1
00:00:00,000 --> 00:00:09,000
What up, freaks? It's your boy Marty Ben here to introduce this week's episode.

2
00:00:09,000 --> 00:00:15,000
I had the immense pleasure of sitting down with somebody whose blog posts I've been
reading for quite some time,

3
00:00:15,000 --> 00:00:17,000
somebody I've been conversing with on Twitter for quite some time,

4
00:00:17,000 --> 00:00:22,000
somebody who is a unique thinker in the Bitcoin space. He definitely ruffles some
feathers from time to time.

5
00:00:22,000 --> 00:00:29,000
He's ruffled my feathers before, including last week which was the impetus for me
reaching out and hopping on the mic with him.

6
00:00:30,000 --> 00:00:36,000
This week's episode of Tales from the Crypt, I sit down with Paul Sztorc, the
creator of Truthcoin.info,

7
00:00:36,000 --> 00:00:43,000
which is a wealth of knowledge, a bunch of hours-long blog posts that I highly
recommend you read.

8
00:00:43,000 --> 00:00:48,000
They've been around for a while. Paul and I dive into some of them in this
conversation.

9
00:00:48,000 --> 00:00:55,000
We talk about the fee market, the concept of Drivechains, which is his idea for
applying merged mining sidechain

10
00:00:55,000 --> 00:00:58,000
that he believes would help a fee market develop.

11
00:00:58,000 --> 00:01:02,000
That's a controversial topic because of the way miners could steal the coins,

12
00:01:02,000 --> 00:01:10,000
but we talk about all the scenarios and the disincentives for miners to do such a
thing and the ways in which that could be prevented.

13
00:01:10,000 --> 00:01:16,000
On top of that, we talk about his HiveMine project, which is the reason for the idea
behind drivechains.

14
00:01:16,000 --> 00:01:19,000
He started with HiveMine and worked backwards from there.

15
00:01:20,000 --> 00:01:28,000
We didn't go at it. We had a conversation for two and a half hours, most of which
Paul was speaking,

16
00:01:28,000 --> 00:01:34,000
which is fine by me because, again, this is somebody I've been following for quite
some time

17
00:01:34,000 --> 00:01:42,000
and am very fascinated by his ideas, particularly around the cost of proof-of-stake
versus proof-of-work

18
00:01:42,000 --> 00:01:50,000
and why proof-of-stake is probably not that advantageous in the long run or less
costly than proof-of-work.

19
00:01:50,000 --> 00:01:54,000
I hope you guys enjoy this episode. A lot of topics covered.

20
00:01:54,000 --> 00:01:57,000
This episode of Tales from the Crypt is brought to you by the Cash App.

21
00:01:57,000 --> 00:02:00,000
You freaks already know all about them, and if you don't, let me tell you about
them.

22
00:02:00,000 --> 00:02:04,000
They're letting you do a bunch of things. You sign up. You can get their boost card.

23
00:02:04,000 --> 00:02:08,000
You get their boost card. You put your signature on there, a little Bitcoin sign on
there.

24
00:02:08,000 --> 00:02:11,000
You get the boost card delivered to you, and then you have it.

25
00:02:11,000 --> 00:02:14,000
You have money on your account, and then you can activate their boost.

26
00:02:14,000 --> 00:02:20,000
I just saved $5 at the grocery store the other day activating my $5 grocery store
boost.

27
00:02:20,000 --> 00:02:26,000
On top of that, they have partners like Chick-fil-A, DoorDash, Nike from time to
time,

28
00:02:26,000 --> 00:02:35,000
Whole Foods from time to time, a bunch of partner merchants that you can save money
at when you're shopping at them with your cash card.

29
00:02:35,000 --> 00:02:41,000
On top of that, they're letting you stack sats. You can stack sats, sell sats,
receive sats, send sats.

30
00:02:41,000 --> 00:02:45,000
I sent some sats to Wasabi to mix the other day.

31
00:02:45,000 --> 00:02:50,000
You can send it off in Wasabi if you want to.

32
00:02:50,000 --> 00:02:54,000
On top of that, they have Cash App Investing, which is new.

33
00:02:54,000 --> 00:03:01,000
We know you like to stack sats. If you want to stack stonks, Cash App Investing is
letting you do that.

34
00:03:01,000 --> 00:03:06,000
If your favorite stonk is a little too expensive, you can stack as little as $1.

35
00:03:06,000 --> 00:03:09,000
You can stack a sliver of a stonk.

36
00:03:09,000 --> 00:03:13,000
On top of that, there's no 4-5 day waiting periods to start investing.

37
00:03:13,000 --> 00:03:17,000
Since Cash App is connected directly to your bank account, you can start investing
today.

38
00:03:17,000 --> 00:03:23,000
Cash App Investing is a subsidiary of Square and member SIPC.

39
00:03:23,000 --> 00:03:27,000
Use the code stackingsats when you download the Cash App if you haven't already.

40
00:03:27,000 --> 00:03:31,000
That's one word, S-T-A-C-K-I-N-G-S-A-T-S.

41
00:03:31,000 --> 00:03:38,000
You're going to get $10 and Cash App is going to be so kind to send $10 to our great
friends at Owl's Lacrosse.

42
00:03:38,000 --> 00:03:41,000
Oooooooooooooooh!

43
00:03:41,000 --> 00:03:43,000
Oooooooooooooooh!

44
00:03:43,000 --> 00:03:45,000
Owl's Lacrosse!

45
00:03:45,000 --> 00:03:47,000
Don't listen to that dirtbag, Owl.

46
00:03:47,000 --> 00:03:50,000
He's a scummy dude. Enjoy this episode. Take care!

47
00:03:58,000 --> 00:04:02,000
You've had a dynamic where money's become freer than free.

48
00:04:02,000 --> 00:04:04,000
You talk about a Fed just gone nuts.

49
00:04:04,000 --> 00:04:07,000
All the central banks going nuts.

50
00:04:07,000 --> 00:04:09,000
So it's all acting like safe haven.

51
00:04:09,000 --> 00:04:16,000
I believe that in a world where central bankers are tripping over themselves to
devalue their currency, Bitcoin wins.

52
00:04:16,000 --> 00:04:20,000
In the world of fiat currencies, Bitcoin is the victor.

53
00:04:20,000 --> 00:04:23,000
I mean, that's part of the bull case for Bitcoin.

54
00:04:23,000 --> 00:04:26,000
If you're not paying attention, you probably should be.

55
00:04:29,000 --> 00:04:34,000
What is up, phreaks? Welcome back to Tales from the Crypt. It's your boy, Marty
Bent, here on a Friday afternoon.

56
00:04:34,000 --> 00:04:38,000
Very excited for this conversation. I think this is going to be a long one.

57
00:04:38,000 --> 00:04:44,000
If the pre-interview conversation is any indication, it is going to be a long and
very interesting podcast.

58
00:04:44,000 --> 00:04:49,000
I'd like to introduce you, phreaks, to Paul Sztorc, making his second appearance on
the podcast.

59
00:04:50,000 --> 00:04:52,000
Yes, I remember that now.

60
00:04:52,000 --> 00:04:55,000
Yeah, second appearance. Yeah, I remember my line from the first one.

61
00:04:55,000 --> 00:04:57,000
Things that you didn't even know you did.

62
00:04:57,000 --> 00:04:59,000
About Ethereum.

63
00:04:59,000 --> 00:05:07,000
For you phreaks that don't remember, the first appearance was the rabbit hole recap
on the roof of the Bitcoin 2019 conference.

64
00:05:07,000 --> 00:05:13,000
Paul made a guest appearance to talk about proof of stake.

65
00:05:13,000 --> 00:05:15,000
And we have a lot to talk about.

66
00:05:15,000 --> 00:05:17,000
It's three months away. It's three months away.

67
00:05:17,000 --> 00:05:21,000
Ethereum, three months from now, they'll have it all worked out.

68
00:05:21,000 --> 00:05:24,000
And everything will work perfectly.

69
00:05:24,000 --> 00:05:27,000
You just have to keep in mind that it's right around the corner.

70
00:05:27,000 --> 00:05:29,000
It's coming. It's coming.

71
00:05:29,000 --> 00:05:32,000
2020. That's what they say.

72
00:05:32,000 --> 00:05:38,000
Yeah, it's going to be quarter three of 2020, quarter two of 2020.

73
00:05:38,000 --> 00:05:42,000
I heard January 3rd at one point a few months ago, but they keep pushing it back.

74
00:05:43,000 --> 00:05:52,000
It is sad that we have no real way of communicating to people just how often they
have said that it is right around the corner.

75
00:05:52,000 --> 00:05:58,000
They literally said that before Ethereum had even released in 2015 or something.

76
00:05:58,000 --> 00:06:00,000
They were like, oh, we'll do proof of stake.

77
00:06:00,000 --> 00:06:10,000
Yeah, I believe their first goal pre-launch for proof of stake was 18 months after
launch, if I recall correctly.

78
00:06:10,000 --> 00:06:15,000
I've actually been keeping a thread since August 2017.

79
00:06:15,000 --> 00:06:17,000
Yeah, the Twitter thread.

80
00:06:17,000 --> 00:06:24,000
The Twitter thread of like the Steam's 11 quote about that's the most beautiful.

81
00:06:24,000 --> 00:06:26,000
It will just keep paying forever.

82
00:06:26,000 --> 00:06:28,000
I mean, that is the best way.

83
00:06:28,000 --> 00:06:32,000
That is the best way of convincing of just not convincing people.

84
00:06:32,000 --> 00:06:35,000
It's not so much because they could eventually theoretically do it.

85
00:06:35,000 --> 00:06:41,000
But it's hard to imagine a point of view having any less credibility than that one
at this particular point.

86
00:06:41,000 --> 00:06:44,000
Yeah, that is my magnum opus of a thread.

87
00:06:44,000 --> 00:06:46,000
And actually, it's a good segue.

88
00:06:46,000 --> 00:06:48,000
Yeah, that's a wonderful thread.

89
00:06:48,000 --> 00:06:50,000
It is really great.

90
00:06:50,000 --> 00:06:54,000
One of the best threads on crypto Twitter ever, I think.

91
00:06:54,000 --> 00:06:59,000
Well, you have one of the best blogs in all of crypto.

92
00:06:59,000 --> 00:07:01,000
I know, it's very weird.

93
00:07:01,000 --> 00:07:02,000
It's a very weird blog.

94
00:07:02,000 --> 00:07:11,000
As I was telling you before, it's like a kind of art therapy or something where I
have to just read about what people are talking about.

95
00:07:11,000 --> 00:07:14,000
And then I'm like I don't really agree that I take notes.

96
00:07:14,000 --> 00:07:21,000
And then I edit them into a blog, and the blog posts will reach hundreds of pages of
notes.

97
00:07:21,000 --> 00:07:26,000
Some of the posts are more than 100 pages long, and they broke into sections or
something.

98
00:07:26,000 --> 00:07:29,000
The one about fraud proofs is like 48 pages long.

99
00:07:29,000 --> 00:07:34,000
And it's just like me dumping stuff out of my head because it's driving me crazy.

100
00:07:34,000 --> 00:07:37,000
But people end up appreciating it, which I like.

101
00:07:37,000 --> 00:07:40,000
People like different parts of it.

102
00:07:40,000 --> 00:07:42,000
It's very interesting.

103
00:07:42,000 --> 00:07:45,000
Different people have quoted it at points.

104
00:07:45,000 --> 00:07:51,000
Adam Beck quoted it a long time ago, and also Gavin Andreessen and Roger Ver.

105
00:07:51,000 --> 00:07:55,000
Like all these different people, they can find something in it they like.

106
00:07:55,000 --> 00:07:56,000
So I don't know.

107
00:07:56,000 --> 00:08:01,000
I must be doing something right or wrong depending on how you think about any of
that.

108
00:08:01,000 --> 00:08:03,000
No, I was telling you.

109
00:08:03,000 --> 00:08:09,000
And then other posts are like completely – I never hear anyone talk about some of
them.

110
00:08:09,000 --> 00:08:11,000
Some of them have like a controversial element.

111
00:08:11,000 --> 00:08:13,000
It's proof of work, proof of stake.

112
00:08:13,000 --> 00:08:18,000
People love nothing is cheaper than proof of work.

113
00:08:18,000 --> 00:08:22,000
I wrote one about ASIC boost that was like controversial.

114
00:08:23,000 --> 00:08:26,000
And then some like no one really ever talks about.

115
00:08:26,000 --> 00:08:30,000
Let's touch on like proof of stake isn't cheaper and isn't better than proof of work

116
00:08:30,000 --> 00:08:34,000
since we were talking about Ethereum.

117
00:08:34,000 --> 00:08:36,000
Yeah, I think it's important.

118
00:08:36,000 --> 00:08:37,000
Yes, continue.

119
00:08:37,000 --> 00:08:44,000
Yeah, I think it's funny that Ethereum has been trying so hard to transition to
proof of stake

120
00:08:44,000 --> 00:08:51,000
when it seems to me to not be a valid consensus mechanism or a worthwhile consensus
mechanism.

121
00:08:51,000 --> 00:08:57,000
And they are sort of digging this hole trying to make this transition to this new
consensus mechanism.

122
00:08:57,000 --> 00:09:00,000
And it may not even be worthwhile when they finally get there.

123
00:09:00,000 --> 00:09:03,000
So let's dissect that blog post in particular.

124
00:09:03,000 --> 00:09:04,000
Sure.

125
00:09:04,000 --> 00:09:10,000
Yeah, I think the deepest critique of Ethereum that one can make is that the
community –

126
00:09:10,000 --> 00:09:16,000
it doesn't really have – the culture rewards like kind of these Hail Mary paths,

127
00:09:16,000 --> 00:09:31,000
kind of very optimistic sort of way of doing things that someone somewhere will
invent something to fix this,

128
00:09:31,000 --> 00:09:35,000
which I admire the optimism, and I mean that sincerely.

129
00:09:35,000 --> 00:09:39,000
But it's also like you can't just say someone will invent something to solve this
problem.

130
00:09:39,000 --> 00:09:41,000
Someone actually has to invent it at some point.

131
00:09:41,000 --> 00:09:45,000
And proof of stake, there's a very long – it came out in like 2010.

132
00:09:45,000 --> 00:09:51,000
You can read about this on bitcointalk.org if you go into the ancient archives of
bitcointalk.org

133
00:09:51,000 --> 00:09:57,000
where every crypto idea was once posted at some point before being rediscovered.

134
00:09:57,000 --> 00:09:59,000
You can find it.

135
00:09:59,000 --> 00:10:04,000
And people are very enthusiastic about it at first, but then problems started to
emerge.

136
00:10:05,000 --> 00:10:13,000
And then eventually Andrew Polster wrote I think in 2012 something on proof of stake

137
00:10:13,000 --> 00:10:20,000
where he argued that in practice because of stake grinding, it just became proof of
work,

138
00:10:20,000 --> 00:10:22,000
and so it was ultimately pointless.

139
00:10:22,000 --> 00:10:31,000
But people tried to get around that by then – they didn't really understand the
substance of what Andrew Polster was saying,

140
00:10:31,000 --> 00:10:33,000
and they said, oh, stake grinding is the problem.

141
00:10:33,000 --> 00:10:38,000
So now we'll solve stake grinding, and we'll do this slashing, and we'll do these
other things.

142
00:10:38,000 --> 00:10:47,000
And they were still like trying to solve proof of stake, even though it had a lot of
conceptual holes in it.

143
00:10:47,000 --> 00:10:54,000
And so what I set out to do is I set out to just say that since it's peer-to-peer,

144
00:10:54,000 --> 00:10:56,000
and anyone can join or leave the network at any time,

145
00:10:56,000 --> 00:10:59,000
and there's no privileged person in like a monopolized position,

146
00:10:59,000 --> 00:11:04,000
no matter what you do, these new blocks need to be found or produced by someone.

147
00:11:04,000 --> 00:11:13,000
And so whatever that is, it will involve people doing effort to gain their chances.

148
00:11:13,000 --> 00:11:17,000
And so I tried to set out and say, look, even if you fix all these problems,

149
00:11:17,000 --> 00:11:22,000
you would still have this Andrew Polster-like regression thing.

150
00:11:22,000 --> 00:11:27,000
And then I laid out all these examples about how it was not only would it happen,

151
00:11:27,000 --> 00:11:34,000
but it had already happened with Dan Larimer's delegated proof of stake

152
00:11:34,000 --> 00:11:41,000
and then the idea of locking up the bonds in this so you could slash them later.

153
00:11:41,000 --> 00:11:42,000
Is that BitShares?

154
00:11:42,000 --> 00:11:44,000
I wrote this big essay.

155
00:11:44,000 --> 00:11:47,000
Yeah, yes, that was the era of BitShares.

156
00:11:47,000 --> 00:11:52,000
This was like late 2014, early 2015.

157
00:11:53,000 --> 00:11:59,000
But then again, it doesn't really work.

158
00:11:59,000 --> 00:12:05,000
People get very optimistic and they have wishful thinking,

159
00:12:05,000 --> 00:12:08,000
especially when money is concerned.

160
00:12:08,000 --> 00:12:11,000
This happens to Bitcoiners as well.

161
00:12:11,000 --> 00:12:12,000
It happens to everyone.

162
00:12:12,000 --> 00:12:18,000
I think definitely the biggest critique of Bitcoin ever is if you watch the Flat
Earth documentary

163
00:12:18,000 --> 00:12:21,000
and you just see these people and they're just so optimistic

164
00:12:21,000 --> 00:12:30,000
and then they say things like, how long do you think it will be until the Flat Earth
theory is taught in schools?

165
00:12:30,000 --> 00:12:32,000
And then they'll be like, yeah, anytime.

166
00:12:32,000 --> 00:12:33,000
It's just around the corner.

167
00:12:33,000 --> 00:12:39,000
We just need to just keep – everyone just keep hodling the Flat Earth theory.

168
00:12:39,000 --> 00:12:43,000
And you're like, oh, no, this is what people can do.

169
00:12:44,000 --> 00:12:52,000
But yeah, Ethereum has this optimism and they're willing to try these weird ideas.

170
00:12:52,000 --> 00:12:58,000
It's extremely complex and it ultimately achieves basically nothing because
ultimately,

171
00:12:58,000 --> 00:13:00,000
you'll just waste a different resource.

172
00:13:00,000 --> 00:13:06,000
It was proof of work waste, you know, a lot of quotation marks around the word
waste,

173
00:13:06,000 --> 00:13:10,000
silicon and electrical energy.

174
00:13:10,000 --> 00:13:17,000
Even if proof of stake worked and there was no way of gaming it, which is something
that I think no one believes,

175
00:13:17,000 --> 00:13:24,000
but even if it did, you would have situations where lots of working capital was
locked up.

176
00:13:24,000 --> 00:13:26,000
And we can talk about that.

177
00:13:26,000 --> 00:13:34,000
It's ironic that Ethereum has now evolved to the point where it's gone from having
absolutely nothing at all

178
00:13:34,000 --> 00:13:39,000
to having nothing plus the Dow, which was a disaster.

179
00:13:39,000 --> 00:13:44,000
And now it has this weird, very thin – it has like kind of a money market.

180
00:13:44,000 --> 00:13:48,000
But the money market actually proves in a weird way that I was right all along
about.

181
00:13:48,000 --> 00:13:53,000
Because now if you have ETH, you can kind of lend it out using these weird loans.

182
00:13:53,000 --> 00:13:54,000
I mean at least you can for now.

183
00:13:54,000 --> 00:14:02,000
Maybe they will decide to pull the plug on all this because it's just like having a
rough couple of weeks.

184
00:14:02,000 --> 00:14:07,000
Yeah, they had one of their dApps.

185
00:14:07,000 --> 00:14:15,000
Somebody executed a trade and basically stole a bunch of ETH from the decentralized
financial app, right?

186
00:14:15,000 --> 00:14:18,000
Yes, they have this – I don't fully understand it.

187
00:14:18,000 --> 00:14:22,000
I have to warn everyone, but probably no one does.

188
00:14:22,000 --> 00:14:29,000
But it's something like they have these areas where you can for very short periods
of time

189
00:14:29,000 --> 00:14:32,000
loan ETH or loan other assets and trade them.

190
00:14:32,000 --> 00:14:38,000
And those assets have market prices, and some people are using those market prices
as inputs for collateral.

191
00:14:38,000 --> 00:14:42,000
So they're like mark to market type situation.

192
00:14:42,000 --> 00:14:51,000
And so as I understand it, it's possible to borrow a lot of stuff, anything, ETH or
whatever, for a very short while.

193
00:14:51,000 --> 00:14:53,000
You put up some collateral.

194
00:14:53,000 --> 00:14:57,000
You can borrow – you say I only need to borrow this for like a day.

195
00:14:57,000 --> 00:15:01,000
And so I only need small amounts worth of interest.

196
00:15:01,000 --> 00:15:08,000
You borrow all this stuff, and then you sell it or you buy it or you do something to
manipulate a price,

197
00:15:08,000 --> 00:15:14,000
and that causes this cascade of basically margin calls on other people.

198
00:15:14,000 --> 00:15:18,000
And you can then bet on those and use that to your advantage.

199
00:15:18,000 --> 00:15:21,000
And again, I have to stress that I don't really understand it.

200
00:15:21,000 --> 00:15:29,000
But the point is that they have an area where you can – it's now possible to loan
ETH and earn a return on your money,

201
00:15:29,000 --> 00:15:35,000
which is a lot like how the U.S. money markets work, and we have many of them.

202
00:15:35,000 --> 00:15:40,000
And if you have a checking account or a savings account and you want to earn higher
interest rate,

203
00:15:40,000 --> 00:15:44,000
you can put your money in a money market mutual account.

204
00:15:45,000 --> 00:15:55,000
And notwithstanding 2008 financial crisis in which something very bizarre happened
that I could explain,

205
00:15:55,000 --> 00:15:59,000
and there was a weird kind of run on money market mutual funds because they were not
FDIC insured,

206
00:15:59,000 --> 00:16:01,000
but there was no reason to think that.

207
00:16:01,000 --> 00:16:05,000
It's a very long story, but basically you can get a higher interest rate if you just
want to say,

208
00:16:05,000 --> 00:16:11,000
look, I really don't need this cash, but why don't you use it for something.

209
00:16:11,000 --> 00:16:16,000
But you see what I mean? This is like a checking savings. It's like the next thing.

210
00:16:16,000 --> 00:16:23,000
And then with the proof of stake on Ethereum, you're supposed to be able to lock up
money,

211
00:16:23,000 --> 00:16:28,000
huge amounts of money, much more than is spent on entire mining infrastructure.

212
00:16:28,000 --> 00:16:37,000
And then you would – this money would be deleted if you didn't do the stake things
properly.

213
00:16:37,000 --> 00:16:42,000
So much money would be locked up that it would end up wasting just as much of
society's resources

214
00:16:42,000 --> 00:16:50,000
as would if you just spent that money building a power plant that produced all the
power used by all the proof of work miners.

215
00:16:50,000 --> 00:16:57,000
And in practice, I don't even think that any of this would work because proof of
stake gives you an incentive

216
00:16:57,000 --> 00:17:05,000
to try various schemes like denial of service attacking people to make it look like
they aren't holding up their end.

217
00:17:06,000 --> 00:17:10,000
Really just – it's possible that they will eventually figure it out,

218
00:17:10,000 --> 00:17:16,000
but it's also possible that all the serious people who would have reviewed it have
stopped paying attention a long time ago

219
00:17:16,000 --> 00:17:25,000
and insist that it's another problem that BitShares had, which is that the design
would keep changing.

220
00:17:25,000 --> 00:17:32,000
And so you'd just be like – come back when it stops changing.

221
00:17:32,000 --> 00:17:40,000
Yeah, that's the thing that perplexes me the most is how people can still be
confident that it's right around the corner

222
00:17:40,000 --> 00:17:47,000
when the specs have changed and the timelines changed and there was Casper, the
constant –

223
00:17:47,000 --> 00:17:52,000
there's a bunch of different implementations that they're trying to go after at the
same time.

224
00:17:52,000 --> 00:17:58,000
It's all very confusing. I don't know if that's on purpose, but that's what I really
liked about your blog post in particular.

225
00:17:58,000 --> 00:18:03,000
You point out the whole virtue signal of moving to proof of stake is because it's
more energy efficient,

226
00:18:03,000 --> 00:18:06,000
less capital intensive, and better for the environment.

227
00:18:06,000 --> 00:18:10,000
And you make a very compelling point that actually at the end of the day,

228
00:18:10,000 --> 00:18:13,000
when you're locking up all the stake, like you just said,

229
00:18:13,000 --> 00:18:18,000
you'll be expending more energy than is needed in a proof of work system.

230
00:18:18,000 --> 00:18:23,000
Yeah, it's not – it is – right, it's not necessarily energy, but it's something.

231
00:18:23,000 --> 00:18:31,000
You have less capital available for funding projects, so it means that economic
growth will be slower.

232
00:18:31,000 --> 00:18:39,000
And what's really better for the environment, you know, if we invent something like
cold fusion or just hot fusion.

233
00:18:39,000 --> 00:18:44,000
Now, someone is building something in Europe where it's like regular hot fusion,

234
00:18:44,000 --> 00:18:51,000
but in some kind of chamber where it's – but the point is, you know, with fusion
energy,

235
00:18:51,000 --> 00:18:58,000
you can use – there's like some isotope in seawater that could power the Earth for
like 3,000 times longer

236
00:18:58,000 --> 00:19:00,000
than the expected life of the universe or something.

237
00:19:00,000 --> 00:19:01,000
Holy shit.

238
00:19:01,000 --> 00:19:10,000
So more than enough energy for all of mankind until the sun explodes in 5 billion
years or so,

239
00:19:10,000 --> 00:19:13,000
and that would be unbelievably cheap.

240
00:19:13,000 --> 00:19:17,000
And then you could have all these things coming from cheap energy, whatever the
cheap energy source is.

241
00:19:17,000 --> 00:19:24,000
If it's this fusion idea or something else, you could have, you know, vertical
indoor farming and all this other stuff.

242
00:19:24,000 --> 00:19:26,000
So what's really better for the environment?

243
00:19:26,000 --> 00:19:35,000
To invent that technology like one year earlier than you otherwise would or, you
know, and not –

244
00:19:35,000 --> 00:19:41,000
don't do the proof of work mining, but have this technology be delayed a year

245
00:19:41,000 --> 00:19:48,000
or do proof of work mining, but have this technology be invented a year earlier or
two years earlier or whatever.

246
00:19:48,000 --> 00:19:56,000
So even on the criterion of environmentalism, it's not clear that proof of stake is
any better.

247
00:19:56,000 --> 00:20:02,000
But even if you just say – if you just count up the waste in pure dollar terms,

248
00:20:02,000 --> 00:20:07,000
then it really can't be the same because the waste is equal to the block reward.

249
00:20:07,000 --> 00:20:13,000
So the block reward should probably have led with this for anyone who has no idea
what we're even talking about

250
00:20:13,000 --> 00:20:15,000
and where this is even going.

251
00:20:15,000 --> 00:20:21,000
But that original – yeah, I was like a total nobody, and then I wrote this post and
Adam Back quoted in a Bitcoin talk,

252
00:20:21,000 --> 00:20:28,000
and then people started to read my blog where I write about how the block reward,

253
00:20:28,000 --> 00:20:34,000
every Bitcoin block has a certain amount, right now 12.5 Bitcoin plus the fees.

254
00:20:34,000 --> 00:20:42,000
And those new blocks, you know, they're worth a certain amount of money even in U.S.
dollar terms.

255
00:20:42,000 --> 00:20:45,000
You just multiply by the exchange rate and they're worth whatever it is.

256
00:20:45,000 --> 00:20:52,000
So right now you take $10,000 and 12.5 plus one, and for fees you have 13.5 BTC,

257
00:20:52,000 --> 00:20:55,000
and then you have $135,000.

258
00:20:55,000 --> 00:21:02,000
So it's like $135,000 – it's like a briefcase full of cash that has $135,000 of cash
in it,

259
00:21:02,000 --> 00:21:04,000
and you're auctioning it off.

260
00:21:04,000 --> 00:21:07,000
That's really what the blockchain is like.

261
00:21:07,000 --> 00:21:12,000
It's saying whoever finds the next block gets this cash,

262
00:21:12,000 --> 00:21:17,000
and then you have all these people fighting over how to get it, and they're
basically bidding it up.

263
00:21:17,000 --> 00:21:19,000
And what do you think the final bid price is going to be?

264
00:21:19,000 --> 00:21:24,000
Of course it's going to be like, you know, $134.99.

265
00:21:24,000 --> 00:21:32,000
It's going to be like bid up right up to what that number is.

266
00:21:32,000 --> 00:21:40,000
And that is why it doesn't make any difference if you swap it from proof of work or
proof of stake

267
00:21:40,000 --> 00:21:42,000
or really proof of anything else.

268
00:21:42,000 --> 00:21:48,000
Bram Cohen came very close.

269
00:21:48,000 --> 00:21:49,000
Excuse me.

270
00:21:49,000 --> 00:21:56,000
He said if we had a proof of space and time because you had this –

271
00:21:56,000 --> 00:22:00,000
he had this idea where you would use all this unused hard drive space.

272
00:22:00,000 --> 00:22:09,000
So he built this way of tapping hard drive space that wasn't used to try to do
blockchain consensus,

273
00:22:09,000 --> 00:22:11,000
which is extremely interesting.

274
00:22:11,000 --> 00:22:15,000
But the way it works is by making unused hard drive space valuable

275
00:22:15,000 --> 00:22:19,000
and then immediately wasting all of that value.

276
00:22:19,000 --> 00:22:25,000
So if that were successful, all it would mean is something like David Vorek's
project,

277
00:22:25,000 --> 00:22:34,000
the SIA project, which is like a very interesting project where you can sell your
unused hard drive space.

278
00:22:34,000 --> 00:22:39,000
All that would mean is that his project would probably be successful and would
probably create value,

279
00:22:39,000 --> 00:22:46,000
and then that value would be the value that proof of space and time would destroy.

280
00:22:46,000 --> 00:22:56,000
So it would still be equally wasteful because you are just auctioning off this
briefcase full of cash.

281
00:22:56,000 --> 00:23:01,000
So you're referring to Chia particularly, Bram Cohen's?

282
00:23:01,000 --> 00:23:02,000
Yes.

283
00:23:02,000 --> 00:23:12,000
So, yeah, so you're basically getting at the fact that the cost of production is
very close to the value of this briefcase.

284
00:23:12,000 --> 00:23:18,000
Yeah, this ended up being summarized as this MC equals MR argument, marginal cost
equals marginal revenue,

285
00:23:18,000 --> 00:23:28,000
which is something that is taught to like economics undergraduates or high school
students like very early on,

286
00:23:28,000 --> 00:23:30,000
which is just that the blocks have this worth.

287
00:23:30,000 --> 00:23:42,000
And so it wouldn't make any sense if you could earn a ton of money by making these
blocks and it was cheap to do so.

288
00:23:42,000 --> 00:23:44,000
That situation doesn't make sense.

289
00:23:44,000 --> 00:23:48,000
You sell the blocks for $10,000 each, and they cost $100 to produce.

290
00:23:48,000 --> 00:23:53,000
Why more people would want to get in on that scheme?

291
00:23:53,000 --> 00:23:56,000
You just easily make a lot of money.

292
00:23:56,000 --> 00:24:04,000
So those people will come in and they will do whatever it is you are doing and then
some,

293
00:24:04,000 --> 00:24:08,000
and that is where all the waste will start to leak out.

294
00:24:08,000 --> 00:24:11,000
Yes, that's another thing that Posty gets.

295
00:24:11,000 --> 00:24:22,000
It will be like an equal – if there is a moment of disequilibrium, that waste will
get spread out and filled in some places somewhere.

296
00:24:23,000 --> 00:24:34,000
It's like with proof of work where you don't know if it's – some of it is
electricity, but that's actually not all of it.

297
00:24:34,000 --> 00:24:36,000
Of course, you have to make the chips.

298
00:24:36,000 --> 00:24:38,000
People have to run – there is labor involved.

299
00:24:38,000 --> 00:24:43,000
There is the air circulation and all this other stuff.

300
00:24:43,000 --> 00:24:46,000
You have to maintain the chips.

301
00:24:46,000 --> 00:24:48,000
You have to cool the chips.

302
00:24:48,000 --> 00:24:51,000
So mining is not just electricity.

303
00:24:51,000 --> 00:24:52,000
It's a lot of things.

304
00:24:52,000 --> 00:24:58,000
So all these things, there is no guarantee that they will take just one form.

305
00:24:58,000 --> 00:25:00,000
As I mentioned, proof of stake.

306
00:25:00,546 --> 00:25:19,546
If you have to – there is kind of a theory where you put up working capital, but you
would also need to follow the rules of the blockchain system and you need to produce
blocks when you are told, otherwise you lose your stake.

307
00:25:19,546 --> 00:25:34,546
So who is to say that people won't build elaborate systems for denial of service
attacking you and stopping you from doing that. Because remember, it's a huge amount
of money at stake, no pun intended.

308
00:25:34,546 --> 00:25:54,546
But you have a lot of money that's being earned, because it's 13.5 every 10 minutes.
Bitcoin, if you say 12.5 plus one in fees and you say that Ethereum would be
comparable. So then it's $10,000 for Bitcoin and it's $135,000. We're talking like
$100,000, $200,000 per 10 minutes.

309
00:25:54,546 --> 00:26:17,546
So it's 144 blocks a day, so now we're two orders of magnitude higher already. So
we're talking like $20, $30 million a day is what you can earn if you're the only
miner. So in proof of work you want to mine really efficiently and put everyone else
out of business, you get the $20, $30 million for yourself.

310
00:26:17,546 --> 00:26:36,546
In proof of stake, if you can find a way to shove people off, it's $20, $30 million
a day in revenue for you. So what is it per year, 365 days a year, two more orders
of magnitude if not more. So we're talking unbelievable amounts of money.

311
00:26:36,546 --> 00:26:51,546
Yeah, there would be professional people figuring out exactly how to take other
people off the network or exactly how to manipulate the randomness used to assign
who finds blocks. This is what I think people don't understand.

312
00:26:51,546 --> 00:27:07,546
Similar thing with, I mean I don't know the status of Emman Goodsire's Avalanche
thing, but he said something like it would be a proof of work competitor. And some
people, he was in a conversation I was in and we were talking about it.

313
00:27:07,546 --> 00:27:26,546
And I was like, what about simple attacks or whatever. And he said that at the time,
and this was six or eight months ago, he was like, well we have this part closed
source because we don't want people stealing it. And I kind of laughed too, that was
my reaction.

314
00:27:26,546 --> 00:27:28,546
It's a non-starter.

315
00:27:29,546 --> 00:27:45,546
So right, it is kind of a non-starter. And maybe he'll publish it or has published
it and I didn't notice and we can look at it more. But what I was trying to give
everyone in that conversation the impression is that this is a huge amount of money.

316
00:27:45,546 --> 00:28:04,546
Theoretically, let's give it the benefit of the doubt and we'll say Avalanche
replaces Ethereum and Bitcoin and everything, and the US dollar and it's in this
position where you have just the rewards that come in to distribute the coins or to
process the fees.

317
00:28:05,546 --> 00:28:21,546
We'll just give everything the benefit of the doubt and we'll just say that all
that's outrageously successful. Well now you have the situation where even with
today's numbers, it's millions of dollars per day, 10, 20 million dollars, 30
million dollars per day.

318
00:28:21,546 --> 00:28:40,546
And if the price of Bitcoin goes up by 20 or 30 percent, then it's 20 or 30 percent
more than that. Obviously, if it goes down, it's less, but a lot of people in mining
believe in Bitcoin and they are sort of half speculating that it has potential and
that if they do a good job mining, it will continue to go up.

319
00:28:41,546 --> 00:29:08,546
They can get more of a return. So this is a huge amount of money, billions of
dollars per year. And the proof of stake is that it's a kind of theory that people
will just volunteer, run software on their computer and then it will just be this
happy equilibrium where no one will try to seize more of this gigantic pie for
themselves.

320
00:29:09,546 --> 00:29:31,546
Some people will be easier to attack than others. It will be like mining where some
people go out of business first. The least efficient miners will go out of business
first. There will be some new thing that will evolve around proof of stake that will
involve people spending basically the two billion dollars that they earn.

321
00:29:32,546 --> 00:29:53,546
It will be just like auctioning the briefcase. So this is the point I tried to
convey and I'm sorry, we did actually go on quite a bit of a tangent, but you
mentioned earlier that it's funny and I don't remember if this was before you hit
record, but people come in on the blog and I actually – Vitalik and Jay Kwan on the
nothing is cheaper than proof of work.

322
00:29:54,546 --> 00:30:05,546
I thought that I had convinced them. It seemed if you read the comments that they
ended up agreeing or they even said something like, well of course we've always
believed that kind of line. I think Vitalik may have said something like that.

323
00:30:05,546 --> 00:30:23,546
Jay Kwan eventually was like, oh, do you think you can help us solve this problem,
which is like a different response. But those are the big people pushing proof of
stake and then that was like 2015 and then I saw them in – I remember I saw them in
consensus May 2016 and I was like in New York City.

324
00:30:24,546 --> 00:30:41,546
And I was like, why are you guys doing proof of stake because I thought that you
were convinced by what I had to say. And then they were like, well we – I think
actually Vlad Zamfir said something like, yeah, but you know we're going to just
like keep working on it because we think we can improve it.

325
00:30:41,546 --> 00:30:42,546
Yeah, dude, it's insufferable.

326
00:30:43,546 --> 00:30:47,546
I kind of shrugged and was like shrugging and kind of saying like, okay. And I was
like, oh.

327
00:30:48,546 --> 00:30:49,546
Well, how much –

328
00:30:50,546 --> 00:30:54,546
I was like, okay, well that's kind of funny. All right, great, well good luck with
that.

329
00:30:55,546 --> 00:31:03,546
So how much is the probabilistic nature of SHA-256 proof of work mining? Is that
sort of the differentiator there, the probabilistic nature of that?

330
00:31:04,546 --> 00:31:17,546
Yeah, well, yeah. What's nice about SHA-256 and mining is that, yeah, it's very hard
to inject randomness into something, but the hash function is already random on its
interval.

331
00:31:18,546 --> 00:31:31,546
So that takes care of that. But the really cool thing about proof of work is that
all of the work done by everyone, all the waste is actually measurable in the form
of the low hashes.

332
00:31:32,546 --> 00:31:39,546
And it's very imperfect. It is not perfect at all, but you have some measurement of
it.

333
00:31:39,546 --> 00:31:49,546
And since the hashes are in the linked list, this Haber-Starnetta thing where each
block has the hash of the previous block, the work accumulates.

334
00:31:49,546 --> 00:31:56,546
So it's quite ingenious. Satoshi obviously was quite a genius, and he worked this
out.

335
00:31:56,546 --> 00:32:02,546
And so even though they're all equally wasteful, oftentimes – see, here's the thing.

336
00:32:02,546 --> 00:32:12,546
If you prove a mistake and then people denial of service attack someone, and then
someone says, look, I was denial of service attacked, you have no way of knowing if
they really were or not.

337
00:32:12,546 --> 00:32:15,546
You just have their evidence, which you don't know how to interpret.

338
00:32:16,546 --> 00:32:21,546
You don't know the context. Maybe they denial of service attack themselves. Maybe
they unplug their router.

339
00:32:21,546 --> 00:32:26,546
I don't know. Maybe they have no idea what they're talking about, and they're just
crazy.

340
00:32:26,546 --> 00:32:31,546
They could be schizophrenic. You have no idea. So you have no idea what's going on.

341
00:32:31,546 --> 00:32:39,546
But with proof of work, you really do know all the headers and their hashes, and
they are all very low.

342
00:32:39,546 --> 00:32:49,546
So all the work is piled into one easily measurable thing, which is ingenious, and
it's great.

343
00:32:49,546 --> 00:33:08,546
And it's a really clever thing about the way it's all set up is that all the work is
done on the headers, which are these very short little 80-byte things that – I think
it's like 4.7 megabytes per year to get an entire year of Bitcoin headers.

344
00:33:09,546 --> 00:33:17,546
So it's like a photograph or something. You can easily get all the headers and check
the work on them.

345
00:33:17,546 --> 00:33:30,546
So all the – like 99% of the effort of constructing the block can be checked with
0.01% of the effort.

346
00:33:31,546 --> 00:33:34,546
So it's very ingeniously all set up.

347
00:33:34,546 --> 00:33:54,546
With proof of stake, again, it's not clear if that's the case because, again, the
design keeps changing, but you have to have these – you know, it's funny that
talking about this, I almost wanted to have – who is it that – I think Eric Wall was
– he posted something, but it's terrible if it was someone else.

348
00:33:54,546 --> 00:34:05,546
But someone posted a thing where they said they actually thought it was – there was
still a difference in the type of waste, and we were going to debate it on some
podcast, but I forgot about it.

349
00:34:05,546 --> 00:34:07,546
I wouldn't be surprised if it was Eric Wall.

350
00:34:07,546 --> 00:34:14,546
But that would have been nice. I could have had my notes for that, and we could have
come on here and done it.

351
00:34:15,546 --> 00:34:18,546
This is such an old issue though. I think for most people are just like so tired of
hearing about it.

352
00:34:18,546 --> 00:34:22,546
I was almost tired of talking about it because it's going on for so long.

353
00:34:22,546 --> 00:34:30,546
I think it is an insult to people's intelligence that they keep saying that.

354
00:34:31,546 --> 00:34:35,546
I mean I know that software is like this. I feel the exact same way.

355
00:34:35,546 --> 00:34:41,546
Whenever anyone produces a piece of software, they're always like, well, it's almost
done. It's almost done.

356
00:34:41,546 --> 00:34:47,546
And then it takes 37 years later. It's the first release.

357
00:34:47,546 --> 00:34:56,546
There's even that joke about if you wait until the first release is perfect, then
you waited too long, things like that.

358
00:34:56,546 --> 00:35:05,546
So I realize, I understand that it takes a long time, but there does seem to be a
total, like, it does seem to be like an insulting character.

359
00:35:05,546 --> 00:35:06,546
Yeah, I agree.

360
00:35:06,546 --> 00:35:08,546
People in Ethereum like this.

361
00:35:08,546 --> 00:35:16,546
The other thing, Ethereum is, it's doing like some kind of clever mind games where
it's like pretending that it's not a Bitcoin competitor until it is.

362
00:35:16,546 --> 00:35:21,546
And then, you know, there's no way that that stuff would get up on, like dress up in
cotton.

363
00:35:22,546 --> 00:35:28,546
I lost you at, we're still recording. I lost you at, they do funny stuff like
dancing on stage.

364
00:35:28,546 --> 00:35:31,546
Oh, there you go. Yeah, they do.

365
00:35:31,546 --> 00:35:37,546
Like, so why do they do that? You know, like, is it because they're crazy? I don't
know. I don't think so.

366
00:35:37,546 --> 00:35:45,546
You know, I think they know that they have to appear like unthreatening to Bitcoin
until like the opportune moment.

367
00:35:45,546 --> 00:35:47,546
I think it's like a trick.

368
00:35:47,546 --> 00:35:48,546
Yeah, it's.

369
00:35:48,546 --> 00:35:49,546
I think they do it on purpose.

370
00:35:49,546 --> 00:35:57,546
A lot of the things they do have, they're like, it's almost like so dumb that you
can't, you have to be worried that, oh, what's going on?

371
00:35:57,546 --> 00:36:00,546
There's some scheme, some scheme.

372
00:36:00,546 --> 00:36:04,546
I mean, it's always seemed very schemey to me, at least.

373
00:36:04,546 --> 00:36:10,546
I remember going to a consensus meet up here in New York in the summer of 2017.

374
00:36:11,546 --> 00:36:18,546
And they were like basically begging people, companies, startups that are
well-established already to launch ICOs and just felt like,

375
00:36:18,546 --> 00:36:22,546
ah, you're really going to tell people to launch blockchains for their companies?

376
00:36:22,546 --> 00:36:24,546
And obviously a lot of people went down that path.

377
00:36:24,546 --> 00:36:28,546
We had the ICO boom and bust and that's no longer a narrative.

378
00:36:28,546 --> 00:36:32,546
They're no longer convincing people to launch ICOs on Ethereum.

379
00:36:32,546 --> 00:36:34,546
Now it's DeFi.

380
00:36:35,546 --> 00:36:36,546
I know.

381
00:36:36,546 --> 00:36:42,546
But one thing you said, like the thing that really irks me is, and what I'm really
happy you said about Bitcoin and Proof-of-Work,

382
00:36:42,546 --> 00:36:45,546
particularly is that Proof-of-Work's imperfect.

383
00:36:45,546 --> 00:36:50,546
SHA-256 is imperfect and that's something that Bitcoiners and Bitcoin as a project
is upfront with.

384
00:36:50,546 --> 00:36:53,546
It's like, hey, it's not perfect, but it works.

385
00:36:53,546 --> 00:37:02,546
And it seems like what they're trying to do with Proof-of-Stake is create a perfect
system, which I just heuristically think is impossible.

386
00:37:05,546 --> 00:37:07,546
Yeah, I think that's true.

387
00:37:07,546 --> 00:37:14,546
Well, yeah, this is something that's been said a lot about Bitcoin, that a lot of
people had really –

388
00:37:14,546 --> 00:37:20,546
almost everyone had a hard time understanding it because it's just this crazy
scheme.

389
00:37:20,546 --> 00:37:34,546
And previous stuff was kind of – it was like where you needed to break a hash
function or a signature or something in order to break it.

390
00:37:34,546 --> 00:37:44,546
So it had like perfect privacy and perfect everything, but it had a server to
mitigate double spends.

391
00:37:44,546 --> 00:37:46,546
But other than that, it was perfect.

392
00:37:46,546 --> 00:37:54,546
And then Bitcoin came along and it's this really weird other thing, and it is very
different.

393
00:37:54,546 --> 00:38:04,546
And it's this weird kind of Hayekian thing where it's kind of like trial and error.

394
00:38:04,546 --> 00:38:11,546
And yeah, it's kind of like – yeah, it is very sly, but yeah, I know what you're
referring to.

395
00:38:12,546 --> 00:38:15,546
Yeah, I think Hayek was right about that.

396
00:38:15,546 --> 00:38:18,546
He was very good.

397
00:38:18,546 --> 00:38:20,546
He knew culture, I think.

398
00:38:20,546 --> 00:38:28,546
He knew that culture evolved slowly due to all these little decisions that people
made.

399
00:38:28,546 --> 00:38:35,546
And if people's opinions reach like an equilibrium, you can't get out of it.

400
00:38:36,546 --> 00:38:46,546
He knew you needed a new subversive thing that the minority could use as it slowly
became more popular.

401
00:38:46,546 --> 00:38:52,546
But see, that's the same slyness that I'm talking about when you see people in
costumes on the Ethereum stage.

402
00:38:52,546 --> 00:38:57,546
And you're just like, what is – are we being like – who is scamming who here?

403
00:38:57,546 --> 00:39:01,546
Because this is just so absurd that it almost can't be.

404
00:39:01,546 --> 00:39:02,546
Right.

405
00:39:03,546 --> 00:39:06,546
It almost can't be legit.

406
00:39:06,546 --> 00:39:09,546
So that's the only thing that has me worried about Ethereum is how crazy it is.

407
00:39:09,546 --> 00:39:11,546
Are you that worried about it?

408
00:39:13,546 --> 00:39:17,546
Well, I think that money has very strong network effects.

409
00:39:17,546 --> 00:39:28,546
And I think that the differences between – I think if you had to group like the yen,
the U.S. dollar, Ethereum, and Bitcoin into groups,

410
00:39:28,546 --> 00:39:33,546
you would have Ethereum and Bitcoin in one group and then all the fiat currencies in
another group.

411
00:39:33,546 --> 00:39:42,546
So I think the differences between crypto and fiat are much more profound than even
the differences between Bitcoin and Ethereum.

412
00:39:42,546 --> 00:39:51,546
So I do think that if Ethereum became more popular, it would be on a sort of a path
to success.

413
00:39:51,546 --> 00:39:59,546
But fortunately for anyone who dislikes Ethereum, it doesn't really seem to actually
be.

414
00:39:59,546 --> 00:40:06,546
If you look at like Google Trends and things, almost everyone who's – everyone who's
heard of Ethereum has heard of Bitcoin.

415
00:40:06,546 --> 00:40:10,546
But it doesn't go the other way around and stuff like that.

416
00:40:10,546 --> 00:40:12,546
But I do think it's theoretically possible.

417
00:40:13,546 --> 00:40:14,546
I mean, think about this.

418
00:40:14,546 --> 00:40:20,546
One way of putting it is to say – is to reformulate the question and say,

419
00:40:20,546 --> 00:40:29,546
is it the case that no matter what mistakes the BTC community makes, it will
inevitably triumph?

420
00:40:29,546 --> 00:40:36,546
And I think the answer to that question is that it is possible to make a mistake
that causes BTC to fail.

421
00:40:36,546 --> 00:40:40,546
I don't think that its success is completely inevitable.

422
00:40:41,546 --> 00:40:43,546
Even though it's BTC's game to lose.

423
00:40:43,546 --> 00:40:46,546
But I've been saying this for a while now.

424
00:40:48,546 --> 00:40:54,546
Wouldn't the failure of Bitcoin erode confidence in the whole idea of a
cryptocurrency, right?

425
00:40:55,546 --> 00:40:56,546
I do think it would.

426
00:40:56,546 --> 00:40:57,546
Yes, I've said similar things.

427
00:40:57,546 --> 00:41:02,546
But I think those – someone clever could come up with a way.

428
00:41:02,546 --> 00:41:05,546
I mean, one thing is a hard fork of Bitcoin.

429
00:41:06,546 --> 00:41:16,546
If the Victor project, the project that triumphed over BTC, if it was a hard fork
and shared the UTXO set,

430
00:41:16,546 --> 00:41:21,546
most of the people – it takes a long time for most people to split their coins.

431
00:41:21,546 --> 00:41:23,546
It was very interesting.

432
00:41:23,546 --> 00:41:24,546
I liked watching.

433
00:41:24,546 --> 00:41:27,546
You could watch – I think it was Forks.network maybe.

434
00:41:27,546 --> 00:41:29,546
Forks.monitor?

435
00:41:29,546 --> 00:41:30,546
Was that Jameson?

436
00:41:30,546 --> 00:41:33,546
Yeah, I think Jameson Lapp or someone.

437
00:41:33,546 --> 00:41:36,546
I should really not say because I can't remember whose name is associated with what.

438
00:41:36,546 --> 00:41:37,546
I'm terrible.

439
00:41:37,546 --> 00:41:39,546
I was forgetting that and giving credit to the wrong people.

440
00:41:39,546 --> 00:41:46,546
But you could watch the extent to which the UTXOs were the same

441
00:41:46,546 --> 00:41:51,546
because BCH split off from BTC in August 2017.

442
00:41:51,546 --> 00:41:56,546
And then at that moment, the UTXO set was 100% identical.

443
00:41:56,546 --> 00:41:58,546
Because they didn't add replay protection, right?

444
00:41:59,546 --> 00:42:04,546
Yeah, they intentionally did add replay protection, I think.

445
00:42:04,546 --> 00:42:09,546
So the transaction – this is what makes it even more interesting,

446
00:42:09,546 --> 00:42:13,546
which is that the transaction replay protection was on by default.

447
00:42:13,546 --> 00:42:19,546
So if you made any transaction at all, even if you just sent BTC to yourself,

448
00:42:23,546 --> 00:42:24,546
it would split.

449
00:42:24,546 --> 00:42:25,546
It would count the chains as split.

450
00:42:25,546 --> 00:42:31,546
So if you had 10 BTC, you had a UTXO that had 10 coins in it at the time of the
fork.

451
00:42:31,546 --> 00:42:35,546
You'd end up with one that had 10 BTC and one that had 10 BCH.

452
00:42:35,546 --> 00:42:42,546
And then if you just spent one of the – if you spent like 0.01 BTC,

453
00:42:42,546 --> 00:42:47,546
you spend that somewhere, and then you have 0.01 going to that destination

454
00:42:47,546 --> 00:42:50,546
and then 0.99 going back to you as change.

455
00:42:50,546 --> 00:42:53,546
It looked as though you split the full 10.

456
00:42:53,546 --> 00:42:54,546
Interesting.

457
00:42:57,546 --> 00:43:02,546
And so it greatly overestimated the amount of splitting just looking at this UTXO
divergence.

458
00:43:02,546 --> 00:43:11,546
So the UTXO divergence was just one way of looking at how much could –

459
00:43:11,546 --> 00:43:16,546
in the most extreme case, how separated have the communities gotten?

460
00:43:16,546 --> 00:43:21,546
And for a very long time, it was much less than 50%.

461
00:43:21,546 --> 00:43:23,546
Mostly, it was the same.

462
00:43:23,546 --> 00:43:25,546
It was just the same owners and the same people,

463
00:43:25,546 --> 00:43:29,546
even though there was very loud disagreement online, of course.

464
00:43:29,546 --> 00:43:35,546
It was mostly the same people who were BTC people and BCH people,

465
00:43:35,546 --> 00:43:39,546
judging by that criterion of did you own any.

466
00:43:39,546 --> 00:43:42,546
And that also misestimated various other things.

467
00:43:42,546 --> 00:43:45,546
So some people were on record.

468
00:43:45,546 --> 00:43:48,546
I believe Eric Voorhees, although again, I'm getting all my names mixed up,

469
00:43:48,546 --> 00:43:50,546
so I can't remember who has said whatever.

470
00:43:50,546 --> 00:43:54,546
Eric Voorhees said that he sold and then re-bought and then sold or something.

471
00:43:54,546 --> 00:43:59,546
At various times, he said that he owned different amounts of BCH or something
publicly.

472
00:43:59,546 --> 00:44:06,546
And the point is not to critique or appraise or whatever any of those decisions,

473
00:44:06,546 --> 00:44:10,546
but the point is just that that makes it look as though it's more split than it
really is

474
00:44:10,546 --> 00:44:14,546
because if he intentionally moves the coins around and then unmoves them

475
00:44:14,546 --> 00:44:22,546
so that his accounting position is that he's back to owning similar portions of BTC
and BCH,

476
00:44:22,546 --> 00:44:24,546
now he's back to being equal.

477
00:44:24,546 --> 00:44:26,546
But in the meantime, he's split a bunch of UTXOs,

478
00:44:26,546 --> 00:44:28,546
so it looks as though they diverged even though they did not.

479
00:44:28,546 --> 00:44:32,546
So the real communities, the bottom line is the real communities were more similar

480
00:44:32,546 --> 00:44:37,546
than even that metric suggested, which it suggested that they were very similar.

481
00:44:37,546 --> 00:44:48,546
And so to your point about what does failure of BTC like make in peril all the other
projects,

482
00:44:48,546 --> 00:44:52,546
you could have one way of getting – you could have different ways of getting around
that.

483
00:44:52,546 --> 00:44:56,546
One of them would be to have this hard fork succeed, and then you could say,

484
00:44:56,546 --> 00:45:03,546
well, almost everyone, almost every single person who was in BTC is in this project.

485
00:45:03,546 --> 00:45:09,546
It's only a few people who intentionally split their coins in a speculative sense

486
00:45:09,546 --> 00:45:11,546
or who didn't hear about it in time or something.

487
00:45:11,546 --> 00:45:15,546
So I think that's one way, but I think there are other ways.

488
00:45:15,546 --> 00:45:16,546
There are other ways.

489
00:45:16,546 --> 00:45:18,546
You could just say – you could have some pretext or an excuse.

490
00:45:18,546 --> 00:45:25,546
You could say this new project has something that BTC could not have because of some
reason.

491
00:45:25,546 --> 00:45:27,546
It could be a false reason or a true reason,

492
00:45:27,546 --> 00:45:33,546
but you could just – you just need a story that says, well, I took what was great
from Bitcoin,

493
00:45:33,546 --> 00:45:36,546
and then I changed X.

494
00:45:36,546 --> 00:45:41,546
So I think it's still possible to get around that story where you just say that –

495
00:45:41,546 --> 00:45:44,546
you just have to attribute BTC's failure to something else,

496
00:45:44,546 --> 00:45:51,546
or you have to say that this new thing, while it's not Bitcoin,

497
00:45:52,546 --> 00:46:02,546
it was so overwhelmingly overlapped with Bitcoin that 95% of the coins and 99% of
the users came along,

498
00:46:02,546 --> 00:46:05,546
and then you can call it Bitcoin 2.0 or whatever,

499
00:46:05,546 --> 00:46:10,546
and you can just say that it was a rough transition, but it was basically the same.

500
00:46:10,546 --> 00:46:14,546
So I think it's possible to get around that, although I do think that that is an
element of it.

501
00:46:14,546 --> 00:46:23,546
I think it's not the case that BTC is totally immune to errors, like completely.

502
00:46:23,546 --> 00:46:29,546
If there's no error that BTC can make, that will lead to its death.

503
00:46:29,546 --> 00:46:30,546
I think that –

504
00:46:30,546 --> 00:46:31,546
That's naive.

505
00:46:31,546 --> 00:46:33,546
Definitely, it's possible.

506
00:46:33,546 --> 00:46:37,546
I think it's definitely possible to commit suicide with BTC.

507
00:46:37,546 --> 00:46:40,546
Well, it's important to be upfront with that too, right?

508
00:46:41,546 --> 00:46:44,546
Actually, that's sort of the reason why we're talking right now,

509
00:46:44,546 --> 00:46:50,546
is the thread I wrote about Jevin's paradox and UTXOs and potential development of
the fee market.

510
00:46:50,546 --> 00:46:52,546
That could be one of the ways Bitcoin dies.

511
00:46:52,546 --> 00:47:00,546
If people are ardent about having a hard $21 million supply cap and a fee market
doesn't develop,

512
00:47:00,546 --> 00:47:06,546
maybe that's the case where you have a hard fork that adds tail emissions,

513
00:47:07,546 --> 00:47:10,546
and that is the successor.

514
00:47:10,546 --> 00:47:11,546
Yes.

515
00:47:11,546 --> 00:47:18,546
I'm quite proud of the fact that it never even occurred to me when I wrote that
piece to write about adding inflation.

516
00:47:18,546 --> 00:47:25,546
That's the thing that people always run to, and it didn't even occur to me,

517
00:47:25,546 --> 00:47:27,546
and it doesn't appear anywhere in the piece.

518
00:47:27,546 --> 00:47:32,546
So if you want a piece complaining about long-run security that does not have
anything in it

519
00:47:32,546 --> 00:47:39,546
about violating the 21 million coin limit, even though probably people should at
least talk about it.

520
00:47:39,546 --> 00:47:42,546
I mean, every idea you should talk about because every idea could be a good idea.

521
00:47:42,546 --> 00:47:48,546
But yes, I wrote this piece, Security Budget in the Long Run, and that is what we
were talking about on Twitter.

522
00:47:49,546 --> 00:47:56,546
And it's a very interesting piece.

523
00:47:56,546 --> 00:48:04,546
It had a lot of interesting – people interpreted it in very different ways.

524
00:48:04,546 --> 00:48:09,546
I mean, one way is that – I think it was misinterpreted in a lot of ways.

525
00:48:09,546 --> 00:48:13,546
One was that you have these people who think that proof of work is very wasteful
still,

526
00:48:13,546 --> 00:48:17,546
and they complain about how much energy proof of work wastes.

527
00:48:17,546 --> 00:48:20,546
This piece goes right up to those people and just kind of slaps them in the face.

528
00:48:20,546 --> 00:48:29,546
It says that we need to waste way more than we currently are, and there's nowhere
near enough.

529
00:48:29,546 --> 00:48:33,546
And so those people are just, I think, just completely stunned.

530
00:48:33,546 --> 00:48:38,546
Most Bitcoiners are not in that group, but anyone who was would just have no idea
what to say.

531
00:48:38,546 --> 00:48:40,546
They'd be like speechless.

532
00:48:40,546 --> 00:48:48,546
But another thing is that people have been trained to respond to any complaint about
fees in a certain way.

533
00:48:48,546 --> 00:48:55,546
They're trained to say that lightning will bring them down, or that channel
factories will bring the fees down.

534
00:48:55,546 --> 00:48:59,546
And that is the opposite of what the piece is saying.

535
00:48:59,546 --> 00:49:08,546
The piece is saying that fees will be too low, and so this puts people who have been
jumping into that line of response.

536
00:49:08,546 --> 00:49:14,546
It throws them into a kind of – they're like the opposite of the point there.

537
00:49:14,546 --> 00:49:16,546
Can I push back on the lightning thing a bit?

538
00:49:16,546 --> 00:49:17,546
Yes, you can.

539
00:49:17,546 --> 00:49:26,546
So lightning, when I think of lower – like I think we do need higher fees at the
base level if we do want to keep the $21 million supply cap

540
00:49:26,546 --> 00:49:33,546
and entice miners to keep mining the chain.

541
00:49:33,546 --> 00:49:37,546
But when people say lightning will bring lower fees, is it lower fees on lightning?

542
00:49:37,546 --> 00:49:41,546
Because when they're transacting on the lightning network on the second layer, fees
will be lower,

543
00:49:41,546 --> 00:49:52,546
but not necessarily saying the creation of the HTLC would be the fee creating that.

544
00:49:52,546 --> 00:49:54,546
Yes, you're completely right.

545
00:49:54,546 --> 00:49:55,546
I say that in the piece.

546
00:49:55,546 --> 00:50:01,545
I say like the immediate effect is to reduce demand through the block space.

547
00:50:01,545 --> 00:50:16,545
But the long-term effect is to make it easier for people to tolerate high LayerOne
fees because they would do most of their transacting on the lightning network and so
then they would be able to – so yes, you're completely 100% right about that.

548
00:50:17,545 --> 00:50:31,545
But it's just a lot of the people responding to the post on Twitter or whatever,
people are just kind of used to thinking about the fee conversation that way, and
this is the opposite of how the fee conversation normally goes. I'm saying that the
fees are too low.

549
00:50:32,545 --> 00:50:41,545
And there's another issue is of course that the word fee is used in two completely
different senses, which is annoying. It's used as a price and as a revenue.

550
00:50:42,545 --> 00:50:44,545
That's a very interesting point.

551
00:50:45,545 --> 00:51:04,545
Yeah, Walmart has low prices, but it has high revenue because it makes a lot of
sales. But Steinway and Sons, you buy $175,000 piano, the price is very high. But I
don't know if their revenue – I would guess their revenue is much lower than
Walmart's by quite a bit.

552
00:51:04,545 --> 00:51:13,545
So fees are one sense used as a price, and I try to only use fee rate in the piece
when I talk about that, but I mentioned this explicitly.

553
00:51:14,545 --> 00:51:31,545
But yeah, what I'm talking about in the piece is revenues being too low. The amount
of money we pay miners is too low, and not necessarily making any comment about the
price, although of course price times quantity sold equals revenue.

554
00:51:31,545 --> 00:51:47,545
But they are totally different units. So there's one is the Satoshi per byte fee
rate, whereas I prefer to price it in dollars because it makes a lot more sense that
way. But it's like dollars per transaction is really a better way to think about it.

555
00:51:48,545 --> 00:51:52,545
Is that viable in the long term though? What if we go to a closed loop Bitcoin
economy?

556
00:51:53,545 --> 00:52:08,545
I think it still is because you just say that in the economics profession there are
ways to deal with that because of all these problems. How do you compare money
supply with different countries that have different currencies?

557
00:52:09,545 --> 00:52:31,545
So there's this idea of purchasing power parity, and you can say something like it's
possible to construct a statement that goes something like the euro's money supply
increased from 10 trillion to 20 trillion, and then you just say US dollar
purchasing power parity or you say some other thing.

558
00:52:32,545 --> 00:52:42,545
So you can convert them all into comparable units so that people can understand
what's going on, even though of course the euro money supply isn't in US dollars,
it's in euros.

559
00:52:43,545 --> 00:52:54,545
But it's still possible to compare them all, and what's important to keep in mind is
that there's a difference between the block subsidy and the fees. They're very
different.

560
00:52:54,545 --> 00:53:19,545
The block subsidy pays you 12.5 or whatever it is right now, no matter what the
exchange rate is, no matter how high it climbs. So if the exchange rate climbs to, I
don't know, it doesn't matter anything, $100,000 per Bitcoin, then it's 10 times
higher than $10,000 per Bitcoin, but the block subsidy does not change, still 12.5.

561
00:53:20,545 --> 00:53:31,545
So you see then the security budget went up by 10, because now mining is way more
profitable than it was before. You can buy more stuff, you have a greater claim, you
have a greater purchasing power.

562
00:53:32,545 --> 00:53:41,545
You can get more stuff, you can get more houses, you can get more shoes, you can get
more whatever, lumber, restaurant food, you can get more stuff.

563
00:53:42,545 --> 00:53:58,545
But with fees, it's really not like that. When miners are on fees, it's because
someone else paid, and so you cannot just say the exchange rate goes up and then
people willingly at the exact same time become, you know, the price of Bitcoin goes
up by 10.

564
00:53:58,545 --> 00:54:16,545
It doesn't mean that you become 10 times more willing to process a payment in
Bitcoin relative to Visa or cash or something else. It doesn't change any of the
relative factors of the payment world.

565
00:54:17,545 --> 00:54:40,545
So actually I think the fact that it is priced in satoshis per byte is actually
misleading. It's one of the things that I try to fight against in the post, because
it has to be in satoshis per byte, because of course the software doesn't know the
exchange rate without getting it from somewhere, some exchange.

566
00:54:40,545 --> 00:54:55,545
Who's to say that exchanges run well, or who's to say anything else. So the software
doesn't know how to price it in dollars per transaction, because the transactions
can take any number of bytes and it doesn't know what the exchange rate is anyway.

567
00:54:55,545 --> 00:55:16,545
It doesn't even know if you're American, you know, and you download Bitcoin Core,
you could be living in Europe or you could be living in Japan. Obviously, you know,
you could build user-friendly software that tries to do these things, but
fundamentally the fees change as a result of people's willingness to use the payment
network, the layer one payment network.

568
00:55:17,545 --> 00:55:31,545
And so they're driven by that and if the exchange rate goes up by 10x, then people
won't suddenly want to pay 10x more for that. They'll reprice it so that it's always
the same dollar amount that they were paying before.

569
00:55:31,545 --> 00:55:47,545
So if there's a hyper-Bitcoinization world, it's true that there wouldn't literally
be any dollars in that hypothetical scenario, but there would still be some unit of
purchasing power that's comparable. You could price it in hamburgers or something
instead.

570
00:55:47,545 --> 00:56:05,545
You just find something that costs about as much as what a Bitcoin transaction is
now. And that would be what it would really be. It would be something like, do I
want to give up one hamburger to use the layer one Bitcoin at the current fees, you
know, or at some rate.

571
00:56:06,545 --> 00:56:33,545
So I think it really is priced in dollars per transaction and I think the security
budget really is in dollars. And again, that's not to say that it's literally in
dollars. In fact, it's a way of trying to get around the fact that all these
exchange rates exist and they keep changing. So just put it in one unit for people
to understand because those exchange rate fluctuations confuse what's really going
on.

572
00:56:34,545 --> 00:56:45,545
So there's a difference. The block subsidy, the 12.5, does, we do get, that hits for
full force no matter how high the exchange rate climbs, but the fees do not.

573
00:56:45,545 --> 00:56:49,545
So how does this problem alleviate in the long run, do you think?

574
00:56:50,545 --> 00:56:57,545
Well, I, you know, I post about how layer twos need to absorb more transactions and
then they settled layer one.

575
00:56:58,545 --> 00:57:12,545
And one of the things that is problematic about the piece is that it does touch on
this block size limit question, because at the end I say, well, hypothetically, what
if you had the huge block chain?

576
00:57:12,545 --> 00:57:27,545
And it was like a Visa chain and it processes as many transactions as Visa processes
and it charges a similar amount. Then you would actually have much, much more.

577
00:57:28,545 --> 00:57:37,545
And this inevitably causes it to intersect with the block size debate, which people
already have made up their minds about one way or another.

578
00:57:37,545 --> 00:57:48,545
And so it's very difficult for me because I have a third, I have a very different
point of view that's very different from both the mainstream small blocker point of
view and large blocker point of view.

579
00:57:48,545 --> 00:58:08,545
But I bring up that you can have merge mine sidechain, which is a large block sidechain that where it does not require anyone's full node to do any more work, which I
think is the major complaint that small blockers have about large blocks, that it
requires a hard fork and that it increased the cost of running a node.

580
00:58:08,545 --> 00:58:32,545
So you can avoid both of those, this optional sidechain extension block. And at the
same time, it would have to settle the way Blind Merged Mining, which is something
that I developed, the way that works, the miners, the main chain, Bitcoin charged to
56 miners end up getting all the revenues from all the sidechains.

581
00:58:33,545 --> 00:59:00,545
There's like a two-step thing, but they end up with all of the money. So that is –
but I don't – I'm not trying to say that's the only way. I mean I point out – I list
Lightning Network and merge mine sidechains as two ways, but I do say that
Lightning will probably be – I'm not sure exactly how Lightning will be used in the
real world.

582
00:59:00,545 --> 00:59:14,545
I'm certain that it will have a lot of uses, but I'm not sure that really the whole
scaling Bitcoin to worldwide adoption is the Lightning use case.

583
00:59:14,545 --> 00:59:25,545
The people who invented the Lightning Network never claimed that it would be like
that. They said that it would allow a lot of transactions, but they know of course
that to onboard people you need a layer one transaction.

584
00:59:25,545 --> 00:59:37,545
And whenever you need to edit your Lightning channel, you need another layer one
transaction. Even if you want to do these loop out submarine swaps things, you still
need some layer one transaction somewhere else.

585
00:59:38,545 --> 00:59:57,545
And even like Jack Mallers, who has done probably the most for like the
user-friendly Lightning experience, he kind of transformed it into this thing where
people are paying – if I understood him correctly and perhaps I did not, but I tried
to.

586
00:59:57,545 --> 01:00:16,545
I think his scheme is something like the merchant wants Bitcoin, and so he's really
the payment processor. He's like the point of sale terminal. People pay him in fiat
through his app like a debit card, and then he pays the merchant with Lightning.

587
01:00:17,545 --> 01:00:37,545
So even in that case, that is very user-friendly, but it isn't like using Lightning
for the full circuit of the economic transaction. It's still like half fiat. That's
no critique really.

588
01:00:38,545 --> 01:00:58,545
I also worry like is Bitcoin really hard to use for people already. Lightning, you
need to be online to receive money. You need to interact to receive money. Whenever
you either spend or receive money, you have to sign a new message with your private
key.

589
01:00:58,545 --> 01:01:05,545
So you have to do a lot of work. It's possible that all these things will be…

590
01:01:06,545 --> 01:01:07,545
Abstracted.

591
01:01:07,545 --> 01:01:18,545
Fixed, but the sidechain doesn't have a lot of those properties. You can onboard
people without layer one, and you do not have to be online to receive money.

592
01:01:19,545 --> 01:01:39,545
So it's obviously a big song and dance whether or not people believe that sidechains
are viable. I'm kind of kicking that conversation out, which is perhaps a little
unfair, but I did want to end it on an optimistic note because I do not believe,
contrary to what a lot of people did think, that I was saying the end is near and we
should all give up.

593
01:01:39,545 --> 01:01:46,545
First of all, we have a very long time to figure it out because the block subsidy
doesn't have for a long time.

594
01:01:47,545 --> 01:02:03,545
In the beginning I talked about how big it is right now, even if you include the
block subsidy, the 12.5 and what did I do, I printed it out last year. 2.6 billion.

595
01:02:04,545 --> 01:02:22,545
Yeah, 2018. So in 2018, 2.6 billion per year. That's for the entire year. That's all
the money that we pay to miners. That's all the money that miners spend by that long
conversation we had before that marginal cost equals marginal revenue.

596
01:02:22,545 --> 01:02:31,545
It's all the money that we pay to miners and it's all the money that the miners
spend fighting amongst themselves to see who will produce the blocks and spend on
SHA-256.

597
01:02:31,545 --> 01:02:42,545
So it's also the amount that any attacker has to spend to buy theoretically 100% of
the hash rate or do something very similar to that.

598
01:02:43,545 --> 01:02:54,545
So only 2.6 billion per year is an awful lot of money, but it's not that much. I
mean, I don't know what Calvin Ayer's net worth is, but I think it's more than that.

599
01:02:54,545 --> 01:03:02,545
So if you wanted to spend more, I think he has more than three or so billion
dollars. I don't know, I have no idea what I'm talking about people.

600
01:03:03,545 --> 01:03:04,545
Yeah, I'm not paying.

601
01:03:04,545 --> 01:03:15,545
I don't know how much money Roger Ver has. I don't know how much money, I mean we
know that what is it, Michael Bloomberg running for president. Now everyone knows
that he has whatever, 60 something billion dollars.

602
01:03:16,545 --> 01:03:30,545
So that's for the entire year and that's with the security budget included. So I
think this is another problem with the piece, a problem with how effective it is
that a lot of people have this mindset that finally I have Bitcoin.

603
01:03:30,545 --> 01:03:41,545
This is this immovable object, this anchor of absolute truth in my life and I can
build my whole life on this foundation and no one can mess with your stuff.

604
01:03:41,545 --> 01:03:56,545
The Bitcoin user not affected meme, that's one of my favorite memes of all time. Now
we can't even do it anymore because it seems like after SegWit2x and stuff, people
seem like people are constantly being affected by things and constantly needing to
do various things.

605
01:03:56,545 --> 01:04:09,545
But I think this challenges that, this says well it just tangibly costs some amount
of dollars to mess with Bitcoin and potentially shut it off.

606
01:04:10,545 --> 01:04:26,545
But I wanted to say, so when I ended the piece with this whole, what if we had Visa
transaction fees, I wanted to kind of end it in a way that said we could amp this
number way up if we could do something like that.

607
01:04:26,545 --> 01:04:45,545
And there are many other things as well. There are a lot of other layer twos, I like
Ruben Somsen's state chains. I'm not sure that they, I don't actually quite
remember. I think with those, see some of these have the property that they do not
pay the fees to miners.

608
01:04:45,545 --> 01:05:06,545
So LM, you can tolerate a higher layer one fee and with state chains. If you need a
layer one, you don't need it as often. So you can pay more, you can pay a higher
layer one fee. But the fees that are paid when you do your lightning fees which are
lower, those go to the lightning node operators who front working capital.

609
01:05:07,545 --> 01:05:21,545
So they don't go to miners. So that's fine. But it's good for them, but it's not
good for the miners or the security budget on which the foundation depends. So yeah,
there's kind of a lot of stuff in this little piece.

610
01:05:21,545 --> 01:05:46,545
But it was very fun to write. And I think, yeah, I think it was a mistake. And then
you were saying online like, you know, you're like, oh, this is like just all those
people are complaining at it. That's just fun. And those people don't know what
they're talking about. But there are a lot of people do take this point of view that
I expressed, including people like Rusty Russell in particular, who's like a big,
huge lightning guy, huge Blockstream guy.

611
01:05:47,545 --> 01:06:09,545
I think he's got quite a resume, in fact, and the reputation is super nice guy. And
then he wrote, he wrote that thing about like, people should worry about it. So it
was that in particular, when I was like reading your tweet, and I was like, I have
to push back on this a little bit because there are a lot of people who do worry
about this, who do think about it.

612
01:06:09,545 --> 01:06:38,545
And I think it is a case where, you know, if I had to guess, I would say that
probably, even though I put a lot of this stuff out in writing a lot, and people
have taken it however they like, but I wrote some things I write about, you know,
one of the things I wrote about is that how Satoshi was the one who put the one
megabyte block size limit in place, because people write about how Satoshi's vision
was,

613
01:06:39,545 --> 01:06:43,545
unlimited block size, but in July 2010, he was the one who put the limit.

614
01:06:43,545 --> 01:06:46,545
And noticing the potential for spam attacks.

615
01:06:47,545 --> 01:07:05,545
So, well, yes, then you can read and talk about which justifications he felt
comfortable writing on the forum post and, and to what extent you believe any of
them, which is, those are very difficult questions to answer.

616
01:07:06,545 --> 01:07:14,545
But yeah, it seems as though his original vision really was for it to be processing
lots of payments.

617
01:07:14,545 --> 01:07:20,545
And he really didn't, he really was not concerned about the block size getting very
large.

618
01:07:20,545 --> 01:07:27,545
And then at some point, he sort of had a crisis of confidence about that.

619
01:07:27,545 --> 01:07:40,545
He put this limit in, and even though he could have coded it to expire, or he could
have coded it to, he could have put it in permanently and then coded it to expire
later, like right before leaving, he didn't.

620
01:07:41,545 --> 01:07:56,545
And that's not to say that either of those, you know, either the large blocker or
small blocker point of view is right or justified by Satoshi or that Satoshi was
right or that Satoshi never makes any mistakes or any of that.

621
01:07:57,545 --> 01:08:04,545
But it seems as though that's kind of what he thought.

622
01:08:04,545 --> 01:08:15,545
And so when the one megabyte limit was put in place, it was thought that other
things is a point that Hal Finney makes other people make that.

623
01:08:15,545 --> 01:08:21,545
And Peter Todd made this in a funny video he made in 2013 to keep Bitcoin free
video.

624
01:08:21,545 --> 01:08:27,545
I think it's great. It's a really charming little video, but it's also a cool piece
of like Bitcoin history.

625
01:08:27,545 --> 01:08:37,545
And so you can look it up on, it's like two minutes long and it's like a funny
little xylophone and like cartoons and stuff. It's great.

626
01:08:37,545 --> 01:08:47,545
And so they're saying like we could have other stuff on top and people would only
use this to settle and there would be layers.

627
01:08:47,545 --> 01:08:59,545
And this is related to the point that I was trying to make earlier, which is that
BTC could make an error and destroy itself.

628
01:08:59,545 --> 01:09:06,545
And one error would just be if no suitable payment scheme ever materializes.

629
01:09:07,545 --> 01:09:17,545
But again, probably at that point someone would just hard fork again and run with
the block size strategy at that point.

630
01:09:17,545 --> 01:09:26,545
And so it's still then you'd have the BTC UTXOs, they would have to compete with
these BCH BSV UTXOs,

631
01:09:26,545 --> 01:09:36,545
but they'd probably still do very well because I think that the network effects are
so important to the viability of money,

632
01:09:36,545 --> 01:09:45,545
that even if you hard forked BTC to a large block size today would probably still do
better.

633
01:09:46,545 --> 01:09:52,545
I feel bad saying this. I feel bad for the BCH BSV people often.

634
01:09:52,545 --> 01:10:01,545
But if BTC hard forked to a larger block size it would probably do better than BCH.

635
01:10:01,545 --> 01:10:02,545
Just as a network effect.

636
01:10:02,545 --> 01:10:09,545
Just as like if you did it a slightly different way where you announced it months in
advance and there was a lot of discussion

637
01:10:09,545 --> 01:10:13,545
and it was like there really is no other way, we tried all these other things.

638
01:10:13,545 --> 01:10:19,545
But of course we have barely scratched the surface of trying a lot of other things.

639
01:10:19,545 --> 01:10:28,545
Obviously one thing that I think is kind of silly is that Lightning gets ridiculous
amounts of praise and attention.

640
01:10:28,545 --> 01:10:36,545
I think a lot of it is deserved, but I think people are really just thinking
Lightning equals good

641
01:10:36,545 --> 01:10:41,545
and then they have decided not to think much more past that.

642
01:10:41,545 --> 01:10:48,545
And so as a result we never hear about what happened to Ruben Somsen's state chains
idea.

643
01:10:48,545 --> 01:10:50,545
We don't hear about it. I think it's really good.

644
01:10:50,545 --> 01:10:51,545
I like that idea too.

645
01:10:51,545 --> 01:10:58,545
It's really weird because you need fixed size UTXOs. That's a really weird quirk.

646
01:10:58,545 --> 01:11:03,545
But other than that it's better than a federated chain in literally like every
possible way.

647
01:11:03,545 --> 01:11:06,545
It's exactly what that is except much better.

648
01:11:07,545 --> 01:11:11,545
State chains are just trading private keys really at the end of the day, right?

649
01:11:11,545 --> 01:11:17,545
His blind state chains, the servers have no idea what they're signing at all.

650
01:11:17,545 --> 01:11:20,545
They have no idea if it's even a Bitcoin message or anything.

651
01:11:20,545 --> 01:11:29,545
It's very difficult. They have to collude with – it's very difficult for them to
steal your money.

652
01:11:29,545 --> 01:11:35,545
They almost never end up with it. They just have to – they can like reset it to the
very first state.

653
01:11:35,545 --> 01:11:41,545
So it's much more secure, much more private.

654
01:11:41,545 --> 01:11:49,545
They don't know – they don't necessarily know how much money is even in this system.

655
01:11:49,545 --> 01:11:57,545
It does require – my understanding is it requires hard requirement for Schnorr and
some other things.

656
01:11:58,545 --> 01:12:00,545
So you can't currently do it.

657
01:12:00,545 --> 01:12:03,545
But yeah, I think that's a good idea.

658
01:12:03,545 --> 01:12:09,545
Why do you think people are apprehensive to try things like blind merge sidechains?

659
01:12:09,545 --> 01:12:13,545
Oh yeah, blind merge mined sidechains.

660
01:12:13,545 --> 01:12:24,545
Well, there are – I do keep like an FAQ and there are one – I have a peer review.

661
01:12:24,545 --> 01:12:28,545
On drivechain.info, I have a peer review section.

662
01:12:28,545 --> 01:12:35,545
But I replaced it with a new one because I feel like you could boil it down to these
two objections.

663
01:12:35,545 --> 01:12:45,545
The big one is that with merge mined sidechains, there's this complaint about miners
being able to steal the sidechain funds,

664
01:12:46,545 --> 01:12:50,545
which is technically true, but very misleading.

665
01:12:50,545 --> 01:12:57,545
Because it's like – one analogy I give is that it's like someone asking,

666
01:12:57,545 --> 01:13:00,545
does the free market allow entrepreneurs to go bankrupt?

667
01:13:00,545 --> 01:13:04,545
Because it does, but that's kind of the whole point.

668
01:13:04,545 --> 01:13:10,545
The whole point is that the threat of bankruptcy is what enforces quality.

669
01:13:11,545 --> 01:13:25,545
And so you have to induce some way of keeping the junk software out of the system.

670
01:13:25,545 --> 01:13:32,545
It's kind of frustrating because when I wrote the post in November 2015,

671
01:13:32,545 --> 01:13:35,545
I knew that people would have this misunderstanding about it,

672
01:13:35,545 --> 01:13:38,545
and so I wrote a large section about it back then.

673
01:13:39,545 --> 01:13:45,545
And if I read it now, it really holds up very well because it's just – it is all the
stuff that everyone –

674
01:13:45,545 --> 01:13:50,545
this line that the miners can steal line that people complain.

675
01:13:50,545 --> 01:13:55,545
A lot of people think that, oh, if miners can steal, then that means there's 100
bitcoin in it.

676
01:13:55,545 --> 01:14:03,545
And then the very next block, why wouldn't the miners just take that money and give
it to themselves immediately?

677
01:14:03,545 --> 01:14:08,545
And am I assuming that the miners are altruistic?

678
01:14:08,545 --> 01:14:09,545
The answer is absolutely not.

679
01:14:09,545 --> 01:14:16,545
I'm assuming – in fact, relying on the miners to be as self-interested as possible.

680
01:14:16,545 --> 01:14:21,545
So in their self-interest, they wouldn't steal because it would –

681
01:14:21,545 --> 01:14:25,545
Well, first of all, it's much more difficult to steal than I think people really
appreciate.

682
01:14:25,545 --> 01:14:29,545
They have to – the miners have to work together on a given withdrawal.

683
01:14:29,545 --> 01:14:33,545
They converge on a withdrawal over three to six months.

684
01:14:33,545 --> 01:14:39,545
So they can't just like withdraw the next block.

685
01:14:39,545 --> 01:14:46,545
They have to announce this thing and then wait a very long time with it hanging in
the air the whole time,

686
01:14:46,545 --> 01:14:53,545
like very visibly to everyone that the withdrawal that they are trying to ram
through

687
01:14:53,545 --> 01:14:59,545
does not match what is reported by a sidechain full nodes, the full nodes of a given
sidechain.

688
01:14:59,545 --> 01:15:01,545
So that's –

689
01:15:01,742 --> 01:15:05,182
you know, that's kind of one of the points. I think a more important point to make
though

690
01:15:05,182 --> 01:15:12,222
is that if we wanted to change Drivechain, which is my sidechain's idea that we're

691
01:15:12,222 --> 01:15:18,222
talking about, is if we wanted to change it so that it would be impossible for
miners

692
01:15:18,222 --> 01:15:24,662
to steal funds, that would be extremely easy. That would be like one line of code or
something,

693
01:15:24,662 --> 01:15:29,862
or even zero lines of code, because it could be just redrawing the definition of
Bitcoin

694
01:15:29,862 --> 01:15:39,142
to include all the sidechains, and then your full node would be responsible for
every sidechain,

695
01:15:39,142 --> 01:15:44,502
all the sidechain code. And it would be more like Ethereum, where people could run
all

696
01:15:44,502 --> 01:15:48,022
this code and you'd be responsible for all of it, and the validation costs would
just

697
01:15:48,022 --> 01:15:55,622
grow and grow and grow forever. And that's why it's bad, and we need a way for your

698
01:15:55,622 --> 01:16:01,862
full node to ignore what other people are doing on other sidechains. So that's
really

699
01:16:01,862 --> 01:16:08,422
the heart and soul of sidechains is your sovereignty as a user. It's really trying
to prevent

700
01:16:08,422 --> 01:16:16,622
funds from being stolen in a sense of creeping this other code in, or stuff like
these hard

701
01:16:16,622 --> 01:16:20,342
fork campaigns like SegWit2x. See, if you had sidechains, there wouldn't be any need

702
01:16:20,342 --> 01:16:27,262
for SegWit2x. People would just make a sidechain that had large blocks, they'd go
off on their

703
01:16:27,262 --> 01:16:35,742
own system in this ideal world of pitching, they'd just go off and be opt-in. And
then

704
01:16:35,742 --> 01:16:40,982
they would never need to hard fork the entire network. So people could stay in their
small

705
01:16:40,982 --> 01:16:45,582
block world, but the people who wanted to go to large block world, they would go
over

706
01:16:45,582 --> 01:16:50,862
there and then you'd just have two separate worlds that interacted and they share 21

707
01:16:50,862 --> 01:16:57,022
million coins, but otherwise they don't care as much about what each other do.

708
01:16:57,022 --> 01:17:05,702
Now you know, how is the case – with altcoins we already have that situation, but
with sidechains

709
01:17:05,702 --> 01:17:09,222
you need to have it be the case that they share 21 million coins. So if some people

710
01:17:09,222 --> 01:17:15,622
acquire the sidechain coins, and they want mainchain coins, they need to be able to
get

711
01:17:15,622 --> 01:17:22,382
them back. If Brian Armstrong gives them 20 BTC, or it would really be something
like

712
01:17:22,382 --> 01:17:31,222
if Brian Armstrong gives them 20 Drive2-BTC or something, you know, a sidechain in
the

713
01:17:31,222 --> 01:17:34,622
second Drivechain slot or something. It would be slightly different, the same way
that Liquid

714
01:17:34,622 --> 01:17:44,102
has LBTC. But it would be very much like BTC, because like LBTC it has to trade at

715
01:17:44,102 --> 01:17:51,422
par with mainchain Bitcoin. You have to be able to redeem these 20 BTC that you got
from

716
01:17:51,422 --> 01:17:59,982
Brian Armstrong, because he loves large blocks so much, or Roger Veer. They give you
40 BTC,

717
01:17:59,982 --> 01:18:07,462
you want to be able to say, okay, you know, thanks but no thanks. I want 40 on you
know,

718
01:18:07,462 --> 01:18:15,222
the Luke Junior, the tiniest blockchain in the world, 350k whatever blockchain. So
you

719
01:18:15,222 --> 01:18:22,782
have to be able to exchange them at a one-to-one rate. And how can you do that is
the big question

720
01:18:22,782 --> 01:18:29,662
of sidechains. And one easy way is just to make it so that you actually check every

721
01:18:30,342 --> 01:18:37,342
sidechain's rules in all their software, but that just cheats and just staples. You
basically

722
01:18:37,342 --> 01:18:42,542
got a hard fork, you know, that's basically just hard forking to a larger block
size,

723
01:18:42,542 --> 01:18:50,062
just in a sneaky way. So you can't have that. So what you need is some way of – what
would

724
01:18:50,062 --> 01:18:54,262
Bitcoin Core, the mainchain full nodes need, is some way of figuring out whether or
not

725
01:18:54,302 --> 01:19:01,982
withdrawals are real. That doesn't involve caring about anything else that the
sidechain might do,

726
01:19:01,982 --> 01:19:09,782
because you don't care. Yeah, and well, yeah, the way it works is this SPV proof
that this is like

727
01:19:09,782 --> 01:19:15,422
a much older thing, Satoshi invented it, and then Blockstream wrote a paper about it
in October

728
01:19:15,422 --> 01:19:21,742
2014, which is that it's easy to only check the work as we were explaining earlier.
The headers

729
01:19:21,782 --> 01:19:29,382
have all the work, the headers are just 80 bytes, that's 4 megabytes per year. Very,
very easy to

730
01:19:29,382 --> 01:19:35,782
check, and that was where all the effort was placed. So it's very, very unlikely
that someone

731
01:19:35,782 --> 01:19:40,462
would go through all that effort to create blocks that were invalid, although it's
certainly

732
01:19:40,462 --> 01:19:46,062
possible. Nothing stops it from being possible, and it has occasionally happened by
accident.

733
01:19:46,062 --> 01:19:53,862
It happened in July 2015, I think, around the 4th of July, there was something funny
happened where

734
01:19:54,822 --> 01:20:00,422
someone actually, a miner, created an invalid block that had the same proof of work,
that had

735
01:20:00,422 --> 01:20:07,182
valid proof of work by accident on mainchain BTC. So it does occasionally happen,
and it could

736
01:20:07,182 --> 01:20:11,262
happen, and that is why running full nodes is important, because you need some
negative feedback

737
01:20:11,302 --> 01:20:16,102
loop to prevent that from taking everything off the rails.

738
01:20:18,742 --> 01:20:24,782
So the point is that the way to check the withdrawals is with some SPV proof, and
the SPV proof that I

739
01:20:24,782 --> 01:20:31,862
use is I just say every time a mainchain block is found, that counts as an SPV
proof. So this is a

740
01:20:31,862 --> 01:20:38,062
little complicated, because what I had to do when I invented Drivechain was
acknowledge a lot of the

741
01:20:38,062 --> 01:20:44,382
previous work, but also undo parts of it that I didn't like. So if someone is coming
at it fresh, they

742
01:20:44,382 --> 01:20:49,782
will not be able to really understand what I'm talking about, because I would
introduce things, and

743
01:20:49,782 --> 01:20:55,582
then I would say why I don't do them, and that would be confusing for people. But I
guess the best way

744
01:20:55,582 --> 01:21:00,462
of explaining it, I had this funny little train metaphor, but there's like a train
going from New York

745
01:21:00,462 --> 01:21:08,102
to Los Angeles, and the train, everyone's withdrawals, individual withdrawals in the
sidechain, they're

746
01:21:08,102 --> 01:21:14,622
like passengers on this train, and the train leaves once every three months.
Passengers get on the train,

747
01:21:14,622 --> 01:21:22,862
and then everyone can watch as it very slowly, in full view of everyone, this one
little 32-byte hash

748
01:21:22,862 --> 01:21:33,582
withdrawal moves slowly from New York to LA. And there's many other details about it
as well. But

749
01:21:33,582 --> 01:21:41,782
basically, what I'm suggesting is that the miners would not want to allow, and
there's a big difference

750
01:21:41,782 --> 01:21:47,542
between just miners not thinking about it and miners thinking about it, because they
don't think about it,

751
01:21:47,542 --> 01:21:53,222
they have pretext to say it was a mistake or that someone snuck something by. But if
it's very slow, and

752
01:21:53,222 --> 01:21:59,342
they can only do one at a time, then they are endorsing it, they're in fact
endorsing it. There's no way it

753
01:21:59,342 --> 01:22:07,302
can go three months on this long journey without all the miners consciously saying
that they have no

754
01:22:07,302 --> 01:22:14,262
problem with this hash. So this hash is conjectured, and then if miners have a
problem with it, they could

755
01:22:14,262 --> 01:22:19,222
stop the train or even send it backwards. And after six months, the train just, you
know,

756
01:22:19,902 --> 01:22:22,502
So how would they do that? Would they just reorg?

757
01:22:22,542 --> 01:22:29,862
No, that would not work at all. If they reorg, then it would be affecting the main
chain, which is the

758
01:22:29,862 --> 01:22:35,742
whole design criterion is that someone should, in fact, as a soft fork, you should
be able to not even

759
01:22:35,742 --> 01:22:43,662
upgrade your software to any code that had Drivechain in it at all. And everything
should still work

760
01:22:43,662 --> 01:22:52,102
for you. Right? So you shouldn't even have to notice this. So reorgs would be people
noticing it, and

761
01:22:52,102 --> 01:22:58,102
that's not good. So but there is a inside that I have this little game where each
with these withdrawals

762
01:22:58,102 --> 01:23:05,062
show up sidechains have there's, you know, it's kind of hard to explain to a wide
audience, because I

763
01:23:05,062 --> 01:23:09,502
don't know what background knowledge they already have. But Drivechain kind of
makes 256 slots, it

764
01:23:09,502 --> 01:23:16,822
says that you could have 256 sidechains if you wanted them. And then you turn one
on. There's some

765
01:23:16,822 --> 01:23:24,662
hash commitments to the software, so that people can at least know. If someone says,
if Brian

766
01:23:24,662 --> 01:23:28,662
Armstrong says, this is funny, because this is happening now, this is the live by
the fork, die by

767
01:23:28,662 --> 01:23:36,702
the fork problem. If Roger Ver says, this is BCH, but then Amri Shisei says, this
other thing is BCH.

768
01:23:36,982 --> 01:23:42,142
How do you know which piece of software really was the sidechain? So they kind of
have that at the very

769
01:23:42,142 --> 01:23:49,782
beginning, you get to hash the tarball and the GitHub latest commit. And you can
those are all

770
01:23:49,782 --> 01:23:57,502
optional, but highly, highly recommended. Because there's no real way to enforce
software as Bitcoin

771
01:23:57,502 --> 01:24:03,982
Core has no idea what you, you know, are doing with your sidechain, but highly
recommended that you do

772
01:24:04,022 --> 01:24:11,262
those things. And then people deposit money into it, it all rolls into this output.
This Bitcoin,

773
01:24:11,862 --> 01:24:19,702
because money goes into this box. And then if you want to withdraw, the sidechain
will assemble a

774
01:24:19,702 --> 01:24:23,702
transaction that pays out all these people. So if you have 17 different people that
want to withdraw,

775
01:24:24,262 --> 01:24:28,062
the sidechain software that we wrote, it will automatically figure out what to do.
They'll say

776
01:24:28,062 --> 01:24:36,022
select this, select this box, and pay out the 17 people. Here's the transaction that
does that. And

777
01:24:36,022 --> 01:24:46,102
here's the hash of that. Or a hash 32 bytes that correspond to that. Those 32 bytes
can then be

778
01:24:46,102 --> 01:24:52,262
proposed, anyone can do this at any time, they propose these 32 bytes, and they
still 32 bytes

779
01:24:52,262 --> 01:24:59,342
will stick around for six months. And then they expire and go away. But when they're
proposed,

780
01:24:59,342 --> 01:25:05,382
miners can, there's a little score. And there's a score. And if the score goes up,
they can move the

781
01:25:05,382 --> 01:25:12,302
score up by one, each block, or keep it the same if they do nothing or even move it
down. They can

782
01:25:12,302 --> 01:25:19,182
upvote it or downvote it once per block. And if the score climbs up to 13,150, which
is three months,

783
01:25:19,782 --> 01:25:28,222
then you can include blocks. Three months worth of mainchain BTC blocks. You can
then if that once

784
01:25:28,222 --> 01:25:34,542
it's in that state, you can include that withdrawal transaction that pays the 17
people.

785
01:25:34,622 --> 01:25:39,702
Okay. So there's delayed gratification built into it.

786
01:25:39,742 --> 01:25:46,262
It's extremely delayed. Yes. And this is yeah, this is why Adam Beck often calls it
the slow return.

787
01:25:46,702 --> 01:25:52,262
He's the basically the first person even before me to identify that that was even
though I designed it,

788
01:25:52,582 --> 01:25:57,542
he was like, this is what really makes it different. Makes it sort of what makes it
work, which I think

789
01:25:57,582 --> 01:26:06,622
is, is correct. Now, if you can only within each sidechain group, there's 256 slots.
So if you propose

790
01:26:06,622 --> 01:26:13,422
two withdrawals from from a given sidechain at the same time, only one of them can
get can move up and

791
01:26:13,422 --> 01:26:21,222
score. The others automatically move down. So it's extremely rate limited. Not only
can it doesn't take

792
01:26:21,222 --> 01:26:29,302
three months, but you can only do one withdrawal per three months. So it's very,
very slow. And so this is

793
01:26:29,302 --> 01:26:35,222
to address this question of, well, how do I know the miners won't steal the money?
Well, it's very difficult

794
01:26:35,222 --> 01:26:43,702
for anyone to get any money out, let alone the miners. And, but the other angle is
that it's very difficult.

795
01:26:43,702 --> 01:26:47,822
It's kind of you have a prison metaphor and some slides that I use where there's
like these gates, you know,

796
01:26:47,822 --> 01:26:53,742
these transparent gates with chains, and you have to go through 13,000 gates to get
out of the prison, you know,

797
01:26:53,742 --> 01:26:58,062
because some people have to get out the employees, the lawyers, they have to let
people in and out of the

798
01:26:58,062 --> 01:27:03,582
prison. But you know, they have buzzers and things, you know, when the door opens,
there's a buzzer and you

799
01:27:03,582 --> 01:27:09,542
walk through the next gate and you can't just waltz out. But nonetheless, it's
possible to leave. So people have

800
01:27:09,542 --> 01:27:15,542
to be able to leave the prison. Eventually, unless there's something to life, you
know, time is up and you get

801
01:27:15,542 --> 01:27:22,942
out. But the prisons are the sidechains. And they generate money for they generate
money for the miners,

802
01:27:22,942 --> 01:27:33,862
they have transaction fees. And they should amp the exchange rate. Because a token
that can do anything, could do

803
01:27:33,862 --> 01:27:40,342
anything. It's more useful, should be worth more. Yeah, it should be worth more. So
by attacking a popular side

804
01:27:40,342 --> 01:27:52,022
chain, it should decrease actually miners revenues, maybe not by enough. But perhaps
it's you see, this is what

805
01:27:52,022 --> 01:27:58,382
actually depends. I have a meme on drivechain.info. I have memes. I think some of
them are made by other people.

806
01:27:58,422 --> 01:28:03,022
Some of them are made by me. I made one of them. One of them I call skimming the
vital few.

807
01:28:03,022 --> 01:28:04,262
I'm looking at them right now.

808
01:28:05,342 --> 01:28:11,622
Yeah, do you see this one with this one with like a little bell curve, and it's
called skimming the vital few. And most

809
01:28:11,622 --> 01:28:20,022
sidechain designs will be terrible. And so the design criterion of Drivechain is
that only a few will actually be

810
01:28:20,022 --> 01:28:27,902
viable enough. It's like most businesses of all the theoretically possible
businesses in the world. Most would fail, you

811
01:28:27,902 --> 01:28:34,862
know, but we in the real world, we interact with only the ones. So certainly, it's
important for people to understand that

812
01:28:34,902 --> 01:28:40,622
they're taking a big risk at first. But if the sidechain does become popular, or if
it just has some theoretical

813
01:28:40,622 --> 01:28:47,662
justification for existing, like for example, a Zcash sidechain that people just use
to like launder their toxic sludge

814
01:28:47,702 --> 01:28:56,102
coins that they know already, that someone knows that they own these UTXOs. So
they're doomed. They can't, their privacy is

815
01:28:56,102 --> 01:29:02,742
already lost. What can they do? They can't, you know, they can try to send them to
themselves, you know, you may see like

816
01:29:02,742 --> 01:29:10,182
blacklisted coins, you send them to Zcash sidechain. And then now what is people
going to do when they come back, no one

817
01:29:10,182 --> 01:29:15,102
will know what happened where they were going, you know, what happened to them, it's
while they were in the Zcash

818
01:29:15,102 --> 01:29:22,422
sidechain. So if a sidechain has some theoretical reason for existing, you see,
there's a problem with Zcash, there's a

819
01:29:22,422 --> 01:29:30,542
problem with a lot of the crypto is that it allows inflation, but Drivechain does
the accounting for the 21 million coins.

820
01:29:30,582 --> 01:29:38,622
That's one of the few things that is checked across all the all the chains. In fact,
it must because there is no way it

821
01:29:39,222 --> 01:29:48,662
could be valid Bitcoin transactions if you could pay 10 Bitcoin into some mysterious
script and then get 15 back out. Every

822
01:29:48,662 --> 01:29:58,982
other node would reject that. So there is no possibility of inflation in the broader
system. Someone could easily make a

823
01:29:58,982 --> 01:30:04,302
mistake on a sidechain where they accidentally created inflation, that would lead
immediately to the death of that

824
01:30:04,302 --> 01:30:09,702
sidechain because everyone would run, there would basically be a bank run, and
people would withdraw their money. But you

825
01:30:09,702 --> 01:30:18,262
see, then what would happen, the developers or whoever, and the promoters, they
would be blamed for that, which is very

826
01:30:18,262 --> 01:30:24,182
healthy, because then someone would make a new sidechain or all the existing
sidechains that did a better job would get more

827
01:30:24,182 --> 01:30:29,382
credit for doing it the right way. So it's a very healthy antifragile thing.

828
01:30:30,222 --> 01:30:38,142
Well, so that's the idea. And many of these, you know, I don't think, I think it's,
you know, the Ethereum concept that

829
01:30:38,142 --> 01:30:47,702
whatever, however bad your code is, will support it 100%. That has, that definitely
has pros. That is, you know, that has

830
01:30:47,702 --> 01:30:54,142
advantages. But of course, then you have something like the DAO. And then they did
have to hard fork the whole thing or reorg the

831
01:30:54,142 --> 01:30:54,462
whole thing.

832
01:30:54,462 --> 01:30:55,302
State transition.

833
01:30:55,342 --> 01:30:58,622
So it has its pretty big disadvantages as well.

834
01:30:58,622 --> 01:30:59,582
State transition.

835
01:31:01,582 --> 01:31:08,982
Yeah, right. State transition, yeah, yeah, yeah. Some euphemism. So with Drivechain,
what you want is the miners can

836
01:31:08,982 --> 01:31:17,182
steal, because what that means is that it's not your problem. That's, it's like, you
know, sorry for your loss. That's what

837
01:31:17,182 --> 01:31:23,102
Bitcoin kind of means to me, really, is that some other people tried some weird
thing. It didn't work out.

838
01:31:23,342 --> 01:31:24,102
Tied off.

839
01:31:24,102 --> 01:31:33,222
They lost their money. But miners can't steal any money that's not deposited into a
Drivechain. It's completely unchanged

840
01:31:33,222 --> 01:31:40,782
for every, so the way it is now, it's, if you're just, if you just like using layer
one, you have really no basis for

841
01:31:41,622 --> 01:31:47,542
complaining about what other people do. Other people are allowed, this, I asked this
question to a lot of smart people,

842
01:31:47,542 --> 01:31:57,582
including Peter Weil and Andrew Polstra. And I, because we're, we talk about these
types of things from time to time. And I

843
01:31:57,582 --> 01:32:03,542
remember I asked him in Amsterdam, I was like, well, you know, you think that people
should be allowed to sell their BTC

844
01:32:03,542 --> 01:32:14,742
for US dollar, right? You know, yes. And you think that people should be allowed to
sell their BTC for, you know, Litecoin

845
01:32:14,742 --> 01:32:21,382
or Ethereum or some other dumb project. And of course, the answer is yes, because
it's your money. It's your sovereign money.

846
01:32:21,382 --> 01:32:30,382
If you want to sell it and buy something else with it, you know, that must be
allowed. But all I'm saying with Drivechain is you

847
01:32:30,382 --> 01:32:40,422
should be allowed to spend it to a weird script. And so, but apparently that is,
that is people just, that is the main sticking

848
01:32:40,422 --> 01:32:47,262
point for people. They really think, because miners can steal, it's just three
words. And so there's actually a pact with

849
01:32:47,262 --> 01:32:55,382
nuance. It's easy, you could easily change it so that miners couldn't steal, but
that would be a mistake. It would be a much more

850
01:32:55,382 --> 01:32:56,142
horrific mistake.

851
01:32:56,142 --> 01:32:59,262
Sacrificing latency and the ability to download a full node.

852
01:33:00,262 --> 01:33:11,822
You would, yeah, it would turn everyone's weird pet project into a mandatory hard
fork of Bitcoin. That's a nightmare. And

853
01:33:11,822 --> 01:33:18,342
especially if you don't like large blocks, we're way past that. Now you not only
have to download everyone's block data, but you have to

854
01:33:18,342 --> 01:33:27,862
perform whatever weird computations they think you should perform. And the other
angle is that it's not actually very easy for anyone

855
01:33:27,862 --> 01:33:37,102
to get money out of the system, because you can only do it four times a year. It
takes forever. At most, if they fight and they

856
01:33:37,102 --> 01:33:44,222
start moving this train forward and back, it could take six months or never, because
it expires after six months. So you could

857
01:33:44,222 --> 01:33:51,022
never, you could have multiple attempts to get a train from New York to LA that all
fail. And at which point no one's money is,

858
01:33:51,102 --> 01:33:58,582
everyone's money is still safe. It's all protected by the respective full nodes. So
if there's dissent, it's just maintains the status

859
01:33:58,582 --> 01:34:06,622
quo, which I think is great. Usually this leads people to believe that, isn't that
such a dumb idea? Money will never come back from the

860
01:34:06,622 --> 01:34:12,822
sidechain. Who would ever deposit the sidechain? And how would I ever get my money
back? So why would I do any of this? This is a dumb

861
01:34:12,822 --> 01:34:21,982
idea. But that's very easy to fix. In fact, we already did it. It was the origin of
Andreas Brecken's project, SideShift.ai, which now is

862
01:34:22,022 --> 01:34:29,222
like a shapeshift competitor. But he just, you know, it was originally I was sort of
explaining this little idea to him, and he kind of

863
01:34:29,222 --> 01:34:37,822
coded it up in like a weekend or something. But then the idea is that you'd have
someone like, you don't need a shapeshift or

864
01:34:37,822 --> 01:34:44,942
whatever. But for user friendliness reasons, people would probably do something like
that. You could do it completely with crypto and

865
01:34:44,942 --> 01:34:52,262
with atomic swaps and things. But you'd have on the sidechain, people would
basically sell, they go to something like shapeshift and

866
01:34:52,262 --> 01:34:59,342
instead of selling at a complete one to one ratio, they'd sell for like 99 cents on
the dollar or something. They'd say, I don't want to

867
01:34:59,342 --> 01:35:13,742
wait three months. I have Brian Armstrong gave me 20 large block BTC, but I want
original main chain BTC. I don't believe in

868
01:35:13,742 --> 01:35:21,102
Drivechain and I don't believe in large blocks and I don't believe in whatever,
blah, blah, blah. So you'd say, okay, so I tell you,

869
01:35:21,102 --> 01:35:27,502
okay, well, look, here's what you can do. You can put your money on this train and
hope for the best. It might get there in three

870
01:35:27,502 --> 01:35:39,462
months. Or you can go to, you know, sideship.ai or whatever, or shapeshift.io or
whatever. And someone will buy them for you, you

871
01:35:39,462 --> 01:35:49,102
know, basically immediately. They'd be earning time value of money because they're
taking that risk. You see, anyone can do this.

872
01:35:49,262 --> 01:35:58,822
Anyone, right, exactly. Anyone with main chain BTC could do this. They assemble
everyone's transactions in a big pile. And they may own

873
01:35:58,822 --> 01:36:10,262
many UTXOs. They may own like 20,000 UTXOs of various shapes and sizes on the sidechain. But when they withdraw, they're just going to

874
01:36:10,262 --> 01:36:20,102
withdraw the sum, presumably, to themselves. So when it comes back in the main
chain, it's actually already shrunk all the entire activity of

875
01:36:20,102 --> 01:36:30,102
the three months from all these people into just one transaction. It's kind of
crazy. They say, this Andreas Brecken or whoever it is, they

876
01:36:30,102 --> 01:36:40,342
have all these things, they paid 99 cents on the dollar, then they watch. They care
very much that this train thing works as advertised. But

877
01:36:40,342 --> 01:36:41,822
most people would not really need to care.

878
01:36:41,862 --> 01:36:50,542
No, well, and I think this actually really highlights the thread that I wrote that
we that brought us here is like, we want these UTXOs to

879
01:36:50,542 --> 01:36:57,782
have more utility. Because then we'll drive fees up on the main chain. It seems
like, at least the way you're explaining it, these side

880
01:36:57,782 --> 01:36:58,822
chains would do that.

881
01:36:59,822 --> 01:37:07,862
Yes, the sidechains all pay. I mean, it's possible, it's theoretically possible to
have. This is like the goal of sidechains is to let

882
01:37:07,862 --> 01:37:15,982
people try all of their crazy ideas, because it's like a Friedrich Hayek thing. Try
whatever idea you want, something will work, right.

883
01:37:15,982 --> 01:37:23,422
People were skeptical of Bitcoin when it first came out, blah, blah, blah. But it
would be terrible if you weren't allowed to try this or

884
01:37:23,422 --> 01:37:33,622
that. Who knows, you know, society is built on crazy people trying crazy things. So
you could, there's a lot of flexibility, you could

885
01:37:33,622 --> 01:37:39,302
make a sidechain that has proof of stake, you could make a sidechain that has a
different proof of work. All of it would be very

886
01:37:39,302 --> 01:37:51,062
weird. And possibly a waste of time, because the main chain miners, 51% of main
chain miners can always, in all circumstances, filter out

887
01:37:51,062 --> 01:37:59,622
any message that they don't like. They just have to not mine on any block that has
that message, and that's all they need to do. So that's

888
01:37:59,622 --> 01:38:08,902
already given. So I don't know why you would involve more people. It's like more
people, because ultimately, when you try to move back to

889
01:38:08,902 --> 01:38:17,942
the main chain, you have to get through this first group. So I find that, so you
know, the many designs are possible. I tweaked, there

890
01:38:17,942 --> 01:38:26,862
was originally, of course, merge mining, which was invented by Satoshi for Namecoin.
And I tweaked it a little bit to take advantage of the

891
01:38:26,862 --> 01:38:38,342
fact that in sidechains, and we're in Drivechain at any rate, in order to run a
full node of any sidechain, you must run a full node of all

892
01:38:38,342 --> 01:38:47,182
the parent, any parent chain. So if you have BTC as the ultimate parent, and then if
you have a sidechain of that, you need to run its full

893
01:38:47,182 --> 01:38:55,702
node and the Bitcoin full node. And then you could have a sidechain of a sidechain, in which case you would need to run three full nodes to

894
01:38:55,702 --> 01:39:04,022
really understand what's going on. So it goes in one direction, it's, you can ignore
everything. But in another direction, everything is

895
01:39:04,022 --> 01:39:11,342
mandatory. So in the downstream, and that's exactly how lightning works as well, you
know, you need to run your lightning node, but lightning

896
01:39:11,342 --> 01:39:13,502
node doesn't work unless you have the Bitcoin full node.

897
01:39:13,502 --> 01:39:19,622
So did Satoshi bring up merge mining, because Namecoin was shot 256 too, and he just
didn't want them stealing hash power?

898
01:39:21,502 --> 01:39:30,782
He, yes, that was in the original Bitcoin talk thread, as I remember it, that was a
major consideration that people complained about the hash

899
01:39:30,782 --> 01:39:40,422
power being split. He said, actually, we don't need to split the hash power, we can
pile it all, they can all share hash power. It's funny, in

900
01:39:40,422 --> 01:39:47,822
that thread, he also said that piling everything into one chain won't scale, which
is one of his big, see, you can line up all these

901
01:39:47,822 --> 01:39:56,742
different quotes about was Satoshi a large block or a small block, which is very fun
pastime. But yeah, Satoshi actually invented the

902
01:39:56,742 --> 01:39:59,022
phrase sidechain with a space.

903
01:39:59,139 --> 01:40:14,619
Invented the phrase sidechain with a space in that thread also, so there's a lot of
weird trivia going on in that Namecoin thread, which is very interesting, because it
shows just how open, and people are very excited about Namecoin, and I'm also
excited by it.

904
01:40:14,619 --> 01:40:33,739
I think it has potential for, especially Bitcoin has a kind of affinity with the
dark net, and it's annoying to type these onion addresses, and I think somehow it
could work, you know, the way DNS works, it costs a lot of money to buy domains, you
have to renew them.

905
01:40:33,739 --> 01:40:53,739
Yeah, that's a really good read for anyone who wants to read about it, because you
can read about people's attempts to redesign a second chain that's not Bitcoin, and
they invent all this cool stuff, including merge mining collectively in the thread,
and then they debate it, and it's a very interesting debate if you're interested in
that.

906
01:40:53,739 --> 01:41:09,739
If you're interested in stuff like proof of work versus proof of stake, I think this
is much better than that, you know, it's much higher quality discussion, you know,
because a lot of that stuff ended up being very quickly turned into a real project,
Namecoin.

907
01:41:09,739 --> 01:41:31,739
It was successfully merge mined, I mean it still is, and it occasionally has the
hilarious property that it's happening again. I had a tweet about this, one of my
favorite tweets ever, where from Jeremy Rand, who is basically the chief Namecoin
guy, he's an awesome guy, he's a super nice guy and very smart.

908
01:41:31,739 --> 01:41:51,739
And he found out that he watches Namecoin very carefully, and after the split, the
BCH, BTC August 2017 split, because of the way Namecoin's merge mining works, pools
were configured to do it.

909
01:41:51,739 --> 01:41:52,739
This is fascinating.

910
01:41:53,739 --> 01:42:07,739
And the pools were also configured to switch between BTC and BCH, based on the fact
that the profitability changed, because the difficulty resets, as we have talked to
death a lot about already.

911
01:42:07,739 --> 01:42:18,739
Difficulty resets to erase all the profits, so even though BTC had a much higher
price, BCH came out with a low difficulty and a low price, but then its price
currently quickly went up.

912
01:42:19,739 --> 01:42:43,739
And then, so it became relatively more profitable, and so it was switching back and
forth. The pools kept merge mining, and because it didn't matter if they were mining
on BTC or BCH, it ended up being the case that the hash rate on Namecoin was higher
than both BTC and BCH.

913
01:42:44,739 --> 01:43:09,739
Which had the hilarious property, because you had all those people who were saying
that, that was also around the time when the meme of the most hash rate determines
which Bitcoin is the real Bitcoin or whatever, that meme, and the most hash rate in
a kind of who cares how it was calculated way, like the hash rate of what?

914
01:43:09,739 --> 01:43:20,739
The Bitcoin headers? How do you know that it's a Bitcoin header? So this view was
always wrong, it didn't make any sense, but it became temporarily absurd completely,
because it would have claimed that Namecoin was actually the real Bitcoin.

915
01:43:20,739 --> 01:43:21,739
Because it was being merge mined on both.

916
01:43:22,739 --> 01:43:25,739
Something that literally no one believes, that it had the highest hash rate.

917
01:43:26,739 --> 01:43:36,739
And this has been happening again actually, because of, I think this just happened,
Jeremy just pinged me on Reddit to tell me that this is happening again.

918
01:43:37,739 --> 01:43:47,739
Because this happens when, so it's very funny because even though Namecoin, the
block rewards were only ever worth like $5 or something, some microscopic amount of
money.

919
01:43:48,739 --> 01:44:03,739
And there was a time when Bitcoin's block rewards were worth like $5,000 total,
because it was like 25 Bitcoin, it was like 25.1 Bitcoin times some small number,
and it was like $5,000 per block.

920
01:44:04,739 --> 01:44:08,739
Whereas today of course it's like $135,000 per block or something.

921
01:44:10,739 --> 01:44:16,739
But there was a time when it was like $5,000 for BTC, and then plus $5 for Namecoin.

922
01:44:17,739 --> 01:44:31,739
There was this tiniest amount of money possible, and yet it was still like 56% of
the network participated in this merge mining.

923
01:44:32,739 --> 01:44:38,739
Anyway, that was a bit of a tangent. All I'm saying is that I tweaked it a little
bit to try and take advantage of the setup.

924
01:44:39,739 --> 01:44:47,739
And what I took advantage of enables the miners to be paid, see because when you get
Blind Merged Mining you get paid in Namecoin.

925
01:44:48,739 --> 01:44:50,739
You get $5 worth of Namecoin that you have to sell.

926
01:44:51,739 --> 01:44:54,739
But with Blind Merged Mining you get paid on layer one actually.

927
01:44:55,739 --> 01:44:58,739
So you don't have to worry about, you have to worry even less about what the sidechain is doing.

928
01:44:58,739 --> 01:45:02,739
And in fact, believe it or not, it's possible to blind merge mine.

929
01:45:03,739 --> 01:45:12,739
With regular merge mining you had to run a Namecoin node so that you would know how
to assemble the blocks and collect the transaction fees and make sure the blocks
were valid.

930
01:45:13,739 --> 01:45:18,739
With Blind Merged Mining, hence the name, you do not actually need to look at sidechain blocks at all.

931
01:45:19,739 --> 01:45:24,739
You can sell that risk to someone else who is running a sidechain full node, which
is all the people who are using it already.

932
01:45:24,739 --> 01:45:33,739
So the Blind Merged Mining is kind of clever because everyone who is using the sidechain is already running a full node for free just to use it.

933
01:45:34,739 --> 01:45:42,739
So I exploit that fact and I say, okay, everyone running a sidechain node who wants
to participate in this weird scheme.

934
01:45:43,739 --> 01:45:50,739
If you have main chain BTC, so you have to be a sidechain user and you have to have
main chain BTC.

935
01:45:51,739 --> 01:45:58,739
But remember, everyone who is using my scheme, unlike Namecoin, everyone who uses a
sidechain is also a user of the main chain.

936
01:45:59,739 --> 01:46:02,739
So everyone has to have main chain BTC to even deposit it to the sidechain in the
first place.

937
01:46:03,739 --> 01:46:12,739
So yes, it's possible they deposit 100% of their BTC to the sidechain, but many
people will have most of their BTC on the main chain and just some in the sidechain.

938
01:46:13,739 --> 01:46:15,739
The same way you have some in your checking account and some in your lightning.

939
01:46:16,739 --> 01:46:18,739
You don't put all of the BTC in.

940
01:46:18,739 --> 01:46:22,739
And when you say on the sidechain, is that locked up?

941
01:46:23,739 --> 01:46:26,739
Correct. I mean that is in the box.

942
01:46:27,739 --> 01:46:29,739
Just like you deposit it to this special script.

943
01:46:30,739 --> 01:46:39,739
So of course, it's basically still in the main chain, sort of, but it's in this
state where it can only be removed very slowly.

944
01:46:40,739 --> 01:46:47,739
And so it's basically frozen in place and then once it's frozen in place, the sidechain credits you.

945
01:46:48,739 --> 01:46:49,739
Over there.

946
01:46:50,739 --> 01:46:59,739
And the sidechain starts with 0 BTC and it ends with 0 BTC, so it doesn't have its
own block reward, which is a little scary.

947
01:47:00,739 --> 01:47:05,739
But ultimately Bitcoin will have that fate, so we should try to learn about it
sooner rather than later.

948
01:47:06,739 --> 01:47:13,739
And so anyway, with Blind Merged Mining, what you do is you have someone, Alice, has
sidechain node and they have some main chain BTC.

949
01:47:14,739 --> 01:47:24,739
They assemble a sidechain block that pays themselves the 7 Bitcoin and fees and
then they pay 6.99 over on the main chain separately.

950
01:47:25,739 --> 01:47:34,739
They say to the miner, they say, I'll pay you 6.99 if you include this exact hash
giving me this block, this sidechain block over here.

951
01:47:35,739 --> 01:47:39,739
And the miners just say, okay, because they get 6.99 for one transaction.

952
01:47:40,739 --> 01:47:45,739
But of course, to stop various gaming, there's all these rules, so they can only
take it.

953
01:47:46,739 --> 01:47:56,739
Remember there's 256 sidechain slots in Drivechain, so they can only take one of
those per block per slot.

954
01:47:57,739 --> 01:48:02,739
So of course they can only find one sidechain block per main chain block.

955
01:48:03,739 --> 01:48:10,739
Hopefully that's not too confusing, but you see the point is you can't have someone
bid 6.99 and someone else bid 6.8 and then have the miners take both of them.

956
01:48:11,739 --> 01:48:17,739
So the sidechain and Drivechain setup would have to compete to get their
transactions in a block.

957
01:48:18,739 --> 01:48:26,739
Yeah, everyone who's running, exactly, all the people who want to do this on the
sidechain, if they want, they will start bidding it up.

958
01:48:26,739 --> 01:48:30,739
So they start collecting the transactions into blocks, if there are many.

959
01:48:31,739 --> 01:48:36,739
And they pay themselves, now they're paying themselves half of Bitcoin, 0.6 Bitcoin,
0.7 Bitcoin, 0.8.

960
01:48:37,739 --> 01:48:40,739
And then they keep increasing their bid as well, because they know the miner is only
going to take one.

961
01:48:41,739 --> 01:48:42,739
And they'll only take the highest one.

962
01:48:43,739 --> 01:48:44,739
And then the other ones become discarded.

963
01:48:45,739 --> 01:48:46,739
They're like fill or kill.

964
01:48:47,739 --> 01:48:49,739
Yeah, they could try again next block.

965
01:48:50,739 --> 01:48:53,739
Yeah, so this is actually a good thing.

966
01:48:53,739 --> 01:48:55,739
I think this is another thing that's misunderstood.

967
01:48:56,739 --> 01:49:06,739
If the sidechain node is very difficult to run, it actually compensates people for
running it actually, because they can make the delta a little bigger.

968
01:49:07,739 --> 01:49:15,739
So it's no cost to the main chain miners, but it's a shift of who pays.

969
01:49:16,739 --> 01:49:27,739
So it's quite a neat idea, because let's say that the sidechain blocks always pay 7
Bitcoin in fees, even though that doesn't make any sense, but we'll just say
hypothetically they do.

970
01:49:28,739 --> 01:49:39,739
And we'll say that the sidechain node is so difficult to run, it's like this ESPN
4K broadcast sports thing, and it costs millions and billions of dollars to run a
year.

971
01:49:39,739 --> 01:49:45,739
So it costs basically 1 Bitcoin or half a Bitcoin every 10 minutes to run.

972
01:49:46,739 --> 01:49:48,739
It has a lot of operating costs.

973
01:49:49,739 --> 01:49:58,739
So instead of bidding up when you're earning 7, instead of bidding up to 6.99, you
can just bid up to 6.49.

974
01:49:59,739 --> 01:50:01,739
And then you can just say I'm breaking even.

975
01:50:02,739 --> 01:50:15,739
And then the miner can say, well hey, wait a minute, I'm getting less than I got
before, but they really aren't, because what they could do is run the node
themselves, and then they'd have to pay the 0.5.

976
01:50:16,739 --> 01:50:19,739
And so they would earn 7, but they'd have to pay 0.5, and they'd be back where they
were starting.

977
01:50:19,739 --> 01:50:32,739
They can, of course, also run the node in SPV mode, sidechain node and SPV node,
and be truly blind and depraved, not caring at all about what goes in these blocks,
if they're valid or not.

978
01:50:33,739 --> 01:50:41,739
At that point, they're likely to find invalid sidechain blocks, which means that
they will not get paid the sidechain fees.

979
01:50:42,739 --> 01:50:47,739
So there's actually kind of a lot of cool little equilibrium feedback stuff that's
kind of neat.

980
01:50:48,739 --> 01:50:51,739
So how do we get this stuff live?

981
01:50:54,739 --> 01:51:00,739
Well, I've been focused on just making it all, and basically CryptX does all the
work.

982
01:51:01,739 --> 01:51:07,739
He's a developer friend who has contributed to several Bitcoin Core releases.

983
01:51:08,739 --> 01:51:10,739
He really does all the C++.

984
01:51:10,739 --> 01:51:17,739
And so I've just been focusing on making it better, and I get invited to talk about
it from time to time if I'd like to talk about it with other people.

985
01:51:18,739 --> 01:51:21,739
But I think the important thing, we have a couple testnets.

986
01:51:22,739 --> 01:51:36,739
So if you go to drivechain.info, you can find the GitHub, and you can find those
releases, and there's like a little guide on how to create, turn it on, and create a
sidechain and send money to it, and then get it back.

987
01:51:37,739 --> 01:51:41,739
And then in test mode, I've changed it. It's not three months. That would be
impossible to test.

988
01:51:42,739 --> 01:51:49,739
We make it like 140 blocks, and then the difficulty is faster, so it's only like a
few hours.

989
01:51:50,739 --> 01:51:53,739
Otherwise, it would be completely impossible to ever test.

990
01:51:54,739 --> 01:52:00,739
But yeah, I think we've basically finished. I hate to say that because it's a cursed
thing to say.

991
01:52:01,739 --> 01:52:02,739
It's right around the corner.

992
01:52:03,739 --> 01:52:04,739
Yeah, exactly. We've been debugging.

993
01:52:05,739 --> 01:52:10,739
But I'm instead going to say that instead of being right around the corner, it sort
of is kind of done.

994
01:52:11,739 --> 01:52:14,739
We have to put out this release because our version does not, obviously.

995
01:52:15,739 --> 01:52:25,739
We've only put out the releases after we've buried all the bodies far away, and no
one can see all the mistakes.

996
01:52:26,739 --> 01:52:29,739
But yeah, we have to put out a new release, and it looks pretty good.

997
01:52:29,739 --> 01:52:34,739
And of course, the thing is consensus is very important in the BTC community.

998
01:52:35,739 --> 01:52:40,739
So one thing that many people have complimented me on is that they're like,

999
01:52:41,739 --> 01:52:43,739
especially Adam Beck brings this up from time to time.

1000
01:52:44,739 --> 01:52:49,739
He's like, well, Paul never tried to ram this through like SegWit2x style or
whatever.

1001
01:52:50,739 --> 01:52:51,739
He's just slowly working on it.

1002
01:52:52,739 --> 01:52:54,739
So is a soft fork necessary to make this happen?

1003
01:52:55,739 --> 01:53:00,739
Yeah, there is a soft fork that is required to enforce the rules about the
three-month withdrawal,

1004
01:53:01,739 --> 01:53:04,739
and to enforce the rules, the fill or kill rules for the blind bridge mining.

1005
01:53:05,739 --> 01:53:08,739
I have a BIP, and you know, it took a while to get the BIP numbers,

1006
01:53:09,739 --> 01:53:11,739
but it's actually a good thing because when I reread earlier drafts of the BIP,

1007
01:53:12,739 --> 01:53:15,739
they're terrible and they're horribly long, and eventually I made them much shorter.

1008
01:53:16,739 --> 01:53:23,739
So finally earlier, a few months ago, we got BIP numbers 300 and 301.

1009
01:53:24,739 --> 01:53:29,739
So 300 is called for hash rate escrows, which is like the Drivechain, the 256
slots,

1010
01:53:30,739 --> 01:53:31,739
and then blind bridge mining is 301.

1011
01:53:32,739 --> 01:53:38,739
So that took a little while, but that was a good thing because we, you know,

1012
01:53:39,739 --> 01:53:44,739
just made a couple tweaks to the design that all things considered were pretty
minor,

1013
01:53:45,739 --> 01:53:46,739
but they did change the way the BIPs had to be written.

1014
01:53:47,739 --> 01:53:52,739
And my writing of the BIPs, I think was atrocious on the first two or three drafts.

1015
01:53:52,739 --> 01:53:55,739
You know, I made a mistake in the BIPs where I tried to explain and justify
everything.

1016
01:53:56,739 --> 01:53:57,739
Yeah, were you writing five-hour BIPs?

1017
01:53:58,739 --> 01:54:00,739
Yeah, I was. It was terrible.

1018
01:54:01,739 --> 01:54:02,739
And I was like, that's not what people want out of the BIP.

1019
01:54:03,739 --> 01:54:06,739
They just want, this is what the bytes are, and this is what they do,

1020
01:54:07,739 --> 01:54:11,739
and here's a list of the functions and the BIP.

1021
01:54:12,739 --> 01:54:15,739
So they're much shorter. They're actually very readable now.

1022
01:54:16,739 --> 01:54:17,739
You can find them if you go to drivechain.info.

1023
01:54:18,739 --> 01:54:21,739
I packed everything onto the front page so you can find the BIPs.

1024
01:54:22,739 --> 01:54:25,739
And the front page on drivechain.info is packed with links.

1025
01:54:26,739 --> 01:54:27,739
And memes.

1026
01:54:28,739 --> 01:54:29,739
I don't think it's that long. Yeah, there are some memes.

1027
01:54:30,739 --> 01:54:31,739
There are some great memes.

1028
01:54:32,739 --> 01:54:35,739
I like the one that is like the piano versus the synthesizer.

1029
01:54:36,739 --> 01:54:39,739
It's like it can do a piano sound or it can do other sounds.

1030
01:54:40,739 --> 01:54:42,739
And I was like, oh, there you go. It's a meme.

1031
01:54:43,739 --> 01:54:44,739
Someone else had that idea.

1032
01:54:45,739 --> 01:54:47,739
Then I have what, I think, some of them I've edited over the years.

1033
01:54:48,739 --> 01:54:51,739
Some of them are Mike in space weirdo memes.

1034
01:54:52,739 --> 01:54:53,739
I like the galaxy brain meme.

1035
01:54:54,739 --> 01:54:56,739
Yeah, I like that one too.

1036
01:54:57,739 --> 01:54:59,739
Yeah, that's the miners can steal reaction meme.

1037
01:55:00,739 --> 01:55:05,739
I try valiantly to get people to avoid thinking about that.

1038
01:55:06,739 --> 01:55:08,739
I want to end it on a couple of things.

1039
01:55:09,739 --> 01:55:14,739
One of the applications of Drivechain that you're working on too, the Hivemind.

1040
01:55:15,739 --> 01:55:19,739
Yes, that's interesting. I hate to interrupt, but it's just such a weird,

1041
01:55:19,739 --> 01:55:21,739
I have a very weird story in Bitcoin.

1042
01:55:22,739 --> 01:55:25,739
And my interest in Drivechain really has nothing to do with Drivechain at all.

1043
01:55:26,739 --> 01:55:29,739
I want to use it for the specific other thing,

1044
01:55:30,739 --> 01:55:35,739
which I kind of think is a good sign because we have an overabundance of projects

1045
01:55:36,739 --> 01:55:40,739
that are like solutions looking for a problem, I think, in the wider crypto world.

1046
01:55:41,739 --> 01:55:43,739
You know, people like over blockchain healthcare.

1047
01:55:44,739 --> 01:55:49,739
And I've even been invited many times over the years in various contexts.

1048
01:55:50,739 --> 01:55:52,739
You would go and someone would want to meet with you and they'd say,

1049
01:55:53,739 --> 01:55:55,739
how can we use blockchain to improve whatever?

1050
01:55:56,739 --> 01:55:58,739
I had somebody ask me how they could improve a paper company today.

1051
01:55:59,739 --> 01:56:00,739
I was like, don't do it.

1052
01:56:01,739 --> 01:56:05,739
Yeah, but you see, this is a style of solving problems that is very strange, isn't
it?

1053
01:56:06,739 --> 01:56:08,739
Normally, and I think most people don't notice it.

1054
01:56:09,739 --> 01:56:12,739
And I think it's really worth pointing out because I think it will improve your life
a lot.

1055
01:56:13,739 --> 01:56:18,739
If you get on the right track with this, which is that knowledge is about problems.

1056
01:56:19,739 --> 01:56:20,739
It doesn't go the other way.

1057
01:56:21,739 --> 01:56:23,739
You start with the problem first and then you say, what will solve this?

1058
01:56:24,739 --> 01:56:27,739
Then you invent some new thing or you take an old thing,

1059
01:56:28,739 --> 01:56:30,739
a new application of an old thing.

1060
01:56:31,739 --> 01:56:33,739
You say, oh, my garage door doesn't work.

1061
01:56:34,739 --> 01:56:35,739
Okay, maybe I need a screwdriver.

1062
01:56:36,739 --> 01:56:38,739
Maybe I need, I don't know, a multimeter.

1063
01:56:39,739 --> 01:56:40,739
I don't know. You don't know what you need.

1064
01:56:41,739 --> 01:56:42,739
Maybe you need to check the breakers.

1065
01:56:43,739 --> 01:56:46,739
You start with the problem first and then you look for the solution.

1066
01:56:47,739 --> 01:56:50,739
But you don't say like, how do we use screwdrivers to fix garage doors?

1067
01:56:51,739 --> 01:56:54,739
Like, you don't know that you need a screwdriver yet.

1068
01:56:55,739 --> 01:56:56,739
Maybe it won't help at all, you know.

1069
01:56:57,739 --> 01:56:59,739
Maybe it will, but the point is it's a weird way of –

1070
01:57:00,739 --> 01:57:01,739
but this is a thing that people are determined to do.

1071
01:57:02,739 --> 01:57:06,739
And it's one of the things that kind of keeps me motivated for Drivechain

1072
01:57:07,739 --> 01:57:09,739
is that I have this other project which is extremely –

1073
01:57:09,739 --> 01:57:15,739
it's very high risk and very high reward and it has very ambitious and insane.

1074
01:57:16,739 --> 01:57:18,739
And it's weird because I've drawn on lots of different experts

1075
01:57:19,739 --> 01:57:21,739
in various completely different areas

1076
01:57:22,739 --> 01:57:24,739
and I've combined it into this very weird thing.

1077
01:57:25,739 --> 01:57:28,739
But I believe in it a lot and I have –

1078
01:57:29,739 --> 01:57:31,739
this is the BitcoinHiveMind idea.

1079
01:57:32,739 --> 01:57:35,739
This is at BitcoinHiveMind.com and I have that 20-minute video

1080
01:57:35,739 --> 01:57:37,739
which I hope you were able to watch

1081
01:57:38,739 --> 01:57:41,739
because I was able to sort of pack the point of the project.

1082
01:57:42,739 --> 01:57:44,739
Yeah, it was your presentation at Archipoco last summer.

1083
01:57:45,739 --> 01:57:46,739
Yeah, at Archipoco.

1084
01:57:47,739 --> 01:57:48,739
That was really good.

1085
01:57:49,739 --> 01:57:50,739
And so, yeah, let's just focus on that.

1086
01:57:51,739 --> 01:57:54,739
You explain Hivemind in the context of US elections.

1087
01:57:55,739 --> 01:57:56,739
Yeah.

1088
01:57:57,739 --> 01:58:00,739
It's funny because Hivemind is yet another thing

1089
01:58:01,739 --> 01:58:03,739
where it creates this general purpose thing.

1090
01:58:03,739 --> 01:58:07,739
But again, I intend to only use it or mainly use it

1091
01:58:08,739 --> 01:58:12,739
in service of exploring this concept of futarchy.

1092
01:58:13,739 --> 01:58:14,739
It's not limited to elections,

1093
01:58:15,739 --> 01:58:18,739
but I thought that would be wonderful for an Archipoco.

1094
01:58:19,739 --> 01:58:22,739
And I think that's probably the biggest value extraction.

1095
01:58:23,739 --> 01:58:29,739
But there's many situations where we face these problems.

1096
01:58:30,739 --> 01:58:31,739
You see, elections is one,

1097
01:58:32,739 --> 01:58:35,739
but we also elect board members for corporations.

1098
01:58:36,739 --> 01:58:39,739
So it's the same process of just shareholders vote,

1099
01:58:40,739 --> 01:58:42,739
but the shareholders have no idea who any of these people are.

1100
01:58:43,739 --> 01:58:45,739
If you've ever owned a company,

1101
01:58:46,739 --> 01:58:47,739
I used to own U.S. Steel

1102
01:58:48,739 --> 01:58:50,739
because after the financial crisis,

1103
01:58:51,739 --> 01:58:53,739
it was like $1 a share or something insane.

1104
01:58:54,739 --> 01:58:55,739
And its price-to-earnings multiple was like one

1105
01:58:56,739 --> 01:58:57,739
or some absurdly low amount.

1106
01:58:57,739 --> 01:58:58,739
So I bought some U.S. Steel.

1107
01:58:59,739 --> 01:59:02,739
And even if you own one millionth of a percent,

1108
01:59:03,739 --> 01:59:04,739
they send you the stuff in the mail.

1109
01:59:05,739 --> 01:59:08,739
You're asked to vote for the board of directors

1110
01:59:09,739 --> 01:59:11,739
with your microscopic vote amount,

1111
01:59:12,739 --> 01:59:13,739
and you have no idea who these people are.

1112
01:59:14,739 --> 01:59:16,739
And almost everyone just throws this straight into the trash

1113
01:59:17,739 --> 01:59:18,739
because it's a waste of time to figure out.

1114
01:59:19,739 --> 01:59:21,739
Voting on elections is a similar thing.

1115
01:59:22,739 --> 01:59:24,739
So anyway, to get back to your question,

1116
01:59:24,739 --> 01:59:28,739
there was this website called InTrade a long time ago,

1117
01:59:29,739 --> 01:59:30,739
and it closed down in 2012.

1118
01:59:31,739 --> 01:59:34,739
But InTrade was a place where you could bet on election results.

1119
01:59:35,739 --> 01:59:36,739
And elections are one of those things

1120
01:59:37,739 --> 01:59:39,739
where people's IQ points collapse

1121
01:59:40,739 --> 01:59:44,739
because it's partially by design.

1122
01:59:45,739 --> 01:59:48,739
The politicians are pros at manipulating people

1123
01:59:49,739 --> 01:59:52,739
and getting people to think that they are trustworthy

1124
01:59:52,739 --> 01:59:55,739
and that their rivals are the devil incarnate

1125
01:59:56,739 --> 01:59:59,739
and that everyone is conspiring against them

1126
02:00:00,739 --> 02:00:03,739
and have to move quickly to protect their freedoms

1127
02:00:04,739 --> 02:00:06,739
or their family or their rights or whatever it is.

1128
02:00:07,739 --> 02:00:08,739
It's always very lofty.

1129
02:00:09,739 --> 02:00:10,739
It's never anything specific.

1130
02:00:11,739 --> 02:00:12,739
It's always vague.

1131
02:00:13,739 --> 02:00:14,739
Save the Children.

1132
02:00:15,739 --> 02:00:16,739
Yeah, right.

1133
02:00:17,739 --> 02:00:20,739
The Children with a capital T and a capital C.

1134
02:00:21,739 --> 02:00:25,739
Or the people or the corporations, right?

1135
02:00:26,739 --> 02:00:28,739
They'll never say like this corporation

1136
02:00:29,739 --> 02:00:32,739
underpaid their taxes by exactly whatever,

1137
02:00:33,739 --> 02:00:34,739
$13.8 million.

1138
02:00:35,739 --> 02:00:36,739
It's never anything like that.

1139
02:00:37,739 --> 02:00:38,739
It's vague.

1140
02:00:39,739 --> 02:00:40,739
But the point is these people are pros

1141
02:00:41,739 --> 02:00:42,739
at manipulating everyone's brain

1142
02:00:43,739 --> 02:00:44,739
and you have a very small ability

1143
02:00:45,739 --> 02:00:46,739
to affect the outcome when you vote.

1144
02:00:47,739 --> 02:00:49,739
And you have no incentive to do research as a result.

1145
02:00:50,739 --> 02:00:54,739
And so we end up with the situation

1146
02:00:55,739 --> 02:00:57,739
where no one is happy with what happens.

1147
02:00:58,739 --> 02:01:00,739
Everyone hates the congressional approval ratings are low

1148
02:01:01,739 --> 02:01:03,739
and then you have, I brought up the Simpsons characters

1149
02:01:04,739 --> 02:01:07,739
that the Mayor Quimby and the Police Chief Wiggum

1150
02:01:08,739 --> 02:01:11,739
who are, those are like usually elected musicians.

1151
02:01:12,739 --> 02:01:14,739
But everyone's just like,

1152
02:01:15,739 --> 02:01:16,739
the reason that those jokes are funny

1153
02:01:17,739 --> 02:01:19,739
is because everyone kind of knows

1154
02:01:20,739 --> 02:01:22,739
that actually Mayor Quimby is not too far off

1155
02:01:23,739 --> 02:01:26,739
of what they kind of suspect their own mayor is doing.

1156
02:01:27,739 --> 02:01:28,739
But they just kind of like, whatever,

1157
02:01:29,739 --> 02:01:30,739
look the other way.

1158
02:01:31,739 --> 02:01:32,739
And so the future,

1159
02:01:33,739 --> 02:01:34,739
I'm not sure like in what order is best.

1160
02:01:35,739 --> 02:01:36,739
I think the video is a good way

1161
02:01:37,739 --> 02:01:38,739
because I like wrote this sort of script

1162
02:01:39,739 --> 02:01:41,739
for a target audience of people.

1163
02:01:42,739 --> 02:01:45,739
But maybe it's easier if I just answer any questions

1164
02:01:46,739 --> 02:01:47,739
or you should frame it

1165
02:01:48,739 --> 02:01:49,739
because you just watched it or something.

1166
02:01:50,739 --> 02:01:52,739
That's what people would be interested in.

1167
02:01:53,739 --> 02:01:55,739
Hivemind is a project for peer-to-peer Oracle.

1168
02:01:56,739 --> 02:01:57,739
So it's just,

1169
02:01:58,739 --> 02:02:00,739
it's itself this weird econ statistics project

1170
02:02:01,739 --> 02:02:03,739
for figuring out what happened in the real world.

1171
02:02:04,739 --> 02:02:06,739
And that has, you know,

1172
02:02:07,739 --> 02:02:08,739
I don't want to say endorsements,

1173
02:02:09,739 --> 02:02:11,739
but I have some quotes on the front page

1174
02:02:12,739 --> 02:02:14,739
from people like Andrew Paulstra

1175
02:02:15,739 --> 02:02:16,739
and even Peter Todd

1176
02:02:17,739 --> 02:02:19,739
about whether or not it's sort of viable.

1177
02:02:20,739 --> 02:02:21,739
They sort of think it is.

1178
02:02:22,739 --> 02:02:24,739
And that's the best I can do in a short podcast.

1179
02:02:25,739 --> 02:02:27,739
Otherwise, I mean the white paper for Truthcoin,

1180
02:02:28,739 --> 02:02:30,739
that was the origin of the name Truthcoin.

1181
02:02:31,739 --> 02:02:33,739
And that is a very long paper

1182
02:02:34,739 --> 02:02:35,739
that involves a lot of explaining

1183
02:02:36,739 --> 02:02:37,739
as to why I think that that will work.

1184
02:02:38,739 --> 02:02:39,739
But in addition to the Oracle,

1185
02:02:40,739 --> 02:02:42,739
the Oracle is deciding whether or not certain events happen.

1186
02:02:43,739 --> 02:02:45,739
There's markets for betting on

1187
02:02:46,739 --> 02:02:47,739
whether or not those things happen

1188
02:02:48,739 --> 02:02:49,739
in various combinations with each other.

1189
02:02:50,739 --> 02:02:51,739
So it's peer-to-peer Oracle

1190
02:02:52,739 --> 02:02:55,739
and event derivative marketplace

1191
02:02:56,739 --> 02:02:58,739
is like the whole thing.

1192
02:02:59,739 --> 02:03:01,739
And then some of the derivatives you can make

1193
02:03:02,739 --> 02:03:04,739
are about election betting,

1194
02:03:05,739 --> 02:03:08,739
which are like,

1195
02:03:09,739 --> 02:03:10,739
we have these already

1196
02:03:11,739 --> 02:03:12,739
and I post to electionbettingodds.com.

1197
02:03:13,739 --> 02:03:14,739
I tweet about it a lot because I find it so interesting.

1198
02:03:15,739 --> 02:03:16,739
You can bet on who you think will win various things.

1199
02:03:17,739 --> 02:03:19,739
But what I want to do is go beyond winning

1200
02:03:20,739 --> 02:03:21,739
and say, if someone wins,

1201
02:03:22,739 --> 02:03:25,739
what outcomes are likely to take place.

1202
02:03:26,739 --> 02:03:28,739
And so then we just vote for whoever has the better numbers.

1203
02:03:29,739 --> 02:03:31,739
And that's like the whole thing in a very brief nutshell.

1204
02:03:32,739 --> 02:03:33,739
But probably you can frame it probably a lot better

1205
02:03:34,739 --> 02:03:37,739
than your poor audience.

1206
02:03:38,739 --> 02:03:40,739
I think a good idea would be to hone in on the one slide

1207
02:03:41,739 --> 02:03:42,739
where what you just described,

1208
02:03:43,739 --> 02:03:44,739
where post-election you had the results,

1209
02:03:45,739 --> 02:03:48,739
where the country would be more profitable,

1210
02:03:48,739 --> 02:03:50,739
less people would die.

1211
02:03:51,739 --> 02:03:52,739
Yes, I think that is a good slide.

1212
02:03:53,739 --> 02:03:54,739
You're right.

1213
02:03:55,739 --> 02:03:56,739
Before that I had the menu.

1214
02:03:57,739 --> 02:03:58,739
I was trying to make a joke.

1215
02:03:59,739 --> 02:04:00,739
It's like you're buying breakfast

1216
02:04:01,739 --> 02:04:02,739
and you have a menu

1217
02:04:03,739 --> 02:04:04,739
and you can buy an omelet or whatever.

1218
02:04:05,739 --> 02:04:06,739
You have some idea of what you're going to get

1219
02:04:07,739 --> 02:04:08,739
and how much it's going to cost.

1220
02:04:09,739 --> 02:04:11,739
But then you walk into the voting booth.

1221
02:04:12,739 --> 02:04:14,739
I've had many people admit to me

1222
02:04:15,739 --> 02:04:16,739
because I've been talking about this for a long time.

1223
02:04:16,739 --> 02:04:17,739
And I said, yes, some people do.

1224
02:04:18,739 --> 02:04:19,739
They vote for president

1225
02:04:20,739 --> 02:04:21,739
but then they didn't really remember.

1226
02:04:22,739 --> 02:04:23,739
They forgot about it.

1227
02:04:24,739 --> 02:04:25,739
They have to vote on all these other positions,

1228
02:04:26,739 --> 02:04:27,739
aldermen and all this other nonsense.

1229
02:04:28,739 --> 02:04:29,739
So people have admitted to me

1230
02:04:30,739 --> 02:04:31,739
that they do like zigzags

1231
02:04:32,739 --> 02:04:33,739
or they do whose name they like.

1232
02:04:34,739 --> 02:04:35,739
They don't have any idea.

1233
02:04:36,739 --> 02:04:37,739
They vote completely on party lines

1234
02:04:38,739 --> 02:04:39,739
or they just leave it blank.

1235
02:04:40,739 --> 02:04:41,739
The real sad things are

1236
02:04:42,739 --> 02:04:44,739
that Congress is actually much more important.

1237
02:04:44,739 --> 02:04:46,739
Most people can't name their representative

1238
02:04:47,739 --> 02:04:48,739
or their senator

1239
02:04:49,739 --> 02:04:50,739
and those are the people who make the rules

1240
02:04:51,739 --> 02:04:52,739
and they're very important

1241
02:04:53,739 --> 02:04:54,739
and the turnout for those are low.

1242
02:04:55,739 --> 02:04:56,739
You have a situation where people walk in to vote

1243
02:04:57,739 --> 02:04:58,739
and they don't really know what they're doing.

1244
02:04:59,739 --> 02:05:00,739
They remember some vague images and things.

1245
02:05:01,772 --> 02:05:28,772
And so, the core idea is that they can look up and find very reliable information
that's very, very difficult to manipulate. I would say almost impossible, which is a
tall order, but the information is of the following form, as you say, you basically
have a two-party system you can just subtract, but if you had more than two parties,
you'd have columns, Republican, Democrat, Libertarian,

1246
02:05:28,772 --> 02:05:33,732
whatever, Green, Labor, blah, blah, blah. But in a two-party system, what you'd
probably

1247
02:05:33,732 --> 02:05:37,692
want to do is just subtract and just see the net, but you'd have these columns and
the

1248
02:05:37,692 --> 02:05:44,032
rows would be various metrics. And they'd say, if you vote for the Republican
candidate,

1249
02:05:44,032 --> 02:05:52,052
this is how much money the government is going to spend per person. So whatever,
$26,000

1250
02:05:52,052 --> 02:05:59,932
per year or whatever it is. And this is how much, this is what GDP will be. This is
how

1251
02:05:59,932 --> 02:06:07,652
much money everyone will earn in the entire United States over the next few years or
over

1252
02:06:07,652 --> 02:06:12,092
the next four years or the next six years if it's a Senator or the next whatever.
And

1253
02:06:12,092 --> 02:06:17,452
then this is how much the value of the land will appreciate. This is what the
unemployment

1254
02:06:17,452 --> 02:06:24,252
rate will be. This is how many people will die in all various ways, you know,
plague,

1255
02:06:24,252 --> 02:06:29,972
war, whatever, mental health. So you can just look at the numbers and you can just
say,

1256
02:06:29,972 --> 02:06:33,612
well, this group has a better number than another group. And if enough people start

1257
02:06:33,612 --> 02:06:39,812
to do that, then the politicians will have to compete on those numbers. And there's
a

1258
02:06:39,812 --> 02:06:45,492
long precedent for this. The medium is the message, so to speak. The United States
was

1259
02:06:45,532 --> 02:06:50,292
built in a world where everything was done by the newspaper, and I can get into
that. There's

1260
02:06:50,292 --> 02:06:57,372
a lot of interesting history with that. But then eventually you had radio and FDR,
and then it's

1261
02:06:57,372 --> 02:07:03,332
well known that the invention of television changed a lot with the election of
Richard

1262
02:07:03,332 --> 02:07:11,492
Nixon and Ronald Reagan. And then it's well known that Ron Paul and Barack Obama
were getting out

1263
02:07:11,492 --> 02:07:17,172
the vote via internet in 2008. And now it's unavoidably known that Donald Trump with
his

1264
02:07:17,172 --> 02:07:23,332
use of Twitter, like, like changed the game yet again. So the game, there's a long
precedent of

1265
02:07:23,332 --> 02:07:31,692
changing the game with a different medium of getting your message out to voters. And
so this

1266
02:07:31,692 --> 02:07:37,532
is a kind of, it's kind of aiming at that. And so yeah, and these rows can be
anything, anything

1267
02:07:37,612 --> 02:07:42,132
that's measurable post hoc. And they don't settle. The cool thing is they don't
settle until after

1268
02:07:42,132 --> 02:07:43,212
the presidency is over.

1269
02:07:43,572 --> 02:07:47,692
This is where my question is, how are those numbers determined? Are people putting
skin in

1270
02:07:47,692 --> 02:07:48,172
the game?

1271
02:07:48,212 --> 02:07:52,772
Of course, yes, absolutely. So yeah, so I opened, I kind of put that at the
beginning of the slide

1272
02:07:52,772 --> 02:07:59,132
and I say, well, here's the end result. And this will all be, these numbers will all
be accurate,

1273
02:07:59,132 --> 02:08:02,252
and they won't be able, won't be able to manipulate them. And then of course, the
question

1274
02:08:02,292 --> 02:08:09,212
is, well, that just kind of passes the buck to the explanation of where those
numbers come from.

1275
02:08:10,092 --> 02:08:16,892
Where they come from are these conditional bets. So someone is making a bet that you
have to

1276
02:08:16,892 --> 02:08:24,492
understand a little bit about conditional probability and about how asset prices
work just a

1277
02:08:24,492 --> 02:08:32,292
little bit. But basically, if you bet on a coin flip, then you should be at most
willing, for the

1278
02:08:32,332 --> 02:08:38,212
head's share, you should be willing to pay about 50 cents on the dollar. And for the
tail share,

1279
02:08:38,212 --> 02:08:45,212
you should pay 50 cents on the dollar. And if you bet on a dice roll, you should pay
about one

1280
02:08:45,212 --> 02:08:54,172
sixth of a dollar on the dollar and so forth. So the prices co-vary with the
likelihood. But what I

1281
02:08:54,172 --> 02:09:02,652
do is you build this kind of grid, and you have these joint events, which is very
easy to do. It's

1282
02:09:02,652 --> 02:09:07,092
annoying, because this project tries to move the needle forward in a lot of
different ways at once.

1283
02:09:07,372 --> 02:09:13,132
But ignoring other questions of liquidity and how the oracle handles all this, which
is actually

1284
02:09:13,132 --> 02:09:20,012
very easy to do. But I'm going to avoid explaining it, because we haven't even
gotten there yet, if

1285
02:09:20,012 --> 02:09:24,652
we ever get there. But this is all written down. And you can check all this stuff
out on the site if

1286
02:09:24,652 --> 02:09:30,732
you are interested, and I hope you are. But the grid is, you make these different
events. And then

1287
02:09:30,732 --> 02:09:35,252
you say the asset only pays if they both happen. So you have what's called in
statistics, the joint

1288
02:09:35,252 --> 02:09:42,372
probability. And from the joint probability, you say this pays if it's heads and you
roll a two on the

1289
02:09:42,372 --> 02:09:48,852
dice. So make a grid that's like six units in one direction and heads and tails, two
units in another

1290
02:09:48,852 --> 02:09:56,452
direction, you have 12 squares. And then each have something like a 12th. And if you
take from this

1291
02:09:56,452 --> 02:10:00,252
grid, you can get everything you had before and more. You can get what you had
before by just

1292
02:10:00,252 --> 02:10:08,412
summing up along a dimension. So you add up six 12ths, you get the halves for heads
and tails. And

1293
02:10:08,412 --> 02:10:17,692
if you add column wise, or however the other way is, you can get one sixth for the
dice. And so you

1294
02:10:17,692 --> 02:10:25,492
have everything you had before. But in a dice and coin are independent. So they're
just diffused,

1295
02:10:25,492 --> 02:10:30,852
there's just these numbers that are just the same in every cell. But if the events
are related, the

1296
02:10:30,852 --> 02:10:37,252
numbers will clump up on a line in the, in the, and some kind of diagonal line
through this grid,

1297
02:10:38,132 --> 02:10:45,532
because it'll be saying that, although some, you know, maybe something's not likely,
maybe a good

1298
02:10:45,532 --> 02:10:51,652
economy isn't likely, and electing whoever it is, take your pick, you know, Andrew
Yang is, is

1299
02:10:51,652 --> 02:10:56,652
unlikely, they could both be unlikely, but maybe there's only a 5% chance that the
economy will be

1300
02:10:56,652 --> 02:11:02,212
good. Maybe every single one of those five percentage points out of the total
hundred that

1301
02:11:02,212 --> 02:11:09,252
occupy the grid, maybe all of those are in the Andrew Yang gets elected grid. And
that takes them

1302
02:11:09,252 --> 02:11:15,652
out of the other grids. And so then this forces this line to appear. And if you
know, maybe, you

1303
02:11:15,652 --> 02:11:21,012
know, if people just Google joint probability, and marginal probability, and
conditional

1304
02:11:21,012 --> 02:11:29,692
probability, you'll see that it's extremely simple math to just get these numbers
out of this grid.

1305
02:11:29,692 --> 02:11:30,292
Yes.

1306
02:11:30,772 --> 02:11:34,652
Now, of course, where are these numbers coming from? People are trading, they're
betting, someone is

1307
02:11:34,692 --> 02:11:40,332
betting, I think that because this is infinitely regressing even further, because
it's like, sure, I

1308
02:11:40,332 --> 02:11:45,732
have to say this is clumping on a line. But where's the clumping? Where's the line
coming from? Well,

1309
02:11:45,772 --> 02:11:54,892
people will be able to bet, they'd be able to say, I want to pay 5 cents for this
contract. It pays me

1310
02:11:54,892 --> 02:12:05,132
money if Andrew Yang is not elected. Or if Andrew Yang is elected and the economy
does well. In fact,

1311
02:12:05,172 --> 02:12:12,492
the only way I lose money is if Andrew Yang is elected and the economy does poorly.
That's the

1312
02:12:12,492 --> 02:12:17,212
only way you lose. So you can buy that and then people are buying and selling all
these things. So

1313
02:12:17,212 --> 02:12:22,092
it's a contract that pays you no matter what before the election or before the
primary or before

1314
02:12:22,092 --> 02:12:28,452
anything, you're betting on these things. They won't settle until long after the
election is over and the

1315
02:12:28,452 --> 02:12:34,492
presidency is over, because you need to check. There's a very complicated timeline
here. They don't

1316
02:12:34,492 --> 02:12:40,572
settle until the far future, but you can buy and sell them today. And so they should
have different

1317
02:12:40,572 --> 02:12:51,652
prices. And so you can pay something that pays you more money in every scenario,
except the one where

1318
02:12:51,652 --> 02:12:54,052
your guy is elected and does a bad job.

1319
02:12:54,612 --> 02:13:01,252
And so the theory here is that because people are putting money down, putting skin
in the game, if

1320
02:13:01,252 --> 02:13:04,172
you will, you're going to get better information.

1321
02:13:06,292 --> 02:13:10,692
Yeah, you should get the best information, because if anyone has any information at
all, they should be

1322
02:13:10,692 --> 02:13:16,652
willing to trade in this or partner with some rich person who will invest on their
behalf. So you and

1323
02:13:16,652 --> 02:13:20,612
again, out of this grid, you can get everything you had before you get the
likelihood that the economy

1324
02:13:20,612 --> 02:13:26,732
does well, and you get the likelihood of everyone getting elected. Those would be
the heads and tails

1325
02:13:26,732 --> 02:13:32,932
and the dice in this. So a lot of people already only want to bet on one of those
two things. So this is

1326
02:13:32,932 --> 02:13:39,092
actually kind of combining three completely different things into one thing, which
is clever.

1327
02:13:39,092 --> 02:13:44,532
There's this other thing I could say about market scoring rules and liquidity, where
it's actually much,

1328
02:13:44,532 --> 02:13:51,572
much better than you could ever imagine being possible. Still not great, but the
whole interesting

1329
02:13:51,572 --> 02:13:58,732
conversation in itself. But yeah, you think about it, these assets will have
different price. So this is

1330
02:13:58,732 --> 02:14:04,812
the Andrew Yang does well for the economy asset, and then you have the Bernie
Sanders does well for the

1331
02:14:04,812 --> 02:14:12,212
economy. Donald Trump does well for the economy asset. They all have prices, and
they can't all be a tie

1332
02:14:12,212 --> 02:14:21,292
for 100%. You know, someone's got to have the best price. Yeah. And that's only if
you have this one

1333
02:14:21,292 --> 02:14:26,972
criterion, that's only on one criterion. Really, some people would be different.
Some people would be

1334
02:14:26,972 --> 02:14:33,412
better than on different things than others. Some people might have, you know, I
don't know, some

1335
02:14:33,412 --> 02:14:39,132
people might be more likely to get us into a war. So they might be more likely to
spend a lot of the

1336
02:14:39,132 --> 02:14:46,252
government's money and have more deaths or something, but they might be better for,
I don't know, income or

1337
02:14:46,252 --> 02:14:51,612
whatever, unemployment, who knows, there could be all these different dimensions. So
it still would be when

1338
02:14:51,612 --> 02:14:57,732
you go into vote, you'd still have a little thinking to do, but you wouldn't need to
understand this

1339
02:14:57,732 --> 02:15:04,172
complicated world that we live in to a great extent. This idea is that what happens
is that my sort of

1340
02:15:04,172 --> 02:15:10,732
political theory is that it actually does mostly work the way it's designed, which
is that the democracy represents

1341
02:15:10,892 --> 02:15:17,492
the consent of the governed. But it's that the governed are just too busy to look
into this economy is so

1342
02:15:17,492 --> 02:15:23,652
complicated these days. And people know that they don't have, they have no rational
reason to put in a lot of

1343
02:15:23,692 --> 02:15:30,492
research effort. And the politicians are professional liars who are confusing them
at every turn, and turning

1344
02:15:30,492 --> 02:15:38,412
them against their family and whatever. So they are building these weird cults,
because they're professionals, you

1345
02:15:38,412 --> 02:15:47,932
know, you can't win unless you're like a cult leader. So it's impossible for people
to, so the governed, the population

1346
02:15:47,932 --> 02:15:53,732
is, you know, they're doing their best to decide what they want. But what they want
is poorly thought out. So what

1347
02:15:53,732 --> 02:16:01,172
I'm just trying to say is bring them super high quality, the best quality
information. There's, if anyone disagrees

1348
02:16:01,172 --> 02:16:08,132
with any of these prices, and they're right, they can make money. You see, you only,
this thing, you still make money

1349
02:16:08,132 --> 02:16:15,652
if you're in the counterfactual case, where you say, you say that Andrew Yang will
be great, and he isn't chosen by

1350
02:16:15,652 --> 02:16:22,492
either the primary or the general election, you're still making money. So now you're
hoping, you're kind of

1351
02:16:22,492 --> 02:16:30,252
hoping, you're like, whatever, whatever, you know, whatever happens, to lose the
money. Right.

1352
02:16:32,132 --> 02:16:36,532
Let's not even focus in on like the granular, any more granular details, how does
this work? Like, how do you

1353
02:16:36,532 --> 02:16:41,612
envision this changing the world? Obviously, we just focused on elections there. But
beyond elections,

1354
02:16:41,652 --> 02:16:50,452
of course, the yeah, it's not limited to elections. And you know, it's not really
limited to us. It's really any policy

1355
02:16:50,452 --> 02:16:59,972
where you'd want, it's, it works best when you have really measurable criteria for
success. So really, the best

1356
02:16:59,972 --> 02:17:08,612
place is actually the stock market. Because you have the best criterion is the
market cap of the corporation.

1357
02:17:08,652 --> 02:17:11,772
Yeah, with this, with the stock market, act like it would today.

1358
02:17:11,772 --> 02:17:18,132
You basically say, yeah, I think, well, I think everything, we have a lot of, I
think we have actually a lot of

1359
02:17:18,132 --> 02:17:25,012
corruption with CEOs. And I think most CEOs are great, and they do a good job. But I
think this is a game that every CEO

1360
02:17:25,012 --> 02:17:34,732
plays. Firms are not really as efficient as economics textbook would imply. They do
lots of clever little things to

1361
02:17:34,732 --> 02:17:45,772
avoid blame and entrench themselves, which is, which I think is partially makes some
sense, because you want the CEO

1362
02:17:45,772 --> 02:17:53,052
to be in there for the long haul. You want someone like Elon Musk, maybe who really
believes in the vision. But many times,

1363
02:17:53,052 --> 02:18:01,532
you know, the CEOs are paid a ton of money, and they elect their friends and the
board is their friend. And they not only pay

1364
02:18:01,532 --> 02:18:10,932
themselves tons of money wasting that money, but they don't run the company very
well. And with this, you could just say, you

1365
02:18:10,932 --> 02:18:19,052
could have one single market, should we fire the CEO against the stock price, and
then people would be able to bet, well, if you

1366
02:18:19,052 --> 02:18:27,052
fired the CEO and replaced him with the number two person, then the stock price
would go up. And then you make money if they

1367
02:18:27,052 --> 02:18:33,172
ignore you or if they follow your advice, and you're right. And if they follow your
advice and fire the CEO and the stock price

1368
02:18:33,172 --> 02:18:40,692
goes down, then you lose a ton of money. But you only lose money if you're wrong,
which is desirable. I mean, that's the way it

1369
02:18:40,692 --> 02:18:51,092
should work. And, you know, I think corporations, just think about how innovative a
corporation can be when it has a good

1370
02:18:51,092 --> 02:19:00,132
leader, which good is obviously with a lot of, you know, quotation marks and
qualifiers and things around. But if you have

1371
02:19:00,132 --> 02:19:07,932
basically someone who has united people around a vision, and people are no longer
infighting, and they're committed to one

1372
02:19:07,932 --> 02:19:17,532
vision, that I think is a good place to start. You have like Steve Jobs, and you
have like Elon Musk, something like that. And

1373
02:19:17,532 --> 02:19:23,612
that makes a big difference. Think about how big the iPhone changed. There was no
app store. There were no apps. There was no

1374
02:19:23,612 --> 02:19:35,532
like touchscreen phone before the iPhone. There were no tablets before the iPad.
And, you know, Elon Musk, when he lands those

1375
02:19:35,532 --> 02:19:45,252
rockets, you know, like, like landing a pencil on an eraser. It's so cool to me.
It's so cool. And then you're just like electric

1376
02:19:45,252 --> 02:19:52,972
cars. America will never do it. And then he just, he just did it. You know, he just
like, somehow you just do these things. And I

1377
02:19:52,972 --> 02:20:00,412
think every company can be so contentious, though. I know. Yeah, it's crazy. No,
that's, that's fascinating. Like,

1378
02:20:00,412 --> 02:20:08,932
But yeah, I think there's obviously so much, some people have done estimates. I have
this link somewhere, because I like this so

1379
02:20:08,932 --> 02:20:17,012
much. I have like the prediction market propaganda folder, but I don't remember
where I put it. But it's, but there's someone did a

1380
02:20:17,012 --> 02:20:24,612
study, you can look this up, of like various projects the government could do, and
their hypothetical return on investment. So it

1381
02:20:24,612 --> 02:20:31,332
was kind of tongue in cheek, because it was done by, it was done by like Brookings
or something, some like econ style place, but

1382
02:20:31,332 --> 02:20:37,652
relatively mainstream. But in framing it as return on investment, they were being
kind of clever about it. They're like, because

1383
02:20:37,652 --> 02:20:43,412
they're like, they know that's not the real stated goal of the government is to like
make all this money or whatever. But they were,

1384
02:20:43,452 --> 02:20:52,292
there were some things on there, like global free trade, unrestricted movement of
labor and capital, like open borders and stuff,

1385
02:20:52,412 --> 02:20:59,132
where like, the return on investment is like 15 million percent, or like some absurd
number. And there's all these other, these other,

1386
02:20:59,132 --> 02:21:08,212
like, there's tons of stuff that the government could do, policies that would be a
little different. Changing, why is our tax system so

1387
02:21:08,212 --> 02:21:14,132
bad? It's like the worst tax system in the universe. It's why, you know, Adam Smith
had land value taxes, and

1388
02:21:14,332 --> 02:21:15,292
it's so stressful.

1389
02:21:16,092 --> 02:21:21,652
Hundreds of years ago, and we still don't do, still don't do them.

1390
02:21:22,372 --> 02:21:22,972
That's

1391
02:21:23,372 --> 02:21:24,892
this weird bureaucracy instead.

1392
02:21:24,932 --> 02:21:28,852
Weird bureaucracy that makes it very hard to do your taxes.

1393
02:21:31,252 --> 02:21:39,532
Yeah, a lot of, one major function of the tax system is to punish and reward certain
groups of people. It's not really even, this is not the

1394
02:21:39,532 --> 02:21:46,972
most efficient way of raising money. Some of it's just absurd. The payroll tax makes
no sense. It's a tax on employing people. It's a tax on

1395
02:21:46,972 --> 02:21:54,612
being poor. It's a tax on, it doesn't, it's just like nothing about it makes any
sense. It's like universal agreement that it should be

1396
02:21:55,772 --> 02:22:04,692
just deleted. And the corporate, the idea of the corporate income tax is also a lie.
There's no evidence that most corporations don't even

1397
02:22:04,692 --> 02:22:12,012
pay it, even if when they do, they just take their money away from either the
customers through higher prices or through their employees. It's like,

1398
02:22:12,332 --> 02:22:17,012
there's many tax things where there's wide agreement across all,

1399
02:22:18,492 --> 02:22:26,012
many experts across the political spectrum that certain things should just, you
should just delete them and just not even replace them with anything

1400
02:22:26,012 --> 02:22:28,092
because they, they do such a bad job.

1401
02:22:30,892 --> 02:22:33,372
But yeah, we, we have all these weird things. So

1402
02:22:34,172 --> 02:22:38,652
yeah, it would be nice to make the tax structure more efficient.

1403
02:22:41,652 --> 02:22:45,692
Interesting. It's been a fascinating conversation. I have one last question to ask
you because I've

1404
02:22:47,212 --> 02:22:54,252
always been fascinated because you have the economics background and it seems like
the computer science design background, at least engineering

1405
02:22:54,252 --> 02:23:01,212
design with Drivechain and stuff like that. Like what interests you about Bitcoin
more, like the economic side of it or the technical side of it?

1406
02:23:03,812 --> 02:23:04,972
Oh, that's a good question.

1407
02:23:06,332 --> 02:23:18,892
Yeah, it's funny. There's, it should, there kind of could be a, it's weird. I have a
lot of mainstream economics training, and yet I'm like in the Bitcoin world, which
is very funny.

1408
02:23:20,772 --> 02:23:22,092
Ultimately, I do think that

1409
02:23:23,572 --> 02:23:27,612
a lot of the disputes in economics and all these, these schools,

1410
02:23:29,772 --> 02:23:30,772
you know, whether or not

1411
02:23:31,772 --> 02:23:39,972
whatever Austrian economics or neoclassical economics or whatever is right about
any, I think most of that doesn't really even matter because we have a kind of

1412
02:23:41,852 --> 02:23:43,332
scheme where

1413
02:23:44,372 --> 02:24:00,652
your cash is being inflation taxed away. And so there's no reason not to look for an
alternative. And you have a payment system where, I mean, Silk Road is a big eye
opener where it's like you can't use

1414
02:24:00,772 --> 02:24:06,932
credit cards for that. So the payment system actually is a subset of what is
politically feasible.

1415
02:24:08,092 --> 02:24:22,372
And election betting is banned in the United States, it's heavily restricted by the
CFTC. So this is my favorite website Intrade. But you could, you had to go, you had
to wire money to this company in Ireland to use Intrade.

1416
02:24:23,132 --> 02:24:38,572
And even though it was not a, it was a company in Ireland, it still, you would get
harassed if you did anything with it. Even CNBC would do stories about it in the
United States. It's not even a US company, and it would still get harassed. So I'm
kind of interested in

1417
02:24:38,572 --> 02:24:49,572
just by being interested in election betting, I kind of became sort of more
interested in Bitcoin. But yeah, I don't know the, I think definitely the, for me,
I'm more interested in the economics

1418
02:24:50,852 --> 02:25:05,932
of Bitcoin than the computer science. A lot of it, a lot of, even though I knew some
computer science, a lot of the cryptography and stuff I did not know at all. I had
to learn when I was learning Bitcoin. I was like amazed that

1419
02:25:06,052 --> 02:25:27,932
I kind of always knew like that there were hash functions, because if you'd ever
used BitTorrent or something, you would kind of, but I kind of didn't really realize
what they could do before. And now they seem like, or post-Bitcoin, they seem way
more impressive. So a lot of that stuff I didn't know when I was still getting into
Bitcoin. Really what did it for me was the Silk Road article as someone who never
really used Silk Road ever.

1420
02:25:27,932 --> 02:25:57,212
But just seeing that you could have people, you know, you had people who are like
drug addicts, and they could somehow get all of this stuff to work, you know, and
they were like the early adopters on the cutting edge. And then I was like, holy
crap, there must be something really interesting going on here. And there was, and
it was more interesting than I could have ever imagined at the time.

1421
02:25:57,932 --> 02:26:09,932
Well, thank you for getting interested in this and sharing your crazy thoughts on
your blog on drivechain.info, bitcoinhivemind.info, or .com?

1422
02:26:09,932 --> 02:26:19,932
.com. But they all link to each other. I have like a lot of different, and then you
can see on the sidebar, I have them all linked. So if you go astray, you can find
your way back pretty easily.

1423
02:26:19,932 --> 02:26:30,932
This has been, Paul, it's always a pleasure conversing with you on Twitter and in
person. Is there any like parting notes that you want to get out there?

1424
02:26:30,932 --> 02:26:38,932
I don't know. I don't know. I don't think so. I mean, I have all the stuff on
drivechain.info and on bitcoinhivemind.com.

1425
02:26:38,932 --> 02:26:39,932
Can people help you review?

1426
02:26:39,932 --> 02:26:41,932
You can get the video.

1427
02:26:41,932 --> 02:26:44,932
Can people help you review the BIPs or anything like that?

1428
02:26:44,932 --> 02:26:54,932
Definitely, yes. I think, well, I think if you want to know exactly what's going on
and you don't like, you like some weird podcast explanation, you're like, I just
want to know exactly what is going on.

1429
02:26:54,932 --> 02:27:04,932
The BIPs, I think they actually do a decent job of telling you what is technically
exactly happening. And then we have releases, so you can download them and play with
them.

1430
02:27:04,932 --> 02:27:16,932
And we have, we even have, we have GUIs because Cryptex is great with QT, so we
have, everything has buttons that you can click and stuff. It's kind of a, I dare
say it's possible for someone to use.

1431
02:27:16,932 --> 02:27:18,932
You don't have to do all this from the terminal?

1432
02:27:18,932 --> 02:27:28,932
Yeah, you don't need to. There's RPC commands for, I think, everything at this
point, so you can do either.

1433
02:27:29,932 --> 02:27:45,932
Well, Phreaks, if you haven't gone and checked out Paul's blog yet, go read it. It's
going to take you some time to get through, but it's really helped me understand a
lot of these concepts, particularly pertaining to consensus networks, proof of stake
versus proof of work.

1434
02:27:45,932 --> 02:27:51,932
Those are, that's one of my favorite blog posts on any subject in Bitcoin.

1435
02:27:52,932 --> 02:28:09,932
Thank you so much. Yeah, again, it is, be warned that it is writing therapy for Paul
when you open it. It's me dumping these thoughts out of my head, so I don't have to
think about them anymore. Pushing them into your head, so be aware of that.

1436
02:28:09,932 --> 02:28:13,932
On the actual post, go into the comments of the post, too, because there's some…

1437
02:28:14,932 --> 02:28:30,932
Some of them are great. Yeah, some of them are really funny. The proof of work
versus proof of stake one is funny, where Vitalik and Vlad and Jaquan are in there,
and then I thought they, well, we talked about it already, but sometimes the
comments are really something.

1438
02:28:31,932 --> 02:28:41,932
Paul, thank you for all that you do. I'm very interested to see Drivechain and,
hopefully in the future, the Hivemind progress.

1439
02:28:42,932 --> 02:29:01,932
Yeah, I mean, they're both pretty polished off. I mean, even Hivemind, if you go on
the site, you can see we have charts and things. We have screenshots, you know. So,
it's kind of not, I'm kind of proud of the fact that I don't, I try not to talk
about things while they're still vaporware.

1440
02:29:01,932 --> 02:29:07,932
So, you can actually go and just take a look. Just look at some screenshots, at
least. Some beautiful screenshots.

1441
02:29:07,932 --> 02:29:12,932
Big fan of screenshots. That's what half the bet is usually, screenshots.

1442
02:29:12,932 --> 02:29:13,932
Yeah.

1443
02:29:13,932 --> 02:29:14,932
Paul.

1444
02:29:14,932 --> 02:29:16,932
Thank you so much for having me.

1445
02:29:16,932 --> 02:29:18,932
That's all we got this week, freaks. Peace and love.