26,140
reverse, which is that no one wants to pay a cost that they don't have to pay.

340
00:21:26,300 --> 00:21:31,500
Again, Peter repeated this thing about the fixed costs, where he's right that a
fixed

341
00:21:31,500 --> 00:21:34,100
cost is something that you can amortize over people.

342
00:21:34,540 --> 00:21:38,820
But to some extent, it depends on the context and the time frame.

343
00:21:38,820 --> 00:21:45,660
So an individual ASIC is a fixed cost in a timeline that most people would just
assume

344
00:21:45,660 --> 00:21:46,900
that Peter and I are talking about.

345
00:21:46,900 --> 00:21:50,780
And then on a long enough timeline, all of the fixed costs become variable costs.

346
00:21:51,140 --> 00:21:55,780
So if you just take a huge view and you say you're the dictator of the continent and

347
00:21:55,780 --> 00:22:00,780
you're going to rule for 200 years, whether or not you build eight hydroelectric
dams

348
00:22:00,780 --> 00:22:03,340
or 10, that's a variable cost to you.

349
00:22:03,380 --> 00:22:05,380
You just think, how much is it going to cost to build each dam?

350
00:22:05,380 --> 00:22:06,540
How much electricity are we going to get?

351
00:22:06,940 --> 00:22:12,020
But of course, when you zoom in, the hydroelectric dam is, almost everyone would

352
00:22:12,020 --> 00:22:12,900
say, a fixed cost.

353
00:22:13,140 --> 00:22:14,860
So it depends on the context.

354
00:22:15,460 --> 00:22:21,420
But even in any context, the whole idea that the fixed cost of starting a new pool

355
00:22:21,420 --> 00:22:26,260
would be significantly increased by Drivechain is incorrect because the pool doesn't

356
00:22:26,260 --> 00:22:28,780
need to run a sidechain node at all.

357
00:22:28,860 --> 00:22:31,020
So I don't know if we're ever going to walk it.

358
00:22:31,020 --> 00:22:32,940
This is like the most important contradiction of all.

359
00:22:32,940 --> 00:22:33,860
And so I said it first.

360
00:22:34,020 --> 00:22:37,780
The fact that Ocean is having trouble competing, I think Peter and I both know

361
00:22:37,780 --> 00:22:42,780
there's a bunch of other reasons tacked on with that, but even if Peter were right,

362
00:22:42,780 --> 00:22:47,780
it would just say, demonstrate that it's very difficult to start a new pool if none

363
00:22:47,780 --> 00:22:49,420
of the other pools are doing anything wrong.

364
00:22:49,420 --> 00:22:54,700
And that despite not having Drivechain is still difficult.

365
00:22:54,780 --> 00:22:58,540
And so Drivechain doesn't have any marginal effect on this type of thing.

366
00:22:58,540 --> 00:23:00,580
But a pool is a proportional, you know what I mean?

367
00:23:01,020 --> 00:23:02,820
The pools add up to a hundred percent.

368
00:23:03,260 --> 00:23:07,980
So a pool is a special kind of thing where you won't automatically be able to, like

369
00:23:07,980 --> 00:23:13,180
if 100% of the pools that currently exist are behaving optimally, then there's no

370
00:23:13,180 --> 00:23:15,420
reason for you to be able to break in, you know?

371
00:23:16,020 --> 00:23:17,100
So I don't know.

372
00:23:17,340 --> 00:23:19,140
I think those are the important things.

373
00:23:19,140 --> 00:23:22,420
Like I did ask about the history.

374
00:23:22,420 --> 00:23:25,460
I'm very curious about exactly what Blockstream decided.

375
00:23:25,460 --> 00:23:29,300
I mean, it is really as true as Peter says that people just thought Lightning was a

376
00:23:29,380 --> 00:23:35,820
lot better than I think with Anthony Riard and other people, a lot of people,

377
00:23:35,820 --> 00:23:39,660
Rene Picard, these people, the author of Mastering Lightning, they are now trying to

378
00:23:39,660 --> 00:23:41,300
kind of walk a lot of things back.

379
00:23:42,300 --> 00:23:47,020
So I suppose that's kind of good news for me, as I think Lightning, the sun is

380
00:23:47,180 --> 00:23:48,500
starting to set on it, so.

381
00:23:48,780 --> 00:23:50,780
You got one minute left on this round, Paul.

382
00:23:51,660 --> 00:23:56,180
Well, I think I'd just like to emphasize that the questions, I didn't, I should

383
00:23:56,180 --> 00:23:59,540
have mentioned this, but I didn't, but the questions are sort of in order from how

384
00:23:59,540 --> 00:24:00,260
important they are.

385
00:24:00,260 --> 00:24:06,620
So the question of what is mining centralization and do people need to run, can

386
00:24:06,620 --> 00:24:08,180
you defer to someone else's full node?

387
00:24:08,420 --> 00:24:12,340
The answer is certainly yes, that you can defer to someone else's full node.

388
00:24:12,340 --> 00:24:17,380
And that is why the effect on mining pool costs is basically zero, because they can

389
00:24:17,380 --> 00:24:20,020
just use a sidechain node that someone else, someone out there is running.

390
00:24:20,860 --> 00:24:31,100
And the one, the reason why it may actually improve mining decentralization is that

391
00:24:31,180 --> 00:24:37,140
unlike Lightning and unlike Ocean, you can just pay people out on the transaction
that

392
00:24:37,140 --> 00:24:41,820
nets out all the hashers pay per share every 10 minutes.

393
00:24:41,860 --> 00:24:44,820
That is just a normal transaction on a BIP300 L2.

394
00:24:44,820 --> 00:24:48,140
It's no different than buying a cheese or whatever.

395
00:24:48,140 --> 00:24:49,660
So you just pay them out every 10 minutes.

396
00:24:49,660 --> 00:24:51,260
And that is what Ocean aspires to do.

397
00:24:51,260 --> 00:24:54,700
But that is what we could do with BIP300 tomorrow if we had.

398
00:24:55,060 --> 00:25:01,140
OK, great. So that's the first round of, well, first rebuttal from Paul.

399
00:25:01,140 --> 00:25:04,860
And now, Peter, you've got five minutes to have a round of rebuttals.

400
00:25:05,287 --> 00:25:09,287
Yeah, I mean, like, if you're going to go for most important, I mean, the simple
fact is your claims about, you know, BIP301 and BIP300 are just wrong.

401
00:25:09,287 --> 00:25:22,287
Like, if I'm going to go and speak to an audience, I mean, I think the thing I need
to go speak to is really what, why? And, you know, BIP301 and BIP300, they really
don't have very much to do with each other.

402
00:25:23,287 --> 00:25:34,287
BIP301 is sort of this idea of, well, somehow we'll kind of go do blind merge
mining and we'll go pay, you know, to go create a consensus on a sidechain and so
on.

403
00:25:34,287 --> 00:25:45,287
And, you know, it's a way to think of it as kind of like an auction per block, per
chain. And you go pay money and you go get a hash. And that's considered to be
consensus.

404
00:25:45,287 --> 00:25:54,287
But none of that has anything to do with the money on the chain. You know, that's
what BIP300 is about. And, you know, I personally made this mistake when I read
about sidechains.

405
00:25:54,287 --> 00:26:03,287
You know, for the longest time, I just assumed, oh, yeah, obviously, the way that we
decide how this pot of money assigned to the chain gets split up and withdrawn and
so on.

406
00:26:03,287 --> 00:26:08,287
Obviously, you go and have that related to this BIP301 idea of Blind Merged Mining.

407
00:26:08,287 --> 00:26:15,287
But the reality is it purely is miners are in control. You know, that is the
Drivechain's proposal. Miners are in control.

408
00:26:15,287 --> 00:26:26,287
You have to have a majority of miners to do anything to money on a chain. And the
only way a majority of miners and, you know, really the miners themselves can
actually validate what's happening is to go run Drivechain nodes.

409
00:26:26,287 --> 00:26:32,287
And if they don't validate what's happening, they can be participants in theft,
which poses enormous problems.

410
00:26:32,287 --> 00:26:36,287
And equally, if they want to be malicious, well, they can just go take the money and
that's that.

411
00:26:36,287 --> 00:26:50,287
Like, there's just no getting around that problem. And, you know, I think where this
kind of comes from is people have this dream that surely we can create some easy way
to go and somehow have new consensus rules without having new consensus rules.

412
00:26:50,287 --> 00:26:59,287
But people just haven't figured this stuff out. Now, obviously, I think with moon
math, as we like to call it, with, you know, recursive zk-SNARKs and all this other
clever stuff.

413
00:26:59,287 --> 00:27:06,287
Yeah, we can absolutely do things like Drivechains that actually work properly and
go and have this kind of withdrawal.

414
00:27:06,287 --> 00:27:12,287
But that's not what the Drivechain's proposal is. It just takes the shortcut of
saying, let's just assume miners are trustworthy and honest.

415
00:27:12,287 --> 00:27:25,287
And the honest, trustworthy miners, the only thing they can do with Drivechains is
either not participate, which case money just gets frozen, or they run a Drivechain
node, which creates all these fixed cost problems.

416
00:27:25,287 --> 00:27:31,287
I mean, you know, and like talking about like dams and all this, I mean, the
definition of fixed cost is simple.

417
00:27:31,287 --> 00:27:36,287
It is a cost that is not related to how much hashing power you have.

418
00:27:36,287 --> 00:27:46,287
Like, this is a pretty simple thing. The node that I go run for mining pool, that's
a fixed cost because that's unrelated to how many hashers you have.

419
00:27:46,287 --> 00:27:51,287
Like, it's a pretty simple thing. Talking about like hydro dams, that's just a bunch
of nonsense.

420
00:27:51,287 --> 00:27:56,287
I mean, you know, talk about like an ASIC. I mean, an ASIC is obviously a variable
cost.

421
00:27:56,287 --> 00:28:01,287
An ASIC produces a certain amount of hashing power, and the cost is proportional to
the hashing power.

422
00:28:01,287 --> 00:28:07,287
Like, I don't know why we're arguing about this silly stuff. Like, these are very
basic economic terms.

423
00:28:07,287 --> 00:28:13,287
And, you know, I would hope that we would be in agreement on this, so we could move
on to a substantial thing to go talk about.

424
00:28:13,287 --> 00:28:18,287
Okay, you've still got another 1 minute 45 on this, if you have anything else you
want to get to here.

425
00:28:18,287 --> 00:28:27,287
I mean, I guess the one thing I could quickly say is like, you know, in terms of all
this stuff about, you know, altcoins having new ideas and so on.

426
00:28:27,287 --> 00:28:37,287
I mean, again, the biggest, you know, altcoin drama that's happening right now is
about putting pictures, like low resolution pictures on Bitcoin.

427
00:28:37,287 --> 00:28:43,287
I mean, you know, there are altcoins out there that have interesting ideas, but they
are very, very rare.

428
00:28:43,287 --> 00:28:48,287
I mean, the vast majority of this stuff is just marketing, and that's just the
nature of it. I mean, it's a scammy thing.

429
00:28:48,287 --> 00:28:55,287
You want to go make money, you scam people into buying into an idea that doesn't
quite work, but it's different from other ideas.

430
00:28:55,287 --> 00:28:57,287
You know, and that's just the nature of altcoins.

431
00:28:57,287 --> 00:29:04,287
And, you know, if a couple of coins exist, like Monero, where they actually have an
interesting idea in a different model, that's fine.

432
00:29:04,287 --> 00:29:08,287
And it's probably fine if they aren't actually the same monetary base as Bitcoin.

433
00:29:08,287 --> 00:29:10,287
After all, like Monero involves different tradeoffs.

434
00:29:10,287 --> 00:29:16,287
Monero is fundamentally more vulnerable to losing everything due to crypto mistakes
than Bitcoin.

435
00:29:16,287 --> 00:29:20,287
And it's fine if those people choose to have their own currency to go do that on.

436
00:29:20,287 --> 00:29:22,287
I mean, I'm OK with that.

437
00:29:22,287 --> 00:29:29,287
Like, if anything, there's arguments that this is actually a good thing, that
they're firewalled off Bitcoin and that their failures don't affect us and vice
versa.

438
00:29:29,287 --> 00:29:33,287
But certainly the vast majority of the stuff is just scammy nonsense.

439
00:29:33,287 --> 00:29:36,287
And, you know, Drivechains aren't going to change that.

440
00:29:37,287 --> 00:29:39,287
Back to the show in a moment.

441
00:29:39,287 --> 00:29:43,287
With Bitcoin, we need hardware that can help us secure our coins.

442
00:29:43,287 --> 00:29:47,287
And CoinKite.com makes some of my favourite hardware in the space.

443
00:29:47,287 --> 00:29:52,287
Most notably, the cold card, which I use as part of various setups that I have.

444
00:29:52,287 --> 00:29:54,287
The cold card is a very reliable device.

445
00:29:54,287 --> 00:29:58,287
It's very secure and you can use it in all kinds of different configurations.

446
00:29:58,287 --> 00:30:00,287
Now, if you are a beginner, don't be concerned.

447
00:30:00,287 --> 00:30:10,287
You can just get a cold card and get a USB-C cable and you can plug that into your
computer and use it easily with software such as Sparrow Wallet or Spectre Desktop
or Electrum.

448
00:30:10,287 --> 00:30:13,287
Now, on the mobile phone, you can also use Nunchuk.

449
00:30:13,287 --> 00:30:16,287
And for those of you looking for a cheaper device, you can get the TapSigner.

450
00:30:16,287 --> 00:30:18,287
So this one is a cheaper device.

451
00:30:18,287 --> 00:30:25,287
Obviously not as secure as the cold card, but it is a more accessible option for
those of you who want something a little bit different.

452
00:30:25,287 --> 00:30:30,287
And you could even potentially use them together in some kind of multi-signature
setup.

453
00:30:30,287 --> 00:30:37,287
Now, as you learn about Bitcoin, you can start out in a more basic way and then
advance to more secure setups.

454
00:30:37,287 --> 00:30:49,287
So, for example, you can start out with a single signature basic 12 or 24 word setup
and later do things like migrate into a passphrase setup or use a multi-signature
setup or Seed XOR.

455
00:30:49,287 --> 00:30:56,287
There's so many options, but it starts with having hardware that you can use to help
you secure your coins, which you can get over at CoinKite.com.

456
00:30:56,287 --> 00:30:58,287
So go get your cold card at CoinKite.com.

457
00:30:58,287 --> 00:31:00,287
Use code LEVERA for a discount there.

458
00:31:00,287 --> 00:31:02,287
And now, back to the show.

459
00:31:02,287 --> 00:31:03,287
Okay.

460
00:31:03,287 --> 00:31:04,287
All right.

461
00:31:04,287 --> 00:31:08,287
Well, that's sort of concluding the more timed, more formally timed segments.

462
00:31:08,287 --> 00:31:12,287
And now we're going to have more of a, let's call it gentlemanly back and forth.

463
00:31:12,287 --> 00:31:15,287
But let's start with Paul.

464
00:31:16,287 --> 00:31:27,287
And so, Paul, you can Socratically question or challenge Peter on something, perhaps
one of the questions that maybe you believe it was not answered or was not answered
well.

465
00:31:27,287 --> 00:31:31,287
Perhaps you want to ask a question now and challenge Peter.

466
00:31:31,287 --> 00:31:32,287
Yes.

467
00:31:32,287 --> 00:31:45,287
So if someone wants to profit from running the site, if they're a miner and they
want to profit from take advantage of the revenues generated by the sidechain, they
don't need to run a node.

468
00:31:45,287 --> 00:31:48,287
They can just get information from someone else's node.

469
00:31:48,287 --> 00:32:03,287
And the fact that nodes, again, it's the exact same contradiction as always, which
is it can't be a fixed cost that is split among multiple people unless it's possible
for one full node to be used by more than one person.

470
00:32:03,287 --> 00:32:17,287
If it were the case that I have to run a full node and then if someone else, if a
friend of mine walks into the room, if they don't run their own full node, then they
just like burst into flames or something, then it would be the case that running the
full nodes is mandatory.

471
00:32:17,287 --> 00:32:22,287
But it's because it's split. You're determined to have it both ways.

472
00:32:22,287 --> 00:32:27,287
You're determined to say this is a fixed cost that is split among multiple people.

473
00:32:27,287 --> 00:32:31,287
And then you also have to say everyone has to run the full node.

474
00:32:31,287 --> 00:32:35,287
So I don't know how to resolve this contradiction.

475
00:32:35,287 --> 00:32:45,287
But I would say if a client of the pool is deferring to the pool's full node, then
what happens if a pool just decides to defer to a different pool?

476
00:32:45,287 --> 00:32:49,287
I mean, this is the basis of the block size debate.

477
00:32:49,287 --> 00:32:51,287
I mean, that's really what it comes down to.

478
00:32:51,287 --> 00:33:00,287
The block size debate was about saying, hey, we should go set block size low enough
that running a full node is not a significant overhead for anyone.

479
00:33:00,287 --> 00:33:03,287
You know, that is really what it comes down to.

480
00:33:03,287 --> 00:33:05,287
Right, but that's not what this is about.

481
00:33:05,287 --> 00:33:11,287
What the block size debate was about was that different people wanted to pay
different costs.

482
00:33:11,287 --> 00:33:14,287
Roger Ver really wanted the full node to cost more.

483
00:33:14,287 --> 00:33:16,287
I mean, I think you understand that perfectly.

484
00:33:16,287 --> 00:33:25,287
Look, what you want to do with Drivechains, especially the scaling argument, which
is really like how Drivechains competes with Lightning, is to go have big blocks.

485
00:33:25,287 --> 00:33:28,287
I mean, that is the reality of that.

486
00:33:28,287 --> 00:33:32,287
And this is how Drivechains competes with Lightning.

487
00:33:32,287 --> 00:33:41,287
Well, look, as long as people go and actually go validate rather than just blindly
trusting other people to run the system, you have to go and run a full node.

488
00:33:41,287 --> 00:33:43,287
There's no shortcuts to this.

489
00:33:43,287 --> 00:33:47,287
And when people stop doing that, things fail in very bad ways.

490
00:33:47,287 --> 00:33:49,287
You know, you can't get around that.

491
00:33:49,287 --> 00:34:02,287
Well, the great example being if you're trusting someone else to go run a full node,
those people are in control of the money on the Drivechain because they can go lie
and they can go approve withdrawals or they can be pressured to go approve
withdrawals and money gets taken.

492
00:34:02,287 --> 00:34:12,287
I mean, in Bitcoin, we always try to keep so far away from this by keeping the cost
to go run fully validating nodes low.

493
00:34:12,287 --> 00:34:14,287
I fully agree with that.

494
00:34:14,287 --> 00:34:16,287
We want every node to be as cheap as possible.

495
00:34:16,287 --> 00:34:24,287
But some people, not everyone agrees on how much it should cost, which is the whole
point, is how to make it cost more expensive for some and less expensive for others.

496
00:34:24,287 --> 00:34:29,287
If you don't agree, I mean, you're welcome to go and sell Bitcoin and go buy a
different currency.

497
00:34:29,287 --> 00:34:31,287
I think that's a very good example.

498
00:34:31,287 --> 00:34:35,287
That's exactly the problem that my chains are supposed to solve, though, is that
someone who disagrees doesn't have to do that.

499
00:34:35,287 --> 00:34:37,287
I mean, Roger really did not want to convey that.

500
00:34:37,287 --> 00:34:41,287
It would be lovely if we could solve that problem, but the technology doesn't exist.

501
00:34:41,287 --> 00:34:43,287
I mean, my trade chains…

502
00:34:43,287 --> 00:34:45,287
Peter, you're the only one.

503
00:34:45,287 --> 00:34:54,287
I've searched high and low for the reason why this technology can't exist, and I
think everyone is deferring to you, and all you have is this contradiction on
whether or not…

504
00:34:54,287 --> 00:34:56,287
People are deferring to me.

505
00:34:56,287 --> 00:34:59,287
I'm just some dude who has the patience to go sit through this stuff.

506
00:34:59,287 --> 00:35:02,287
I mean, the vast majority of devs have work to do.

507
00:35:02,287 --> 00:35:04,287
You're the original.

508
00:35:04,287 --> 00:35:09,287
Yeah, because I am the original guy who went and had the patience to sit down and
write arguments about this.

509
00:35:09,287 --> 00:35:16,287
The majority of devs are not interested in going on social media or writing blog
posts explaining to a general audience.

510
00:35:16,287 --> 00:35:19,287
The majority of devs want to actually get real work done.

511
00:35:19,287 --> 00:35:22,287
I specialize in this kind of communication.

512
00:35:22,287 --> 00:35:35,287
Well, you know that we have a list, LayerTwoLabs.com, slash friends, and it's full of
a lot of very technical people, including Rene Picard, author of Mastering
Lightning, and Robin Linus, who invented the camera.

513
00:35:35,287 --> 00:35:41,287
Your quotes are very optimistic how much support you actually have.

514
00:35:41,287 --> 00:35:42,287
Yeah.

515
00:35:42,287 --> 00:35:43,287
I've read that.

516
00:35:43,287 --> 00:35:45,287
It's optimistic.

517
00:35:45,287 --> 00:35:47,287
Okay, guys, let me just jump in here.

518
00:35:48,287 --> 00:35:52,287
I think we're sort of veering off into who supports Drivechain and who doesn't.

519
00:35:52,287 --> 00:35:54,287
It's not a good argument.

520
00:35:54,287 --> 00:35:56,287
Let's keep this to the specific point.

521
00:35:56,287 --> 00:35:58,287
But he's the one who actually said, though.

522
00:35:58,287 --> 00:36:06,287
He says, like, I'm trying to ask him about why doesn't he like this idea, and he's
saying, well, I'm the only one who's bringing this up or something.

523
00:36:06,287 --> 00:36:11,287
No, I didn't say that I'm the only one who, say, is against Drivechains.

524
00:36:11,287 --> 00:36:18,287
I'm saying I'm the only one who has the patience to go do things, like sit through
35-minute-long interviews about this silly topic.

525
00:36:18,287 --> 00:36:24,287
The fact is so many devs are just tired of this subject and don't want to have
anything to do with it because it's dumb.

526
00:36:24,287 --> 00:36:27,287
Like, you know, that's what you're up against.

527
00:36:27,287 --> 00:36:30,287
Let me try to explain it.

528
00:36:30,287 --> 00:36:33,287
Guys, let me just jump in here.

529
00:36:33,287 --> 00:36:50,287
I think what we're trying to get to the bottom of on this particular question is do
miners have to run, you know, so as the concept of Drivechains, there are 256
Drivechain slots, and there would be, you know, Zcoin and so on, some of these other
coins.

530
00:36:50,287 --> 00:37:00,287
And I think the criticism, as I'm hearing, as I'm understanding from Peter and
others, is that you would create this additional, let's say, burden or fixed cost,
as we've been talking about.

531
00:37:00,287 --> 00:37:10,287
And I think Paul's answer to this point is, no, the miners do not have to run these
sidechain or side, you know, side Drivechain nodes.

532
00:37:10,287 --> 00:37:13,287
They can delegate that capability.

533
00:37:13,287 --> 00:37:23,287
And as I understand, Peter, your counterargument here is more like, no, part of the
whole point of Bitcoin is that you need to be able to validate everything because
otherwise the pools can lie to you.

534
00:37:23,287 --> 00:37:25,287
Is that sort of a fair…

535
00:37:25,287 --> 00:37:27,287
I think you're missing my point a little bit.

536
00:37:27,287 --> 00:37:38,287
So what it comes down to is that if Drivechains are to work properly, you need
miners to be running Drivechain nodes and properly validated, because otherwise you
don't actually have separate miners.

537
00:37:38,287 --> 00:37:45,287
What you really have is a very small number, potentially just one dude, you know,
running nodes that actually go do stuff.

538
00:37:45,287 --> 00:37:48,287
And then the Drivechains start working properly.

539
00:37:48,287 --> 00:37:52,287
So you don't, like, I think the thing is here is Paul's trying to get it both ways.

540
00:37:52,287 --> 00:37:55,287
He's trying to go say, well, you can go have this thing that works properly.

541
00:37:55,287 --> 00:37:58,287
We don't actually need to do the hard work of validating anything.

542
00:37:58,287 --> 00:37:59,287
That's OK.

543
00:37:59,287 --> 00:38:01,287
You know, you can just trust the other guy to go do it.

544
00:38:01,287 --> 00:38:02,287
But Peter, I do.

545
00:38:02,287 --> 00:38:03,287
I have it both ways.

546
00:38:03,287 --> 00:38:04,287
You just don't…

547
00:38:04,287 --> 00:38:06,287
Well, you don't have it both ways.

548
00:38:06,287 --> 00:38:07,287
Why?

549
00:38:07,287 --> 00:38:08,287
Yes, because the people…

550
00:38:08,287 --> 00:38:13,287
Because Roger wanted to run a more expensive node, but Luke Dashjr. did not.

551
00:38:13,287 --> 00:38:31,287
So the question is just how can we exploit the fact that Roger was actually willing
to run the more expensive node and thus only have them synchronize very rarely with
this tiny hash once every three months, thus making it very unbelievably impractical
for anyone to lie.

552
00:38:31,287 --> 00:38:35,287
Because everyone who's running the sidechain node is going to report the same hash
for three months.

553
00:38:35,287 --> 00:38:38,287
So it's going to be extremely impractical for anyone to get away with the lie.

554
00:38:38,287 --> 00:38:46,287
The slow synchronization, which would be way too slow for anyone to actually make
use of as an actual feature.

555
00:38:46,287 --> 00:38:57,287
But since it's synchronizing an entire three months' worth of blockchain history, no
matter what the sidechain's block size is, that is what would allow anyone to have
whatever, Bitcoin SV node or Zcash node or Monero node or whatever else.

556
00:38:57,287 --> 00:39:00,287
For starters, I mean that's not even what the thing is.

557
00:39:00,287 --> 00:39:05,287
Like you have to go put in these hashes every block for anything to go happen.

558
00:39:06,287 --> 00:39:10,287
And also, hang on, hang on, hang on.

559
00:39:10,287 --> 00:39:13,287
And also, remember, we're not talking about one sidechain node.

560
00:39:13,287 --> 00:39:16,287
We're talking about hundreds of them potentially.

561
00:39:16,287 --> 00:39:18,287
Like you've allowed for that.

562
00:39:18,287 --> 00:39:27,287
So hundreds, even in your hypothetical example, still a lot of work constantly that
miners have to be doing to be updating this.

563
00:39:27,287 --> 00:39:30,287
Like that's just not feasible in a decentralized environment.

564
00:39:30,287 --> 00:39:35,287
For each one, people have to make a decision on whether or not they want to try to
lie.

565
00:39:35,287 --> 00:39:39,287
And for each one, it takes three to six months' worth of lying.

566
00:39:39,287 --> 00:39:40,287
It's too impractical.

567
00:39:40,287 --> 00:39:41,287
It's too much of a deterrent.

568
00:39:41,287 --> 00:39:42,287
You know what I mean?

569
00:39:42,287 --> 00:39:44,287
There is no deterrent here.

570
00:39:44,287 --> 00:39:46,287
Like there isn't a deterrent.

571
00:39:46,287 --> 00:39:50,287
There's nothing in Drivechains that stops this.

572
00:39:50,287 --> 00:39:52,287
Well, why do you say that, though?

573
00:39:52,287 --> 00:39:53,287
Because there is, of course.

574
00:39:53,287 --> 00:39:55,287
The fee revenue to the miners is enormous.

575
00:39:55,287 --> 00:39:57,287
So they have some incentive to get it right.

576
00:39:58,287 --> 00:40:01,287
Well, it would be like $100 billion a year.

577
00:40:01,287 --> 00:40:05,287
Fee revenue in Drivechains is not enormous because there is no block size limit.

578
00:40:05,287 --> 00:40:08,287
This is the security model of Drivechain, though.

579
00:40:08,287 --> 00:40:12,287
If the fee revenue is not low, then the chain will not be secure or viable.

580
00:40:12,287 --> 00:40:15,287
So this is fully admitted by me, 100 percent.

581
00:40:15,287 --> 00:40:22,287
But the good news is that every reason to suspect the fee revenue will be 10,000
times higher than what is currently available.

582
00:40:22,287 --> 00:40:25,287
I mean it's clearly not because the fee revenue of Drivechains doesn't have a block
size limit.

583
00:40:25,287 --> 00:40:33,287
And just like those arguments with Bitcoin itself, there will obviously be a race to
the bottom, and there's not going to be fee revenue.

584
00:40:33,287 --> 00:40:35,287
I mean there's no getting around that.

585
00:40:35,287 --> 00:40:37,287
But Peter, you don't understand.

586
00:40:37,287 --> 00:40:40,287
It's a basic math question of height versus area.

587
00:40:40,287 --> 00:40:43,287
Do you really not know the difference between price and revenue?

588
00:40:43,287 --> 00:40:46,287
Look, I am well aware of all these arguments.

589
00:40:46,287 --> 00:40:50,287
But the fact is that in Drivechains, there isn't a block size limit.

590
00:40:50,287 --> 00:40:54,287
So that there is no incentive for there to be any fees at all.

591
00:40:54,287 --> 00:40:56,287
You can always undercut the next guy.

592
00:40:56,287 --> 00:40:59,287
That's just the fact of how Drivechains go.

593
00:40:59,287 --> 00:41:01,287
This is not true.

594
00:41:01,287 --> 00:41:04,287
Each individual chain has its own limit.

595
00:41:04,287 --> 00:41:09,287
So it's no different between Ethereum and BTC today.

596
00:41:09,287 --> 00:41:13,287
There is nothing in Drivechains that actually goes and makes it happen.

597
00:41:13,287 --> 00:41:17,287
Yes, of course, Peter, there is.

598
00:41:17,287 --> 00:41:20,287
Because the designer wants their sidechain to be popular.

599
00:41:20,287 --> 00:41:23,287
So they want their sidechain full node to be a reasonable cost.

600
00:41:23,287 --> 00:41:29,287
If you want your Drivechain to be popular, you have to have low fees.

601
00:41:29,287 --> 00:41:32,287
Yes, that's exactly why we have something like Ethereum.

602
00:41:32,287 --> 00:41:34,287
Which pushes the race to the bottom.

603
00:41:34,287 --> 00:41:36,287
You can't get away from that.

604
00:41:36,287 --> 00:41:41,287
But Peter, we have to emphasize this point though.

605
00:41:41,287 --> 00:41:43,287
Peter is saying race to the bottom.

606
00:41:43,287 --> 00:41:45,287
He's referring to the fee rate.

607
00:41:45,287 --> 00:41:47,287
Like a dollar per apple or something.

608
00:41:47,287 --> 00:41:50,287
And it doesn't matter if you sell a trillion apples to Peter.

609
00:41:50,287 --> 00:41:52,287
It certainly does.

610
00:41:52,287 --> 00:41:54,287
This is elementary school math.

611
00:41:54,287 --> 00:41:56,287
That's why I'm saying it does matter, Peter.

612
00:41:56,287 --> 00:41:59,287
The revenue is the total area of the rectangle.

613
00:41:59,287 --> 00:42:01,287
This is a very simple point.

614
00:42:01,287 --> 00:42:06,287
So do you understand that the race to the bottom of the fees can be what maximizes
the total?

615
00:42:06,287 --> 00:42:09,287
The price can go down and the revenue can go up.

616
00:42:09,287 --> 00:42:11,287
Which is exactly what will happen.

617
00:42:11,287 --> 00:42:13,287
If you're going to have a large amount in total.

618
00:42:13,287 --> 00:42:16,287
You need to have some mechanism where fees do not end up at zero.

619
00:42:17,287 --> 00:42:22,287
Why aren't they zero on something like Tron or whatever?

620
00:42:22,287 --> 00:42:24,287
Ethereum, anything.

621
00:42:24,287 --> 00:42:26,287
Any other alt network.

622
00:42:26,287 --> 00:42:28,287
Because Tron is a centralized system.

623
00:42:28,287 --> 00:42:30,287
So that the people who run it can just decide what the fee will be.

624
00:42:30,287 --> 00:42:32,287
It doesn't make any difference.

625
00:42:32,287 --> 00:42:34,287
The sidechain can be fully centralized or decentralized.

626
00:42:34,287 --> 00:42:36,287
It can have an expensive node.

627
00:42:36,287 --> 00:42:38,287
It makes absolutely no difference in my argument at all.

628
00:42:38,287 --> 00:42:42,287
Look, Tron is able to have non-zero fees.

629
00:42:42,287 --> 00:42:44,287
Because they can go pick an amount.

630
00:42:44,287 --> 00:42:47,287
And because Tron is something that people have to buy into.

631
00:42:47,287 --> 00:42:50,287
Rather than competing like Drivechains would with each other.

632
00:42:50,287 --> 00:42:52,287
A better example is actually something like Ethereum.

633
00:42:52,287 --> 00:42:54,287
Where that was the idea.

634
00:42:54,287 --> 00:42:57,287
But because Ethereum has technical limits.

635
00:42:57,287 --> 00:42:59,287
Because it does actually have a block size limit.

636
00:42:59,287 --> 00:43:01,287
It's still wound up with non-zero fees.

637
00:43:01,287 --> 00:43:08,287
But that's the same reason why Ethereum doesn't go work properly.

638
00:43:08,287 --> 00:43:10,287
Drivechains can't get away from that.

639
00:43:11,287 --> 00:43:15,287
But a sidechain of Ethereum will also have its own block size limit.

640
00:43:15,287 --> 00:43:17,287
That will just be similar to what Ethereum's is.

641
00:43:17,287 --> 00:43:19,287
And then when that one shows up.

642
00:43:19,287 --> 00:43:21,287
Someone will just create a second one.

643
00:43:21,287 --> 00:43:23,287
That has a different block size limit.

644
00:43:23,287 --> 00:43:25,287
Hang on.

645
00:43:25,287 --> 00:43:27,287
Which is a process.

646
00:43:27,287 --> 00:43:29,287
The rates will be going down all the time.

647
00:43:29,287 --> 00:43:31,287
Yes.

648
00:43:31,287 --> 00:43:33,287
But the total revenue will be going up.

649
00:43:33,287 --> 00:43:35,287
It's just such a bizarre argument to try to go make.

650
00:43:35,287 --> 00:43:37,287
Oh yeah.

651
00:43:37,287 --> 00:43:39,287
I have something where there is no cost to it.

652
00:43:39,287 --> 00:43:41,287
But I'll go make it up in volume.

653
00:43:41,287 --> 00:43:43,287
Exactly.

654
00:43:43,287 --> 00:43:50,287
But Peter, the argument is literally that it's one chain versus one plus N.

655
00:43:50,287 --> 00:43:52,287
So it must go up.

656
00:43:52,287 --> 00:43:55,287
But I'm already admitting to you that if the revenue isn't there.

657
00:43:55,287 --> 00:43:57,287
Then the chain won't be secure.

658
00:43:57,287 --> 00:44:01,287
But the problem is the chain can easily be sufficiently secure.

659
00:44:01,287 --> 00:44:03,287
To go and screw over Bitcoin.

660
00:44:03,287 --> 00:44:07,287
Remember, all this stuff ends up competing with lightning.

661
00:44:07,287 --> 00:44:10,287
In a lot of the visions of the Drivechain proponents.

662
00:44:10,287 --> 00:44:12,287
In lightning at least.

663
00:44:12,287 --> 00:44:14,287
Hang on.

664
00:44:14,287 --> 00:44:18,287
In lightning at least has an easy to understand fee model.

665
00:44:18,287 --> 00:44:21,287
Which does at some point go back to miners.

666
00:44:21,287 --> 00:44:23,287
Now of course I argue that on top of all this.

667
00:44:23,287 --> 00:44:25,287
We should have a belt and suspenders option.

668
00:44:25,287 --> 00:44:28,287
With some kind of security tax.

669
00:44:28,287 --> 00:44:31,287
Like either influence with deflation or inflation.

670
00:44:31,287 --> 00:44:33,287
Either way it doesn't really matter.

671
00:44:33,287 --> 00:44:38,287
But this idea that Drivechains will just bring magical fever to miners.

672
00:44:38,287 --> 00:44:40,287
Just doesn't work.

673
00:44:40,287 --> 00:44:42,287
I'm sorry but it just doesn't.

674
00:44:42,287 --> 00:44:44,287
And you have the overhead problem.

675
00:44:44,287 --> 00:44:47,287
Peter, you go to cryptofees.info or some sites.

676
00:44:47,287 --> 00:44:51,287
This is just the reality of what is happening every day.

677
00:44:51,287 --> 00:44:53,287
And you can just see.

678
00:44:53,287 --> 00:44:56,287
Here's a bunch of projects that pay these fees.

679
00:44:56,287 --> 00:44:58,287
Maybe the data is not reliable.

680
00:44:58,287 --> 00:45:00,287
Maybe whatever.

681
00:45:00,287 --> 00:45:06,287
For many, many years Ethereum has been collecting like $10 million a day in fees.

682
00:45:06,287 --> 00:45:10,287
And I think that the Ethereum version is more unpopular.

683
00:45:10,287 --> 00:45:13,287
Than would be a unified thing.

684
00:45:13,287 --> 00:45:17,287
Where we have one coin behind all these different blockchains.

685
00:45:17,287 --> 00:45:19,287
I think people would like that even more.

686
00:45:19,287 --> 00:45:21,287
They would say I don't.

687
00:45:21,287 --> 00:45:23,287
A lot of people I think are waiting on the sidelines saying.

688
00:45:23,287 --> 00:45:24,287
I don't know.

689
00:45:24,287 --> 00:45:26,287
If you talk to a normal person at Thanksgiving or something.

690
00:45:26,287 --> 00:45:28,287
They have no idea.

691
00:45:29,287 --> 00:45:31,287
You guys will all think this is funny.

692
00:45:31,287 --> 00:45:34,287
I brought up Bitcoin and then he asked about Bitcoin Cash.

693
00:45:34,287 --> 00:45:36,287
And then he was clear that he thought they were the same thing.

694
00:45:36,287 --> 00:45:38,287
And he was like oh I didn't even know that.

695
00:45:38,287 --> 00:45:40,287
And then he's like isn't that fraud or something.

696
00:45:40,287 --> 00:45:42,287
Well that's what he said.

697
00:45:42,287 --> 00:45:43,287
And he's actually loyal.

698
00:45:43,287 --> 00:45:44,287
It is fraud.

699
00:45:44,287 --> 00:45:45,287
But he's a smart guy.

700
00:45:45,287 --> 00:45:46,287
And so this is what.

701
00:45:46,287 --> 00:45:48,287
The layperson is very confused by all this.

702
00:45:48,287 --> 00:45:50,287
And I think that it would actually be more popular.

703
00:45:50,287 --> 00:45:53,287
If we just had completely the act together 100%.

704
00:45:53,287 --> 00:45:57,287
And we said no Bitcoin can literally do any software operation.

705
00:45:57,287 --> 00:45:59,287
And that is a total pie in the sky.

706
00:45:59,287 --> 00:46:02,287
Because you cannot make those people go away.

707
00:46:02,287 --> 00:46:06,287
You will always go have that problem without government interference.

708
00:46:06,287 --> 00:46:08,287
Like that's just irrelevant.

709
00:46:08,287 --> 00:46:10,287
Let's stop that segment there.

710
00:46:10,287 --> 00:46:12,287
Back to the show in a moment.

711
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720
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722
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723
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724
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760
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And now back to the show.

761
00:48:27,287 --> 00:48:28,287
Segment there.

762
00:48:28,287 --> 00:48:32,287
Like I think let's count that as Paul's chance of questioning Peter.

763
00:48:32,287 --> 00:48:33,287
Peter let's now.

764
00:48:33,287 --> 00:48:36,287
You have a chance to challenge Paul.

765
00:48:36,287 --> 00:48:37,287
You can ask a question.

766
00:48:37,287 --> 00:48:40,287
And you know use a Socratic approach.

767
00:48:40,287 --> 00:48:42,287
Or approach to challenge him there.

768
00:48:42,287 --> 00:48:43,287
I mean.

769
00:48:43,287 --> 00:48:45,287
I'll be honest.

770
00:48:45,287 --> 00:48:47,287
I look at this and think like.

771
00:48:47,287 --> 00:48:49,287
I think we've covered all.

772
00:48:49,287 --> 00:48:51,287
Like Drivechains is not a complex thing.

773
00:48:51,287 --> 00:48:54,287
We've covered all of the interesting points there.

774
00:48:54,287 --> 00:48:56,287
You know.

775
00:48:56,287 --> 00:48:58,287
Like there really isn't much to Drivechains.

776
00:48:58,287 --> 00:49:01,287
It is two bips that are extremely simple.

777
00:49:01,287 --> 00:49:03,287
And the simplicity.

778
00:49:03,287 --> 00:49:05,287
Unfortunately isn't you know.

779
00:49:05,287 --> 00:49:08,287
Isn't such a way that doesn't work.

780
00:49:08,287 --> 00:49:11,287
Like I mean bitcoin happens to be something that's extremely simple.

781
00:49:11,287 --> 00:49:12,287
At the core.

782
00:49:12,287 --> 00:49:13,287
But fortunately it works.

783
00:49:13,287 --> 00:49:14,287
Drivechains.

784
00:49:14,287 --> 00:49:15,287
What's a little bit too simple.

785
00:49:15,287 --> 00:49:17,287
And it doesn't work.

786
00:49:17,287 --> 00:49:18,287
But too simple.

787
00:49:18,287 --> 00:49:19,287
It doesn't work.

788
00:49:19,287 --> 00:49:20,287
So.

789
00:49:20,287 --> 00:49:21,287
So let me.

790
00:49:21,287 --> 00:49:22,287
Let me ask it one or two questions.

791
00:49:22,287 --> 00:49:23,287
Just for the sake of the listeners as well.

792
00:49:23,287 --> 00:49:24,287
So that people can.

793
00:49:24,287 --> 00:49:25,287
You know.

794
00:49:25,287 --> 00:49:26,287
Because they may have these questions as well.

795
00:49:27,391 --> 00:49:54,391
As an example. One of the. And to some extent. You gentlemen. You both touched on
this idea. This question of. If miners were to try and steal. Now Paul. I believe
your argument is that. They would not have an incentive to do so. Unless the chain
was insecure. But I suppose. This is one area that I've been curious about as well.
That I've seen it be said that. Okay. Imagine if the miners were trying to steal.
And the response I've seen. Is that miners are trying to steal.

796
00:49:54,391 --> 00:50:24,391
Is this idea that somehow. The network would try to do a soft fork. To try to stop
that miner. Or that group of miners from stealing. Would that not create a lot of
soft fork. You know. Cacophony. And craziness of people saying. Well. I need to run
this node or that node. Because I want to reject this particular. You know. Stealing
attempt. And maybe there'll be. You know. In the future that could get more
complicated. I'm curious. How are you both seeing that. Is that a. You know. Is that
a problem. For this. Drivechains approach. Would that.

797
00:50:24,391 --> 00:50:54,391
Create more. Politics and drama. Where currently. It's not there. I'm glad you asked
that. Because. This is unfortunately. A misunderstanding. Where it is another case.
Where we actually do have it both ways. But people just kind of don't really see
why. But what I mean by that is. The security model of Drivechain does not rely on.
People from L1. Taking some. Sympathetic action. UASF or something like that. If it
did. Just as a kind of a side note. If it did.

798
00:50:54,391 --> 00:51:05,111
Then notice that those people could already. The sympathetic L1 people. They could
already. UASF to force Drivechain into existence. And then force the specific
Drivechain into. So you see what I mean. If you had this group of people who are
like.

799
00:51:05,111 --> 00:51:16,711
Willing to take extraordinary action. I guess the point would be. It's very hard to
coordinate that kind of action. Indeed. Right. And that is. So the model of
Drivechain is. That the fees will outweigh.

800
00:51:16,711 --> 00:51:26,951
The what can be removed. And so for example. Let me just give you a tiny example.
And all the math in the original November 2015 post.

801
00:51:26,951 --> 00:51:38,071
That Peter said didn't exist or didn't enjoy or whatever it is. Whatever the case
may be. That was all that math is about this question of what will the miners decide
to take the funds.

802
00:51:38,151 --> 00:51:50,311
And just on a completely separate tangent. The miners can basically steal from
anything. They can hold liquid funds hostage or UTXO hostage or even the Lightning
Network hostage. And plenty of people have admitted that that's the case. But that's
sort of a tangent.

803
00:51:50,311 --> 00:52:03,911
The math like. So for example. If you took like what ETH is earning each day. Which
is like. It depends on the day. But I did one example recently with the $7.2 million
per day math.

804
00:52:03,911 --> 00:52:13,351
You can go to cryptofees.info and see if it's a good day or bad day today. Or
whenever you visit the site. But that is $216 million a month.

805
00:52:13,431 --> 00:52:28,071
And if you just discount that with the NPV. Net present value. Then it depends on
kind of like how many months do you want to go out before you just truncate and say
that the life of a tech project ends after 18 months or whatever. But that's like $4
billion.

806
00:52:28,071 --> 00:52:40,871
So that's like tens of thousands or 100,000 BTC. Depends on the price any given day.
But the point is you could fit like 50,000 BTC in something like that.

807
00:52:41,031 --> 00:52:53,351
And that's just what Ethereum is currently doing today. And if you do that. Then the
miners will kill the goose that lays the golden eggs by stealing from the chain. And
that is exactly why they won't have any motivation to do it.

808
00:52:53,351 --> 00:53:01,831
And this is actually far superior security model than what people are trying to do
is get some kind of technical thing where it's impossible for the miners to steal.

809
00:53:02,071 --> 00:53:14,471
But that always means if there's ever some kind of bug, or if there's any some kind
of glitch or misunderstanding or whatever, some kind of like psyop campaign or
something. If there's ever some way then the miners are always waiting to steal.

810
00:53:14,711 --> 00:53:27,271
Whereas if the miners have an incentive not to steal, and they just want to grow the
network, and what they're really thinking about is how can we get more people paying
a Bitcoin transaction fee and grow the size of the Bitcoin economy and the network.

811
00:53:28,231 --> 00:53:40,391
That's always better than to have them be them not want to steal. And of course, the
steal, the reason why it's threaded is many reasons why it's threaded into this one
withdrawal every three to six months, which is unbearably slow.

812
00:53:41,431 --> 00:53:55,991
But that's in part because it makes it impossible for anyone to lie about what the
withdrawal is supposed to be since it's just this one hash. And so it's just anyone
who would try to lie is just, you know, not going to succeed and they will only
embarrass themselves.

813
00:53:55,991 --> 00:54:13,671
And but another reason is that the mining who the composition of hashing and which
hash belongs to which, which pool, those are things that can change enormously in
three months, they could even react, you know, the pool operator may be doing
something that the individual hashes don't know about or don't want to have happen.

814
00:54:13,671 --> 00:54:18,551
And so three months is more than enough time for them to stab the pool on the back.

815
00:54:18,551 --> 00:54:20,711
So this is what I was saying before about the pool being proportionate.

816
00:54:20,711 --> 00:54:25,271
I mean, I think you're I think you're kind of getting a little far from like where
Stefan started here.

817
00:54:25,271 --> 00:54:36,471
And I think, first of all, with regards to the UASF stuff, I mean, I think, you
know, the simple answer to what Stefan said is absolutely, yeah, this can create
enormous amounts of very, very, very disruptive drama.

818
00:54:37,191 --> 00:54:42,231
You know, we did our well, at least arguably, we did a UASF to get SigWit activated.

819
00:54:42,231 --> 00:54:44,391
But that was very, very risky.

820
00:54:44,391 --> 00:54:55,751
You know, we could have in the Bitcoin community, we could easily be in a position
where the UASF had failed, but not clearly failed, or had partially succeeded, but
not clearly succeeded.

821
00:54:55,751 --> 00:55:03,351
And all hell would have broken loose because you would have different parts of the
Bitcoin network out of consensus with other parts without a clear way to go deal
with that.

822
00:55:03,431 --> 00:55:15,031
You know, if we'd be in a position where some big exchanges have decided, you know
what, we do want SigWit to happen, some miners who've gone along with that and
created SigWit blocks and some other miners hadn't, it would have been a real
disaster for Bitcoin.

823
00:55:15,031 --> 00:55:19,751
And, you know, I could see the arguments that for SigWit, this was worth it.

824
00:55:20,791 --> 00:55:30,711
I would make the arguments that with SigWit what actually happened was people
threatened that scenario, said, hey, if you don't go along with this miners, this
may actually go happen.

825
00:55:30,791 --> 00:55:34,151
You would be much better off just activating SigWit.

826
00:55:34,791 --> 00:55:38,231
You know, I think that's actually the more accurate interpretation of what happened
there.

827
00:55:38,871 --> 00:55:42,471
But the bigger picture there is that's dangerous as hell.

828
00:55:42,471 --> 00:55:45,511
And you really want to be doing this for a very, very good reason.

829
00:55:46,551 --> 00:55:50,071
Now, inviting that kind of failure to happen more often just because...

830
00:55:50,071 --> 00:55:50,871
Yeah, but I don't mean...

831
00:55:50,871 --> 00:55:51,751
Hang on.

832
00:55:51,751 --> 00:55:52,631
Hang on a second.

833
00:55:52,631 --> 00:55:53,351
Hang on a second.

834
00:55:53,351 --> 00:55:54,951
So inviting the failure to...

835
00:55:54,951 --> 00:55:55,751
Hang on a second.

836
00:55:55,751 --> 00:56:01,431
So inviting a failure to happen more often just because some Drivechain potentially
failed is really ugly.

837
00:56:01,431 --> 00:56:16,951
And one of the ugly things Drivechains does is because miners are now in control of
money on the Drivechain, it is actually feasible to do things like give them court
orders and say, hey, you know, you damn well better go comply and take this money
and reassign it to someone else.

838
00:56:16,951 --> 00:56:29,191
You know, of course, I personally am the target of a lawsuit from Craig Wright
trying to go do basically that and redefine the Bitcoin protocol to go give him a
couple billion dollars that, well, he's never proven that he actually owns.

839
00:56:29,191 --> 00:56:30,391
And right now, it's very...

840
00:56:30,391 --> 00:56:31,111
Hang on a second.

841
00:56:31,111 --> 00:56:31,911
Hang on a second.

842
00:56:31,911 --> 00:56:33,031
Hang on a second.

843
00:56:33,031 --> 00:56:34,151
Hang on a second.

844
00:56:34,151 --> 00:56:35,911
And hang on a second.

845
00:56:35,911 --> 00:56:43,751
And right now, it's very easy to go and say, look, this lawsuit is nonsense because
I personally do not have the ability to go do this.

846
00:56:44,311 --> 00:56:50,151
You know, from miners' point of view, it's very easy for them to go say, hey, we do
not have the ability to go do this.

847
00:56:50,151 --> 00:56:52,151
Drivechains fundamentally changes that.

848
00:56:52,151 --> 00:56:54,791
Drivechains means that miners can go seize money.

849
00:56:54,791 --> 00:56:57,271
They can go move it to other people.

850
00:56:57,271 --> 00:57:00,311
And that's a very sketchy thing to be involved in.

851
00:57:00,311 --> 00:57:01,671
Who exactly would be sued, though?

852
00:57:01,671 --> 00:57:04,551
Foundry or like every miner, you know?

853
00:57:04,551 --> 00:57:09,911
Oh, it would be very easy to sue like Foundry and Antpool and give them a court
order to go do that.

854
00:57:09,911 --> 00:57:11,031
And the problem is that...

855
00:57:11,031 --> 00:57:13,671
Peter, you know perfectly well that's a good example because of how bad it is,
though.

856
00:57:13,991 --> 00:57:14,631
Well, but hang on.

857
00:57:14,631 --> 00:57:15,671
Because think about it.

858
00:57:15,671 --> 00:57:17,511
Think about what would really happen in that scenario.

859
00:57:17,511 --> 00:57:22,711
Foundry would just be able to say, well, we think we'll probably lose all of our
clients if we do this.

860
00:57:22,711 --> 00:57:24,071
I don't think that would happen at all.

861
00:57:24,071 --> 00:57:25,671
We're going to keep the clients.

862
00:57:25,671 --> 00:57:28,871
They could say we gain less amount of Bitcoin by moving.

863
00:57:28,871 --> 00:57:30,151
Think about what it means, Peter.

864
00:57:30,151 --> 00:57:31,191
If I'm saying that...

865
00:57:32,791 --> 00:57:35,511
With Drivechains, it is not a disaster for Bitcoin.

866
00:57:35,511 --> 00:57:37,671
It's just one Drivechain failing.

867
00:57:37,671 --> 00:57:40,551
This is essential to the security model of Drivechains.

868
00:57:40,551 --> 00:57:45,271
So I'm saying that the miners earn a certain amount of money each period,

869
00:57:45,271 --> 00:57:47,831
such that the net present value is like $100 billion.

870
00:57:48,951 --> 00:57:51,511
And maybe there's $20 billion in the chain.

871
00:57:51,511 --> 00:57:53,831
And the court order is going to be...

872
00:57:53,831 --> 00:57:55,351
But think about what it means, Peter.

873
00:57:55,351 --> 00:57:55,911
Just pick anything.

874
00:57:56,551 --> 00:57:58,791
Say it's $100 then and $20 total.

875
00:57:58,791 --> 00:58:01,031
There's $20 total in the Drivechain.

876
00:58:01,031 --> 00:58:02,551
And then it's worth $100.

877
00:58:02,551 --> 00:58:03,911
It's worth, you know, like a dollar a day.

878
00:58:03,911 --> 00:58:06,151
And that comes out to a net present value of $100 or whatever.

879
00:58:06,151 --> 00:58:07,351
These are made-up numbers.

880
00:58:07,351 --> 00:58:10,471
The point is the miners are getting a certain amount of money.

881
00:58:10,471 --> 00:58:11,671
It's a magic money tree.

882
00:58:11,671 --> 00:58:13,191
This is a goose that lays the golden egg.

883
00:58:13,191 --> 00:58:14,791
That's worth $100 to them.

884
00:58:15,671 --> 00:58:19,671
The court order says you have to take that $20 out and give it to some other guy.

885
00:58:19,671 --> 00:58:21,191
Then the miner can just say, well, I'm just...

886
00:58:21,191 --> 00:58:23,671
You're asking me to just delete $100 for no reason.

887
00:58:25,751 --> 00:58:27,751
You are giving a very lovely...

888
00:58:27,751 --> 00:58:30,311
Everything went exactly the way you want the scenario.

889
00:58:30,311 --> 00:58:32,311
Much more like taking your own example.

890
00:58:32,311 --> 00:58:35,431
Look, that wasn't my example.

891
00:58:35,431 --> 00:58:35,911
No, no.

892
00:58:35,911 --> 00:58:36,471
The example...

893
00:58:36,471 --> 00:58:38,311
I'm telling you, the expression only applies...

894
00:58:38,311 --> 00:58:39,831
Can I go talk?

895
00:58:39,831 --> 00:58:41,111
Are you going to let me talk?

896
00:58:41,671 --> 00:58:42,391
Thank you.

897
00:58:42,391 --> 00:58:45,591
So, the example that's actually much more likely is that

898
00:58:45,591 --> 00:58:47,751
if Drivechains activate, they don't really catch on.

899
00:58:48,471 --> 00:58:51,271
You know, you get a bunch of people interested in some Drivechains.

900
00:58:52,551 --> 00:58:53,991
They put a bunch of money in.

901
00:58:53,991 --> 00:58:55,111
Something more like Liquid.

902
00:58:55,111 --> 00:58:55,751
Wait, no, sorry.

903
00:58:55,751 --> 00:58:57,991
Something more like Liquid where there's some transactions.

904
00:58:57,991 --> 00:59:02,711
People basically, because, well, you know, it's kind of sketchy to go and steal
money.

905
00:59:02,711 --> 00:59:07,111
Don't steal the money even though there really isn't that much incentive not to.

906
00:59:07,111 --> 00:59:08,711
And some court order comes along and says,

907
00:59:08,711 --> 00:59:10,711
oh, yeah, we've got to go and change this.

908
00:59:11,511 --> 00:59:13,831
And something like Ant, Pool, and Foundry are probably going to say,

909
00:59:13,831 --> 00:59:16,631
well, you know, we can go to jail for failing to comply.

910
00:59:17,271 --> 00:59:20,471
We can comply because we've changed the Bitcoin protocol

911
00:59:20,471 --> 00:59:21,991
to allow this to happen in the first place.

912
00:59:23,351 --> 00:59:27,351
And we might as well go with it because it's really only like, you know,

913
00:59:28,391 --> 00:59:32,231
$50 million and this is a tiny part of our actual business.

914
00:59:32,311 --> 00:59:34,631
And now you get the whole mess of people then going and saying,

915
00:59:34,631 --> 00:59:36,631
no, no, we've got to UASF it.

916
00:59:37,271 --> 00:59:41,351
Or worse, like you get another court order saying you've got to UASF it in a
different way.

917
00:59:41,351 --> 00:59:45,351
You know, this all invites an enormous amount of drama for, frankly, very little
benefit.

918
00:59:45,911 --> 00:59:47,911
You know, like Drivechains is a model where-

919
00:59:47,911 --> 00:59:53,431
The security model is that the fees will be enough to dissuade the miners from not
wanting to.

920
00:59:53,431 --> 00:59:57,111
If you're just going to say that the miners can just become a victim to various
lawsuits

921
00:59:57,111 --> 00:59:58,471
demanding that they change this and that.

922
00:59:58,471 --> 01:00:00,951
I mean, you yourself gave an example of yourself

923
01:00:00,951 --> 01:00:03,271
being hit with a totally frivolous lawsuit that's based on-

924
01:00:03,271 --> 01:00:10,871
Only because the Bitcoin protocol is such that I genuinely can say I can't do that.

925
01:00:11,511 --> 01:00:15,991
Right now for miners, you know, mining pools can genuinely say

926
01:00:15,991 --> 01:00:18,391
we are not in a position to go seize money.

927
01:00:18,391 --> 01:00:20,231
That is not something we can do.

928
01:00:20,231 --> 01:00:23,511
But you want to change the Bitcoin protocol to let them go do that.

929
01:00:23,511 --> 01:00:25,431
That is why this is so sketchy.

930
01:00:25,431 --> 01:00:28,311
And this is why I think it's in miners' own interest

931
01:00:28,311 --> 01:00:30,951
to definitely not allow Drivechains to go happen

932
01:00:30,951 --> 01:00:33,671
because they don't want to be in a position where they can go steal money.

933
01:00:33,671 --> 01:00:36,951
Like, if you're in that position, you can be told to go do it.

934
01:00:36,951 --> 01:00:37,991
You can be coerced to go do it.

935
01:00:37,991 --> 01:00:40,871
They're very limited because they have to declare the-

936
01:00:40,871 --> 01:00:45,591
It's like being buzzed through a gate that takes three months to get through.

937
01:00:45,591 --> 01:00:52,151
So they have a very, very limited ability to direct the eventual destination.

938
01:00:52,151 --> 01:00:58,231
All they have to do is go put a number by court order into their, you know,

939
01:00:58,231 --> 01:01:01,911
into their coin bases and the money will get stolen.

940
01:01:01,911 --> 01:01:05,751
Like, there is nothing in Drivechains that actually disincentivizes this.

941
01:01:05,751 --> 01:01:08,871
You've got a bunch of stuff that we're saying about fee revenue, but like-

942
01:01:10,951 --> 01:01:14,791
You see, that's the point is if the sidechains have their own fate

943
01:01:14,791 --> 01:01:16,871
where they rise or fall on their own merit.

944
01:01:16,871 --> 01:01:20,471
So if something about a sidechain attracts a court order that destroys it,

945
01:01:20,471 --> 01:01:22,391
then that's the sidechain's business.

946
01:01:22,391 --> 01:01:24,071
I make no claim.

947
01:01:24,071 --> 01:01:25,031
I don't even really-

948
01:01:25,031 --> 01:01:29,511
You know, I don't make any claim about what people should do with their own money.

949
01:01:29,511 --> 01:01:32,871
I think if people want to use a Monero sidechain, then they should.

950
01:01:32,871 --> 01:01:36,231
And if they don't want to use that, then they shouldn't.

951
01:01:36,231 --> 01:01:40,551
As long as you've involved Bitcoin miners and the Bitcoin consensus,

952
01:01:40,551 --> 01:01:42,551
you have got involved the rest of us.

953
01:01:42,551 --> 01:01:46,391
Like, you would have a good argument if you were talking about creating a new proof
of work coin.

954
01:01:46,391 --> 01:01:49,191
Monero itself is independent to Bitcoin.

955
01:01:49,991 --> 01:01:51,751
You know, they can go do their own thing.

956
01:01:51,751 --> 01:01:53,431
And it's really not very relevant to us.

957
01:01:53,431 --> 01:01:54,231
It's its own coin.

958
01:01:54,231 --> 01:01:57,271
We'd rather have all the flexibility of launching new software,

959
01:01:57,271 --> 01:01:58,551
but with all the same coin.

960
01:01:58,551 --> 01:01:59,271
That's the whole idea.

961
01:01:59,271 --> 01:02:00,151
That's all well and good.

962
01:02:00,151 --> 01:02:04,311
But you have not come up with technology that lets that happen without affecting
Bitcoin.

963
01:02:04,311 --> 01:02:05,751
You know, that's really what this comes down to.

964
01:02:05,751 --> 01:02:06,711
When you say affecting Bitcoin, you only mean-

965
01:02:06,711 --> 01:02:07,991
I agree with your goals.

966
01:02:09,191 --> 01:02:11,351
I agree with your goals, but you haven't succeeded.

967
01:02:12,791 --> 01:02:14,311
You only mean that the-

968
01:02:14,951 --> 01:02:15,831
Like, even in-

969
01:02:16,471 --> 01:02:17,831
You're even wrong about this.

970
01:02:17,911 --> 01:02:20,071
You're not right about almost anything that you say.

971
01:02:20,071 --> 01:02:22,471
But even this one thing that you're wrong about,

972
01:02:23,831 --> 01:02:27,751
of the idea that miners might have an incentive to pay the full node cost,

973
01:02:29,271 --> 01:02:31,191
even that is absurd.

974
01:02:31,191 --> 01:02:36,231
Because you know full well that that must be one billionth of what the eventual
mining costs will be

975
01:02:36,231 --> 01:02:40,871
as Bitcoin continues to become more popular and difficulty adjusts upward.

976
01:02:42,231 --> 01:02:44,311
Marathon alone, you can look this up.

977
01:02:44,311 --> 01:02:47,591
They have like a selling general administrative cost or something.

978
01:02:47,591 --> 01:02:49,831
That was like $57 million a year.

979
01:02:49,831 --> 01:02:54,391
So the full nodes already are utterly minuscule,

980
01:02:54,391 --> 01:02:56,951
and they are not significant cost to anyone.

981
01:02:56,951 --> 01:02:59,271
Even the regular people who are running the full nodes,

982
01:02:59,271 --> 01:03:02,951
just as end users who have 0% hash rate and derive no income.

983
01:03:03,831 --> 01:03:05,031
What matters is how-

984
01:03:05,031 --> 01:03:08,311
How large is not a significant cost at all under any circumstance.

985
01:03:08,311 --> 01:03:12,071
So even if it were the case that the miners were required to run full nodes,

986
01:03:12,071 --> 01:03:13,911
even that would make no difference whatsoever.

987
01:03:14,711 --> 01:03:19,511
The cost of mining, including the electricity and the ASICs and stuff,

988
01:03:19,511 --> 01:03:20,231
they're not in the-

989
01:03:20,871 --> 01:03:24,231
Someone has to pay $3,000 for a Solana node,

990
01:03:25,431 --> 01:03:27,751
only in the event of a withdrawal dispute also.

991
01:03:30,791 --> 01:03:35,271
Paul, what you are arguing is that it's okay to go and increase the block size.

992
01:03:35,271 --> 01:03:36,231
That is your argument.

993
01:03:36,231 --> 01:03:36,791
Absolutely not.

994
01:03:36,791 --> 01:03:42,871
The whole point of the action is to differentially increase it for some people and
not others.

995
01:03:43,271 --> 01:03:50,631
Everything you said is an argument that because mining costs money,

996
01:03:50,631 --> 01:03:52,871
it's okay to go increase fixed costs.

997
01:03:52,871 --> 01:03:54,551
That is your argument there.

998
01:03:54,551 --> 01:03:59,351
And the simple fact is we are trying hard to go keep fixed costs down.

999
01:03:59,351 --> 01:04:00,951
I mean, in particular, to allow things like-

1000
01:04:01,991 --> 01:04:02,871
Paul, Paul, let me finish.

1001
01:04:02,871 --> 01:04:03,831
It has nothing to do with-

1002
01:04:03,831 --> 01:04:04,951
Paul, let me finish.

1003
01:04:06,151 --> 01:04:07,111
Mining costs.

1004
01:04:07,111 --> 01:04:08,231
Let me finish.

1005
01:04:08,231 --> 01:04:11,111
So why we want to go keep these fixed costs low

1006
01:04:11,111 --> 01:04:13,431
is because we want to go decentralize mining.

1007
01:04:13,431 --> 01:04:19,511
We want actual hashers, the people pointing hash power at things like OceanPool

1008
01:04:19,511 --> 01:04:23,831
to be able to go run actual full nodes and actually go validate what they're mining.

1009
01:04:24,471 --> 01:04:26,391
That is why we're trying so hard to do this.

1010
01:04:28,391 --> 01:04:29,831
Zero effect on that.

1011
01:04:29,831 --> 01:04:34,551
It certainly does because if you want to go and validate what you are mining,

1012
01:04:34,551 --> 01:04:37,511
you have to either trust someone else to go do that,

1013
01:04:38,071 --> 01:04:41,351
potentially exposing yourself to all kinds of problems when that person lies,

1014
01:04:41,351 --> 01:04:43,911
fails, or whatever, or run nodes.

1015
01:04:43,911 --> 01:04:45,591
You can't get away from that.

1016
01:04:45,591 --> 01:04:47,351
No, I choose the first option.

1017
01:04:47,351 --> 01:04:50,151
So let's say the sidechain nodes are all designed

1018
01:04:50,151 --> 01:04:56,791
so that the header of the sidechain has the withdrawal hash in them for three months

1019
01:04:56,791 --> 01:04:59,511
so that you can just look at the head SPV mode

1020
01:05:00,151 --> 01:05:02,951
or you can just look at anyone who's on the network,

1021
01:05:02,951 --> 01:05:04,711
any block explorer or anything like that.

1022
01:05:05,351 --> 01:05:13,191
Look, your argument is that it is okay for people to go and sit there

1023
01:05:13,191 --> 01:05:16,311
manually going and copying, pasting hashes, hoping it's correct.

1024
01:05:17,671 --> 01:05:20,711
That is just not something we want to go add to the Bitcoin protocol.

1025
01:05:21,671 --> 01:05:23,911
That is something miners shouldn't want.

1026
01:05:23,911 --> 01:05:24,551
Yes, you are.

1027
01:05:25,431 --> 01:05:26,471
No, of course not.

1028
01:05:26,471 --> 01:05:29,591
The Bitcoin rules are just counting to 13,000.

1029
01:05:29,591 --> 01:05:31,591
You're advocating for a soft fork.

1030
01:05:31,591 --> 01:05:33,991
You are advocating to add this to Bitcoin protocol.

1031
01:05:33,991 --> 01:05:38,151
To take off not five so that the people who want to spend block coins to this,

1032
01:05:38,151 --> 01:05:39,431
the hashrate escrow can do so.

1033
01:05:39,431 --> 01:05:40,471
It's a soft fork.

1034
01:05:40,471 --> 01:05:43,431
If you do not follow those rules, your blocks are invalid.

1035
01:05:43,431 --> 01:05:46,951
Like you are advocating for a change to Bitcoin protocol to add this kind of voting.

1036
01:05:46,951 --> 01:05:49,351
Well, I actually don't really care if people don't.

1037
01:05:50,071 --> 01:05:53,511
But you're just evading the issue completely.

1038
01:05:53,511 --> 01:05:54,711
I think you're evading the issue.

1039
01:05:54,711 --> 01:05:58,631
Like this is why this is such a crazy argument.

1040
01:05:59,271 --> 01:06:03,751
But let's say I'm a miner and I want to start up a new mining operation

1041
01:06:03,751 --> 01:06:11,671
and I don't run, we have a bit Solana and I don't want to run a bit Solana node.

1042
01:06:12,391 --> 01:06:16,951
But I just use the withdrawal hash that I think my other miner friends are using.

1043
01:06:16,951 --> 01:06:19,511
What's the disaster scenario in that case?

1044
01:06:20,471 --> 01:06:25,031
I mean, the fact is, if that is what's happening, you're in a situation where...

1045
01:06:25,911 --> 01:06:28,151
If this is what's happening, you're in a situation where

1046
01:06:28,151 --> 01:06:30,071
Drivechains aren't going to go work properly.

1047
01:06:30,071 --> 01:06:32,631
On the other hand, if they're actually doing their job...

1048
01:06:32,631 --> 01:06:34,151
How do they not work properly?

1049
01:06:34,151 --> 01:06:38,471
Because people start going and copying, pasting hashes and something goes and fails.

1050
01:06:38,471 --> 01:06:40,471
Because people aren't validating.

1051
01:06:40,471 --> 01:06:44,951
Like you can't get away from the fact that people need to be evaluated if it's going
to work properly.

1052
01:06:44,951 --> 01:06:47,351
It's just you that just doesn't understand how it works, Peter.

1053
01:06:47,351 --> 01:06:52,311
Which is that the end users, those are the people, the Roger Ver type people.

1054
01:06:52,311 --> 01:06:55,991
They wanted the block size, the BitPay, Coinbase.

1055
01:06:55,991 --> 01:06:57,031
They wanted to pay.

1056
01:06:57,031 --> 01:06:59,191
You are not making a technical argument.

1057
01:06:59,271 --> 01:07:02,551
And they have a completely full node.

1058
01:07:02,551 --> 01:07:05,511
And that node gives them the ability to find out...

1059
01:07:05,511 --> 01:07:07,591
You are not making a technical argument now.

1060
01:07:08,311 --> 01:07:11,591
Like you are making a, I hope things will work this way.

1061
01:07:12,311 --> 01:07:14,791
Well, in fact, you're talking about what Roger Ver wanted.

1062
01:07:16,151 --> 01:07:17,671
No, you don't get it, Peter.

1063
01:07:17,671 --> 01:07:20,311
Some people want to pay the higher node costs.

1064
01:07:20,311 --> 01:07:25,111
So the question is, how can you have some people pay small costs and some people pay
large costs?

1065
01:07:25,111 --> 01:07:26,711
That's the whole idea.

1066
01:07:26,711 --> 01:07:27,751
That is the idea.

1067
01:07:27,751 --> 01:07:28,151
Yeah.

1068
01:07:28,151 --> 01:07:29,911
And your idea didn't work.

1069
01:07:29,911 --> 01:07:31,751
I mean, you know, a good counter example here.

1070
01:07:32,391 --> 01:07:36,231
You don't even realize that a lot of the things you say are contradicting yourself.

1071
01:07:37,271 --> 01:07:39,111
I mean, I think you're just making shit up.

1072
01:07:39,111 --> 01:07:41,271
Like you saying all this stuff contradicts.

1073
01:07:41,271 --> 01:07:45,111
Like there's nothing I can go say that will make you not say that.

1074
01:07:45,111 --> 01:07:46,071
I mean, this is just silly.

1075
01:07:46,071 --> 01:07:46,711
Now, hang on.

1076
01:07:47,271 --> 01:07:50,951
How can it be a fixed cost that's amortized if people can't defer to...

1077
01:07:50,951 --> 01:07:57,591
What do you think is happening when the mining pool runs a full node and then they
have all the other people not running a full node?

1078
01:07:57,991 --> 01:07:59,751
They're trusting the mining pool.

1079
01:07:59,751 --> 01:08:01,991
But they have reasons for trusting the mining pool.

1080
01:08:01,991 --> 01:08:08,311
They have reason to believe that the process that gives them information from the
mining pool is accurate.

1081
01:08:08,311 --> 01:08:12,631
If we could apply the exact same argument in an inverse sense, what would you say?

1082
01:08:12,631 --> 01:08:14,311
What are you even talking about there?

1083
01:08:14,311 --> 01:08:15,031
I mean, like...

1084
01:08:15,991 --> 01:08:21,991
Peter, we have been discussing this one topic the whole time of whether or not you
can defer to someone else's full node.

1085
01:08:21,991 --> 01:08:24,231
And what does it even mean to run a full node?

1086
01:08:24,231 --> 01:08:28,311
Because you could run a full node and then you could actually conclude,

1087
01:08:28,311 --> 01:08:28,791
you know what?

1088
01:08:28,791 --> 01:08:29,991
Actually, this full node is bugged.

1089
01:08:29,991 --> 01:08:31,751
There's something wrong with my computer.

1090
01:08:31,751 --> 01:08:36,391
And so even running the full node is not enough to gain a full amount of confidence

1091
01:08:36,391 --> 01:08:38,951
that you are actually looking at the blockchain the right way.

1092
01:08:39,991 --> 01:08:41,751
Now we're just getting into the metaphysics.

1093
01:08:41,751 --> 01:08:43,031
Like this is very silly.

1094
01:08:43,031 --> 01:08:44,231
There's nothing metaphysical at all.

1095
01:08:44,231 --> 01:08:44,551
This is...

1096
01:08:44,551 --> 01:08:46,471
We are talking about epistemology, Peter.

1097
01:08:46,471 --> 01:08:51,831
Because we are talking about epistemology because what a full node does is give you
information.

1098
01:08:52,391 --> 01:08:57,191
You are getting into metaphysics around the nature of full nodes.

1099
01:08:57,191 --> 01:09:01,591
You are just trying to evade answering this one question because this contradiction
just

1100
01:09:01,591 --> 01:09:02,711
obliterates your argument.

1101
01:09:02,711 --> 01:09:05,431
And I've been very polite by letting you meander around and around.

1102
01:09:05,431 --> 01:09:08,471
But now it's time for you to just either admit that you're wrong about this or...

1103
01:09:08,471 --> 01:09:12,231
I think out of the two of us, there's one of us that's meandering and not the other.

1104
01:09:14,471 --> 01:09:15,911
Yes, because two.

1105
01:09:16,871 --> 01:09:19,431
So I guess I'm not sure if I'm making a lot of progress here.

1106
01:09:19,431 --> 01:09:23,191
I'd like to ask Stefan, do you think that you can defer to someone else's full node

1107
01:09:23,191 --> 01:09:25,271
or not to get information from it?

1108
01:09:25,271 --> 01:09:27,671
Like what happens when you visit a block explorer?

1109
01:09:27,671 --> 01:09:30,871
Does the universe just burst into flames when that happens or what?

1110
01:09:32,071 --> 01:09:36,631
So the question I think you're getting at is, can you defer to someone's node?

1111
01:09:36,631 --> 01:09:38,231
Obviously, yes, you can.

1112
01:09:38,231 --> 01:09:38,951
But the question...

1113
01:09:38,951 --> 01:09:44,551
But I think the point, the counter-argument is more about how easy it is for people
to

1114
01:09:44,551 --> 01:09:46,711
self-verify and to do it themselves, right?

1115
01:09:46,711 --> 01:09:51,991
And I think, as an example, there's a lot of progress now in the ecosystem around
Stratum

1116
01:09:51,991 --> 01:09:56,951
V2, as an example, this idea that you can sort of separate the mining pools from the

1117
01:09:58,151 --> 01:10:03,111
individual miners and let those individual miners create their own block template
and

1118
01:10:03,111 --> 01:10:05,271
select which transactions go into the block.

1119
01:10:05,271 --> 01:10:12,311
And I guess people could have a concern that Drivechains could cut against some of
that

1120
01:10:12,311 --> 01:10:15,351
progress or potentially in the future we're going to get maybe a break pool or some
of

1121
01:10:15,351 --> 01:10:16,071
these other ideas.

1122
01:10:16,071 --> 01:10:21,191
I think this is the only way that that idea will succeed, is if you can pay out the
miners

1123
01:10:21,191 --> 01:10:22,231
on L2.

1124
01:10:22,231 --> 01:10:26,391
And in fact, the miners getting paid out every 10 minutes on L2 is a fantastic deal
for them

1125
01:10:26,951 --> 01:10:29,911
because this reduces the leverage of the pools.

1126
01:10:31,991 --> 01:10:35,191
If I'm understanding you here, you're sort of saying you would have like a big block

1127
01:10:35,191 --> 01:10:38,551
Drivechain and this would allow the miners to get paid out onto that.

1128
01:10:38,551 --> 01:10:40,551
But I guess that still doesn't...

1129
01:10:40,551 --> 01:10:43,911
Because think about it, the miners, they're very confident that they'll eventually
get

1130
01:10:43,911 --> 01:10:45,831
paid if they get paid on BIP300.

1131
01:10:46,951 --> 01:10:50,231
Yeah, but I think that to me, that doesn't quite answer the question of...

1132
01:10:50,231 --> 01:10:52,951
BIP300 doesn't involve payment.

1133
01:10:52,951 --> 01:10:58,551
No, but I'm saying it does what Stratum V2 and Ocean wish they could do, which is
you

1134
01:10:58,551 --> 01:11:01,431
can do pay per share and you can get paid out every 10 minutes.

1135
01:11:01,431 --> 01:11:01,991
And in that way...

1136
01:11:01,991 --> 01:11:05,911
Yeah, this is why Ocean is working towards Lightning.

1137
01:11:05,911 --> 01:11:09,431
I mean, that's not anything necessary there.

1138
01:11:09,431 --> 01:11:11,751
I mean, Lightning is far worse.

1139
01:11:11,751 --> 01:11:16,471
Peter, do you really not understand that the Lightning has tremendous onboarding
costs

1140
01:11:16,471 --> 01:11:20,231
and liquidity costs and tremendous channel risk, which each person, if you want to
onboard

1141
01:11:20,231 --> 01:11:20,791
someone to Lightning...

1142
01:11:20,791 --> 01:11:23,111
Sorry, that's just nonsense.

1143
01:11:23,671 --> 01:11:23,991
I'm sorry.

1144
01:11:23,991 --> 01:11:25,031
It was nonsense of mine.

1145
01:11:25,991 --> 01:11:28,631
There are not tremendous liquidity costs around Lightning.

1146
01:11:31,751 --> 01:11:36,791
Paul, Ocean adding Lightning is a very simple thing for them to do.

1147
01:11:38,551 --> 01:11:39,031
I'm not sure.

1148
01:11:39,031 --> 01:11:42,711
You should get your stories checked with them, because people who are there asked
them and

1149
01:11:42,711 --> 01:11:47,191
they said running LN infrastructure is complicated and we have no intention of doing
it.

1150
01:11:47,191 --> 01:11:48,551
So I'm not saying that maybe...

1151
01:11:48,551 --> 01:11:52,391
Well, I mean, Ocean is doing a lot of very weird stuff.

1152
01:11:52,391 --> 01:11:54,871
So I wouldn't be surprised if they don't understand what they're doing.

1153
01:11:54,871 --> 01:11:58,951
But the fact is, for Ocean to go pay miners out with Lightning is very easy.

1154
01:11:58,951 --> 01:11:59,751
They have coins.

1155
01:11:59,751 --> 01:12:00,951
They open new channels.

1156
01:12:01,671 --> 01:12:03,271
They go pay the miner.

1157
01:12:03,271 --> 01:12:06,551
You have to have the money that you plan on paying someone.

1158
01:12:06,551 --> 01:12:07,991
This is an anonymous question.

1159
01:12:07,991 --> 01:12:15,911
Oh, my God, Paul, Ocean has money coming in whenever they find a new block, right?

1160
01:12:16,951 --> 01:12:20,231
Paul, let me speak.

1161
01:12:21,351 --> 01:12:22,311
Paul, let me speak.

1162
01:12:23,111 --> 01:12:26,871
Ocean, whenever they go find a block, they have a pile of money that comes in.

1163
01:12:26,871 --> 01:12:31,751
They can use that money to open channels and they can go pay miners over those
channels.

1164
01:12:31,751 --> 01:12:37,431
If they choose to go set up the economics such that payouts still happen when they
find blocks,

1165
01:12:37,431 --> 01:12:39,031
that's exactly how they can go do it.

1166
01:12:39,031 --> 01:12:40,711
They find a block, they open a channel.

1167
01:12:41,271 --> 01:12:44,951
Once the 100 block, you know, unlock period has come up,

1168
01:12:44,951 --> 01:12:47,431
they go use that money to go pay miners.

1169
01:12:47,431 --> 01:12:49,271
And they can just close the channels.

1170
01:12:49,271 --> 01:12:51,351
And all that money will go flow to miners.

1171
01:12:51,351 --> 01:12:52,711
I mean, this is not a hard problem.

1172
01:12:53,591 --> 01:12:58,471
Oh, Paul, Paul, Paul, let me, let me speak.

1173
01:12:58,711 --> 01:12:59,751
And on the 300.

1174
01:13:00,791 --> 01:13:03,191
And on the incoming side for miners,

1175
01:13:03,191 --> 01:13:09,191
all they have to go do is have a channel to them and money will flow in on that
channel.

1176
01:13:09,191 --> 01:13:10,951
And they can go spend that money out on that channel.

1177
01:13:10,951 --> 01:13:12,631
I mean, there's nothing difficult about this.

1178
01:13:13,271 --> 01:13:15,831
And this is much easier than trying to go and say,

1179
01:13:15,831 --> 01:13:21,911
oh, by the way, which of the 256 possible Drivechains do you want to go have money
on?

1180
01:13:21,911 --> 01:13:24,231
Oh, by the way, you also go need to run a token owner.

1181
01:13:24,231 --> 01:13:27,111
If you want to go verified, of course, it's going to be a big blocker thing.

1182
01:13:27,111 --> 01:13:28,871
So you got to go run a full node and all this stuff.

1183
01:13:28,871 --> 01:13:33,431
I mean, like lightning is a very simple solution here, you know,

1184
01:13:33,431 --> 01:13:37,911
and I've never understood why people try to go add so much complexity to this.

1185
01:13:37,911 --> 01:13:39,271
It's not a hard problem.

1186
01:13:39,271 --> 01:13:45,271
Lightning is a way of amortizing multiple transactions over one transaction.

1187
01:13:46,231 --> 01:13:47,431
It's really a pretty simple thing.

1188
01:13:48,551 --> 01:13:49,591
It really can't though.

1189
01:13:49,591 --> 01:13:53,511
So if we can easily compare the two scenarios where in one scenario,

1190
01:13:53,511 --> 01:13:59,591
we have my proposal of just paying them out, pay per share every 10 minutes on L2
sidechain,

1191
01:13:59,591 --> 01:14:01,111
just pick whichever one is the biggest.

1192
01:14:02,071 --> 01:14:03,431
And so there will only be one.

1193
01:14:03,431 --> 01:14:04,951
And then you compare that to lightning.

1194
01:14:04,951 --> 01:14:09,191
In the case of a new miner joining, which is this is exactly what you wanted, Peter.

1195
01:14:09,191 --> 01:14:12,471
This is the low barrier to entry, low fixed costs, little guy.

1196
01:14:13,351 --> 01:14:15,911
Nope, you are talking about something different right now.

1197
01:14:15,911 --> 01:14:17,671
You are talking about Azure is not mining pools.

1198
01:14:17,671 --> 01:14:21,191
Let's have Paul finish that answer and then you can go back.

1199
01:14:21,671 --> 01:14:23,351
This new person wants to join.

1200
01:14:23,351 --> 01:14:27,431
In my scenario, they just point their hash at the pool and they can get paid in 10
minutes.

1201
01:14:27,431 --> 01:14:28,391
Pay per share.

1202
01:14:28,606 --> 01:14:32,606
Paul, you are talking about hashers, not miners here. I am talking about mining
pools. You want to change the topic to go mislead people.

1203
01:14:32,606 --> 01:14:35,606
Well, I honestly have no idea what you are talking about.

1204
01:14:35,606 --> 01:14:44,606
You know full well. I am talking about mining pools here for barriers to entry. You
now change the topic to hashers.

1205
01:14:44,606 --> 01:14:52,606
I don't know. I honestly was not trying to mislead anyone, but I thought we were
talking about the idea of Ocean to pay the hashers.

1206
01:14:52,606 --> 01:14:58,606
The pool paying the hasher out every 10 minutes. Is that what we are talking about
or not?

1207
01:14:58,606 --> 01:15:05,606
When you went into it, we were talking about overheads there. Now for Ocean to go
pay miners, all they have to do is pay.

1208
01:15:05,606 --> 01:15:12,606
If Ocean wants to go pay miners over lightning, all they have to do is do lightning
transactions to these miners.

1209
01:15:12,606 --> 01:15:19,606
Paul, if they choose to do lightning transactions on a pay per share basis, that is
their choice.

1210
01:15:19,606 --> 01:15:27,606
Currently, Ocean doesn't do that because they know that they do not have the
financial resources to go deal with full pay per share.

1211
01:15:27,606 --> 01:15:31,606
A lot of mining pools choose not to do it.

1212
01:15:32,606 --> 01:15:37,606
A lot of mining pools choose not to do it.

1213
01:15:37,606 --> 01:15:45,606
You're the one who cut in and said I was – now you're saying I was not at all being
misleading, and I was talking exactly about what we were trying to talk about.

1214
01:15:45,606 --> 01:15:48,606
You tried to sneak in overheads over here.

1215
01:15:48,606 --> 01:15:53,606
For the poor people in the audience, I would like the poor people in the audience to
at least learn something from this.

1216
01:15:54,606 --> 01:16:04,606
I don't know what you're going to say after I'm done, but I would like to just give
everyone something that they can take home at least, which is in the scenario I
outlined, the people connect.

1217
01:16:04,606 --> 01:16:06,606
They do some hashing.

1218
01:16:06,606 --> 01:16:09,606
They don't find a block because their hash rate is very, very small.

1219
01:16:09,606 --> 01:16:15,606
Of course, statistically, it's very unlikely that if you have a tiny amount of hash,
you actually find the block, but they find some shares at the pool.

1220
01:16:15,606 --> 01:16:17,606
The pool pays per share.

1221
01:16:17,606 --> 01:16:19,606
That's what I've been saying, pay per share.

1222
01:16:19,606 --> 01:16:26,606
They pay those people out every 10 minutes, taking the absolute theoretical minimum
custody possible.

1223
01:16:26,606 --> 01:16:29,606
They just pay them out on the L2 chain.

1224
01:16:29,606 --> 01:16:33,606
It's no different than buying cheese or alpaca socks or whatever.

1225
01:16:33,606 --> 01:16:35,606
They do that.

1226
01:16:35,606 --> 01:16:41,606
In the scenario with Lightning, what the pool has to do is they have to make a
decision when someone connects to them.

1227
01:16:41,606 --> 01:16:59,606
They have to say, if we want to pay this person, we must broadcast a transaction on
L1 with a new 2 of 2 multisig output, paying the L1 fee, and we have to fund this
channel with about as much money as we think we are going to be paying them over the
next time horizon or whatever this is.

1228
01:16:59,606 --> 01:17:02,606
Paul, you know that is not how Lightning works.

1229
01:17:02,606 --> 01:17:04,606
That is exactly how it works.

1230
01:17:04,606 --> 01:17:06,606
Let me just jump in and explain something here.

1231
01:17:06,606 --> 01:17:10,606
I think I agree a little bit more with Peter on this point.

1232
01:17:10,606 --> 01:17:16,606
It's not that the mining pool has to have direct channels with every participating
hasher or miner in this case.

1233
01:17:16,606 --> 01:17:18,606
Someone has to open those channels when some of the person is new.

1234
01:17:18,606 --> 01:17:26,606
Remember, you could put that obligation on the individual hasher or miner in this
case and say, hey, it's your responsibility to have inbound liquidity.

1235
01:17:26,606 --> 01:17:34,606
Because remember, Lightning has multi-hop, so it's not like you need direct channels
between the mining pool and the miner in this case.

1236
01:17:35,606 --> 01:17:36,606
You're right about that.

1237
01:17:36,606 --> 01:17:37,606
That's true.

1238
01:17:37,606 --> 01:17:41,606
But anyone who wants to join the Lightning network at all must do that with someone.

1239
01:17:41,606 --> 01:17:42,606
I guess that's what I'm saying.

1240
01:17:42,606 --> 01:17:43,606
Correct.

1241
01:17:43,606 --> 01:17:44,606
You need at least a channel.

1242
01:17:44,606 --> 01:17:47,606
Whereas in my scenario, they don't have to do that.

1243
01:17:47,606 --> 01:17:50,606
Paul, you know that Lightning is a routed network.

1244
01:17:50,606 --> 01:17:51,606
I know you know this.

1245
01:17:51,606 --> 01:17:54,606
Don't try to obfuscate it for our audience here.

1246
01:17:54,606 --> 01:18:09,606
The fact is, if I was to go join Ocean and start getting money in, I would go tell
them, all right, which Lightning account you want to go pay out to.

1247
01:18:09,606 --> 01:18:12,606
And they can go do it on the wallet I would go have.

1248
01:18:12,606 --> 01:18:20,606
And if I choose to go and set up a wallet with some inbound liquidity that's running
24-7 because I might want to do it, that's fine.

1249
01:18:20,606 --> 01:18:23,606
I do not have to get a channel open with Ocean specifically.

1250
01:18:23,606 --> 01:18:26,606
I can use that same wallet for anyone.

1251
01:18:26,606 --> 01:18:27,606
That's true.

1252
01:18:27,606 --> 01:18:31,606
But the point is, you have to open some channel somewhere that has some inbound
liquidity for this project.

1253
01:18:31,606 --> 01:18:35,606
And you have to hope that you have enough threaded through the whole route.

1254
01:18:35,606 --> 01:18:37,606
There's nothing hard about that.

1255
01:18:37,606 --> 01:18:38,606
Lightning solves that problem.

1256
01:18:38,606 --> 01:18:41,606
But that is more expensive than what I propose.

1257
01:18:41,606 --> 01:18:43,606
Look, what you're proposing is…

1258
01:18:43,606 --> 01:18:45,606
I'm making mining more decentralized.

1259
01:18:45,606 --> 01:18:46,606
No, you're not.

1260
01:18:47,606 --> 01:18:50,606
And it means that probably people like Foundry would not want to touch it.

1261
01:18:50,606 --> 01:18:56,606
So, I'm further decentralizing mining by offering them this set of revenues.

1262
01:18:56,606 --> 01:19:03,606
I'm not sure people would agree there because, I mean, ultimately, if this person is
a miner, they are likely to want to use Bitcoin.

1263
01:19:03,606 --> 01:19:05,606
And they may be earning and spending over Lightning anyway.

1264
01:19:05,606 --> 01:19:11,606
So, it may not really be a big deal for them to earn over mining in this example
from Ocean.

1265
01:19:11,606 --> 01:19:12,606
Well, yeah.

1266
01:19:12,606 --> 01:19:13,606
But I'm just saying it is better.

1267
01:19:13,606 --> 01:19:21,606
My scenario is actually more advantageous to a small miner in every scenario because
they have less total setup cost.

1268
01:19:21,606 --> 01:19:24,606
I just think it's an irony that it happens to be…

1269
01:19:24,606 --> 01:19:30,606
It's not essential to my argument, but it's just ironic that it happens to be better
in a way that is a fixed cost.

1270
01:19:30,606 --> 01:19:31,606
Okay.

1271
01:19:31,606 --> 01:19:32,606
So, here's how I'm thinking about this.

1272
01:19:33,606 --> 01:19:38,606
What we're talking about here is the advent of Stratum V2.

1273
01:19:38,606 --> 01:19:41,606
We're talking about this idea because it's going to help mining decentralization.

1274
01:19:41,606 --> 01:19:47,606
It's going to help more individual hashes actually be miners instead of merely
hashes.

1275
01:19:47,606 --> 01:19:48,606
Yep.

1276
01:19:48,606 --> 01:19:53,606
But part of what's predicating there is that person being able to run a Bitcoin full
node.

1277
01:19:53,606 --> 01:20:03,606
And in the Drivechain context, that now means running a Bitcoin full node and up to
256 Drivechain nodes if they want to be validating everything.

1278
01:20:03,606 --> 01:20:08,606
Not to me because they could still only run the Bitcoin core node if they only
wanted to run that.

1279
01:20:08,606 --> 01:20:14,606
People are still imagining that there's some enormous negative consequence of them
not getting the node.

1280
01:20:14,606 --> 01:20:21,606
It's because the node synchronizes so slowly that you can rely on…

1281
01:20:21,606 --> 01:20:22,606
Think about it like this.

1282
01:20:22,606 --> 01:20:32,606
The network is either going to be this huge successful network like Ethereum where
it's going to have $7 million a day in fees being paid and has huge amounts of
users.

1283
01:20:32,606 --> 01:20:37,606
And that's really the only case that I'm interested in because if something else
happens, then it won't be secure, but I don't really care.

1284
01:20:37,606 --> 01:20:39,606
I'm kind of like I'm dropping that.

1285
01:20:39,606 --> 01:20:41,606
So, I skim the vital few.

1286
01:20:41,606 --> 01:20:44,606
So, I'm saying like most new restaurants fail, you know.

1287
01:20:44,606 --> 01:20:48,606
So, I'm saying, okay, maybe a lot of these ideas will fail, but I don't care.

1288
01:20:48,606 --> 01:20:59,606
We're talking that if it's really big, then all those people, you know, there's
going to be a huge number of users and some percentage of them will have full nodes
and some percentage of them will have big projects.

1289
01:20:59,606 --> 01:21:06,606
And it will just be very, very implausible since the node calculates for everyone
the same hash every three to six months.

1290
01:21:06,606 --> 01:21:08,606
It's just going to be available information.

1291
01:21:08,606 --> 01:21:17,606
It'll be much easier to get that information than it will be to do other things that
the miner has to do such as like keep up to date on which ASIC technology is being
invented or something like that.

1292
01:21:18,606 --> 01:21:19,606
Miners do not have to do that.

1293
01:21:19,606 --> 01:21:26,606
There's no fundamental difference between the other ways that miners compete, which
involve a huge mixture of fixed and variable costs.

1294
01:21:26,606 --> 01:21:34,606
They compete over getting the ERCOT demand management credits, new weird mining
cooling ideas are invented.

1295
01:21:34,606 --> 01:21:36,606
So, they compete on millions of dimensions.

1296
01:21:36,606 --> 01:21:42,606
Probably it's not an understatement to say millions of dimensions in some form or
another.

1297
01:21:42,606 --> 01:21:44,606
And this is just some random thing.

1298
01:21:44,606 --> 01:21:53,606
And there's just a prejudice against this dimension, I think, because it would be so
good for Bitcoin that people can have trouble wrapping their heads around it.

1299
01:21:53,606 --> 01:21:58,606
We care because you're adding fixed costs that miners will have to go in and add.

1300
01:21:58,606 --> 01:22:00,606
All this stuff.

1301
01:22:00,606 --> 01:22:06,606
Paul, when you go talk about things like, you know, they got to go pay for the
latest ASIC, that's just not true.

1302
01:22:06,606 --> 01:22:16,606
You know, if I go have a hashing set up and I go set up with Stratum V2 and I go to
that bit of effort, I can just let the thing sit there indefinitely and it'll
continue to work.

1303
01:22:16,606 --> 01:22:17,606
I mean, I've done this before.

1304
01:22:17,606 --> 01:22:19,606
You know, back in the day when…

1305
01:22:19,606 --> 01:22:21,606
Paul, let me finish.

1306
01:22:21,606 --> 01:22:26,606
Back in the day when I was mining myself, I set up with P2 Pool, which was
decentralized hashing.

1307
01:22:26,606 --> 01:22:31,606
And P2 Pool, other than one or two technical reasons, would work just fine these
days.

1308
01:22:31,606 --> 01:22:34,606
And all I had to do was set it up and just leave it there.

1309
01:22:34,606 --> 01:22:36,606
I mean, that is the world we want to be in.

1310
01:22:36,606 --> 01:22:46,606
We do not want to be in a world where hashers like me now have to go track down
websites and block explorers and copy and paste hashes for Drivechains to go work
and for fees to keep coming in.

1311
01:22:46,606 --> 01:22:48,606
Like, all that's nonsense.

1312
01:22:48,606 --> 01:22:54,606
Well, we're not living in a world of hobbyist miners ever because the difficulty
adjustment hires the bottom half of performers.

1313
01:22:54,606 --> 01:22:57,606
And so it will get more and more specialized over time.

1314
01:22:57,606 --> 01:23:01,606
And these days, every miner has a business plan and things like that.

1315
01:23:01,606 --> 01:23:02,606
If you're really trying to say…

1316
01:23:02,606 --> 01:23:03,606
That's not what's happened.

1317
01:23:03,606 --> 01:23:06,606
It's about whether or not the miner can compete profitably.

1318
01:23:06,606 --> 01:23:07,606
We don't want the mine…

1319
01:23:07,606 --> 01:23:17,606
If someone is sitting there and they have the ASIC plugged in and they're losing
money every month because they spend a certain amount on electricity and what they
get in is less than that, that is not setting it and forgetting it.

1320
01:23:17,606 --> 01:23:20,606
They're lighting their own money on fire when they pay their electricity bill.

1321
01:23:20,606 --> 01:23:22,606
That's irrational.

1322
01:23:22,606 --> 01:23:24,606
It's probably fair to say.

1323
01:23:24,606 --> 01:23:25,606
Go on.

1324
01:23:26,606 --> 01:23:33,606
You're ignoring the actual model of mining, which is you go find an opportunity you
have, such as a cheap source of power.

1325
01:23:33,606 --> 01:23:34,606
You have to find the opportunity.

1326
01:23:34,606 --> 01:23:35,606
That's a fixed cost.

1327
01:23:35,606 --> 01:23:37,606
Paul, Paul, Paul, let me finish.

1328
01:23:37,606 --> 01:23:41,606
Is it not true that searching for the opportunity is a fixed cost?

1329
01:23:41,606 --> 01:23:43,606
Is that the case or not?

1330
01:23:43,606 --> 01:23:47,606
No, it's not because opportunities go in varied by amount of hashing power.

1331
01:23:47,606 --> 01:23:48,606
You know, and again…

1332
01:23:48,606 --> 01:23:51,606
But searching for an opportunity is a fixed cost.

1333
01:23:51,606 --> 01:23:52,606
No, it is not.

1334
01:23:52,606 --> 01:23:53,606
No, it is not.

1335
01:23:53,606 --> 01:23:54,606
That is fundamentally wrong.

1336
01:23:54,606 --> 01:23:56,606
How are you searching for it if you don't find it?

1337
01:23:56,606 --> 01:24:00,606
Paul, your effort to go find these things scales with amount of hashing power.

1338
01:24:00,606 --> 01:24:02,606
I mean, you're just throwing out nonsense here.

1339
01:24:02,606 --> 01:24:06,606
Yeah, but the fact that it covaries with the scale doesn't change the fact that it's
a fixed cost.

1340
01:24:06,606 --> 01:24:09,606
Yeah, you're just talking nonsense now.

1341
01:24:09,606 --> 01:24:22,606
Anyway, so what we go see miners go do is they go find an opportunity, which tends
to be a source of cheap power and or a thing to go do with the heat.

1342
01:24:22,606 --> 01:24:27,606
Now, as we know, those things inherently are decentralized because they come in
small quantities.

1343
01:24:27,606 --> 01:24:33,606
And you see things such as flare gas, where people go run a small number of miners
on a location with some flare gas.

1344
01:24:33,606 --> 01:24:38,606
We want those people to be able to actually participate in an actual block creation.

1345
01:24:38,606 --> 01:24:40,606
That's really what all this comes down to.

1346
01:24:40,606 --> 01:24:44,606
We do not want there to be a high barrier to entry for that person to go do that.

1347
01:24:44,606 --> 01:24:50,606
You know, and again, in my case, let's just say I had access to cheap power up to a
certain amount.

1348
01:24:50,606 --> 01:24:53,606
There's a lot of people in that same position as I was for the same reason as me.

1349
01:24:53,606 --> 01:24:54,606
Yes.

1350
01:24:54,606 --> 01:25:04,606
And we want those people to be able to, without very much effort, set up something
like P2 Pool or at least Stratum V2, do their setup once and just let it run.

1351
01:25:04,606 --> 01:25:06,606
That is just incompatible with Drivechains.

1352
01:25:06,606 --> 01:25:09,606
How is it incompatible?

1353
01:25:09,606 --> 01:25:15,606
Because you are asking for a system where that person like me would have to go cut
and paste Drivechain assets for the system to work.

1354
01:25:16,606 --> 01:25:21,606
Well, you have to download P2 Pool and you have to poke in every now and then to
make sure it didn't crash or something.

1355
01:25:21,606 --> 01:25:23,606
You have to do some work.

1356
01:25:23,606 --> 01:25:30,606
And all of these things are software which we can make reliable in a way that we
cannot make a bunch of Drivechains just automatically do this.

1357
01:25:30,606 --> 01:25:33,606
Nothing is completely software, though, as you know, Peter.

1358
01:25:33,606 --> 01:25:41,606
Because this does cut back to what I was getting at before, which is that even if
you run the software, you could still think, oh, I've run the software.

1359
01:25:41,606 --> 01:25:43,606
And then you would think, wait a minute.

1360
01:25:43,606 --> 01:25:47,606
Did I run the right software or is there a bug in the software or do I have to
update?

1361
01:25:47,606 --> 01:25:50,606
And this has happened in Bitcoin's history also where they've been made.

1362
01:25:50,606 --> 01:25:55,606
So I'm just trying to sketch out that there's no – you don't have this like
fundamental thing.

1363
01:25:55,606 --> 01:26:00,606
What is fundamental, though, is that the miner puts in effort and they get paid
money.

1364
01:26:00,606 --> 01:26:01,606
That is fundamental.

1365
01:26:01,606 --> 01:26:06,606
Paul, you are arguing that because the world isn't perfect, we should make it a lot
worse.

1366
01:26:06,606 --> 01:26:09,606
That is what your argument boiled down to there.

1367
01:26:09,606 --> 01:26:12,606
Because the world isn't perfect, because occasionally we screw up and people have to
–

1368
01:26:12,606 --> 01:26:14,606
I'm saying that you –

1369
01:26:14,606 --> 01:26:16,606
Paul, Paul.

1370
01:26:16,606 --> 01:26:19,606
What the miner must do – so let's take the flare gas thing.

1371
01:26:19,606 --> 01:26:23,606
They have to research opportunities to take advantage of the flare gas.

1372
01:26:23,606 --> 01:26:26,606
They have to measure the flare gas and all this other stuff.

1373
01:26:27,606 --> 01:26:31,606
And then they have to pay for the ongoing costs like physical security.

1374
01:26:31,606 --> 01:26:36,606
As I'm saying, the miner has an enormous number of costs on different dimensions.

1375
01:26:36,606 --> 01:26:40,606
Everything you mentioned there scales with hashing power.

1376
01:26:40,606 --> 01:26:43,606
It is not a fixed cost. It is a marginal cost.

1377
01:26:43,606 --> 01:26:46,606
Everything there, even searching for the opportunity –

1378
01:26:46,606 --> 01:26:52,606
Yes, because opportunity scales relative to how much search effort you go into.

1379
01:26:52,606 --> 01:26:59,606
You're really trying to say that if there's ever any cost, no matter how small it is
in an absolute term,

1380
01:26:59,606 --> 01:27:05,606
like it could be like $0.10 a year, that will irrevocably centralize mining.

1381
01:27:05,606 --> 01:27:07,606
Nope, that's not my argument.

1382
01:27:07,606 --> 01:27:11,606
My argument is that we want to keep these costs as minimal as possible.

1383
01:27:11,606 --> 01:27:17,606
Running the fixed node is a fixed cost, but we do not want that to be an expensive
fixed cost.

1384
01:27:17,606 --> 01:27:19,606
We want to keep these things small.

1385
01:27:19,606 --> 01:27:26,606
The idea that miners' costs will be low is incompatible with proof-of-work, which
forces the cost to be high.

1386
01:27:26,606 --> 01:27:29,606
Sorry, that has nothing to do with my argument, and you know it.

1387
01:27:29,606 --> 01:27:31,606
It is the exact argument.

1388
01:27:31,606 --> 01:27:34,606
No, it is not. The idea that miners' costs will be low –

1389
01:27:34,606 --> 01:27:38,606
I am talking about fixed costs here, not variable costs.

1390
01:27:38,606 --> 01:27:41,606
Obviously, proof-of-work will scale to variable costs.

1391
01:27:41,606 --> 01:27:46,606
We do not want the fixed costs to be high to allow things to just end up purely on
variable costs.

1392
01:27:46,606 --> 01:27:52,606
Do you think that when Marathon pays $57 million a year in general and
administrative costs,

1393
01:27:52,606 --> 01:27:54,606
which you can look up on their site, is that a fixed cost?

1394
01:27:54,606 --> 01:28:02,606
Well, chances are, the majority of that is not, because it is related to the scale
of their gigantic hashing system.

1395
01:28:02,606 --> 01:28:09,606
But isn't it also the case that Marathon could just say,

1396
01:28:10,606 --> 01:28:13,606
What if they misplaced – they ran the sidechain tool node?

1397
01:28:13,606 --> 01:28:16,606
Paul, we know that it is not – Paul, we know that it is not –

1398
01:28:16,606 --> 01:28:20,606
And they accidentally put it in that line, and they said, oh, we'll put it in here.

1399
01:28:20,606 --> 01:28:21,606
Paul, let me finish.

1400
01:28:21,606 --> 01:28:26,606
We know that Marathon's $57 million is a variable cost, not a fixed cost,

1401
01:28:26,606 --> 01:28:32,606
because I myself have been a miner creating blocks on the same level as Marathon,

1402
01:28:32,606 --> 01:28:38,606
and I did not pay $57 million, because the cost to me scaled with the amount of hash
power.

1403
01:28:39,606 --> 01:28:46,606
If Marathon lights a briefcase of $100,000 on fire, then that was a mandatory cost.

1404
01:28:46,606 --> 01:28:47,606
It was inherent to Marathon.

1405
01:28:47,606 --> 01:28:51,606
Nothing in the Bitcoin protocol says Marathon means to light a briefcase on fire.

1406
01:28:51,606 --> 01:28:52,606
I don't know what to say, Peter.

1407
01:28:52,606 --> 01:28:57,606
I think you really hate this idea, and I think you kind of just won't explain why.

1408
01:28:57,606 --> 01:28:59,606
And I would like to know why.

1409
01:28:59,606 --> 01:29:02,606
I just spent an hour and 30 minutes explaining why.

1410
01:29:02,606 --> 01:29:05,606
Maybe Stefan can translate for me.

1411
01:29:06,606 --> 01:29:07,606
This is not real.

1412
01:29:07,606 --> 01:29:13,606
This idea that mining costs may increase hypothetically by the need to run some free
open-source software

1413
01:29:13,606 --> 01:29:16,606
sometime that other people are running and where the producer is extremely slow,

1414
01:29:16,606 --> 01:29:19,606
moving information that is readily available on the internet,

1415
01:29:19,606 --> 01:29:23,606
that is much easier to obtain than even stuff like troubleshooting P2Pool

1416
01:29:23,606 --> 01:29:31,606
or other basic stuff like how to make sure that the investment you put in mining
pays off,

1417
01:29:31,606 --> 01:29:35,606
which involves some kind of planning and independent business modeling

1418
01:29:35,606 --> 01:29:38,606
and running forecasts of costs and things.

1419
01:29:38,606 --> 01:29:42,606
The idea that that would be definitive enough to block a technology

1420
01:29:42,606 --> 01:29:45,606
that would transform Bitcoin from something that's very niche

1421
01:29:45,606 --> 01:29:49,606
and reliant on a bunch of other stuff like the Lightning Network,

1422
01:29:49,606 --> 01:29:54,606
which is not going anywhere near as well as people thought, including myself,

1423
01:29:54,606 --> 01:29:55,606
over the last eight years,

1424
01:29:55,606 --> 01:30:01,606
and that would give us tomorrow global scale and privacy and unlimited flexibility

1425
01:30:01,606 --> 01:30:07,606
and immediately humiliate all of our rival coins by allowing us to copy them.

1426
01:30:07,606 --> 01:30:12,606
I mean you laugh, but what is your alternative?

1427
01:30:12,606 --> 01:30:16,606
I'd just like to say, what is the alternative to global 8 billion people?

1428
01:30:16,606 --> 01:30:20,606
Paul, my alternative is to go continue to work on technology that actually works.

1429
01:30:20,606 --> 01:30:24,606
You just gave a bunch of goals, and that's great to have goals,

1430
01:30:24,606 --> 01:30:25,606
but your tech doesn't work.

1431
01:30:25,606 --> 01:30:29,606
It's not really relevant what your goals are if your tech doesn't work.

1432
01:30:29,606 --> 01:30:31,606
You don't literally claim that it doesn't work.

1433
01:30:31,606 --> 01:30:34,606
You say it will work, and it will affect mining costs in some way.

1434
01:30:34,606 --> 01:30:36,606
So you actually say that it does work.

1435
01:30:36,606 --> 01:30:39,606
And in the trade-offs that we are willing to make in Bitcoin, it doesn't work.

1436
01:30:39,606 --> 01:30:45,606
I mean in SQL database, Paul, putting everything in one giant SQL database

1437
01:30:45,606 --> 01:30:48,606
would go achieve all this stuff that you're talking about,

1438
01:30:48,606 --> 01:30:52,606
but without achieving the goal of decentralization and censorship resistance.

1439
01:30:53,606 --> 01:30:57,606
Well, I think a full node is slightly more expensive than Bitcoin 4.

1440
01:30:57,606 --> 01:30:59,606
We've all been going for a while,

1441
01:30:59,606 --> 01:31:03,606
so I think it's probably a good spot here to have closing thoughts from each side.

1442
01:31:03,606 --> 01:31:09,606
We've covered a lot of different aspects, but ultimately let the listeners decide.

1443
01:31:09,606 --> 01:31:13,606
But let's have each of you just take a few minutes

1444
01:31:13,606 --> 01:31:16,606
and give your closing thought or your closing argument.

1445
01:31:16,606 --> 01:31:21,606
If there's one key argument that you want listeners to take away from this,

1446
01:31:21,606 --> 01:31:23,606
what would that argument be?

1447
01:31:23,606 --> 01:31:25,606
So Paul, do you want to start off there?

1448
01:31:25,606 --> 01:31:27,606
And Peter, you'll go after Paul.

1449
01:31:27,606 --> 01:31:30,606
Okay, I'd just like to talk a little bit about why I'm doing this,

1450
01:31:30,606 --> 01:31:37,606
which is that I think that it's not that I actually want any of the individual
sidechains,

1451
01:31:37,606 --> 01:31:40,606
with the exception of one that Peter already knows about,

1452
01:31:40,606 --> 01:31:42,606
which is that I'm very interested in one.

1453
01:31:42,606 --> 01:31:45,606
But I would launch that as an altcoin if I absolutely had to.

1454
01:31:45,606 --> 01:31:47,606
I would prefer it as a Bitcoin sidechain, of course.

1455
01:31:47,606 --> 01:31:49,606
But that's not really the point.

1456
01:31:50,606 --> 01:31:55,606
I believe in the individual sovereignty and freedom of different people.

1457
01:31:55,606 --> 01:32:00,606
And I felt sorry for the large blockers, and they wanted something.

1458
01:32:00,606 --> 01:32:06,606
And I thought, what can we do to give them something that's almost everything that
they want?

1459
01:32:06,606 --> 01:32:10,606
They have to deal with the withdrawal, the three-month delay.

1460
01:32:10,606 --> 01:32:14,606
And so we can give them something that's almost what they want,

1461
01:32:14,606 --> 01:32:18,606
and it will not have any cost to the L1 participants.

1462
01:32:18,606 --> 01:32:21,606
And this is why I'm kind of, frankly, obsessed with –

1463
01:32:21,606 --> 01:32:25,606
because Peter says that there is a cost to L1, but I really think that there is not.

1464
01:32:25,606 --> 01:32:31,606
And that is why I poured so much research into Peter's ideas,

1465
01:32:31,606 --> 01:32:35,606
and I wrote this post to Mirage of Mining Centralization in January 2017,

1466
01:32:35,606 --> 01:32:41,606
and why I follow him on Twitter, and why we hired him to write these thoughts.

1467
01:32:41,606 --> 01:32:47,606
Because he really says that he has found some way that this affects L1 in a bad way.

1468
01:32:47,606 --> 01:32:51,606
Yeah, in some kind of net way also, because don't forget,

1469
01:32:51,606 --> 01:32:55,606
it's also part of my claim that all the hard fork drama will also go away when you
have this,

1470
01:32:55,606 --> 01:32:58,606
because Roger would never have wanted to campaign,

1471
01:32:58,606 --> 01:33:01,606
Vitalik and all these people wouldn't campaign for changes to Bitcoin

1472
01:33:01,606 --> 01:33:04,606
if they just had this as an alternative.

1473
01:33:04,606 --> 01:33:06,606
They would just do it over there.

1474
01:33:06,606 --> 01:33:10,606
So I'm very, very motivated to try to figure out,

1475
01:33:11,606 --> 01:33:18,606
leaving no stone unturned as to what is the negative impact that this idea has on
L1,

1476
01:33:18,606 --> 01:33:21,606
because I really don't think that there is any.

1477
01:33:21,606 --> 01:33:28,606
And now I just kind of think that, I don't know, Peter has started this argument,

1478
01:33:28,606 --> 01:33:33,606
and now he just kind of doesn't want to admit that he was wrong or whatever,

1479
01:33:33,606 --> 01:33:37,606
and instead he has produced this piece of writing that it has these contradictions
in it

1480
01:33:37,606 --> 01:33:42,606
that are immense, including the big one about whether or not you can defer to
someone else's full notes.

1481
01:33:42,606 --> 01:33:48,606
So that's just my side of the story, for lack of better words.

1482
01:33:48,606 --> 01:33:50,606
Okay, great. Well, thank you, Paul.

1483
01:33:50,606 --> 01:33:53,606
And Peter, a couple of minutes from you on your closing arguments.

1484
01:33:53,606 --> 01:33:58,606
Well, I mean, I've made a bunch of sort of more technical arguments and so on,

1485
01:33:58,606 --> 01:34:05,606
but I think maybe what I should close on is, with all this tech,

1486
01:34:05,606 --> 01:34:10,606
I mean, people love to go talk about what their goals are, what their vision is, et
cetera, et cetera.

1487
01:34:10,606 --> 01:34:13,606
But tech has to actually work.

1488
01:34:13,606 --> 01:34:20,606
And, you know, I myself, I had an idea for something that, frankly, Lightning does a
lot better.

1489
01:34:20,606 --> 01:34:25,606
And, you know, my idea was Fidelity Bonded Banks, and I had a bunch of cool ways to
do things.

1490
01:34:25,606 --> 01:34:29,606
And the fact is, Lightning just out-competed me in every single way.

1491
01:34:29,606 --> 01:34:34,606
And my response, which I think was the same response, was to say, yep, they solved
it.

1492
01:34:34,606 --> 01:34:37,606
My Fidelity Bonded Bank thing is basically entirely obsolete.

1493
01:34:37,606 --> 01:34:40,606
It was never even given a chance to really prove itself.

1494
01:34:40,606 --> 01:34:43,606
But, you know, great. Lightning can go do its thing.

1495
01:34:43,606 --> 01:34:50,606
And, you know, the goals may have been the same, but the reality is I lost because
my tech didn't work.

1496
01:34:50,606 --> 01:34:54,606
You know, and I think this is really what comes down with Drivechains,

1497
01:34:54,606 --> 01:34:58,606
is that Paul has been unwilling to admit that his tech, you know, doesn't really
work.

1498
01:34:58,606 --> 01:35:05,606
It's something that's very simple, but it's not sufficiently complex to actually,
you know, solve the big problems it goes and has.

1499
01:35:05,606 --> 01:35:10,606
And, you know, people got to go look at it, not with like starry eyes, like what
Bitcoin could be,

1500
01:35:10,606 --> 01:35:13,606
but with the hard reality of, well, does this thing actually work?

1501
01:35:13,606 --> 01:35:18,606
You know, and I also think this gets back to all these ideas like competing with
altcoins and stuff.

1502
01:35:18,606 --> 01:35:22,606
It's that, look, the tech has to work well enough to compete with altcoins.

1503
01:35:22,606 --> 01:35:25,606
You know, you have to work well enough to compete with something like Ethereum.

1504
01:35:25,606 --> 01:35:27,606
You have to work well enough to compete with something like Lightning.

1505
01:35:27,606 --> 01:35:33,606
And if you're talking about, well, we'll just put money on this Drivechain, which
miners absolutely can go steal,

1506
01:35:33,606 --> 01:35:39,606
or potentially even more likely, miners will just fail to do anything about it
because, well, shit,

1507
01:35:39,606 --> 01:35:43,606
now a majority of hashing power has to go and move money around on this Drivechain.

1508
01:35:43,606 --> 01:35:46,606
Well, it's not even sure that's really going to happen now the price crashes.

1509
01:35:46,606 --> 01:35:49,606
I mean, there's a lot of ways these things can go fail.

1510
01:35:49,606 --> 01:35:53,606
And it's much more likely that if somehow the soft fork does get activated,

1511
01:35:53,606 --> 01:35:56,606
nothing much will really happen in terms of working.

1512
01:35:56,606 --> 01:35:58,606
And we open up Bitcoin to a bunch of ugly attacks.

1513
01:36:00,606 --> 01:36:03,606
Whereas, you know, things like Lightning genuinely are dependent to Bitcoin.

1514
01:36:04,606 --> 01:36:06,606
And they've proven themselves.

1515
01:36:06,606 --> 01:36:12,606
And finally, I mean, maybe I can go say, you know, Paul Sztorc, he owes me like
$1,250.

1516
01:36:12,606 --> 01:36:14,606
And I should send him a Lightning invoice.

1517
01:36:14,606 --> 01:36:17,606
Because last time he went and paid me, he went and paid me on chain.

1518
01:36:17,606 --> 01:36:20,606
I'm not sure Paul's ever actually going to use Lightning.

1519
01:36:20,606 --> 01:36:24,606
So this would be a good opportunity for him to actually get a wallet and go and try
this out.

1520
01:36:25,606 --> 01:36:27,606
I paid him from a legacy Bitcoin.

1521
01:36:27,606 --> 01:36:29,606
Yeah, yeah, I noticed that.

1522
01:36:29,606 --> 01:36:31,606
Obviously, he had a very old wallet.

1523
01:36:31,606 --> 01:36:34,606
And it might be time for you to actually use some of this tech.

1524
01:36:34,606 --> 01:36:39,606
You know, like the biggest Lightning transaction I've ever done, I think was like,
what, $4,000 or $5,000 US?

1525
01:36:40,606 --> 01:36:41,606
And it worked.

1526
01:36:42,606 --> 01:36:45,606
I mean, this tech works pretty well.

1527
01:36:45,606 --> 01:36:47,606
I mean, I think there's edge cases that we'd love to go solve.

1528
01:36:47,606 --> 01:36:51,606
I think there's definitely things where we'd have to improve to go scale better.

1529
01:36:51,606 --> 01:36:58,606
But, you know, to go and like present all these images of, well, Drivechains will do
this, Drivechains will do that.

1530
01:36:58,606 --> 01:37:02,606
I mean, you got to go prove this tech in ways that are actually convincing.

1531
01:37:02,606 --> 01:37:03,606
And I just...

1532
01:37:03,606 --> 01:37:05,606
The fact is, like, Drivechains hasn't done that.

1533
01:37:05,606 --> 01:37:08,606
And frankly, my advice to Paul is to move on.

1534
01:37:08,606 --> 01:37:10,606
Is there anything that would convince you?

1535
01:37:11,606 --> 01:37:13,606
With Drivechains right now, probably not.

1536
01:37:13,606 --> 01:37:15,606
Because the idea itself is just broken.

1537
01:37:15,606 --> 01:37:19,606
Like, you've tried very hard and you've just failed.

1538
01:37:19,606 --> 01:37:23,606
You know, whereas as a counter example, Lightning was something where...

1539
01:37:23,606 --> 01:37:26,606
I remember when I first looked at it, I wasn't totally clear it would go work.

1540
01:37:26,606 --> 01:37:28,606
But, you know, I read more about the tech and thought through it.

1541
01:37:28,606 --> 01:37:31,606
Yeah, yeah, this obviously could go work.

1542
01:37:31,606 --> 01:37:34,606
You know, and of course, it did go work pretty well.

1543
01:37:34,606 --> 01:37:35,606
It's not perfect.

1544
01:37:35,606 --> 01:37:37,606
Can't necessarily scale to the entire world.

1545
01:37:37,606 --> 01:37:39,606
But there are plausible ways to go fix this.

1546
01:37:39,606 --> 01:37:42,606
And we see this with Arc as an example right now.

1547
01:37:42,606 --> 01:37:47,606
Which is a plausible way that Lightning could scale to a much bigger venue.

1548
01:37:47,606 --> 01:37:50,606
I'm not entirely clear that works, but it's plausible enough.

1549
01:37:51,606 --> 01:37:54,606
And these things convinced me because they're good technical ideas.

1550
01:37:54,606 --> 01:37:56,606
They may not be perfect, but they're reasonable.

1551
01:37:56,606 --> 01:37:58,606
Well, you know, there is one...

1552
01:37:58,606 --> 01:38:02,606
Not to keep going off, but the creator of Arc, he has said that Lightning is...

1553
01:38:02,606 --> 01:38:04,606
He created it because he thought that Lightning is broken.

1554
01:38:04,606 --> 01:38:07,606
And he says that in the beginning of his Arc Masterclass whiteboard video.

1555
01:38:07,606 --> 01:38:09,606
But to be clear, even in the case of Arc,

1556
01:38:09,606 --> 01:38:12,606
Arc has also said that ASPs would also be LSPs.

1557
01:38:12,606 --> 01:38:15,606
Yeah, he wants to transform Lightning into that.

1558
01:38:15,606 --> 01:38:19,606
But, you know, he's not like so super sanguine on Lightning.

1559
01:38:19,606 --> 01:38:21,606
I think that remains to be seen.

1560
01:38:21,606 --> 01:38:25,606
I think there's a range of different views on how far Lightning can scale.

1561
01:38:25,606 --> 01:38:27,606
And potentially with other soft fork ideas.

1562
01:38:27,606 --> 01:38:30,606
I mean, he's got the Lightning light right behind him, so...

1563
01:38:30,606 --> 01:38:32,606
Well, of course.

1564
01:38:32,606 --> 01:38:38,606
Yeah, so look, I think it's been a good debate between you two.

1565
01:38:38,606 --> 01:38:39,606
I agree.

1566
01:38:39,606 --> 01:38:42,606
Hopefully, listeners have had a chance to hear both sides.

1567
01:38:42,606 --> 01:38:45,606
I've done my best to be impartial, even if I have a view.

1568
01:38:45,606 --> 01:38:48,606
But obviously, listeners, you're big boys and big girls out there.

1569
01:38:48,606 --> 01:38:50,606
You can hear both sides.

1570
01:38:50,606 --> 01:38:56,606
As in the show notes, I'll put the links to obviously to Peter Todd's post,

1571
01:38:56,606 --> 01:38:58,606
as well as to Paul's response.

1572
01:38:58,606 --> 01:39:01,606
And listeners, you can make up your own mind.

1573
01:39:01,606 --> 01:39:04,606
Paul and Peter, thank you for joining me today.

1574
01:39:04,606 --> 01:39:05,606
Thank you.

1575
01:39:06,606 --> 01:39:09,606
So I hope you enjoyed the discussion and you found it informative.

1576
01:39:09,606 --> 01:39:11,606
Make sure you leave your comments below

1577
01:39:11,606 --> 01:39:14,606
or share the show out there with family and friends

1578
01:39:14,606 --> 01:39:16,606
so they can also learn about this.

1579
01:39:16,606 --> 01:39:19,606
If you're watching on YouTube, give us a thumbs up if you enjoyed the show.

1580
01:39:19,606 --> 01:39:21,606
Thanks, and I'll see you in the Citadels.