Yo.
Hello.
Welcome to the Drivechain Twitter spaces.
Thank you.
I had some questions about Drivechain.
All right.
Tell me, again, why is it that miners need to be able to approve the Drivechains?
Why can't people just make a Drivechain and interact with Bitcoin without any approval?
That's a great question.
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
versus the choices made by the designers to achieve that limitation as a desired feature.
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
or their termination is affected through the hash rate, or is it better that people just freely create any sidechains they want?
In other words, I think it was part of the design.
It was part of the intended design that the miners have a key role in starting as well as in ending the sidechains.
Right.
But won't that create so much red tape and make it so hard to create a Drivechain?
Because how are you going to get the miners on board to approve your Drivechain?
Will it become a political thing?
Those are great questions.
I think that the idea is that the will of the community is expressed through the miners.
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
without discontinuing the other ones.
And that's as best as I understand it.
That's as best as I understand it.
If Paul or others were here, they could give you a more technical answer, which would be great.
I guess today they're busy.
So it's just me.
One thing my dad said, I was explaining Drivechain to my dad and he was like,
well doesn't Cardano already do that?
And I'm like, I have no idea.
There are a lot of designs out there in crypto that probably resemble the structure or the goal of Drivechain.
These other platforms, they don't have communities that want to permanently ossify their chain.
In most cases, they're interested in aggressive development so that they can attract value and attention.
So yeah, there probably is plenty of designs similar to Drivechain.
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.
For example, in Ethereum, all talk of sharding may have been inspired by Drivechain discourse,
since Drivechain predated that and is similar in design.
The idea of having a bunch of different blockchains all interfacing with one base layer.
That's Drivechain and probably was the source of these other conversations from Cardano or Ethereum about sharding and having multiple chains.
Can you explain to me also the difference between BIP300 and BIP301 again?
Sure, so BIP300 is Hashrate Escrows and BIP301 is Blind Merged Mining.
BIP300 is the most important of the two and that's why people sometimes refer to Drivechain as BIP300.
But Drivechain refers to both BIPs.
And the designers, Paul Sztorc and CryptAxe, they would love to see both BIPs adopted together.
They work together well and the Blind Merged Mining is important for certain Drivechains.
So they're harmonious.
But BIP300 is the most important one because it is the trustless two-way peg or Hashrate Escrow, as you could say.
Some people don't like the word trustless, although some thinkers like Adam Back use that word,
or describe the Drivechains as more trustless or more peer-to-peer than federated sidechains.
And Blind Merged Mining, remind me again what that is exactly?
Merged Mining today in Bitcoin has been around for about a decade.
It was invented by Satoshi.
What Paul Sztorc added was the invention of Blind Merged Mining,
which is code that allows the transaction fees from the sidechains to be received by the blockchain.
From the sidechains to be received by all miners, even those that don't run the node of the sidechain.
So Blind Merged Mining includes the word blind because the miner is blind to the state of the sidechain.
The miner is not running the sidechain node necessarily.
With Blind Merged Mining, running the node is optional.
Whereas in Ordinary Merged Mining, running the node is mandatory.
So what Blind Merged Mining does is it relieves the Bitcoin miners of the obligation to run,
it relieves them of the requirement to run the sidechain node.
However, some will choose to run it.
They may choose to run the sidechain node, but they don't have to.
And so what is Merged Mining that Satoshi invented exactly?
Merged Mining is when you have two blockchains that share the same set of miners.
And the proof of work that's being done, the hashing, all that electricity consumption,
the proof of work is made more productive because it's being used by two different blockchains.
So two different sets of users on two different blockchains are using the same set of miners.
And they're both blockchains are paying fees to the same set of miners.
So that's what Merged Mining is all about.
So when Satoshi was talking about Bitcoin, he was talking about Bitcoin mining.
That's what Merged Mining is all about.
So when Satoshi was talking about Bitcoin, someone else suggested DNS on blockchain.
And that was called BitDNS.
And in the August 2010 posts by Satoshi, he countenanced BitDNS.
He acknowledged it and supported it and wrote favorably about it.
So he mentioned that it'll have a separate fate from Bitcoin and the fees will be collected by the Bitcoin miners.
So that's the cool thing about Merged Mining.
If the blockchain that's the second layer, the other blockchain, if it fails, it doesn't harm the first one.
But if it succeeds, then it pays fees to the Bitcoin miners.
Now, BitDNS was an altcoin.
It was a Merged Mined altcoin.
Whereas in Drivechain, there are no Merged Mined altcoins.
Instead, there are Merged Mined sidechains.
And what's really cool about the sidechain is instead of having a speculative altcoin as the native token of the blockchain,
instead, it's a synthetic Bitcoin.
So each drivechain will have a Bitcoin on it.
A token that is redeemable for Bitcoin and has the same value as Bitcoin.
And those tokens are created only insofar as people send actual Bitcoin to the hashrate escrow.
So Drivechain is designed to support the 21 million hardcap, but create unlimited possibilities for Bitcoin.
So that's why Adam Back tweeted that he's an innovation maximalist, but an altcoin seniorage critic,
emphasizing that Drivechain opens the door to unlimited possibilities for Bitcoiners technologically,
while preserving Bitcoin's hardcap and avoiding any seniorage profit.
So nobody's printing money and making a windfall because the sidechains will use synthetic Bitcoin as their native token.
Which is better than with BitDNS.
In the Satoshi era, no one had understood that sidechains could be that great.
No one had understood how to do a trustless two-way peg.
So instead, Satoshi thought that there would be a whole bunch of altcoins out there paying fees to Bitcoin miners.
But the best, most harmonious situation possible is where the value of the other blockchain is flowing to Bitcoin,
not just with the transaction fees, but also with the token itself.
So that's why the sidechains are better than a merged-mined altcoin.
Because there's no new speculative token introduced with the merged-mined sidechain.
Whereas in a merged-mined altcoin, there's a speculative token that's involved.
Kind of like with Stacks. Stacks has this token that's involved, STX.
I should also point out Stacks is not merged-mined.
But I'm just emphasizing that it's good when the native token of a blockchain is a synthetic Bitcoin.
Because then there isn't some token out there competing with Bitcoin for value.
So Satoshi invented merged mining, but it's actually not part of Bitcoin right now.
It is part of Bitcoin because it really can't be stopped.
So there's no way to stop people from doing it.
Merged mining has been going on for 10 years, uninterrupted, I believe.
Satoshi invented it and then people have been doing it since 2010 or something, 2013.
It has been going on for a long time with various different blockchains or merged mining with Bitcoin.
The largest one is Rootstock.
They've been going on for years with merged mining.
And one of the largest pools in Bitcoin, the Brains pool, run by Slush.
They have a great article about merged mining and they explain.
Slush explains why they like merged mining RSK.
And we had on here in Drivechain Talk, one of the co-founders of RSK, Gabriel Kerman.
And I asked him approximately how much Bitcoin is paid every month to Bitcoin miners through merged mining of Rootstock.
And he said about three Bitcoin per month of transaction fees are coming to Bitcoin miners.
So that's why the Brains pool, the Slush pool is merged mining RSK because they can get three extra Bitcoin per month.
About half of Bitcoin's hash rate is merged mining RSK.
So merged mining is a potentially huge part of the future of Bitcoin.
Right now, it is economically small.
Rootstock has a market capitalization of under $100 million.
That's very small compared to Bitcoin's $400 billion valuation.
So in the far future, especially if Drivechain is adopted, merged mining could be very big.
And the fees that are collected from merged mine sidechains might be enormous.
Maybe the majority of Bitcoin miner revenue in the future after Drivechain adoption, maybe 10 years after Drivechain adoption,
the majority of miner revenue could be the fees from these sidechains that are merged mined.
And this is what got me interested in Drivechain at the very beginning of my Drivechain career,
is that Bitcoin has a security budget problem.
The fees are very low on Bitcoin.
Every day, under $1 million of fees are collected, generally, from transactions.
And the only way to fix that is to have more fees come in from merged mining
or to see the fees somehow magically just go up for Bitcoin's block space.
But I don't think that's going to happen.
I have 13 years of evidence where almost always the fees were very low,
with brief periods where they spiked up momentarily.
So I would like them to spike up and stay there forever.
You know, $50 a transaction, $100 a transaction on layer one.
We need to have layered money where there's very high decentralization on layer one.
And then people can opt in to the cheaper layers as they may wish
to use a large block sidechain called Thunder, which has one gigabyte blocks.
And we'll get a lot of fees from that, potentially,
if the whole world is using this large block Bitcoin sidechain.
I have a question.
I just asked GPT about BIP300 and it says,
BIP300 is blind merged mining and BIP301 sidechain validation.
Is that true or is it the opposite?
BIP300 is hashrate escrow. BIP301 is blind merged mining.
Oh, wow. So GPT has them confused.
Understandable. Maybe GPT was confused.
Maybe it's been listening to Shinobi's podcast
or some other source of arguably inaccurate information about drivechain.
Thank you for your questions.
If you have any more, we'd love to hear them.
Everyone's welcome to come on up to the stage.
I see some familiar faces in the audience.
This is Drivechain Talk.
We meet every Monday and Thursday to discuss drivechain,
one of the most important ideas in the history of cryptocurrency.
Drivechain is a proposal to introduce peer-to-peer sidechains for Bitcoin,
enabling Bitcoin to have greater extensibility
and greater capacity to serve as an expansive platform
for all kinds of interesting technologies,
including peer-to-peer oracles,
which is the project known as HiveMind,
something that is very exciting to some people,
including Fiatjaf. He's a fan of HiveMind.
Fiatjaf is the creator of Nostr,
and he has tweeted that drivechain is worth doing just to get HiveMind.
So he's expressing in that tweet that he would love to see HiveMind created.
HiveMind is a prediction market?
Yes. HiveMind is a multidimensional event derivatives market,
as Paul Sztorc describes it.
He's the creator of HiveMind.
He wrote a white paper that is 80 pages long
and has lots of colorful, interesting charts and graphs and complex diagrams.
And it's all available at bitcoinhivemind.com.
And there you can see the white paper.
It was originally named TruthCoin.
And it's just a lot of fun to look through this white paper.
It's so complicated.
But basically what this would allow the world to do,
this Bitcoin sidechain called HiveMind,
will allow the entire world to just open their Bitcoin node
and place a bet on anything, anything in the future.
People can bet on all kinds of things.
And this, some people believe, will improve society immeasurably.
Because right now there is an extreme amount of limitation imposed by technology
as well as bureaucracy on the ability for society
to leverage the potential benefits of predicting things in a capitalistic manner.
So there's this idea from Robin Hanson,
who I think is a Harvard economist or at some other school.
But Paul is a big fan of his.
I think he often retweets his ideas.
And the idea here is called futarchy,
which is when society uses prediction markets to improve political outcomes.
For example, imagine if there was a prediction market
where people could predict how long a war might take.
So when the politician says, we'll go to war, but it'll be done quickly.
Well, if the prediction market is saying it'll be done in many years to come,
then that would potentially inform the voters
about how long the war really would take.
So Paul refers to this as a multidimensional event derivative,
meaning that it would look like this.
You would place a bet described as follows.
The bet would be if the country goes to war,
then how long will it take to finish the war and have everyone come home?
So you could make a bet like that.
And then the bet would only be active once the country goes to war.
And then.
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.
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?
How can the blockchain possibly correctly adjudicate the smart contract?
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.
They will be anonymous and or presumed to be anonymous, mutually distrusting and self-interested.
And yet, despite those.
Features that set of persons will correctly adjudicate the smart contract.
Just like how the Bitcoin miners are anonymous, mutually distrusting and self-interested, and yet Bitcoin mining works and Bitcoin works.
So what Paul has done is he has overcome the oracle problem.
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.
So again, this is called Hivemind.
It was formerly known as Truthcoin, which was an unfortunate name because there isn't some speculative token involved.
And you can read the whitepaper on BitcoinHivemind.com.
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.
So even if we succeed with getting Drivechain adopted, explaining Hivemind to people will be the next big task.
So once I succeed at Drivechain, I'll be moving on to talking about Hivemind.
And this chat will be called Hivemind Talk, and we'll do that for a few years.
So c'est la vie.
Now, you might wonder, well, Henry, how does the Hivemind oracle work?
How can the people do the right thing?
How will it all happen?
How can the people do the right thing?
How will it all happen?
Well, the first point is that it's extremely complicated.
There is very complex software involved.
My simplistic understanding is that in Hivemind there are two tokens.
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,
because the question would be, who's going to hold the keys?
That's always the question with a federated sidechain.
Currently, every sidechain on Bitcoin is federated.
Everyone, Liquid, RSK, they're all federated, meaning people are holding keys.
Now, in the case of Liquid and probably RSK too, no one knows who the key holders are.
So it's a big secret.
But if the government were to subpoena Blockstream, they would have to say who they are.
So the government could just arrest everybody involved in controlling the Bitcoin held at Liquid.
So it's not good to have a federated sidechain.
As I like to say, federations are fiat and we should move beyond federations.
It was a great effort. Very good people at Blockstream, working hard and doing everything they can do.
But the future is with peer to peer, not with federations.
So I would love to see all of the Bitcoin sidechains that are federated now become drivechains once drivechain is adopted.
And so one of the drivechains will be HiveMind.
And then on HiveMind, there are two tokens.
One of them is the synthetic Bitcoin, which Paul calls the cash coin.
So the only way to create a cash coin is to send Bitcoin into the hash rate escrow.
And you come out the other side.
Now you're in the sidechain and you're holding a cash coin.
When you're done, you send it back through the hash rate escrow and then you have regular Bitcoin again.
Now, of course, not everyone will actually use the hash rate escrow.
Professionals will use it because there's a six month delay for the peg out.
So people instead will just do swaps that are instant and they'll have the token that they want.
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.
What's the hash rate escrow again?
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.
The main chain is Bitcoin blockchain and the sidechain is the other blockchain.
So there's a parent child relationship.
Bitcoin is the parent and the sidechains are the child blockchains.
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.
So on the HiveMind blockchain, there are two tokens.
One of them is the cash coin.
The other one is called vote coin.
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.
The reason why you would want to hold the vote coin is if you want to participate in the activity of being an oracle.
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.
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.
It'll be the largest and most important prediction market the world has ever seen.
How does one gain vote coins?
You can just buy them from someone selling them.
How are they created?
Is there a cap?
I don't know the answer to that.
My knowledge of HiveMind is superficial.
I read through the white paper once.
It has a lot of very complex math and engineering involved.
I have an overall sense of how it works and I've listened to some lectures by Paul about it.
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
activities as an adjudicator of the smart contracts.
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.
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.
Not a real company, though, like a completely decentralized one that people who hold the vote coin want it to be more valuable.
So they want to answer the questions correctly.
Otherwise, the whole HiveMind project wouldn't have value.
So they want to make the whole pseudo-corporation more valuable by answering everything right.
They want to make the reputation of their oracle activity extremely positive.
It's kind of similar to how Bitcoin miners have a lot of commitment to Bitcoin.
They want Bitcoin to be as valuable as possible.
So the Bitcoin miners tend not to do anything that would lower the value of Bitcoin.
They want Bitcoin to be valuable because if Bitcoin's value goes up, then the machines that the miners own go up.
And Bitcoin miner revenue on chain is denominated in Bitcoin.
So the Bitcoin miners want their income to be more valuable.
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?
Because there'll be a drivechain.
The vote coin will not be one-to-one pegged with Bitcoin.
It's only the cash coin that has a one-to-one peg.
The vote coin is necessary to the functioning of HiveMind.
So there is a token there, but it's like a utility token.
You would only buy it to like to do something with it.
It's not intended to have a monetary premium of any sort.
And I think you own it if you want to participate in the Oracle activity.
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.
Maybe the more vote coin you have, the more you can influence the outcome of the decisions, perhaps.
That's how it works.
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.
There's a lot of interesting discussion of Oracles on Twitter and elsewhere.
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.
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.
That's not decentralized.
What happens if the bank closes and all the backing for the stablecoin is gone?
So what we need is the HiveMind Oracle.
The HiveMind Oracle is, I think, the only truly decentralized, completely peer-to-peer Oracle ever conceived.
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.
I mean, similar to it, but nothing quite like HiveMind exists yet because it would need to be a Bitcoin sidechain.
It would have to have all of the decentralized architecture of Bitcoin, and the goal is to have an Oracle that functions.
So there could be, for example, a HiveMind-style Oracle for the maintenance of a U.S.
dollar stablecoin.
In other words, the creation of a token that would trade one for one with the U.S.
dollar at all times without having any kind of centralized backing.
For example, Tether is not peer-to-peer.
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
dollars to be able to maintain the value of the token.
So if there's $60 billion of Tether circulating, then presumably the company has $60 billion of dollars in a centralized accounts.
But with the HiveMind Oracle, there would be no $60 billion of centralized actual dollars in reserve.
Instead, the activity of the Oracle could maintain the peg, if that makes any sense.
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
going on in the real world.
It can know what is the value of the U.S.
dollar. It can know anything because it's people.
It's people who are incentivized through the design of the protocol to correctly behave, and that's what's called incentive
compatibility. When a protocol or a system has the emergent order where everyone is collaborating despite the fact that there's three things I
mentioned earlier about Bitcoin miners, mutually distrusting, anonymous, and self-interested, and yet there's an emergent collaboration that
occurs, not just in mining, but in Bitcoin in general.
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
network, three state chains, four Rootstock, and five drivechain.
That's cool.
There's a great podcast I think everyone should listen to.
It features Adam Back in conversation with Jameson Lopp and Brad Mills and Austin Alexander.
So I'll put up that link here.
It's in the chat.
In that podcast, Dr. Back discusses how federated sidechains were the first step in sidechains and that drivechains are coming next, hopefully.
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
sidechains that accrue extraordinary value.
Because right now the federated sidechains are very small, so what we need is a fundamental change in their design.
All right, any more questions or comments from the audience?
I'm going to go ahead and close out the webinar.
Thank you for joining us and I'll see you next time.
Any more questions or comments from the audience?
Ian, Moon Settler, anyone?
Yeah, it says number three on that list was state chains.
Have you heard of that?
That might be a project associated with Ruben Somsen.
He is a thinker like Paul Sztorc who is interested in the design of sidechains.
Ruben is one of the people who was very helpful in promoting the value of blind merge mining.
Because Ruben designed a few different variations on sidechains called spacechains and softchains and statechains and things like that.
I think he was the creator of those things or some of them.
We have a request to speak from Moon Settler.
Hello, Mr. Moon Settler.
So, yeah, I think statechains is one of those variations on sidechains.
Sometimes people invent sidechains that have a one-way peg.
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.
You're going to have a peer-to-peer one-way peg sidechain on Bitcoin that uses blind merge mining.
And that has attracted the interest of some people because it's peer-to-peer and merge mine.
But, unfortunately, there's no two-way peg and, therefore, the cash coin on the sidechain would not be one-to-one with Bitcoin.
It could have a value of zero because there's no peg out mechanism to get back to Bitcoin.
So, I heard... Oh, wait.
These have been some great questions. Thank you to all who've asked questions.
So, I'm sorry, you mentioned statechain, right?
Yes.
Do you guys want to know about it?
Yeah, please share some ideas about that if you'd like.
So, statechains are, indeed, Ruben Samson's idea, I think.
That's how I remember it.
And it's very much different from the other approaches where you have these various ledgers independent or slightly dependent on Bitcoin mainchain.
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.
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.
So, it's basically a forkless, fork-type key deletion covenant kind of thing.
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...
the statechain token, or statecoin. They call it statecoin.
And so, basically, a single UTXO on Bitcoin mainchain can have many, many owners this way.
And right now, they have relatively short lifespan, I think.
So, every time they change an owner, the lock time gets shortened.
There is a timelock scheme where someone can unilaterally claim the UTXO
if the organizer or the statechain operator stops responding, you know, they get shut down or whatever.
Then there is a timeout and you can then claim the coin unilaterally.
And it keeps getting shorter so that you can cut ahead of any previous owners who also have odd keys, you know.
So, that's kind of how it works and it's very much different from other sidechain...
The GPT says statechains can be integrated with the Lightning Network. Is that true?
Yeah, maybe. So, this is a... I heard talking about this that because you basically trade keys around,
you could actually trade the key belonging to a Lightning Channel endpoint.
So, you have two private keys on two ends of the Lightning Channel.
Alice and Bob both have a private key.
And it's a two-of-two multisig ESCO, basically, with a timeout settlement.
And so, if you applied somehow a statechain, a state token type construct to hold those private keys,
then technically I could basically give you my Lightning balance in a way that I no longer have control over it.
So, I give you the private key ownership for that side of the committed channel.
And you can immediately start using that balance on your end.
So, I'm not saying that this is trivially easy or anyone actually has a working prototype for this or anything.
I think it's just an idea that is floating around,
that maybe we could help more people more easily off-chain resize their channels
and swap their channel balances around without hitting mainchain for a transaction fee ever,
if we try this.
Thank you.
Well said.
Moon Settler, have you had a chance to look into Hivemind,
or is the main drivechain that you're interested in Thunder?
Yeah, I have not looked into Hivemind yet.
I only trolled Paul once with something along the line of what I think about the Bitcoin Hivemind.
You know, that's a Twitter thing and not related to his project at all.
I don't know how he took it.
I think I said that Hivemind is retarded, you know, something like that.
But it was not a comment on his project, actually.
It has nothing to do with the project.
You mean the people are stupid?
Yeah, the lowest common denominator is dominant in Hivemind.
You know, people have this theory that the larger a crowd gets,
the lower this lowest common denominator gets,
the dumber the crowd altogether is,
and the more primitive things will move it.
And Bitcoin, as it gets bigger, it will get dumber.
Yeah, but I'm referring to Hivemind, the sidechain of Bitcoin.
Yeah, that's what I said.
When I said that comment that Hivemind is retarded,
I did not mean to comment on that project.
I did not look into it yet.
You guys know there is this meme,
like people like to call the collective knowledge of Bitcoin Twitter
like about seed oils and stuff like that, Hivemind.
Yeah, I am mostly interested in ways that ownership could be scaled,
like hold your own keys ownership.
But lately I have been working on damage control more like,
so I kind of gave up on a consensus-based solution
for scaling ownership for now.
If it happens, that's great. I love it.
So if people make it happen, good.
But I'm trying to make sure that we have a floor
that things can get any worse than what we have built,
tried and working solutions for,
because hopefully people will opt to use the better tools,
the tools that are more compatible with the Bitcoin ethos.
So we generally, not everyone,
but generally Bitcoiners tend to throne up on fractional reserve banking
and this privacy nonsense,
or this KECM nonsense that we have in the fiat world everywhere.
So we are trying to make something that is not just a paper clone,
that is not basically the SHIVO wallet,
or SHIVO, I don't know how you pronounce it,
but they are going in El Salvador,
and that is basically already we are seeing people
banned from the platform for touching coins
they shouldn't have touched by the judgment of chain analysis
and all kinds of crazy stuff.
So I don't think what SHIVO wallet represents
is anything very worthwhile that Bitcoiners and the cypherpunks
before try to accomplish.
Compared to that, it's basically a nightmare.
What did you mean by the floor that it won't get any worse?
There's a floor where it won't get any worse?
Yeah, so my problem with banking on Bitcoin was always that
I imagined it would be like this SHIVO wallet,
or wallet of Satoshi,
it will end up fully permissioned,
and the privacy nightmare,
literally everyone will know everything you do.
These lightning service providers where you have your account
can deny access to it or report on you,
provide data to every surveillance agency out there,
and they will be able to run a fractional reserve as well
because you have no idea how much Bitcoin they actually have
and how much Bitcoin they dump on the public.
So this is the absolute worst-case scenario,
and we are trying to raise the floor so it can't get that bad, actually.
And one attempt to do this is eCash,
Chaumian eCash, Fedimint, and Cashu
are the two main protocols right now.
So I'm more involved in that lately,
trying to make sure that at least we have privacy,
if everything else fails and we fall to Bitcoin banking.
Let me show you guys something I have posted.
I'm not sure if everyone understands what it was meant to be
or how these plans are rated,
but this is it.
Can you see it?
Yes.
So the original plan by Satoshi was the plan A,
that we just keep adding box space,
and microtransactions will be able to unchain.
That was the original scaling plan.
Some people still believe that we will add more block space.
I myself have given up on that, frankly,
after this whole JPEG thing with NFTs.
And the inscriptions, I think, pretty much killed that idea for you.
And then, of course, early in 2013,
we had this thing that maybe sidechains will solve the problem.
Can you say what did inscriptions stop?
What did inscriptions stop?
I think any hope that we will get the block size increase.
But we don't want a block size increase, right?
Block size increases.
That's besides the point.
So if you want to scale the number of people that can participate in Bitcoin,
these are the options you have.
Every individual has a different preference.
So you are saying you don't want A? Fine.
Some people want A. All right.
I don't think it's realistic,
and I think the current climate shows that even plan B,
which was a later plan, that sidechains will take up the slack.
I think even that has basically turned out to be a bust right now.
And lately, we have been talking about how covenants could be used to scale ownership.
What do you use covenants?
The cooperative protocols would be used to have better trust assumptions
than the perfect trustless sidechain.
Not better than the perfect trustless sidechain or whatever,
but better than any custodial federated solution,
or maybe even better than drivechain.
So these things are contracts enforceable unilaterally on-chain.
That is the C category.
And the D would be drivechains.
That is an economic peg.
I don't want to get into the strengths and weaknesses,
but it's not exactly enforceable on-chain.
So your property rights are not enforceable directly on-chain by you.
And E is basically eCash.
That is a custodial type of thing.
But like I said, we can at least make it private,
and it looks like that we can make it so that a secret fractional reserve cannot be run by the mint.
That is a huge breakthrough,
because all this time that people tried to do this, they failed and failed again,
or couldn't figure it out.
And it kind of looks like we have figured it out,
and not only figured out how to do proof of liabilities for these eCash mints,
but we also figured it out,
and I was actively participating in this,
that how you can prove if the mint is cheating you when eCash in these tokens.
So these tokens are basically IOUs.
They are the equivalent of the paper bills banks handed out to the gold.
The gold is the base money.
Bitcoin is the base money.
On-chain Bitcoin is the base money.
And these tokens are a kind of fiduciary media, as they call it.
So they are IOUs, but they are very fungible and private.
Basically, the issuing mint or bank or whatever doesn't know who you are trading it with
and what you are doing with it.
So they can't exactly deny permission to you personally.
They can rug everyone.
They can run away with the money or try to run away with the money,
but they can't actually deny service to individuals,
same as a bank that issued paper notes.
When you say eCash, is eCash a specific project, or you mean it's a general idea?
It's a general idea.
So there was, I think, eCash by David Chong.
He was maybe trying to do something with that name,
but it was patented for a long time,
and there were many attempts to actually do this with fiat,
and they all failed because basically these mints are not as useful to people out there
if you can only use it to transact with people in the same mint.
So basically, without Lightning,
without the Lightning network interconnecting these mints
and allowing you to pay someone in a different mint, in a different bank, in a different country,
it's not really that useful,
but Bitcoin kind of makes this free banking theory play out pretty well with eCash.
And the early attempts to solve this problem,
that it basically is a money printer protocol, right?
So the mint can issue any number of notes,
doesn't matter how much Bitcoin they have.
People attempted to solve it by organizing regular bank runs.
So you're actually trying to get people to withdraw their money to a new mint,
basically, periodically,
and thus proving that nobody is left holding the bags
and they could actually withdraw to Lightning or whatever,
and the mint is solvent.
It doesn't really actually prove that necessarily,
that the mint is solvent or anything like that,
but that was the idea.
And that's pretty horrible UX, actually,
and I don't think people would have appreciated it,
but we managed to obstruct this in a way that users won't even notice
and it happens in the background automatically.
And so this is the plan A, if you like.
So if everything else fails above it,
if we can't add more block space,
if we can't do trust-minimized sidechains,
if Covenant is not going to happen and DirectChain is not going to happen,
then we still have this possibility to scale without fractional reserve.
And lastly, if this doesn't work for some reason,
then we still have the good old fractional reserve banking to fall back on
that is a pretty well-established technology
and we are sure that it will work.
And people that actually want that will surely find what they are looking for
because that's pretty much guaranteed.
Nothing else is guaranteed on Bitcoin,
but that if you want to give up your keys,
then someone will take them.
What is the difference?
It says B, Bitcoin-denominated trust-minimized sidechains,
and then D is Drivechains, but aren't Drivechains B?
Yeah, one moment.
So with Drivechains, you trust a lot of things.
It's not exactly trustless and not even trust-minimized.
Ideally, a good Bitcoin-denominated trust-minimized sidechain
would allow you to observe your own property rights
and basically there is no group that can actually, you know,
they can't take your money.
Drivechains doesn't fall into that category.
It has weaker assurances, if you like.
It's an entirely different thing, in my opinion.
And I believe even Covenants actually offer
and Cooperative Covenants actually offer stronger private ownership
or self-sovereign ownership guarantees than Drivechains.
What is C, if you could explain?
Covenants sneaked in via Simplicity?
Yeah, that is a reference to Adam Beck
and the pod that you linked, that you sent to me.
Adam Beck mentioned that if people would accept Simplicity
because, you know, it extends Bitcoin and that's good.
More extensibility, great.
And it's pretty well reasonable about, pretty provable.
I don't know how to say it very well,
but it's a relatively simple change in the way that
there are only nine operations that you add, basically.
So it's a scripting language that only has, I think, nine base operations
and everything else is built from them.
It's basically low-level instructions in a virtual machine.
So anyways, a lot of things can be proven
about the scripts that can be written in Simplicity
and they think if they can audit, then they can write covenants in Simplicity.
And basically, if a covenant proposal is not accepted,
then with Simplicity, maybe we can still have covenants on Bitcoin
and they think that is enough because actually Drivechains
in a formal shape could be implemented also in Simplicity
or the primitives that Drivechains use.
And so we would never need to change anything ever again if we had Simplicity.
This is a bit speculative, I believe, this statement,
but I see some potential there that it would be possible.
But to come back to the question about covenants.
So covenants, like I said, in theory could be formed indirectly or with Simplicity
and they would allow you to restrict how coins can be spent.
And this would allow you to...
to create settlement trees that are not committed to on-chain, so you have a bunch of virtual UTXOs.
And these virtual UTXOs never have to hit on-chain so long that the full cooperation in the pool,
the n of n multisig, you know, that basically actually kind of solved the Byzantine general
problem proper in a way. So the generals can only move forward to the next state in perfect unison,
perfect agreement. If they don't have agreement, then this covenant settlement tree will come into
play and basically distribute the funds to every person according to their property rights in this
off-chain ledger. Off-chain ledger becomes on-chain via this covenant mechanism and this is trustless.
So basically anyone can unilaterally exit from these shared pools. So this cooperative
custody, cooperative ownership, shared UTXO ownership schemes are not as trustless,
obviously, as main-chain UTXO that you unilaterally control, not as trustless as
the perfect sidechain version where you can be stolen from and you can basically,
without cooperating with anyone, without any additional burden, you can just
submit your transaction to mempool and miners pick it up and it just happens.
Because you actually trust people to cooperate with you. So you have a lot of peers and you trust
that everyone is cooperating because, not just because they are nice people, but because they
are also screwing themselves and not just you if they don't cooperate. So it's not as trustless,
but at least your property rights are enforceable on-chain and that is an important thing. So up to
C or down to C, if you like, your property rights are enforceable on-chain and in D that is no
longer true and with E it obviously is not true as it is custodial and with F it's, well, no longer
anything is true basically. It's the old system. The only difference, supposedly, is that the
base money supply is limited to 21 million. I just don't know what that means in a fractional
reserve system. I have no idea why people think that that actually matters, right?
And this is all part of BIP-119.
BIP-119 is one possible way to do this, but I would like to add, and then I have to go, sadly.
So this is what I showed you, this plan A, B, C, D, is in a way going from the least amount
of trust to the most amount of trust. A is the absolute least amount of trust and F is the
and F is the absolute most amount of trust and so many different covenant proposals have
different trade-offs currently and some are better at evictions. So if you have 100 people and
one people stops cooperating, then you can very easily evict them because they are eviction
specific covenants, right? So the 99 people can evict them with their amount and then they can
move on with the pool and that is very good. CTV allows for a settlement-free logarithmic eviction.
That means it will keep falling apart to smaller trees in a predetermined manner and
if someone stops cooperating, then if say you have a thousand of thousand multisig,
that means if you have 10 virtual UTXOs on each level, then you have a three level tree.
So 10 on the third exponent is a thousand. So you have a three deep tree
and that means anyone can be evicted with three transactions on the chain and then the tree can
reform with again three transactions. So the worst case is that if someone stops cooperating,
then say with four or five transactions, the pool can reform without him. Something like that in
most cases and these trees can be merged and they can be split with one on-chain transaction
basically. All right, I'm sorry, I have to go. I can't talk anymore, but all right, thank you guys.
It's always great to have Moon Settler here. He knows a lot about Bitcoin, especially
VIP119 and sidechains and merged mining. So it's always great when he's here to talk.
Yeah, I had a lot more questions for him.
My understanding from prior conversations with him as well as someone who's also very smart and
often on Twitter spaces named Jay Berg is that they have a lot of interesting observations about
the pros and cons of merged mining and how it affects miner incentives and different kinds of
you know MEV and related topics.
I have a question about BIPs. Moon Settler's profile said that he's currently signaling for
VIP119 and so that's how a BIP gets adopted or what? How do you signal?
I think that means that he has some miners and when he finds the nonce and creates a block
that he includes a few data points. There are certain switches that the miners can
turn on. If you include a 1 or a 0 in a certain place, just the 1 or a 0 in a certain place,
that indicates something like support for this or that. Miners can kind of flag
what they think about something and that's maybe what he's talking about.
Also, the BIP process in general, I think, was written by Amir Taki and other people,
early Bitcoiners. They wrote this on the code repository that became the GitHub Bitcoin Core
website. If you read BIPs numbers like 1 and 2, they explain how BIPs work and the way you're
supposed to conduct yourself. If you have a way to change Bitcoin that you want to do,
if it's a big change, you write up a Bitcoin improvement proposal, you submit it, it gets
assigned a number, and then the community deliberates on it. If there's the appearance
of consensus in the community, then the core maintainers, who are the people who have the
passwords to go into GitHub and merge new code into Bitcoin Core, which then the community
downloads, that is how it works. There's BIPs that describe the way it's supposed to be.
And they're interesting to read. So go read BIP number 2 to get a general sense of that.
But others would say, especially the cynics and the detractors and those who are dissatisfied
with the process, they would say there's really no script, that the whole thing is kind of amorphous
and that it reached the point of contention in the block size war. And then also,
with more recently, Jeremy Rubin had this BIP 119 where he coded it all up and prepared it and it
was ready to go. But then it never got merged into the code because there was skepticism that
it was a good idea. Like maybe it has problems or it wouldn't be good for Bitcoin. So it didn't
happen. And I think people like Moon Settler liked that idea and then are disappointed it
didn't work out. So it doesn't bode well for Drivechain because BIP 119 was a smaller change.
It was a less aggressive, less ambitious change for Bitcoin than Drivechain. I've heard people
say that to me and it sounds correct. So that's why I'm saying it. I don't know if it's definitely
true. I'm sure some people would say Drivechain is a small change, but there's a lot of code
for Drivechain. It's like lots of code and it introduces these sidechains that could become
very large and influential in different ways. So the fact that BIP 119 didn't make it into Bitcoin
and then Jeremy Rubin quit Bitcoin, it's a note of caution to the Drivechain supporters like me,
like this may be an uphill battle to try to convince everyone to want to do
Drivechain for their own good. It can be hard sometimes to get people to do things.
Can't we focus on the miners? Can we learn Chinese and talk directly to the miners and get them to
signal? There's like a political play in a way.
I think that if the miners all wanted Drivechain, that would be helpful.
But the miners don't want to be perceived as agitating for change in the protocol because of
the history of that, where during the block size war, the miners participated in the Bitcoin protocol
discussion and they were on the side of larger blocks. So they lost. So maybe they're not
interested. Does Riot Blockchain really want to have lots of people saying like,
Riot is attacking Bitcoin. They don't want to hear, they don't want to be controversial.
So that's why they're putting out articles about how Bitcoin mining is clean. But even if they were
to be 100% green, they're not going to have any business model in the future if the fees don't
rise in the long term. So they should be campaigning for Drivechain, not just Riot,
but any miner. But they don't because they don't want to be too political.
The people who really need to be convinced are the Bitcoin developers because everyone kind of
defers to the developers. The developers have the ultimate veto on everything. People like
Greg Maxwell and others, these well-known, famous coders in the Bitcoin community,
most of them currently or historically affiliated with Blockstream, they have a lot of influence
on what the community thinks because nobody's going to say something if the high priests of
development who understand the code deeply, if they're saying, oh, Drivechain isn't safe,
then no one's going to be comfortable supporting it because it's kind of like with the vaccine,
right? The medical community, almost all the doctors were in favor of vaccines,
so it was very difficult for ordinary people who aren't in the medical profession to get their
opinion heard credibly because the doctors have a lot of influence on the discourse of what's
appropriate in medicine. But in the same way, Bitcoin Core developers, and by the way, a Bitcoin
core developer is simply someone who has had their codes accepted by the maintainers. There's hundreds
or maybe even over a thousand different people who've submitted some small change or a large
change to Bitcoin. Only some of those changes actually alter the consensus rules like SegWit
and Taproot. Those were consensus soft fork upgrades for Bitcoin, but other people call
themselves a Bitcoin Core developer because they submitted a spelling correction to the
documentation on Bitcoin. So they can call themselves a core dev, but really the term
refers to a few dozen people whose names have been, like Luke Dashjr. is an example of a core
dev who's had a role in Bitcoin's code for a long time in an important way. And then there are
certain people who are maintainers of the code and how they're selected, I'm not exactly sure,
but they have to be kind of trusted by the people I just mentioned, like those big names that have
been around Bitcoin for a long time. So although Bitcoin is decentralized in various ways, there is
a so-called community of people and even a company at the center of that, that has a lot of influence
on the discourse. And if those people were to speak in unison on a topic, then that would
almost definitely be the consensus within the Bitcoin community. So you're saying that
the miners have de jure say so, but the Bitcoin high priests have de facto power?
Well, the miners per se don't control the consensus. If all the miners, for example,
were to adopt Drivechain, but the nodes among all the users other than miners didn't, I'm not
sure what would happen there. But generally, if the whole community upgrades their nodes
to include Drivechain, then Drivechain is adopted. If only the miners did it, I'm not sure how that
would play out, but it would probably be very contentious and controversial and probably
wouldn't be a way to activate Drivechain. I think that's not the way it would happen. So
there's no plan to do that. There's no plan to do a miner activated software. I've heard of that
phrase on Twitter, but I don't think that's something that's ever been done or can even work.
I think that the way that the BIPs get adopted is they're adopted by the community. Then they're
merged into the code by the maintainers on GitHub. There's like five of them. And they're always
like retiring and going silent because they don't want to get sued by Craig Wright because
there's some people who sue the maintainers because they think the maintainers are the ones
in power. But the maintainers are supposed to perform a merely clerical role, not have ultimate
say. They're supposed to do what the community wants. So they're supposed to be kind of neutral
on what's good or bad for Bitcoin, but they're supposed to be doing the operation of the code
maintenance correctly. So once there appears to be consensus about a BIP, then they merge it in
once the code is ready. So that's the BIP process. And the miners don't really have a
role in that. They can, but they don't. Because the code and the code development and the merging,
that's all sort of happening on GitHub. And the miners are doing something else entirely.
But of course, if the miners are... I mean, the miners are kind of like servants of the protocol.
They're not. And they're users. But ultimately, it's the nodes that have a lot of power.
Because all the users who are sending their Bitcoin around,
they really ultimately own the whole system. That's how it's supposed to work.
Well, we are near the end of our hour and a half. This has been a very pleasant episode of Bitcoin
drivechain talk. I'm your host, Henry of LayerTwo Labs. And we meet every Monday and Thursday at
I'm your host, Henry of LayerTwo Labs. And we meet every Monday and Thursday at 9.30am Pacific.
Please come back, bring your friends and family to talk about drivechain.
We will meet next on Monday. I look forward to it.
Nice.
Thanks for all the questions from the audience. See you next time, everybody.
Take care. Have a great rest of your day.
You too.