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Yo.

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Hello.

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Welcome to the Drivechain Twitter spaces.

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Thank you.

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I had some questions about Drivechain.

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All right.

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Tell me, again, why is it that miners need to be able to approve the Drivechains?

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Why can't people just make a Drivechain and interact with Bitcoin without any approval?

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That's a great question.

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It's probably something which could be answered in a lot of technical detail as to the necessity for the design to feature that limitation

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versus the choices made by the designers to achieve that limitation as a desired feature.

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In other words, is the fact that a large portion of miners approving or a large portion of hash rate approving the creation of the new sidechains

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or their termination is affected through the hash rate, or is it better that people just freely create any sidechains they want?

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In other words, I think it was part of the design.

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It was part of the intended design that the miners have a key role in starting as well as in ending the sidechains.

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Right.

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But won't that create so much red tape and make it so hard to create a Drivechain?

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Because how are you going to get the miners on board to approve your Drivechain?

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Will it become a political thing?

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Those are great questions.

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I think that the idea is that the will of the community is expressed through the miners.

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And if there's ever a problematic Drivechain, then the will of the community expressed through the miners would be able to discontinue the Drivechain

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without discontinuing the other ones.

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And that's as best as I understand it.

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That's as best as I understand it.

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If Paul or others were here, they could give you a more technical answer, which would be great.

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I guess today they're busy.

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So it's just me.

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One thing my dad said, I was explaining Drivechain to my dad and he was like,

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well doesn't Cardano already do that?

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And I'm like, I have no idea.

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There are a lot of designs out there in crypto that probably resemble the structure or the goal of Drivechain.

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These other platforms, they don't have communities that want to permanently ossify their chain.

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In most cases, they're interested in aggressive development so that they can attract value and attention.

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So yeah, there probably is plenty of designs similar to Drivechain.

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Some of the altcoin founders have no doubt studied what Paul has written and studied the BIPs and have deployed the design or something similar to it.

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For example, in Ethereum, all talk of sharding may have been inspired by Drivechain discourse,

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since Drivechain predated that and is similar in design.

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The idea of having a bunch of different blockchains all interfacing with one base layer.

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That's Drivechain and probably was the source of these other conversations from Cardano or Ethereum about sharding and having multiple chains.

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Can you explain to me also the difference between BIP300 and BIP301 again?

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Sure, so BIP300 is Hashrate Escrows and BIP301 is Blind Merged Mining.

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BIP300 is the most important of the two and that's why people sometimes refer to Drivechain as BIP300.

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But Drivechain refers to both BIPs.

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And the designers, Paul Sztorc and CryptAxe, they would love to see both BIPs adopted together.

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They work together well and the Blind Merged Mining is important for certain Drivechains.

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So they're harmonious.

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But BIP300 is the most important one because it is the trustless two-way peg or Hashrate Escrow, as you could say.

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Some people don't like the word trustless, although some thinkers like Adam Back use that word,

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or describe the Drivechains as more trustless or more peer-to-peer than federated sidechains.

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And Blind Merged Mining, remind me again what that is exactly?

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Merged Mining today in Bitcoin has been around for about a decade.

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It was invented by Satoshi.

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What Paul Sztorc added was the invention of Blind Merged Mining,

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which is code that allows the transaction fees from the sidechains to be received by the blockchain.

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From the sidechains to be received by all miners, even those that don't run the node of the sidechain.

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So Blind Merged Mining includes the word blind because the miner is blind to the state of the sidechain.

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The miner is not running the sidechain node necessarily.

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With Blind Merged Mining, running the node is optional.

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Whereas in Ordinary Merged Mining, running the node is mandatory.

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So what Blind Merged Mining does is it relieves the Bitcoin miners of the obligation to run,

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it relieves them of the requirement to run the sidechain node.

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However, some will choose to run it.

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They may choose to run the sidechain node, but they don't have to.

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And so what is Merged Mining that Satoshi invented exactly?

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Merged Mining is when you have two blockchains that share the same set of miners.

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And the proof of work that's being done, the hashing, all that electricity consumption,

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the proof of work is made more productive because it's being used by two different blockchains.

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So two different sets of users on two different blockchains are using the same set of miners.

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And they're both blockchains are paying fees to the same set of miners.

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So that's what Merged Mining is all about.

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So when Satoshi was talking about Bitcoin, he was talking about Bitcoin mining.

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That's what Merged Mining is all about.

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So when Satoshi was talking about Bitcoin, someone else suggested DNS on blockchain.

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And that was called BitDNS.

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And in the August 2010 posts by Satoshi, he countenanced BitDNS.

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He acknowledged it and supported it and wrote favorably about it.

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So he mentioned that it'll have a separate fate from Bitcoin and the fees will be collected by the Bitcoin miners.

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So that's the cool thing about Merged Mining.

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If the blockchain that's the second layer, the other blockchain, if it fails, it doesn't harm the first one.

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But if it succeeds, then it pays fees to the Bitcoin miners.

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Now, BitDNS was an altcoin.

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It was a Merged Mined altcoin.

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Whereas in Drivechain, there are no Merged Mined altcoins.

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Instead, there are Merged Mined sidechains.

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And what's really cool about the sidechain is instead of having a speculative altcoin as the native token of the blockchain,

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instead, it's a synthetic Bitcoin.

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So each drivechain will have a Bitcoin on it.

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A token that is redeemable for Bitcoin and has the same value as Bitcoin.

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And those tokens are created only insofar as people send actual Bitcoin to the hashrate escrow.

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So Drivechain is designed to support the 21 million hardcap, but create unlimited possibilities for Bitcoin.

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So that's why Adam Back tweeted that he's an innovation maximalist, but an altcoin seniorage critic,

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emphasizing that Drivechain opens the door to unlimited possibilities for Bitcoiners technologically,

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while preserving Bitcoin's hardcap and avoiding any seniorage profit.

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So nobody's printing money and making a windfall because the sidechains will use synthetic Bitcoin as their native token.

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Which is better than with BitDNS.

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In the Satoshi era, no one had understood that sidechains could be that great.

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No one had understood how to do a trustless two-way peg.

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So instead, Satoshi thought that there would be a whole bunch of altcoins out there paying fees to Bitcoin miners.

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But the best, most harmonious situation possible is where the value of the other blockchain is flowing to Bitcoin,

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not just with the transaction fees, but also with the token itself.

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So that's why the sidechains are better than a merged-mined altcoin.

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Because there's no new speculative token introduced with the merged-mined sidechain.

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Whereas in a merged-mined altcoin, there's a speculative token that's involved.

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Kind of like with Stacks. Stacks has this token that's involved, STX.

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I should also point out Stacks is not merged-mined.

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But I'm just emphasizing that it's good when the native token of a blockchain is a synthetic Bitcoin.

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Because then there isn't some token out there competing with Bitcoin for value.

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So Satoshi invented merged mining, but it's actually not part of Bitcoin right now.

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It is part of Bitcoin because it really can't be stopped.

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So there's no way to stop people from doing it.

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Merged mining has been going on for 10 years, uninterrupted, I believe.

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Satoshi invented it and then people have been doing it since 2010 or something, 2013.

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It has been going on for a long time with various different blockchains or merged mining with Bitcoin.

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The largest one is Rootstock.

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They've been going on for years with merged mining.

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And one of the largest pools in Bitcoin, the Brains pool, run by Slush.

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They have a great article about merged mining and they explain.

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Slush explains why they like merged mining RSK.

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And we had on here in Drivechain Talk, one of the co-founders of RSK, Gabriel Kerman.

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And I asked him approximately how much Bitcoin is paid every month to Bitcoin miners through merged mining of Rootstock.

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And he said about three Bitcoin per month of transaction fees are coming to Bitcoin miners.

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So that's why the Brains pool, the Slush pool is merged mining RSK because they can get three extra Bitcoin per month.

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About half of Bitcoin's hash rate is merged mining RSK.

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So merged mining is a potentially huge part of the future of Bitcoin.

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Right now, it is economically small.

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Rootstock has a market capitalization of under $100 million.

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That's very small compared to Bitcoin's $400 billion valuation.

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So in the far future, especially if Drivechain is adopted, merged mining could be very big.

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And the fees that are collected from merged mine sidechains might be enormous.

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Maybe the majority of Bitcoin miner revenue in the future after Drivechain adoption, maybe 10 years after Drivechain adoption,

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the majority of miner revenue could be the fees from these sidechains that are merged mined.

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And this is what got me interested in Drivechain at the very beginning of my Drivechain career,

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is that Bitcoin has a security budget problem.

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The fees are very low on Bitcoin.

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Every day, under $1 million of fees are collected, generally, from transactions.

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And the only way to fix that is to have more fees come in from merged mining

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or to see the fees somehow magically just go up for Bitcoin's block space.

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But I don't think that's going to happen.

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I have 13 years of evidence where almost always the fees were very low,

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with brief periods where they spiked up momentarily.

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So I would like them to spike up and stay there forever.

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You know, $50 a transaction, $100 a transaction on layer one.

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We need to have layered money where there's very high decentralization on layer one.

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And then people can opt in to the cheaper layers as they may wish

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to use a large block sidechain called Thunder, which has one gigabyte blocks.

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And we'll get a lot of fees from that, potentially,

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if the whole world is using this large block Bitcoin sidechain.

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I have a question.

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I just asked GPT about BIP300 and it says,

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BIP300 is blind merged mining and BIP301 sidechain validation.

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Is that true or is it the opposite?

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BIP300 is hashrate escrow. BIP301 is blind merged mining.

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Oh, wow. So GPT has them confused.

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Understandable. Maybe GPT was confused.

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Maybe it's been listening to Shinobi's podcast

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or some other source of arguably inaccurate information about drivechain.

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Thank you for your questions.

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If you have any more, we'd love to hear them.

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Everyone's welcome to come on up to the stage.

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I see some familiar faces in the audience.

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This is Drivechain Talk.

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We meet every Monday and Thursday to discuss drivechain,

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one of the most important ideas in the history of cryptocurrency.

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Drivechain is a proposal to introduce peer-to-peer sidechains for Bitcoin,

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enabling Bitcoin to have greater extensibility

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and greater capacity to serve as an expansive platform

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for all kinds of interesting technologies,

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including peer-to-peer oracles,

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which is the project known as HiveMind,

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something that is very exciting to some people,

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including Fiatjaf. He's a fan of HiveMind.

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Fiatjaf is the creator of Nostr,

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and he has tweeted that drivechain is worth doing just to get HiveMind.

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So he's expressing in that tweet that he would love to see HiveMind created.

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HiveMind is a prediction market?

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Yes. HiveMind is a multidimensional event derivatives market,

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as Paul Sztorc describes it.

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He's the creator of HiveMind.

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He wrote a white paper that is 80 pages long

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and has lots of colorful, interesting charts and graphs and complex diagrams.

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And it's all available at bitcoinhivemind.com.

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And there you can see the white paper.

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It was originally named TruthCoin.

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And it's just a lot of fun to look through this white paper.

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It's so complicated.

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But basically what this would allow the world to do,

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this Bitcoin sidechain called HiveMind,

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will allow the entire world to just open their Bitcoin node

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and place a bet on anything, anything in the future.

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People can bet on all kinds of things.

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And this, some people believe, will improve society immeasurably.

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Because right now there is an extreme amount of limitation imposed by technology

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as well as bureaucracy on the ability for society

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to leverage the potential benefits of predicting things in a capitalistic manner.

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So there's this idea from Robin Hanson,

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who I think is a Harvard economist or at some other school.

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But Paul is a big fan of his.

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I think he often retweets his ideas.

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And the idea here is called futarchy,

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which is when society uses prediction markets to improve political outcomes.

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For example, imagine if there was a prediction market

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where people could predict how long a war might take.

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So when the politician says, we'll go to war, but it'll be done quickly.

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Well, if the prediction market is saying it'll be done in many years to come,

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then that would potentially inform the voters

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about how long the war really would take.

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So Paul refers to this as a multidimensional event derivative,

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meaning that it would look like this.

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You would place a bet described as follows.

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The bet would be if the country goes to war,

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then how long will it take to finish the war and have everyone come home?

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So you could make a bet like that.

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And then the bet would only be active once the country goes to war.

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And then.

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Depending on how long the war takes, you could make money if you correctly bet on how long it would take, who says when the war is over.

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So the big problem in blockchains with respect to oracles is the so-called oracle problem, where the question is, how can the blockchain correctly know what's happening outside in the real world?

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How can the blockchain possibly correctly adjudicate the smart contract?

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The answer is that there will be a set of persons who arbitrate the smart contracts and they will be just like the Bitcoin miners.

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They will be anonymous and or presumed to be anonymous, mutually distrusting and self-interested.

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And yet, despite those.

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Features that set of persons will correctly adjudicate the smart contract.

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Just like how the Bitcoin miners are anonymous, mutually distrusting and self-interested, and yet Bitcoin mining works and Bitcoin works.

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So what Paul has done is he has overcome the oracle problem.

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Through a complex arrangement similar to Bitcoin, and this is going to allow for the ultimate, permissionless and most powerful oracle possible, and it will be on a Bitcoin sidechain.

226
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So again, this is called Hivemind.

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It was formerly known as Truthcoin, which was an unfortunate name because there isn't some speculative token involved.

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And you can read the whitepaper on BitcoinHivemind.com.

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It is a very complex idea, and Paul has said that people will probably fail to understand Hivemind even more than they have failed to understand Drivechain.

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So even if we succeed with getting Drivechain adopted, explaining Hivemind to people will be the next big task.

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So once I succeed at Drivechain, I'll be moving on to talking about Hivemind.

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And this chat will be called Hivemind Talk, and we'll do that for a few years.

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So c'est la vie.

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Now, you might wonder, well, Henry, how does the Hivemind oracle work?

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How can the people do the right thing?

236
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How will it all happen?

237
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How can the people do the right thing?

238
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How will it all happen?

239
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Well, the first point is that it's extremely complicated.

240
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There is very complex software involved.

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My simplistic understanding is that in Hivemind there are two tokens.

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So on this Bitcoin sidechain of the future, which will exist only after Drivechain is adopted, because Paul is not going to launch it as a federated sidechain,

243
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because the question would be, who's going to hold the keys?

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That's always the question with a federated sidechain.

245
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Currently, every sidechain on Bitcoin is federated.

246
00:23:18,937 --> 00:23:24,177
Everyone, Liquid, RSK, they're all federated, meaning people are holding keys.

247
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Now, in the case of Liquid and probably RSK too, no one knows who the key holders are.

248
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So it's a big secret.

249
00:23:30,817 --> 00:23:35,737
But if the government were to subpoena Blockstream, they would have to say who they are.

250
00:23:36,058 --> 00:23:40,657
So the government could just arrest everybody involved in controlling the Bitcoin held at Liquid.

251
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So it's not good to have a federated sidechain.

252
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As I like to say, federations are fiat and we should move beyond federations.

253
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It was a great effort. Very good people at Blockstream, working hard and doing everything they can do.

254
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But the future is with peer to peer, not with federations.

255
00:24:00,177 --> 00:24:08,698
So I would love to see all of the Bitcoin sidechains that are federated now become drivechains once drivechain is adopted.

256
00:24:09,218 --> 00:24:12,537
And so one of the drivechains will be HiveMind.

257
00:24:12,978 --> 00:24:16,097
And then on HiveMind, there are two tokens.

258
00:24:16,937 --> 00:24:21,738
One of them is the synthetic Bitcoin, which Paul calls the cash coin.

259
00:24:22,258 --> 00:24:26,937
So the only way to create a cash coin is to send Bitcoin into the hash rate escrow.

260
00:24:27,138 --> 00:24:28,657
And you come out the other side.

261
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Now you're in the sidechain and you're holding a cash coin.

262
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When you're done, you send it back through the hash rate escrow and then you have regular Bitcoin again.

263
00:24:38,337 --> 00:24:40,978
Now, of course, not everyone will actually use the hash rate escrow.

264
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Professionals will use it because there's a six month delay for the peg out.

265
00:24:45,337 --> 00:24:52,217
So people instead will just do swaps that are instant and they'll have the token that they want.

266
00:24:52,937 --> 00:25:08,057
Instead of going through the hash rate escrow and waiting for months, professional arbitrageurs will capture a tiny amount of profit by moving coins back and forth over the hash rate escrow to equilibriate the demand for the tokens on either side of the peg.

267
00:25:09,097 --> 00:25:10,537
What's the hash rate escrow again?

268
00:25:10,777 --> 00:25:19,258
The hash rate escrow is the miner controlled two way peg that links the value on the sidechain to the value on Bitcoin main chain.

269
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The main chain is Bitcoin blockchain and the sidechain is the other blockchain.

270
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So there's a parent child relationship.

271
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Bitcoin is the parent and the sidechains are the child blockchains.

272
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So you send value from the Bitcoin blockchain to the sidechain through the hash rate escrow and that's how you receive your cash coin in HiveMind or what I generally call synthetic Bitcoin.

273
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So on the HiveMind blockchain, there are two tokens.

274
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One of them is the cash coin.

275
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The other one is called vote coin.

276
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The vote coin is not a speculative token in the sense that people aren't going to like buy it and hold it for a gain.

277
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The reason why you would want to hold the vote coin is if you want to participate in the activity of being an oracle.

278
00:26:25,138 --> 00:26:33,738
So you would hold the vote coin if you're a professional in the prediction market business where you want to be adjudicating smart contracts.

279
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So the cash coins, they'll be held by people who want to predict things and there'll be hedge funds where all they do is make predictions about the future on HiveMind with billions of dollars at stake.

280
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It'll be the largest and most important prediction market the world has ever seen.

281
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How does one gain vote coins?

282
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You can just buy them from someone selling them.

283
00:27:00,418 --> 00:27:01,377
How are they created?

284
00:27:01,458 --> 00:27:03,178
Is there a cap?

285
00:27:04,178 --> 00:27:06,258
I don't know the answer to that.

286
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My knowledge of HiveMind is superficial.

287
00:27:10,178 --> 00:27:11,578
I read through the white paper once.

288
00:27:11,617 --> 00:27:14,738
It has a lot of very complex math and engineering involved.

289
00:27:15,138 --> 00:27:19,018
I have an overall sense of how it works and I've listened to some lectures by Paul about it.

290
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I don't know a lot of details, though, but I do understand, I think, that the cash coin is the money on the sidechain and vote coin is what you would hold if you want to conduct

291
00:27:32,537 --> 00:27:36,617
activities as an adjudicator of the smart contracts.

292
00:27:37,418 --> 00:27:52,657
And the vote coin, I think, or maybe there's cash coin compensation involved, too, but the vote coin would appreciate as the smart contracts are adjudicated correctly.

293
00:27:52,698 --> 00:28:04,537
Because there's this phrase in the white paper called pseudo-corporation, which is there's a pseudo-corporation, meaning that the vote is like the vote coin is like shares of a company.

294
00:28:05,258 --> 00:28:13,138
Not a real company, though, like a completely decentralized one that people who hold the vote coin want it to be more valuable.

295
00:28:13,258 --> 00:28:15,898
So they want to answer the questions correctly.

296
00:28:16,458 --> 00:28:19,657
Otherwise, the whole HiveMind project wouldn't have value.

297
00:28:20,178 --> 00:28:26,858
So they want to make the whole pseudo-corporation more valuable by answering everything right.

298
00:28:27,497 --> 00:28:32,138
They want to make the reputation of their oracle activity extremely positive.

299
00:28:33,898 --> 00:28:39,737
It's kind of similar to how Bitcoin miners have a lot of commitment to Bitcoin.

300
00:28:39,937 --> 00:28:42,297
They want Bitcoin to be as valuable as possible.

301
00:28:42,658 --> 00:28:49,977
So the Bitcoin miners tend not to do anything that would lower the value of Bitcoin.

302
00:28:50,417 --> 00:28:56,898
They want Bitcoin to be valuable because if Bitcoin's value goes up, then the machines that the miners own go up.

303
00:28:57,458 --> 00:29:02,098
And Bitcoin miner revenue on chain is denominated in Bitcoin.

304
00:29:02,138 --> 00:29:05,817
So the Bitcoin miners want their income to be more valuable.

305
00:29:12,297 --> 00:29:20,138
And so I assume either the vote coin or the cash coin will be a one-to-one peg, a two-way peg with Bitcoin, right?

306
00:29:20,258 --> 00:29:21,538
Because there'll be a drivechain.

307
00:29:25,458 --> 00:29:28,538
The vote coin will not be one-to-one pegged with Bitcoin.

308
00:29:28,617 --> 00:29:31,098
It's only the cash coin that has a one-to-one peg.

309
00:29:31,218 --> 00:29:35,658
The vote coin is necessary to the functioning of HiveMind.

310
00:29:36,338 --> 00:29:40,338
So there is a token there, but it's like a utility token.

311
00:29:40,338 --> 00:29:43,857
You would only buy it to like to do something with it.

312
00:29:44,497 --> 00:29:47,778
It's not intended to have a monetary premium of any sort.

313
00:29:50,497 --> 00:29:55,218
And I think you own it if you want to participate in the Oracle activity.

314
00:29:57,138 --> 00:30:03,977
Not as a user, but as a producer, like if you're going to make decisions on the contracts, then you have the vote coin.

315
00:30:04,977 --> 00:30:13,578
Maybe the more vote coin you have, the more you can influence the outcome of the decisions, perhaps.

316
00:30:13,578 --> 00:30:14,417
That's how it works.

317
00:30:15,737 --> 00:30:28,778
I would say that what Paul has done is he has tried to create a system that aligns incentives and allows for an emergent order in the activity of Oracles.

318
00:30:29,778 --> 00:30:33,937
There's a lot of interesting discussion of Oracles on Twitter and elsewhere.

319
00:30:33,937 --> 00:30:40,578
People are interested in having, for example, a U.S. dollar stablecoin, and they want to do it in a way that's totally decentralized.

320
00:30:41,057 --> 00:30:49,737
So, of course, for something to be totally decentralized, you can't have a pile of U.S. dollars in a bank account backing the blockchain token.

321
00:30:49,778 --> 00:30:50,977
That's not decentralized.

322
00:30:51,098 --> 00:30:56,937
What happens if the bank closes and all the backing for the stablecoin is gone?

323
00:30:57,737 --> 00:31:01,617
So what we need is the HiveMind Oracle.

324
00:31:01,977 --> 00:31:12,898
The HiveMind Oracle is, I think, the only truly decentralized, completely peer-to-peer Oracle ever conceived.

325
00:31:14,057 --> 00:31:26,578
I think that projects like Chainlink and others are attempting to bring into being something akin to HiveMind, and they probably studied HiveMind and built their projects on top of it.

326
00:31:26,977 --> 00:31:35,258
I mean, similar to it, but nothing quite like HiveMind exists yet because it would need to be a Bitcoin sidechain.

327
00:31:35,297 --> 00:31:47,098
It would have to have all of the decentralized architecture of Bitcoin, and the goal is to have an Oracle that functions.

328
00:31:47,138 --> 00:31:54,297
So there could be, for example, a HiveMind-style Oracle for the maintenance of a U.S.

329
00:31:54,297 --> 00:31:55,297
dollar stablecoin.

330
00:31:56,297 --> 00:32:02,898
In other words, the creation of a token that would trade one for one with the U.S.

331
00:32:02,898 --> 00:32:08,218
dollar at all times without having any kind of centralized backing.

332
00:32:08,617 --> 00:32:10,658
For example, Tether is not peer-to-peer.

333
00:32:10,977 --> 00:32:24,578
Tether is a company that has created this stablecoin, and it trades one for one with the dollar generally because people believe that the company has enough

334
00:32:24,578 --> 00:32:31,338
dollars to be able to maintain the value of the token.

335
00:32:32,458 --> 00:32:46,057
So if there's $60 billion of Tether circulating, then presumably the company has $60 billion of dollars in a centralized accounts.

336
00:32:46,057 --> 00:32:57,617
But with the HiveMind Oracle, there would be no $60 billion of centralized actual dollars in reserve.

337
00:32:58,018 --> 00:33:09,937
Instead, the activity of the Oracle could maintain the peg, if that makes any sense.

338
00:33:10,218 --> 00:33:23,977
Paul could explain it much better, but basically you could have an Oracle maintain a decentralized stablecoin because basically the Oracle can know what's

339
00:33:23,977 --> 00:33:25,177
going on in the real world.

340
00:33:25,338 --> 00:33:27,177
It can know what is the value of the U.S.

341
00:33:27,177 --> 00:33:30,377
dollar. It can know anything because it's people.

342
00:33:31,417 --> 00:33:39,258
It's people who are incentivized through the design of the protocol to correctly behave, and that's what's called incentive

343
00:33:39,258 --> 00:33:49,937
compatibility. When a protocol or a system has the emergent order where everyone is collaborating despite the fact that there's three things I

344
00:33:49,937 --> 00:33:59,538
mentioned earlier about Bitcoin miners, mutually distrusting, anonymous, and self-interested, and yet there's an emergent collaboration that

345
00:33:59,538 --> 00:34:02,857
occurs, not just in mining, but in Bitcoin in general.

346
00:34:02,857 --> 00:34:19,417
I just asked GPT what are the main solutions, the main layer two solutions to improve the scalability of Bitcoin, and it said one lightning network, two liquid

347
00:34:19,417 --> 00:34:24,937
network, three state chains, four Rootstock, and five drivechain.

348
00:34:31,497 --> 00:34:32,098
That's cool.

349
00:34:32,857 --> 00:34:35,737
There's a great podcast I think everyone should listen to.

350
00:34:35,737 --> 00:34:47,098
It features Adam Back in conversation with Jameson Lopp and Brad Mills and Austin Alexander.

351
00:34:48,138 --> 00:34:51,138
So I'll put up that link here.

352
00:34:58,898 --> 00:34:59,658
It's in the chat.

353
00:35:00,458 --> 00:35:11,538
In that podcast, Dr. Back discusses how federated sidechains were the first step in sidechains and that drivechains are coming next, hopefully.

354
00:35:11,937 --> 00:35:20,297
I think that the data so far shows that if federated sidechains are the only sidechains Bitcoin ever has, then Bitcoin will probably never have

355
00:35:20,297 --> 00:35:24,778
sidechains that accrue extraordinary value.

356
00:35:24,778 --> 00:35:30,018
Because right now the federated sidechains are very small, so what we need is a fundamental change in their design.

357
00:35:30,018 --> 00:35:33,377
All right, any more questions or comments from the audience?

358
00:35:33,377 --> 00:35:35,377
I'm going to go ahead and close out the webinar.

359
00:35:35,377 --> 00:35:37,377
Thank you for joining us and I'll see you next time.

360
00:36:00,018 --> 00:36:02,018
Any more questions or comments from the audience?

361
00:36:02,018 --> 00:36:06,018
Ian, Moon Settler, anyone?

362
00:36:09,018 --> 00:36:13,018
Yeah, it says number three on that list was state chains.

363
00:36:13,018 --> 00:36:15,018
Have you heard of that?

364
00:36:15,018 --> 00:36:19,018
That might be a project associated with Ruben Somsen.

365
00:36:19,018 --> 00:36:26,018
He is a thinker like Paul Sztorc who is interested in the design of sidechains.

366
00:36:26,018 --> 00:36:33,018
Ruben is one of the people who was very helpful in promoting the value of blind merge mining.

367
00:36:33,018 --> 00:36:42,018
Because Ruben designed a few different variations on sidechains called spacechains and softchains and statechains and things like that.

368
00:36:42,018 --> 00:36:45,018
I think he was the creator of those things or some of them.

369
00:36:45,018 --> 00:36:49,018
We have a request to speak from Moon Settler.

370
00:36:50,018 --> 00:36:54,018
Hello, Mr. Moon Settler.

371
00:37:02,018 --> 00:37:09,018
So, yeah, I think statechains is one of those variations on sidechains.

372
00:37:09,018 --> 00:37:13,018
Sometimes people invent sidechains that have a one-way peg.

373
00:37:13,018 --> 00:37:22,018
And one of the benefits of that is that they can be peer-to-peer because there's no need for the drivechain trustless peg out mechanism.

374
00:37:22,018 --> 00:37:29,018
You're going to have a peer-to-peer one-way peg sidechain on Bitcoin that uses blind merge mining.

375
00:37:29,018 --> 00:37:35,018
And that has attracted the interest of some people because it's peer-to-peer and merge mine.

376
00:37:35,018 --> 00:37:45,018
But, unfortunately, there's no two-way peg and, therefore, the cash coin on the sidechain would not be one-to-one with Bitcoin.

377
00:37:45,018 --> 00:37:51,018
It could have a value of zero because there's no peg out mechanism to get back to Bitcoin.

378
00:37:55,018 --> 00:37:59,018
So, I heard... Oh, wait.

379
00:38:05,018 --> 00:38:21,018
These have been some great questions. Thank you to all who've asked questions.

380
00:38:21,018 --> 00:38:27,018
So, I'm sorry, you mentioned statechain, right?

381
00:38:27,018 --> 00:38:28,018
Yes.

382
00:38:28,018 --> 00:38:30,018
Do you guys want to know about it?

383
00:38:30,018 --> 00:38:32,018
Yeah, please share some ideas about that if you'd like.

384
00:38:33,018 --> 00:38:40,018
So, statechains are, indeed, Ruben Samson's idea, I think.

385
00:38:40,018 --> 00:38:43,018
That's how I remember it.

386
00:38:43,018 --> 00:38:59,018
And it's very much different from the other approaches where you have these various ledgers independent or slightly dependent on Bitcoin mainchain.

387
00:39:00,018 --> 00:39:13,018
It's basically a way to trade the UTXOs themselves, the Bitcoin mainchain UTXOs, or rather the private keys you can trade and swap off-chain.

388
00:39:14,018 --> 00:39:40,018
Basically, it's a trusted co-signer type thing that they try to decrease the trust and the human factor on by applying an HSM device that will securely delete the keys that need to be deleted.

389
00:39:40,018 --> 00:39:47,018
So, it's basically a forkless, fork-type key deletion covenant kind of thing.

390
00:39:47,018 --> 00:40:01,018
So, in theory, if the device works as it's supposed to work, then they cannot actually, say, double-spend you or create an alternative history for the...

391
00:40:01,685 --> 00:40:06,525
the statechain token, or statecoin. They call it statecoin.

392
00:40:07,525 --> 00:40:15,525
And so, basically, a single UTXO on Bitcoin mainchain can have many, many owners this way.

393
00:40:16,725 --> 00:40:23,925
And right now, they have relatively short lifespan, I think.

394
00:40:24,165 --> 00:40:33,165
So, every time they change an owner, the lock time gets shortened.

395
00:40:33,165 --> 00:40:41,165
There is a timelock scheme where someone can unilaterally claim the UTXO

396
00:40:41,165 --> 00:40:51,165
if the organizer or the statechain operator stops responding, you know, they get shut down or whatever.

397
00:40:51,405 --> 00:40:56,405
Then there is a timeout and you can then claim the coin unilaterally.

398
00:40:56,405 --> 00:41:06,405
And it keeps getting shorter so that you can cut ahead of any previous owners who also have odd keys, you know.

399
00:41:06,405 --> 00:41:14,405
So, that's kind of how it works and it's very much different from other sidechain...

400
00:41:14,644 --> 00:41:21,644
The GPT says statechains can be integrated with the Lightning Network. Is that true?

401
00:41:21,644 --> 00:41:30,644
Yeah, maybe. So, this is a... I heard talking about this that because you basically trade keys around,

402
00:41:30,644 --> 00:41:37,644
you could actually trade the key belonging to a Lightning Channel endpoint.

403
00:41:37,884 --> 00:41:41,884
So, you have two private keys on two ends of the Lightning Channel.

404
00:41:41,884 --> 00:41:45,884
Alice and Bob both have a private key.

405
00:41:45,884 --> 00:41:53,884
And it's a two-of-two multisig ESCO, basically, with a timeout settlement.

406
00:41:54,125 --> 00:42:09,125
And so, if you applied somehow a statechain, a state token type construct to hold those private keys,

407
00:42:09,125 --> 00:42:17,125
then technically I could basically give you my Lightning balance in a way that I no longer have control over it.

408
00:42:17,364 --> 00:42:24,364
So, I give you the private key ownership for that side of the committed channel.

409
00:42:24,364 --> 00:42:29,364
And you can immediately start using that balance on your end.

410
00:42:29,364 --> 00:42:40,364
So, I'm not saying that this is trivially easy or anyone actually has a working prototype for this or anything.

411
00:42:40,604 --> 00:42:42,604
I think it's just an idea that is floating around,

412
00:42:42,604 --> 00:42:52,604
that maybe we could help more people more easily off-chain resize their channels

413
00:42:52,604 --> 00:43:01,604
and swap their channel balances around without hitting mainchain for a transaction fee ever,

414
00:43:01,604 --> 00:43:03,604
if we try this.

415
00:43:10,604 --> 00:43:12,604
Thank you.

416
00:43:20,604 --> 00:43:22,604
Well said.

417
00:43:28,604 --> 00:43:31,604
Moon Settler, have you had a chance to look into Hivemind,

418
00:43:31,604 --> 00:43:37,604
or is the main drivechain that you're interested in Thunder?

419
00:43:37,845 --> 00:43:42,845
Yeah, I have not looked into Hivemind yet.

420
00:43:42,845 --> 00:43:52,845
I only trolled Paul once with something along the line of what I think about the Bitcoin Hivemind.

421
00:43:52,845 --> 00:43:56,845
You know, that's a Twitter thing and not related to his project at all.

422
00:43:56,845 --> 00:43:58,845
I don't know how he took it.

423
00:43:59,084 --> 00:44:07,084
I think I said that Hivemind is retarded, you know, something like that.

424
00:44:07,084 --> 00:44:11,084
But it was not a comment on his project, actually.

425
00:44:11,084 --> 00:44:13,084
It has nothing to do with the project.

426
00:44:13,084 --> 00:44:16,084
You mean the people are stupid?

427
00:44:16,084 --> 00:44:23,084
Yeah, the lowest common denominator is dominant in Hivemind.

428
00:44:23,325 --> 00:44:27,325
You know, people have this theory that the larger a crowd gets,

429
00:44:27,325 --> 00:44:30,325
the lower this lowest common denominator gets,

430
00:44:30,325 --> 00:44:33,325
the dumber the crowd altogether is,

431
00:44:33,325 --> 00:44:37,325
and the more primitive things will move it.

432
00:44:37,325 --> 00:44:42,325
And Bitcoin, as it gets bigger, it will get dumber.

433
00:44:42,325 --> 00:44:47,325
Yeah, but I'm referring to Hivemind, the sidechain of Bitcoin.

434
00:44:47,325 --> 00:44:50,325
Yeah, that's what I said.

435
00:44:50,565 --> 00:44:54,565
When I said that comment that Hivemind is retarded,

436
00:44:54,565 --> 00:44:57,565
I did not mean to comment on that project.

437
00:44:57,565 --> 00:44:59,565
I did not look into it yet.

438
00:45:05,565 --> 00:45:07,565
You guys know there is this meme,

439
00:45:07,565 --> 00:45:14,565
like people like to call the collective knowledge of Bitcoin Twitter

440
00:45:14,565 --> 00:45:18,565
like about seed oils and stuff like that, Hivemind.

441
00:45:20,325 --> 00:45:36,325
Yeah, I am mostly interested in ways that ownership could be scaled,

442
00:45:36,325 --> 00:45:40,325
like hold your own keys ownership.

443
00:45:40,325 --> 00:45:47,325
But lately I have been working on damage control more like,

444
00:45:47,325 --> 00:45:52,325
so I kind of gave up on a consensus-based solution

445
00:45:52,325 --> 00:45:55,325
for scaling ownership for now.

446
00:45:55,325 --> 00:45:58,325
If it happens, that's great. I love it.

447
00:45:58,325 --> 00:46:01,325
So if people make it happen, good.

448
00:46:01,325 --> 00:46:07,325
But I'm trying to make sure that we have a floor

449
00:46:07,325 --> 00:46:13,325
that things can get any worse than what we have built,

450
00:46:13,325 --> 00:46:16,325
tried and working solutions for,

451
00:46:16,325 --> 00:46:21,325
because hopefully people will opt to use the better tools,

452
00:46:21,325 --> 00:46:26,325
the tools that are more compatible with the Bitcoin ethos.

453
00:46:26,325 --> 00:46:33,325
So we generally, not everyone,

454
00:46:33,325 --> 00:46:38,325
but generally Bitcoiners tend to throne up on fractional reserve banking

455
00:46:38,325 --> 00:46:41,325
and this privacy nonsense,

456
00:46:41,325 --> 00:46:45,325
or this KECM nonsense that we have in the fiat world everywhere.

457
00:46:45,325 --> 00:46:49,325
So we are trying to make something that is not just a paper clone,

458
00:46:49,325 --> 00:46:54,325
that is not basically the SHIVO wallet,

459
00:46:54,325 --> 00:46:56,325
or SHIVO, I don't know how you pronounce it,

460
00:46:56,325 --> 00:46:58,325
but they are going in El Salvador,

461
00:46:58,325 --> 00:47:04,325
and that is basically already we are seeing people

462
00:47:05,325 --> 00:47:11,325
banned from the platform for touching coins

463
00:47:11,325 --> 00:47:16,325
they shouldn't have touched by the judgment of chain analysis

464
00:47:16,325 --> 00:47:19,325
and all kinds of crazy stuff.

465
00:47:19,325 --> 00:47:23,325
So I don't think what SHIVO wallet represents

466
00:47:23,325 --> 00:47:31,325
is anything very worthwhile that Bitcoiners and the cypherpunks

467
00:47:31,325 --> 00:47:33,325
before try to accomplish.

468
00:47:33,325 --> 00:47:37,325
Compared to that, it's basically a nightmare.

469
00:47:37,325 --> 00:47:41,325
What did you mean by the floor that it won't get any worse?

470
00:47:41,325 --> 00:47:43,325
There's a floor where it won't get any worse?

471
00:47:43,325 --> 00:47:49,325
Yeah, so my problem with banking on Bitcoin was always that

472
00:47:49,325 --> 00:47:54,325
I imagined it would be like this SHIVO wallet,

473
00:47:54,325 --> 00:47:56,325
or wallet of Satoshi,

474
00:47:56,325 --> 00:47:58,325
it will end up fully permissioned,

475
00:47:58,325 --> 00:48:03,325
and the privacy nightmare,

476
00:48:03,325 --> 00:48:06,325
literally everyone will know everything you do.

477
00:48:06,325 --> 00:48:09,325
These lightning service providers where you have your account

478
00:48:09,325 --> 00:48:15,325
can deny access to it or report on you,

479
00:48:15,325 --> 00:48:20,325
provide data to every surveillance agency out there,

480
00:48:20,325 --> 00:48:24,325
and they will be able to run a fractional reserve as well

481
00:48:24,325 --> 00:48:27,325
because you have no idea how much Bitcoin they actually have

482
00:48:27,325 --> 00:48:29,325
and how much Bitcoin they dump on the public.

483
00:48:29,325 --> 00:48:32,325
So this is the absolute worst-case scenario,

484
00:48:32,325 --> 00:48:38,325
and we are trying to raise the floor so it can't get that bad, actually.

485
00:48:38,325 --> 00:48:44,325
And one attempt to do this is eCash,

486
00:48:44,325 --> 00:48:48,325
Chaumian eCash, Fedimint, and Cashu

487
00:48:48,325 --> 00:48:52,325
are the two main protocols right now.

488
00:48:52,325 --> 00:48:56,325
So I'm more involved in that lately,

489
00:48:56,325 --> 00:48:59,325
trying to make sure that at least we have privacy,

490
00:48:59,325 --> 00:49:05,325
if everything else fails and we fall to Bitcoin banking.

491
00:49:05,325 --> 00:49:11,325
Let me show you guys something I have posted.

492
00:49:11,325 --> 00:49:15,325
I'm not sure if everyone understands what it was meant to be

493
00:49:15,325 --> 00:49:17,325
or how these plans are rated,

494
00:49:17,325 --> 00:49:23,325
but this is it.

495
00:49:23,325 --> 00:49:29,325
Can you see it?

496
00:49:29,325 --> 00:49:31,325
Yes.

497
00:49:31,325 --> 00:49:35,325
So the original plan by Satoshi was the plan A,

498
00:49:35,325 --> 00:49:37,325
that we just keep adding box space,

499
00:49:37,325 --> 00:49:40,325
and microtransactions will be able to unchain.

500
00:49:40,325 --> 00:49:43,325
That was the original scaling plan.

501
00:49:44,325 --> 00:49:49,325
Some people still believe that we will add more block space.

502
00:49:49,325 --> 00:49:54,325
I myself have given up on that, frankly,

503
00:49:54,325 --> 00:49:59,325
after this whole JPEG thing with NFTs.

504
00:49:59,325 --> 00:50:04,325
And the inscriptions, I think, pretty much killed that idea for you.

505
00:50:04,325 --> 00:50:09,325
And then, of course, early in 2013,

506
00:50:09,325 --> 00:50:17,325
we had this thing that maybe sidechains will solve the problem.

507
00:50:17,325 --> 00:50:21,325
Can you say what did inscriptions stop?

508
00:50:21,325 --> 00:50:24,325
What did inscriptions stop?

509
00:50:24,325 --> 00:50:28,325
I think any hope that we will get the block size increase.

510
00:50:28,325 --> 00:50:30,325
But we don't want a block size increase, right?

511
00:50:30,325 --> 00:50:32,325
Block size increases.

512
00:50:32,325 --> 00:50:34,325
That's besides the point.

513
00:50:34,325 --> 00:50:41,325
So if you want to scale the number of people that can participate in Bitcoin,

514
00:50:41,325 --> 00:50:44,325
these are the options you have.

515
00:50:44,325 --> 00:50:48,325
Every individual has a different preference.

516
00:50:48,325 --> 00:50:50,325
So you are saying you don't want A? Fine.

517
00:50:50,325 --> 00:50:54,325
Some people want A. All right.

518
00:50:54,325 --> 00:50:55,325
I don't think it's realistic,

519
00:50:55,325 --> 00:50:59,325
and I think the current climate shows that even plan B,

520
00:50:59,325 --> 00:51:04,325
which was a later plan, that sidechains will take up the slack.

521
00:51:04,325 --> 00:51:08,325
I think even that has basically turned out to be a bust right now.

522
00:51:08,325 --> 00:51:16,325
And lately, we have been talking about how covenants could be used to scale ownership.

523
00:51:16,325 --> 00:51:18,325
What do you use covenants?

524
00:51:18,325 --> 00:51:24,325
The cooperative protocols would be used to have better trust assumptions

525
00:51:24,325 --> 00:51:27,325
than the perfect trustless sidechain.

526
00:51:28,325 --> 00:51:32,325
Not better than the perfect trustless sidechain or whatever,

527
00:51:32,325 --> 00:51:36,325
but better than any custodial federated solution,

528
00:51:36,325 --> 00:51:39,325
or maybe even better than drivechain.

529
00:51:39,325 --> 00:51:44,325
So these things are contracts enforceable unilaterally on-chain.

530
00:51:44,325 --> 00:51:46,325
That is the C category.

531
00:51:46,325 --> 00:51:48,325
And the D would be drivechains.

532
00:51:48,325 --> 00:51:51,325
That is an economic peg.

533
00:51:51,325 --> 00:51:54,325
I don't want to get into the strengths and weaknesses,

534
00:51:54,325 --> 00:51:57,325
but it's not exactly enforceable on-chain.

535
00:51:57,325 --> 00:52:01,325
So your property rights are not enforceable directly on-chain by you.

536
00:52:01,325 --> 00:52:04,325
And E is basically eCash.

537
00:52:04,325 --> 00:52:07,325
That is a custodial type of thing.

538
00:52:07,325 --> 00:52:10,325
But like I said, we can at least make it private,

539
00:52:10,325 --> 00:52:16,325
and it looks like that we can make it so that a secret fractional reserve cannot be run by the mint.

540
00:52:16,325 --> 00:52:18,325
That is a huge breakthrough,

541
00:52:18,325 --> 00:52:24,325
because all this time that people tried to do this, they failed and failed again,

542
00:52:24,325 --> 00:52:26,325
or couldn't figure it out.

543
00:52:26,325 --> 00:52:29,325
And it kind of looks like we have figured it out,

544
00:52:29,325 --> 00:52:36,325
and not only figured out how to do proof of liabilities for these eCash mints,

545
00:52:36,325 --> 00:52:39,325
but we also figured it out,

546
00:52:39,325 --> 00:52:43,325
and I was actively participating in this,

547
00:52:44,325 --> 00:52:50,325
that how you can prove if the mint is cheating you when eCash in these tokens.

548
00:52:50,325 --> 00:52:52,325
So these tokens are basically IOUs.

549
00:52:52,325 --> 00:52:57,325
They are the equivalent of the paper bills banks handed out to the gold.

550
00:52:57,325 --> 00:52:59,325
The gold is the base money.

551
00:52:59,325 --> 00:53:00,325
Bitcoin is the base money.

552
00:53:00,325 --> 00:53:01,325
On-chain Bitcoin is the base money.

553
00:53:01,325 --> 00:53:05,325
And these tokens are a kind of fiduciary media, as they call it.

554
00:53:05,325 --> 00:53:09,325
So they are IOUs, but they are very fungible and private.

555
00:53:09,325 --> 00:53:14,325
Basically, the issuing mint or bank or whatever doesn't know who you are trading it with

556
00:53:14,325 --> 00:53:16,325
and what you are doing with it.

557
00:53:16,325 --> 00:53:23,325
So they can't exactly deny permission to you personally.

558
00:53:23,325 --> 00:53:24,325
They can rug everyone.

559
00:53:24,325 --> 00:53:28,325
They can run away with the money or try to run away with the money,

560
00:53:28,325 --> 00:53:32,325
but they can't actually deny service to individuals,

561
00:53:32,325 --> 00:53:35,325
same as a bank that issued paper notes.

562
00:53:36,325 --> 00:53:42,325
When you say eCash, is eCash a specific project, or you mean it's a general idea?

563
00:53:42,325 --> 00:53:44,325
It's a general idea.

564
00:53:44,325 --> 00:53:50,325
So there was, I think, eCash by David Chong.

565
00:53:50,325 --> 00:53:54,325
He was maybe trying to do something with that name,

566
00:53:54,325 --> 00:53:57,325
but it was patented for a long time,

567
00:53:57,325 --> 00:54:01,325
and there were many attempts to actually do this with fiat,

568
00:54:01,325 --> 00:54:10,325
and they all failed because basically these mints are not as useful to people out there

569
00:54:12,325 --> 00:54:18,325
if you can only use it to transact with people in the same mint.

570
00:54:18,325 --> 00:54:22,325
So basically, without Lightning,

571
00:54:22,325 --> 00:54:25,325
without the Lightning network interconnecting these mints

572
00:54:25,325 --> 00:54:31,325
and allowing you to pay someone in a different mint, in a different bank, in a different country,

573
00:54:31,325 --> 00:54:34,325
it's not really that useful,

574
00:54:34,325 --> 00:54:40,325
but Bitcoin kind of makes this free banking theory play out pretty well with eCash.

575
00:54:40,325 --> 00:54:46,325
And the early attempts to solve this problem,

576
00:54:46,325 --> 00:54:49,325
that it basically is a money printer protocol, right?

577
00:54:49,325 --> 00:54:52,325
So the mint can issue any number of notes,

578
00:54:52,325 --> 00:54:54,325
doesn't matter how much Bitcoin they have.

579
00:54:55,325 --> 00:54:59,325
People attempted to solve it by organizing regular bank runs.

580
00:54:59,325 --> 00:55:07,325
So you're actually trying to get people to withdraw their money to a new mint,

581
00:55:07,325 --> 00:55:09,325
basically, periodically,

582
00:55:09,325 --> 00:55:14,325
and thus proving that nobody is left holding the bags

583
00:55:14,325 --> 00:55:19,325
and they could actually withdraw to Lightning or whatever,

584
00:55:19,325 --> 00:55:22,325
and the mint is solvent.

585
00:55:22,325 --> 00:55:25,325
It doesn't really actually prove that necessarily,

586
00:55:25,325 --> 00:55:29,325
that the mint is solvent or anything like that,

587
00:55:29,325 --> 00:55:31,325
but that was the idea.

588
00:55:31,325 --> 00:55:34,325
And that's pretty horrible UX, actually,

589
00:55:34,325 --> 00:55:37,325
and I don't think people would have appreciated it,

590
00:55:37,325 --> 00:55:41,325
but we managed to obstruct this in a way that users won't even notice

591
00:55:41,325 --> 00:55:43,325
and it happens in the background automatically.

592
00:55:44,325 --> 00:55:50,325
And so this is the plan A, if you like.

593
00:55:50,325 --> 00:55:53,325
So if everything else fails above it,

594
00:55:53,325 --> 00:55:54,325
if we can't add more block space,

595
00:55:54,325 --> 00:55:57,325
if we can't do trust-minimized sidechains,

596
00:55:57,325 --> 00:56:00,325
if Covenant is not going to happen and DirectChain is not going to happen,

597
00:56:00,325 --> 00:56:05,325
then we still have this possibility to scale without fractional reserve.

598
00:56:06,325 --> 00:56:09,325
And lastly, if this doesn't work for some reason,

599
00:56:09,325 --> 00:56:14,325
then we still have the good old fractional reserve banking to fall back on

600
00:56:14,325 --> 00:56:17,325
that is a pretty well-established technology

601
00:56:17,325 --> 00:56:19,325
and we are sure that it will work.

602
00:56:19,325 --> 00:56:23,325
And people that actually want that will surely find what they are looking for

603
00:56:23,325 --> 00:56:25,325
because that's pretty much guaranteed.

604
00:56:25,325 --> 00:56:27,325
Nothing else is guaranteed on Bitcoin,

605
00:56:27,325 --> 00:56:29,325
but that if you want to give up your keys,

606
00:56:29,325 --> 00:56:31,325
then someone will take them.

607
00:56:31,325 --> 00:56:33,325
What is the difference?

608
00:56:33,325 --> 00:56:37,325
It says B, Bitcoin-denominated trust-minimized sidechains,

609
00:56:37,325 --> 00:56:41,325
and then D is Drivechains, but aren't Drivechains B?

610
00:56:45,325 --> 00:56:47,325
Yeah, one moment.

611
00:56:48,325 --> 00:56:52,325
So with Drivechains, you trust a lot of things.

612
00:56:52,325 --> 00:56:57,325
It's not exactly trustless and not even trust-minimized.

613
00:56:59,325 --> 00:57:06,325
Ideally, a good Bitcoin-denominated trust-minimized sidechain

614
00:57:06,325 --> 00:57:11,325
would allow you to observe your own property rights

615
00:57:11,325 --> 00:57:18,325
and basically there is no group that can actually, you know,

616
00:57:18,325 --> 00:57:20,325
they can't take your money.

617
00:57:20,325 --> 00:57:24,325
Drivechains doesn't fall into that category.

618
00:57:24,325 --> 00:57:30,325
It has weaker assurances, if you like.

619
00:57:31,325 --> 00:57:35,325
It's an entirely different thing, in my opinion.

620
00:57:35,325 --> 00:57:38,325
And I believe even Covenants actually offer

621
00:57:38,325 --> 00:57:45,325
and Cooperative Covenants actually offer stronger private ownership

622
00:57:45,325 --> 00:57:51,325
or self-sovereign ownership guarantees than Drivechains.

623
00:57:51,325 --> 00:57:55,325
What is C, if you could explain?

624
00:57:55,325 --> 00:57:58,325
Covenants sneaked in via Simplicity?

625
00:57:58,325 --> 00:58:01,325
Yeah, that is a reference to Adam Beck

626
00:58:01,325 --> 00:58:06,325
and the pod that you linked, that you sent to me.

627
00:58:06,325 --> 00:58:13,325
Adam Beck mentioned that if people would accept Simplicity

628
00:58:13,325 --> 00:58:17,325
because, you know, it extends Bitcoin and that's good.

629
00:58:17,325 --> 00:58:20,325
More extensibility, great.

630
00:58:20,325 --> 00:58:28,325
And it's pretty well reasonable about, pretty provable.

631
00:58:31,325 --> 00:58:33,325
I don't know how to say it very well,

632
00:58:33,325 --> 00:58:37,325
but it's a relatively simple change in the way that

633
00:58:37,325 --> 00:58:42,325
there are only nine operations that you add, basically.

634
00:58:42,325 --> 00:58:47,325
So it's a scripting language that only has, I think, nine base operations

635
00:58:47,325 --> 00:58:49,325
and everything else is built from them.

636
00:58:49,325 --> 00:58:53,325
It's basically low-level instructions in a virtual machine.

637
00:58:53,325 --> 00:58:56,325
So anyways, a lot of things can be proven

638
00:58:56,325 --> 00:59:00,325
about the scripts that can be written in Simplicity

639
00:59:00,325 --> 00:59:06,325
and they think if they can audit, then they can write covenants in Simplicity.

640
00:59:06,325 --> 00:59:11,325
And basically, if a covenant proposal is not accepted,

641
00:59:11,325 --> 00:59:15,325
then with Simplicity, maybe we can still have covenants on Bitcoin

642
00:59:15,325 --> 00:59:20,325
and they think that is enough because actually Drivechains

643
00:59:20,325 --> 00:59:24,325
in a formal shape could be implemented also in Simplicity

644
00:59:24,325 --> 00:59:27,325
or the primitives that Drivechains use.

645
00:59:28,325 --> 00:59:34,325
And so we would never need to change anything ever again if we had Simplicity.

646
00:59:34,325 --> 00:59:41,325
This is a bit speculative, I believe, this statement,

647
00:59:41,325 --> 00:59:45,325
but I see some potential there that it would be possible.

648
00:59:45,325 --> 00:59:49,325
But to come back to the question about covenants.

649
00:59:49,325 --> 00:59:55,325
So covenants, like I said, in theory could be formed indirectly or with Simplicity

650
00:59:55,325 --> 01:00:00,325
and they would allow you to restrict how coins can be spent.

651
01:00:00,325 --> 01:00:02,325
And this would allow you to...

652
01:00:02,575 --> 01:00:10,175
to create settlement trees that are not committed to on-chain, so you have a bunch of virtual UTXOs.

653
01:00:11,295 --> 01:00:17,535
And these virtual UTXOs never have to hit on-chain so long that the full cooperation in the pool,

654
01:00:17,535 --> 01:00:24,335
the n of n multisig, you know, that basically actually kind of solved the Byzantine general

655
01:00:24,335 --> 01:00:31,695
problem proper in a way. So the generals can only move forward to the next state in perfect unison,

656
01:00:31,695 --> 01:00:37,615
perfect agreement. If they don't have agreement, then this covenant settlement tree will come into

657
01:00:37,615 --> 01:00:44,815
play and basically distribute the funds to every person according to their property rights in this

658
01:00:44,815 --> 01:00:51,775
off-chain ledger. Off-chain ledger becomes on-chain via this covenant mechanism and this is trustless.

659
01:00:51,775 --> 01:01:01,214
So basically anyone can unilaterally exit from these shared pools. So this cooperative

660
01:01:05,214 --> 01:01:14,494
custody, cooperative ownership, shared UTXO ownership schemes are not as trustless,

661
01:01:14,575 --> 01:01:20,735
obviously, as main-chain UTXO that you unilaterally control, not as trustless as

662
01:01:21,615 --> 01:01:29,375
the perfect sidechain version where you can be stolen from and you can basically,

663
01:01:29,375 --> 01:01:36,174
without cooperating with anyone, without any additional burden, you can just

664
01:01:36,174 --> 01:01:40,094
submit your transaction to mempool and miners pick it up and it just happens.

665
01:01:40,735 --> 01:01:45,695
Because you actually trust people to cooperate with you. So you have a lot of peers and you trust

666
01:01:45,695 --> 01:01:51,134
that everyone is cooperating because, not just because they are nice people, but because they

667
01:01:51,134 --> 01:01:56,575
are also screwing themselves and not just you if they don't cooperate. So it's not as trustless,

668
01:01:56,575 --> 01:02:02,895
but at least your property rights are enforceable on-chain and that is an important thing. So up to

669
01:02:02,975 --> 01:02:11,614
C or down to C, if you like, your property rights are enforceable on-chain and in D that is no

670
01:02:11,614 --> 01:02:19,694
longer true and with E it obviously is not true as it is custodial and with F it's, well, no longer

671
01:02:19,694 --> 01:02:26,655
anything is true basically. It's the old system. The only difference, supposedly, is that the

672
01:02:26,655 --> 01:02:33,774
base money supply is limited to 21 million. I just don't know what that means in a fractional

673
01:02:33,774 --> 01:02:38,334
reserve system. I have no idea why people think that that actually matters, right?

674
01:02:43,455 --> 01:02:47,134
And this is all part of BIP-119.

675
01:02:47,935 --> 01:02:58,015
BIP-119 is one possible way to do this, but I would like to add, and then I have to go, sadly.

676
01:02:59,694 --> 01:03:07,535
So this is what I showed you, this plan A, B, C, D, is in a way going from the least amount

677
01:03:07,535 --> 01:03:15,694
of trust to the most amount of trust. A is the absolute least amount of trust and F is the

678
01:03:16,254 --> 01:03:26,175
and F is the absolute most amount of trust and so many different covenant proposals have

679
01:03:26,175 --> 01:03:32,815
different trade-offs currently and some are better at evictions. So if you have 100 people and

680
01:03:33,375 --> 01:03:39,935
one people stops cooperating, then you can very easily evict them because they are eviction

681
01:03:39,935 --> 01:03:46,175
specific covenants, right? So the 99 people can evict them with their amount and then they can

682
01:03:46,175 --> 01:03:53,455
move on with the pool and that is very good. CTV allows for a settlement-free logarithmic eviction.

683
01:03:53,455 --> 01:03:59,935
That means it will keep falling apart to smaller trees in a predetermined manner and

684
01:04:00,494 --> 01:04:05,614
if someone stops cooperating, then if say you have a thousand of thousand multisig,

685
01:04:05,614 --> 01:04:13,455
that means if you have 10 virtual UTXOs on each level, then you have a three level tree.

686
01:04:14,494 --> 01:04:24,414
So 10 on the third exponent is a thousand. So you have a three deep tree

687
01:04:25,295 --> 01:04:31,775
and that means anyone can be evicted with three transactions on the chain and then the tree can

688
01:04:31,775 --> 01:04:41,215
reform with again three transactions. So the worst case is that if someone stops cooperating,

689
01:04:41,215 --> 01:04:50,495
then say with four or five transactions, the pool can reform without him. Something like that in

690
01:04:51,694 --> 01:04:56,895
most cases and these trees can be merged and they can be split with one on-chain transaction

691
01:04:56,895 --> 01:05:07,455
basically. All right, I'm sorry, I have to go. I can't talk anymore, but all right, thank you guys.

692
01:05:13,694 --> 01:05:20,254
It's always great to have Moon Settler here. He knows a lot about Bitcoin, especially

693
01:05:20,814 --> 01:05:27,854
VIP119 and sidechains and merged mining. So it's always great when he's here to talk.

694
01:05:29,615 --> 01:05:31,055
Yeah, I had a lot more questions for him.

695
01:05:33,215 --> 01:05:38,895
My understanding from prior conversations with him as well as someone who's also very smart and

696
01:05:38,895 --> 01:05:46,895
often on Twitter spaces named Jay Berg is that they have a lot of interesting observations about

697
01:05:46,895 --> 01:05:53,215
the pros and cons of merged mining and how it affects miner incentives and different kinds of

698
01:05:56,414 --> 01:05:58,335
you know MEV and related topics.

699
01:06:00,735 --> 01:06:10,175
I have a question about BIPs. Moon Settler's profile said that he's currently signaling for

700
01:06:10,254 --> 01:06:19,374
VIP119 and so that's how a BIP gets adopted or what? How do you signal?

701
01:06:20,895 --> 01:06:29,615
I think that means that he has some miners and when he finds the nonce and creates a block

702
01:06:29,615 --> 01:06:41,134
that he includes a few data points. There are certain switches that the miners can

703
01:06:42,254 --> 01:06:49,055
turn on. If you include a 1 or a 0 in a certain place, just the 1 or a 0 in a certain place,

704
01:06:49,055 --> 01:06:54,254
that indicates something like support for this or that. Miners can kind of flag

705
01:06:55,215 --> 01:07:00,335
what they think about something and that's maybe what he's talking about.

706
01:07:02,254 --> 01:07:10,335
Also, the BIP process in general, I think, was written by Amir Taki and other people,

707
01:07:10,335 --> 01:07:17,694
early Bitcoiners. They wrote this on the code repository that became the GitHub Bitcoin Core

708
01:07:18,575 --> 01:07:28,094
website. If you read BIPs numbers like 1 and 2, they explain how BIPs work and the way you're

709
01:07:28,094 --> 01:07:33,534
supposed to conduct yourself. If you have a way to change Bitcoin that you want to do,

710
01:07:34,094 --> 01:07:39,854
if it's a big change, you write up a Bitcoin improvement proposal, you submit it, it gets

711
01:07:40,814 --> 01:07:47,854
assigned a number, and then the community deliberates on it. If there's the appearance

712
01:07:47,854 --> 01:07:54,814
of consensus in the community, then the core maintainers, who are the people who have the

713
01:07:54,814 --> 01:08:03,455
passwords to go into GitHub and merge new code into Bitcoin Core, which then the community

714
01:08:03,455 --> 01:08:09,374
downloads, that is how it works. There's BIPs that describe the way it's supposed to be.

715
01:08:10,175 --> 01:08:15,295
And they're interesting to read. So go read BIP number 2 to get a general sense of that.

716
01:08:16,175 --> 01:08:20,974
But others would say, especially the cynics and the detractors and those who are dissatisfied

717
01:08:20,974 --> 01:08:26,094
with the process, they would say there's really no script, that the whole thing is kind of amorphous

718
01:08:26,654 --> 01:08:30,335
and that it reached the point of contention in the block size war. And then also,

719
01:08:30,974 --> 01:08:38,575
with more recently, Jeremy Rubin had this BIP 119 where he coded it all up and prepared it and it

720
01:08:38,575 --> 01:08:44,895
was ready to go. But then it never got merged into the code because there was skepticism that

721
01:08:44,895 --> 01:08:49,775
it was a good idea. Like maybe it has problems or it wouldn't be good for Bitcoin. So it didn't

722
01:08:52,015 --> 01:08:57,775
happen. And I think people like Moon Settler liked that idea and then are disappointed it

723
01:08:57,775 --> 01:09:09,374
didn't work out. So it doesn't bode well for Drivechain because BIP 119 was a smaller change.

724
01:09:09,374 --> 01:09:18,174
It was a less aggressive, less ambitious change for Bitcoin than Drivechain. I've heard people

725
01:09:18,174 --> 01:09:23,775
say that to me and it sounds correct. So that's why I'm saying it. I don't know if it's definitely

726
01:09:23,775 --> 01:09:31,294
true. I'm sure some people would say Drivechain is a small change, but there's a lot of code

727
01:09:31,294 --> 01:09:39,134
for Drivechain. It's like lots of code and it introduces these sidechains that could become

728
01:09:39,134 --> 01:09:46,254
very large and influential in different ways. So the fact that BIP 119 didn't make it into Bitcoin

729
01:09:46,254 --> 01:09:55,294
and then Jeremy Rubin quit Bitcoin, it's a note of caution to the Drivechain supporters like me,

730
01:09:55,294 --> 01:10:01,294
like this may be an uphill battle to try to convince everyone to want to do

731
01:10:01,294 --> 01:10:06,174
Drivechain for their own good. It can be hard sometimes to get people to do things.

732
01:10:06,734 --> 01:10:13,614
Can't we focus on the miners? Can we learn Chinese and talk directly to the miners and get them to

733
01:10:13,614 --> 01:10:18,174
signal? There's like a political play in a way.

734
01:10:23,934 --> 01:10:29,054
I think that if the miners all wanted Drivechain, that would be helpful.

735
01:10:29,855 --> 01:10:40,814
But the miners don't want to be perceived as agitating for change in the protocol because of

736
01:10:40,814 --> 01:10:46,335
the history of that, where during the block size war, the miners participated in the Bitcoin protocol

737
01:10:47,934 --> 01:10:54,494
discussion and they were on the side of larger blocks. So they lost. So maybe they're not

738
01:10:54,494 --> 01:11:00,095
interested. Does Riot Blockchain really want to have lots of people saying like,

739
01:11:01,134 --> 01:11:06,015
Riot is attacking Bitcoin. They don't want to hear, they don't want to be controversial.

740
01:11:07,374 --> 01:11:15,294
So that's why they're putting out articles about how Bitcoin mining is clean. But even if they were

741
01:11:15,294 --> 01:11:21,775
to be 100% green, they're not going to have any business model in the future if the fees don't

742
01:11:21,775 --> 01:11:31,054
rise in the long term. So they should be campaigning for Drivechain, not just Riot,

743
01:11:31,054 --> 01:11:34,655
but any miner. But they don't because they don't want to be too political.

744
01:11:35,535 --> 01:11:41,215
The people who really need to be convinced are the Bitcoin developers because everyone kind of

745
01:11:41,215 --> 01:11:47,134
defers to the developers. The developers have the ultimate veto on everything. People like

746
01:11:47,614 --> 01:11:54,655
Greg Maxwell and others, these well-known, famous coders in the Bitcoin community,

747
01:11:55,215 --> 01:12:01,134
most of them currently or historically affiliated with Blockstream, they have a lot of influence

748
01:12:01,134 --> 01:12:08,015
on what the community thinks because nobody's going to say something if the high priests of

749
01:12:08,015 --> 01:12:13,374
development who understand the code deeply, if they're saying, oh, Drivechain isn't safe,

750
01:12:13,374 --> 01:12:21,934
then no one's going to be comfortable supporting it because it's kind of like with the vaccine,

751
01:12:21,934 --> 01:12:28,095
right? The medical community, almost all the doctors were in favor of vaccines,

752
01:12:28,095 --> 01:12:34,895
so it was very difficult for ordinary people who aren't in the medical profession to get their

753
01:12:34,895 --> 01:12:41,054
opinion heard credibly because the doctors have a lot of influence on the discourse of what's

754
01:12:41,054 --> 01:12:51,694
appropriate in medicine. But in the same way, Bitcoin Core developers, and by the way, a Bitcoin

755
01:12:51,694 --> 01:12:58,814
core developer is simply someone who has had their codes accepted by the maintainers. There's hundreds

756
01:12:58,814 --> 01:13:05,455
or maybe even over a thousand different people who've submitted some small change or a large

757
01:13:05,455 --> 01:13:12,655
change to Bitcoin. Only some of those changes actually alter the consensus rules like SegWit

758
01:13:12,655 --> 01:13:18,814
and Taproot. Those were consensus soft fork upgrades for Bitcoin, but other people call

759
01:13:18,814 --> 01:13:24,335
themselves a Bitcoin Core developer because they submitted a spelling correction to the

760
01:13:24,335 --> 01:13:32,575
documentation on Bitcoin. So they can call themselves a core dev, but really the term

761
01:13:32,575 --> 01:13:41,054
refers to a few dozen people whose names have been, like Luke Dashjr. is an example of a core

762
01:13:41,054 --> 01:13:48,575
dev who's had a role in Bitcoin's code for a long time in an important way. And then there are

763
01:13:48,575 --> 01:13:52,814
certain people who are maintainers of the code and how they're selected, I'm not exactly sure,

764
01:13:53,535 --> 01:13:59,535
but they have to be kind of trusted by the people I just mentioned, like those big names that have

765
01:13:59,535 --> 01:14:05,215
been around Bitcoin for a long time. So although Bitcoin is decentralized in various ways, there is

766
01:14:05,215 --> 01:14:11,215
a so-called community of people and even a company at the center of that, that has a lot of influence

767
01:14:11,215 --> 01:14:17,374
on the discourse. And if those people were to speak in unison on a topic, then that would

768
01:14:17,374 --> 01:14:26,174
almost definitely be the consensus within the Bitcoin community. So you're saying that

769
01:14:26,174 --> 01:14:34,734
the miners have de jure say so, but the Bitcoin high priests have de facto power?

770
01:14:35,535 --> 01:14:45,455
Well, the miners per se don't control the consensus. If all the miners, for example,

771
01:14:45,455 --> 01:14:52,895
were to adopt Drivechain, but the nodes among all the users other than miners didn't, I'm not

772
01:14:52,895 --> 01:14:56,655
sure what would happen there. But generally, if the whole community upgrades their nodes

773
01:14:57,215 --> 01:15:03,294
to include Drivechain, then Drivechain is adopted. If only the miners did it, I'm not sure how that

774
01:15:03,294 --> 01:15:09,855
would play out, but it would probably be very contentious and controversial and probably

775
01:15:11,134 --> 01:15:16,655
wouldn't be a way to activate Drivechain. I think that's not the way it would happen. So

776
01:15:17,374 --> 01:15:23,054
there's no plan to do that. There's no plan to do a miner activated software. I've heard of that

777
01:15:23,054 --> 01:15:29,855
phrase on Twitter, but I don't think that's something that's ever been done or can even work.

778
01:15:29,855 --> 01:15:35,054
I think that the way that the BIPs get adopted is they're adopted by the community. Then they're

779
01:15:35,054 --> 01:15:40,415
merged into the code by the maintainers on GitHub. There's like five of them. And they're always

780
01:15:40,415 --> 01:15:46,095
like retiring and going silent because they don't want to get sued by Craig Wright because

781
01:15:46,655 --> 01:15:49,855
there's some people who sue the maintainers because they think the maintainers are the ones

782
01:15:49,855 --> 01:15:56,174
in power. But the maintainers are supposed to perform a merely clerical role, not have ultimate

783
01:15:56,174 --> 01:16:01,535
say. They're supposed to do what the community wants. So they're supposed to be kind of neutral

784
01:16:01,535 --> 01:16:07,694
on what's good or bad for Bitcoin, but they're supposed to be doing the operation of the code

785
01:16:07,694 --> 01:16:14,095
maintenance correctly. So once there appears to be consensus about a BIP, then they merge it in

786
01:16:14,095 --> 01:16:19,134
once the code is ready. So that's the BIP process. And the miners don't really have a

787
01:16:19,134 --> 01:16:26,015
role in that. They can, but they don't. Because the code and the code development and the merging,

788
01:16:26,015 --> 01:16:33,134
that's all sort of happening on GitHub. And the miners are doing something else entirely.

789
01:16:33,134 --> 01:16:40,415
But of course, if the miners are... I mean, the miners are kind of like servants of the protocol.

790
01:16:40,415 --> 01:16:45,374
They're not. And they're users. But ultimately, it's the nodes that have a lot of power.

791
01:16:45,374 --> 01:16:48,895
Because all the users who are sending their Bitcoin around,

792
01:16:49,614 --> 01:16:54,494
they really ultimately own the whole system. That's how it's supposed to work.

793
01:16:55,455 --> 01:17:04,335
Well, we are near the end of our hour and a half. This has been a very pleasant episode of Bitcoin

794
01:17:04,335 --> 01:17:13,534
drivechain talk. I'm your host, Henry of LayerTwo Labs. And we meet every Monday and Thursday at

795
01:17:13,855 --> 01:17:22,654
I'm your host, Henry of LayerTwo Labs. And we meet every Monday and Thursday at 9.30am Pacific.

796
01:17:24,335 --> 01:17:30,095
Please come back, bring your friends and family to talk about drivechain.

797
01:17:30,095 --> 01:17:34,014
We will meet next on Monday. I look forward to it.

798
01:17:37,135 --> 01:17:37,615
Nice.

799
01:17:37,615 --> 01:17:41,694
Thanks for all the questions from the audience. See you next time, everybody.

800
01:17:44,255 --> 01:17:46,495
Take care. Have a great rest of your day.

801
01:17:46,495 --> 01:17:48,495
You too.