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🎵

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♪, and for watching my video!

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Hey, thanks everyone for joining.

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Sorry about the hiccup there where we had a link and then it rugged, so I had to

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to create a new Twitter spaces.

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here we are.

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Hopefully, it won't create too much disruption.

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had a large number of people who had registered to attend in terms

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♪, and for watching my video!

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Thanks everyone for being here.

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It's Thursday, February 2nd, and we're going to discuss Drivechain, as we'd love to.

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One thing I had in mind for this space is chatting

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♪, and for watching my video!

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♪, and for watching my video!

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♪, and for watching my video!

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Henry.

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Yeah.

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I'm just recovering from a cold, apologies if I'm coughing or

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anything like that, clearing my throat.

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But yeah, I've been interested in Drivechain for

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a while because like you and everybody else here, I'm interested in scaling

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solutions for Bitcoin, ways to get sidechains

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implemented. And I think that the research that

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Paul Sztorc has done in this area is very important and useful.

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But I've also been somewhat critical of the idea for specific technical reasons.

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about four years ago or something like that, wrote a I just called anyone

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Can Spend Transactions Creep Into Bitcoin.

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That post talks a little bit about some of these technical issues with Drivechain.

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Since that time, seems like Drivechain has changed a and has made some improvements

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to the concept.

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so I'm interested in chatting about that and anything else you'd like to discuss.

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is cool. is exactly why we're here.

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certain technical aspects, I think, have slightly evolved over

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an increasing amount of technical

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refinement and formalization in terms of the creation of a test

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environment where technically speaking Bitcoin is forked in order to test

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you know in a real world kind of however experimental kind of test

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context how things would work so people are able to download software

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and see how things work in kind of like a testnet version.

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yeah, in the process of all of that, I imagine there's been some tweaks to this or that

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technical issue. I, by background, like a philosophy.

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major and a lawyer.

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So I grok Drivechain primarily from an economic theory standpoint.

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People like you who are highly technical and come at it from a

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coder's mindset, in addition to the economic mindset, I think provide a valuable

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critique perspective.

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and it's so cool when people like you opine whether negative, positive, or a

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mixture on the whole topic.

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Does that make sense?

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Yeah, I think it's really important for people to understand about

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these solutions is that there

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are certain trade -offs that have to be made one way or another, no matter how

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sidechains are implemented.

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And people also really need to understand from a kind of marketing perspective

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so that people are not misled.

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when people are talking about Bitcoin, word Bitcoin

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is

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a

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And the idea behind sidechains is that Bitcoin

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is

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going to usable on not just the Bitcoin blockchain, but that there will be all of these

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other blockchains out there that are connected to the Bitcoin blockchain, where you can

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use your Bitcoin.

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However, the problem is that this concept of Bitcoin

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on these other

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chains, depending on how it's implemented, will either more or less resemble

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actual Bitcoin on the original chain.

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And in other words, it will not have the exact same properties as the original Bitcoin

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on the original chain has.

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so we need to think about this

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this because if and when all of these sidechains are going to start coming online, they

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are going to be marketed as Bitcoin.

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And it is unlikely, I think, based on just human nature and behavior

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for there to be very many disclaimers on these other chains

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that say, know, hey, you can use your Bitcoin on this chain, just

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be aware that this isn't actually Bitcoin.

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It's slightly different than actual Bitcoin.

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It's not exactly the same.

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Like, they're not going to say that.

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They're going to say, hey, you can use Bitcoin on this new chain and your Bitcoin will

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be better and your Bitcoin will have all these additional features.

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It'll be more private.

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It'll have this, it'll have that, it'll be faster, cheaper, more private, more secure,

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etc. That's most likely how people are going to market this stuff.

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And we need to make sure if we're going to do this that that marketing is actually true

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and accurate. if it's not, then we need to make sure that people understand

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that this Bitcoin does have certain aspects to it that are not

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the same as the Bitcoin that you have come to know and love.

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That's exactly right.

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It is absolutely important that everyone

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involved in Drivechain in any way, especially as an advocate

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or a user, understands and expresses its features,

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its risks perfectly, as best as they possibly can.

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I couldn't agree more with everything you said.

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in

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a future, hypothetically, every blockchain

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is either the layer one of Bitcoin or a sidechain on Bitcoin's layer one,

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then

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the whole culture around crypto would be very different.

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And one of the

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differences would be that although it would not be a perfect world, the net

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would be probably much better in terms of quality of communication.

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right now in the crypto world, we have a morass of misinformation and

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misunderstanding, unfortunately, there are like 20,000 not

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a hundred thousand crypto currencies floating around and the vast majority of them are

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unfortunately part of a speculative mania pump -and -dump money grab that

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just operates on the greater fool and insiders sort of preying on people.

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The well -known projects aren't

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those things, there's like 99%, unfortunately,

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of the total crypto sector in terms of just individual projects aren't entirely

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legitimate. So I feel that if we had a drivechain feature, while of course there

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wouldn't be perfect information and understanding

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understanding because that's just not part of human life.

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do think there would be an enormous diminution in the misunderstandings

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and the hazards that the ordinary person would succumb to.

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For example, imagine if every major crypto project that anyone really heard

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about was

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a Bitcoin sidechain in which the native token, the main

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token that's used is a synthetic Bitcoin, which

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is a phrase I've been lately using rather than saying stablecoin on Bitcoin because

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people think of fiat when of Staplecoin,

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but from a Bitcoin -centric mindset, something is one -to -one pegged with Bitcoin, it's a

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Bitcoin stablecoin. we should avoid the use of the word stablecoin because it's almost

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always in reference to dollars.

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people should say, well, say synthetic Bitcoin, meaning it's not true

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Bitcoin, but it's one -to -one pegged.

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And the idea, as you know, probably better than me, the whole idea of Drivechain is

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that you get the unit of account of Bitcoin, One Bitcoin worth of

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purchasing power is by design the goal, but with different software, like maybe

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Monero's privacy or, you

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Bitcoin Cash's scaling,

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Ethereum's Turing completeness.

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So you have different software, same unit of account.

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In other words, the quantity of Bitcoin stays the same, but its quality changes.

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it's economically the same experience in terms of purchasing

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power and monetary policy.

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But everything else might change like privacy or fees.

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that's the idea.

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if we had, instead of 20,000 altcoins, just had maybe 25

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different Bitcoin sidechains, your point would remain that they wouldn't have the same

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guarantees. There's a really great tweet just recently by Moon

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Settler, who's in the audience, about that.

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there'd be different, I don't want to misquote him, different security assurances on

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these sidechains.

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And that's one of the ways in which the sidechains are

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different than the main chain.

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think the phrase he used was property rights or property quality, the quality of the

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property interest, which is exactly right.

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You don't have the same economic security, There could be like an attack on a side

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chain under certain circumstances.

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That would be much easier than an attack on the main chain.

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But at least there wouldn't be a pump and dump, right?

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You're not gonna see people saying, hey, buy this, you know, like, you know, for

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example, let's just take the Thunder sidechain.

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It's a big block sidechain that's been proposed.

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a drivechain of the future.

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So it has big blocks, Bitcoin's monetary policy.

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So no one's going to buy that with the expectation of making a huge gain over Bitcoin's

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value, because the whole idea is you can exchange one for the other.

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So if that becomes a major part of the crypto world, is everyone is

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using synthetic Bitcoins, then maybe that would lead to great reduction in

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the pump and dump problem.

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So there's like an ethical achievement that Drivechain could effectuate

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if its optimistic vision is fulfilled, which is

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that people will be just doing lots of different software on Bitcoin without all of

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this pump and dump stuff, at least much less of it maybe.

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What do you think of that?

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that too much of a kind of an optimistic dream or do you think there's some merit that

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in 10 years from now we could see that narrative play out?

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What do you think,

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Greg?

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Just to clarify the question a little bit, you

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asking me what I think about a world or a future

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where Drivechain is adopted and

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there are more...

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Can you clarify the question in a little bit of a shorter sentence?

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Sure. You were talking about accuracy in describing what

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Drivechain aims to achieve.

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And I was saying that's important, that's vitally important.

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And it's also worthwhile to understand that if Drivechain were to be very successful in

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terms of not only being adopted by the Bitcoin community, but the Drivechains became

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enormously successful in terms of many billions of of market

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cap being added to Bitcoin through

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I think that would necessarily mean that the crypto

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community at large had achieved to some extent a

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reduction in the pump and dump Ponzi -nomics that

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are present in the

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altcoin space in parts of it because people will be using, if drivechain is very

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successful, will be using synthetic bitcoins on Bitcoin sidechains

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instead of holding altcoins, which inherently have the possibility

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of outperforming Bitcoin, unlike the

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synthetic Bitcoins.

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Andrew, Bailey, welcome to the stage.

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you to chime in?

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But yeah, just to answer your question regarding pump and dumps,

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think that there might be a reduction in pump and dumps, maybe.

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I think

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Bitcoin could help at least draw more attention to itself and away

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from competitors if it started

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promoting more sidechains.

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I think that's a reasonable hypothesis.

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Here's one reason to be skeptical.

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this working? can't tell.

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Hey,

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Here's one reason to be skeptical.

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There are wrapped Bitcoin products, to use Henry's terms, synthetic Bitcoin products,

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already. billions

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Billions of dollars worth of wrapped Bitcoin on Ethereum.

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And you can deposit it and borrow against it and deposit it into a tornado cash

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style contract and so on.

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So you can get more programmability or more privacy and maybe some other things too.

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That doesn't seem to have done much to

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make the world more of a Bitcoin world, nor does it seem to have reduced pump

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and dumps or the things that, Henry, that you rightly find ethically dubious.

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I'm suspicious. I see it the opposite way, Andrew.

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I think that, well, let's examine that.

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Let's examine the

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economics, the economic theory of

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wrapped Bitcoin. So when people demand wrapped Bitcoin, when they

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buy it and hold it, they are increasing the value of Bitcoin indirectly

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because demand for wrapped Bitcoin creates demand

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for LayerOne Bitcoin.

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when people demand wrapped Bitcoin, instead of

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buying Ether,

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they're increasing the market cap of Bitcoin.

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Now, when they transact in wrapped Bitcoin,

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Bitcoin, they're probably creating transaction fees for Ethereum

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system participants instead of Bitcoin miners.

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I think that it's exactly wrong, in my opinion, as far as I can

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tell, to say that Demand

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wrapped Bitcoin is not somewhat aligned with

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Bitcoinization of the crypto space at large.

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that the success and proliferation of wrapped Bitcoin is not an

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example of people logically

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logically avoiding the price volatility of altcoins.

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What they're doing is exactly not investing in an altcoin.

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They're investing in a synthetic Bitcoin which I think should be differentiated from

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altcoins because the whole idea of

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an altcoin is that it has a different monetary policy and it has a different purchasing

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power. the exact goal by design, of course they can fail

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because of their trust model, but the design of a wrapped Bitcoin is that it is a

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synthetic Bitcoin, which is

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which is tethered to the monetary policy and price and purchasing power, the

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value of layer when Bitcoin.

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I feel that your example is really toward my point.

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I mean, imagine hypothetically that the utilization of wrapped Bitcoin were to be the

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most successful

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successful thing in all of crypto, just hypothetically, an extreme and unlikely

249
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hypothetical.

250
00:19:03,042 --> 00:19:06,962
the future, in the next five years, the only thing that grows in crypto is wrapped

251
00:19:06,962 --> 00:19:10,482
Bitcoin. What would that do for Bitcoin?

252
00:19:11,542 --> 00:19:14,642
would mean that Bitcoin were growing in market cap.

253
00:19:15,102 --> 00:19:15,246
Demand

254
00:19:15,246 --> 00:19:16,366
Demand for Bitcoin was growing.

255
00:19:16,706 --> 00:19:18,186
It would mean that all coins weren't growing.

256
00:19:18,506 --> 00:19:20,266
It would mean that pump and dumps weren't growing.

257
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So I feel that your example of wrapped Bitcoin tends

258
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to support a pro -Drivechain view,

259
00:19:31,546 --> 00:19:33,106
it? Drivechain.

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I think I agree with nearly all of that, Henry, and it helps me sharpen my point.

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Wrapped Bitcoin, or demand for wrapped Bitcoin does capture some of the demand for

262
00:19:46,450 --> 00:19:50,810
Bitcoin, but it's not paying fees to the Bitcoin layer.

263
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This is a drivechain talking point.

264
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There is an important economic difference in the long term between the effects of

265
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people buying wrapped Bitcoin and using it, and people buying real Bitcoin and using

266
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it, transacting in the bitcoin based layer.

267
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So that's where I would see the difference.

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Sure.

269
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But pump and dump.

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have nothing to do with

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♪, and for watching my video!

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♪, and for watching my video!

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♪, and for watching my video!

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generate for Bitcoin miners is much smaller.

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terms of like, you were to 10X the activity in stacks, the value that would accrue

276
00:21:56,106 --> 00:22:01,346
to Bitcoin miners would be much smaller than if you were to 10X the

277
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economic activity

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of merge mining.

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chime in. jump in any time.

280
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We don't have to even be so polite here.

281
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can just go for it.

282
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Okay.

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So while we're talking about

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using the word Bitcoin, I want to just kind of go back to some of the earlier things we

285
00:22:36,770 --> 00:22:42,730
were talking about in terms of the security of Drivechain because I do not see people

286
00:22:42,730 --> 00:22:48,190
in the future, let's say hypothetically, that Drivechain becomes

287
00:22:48,190 --> 00:22:48,890
adopted

288
00:22:49,231 --> 00:22:53,531
into Bitcoin. If that were to happen, do not see people

289
00:22:53,531 --> 00:22:59,511
taking the time to modify their speech and

290
00:22:59,511 --> 00:23:03,511
say synthetic Bitcoin or wrapped Bitcoin or anything along those lines.

291
00:23:03,711 --> 00:23:06,011
think that people are just going to call it Bitcoin.

292
00:23:07,653 --> 00:23:10,333
that can lead to one of two things.

293
00:23:10,993 --> 00:23:16,753
Either they are calling it Bitcoin and using the mental model of Bitcoin to

294
00:23:16,753 --> 00:23:21,493
refer to coins on sidechains that have similar security properties to Bitcoin and so

295
00:23:21,493 --> 00:23:26,033
it's it's okay to call it Bitcoin or it's

296
00:23:30,810 --> 00:23:32,090
are radically different.

297
00:23:32,610 --> 00:23:38,130
And if that were the case, then that's where the potential for

298
00:23:38,130 --> 00:23:41,810
explosions happens. And my background is in security.

299
00:23:42,070 --> 00:23:43,390
work in information security.

300
00:23:43,630 --> 00:23:46,210
So that's always what I'm thinking about.

301
00:23:46,550 --> 00:23:49,082
It's not how, you know, something, uh,

302
00:23:49,142 --> 00:23:55,042
go well or like, I'm not exactly, I don't become hopeful about anything

303
00:23:55,042 --> 00:24:00,562
until all of the potential problems or ways that something can go wrong are addressed.

304
00:24:02,722 --> 00:24:05,242
how can Drivechain explode?

305
00:24:05,662 --> 00:24:06,842
Here's one scenario.

306
00:24:06,842 --> 00:24:07,354
If

307
00:24:07,734 --> 00:24:13,614
If the security issues with Drivechain are not addressed, then we could arrive

308
00:24:13,614 --> 00:24:18,334
in a situation where Drivechain is adopted, lots of people are using it.

309
00:24:19,094 --> 00:24:24,554
it's a scenario that Paul Sztorc and many others have talked about where suddenly

310
00:24:24,554 --> 00:24:25,626
there is a

311
00:24:30,810 --> 00:24:36,230
to reduce the likelihood of of the mechanisms that it uses

312
00:24:36,230 --> 00:24:41,410
to reduce, and actually for those who are not familiar with this entire topic of theft,

313
00:24:41,650 --> 00:24:46,750
should backtrack a little bit and just give a quick overview of what I'm

314
00:24:46,810 --> 00:24:52,510
talking about. Drivechain, what is happening is that when you want to transfer your

315
00:24:52,510 --> 00:24:58,510
coins from the Bitcoin blockchain to a sidechain, first what you do is you

316
00:24:58,510 --> 00:25:01,010
give your Bitcoins to the Bitcoin miners.

317
00:25:01,990 --> 00:25:02,750
You literally give

318
00:25:07,782 --> 00:25:09,082
miners, you give them to everyone.

319
00:25:10,242 --> 00:25:16,242
You put them in an address or to an account that is

320
00:25:16,242 --> 00:25:21,082
called, it uses something called an anyone can spend a transaction.

321
00:25:22,082 --> 00:25:24,562
And that is literally what it sounds like.

322
00:25:24,702 --> 00:25:24,942
Anyone

323
00:25:30,910 --> 00:25:35,390
from being spent in drivechain is miner consensus.

324
00:25:35,970 --> 00:25:41,270
So if somebody tries to spend those bitcoins, then the miners themselves will say,

325
00:25:41,390 --> 00:25:44,950
well, we have some additional rules for spending these coins that need to be followed.

326
00:25:45,030 --> 00:25:46,810
And this particular transaction that someone's

327
00:25:50,470 --> 00:25:54,790
if the miners, and here again we need to be very specific, who are these miners that

328
00:25:54,790 --> 00:25:55,470
we're talking about?

329
00:25:56,150 --> 00:26:02,030
We're talking about the group of entities that has at least 51 %

330
00:26:02,030 --> 00:26:02,810
of the hash

331
00:26:08,998 --> 00:26:14,758
approve or disapprove the spending, then that determines

332
00:26:14,758 --> 00:26:18,558
whether or not those coins are safe and whether or not they follow the drivetrain

333
00:26:18,558 --> 00:26:22,158
rules. That's kind of a simplification of what's going on, but that's the general idea.

334
00:26:24,498 --> 00:26:25,038
so

335
00:26:30,850 --> 00:26:36,070
potentially go wrong here is that the majority of the miners are dishonest and decide

336
00:26:36,070 --> 00:26:41,070
to take all of Bitcoins that are given to them for themselves.

337
00:26:42,850 --> 00:26:48,570
They know that they would wreck the Bitcoin blockchain doing this, but maybe for

338
00:26:48,570 --> 00:26:50,550
whatever reason they want to

339
00:26:50,574 --> 00:26:51,874
wreck their Bitcoin blockchain.

340
00:26:52,654 --> 00:26:54,854
the miners get compromised.

341
00:26:56,614 --> 00:27:02,594
some, know, for example, back in the day, the Chinese miners

342
00:27:02,594 --> 00:27:04,174
were the biggest miners.

343
00:27:04,454 --> 00:27:08,594
I don't think they are anymore because I think the Chinese government, you know,

344
00:27:08,774 --> 00:27:09,574
cracked down on them.

345
00:27:09,574 --> 00:27:10,298
But let's

346
00:27:10,298 --> 00:27:14,658
let's say that they were still, and the Chinese government decided, we would like to

347
00:27:14,658 --> 00:27:17,558
destroy Bitcoin in this specific way,

348
00:27:18,958 --> 00:27:20,978
well, then that could potentially happen.

349
00:27:21,838 --> 00:27:26,718
And that would be disastrous for Bitcoin, even if for a period of time, the sidechains

350
00:27:26,718 --> 00:27:27,938
were working really well.

351
00:27:31,470 --> 00:27:37,230
interesting, Greg. think that I agreed with a lot of what you say, but I'd like to also

352
00:27:37,230 --> 00:27:42,770
rephrase it in a way that I feel is just as compelling or more, which is that

353
00:27:42,770 --> 00:27:46,690
when the participate in Drivechain,

354
00:27:47,510 --> 00:27:53,470
do it in a way in which multiple months goes by, in which the

355
00:27:53,470 --> 00:27:55,950
activity of the miners is completely public.

356
00:27:56,810 --> 00:28:02,810
if the miners were to, by a majority of the hash rate decide to

357
00:28:05,410 --> 00:28:06,310
a drivechain.

358
00:28:07,330 --> 00:28:13,290
That is to say, discontinue one of the merged -mined sidechains on Bitcoin.

359
00:28:13,670 --> 00:28:17,754
That uses BIP300 and Then the decision

360
00:28:30,810 --> 00:28:36,450
six months in a way that is completely public, I think is logically possible, but

361
00:28:36,450 --> 00:28:38,870
practically unlikely in the extreme.

362
00:28:40,830 --> 00:28:43,730
I want to just also elaborate a little more.

363
00:28:44,970 --> 00:28:48,470
Thank you for that clarification because that is important.

364
00:28:48,970 --> 00:28:50,105
As part of

365
00:28:50,385 --> 00:28:52,125
BIPs that are being proposed.

366
00:28:53,105 --> 00:28:58,925
yes, apparently. to land my plane on this interjection, I also want to say that

367
00:28:58,925 --> 00:29:04,685
we've known from the beginning of Bitcoin that in Satoshi's original writing that

368
00:29:04,685 --> 00:29:09,401
the 51 % honest majority of miners has been one of the

369
00:29:09,401 --> 00:29:11,001
fundamental ideas in Bitcoin.

370
00:29:12,141 --> 00:29:14,581
So Drivechain is resonant with that idea.

371
00:29:14,921 --> 00:29:20,821
some have said, some critics as well as proponents of Drivechain

372
00:29:20,821 --> 00:29:26,201
have said that what Drivechain does is not so much introduce a

373
00:29:26,201 --> 00:29:28,696
lesser standard for

374
00:29:28,796 --> 00:29:34,436
Bitcoin users with respect to their security, but instead make very

375
00:29:34,436 --> 00:29:38,716
explicit what is already implicit in the design of Bitcoin.

376
00:29:39,656 --> 00:29:45,456
like, yes, the miners can exert control and that control

377
00:29:45,456 --> 00:29:47,991
can be either malfeasant

378
00:29:48,411 --> 00:29:53,131
or it's also important to understand that since the very beginning of Drivechain, back

379
00:29:53,131 --> 00:29:58,011
in 2015, designers knew or designer Paul,

380
00:29:58,851 --> 00:30:00,411
that the BIPs have two authors.

381
00:30:01,011 --> 00:30:06,791
The designers understand that there is actually scenarios in which it's

382
00:30:06,791 --> 00:30:07,211
good

383
00:30:07,287 --> 00:30:12,187
for the majority of the hashrate to be able to discontinue a Drivechain.

384
00:30:12,587 --> 00:30:18,187
For example, if there is a Drivechain that is diminishing the value of Bitcoin

385
00:30:18,187 --> 00:30:21,567
or interfering with other Drivechains,

386
00:30:22,767 --> 00:30:26,547
in those unusual circumstances, it's actually good that the

387
00:30:26,582 --> 00:30:31,902
community of Bitcoin can express its will through the miners to discontinue that

388
00:30:31,902 --> 00:30:33,202
problematic drivechain.

389
00:30:33,722 --> 00:30:34,982
So it's actually good that Okay.

390
00:30:35,382 --> 00:30:36,802
go ahead. Can I respond?

391
00:30:36,962 --> 00:30:38,882
you. Okay. All right.

392
00:30:39,962 --> 00:30:45,877
that last part that you were talking about, specific drivechains and whatnot, You

393
00:30:45,937 --> 00:30:50,857
that's a somewhat different subject to what I was talking about earlier, is stealing

394
00:30:50,857 --> 00:30:56,817
from the general pool of drivechains that's available to the miners, which includes

395
00:30:56,817 --> 00:30:58,517
one or all of them or anything like that.

396
00:30:58,657 --> 00:31:03,397
And yes, thank you for interjecting and pointing out that with the way that the BIPs

397
00:31:03,397 --> 00:31:05,173
are written, As

398
00:31:05,213 --> 00:31:11,153
as far as I know, there are hard -coded rules for the miners to

399
00:31:11,153 --> 00:31:17,113
wait a certain period of time before withdrawals from that pool

400
00:31:17,113 --> 00:31:19,293
of funds can be made.

401
00:31:20,273 --> 00:31:23,653
That does improve the security of Drivechain.

402
00:31:24,033 --> 00:31:24,468
It definitely

403
00:31:24,588 --> 00:31:25,548
does.

404
00:31:29,268 --> 00:31:34,128
to the point that is Drivechain's security model strictly

405
00:31:34,128 --> 00:31:37,548
not a reduction in Bitcoin.

406
00:31:37,628 --> 00:31:42,248
I think it is strictly a reduction in Bitcoin's existing security model.

407
00:31:42,248 --> 00:31:43,748
because with a 51 %

408
00:31:43,764 --> 00:31:49,024
attack on Bitcoins today over either a period of a few minutes or a few months or

409
00:31:49,024 --> 00:31:54,524
whatever the case may be, the miners are not ever able to steal anybody's funds,

410
00:31:55,204 --> 00:31:59,324
whereas with the drivechain, theft actually becomes a possibility.

411
00:31:59,824 --> 00:32:03,059
as far as I can tell, that is strictly a reduction in the security

412
00:32:03,179 --> 00:32:04,399
of Bitcoins. right.

413
00:32:04,779 --> 00:32:05,339
I agree with that.

414
00:32:05,679 --> 00:32:11,599
a way of expressing that crystal clear to fully concede to you your point, which

415
00:32:11,599 --> 00:32:17,239
is exactly right in my personal understanding, is to say, if you would ask me, Henry,

416
00:32:17,799 --> 00:32:22,354
suppose there were to be a Drivechain which has identical code to

417
00:32:22,354 --> 00:32:28,014
to Bitcoin's main chain, would the users holding a drivechain

418
00:32:28,014 --> 00:32:32,014
token of that sort have an inferior security

419
00:32:32,014 --> 00:32:37,894
assurance than users who hold instead Bitcoin

420
00:32:37,894 --> 00:32:38,814
main chain token?

421
00:32:39,194 --> 00:32:41,650
And the answer would be that those who are holding the token of

422
00:32:41,690 --> 00:32:46,210
this synthetic Bitcoin would I think strictly have an inferior

423
00:32:46,210 --> 00:32:50,490
user experience, you know, all else equal.

424
00:32:51,850 --> 00:32:57,670
of course, the fees on that Drivechain would probably therefore be lower and therefore

425
00:32:57,670 --> 00:33:00,310
maybe they would, you know, there's that to think about.

426
00:33:00,450 --> 00:33:00,945
yeah, you're exactly

427
00:33:01,045 --> 00:33:04,345
right. know, Bitcoin main chain is digital gold.

428
00:33:04,685 --> 00:33:06,805
Nothing is ever going to be more digital gold than that.

429
00:33:07,065 --> 00:33:07,845
So yeah, you're right.

430
00:33:09,505 --> 00:33:15,505
Okay. we should talk about like what additional steps can be taken

431
00:33:15,505 --> 00:33:19,925
to improve the security of Drivechain because I think it is possible to improve on

432
00:33:19,925 --> 00:33:20,240
Drivechain

433
00:33:20,240 --> 00:33:24,300
Drivechain's security beyond the steps that it has taken, which is this long

434
00:33:24,300 --> 00:33:25,480
transparent time window.

435
00:33:25,960 --> 00:33:31,020
And one of the reasons why I'm nevertheless skeptical of the long transparent time

436
00:33:31,020 --> 00:33:31,560
window

437
00:33:33,770 --> 00:33:39,000
is because in the existing world, with the existing financial system,

438
00:33:39,816 --> 00:33:45,776
There are you know banks that will you know, it's it's happened where banks

439
00:33:45,776 --> 00:33:51,556
have stolen client funds And this theft has taken place

440
00:33:51,556 --> 00:33:57,196
over, you know A long period of time and then months go by and that person or

441
00:33:57,196 --> 00:33:58,816
company or entity does not get

442
00:33:58,831 --> 00:33:59,671
their funds back.

443
00:33:59,951 --> 00:34:05,131
I'm specific, like one recent example that comes to my mind is Bitchute, HSBC bank took

444
00:34:05,131 --> 00:34:07,931
their funds and as far as I know they still have not gotten them back.

445
00:34:08,611 --> 00:34:12,451
So something like that could happen with the drivechain and I want to make sure that

446
00:34:12,451 --> 00:34:15,591
that does not happen with the drivechain if drivechain is adopted.

447
00:34:16,791 --> 00:34:22,771
So one of the ways that it's possible to reduce the likelihood of such theft occurring

448
00:34:22,771 --> 00:34:28,631
is to increase the pool

449
00:34:28,631 --> 00:34:33,671
of entities that are participating in the consensus and that make up that

450
00:34:33,671 --> 00:34:34,771
51%.

451
00:34:34,891 --> 00:34:40,611
One of the major problems right now that we have with the Bitcoin mining

452
00:34:40,611 --> 00:34:45,771
is that a lot of the mining power is concentrated in the hands of a very small number

453
00:34:45,771 --> 00:34:51,351
of entities. And one of the ways to fix that problem is by

454
00:34:51,351 --> 00:34:53,311
pushing the mining

455
00:34:53,582 --> 00:34:59,022
out to the edges to create mining pools that are composed of actual

456
00:34:59,022 --> 00:35:04,762
members, thousands of members, and for the selection of transactions that are

457
00:35:04,762 --> 00:35:07,862
happening in those mining pools to happen at the edges as well.

458
00:35:08,682 --> 00:35:12,334
If that happens, your mining pool, then it's

459
00:35:12,394 --> 00:35:16,474
much more difficult to conduct this kind of 51 % attack because there's a large number

460
00:35:16,474 --> 00:35:19,954
of miners. It's kind of like Bitcoin early days, back in the good old days when there

461
00:35:19,954 --> 00:35:21,234
was a large number of miners.

462
00:35:22,214 --> 00:35:23,934
And there are protocols that can achieve this.

463
00:35:23,994 --> 00:35:26,674
And one of those is called Stratum version two.

464
00:35:27,714 --> 00:35:31,085
So one of the things to do maybe with the drivechain would be to push

465
00:35:31,165 --> 00:35:37,145
it in tandem with kind of I don't know, marketing push or something to promote mining

466
00:35:37,145 --> 00:35:42,985
pools that use Stratum v2 and to out -compete the existing mining pools

467
00:35:42,985 --> 00:35:48,545
that don't use it because that would significantly improve the security of Drivechain.

468
00:35:49,365 --> 00:35:49,836
That

469
00:35:49,836 --> 00:35:52,156
is a very interesting idea.

470
00:35:53,116 --> 00:35:57,716
And I appreciate you mentioning that project, I have retweeted

471
00:35:58,616 --> 00:36:00,256
after you tweeted it.

472
00:36:00,956 --> 00:36:03,156
So I'm going to to study that.

473
00:36:04,176 --> 00:36:05,796
And I really appreciate everything you said.

474
00:36:06,016 --> 00:36:08,536
think I agree with basically every single sentence

475
00:36:08,588 --> 00:36:09,348
you've said today.

476
00:36:11,128 --> 00:36:13,408
So it's cool to have you chatting here.

477
00:36:13,648 --> 00:36:14,688
Thank you for being here, Greg.

478
00:36:16,448 --> 00:36:17,348
It's my pleasure.

479
00:36:17,548 --> 00:36:18,648
Thank you inviting me.

480
00:36:18,808 --> 00:36:24,328
One of things I posted in the nest here is a tweet from our favorite champion, Fiat

481
00:36:24,328 --> 00:36:27,088
Joffe, drivechain enthusiast

482
00:36:27,339 --> 00:36:32,879
extraordinaire and famous creator of Noster, he

483
00:36:32,879 --> 00:36:38,679
wrote four days ago some people have been criticizing Drivechain because it somehow

484
00:36:38,679 --> 00:36:43,119
puts shitcoins in Bitcoin, which is not true in any sense at all.

485
00:36:43,699 --> 00:36:44,859
I agree with what he's saying.

486
00:36:45,419 --> 00:36:46,090
The main

487
00:36:46,090 --> 00:36:51,870
main idea of Drivechain is to make every single crypto user in the world

488
00:36:51,870 --> 00:36:57,090
using Bitcoin. When you're

489
00:36:57,090 --> 00:37:02,690
Drivechain, are using a protocol, a

490
00:37:02,690 --> 00:37:04,842
sidechain, native token of

491
00:37:04,842 --> 00:37:10,822
of which is a synthetic Bitcoin and your transaction fees are paid in Bitcoin,

492
00:37:11,062 --> 00:37:15,202
not in altcoins but in Bitcoin to the Bitcoin miners.

493
00:37:16,542 --> 00:37:22,382
So drivechain increases by design the value of Bitcoin and

494
00:37:22,382 --> 00:37:23,162
the

495
00:37:23,593 --> 00:37:25,833
value of Bitcoin's block space.

496
00:37:26,593 --> 00:37:28,793
it's really the opposite of shitcoin to read.

497
00:37:28,973 --> 00:37:34,973
Now of course on some Turing complete drivechain such as, know, Rootstock

498
00:37:34,973 --> 00:37:40,473
were to become a drivechain or if, you know, ETH side, which is the of the Ethereum

499
00:37:40,473 --> 00:37:42,293
clone in the drivechain testnet

500
00:37:42,344 --> 00:37:48,204
was to a real, live drivechain, not in a test environment,

501
00:37:48,424 --> 00:37:49,144
but the real thing.

502
00:37:50,144 --> 00:37:55,084
There could be all kinds of security tokens and other tokens that would have a free

503
00:37:55,084 --> 00:37:57,484
floating exchange rate against Bitcoin.

504
00:37:58,244 --> 00:37:58,744
However,

505
00:38:00,284 --> 00:38:01,095
because of nature of drive

506
00:38:01,095 --> 00:38:06,475
Drivechain, discussed earlier, think that an enormous diminution of

507
00:38:06,475 --> 00:38:12,335
Bitcoinery would occur, an enormous reduction, and the whole idea of

508
00:38:12,335 --> 00:38:14,575
printing money, as it were, would be gone.

509
00:38:14,875 --> 00:38:19,075
There's nothing inherently wrong with having a on a blockchain that has a free -floating

510
00:38:19,075 --> 00:38:19,815
exchange rate to

511
00:38:20,507 --> 00:38:25,947
The token is

512
00:38:25,947 --> 00:38:38,598
a

513
00:38:38,598 --> 00:38:43,958
would accrue value to the token that would have nothing to do with price of Bitcoin

514
00:38:43,958 --> 00:38:48,498
necessarily. So I think there's legitimate possibilities for such tokens.

515
00:38:50,238 --> 00:38:55,838
But unfortunately today, I think because of the lack of Bitcoin advanced sidechains,

516
00:38:56,338 --> 00:38:57,349
there's this theme

517
00:38:57,589 --> 00:39:01,509
that people launch altcoins and they use the rationale.

518
00:39:01,829 --> 00:39:05,889
And we can see this in the Ethereum white paper and probably the white paper of every

519
00:39:05,889 --> 00:39:10,289
other altcoin. It says right there in the white paper of Ethereum.

520
00:39:10,909 --> 00:39:12,069
This is a paraphrase.

521
00:39:13,169 --> 00:39:16,049
It is difficult to build on top of Bitcoin, if

522
00:39:16,101 --> 00:39:21,061
not impossible. So since we can't do our project on top of Bitcoin, we're doing an

523
00:39:21,061 --> 00:39:22,721
altcoin. And there you have it.

524
00:39:22,761 --> 00:39:27,021
That's like the rationale that altcoins so often use.

525
00:39:28,021 --> 00:39:31,161
And that's why I think we've seen this enormous growth in altcoins.

526
00:39:31,361 --> 00:39:34,641
It's because it's in the view of the founders

527
00:39:34,852 --> 00:39:40,852
hard to build on top of Bitcoin or impossible to, they have to use a federated side

528
00:39:40,852 --> 00:39:43,952
chain. And of course the question with a federation is who's gonna hold the keys?

529
00:39:44,212 --> 00:39:44,672
Should it be me?

530
00:39:44,852 --> 00:39:45,512
it be you?

531
00:39:45,752 --> 00:39:47,152
Who's gonna be this trusted party?

532
00:39:47,572 --> 00:39:52,652
So what Drivechain does is entrusts the Bitcoin miners, of course

533
00:39:52,652 --> 00:39:58,452
no one's perfect, but trusting the Bitcoin miners is probably one of the most

534
00:39:58,452 --> 00:40:04,352
reliable systems you can have involved in a trust model because it would take billions

535
00:40:04,352 --> 00:40:10,192
of dollars to attack it, and there's billions of dollars of incentive for them to do

536
00:40:10,192 --> 00:40:10,752
the right thing.

537
00:40:11,752 --> 00:40:15,898
the Bitcoin miners are going to, I think, be

538
00:40:17,958 --> 00:40:21,538
Bitcoin

539
00:40:22,852 --> 00:40:28,492
because the Bitcoin miners would like to see that fee income from the drivechains

540
00:40:28,492 --> 00:40:34,372
in perpetuity. So I feel the drivechain uses economic design to

541
00:40:34,372 --> 00:40:40,092
create a synergistic and sustainable system, just like Bitcoin

542
00:40:40,092 --> 00:40:44,252
itself relies on incentives to operate.

543
00:40:44,632 --> 00:40:50,492
The miners in Bitcoin are presumed to be anonymous, mutually distrusting, and

544
00:40:50,492 --> 00:40:52,652
self -interested, and yet the system works.

545
00:40:53,532 --> 00:40:55,892
And that's what drivechain also assumes.

546
00:40:57,912 --> 00:40:58,832
And I think that's why...

547
00:40:58,852 --> 00:40:59,692
it would also work.

548
00:41:00,492 --> 00:41:03,192
So I love that quote from Fiatjaf that I put in the nest.

549
00:41:03,492 --> 00:41:08,852
The next one I would like to put up is from Adam Back.

550
00:41:09,732 --> 00:41:14,072
The reason why I like this quote is he uses the phrase peer to peer sidechains.

551
00:41:14,892 --> 00:41:18,741
He writes, like peer to peer, he uses the words

552
00:41:18,841 --> 00:41:23,861
P2P, I like P2P sidechains as useful

553
00:41:23,861 --> 00:41:28,421
modularity for faster, more permissionless Bitcoin innovation.

554
00:41:29,121 --> 00:41:32,041
I thought that is a fantastic quote.

555
00:41:32,821 --> 00:41:37,421
And what he's saying there is an idea that I have seen in other very brilliant people

556
00:41:37,421 --> 00:41:38,630
with Blockstream talk

557
00:41:38,910 --> 00:41:44,490
about, Greg Maxwell, has, if you read his writings over the years, as I like

558
00:41:44,490 --> 00:41:50,330
to, he has, Maxwell and Beck have talked for years about the idea that it would be

559
00:41:50,330 --> 00:41:55,930
very valuable for Bitcoin potentially to have peer -to -peer sidechains.

560
00:41:55,930 --> 00:41:58,519
This means a sidechain

561
00:41:58,599 --> 00:42:04,479
in which there is not a federation that is controlling the out from the

562
00:42:04,479 --> 00:42:05,239
two -way peg.

563
00:42:06,579 --> 00:42:12,019
So what we'd like to do, in my view, in Bitcoin is have a

564
00:42:12,019 --> 00:42:17,019
ability for the user to opt in to a sidechain

565
00:42:17,019 --> 00:42:18,299
and when

566
00:42:18,408 --> 00:42:22,448
they're enjoying the software on the sidechain, come back to Bitcoin LayerOne.

567
00:42:23,808 --> 00:42:29,488
And that's really the ultimate goal of the whole sidechain idea, is to enable

568
00:42:29,488 --> 00:42:33,588
different software on top of Bitcoin without affecting Bitcoin mainchain.

569
00:42:35,028 --> 00:42:36,228
yeah. Yeah, go ahead.

570
00:42:36,768 --> 00:42:37,448
Oh, sorry.

571
00:42:38,296 --> 00:42:40,736
ahead. I've already spoken for a little bit.

572
00:42:40,736 --> 00:42:44,896
I'd like to hear more from you, but also let's invite Andrew to chime in.

573
00:42:45,456 --> 00:42:48,936
anyone else, Andrew, what's your thoughts on this quote or anything else?

574
00:42:50,056 --> 00:42:54,516
Henry, I like this language, and I didn't know that you got it from out and back, so

575
00:42:54,516 --> 00:42:55,236
that's good to know.

576
00:42:56,036 --> 00:42:58,156
It sounds better to say that

577
00:42:58,185 --> 00:43:02,945
that Drivechain implements P2P sidechains.

578
00:43:03,985 --> 00:43:09,245
when you described and explained what Adam Back was saying, contrasted a peer -to -peer

579
00:43:09,245 --> 00:43:13,005
implementation of the peg -out mechanism with a federated mechanism.

580
00:43:13,485 --> 00:43:17,985
But as I understand it, Drivechain does involve a federated mechanism.

581
00:43:18,154 --> 00:43:22,074
It's just that the federation is more than half of the miners.

582
00:43:23,254 --> 00:43:27,574
then I guess I don't understand what the difference is between a federated peg out and

583
00:43:27,574 --> 00:43:29,434
a peer -to -peer peg out.

584
00:43:30,994 --> 00:43:34,874
Yeah, the reason why I'm showing this quote is that in our last Drivechain

585
00:43:34,874 --> 00:43:37,963
conversation, we had a little debate among

586
00:43:37,983 --> 00:43:43,683
the speakers where I asked Super Testnet and Paul Sztorc if they

587
00:43:43,683 --> 00:43:49,243
agree with me that drivechains involve peer -to -peer

588
00:43:49,243 --> 00:43:54,203
arrangements that a federated sidechain peg does not.

589
00:43:54,963 --> 00:43:57,852
neither of them, in my understanding, fully agreed with my

590
00:43:57,852 --> 00:44:03,572
view. But I feel that this quote from Adam Back just a few months ago supports

591
00:44:03,572 --> 00:44:07,832
what I said, and that's probably where I got it, because I read probably every tweet

592
00:44:07,832 --> 00:44:10,192
he's ever written over the last few months.

593
00:44:10,892 --> 00:44:13,732
And I'm just an Adam Back fan,

594
00:44:15,012 --> 00:44:17,152
as well as a Greg Maxwell fan.

595
00:44:17,252 --> 00:44:17,741
like to read their

596
00:44:17,801 --> 00:44:22,181
writings. And I feel that among the leadership of Blockstream, has been an

597
00:44:22,181 --> 00:44:26,441
understanding that it would be good in the long run for Bitcoin, one way or another, to

598
00:44:26,441 --> 00:44:31,401
achieve these sidechains that are more aligned with the

599
00:44:31,401 --> 00:44:37,321
technological themes of Bitcoin, more aligned than federated sidechains

600
00:44:37,321 --> 00:44:37,630
are.

601
00:44:38,990 --> 00:44:44,710
And I think the Liquid Project is an outstanding effort to achieve what can be achieved

602
00:44:44,710 --> 00:44:45,650
without a soft fork.

603
00:44:46,790 --> 00:44:51,970
But I do feel that in the history of statements on sidechains, such as this one from

604
00:44:51,970 --> 00:44:53,730
Adam, from Dr.

605
00:44:53,930 --> 00:44:57,519
Back, there is an expression of the difference between

606
00:44:57,559 --> 00:45:02,439
a peer -to -peer sidechain, which is what he's talking about here in a thread on

607
00:45:02,439 --> 00:45:03,299
Drivechain, think,

608
00:45:04,979 --> 00:45:07,079
yeah, that thread is about Drivechain,

609
00:45:10,179 --> 00:45:14,399
and the arguably lesser arrangement, which is a federated sidechain.

610
00:45:14,599 --> 00:45:17,408
So when people say, as we discussed last time on

611
00:45:17,508 --> 00:45:22,548
those Twitter spaces, when people say, well, the Drivechain peg is controlled by just a

612
00:45:22,548 --> 00:45:26,908
bigger federation than an ordinary federation, I think that's not true.

613
00:45:27,968 --> 00:45:32,828
I think the fact that there is a real categorical difference is what he's talking about

614
00:45:32,828 --> 00:45:37,268
here when he says, I like P2P sidechains because, and he uses

615
00:45:37,296 --> 00:45:38,276
the word permissionless.

616
00:45:39,456 --> 00:45:44,936
So I think that one of the categorical differences is it's not simply the case

617
00:45:44,936 --> 00:45:50,896
that trusting 51 % of Bitcoin miners is trusting more

618
00:45:50,896 --> 00:45:56,836
people or trusting a stronger degree of assurance than what

619
00:45:56,836 --> 00:45:57,185
we get

620
00:45:57,285 --> 00:46:02,005
with 15 parties controlling a multisig, which is an ordinary federation.

621
00:46:02,305 --> 00:46:08,205
When we're trusting the Bitcoin miners, you're trusting a set of people that is

622
00:46:08,205 --> 00:46:11,185
fully dynamic and completely replaceable.

623
00:46:12,025 --> 00:46:16,785
So the nature of Bitcoin mining is that the parties are totally anonymous,

624
00:46:18,174 --> 00:46:24,034
mutually distrusting, anyone can enter that set of people who simply have the money to

625
00:46:24,034 --> 00:46:25,314
buy a Bitcoin mining machine.

626
00:46:25,314 --> 00:46:30,734
So it's a dynamic set, whereas a federation in the ordinary sense,

627
00:46:31,374 --> 00:46:36,774
a federated sidechain peg, know, has a bunch of, you know, so -called functionaries

628
00:46:36,963 --> 00:46:42,923
or federated members, are, as I understand, typically

629
00:46:42,923 --> 00:46:47,183
in the ordinary implementation, about 15 people or fewer,

630
00:46:47,583 --> 00:46:51,943
they're appointed in a social, not economic manner.

631
00:46:52,143 --> 00:46:56,683
So they're chosen and designated kind of like the Federal Reserve members, right?

632
00:46:56,683 --> 00:46:56,852
There's

633
00:46:56,912 --> 00:47:00,092
like a body of people and they're appointed socially.

634
00:47:00,352 --> 00:47:05,372
They're not able to, you can't just like raise money tomorrow and say like, I'm gonna

635
00:47:05,372 --> 00:47:09,332
buy my seat at the Federal Reserve, you know, unless you're quite sensible.

636
00:47:09,412 --> 00:47:12,272
That is a spicy comparison.

637
00:47:12,872 --> 00:47:14,332
know, I know.

638
00:47:14,932 --> 00:47:16,741
And the block stream may not be totally happy

639
00:47:16,761 --> 00:47:17,981
with it, but that is very spicy.

640
00:47:18,241 --> 00:47:18,581
love it.

641
00:47:20,841 --> 00:47:24,401
I think it's an accurate description, very accurate.

642
00:47:25,361 --> 00:47:31,121
The federated model consists of identifiable individuals

643
00:47:31,121 --> 00:47:31,721
who,

644
00:47:33,181 --> 00:47:34,761
it's more of a fixed set.

645
00:47:35,401 --> 00:47:36,101
And as you were saying,

646
00:47:36,810 --> 00:47:37,050
Henry,

647
00:47:38,910 --> 00:47:44,090
the Drivechain model allows for the miners to be that set.

648
00:47:44,150 --> 00:47:45,530
And the miners is not a fixed set.

649
00:47:45,590 --> 00:47:46,830
It can change over time.

650
00:47:46,850 --> 00:47:52,450
So that's one of the big advantages of Drivechain over a federated approach to side

651
00:47:52,450 --> 00:47:56,519
chains. I was wondering if you had

652
00:47:56,699 --> 00:48:02,659
time to discuss this point that Paul brought up in one of his talks that I watched on

653
00:48:02,659 --> 00:48:05,599
YouTube, where he talks about drivechain misconceptions.

654
00:48:07,499 --> 00:48:12,899
He brings up this interesting point that I actually agree with, which is

655
00:48:12,899 --> 00:48:16,408
that one

656
00:48:16,628 --> 00:48:22,328
that one of the, I guess, he puts me in a camp of people who

657
00:48:22,328 --> 00:48:26,308
wants theft to be impossible and that's exactly right.

658
00:48:26,708 --> 00:48:32,648
And he makes this point that if you make theft

659
00:48:32,648 --> 00:48:36,296
impossible, then doing a sidechain

660
00:48:36,336 --> 00:48:42,276
requires a kind of mandatory change to Bitcoin and it's

661
00:48:42,276 --> 00:48:43,356
no longer opt -in.

662
00:48:44,296 --> 00:48:49,136
what he likes about Drivechain is that it's opt -in.

663
00:48:50,756 --> 00:48:56,096
I kind of want to drill down into this point a little bit more if you

664
00:48:56,185 --> 00:48:57,725
have time for that.

665
00:48:58,865 --> 00:48:59,645
let's do it.

666
00:49:00,045 --> 00:49:04,685
first thought before you continue is it resonates with what I was saying earlier, I

667
00:49:04,685 --> 00:49:10,025
think, which is that if the miners can express the will of the community to

668
00:49:10,025 --> 00:49:15,545
discontinue a particular Drivechain because it's interfering with the value of Bitcoin

669
00:49:16,074 --> 00:49:20,854
value or the operation of other drivechains, then it's actually a good thing that the

670
00:49:20,854 --> 00:49:26,234
miners can exert that control, you know, as the will of the community to put an end.

671
00:49:26,554 --> 00:49:31,594
imagine if you adopt something else, imagine if we adopt something else like a system

672
00:49:31,594 --> 00:49:35,874
in which the miners have no power to discontinue a

673
00:49:35,963 --> 00:49:41,183
Drivechain, that introduces to Bitcoin a system in which

674
00:49:41,183 --> 00:49:46,743
the community can't rid of something that might

675
00:49:46,743 --> 00:49:50,103
be good for the miners to be able to exert that control.

676
00:49:50,243 --> 00:49:50,823
See what I mean?

677
00:49:51,423 --> 00:49:55,803
We don't want to have innovation that can't ever be discontinued

678
00:49:55,852 --> 00:49:59,612
if the majority of the community wants it to be discontinued.

679
00:49:59,772 --> 00:50:04,852
For example, some Bitcoiners say, I don't think there should be a privacy sidechain on

680
00:50:04,852 --> 00:50:06,572
Bitcoin. Some Bitcoiners say that.

681
00:50:06,872 --> 00:50:09,352
They think that would invite scrutiny from the government.

682
00:50:09,572 --> 00:50:13,072
Well, I say, I think your opinion is valid.

683
00:50:13,332 --> 00:50:15,532
But I also think that if the

684
00:50:15,741 --> 00:50:20,681
majority of Bitcoiners would like there to be a privacy sidechain Let there be one

685
00:50:20,681 --> 00:50:25,661
shouldn't the community decide isn't that the way that a very successful?

686
00:50:26,881 --> 00:50:32,741
would be designed that the community has the power to to Adopt innovation

687
00:50:32,741 --> 00:50:35,301
on it and to express, you know express that innovation.

688
00:50:35,830 --> 00:50:37,730
So that's my point.

689
00:50:38,030 --> 00:50:40,970
um, yep, I hope that wasn't too much of a segment.

690
00:50:41,750 --> 00:50:43,210
no, no, I completely agree.

691
00:50:44,790 --> 00:50:46,990
You're Yes, that's, that's a very good point.

692
00:50:47,630 --> 00:50:52,970
So the idea with this mandatory versus opt in

693
00:50:52,970 --> 00:50:55,230
and theft

694
00:50:55,859 --> 00:51:01,639
possible versus not Paul is right that like there are different

695
00:51:01,639 --> 00:51:06,859
ways of implementing sidechains and The ways that make theft impossible

696
00:51:07,079 --> 00:51:08,939
do require

697
00:51:10,259 --> 00:51:15,408
Certain changes to Bitcoin that I'm not really

698
00:51:15,528 --> 00:51:20,748
sure if they would be hard forks or if they could be done via soft fork or not,

699
00:51:21,208 --> 00:51:26,628
but they would require serious changes to the way that Bitcoin works.

700
00:51:26,628 --> 00:51:29,168
For example,

701
00:51:30,848 --> 00:51:34,988
one method of doing sidechains that I proposed

702
00:51:35,296 --> 00:51:41,256
is rather simple, but at the same time,

703
00:51:41,436 --> 00:51:46,516
changes Bitcoin. It requires a change to Bitcoin that's somewhat fundamental

704
00:51:46,516 --> 00:51:51,676
because the way that Bitcoins are created would be changed.

705
00:51:51,676 --> 00:51:55,185
currently the way that bitcoins are created is

706
00:51:55,625 --> 00:52:01,605
when a miner successfully mines a block, and then those Bitcoins are

707
00:52:01,605 --> 00:52:04,665
introduced as part of the coinbase, and then we have new Bitcoins.

708
00:52:05,725 --> 00:52:11,145
But in this alternative universe where we have theft -proof sidechains,

709
00:52:11,965 --> 00:52:14,605
there is a new way of creating Bitcoins.

710
00:52:15,894 --> 00:52:19,954
the way that it works, I called it a generalized sharding protocol

711
00:52:19,954 --> 00:52:25,354
for blockchains in general, is that when you want to

712
00:52:25,354 --> 00:52:31,234
transfer coins from blockchain A to blockchain B in either direction, whether

713
00:52:31,234 --> 00:52:34,963
it's from the main chain to the sidechain or from the sidechain to the main

714
00:52:34,963 --> 00:52:39,183
You want to have a fixed supply of tokens.

715
00:52:41,963 --> 00:52:47,863
When you're transferring the tokens, burn them on the first chain, ones you're

716
00:52:47,863 --> 00:52:52,883
transferring from, and then you mint them the same amount on the other chain.

717
00:52:52,883 --> 00:52:54,683
And

718
00:52:54,852 --> 00:53:00,772
so, that is called a one -way, like people assumed when I proposed this that

719
00:53:00,772 --> 00:53:05,292
I was proposing a one -way peg because that's actually how a one -way peg with Bitcoin

720
00:53:05,292 --> 00:53:11,192
can be done today is you burn Bitcoins on the Bitcoin blockchain and create them on

721
00:53:11,192 --> 00:53:11,972
some other blockchain.

722
00:53:14,801 --> 00:53:20,421
not this is actually a two -way peg if you modify Bitcoin because you can do the same

723
00:53:20,421 --> 00:53:22,161
exact thing on the Bitcoin blockchain.

724
00:53:22,381 --> 00:53:28,101
When on some other blockchain the Bitcoins are burned, you can then mint them

725
00:53:28,101 --> 00:53:29,741
back on the Bitcoin blockchain.

726
00:53:29,901 --> 00:53:33,801
so there would be two ways of creating, quote -unquote, creating Bitcoins.

727
00:53:34,061 --> 00:53:34,481
You're not really

728
00:53:34,630 --> 00:53:35,710
creating any new Bitcoins.

729
00:53:36,530 --> 00:53:40,770
You're recreating Bitcoins that have moved, it would be, you know, that's a fundamental

730
00:53:40,770 --> 00:53:42,910
change to the way that Bitcoin works.

731
00:53:43,350 --> 00:53:48,710
maybe for that reason, because it's more of a, more of a significant change to the

732
00:53:48,710 --> 00:53:50,210
underlying way that Bitcoin works.

733
00:53:50,470 --> 00:53:52,690
Maybe people would object to that.

734
00:53:52,890 --> 00:53:54,310
I don't know.

735
00:53:54,919 --> 00:53:59,999
But that's one example of how theft -proof chains can be done.

736
00:54:00,639 --> 00:54:06,399
I have not fully explored this idea, but it might be the case that

737
00:54:06,399 --> 00:54:11,079
this other sidechain would have to be kind of like approved

738
00:54:11,079 --> 00:54:13,559
to work with Bitcoin.

739
00:54:13,559 --> 00:54:14,408
because you can

740
00:54:14,448 --> 00:54:19,948
imagine if we had a system that worked this way, if anyone could create a sidechain,

741
00:54:22,028 --> 00:54:27,948
then maybe there would be opportunity for creating Bitcoins out

742
00:54:27,948 --> 00:54:32,548
of thin air, because in order to create Bitcoins out of thin air, you create a

743
00:54:32,548 --> 00:54:34,296
sidechain, you claim that you've destroyed

744
00:54:34,436 --> 00:54:39,376
some Bitcoins, and you then create them on the

745
00:54:39,376 --> 00:54:41,476
original Bitcoin blockchain.

746
00:54:42,196 --> 00:54:45,956
You would need some kind of a proof that that had not happened.

747
00:54:47,196 --> 00:54:48,876
And maybe it's possible to construct that.

748
00:54:48,916 --> 00:54:51,576
That's for any cryptographers in the audience.

749
00:54:53,116 --> 00:54:54,185
I'm not exactly sure how

750
00:54:54,245 --> 00:54:59,665
that would be possible, or maybe you would have to have a fixed set of sidechains that

751
00:54:59,665 --> 00:55:01,045
was agreed upon, that were trusted.

752
00:55:01,985 --> 00:55:03,045
I don't like that personally.

753
00:55:03,485 --> 00:55:05,485
Hopefully there's a trustless way to do that.

754
00:55:05,865 --> 00:55:10,785
that is an example of how sidechains can be done

755
00:55:10,785 --> 00:55:13,565
where theft is

756
00:55:14,074 --> 00:55:17,094
guaranteed to not be possible.

757
00:55:17,994 --> 00:55:21,574
I was advocating for these kinds of ideas to be explored.

758
00:55:21,954 --> 00:55:23,714
I don't know how much of them they have been explored.

759
00:55:23,874 --> 00:55:25,874
I'm hoping other people are exploring them.

760
00:55:26,254 --> 00:55:31,694
Because if we could have something like Drivechain, but at the same time, with the

761
00:55:31,694 --> 00:55:33,874
exact same security properties of

762
00:55:33,963 --> 00:55:39,523
Bitcoin I think everybody would be happy with that so yeah that's that's just something

763
00:55:39,523 --> 00:55:44,263
that I wanted to bring up that's very interesting yeah feel free to DM me further about

764
00:55:44,263 --> 00:55:50,263
that so I can think about it more I personally do like the idea that

765
00:55:50,263 --> 00:55:53,852
the drivechains can be discontinued by

766
00:55:53,892 --> 00:55:59,692
the miners because, as I say, it's my understanding that there could hypothetically

767
00:55:59,692 --> 00:56:05,252
be a problematic drivechain and therefore it's good for the community of Bitcoin users

768
00:56:05,252 --> 00:56:11,092
to be able to express their will through the miners to discontinue a drivechain that,

769
00:56:11,092 --> 00:56:13,692
for example, is interfering with

770
00:56:13,741 --> 00:56:21,441
interesting

771
00:56:21,441 --> 00:56:27,281
and interesting computer science hypothetical in which a drivechain or an altcoin could

772
00:56:27,281 --> 00:56:33,101
be designed using certain kinds of contracts to interfere with operation of Bitcoin

773
00:56:33,101 --> 00:56:33,621
or

774
00:56:33,630 --> 00:56:34,450
certain drivechains.

775
00:56:35,150 --> 00:56:40,030
So it's good if the miners can turn off drivechains, if they're problematic.

776
00:56:41,870 --> 00:56:47,870
The third and final tweet that I wanted to share for conversation today, after we have

777
00:56:47,870 --> 00:56:53,050
now discussed Fiatjaf's tweet in the Nest and then Adam Back's tweet, is Luke Dash

778
00:56:53,050 --> 00:56:53,450
Jr.'s

779
00:56:53,519 --> 00:56:56,879
tweet. So here it is, it's in the nest now.

780
00:56:56,979 --> 00:57:02,759
He wrote a few days ago, it's more important that Bitcoin be

781
00:57:02,759 --> 00:57:07,839
decentralized than that it's scale to global normie usage.

782
00:57:08,719 --> 00:57:12,819
I felt this tweet was very interesting because

783
00:57:13,408 --> 00:57:19,368
it seems to assume, and perhaps correctly, there are trade

784
00:57:19,368 --> 00:57:24,748
-offs between achieving global normie usage, as he says, and

785
00:57:24,748 --> 00:57:30,368
decentralization. However, do feel optimistic that Luke, perhaps,

786
00:57:31,228 --> 00:57:33,148
in the years or months to come,

787
00:57:33,336 --> 00:57:37,936
may see the merit of

788
00:57:37,936 --> 00:57:42,016
the idea that there doesn't have to be such a trade -off.

789
00:57:44,016 --> 00:57:49,756
So as I understand it, decentralization has a lot to do with whether ordinary users can

790
00:57:49,756 --> 00:57:51,376
download a full node.

791
00:57:51,376 --> 00:57:53,185
and therefore decentralization

792
00:57:53,325 --> 00:57:58,765
is very much aligned with the goal of keeping Bitcoin's layer one blocks small

793
00:57:58,765 --> 00:58:03,925
and that's something on which Luke believes

794
00:58:03,925 --> 00:58:09,865
and also drivechain is aligned with so you

795
00:58:09,865 --> 00:58:12,985
know drivechain is very much aligned with the idea of the small of small

796
00:58:13,074 --> 00:58:18,894
blocks on LayerOne, I think that's something Luke cares about a lot from reading his

797
00:58:18,894 --> 00:58:19,154
tweets.

798
00:58:20,894 --> 00:58:25,614
But global normal usage, his phrase, I think can also be achieved if we have large

799
00:58:25,614 --> 00:58:29,194
block sidechains that are very popular.

800
00:58:29,194 --> 00:58:32,814
So I think the system of Bitcoin, including all

801
00:58:32,963 --> 00:58:38,423
sidechains, can potentially serve both the aim of decentralization, meaning

802
00:58:38,423 --> 00:58:43,663
defined as small blocks on LayerOne, as well as global normal usage histories,

803
00:58:44,163 --> 00:58:49,663
defined as the replacement of all altcoins with Drivechains.

804
00:58:50,603 --> 00:58:52,852
So I was wondering if anyone else sees it

805
00:58:52,852 --> 00:58:58,012
that way. you know, when I read Luke's tweets from 2017, he actually expressed interest

806
00:58:58,012 --> 00:59:02,012
in drivechain and said, you know, let's look at this, this could be good.

807
00:59:02,432 --> 00:59:04,212
He wrote, he wrote tweets to that effect.

808
00:59:05,052 --> 00:59:09,612
In more recent years, he's been more of a skeptic, as I understand from his tweets, but

809
00:59:09,612 --> 00:59:15,532
I'm, I'm optimistic that advocates for smaller blocks, we'll, we'll

810
00:59:15,532 --> 00:59:17,432
see how drivechain facilitates that.

811
00:59:17,672 --> 00:59:20,412
I think they'll come to that view, I hope.

812
00:59:20,412 --> 00:59:25,752
Yeah, this brings up the idea of the

813
00:59:25,752 --> 00:59:28,172
DCS triangle, which is

814
00:59:29,232 --> 00:59:34,932
the idea that you can have at most two out of three properties in a

815
00:59:34,932 --> 00:59:40,802
system. And with the DCS triangle, it's decentralization, consensus, and scale.

816
00:59:40,802 --> 01:00:03,802
And for decentralized consensus systems, like Bitcoin, the DCS theorem, this is a paper that I co-wrote with Anja Petrova, you could just search for it, we show that decentralized consensus systems cannot scale without losing either decentralization or consensus.

817
01:00:04,802 --> 01:00:17,802
Sometimes consensus is referred also to as security, the triangle has different names, but that is the reason why Luke Dashjr. is writing those tweets.

818
01:00:18,802 --> 01:00:42,802
In that same paper, we talk about ways of getting around this property of decentralized consensus systems, and one of those ways is a drivechain-like system, or in other words, and it's funny that drivechain has the D and the C there, and in the paper we also refer to these systems as DC systems, decentralized consensus systems.

819
01:00:43,802 --> 01:00:57,802
And we say that you can pair multiple decentralized consensus systems together, as long as they're independent of each other, and then that can be a way of achieving greater scale while preserving decentralization, and that's the approach that drivechain takes.

820
01:00:57,802 --> 01:01:00,802
So it's a solid, theoretically solid approach.

821
01:01:01,802 --> 01:01:21,802
By the way, I noticed that in this space that we have here, we've got CryptAxe, who is one of the developers of drivechain, and I don't know if he has anything that he would like to say, but if he does, I think it'd be a good idea to promote him as a speaker to allow him to say some things.

822
01:01:22,802 --> 01:01:42,802
Oh, absolutely everyone is welcome to come on up. Just raise your hand. All of our spaces are open to the public. So everyone is totally encouraged to raise your hand, I will let you up. You can be a fan of drivechain or a critic, a skeptic, or a complete newcomer. This is open for all.

823
01:01:43,802 --> 01:01:58,802
We might have in the future some spaces where there's a featured speaker who's an expert on some aspect and is welcome to talk at length, but today is open discussion. That's why I titled it Drivechain Lunch.

824
01:01:59,802 --> 01:02:13,802
And we're just fortunate to have Greg here sharing ideas with me, along with Andrew Bailey, who spoke previously. Andrew is a philosopher, an academic philosopher, and also a hardcore Bitcoiner.

825
01:02:13,802 --> 01:02:32,802
Andrew has tweeted about his recent experiences downloading the drivechain software, running some of the sidechains, I believe, and really becoming a very technically sophisticated drivechain enthusiast as he explores the ideas.

826
01:02:33,802 --> 01:02:46,802
Everyone can go to drivechain.info for more information. That is a website created by the drivechain designer, Paul Sztorc, who is one of the co-authors of the Bips, Bips 300 and 301.

827
01:02:47,802 --> 01:02:56,802
Maybe to just reset the room briefly, I would say what drivechain is in case anyone is like this is their first time hearing about this topic.

828
01:02:57,802 --> 01:03:21,802
Drivechain is Bitcoin Proposals 300 and 301. It is a seven-year-old idea that has gained interest and enthusiasm within Bitcoin's community over the years, more and more, I believe, and has support from a large number, from dozens of very recognized Bitcoiners, as well as some skeptics and critics.

829
01:03:21,802 --> 01:03:32,802
So it's an idea that's interesting. And like anything that becomes huge in the future, at this moment, it is not yet as well-known as it may be.

830
01:03:33,802 --> 01:03:43,802
So this is an opportunity for Bitcoiners who are interested in innovative topics within Bitcoin discourse to study something that could become transformative, I think.

831
01:03:44,802 --> 01:03:54,802
Bitcoin has a bunch of interesting topics within its discourse that are ripe for investigation, analysis, and discussion.

832
01:03:55,802 --> 01:04:07,802
So for me personally, what got me into drivechain was discovering the discourse on Bitcoin's long-term security budget, which refers to Bitcoin's fee-reliant economic security model.

833
01:04:08,802 --> 01:04:23,802
The security of the UTXOs depends greatly on whether the hashing in Bitcoin grows over time and whether the value associated with Bitcoin mining activity grows over time.

834
01:04:24,802 --> 01:04:35,802
So the fee income to the miners from merged mine sidechains could be a very big source of income for the miners in the far future, and drivechain would lay the foundation for that to occur.

835
01:04:36,802 --> 01:04:57,802
Right now, there can be merged mine sidechains on Bitcoin like RSK, but their adoption is limited, I think, in large part because the two-way peg for the synthetic Bitcoin on the sidechain is a federated peg instead of one controlled by the massive multitude of Bitcoin miners, which would be a much stronger trust model, I think.

836
01:04:58,802 --> 01:05:09,802
So I always try to make it clear that opinions aren't facts, so I try to say what my opinion is rather than stating a certainty because it's hard to know the future.

837
01:05:09,802 --> 01:05:29,802
But I am optimistic the community will evolve toward embracing sidechains, and I feel that the leading intellectuals within the Bitcoin space are hoping to achieve perfected, advanced sidechains in the future.

838
01:05:30,802 --> 01:05:32,802
It's something a lot of people want.

839
01:05:33,802 --> 01:05:41,802
The question is how exactly to go about it, and I do think that drivechain is within that space the idea which has been around for a long time.

840
01:05:42,802 --> 01:05:52,802
So it's stood the test of time in terms of gaining support among some of the leading intellectuals, and its analysis has been going on for years.

841
01:05:53,802 --> 01:06:15,802
Just last year, Adam Back at Bitcoin Amsterdam on stage with Paul and Aaron Van Weerdam expressed favorably his view on drivechain and how it has been an idea which has undergone validation and testing and has come a long way since its early years.

842
01:06:16,802 --> 01:06:28,802
So I think that there's an uptick in just recent months, there's been an uptick in the support among some of the leading intellectuals in the space, which can have a ripple effect throughout the community.

843
01:06:28,802 --> 01:06:52,802
Because once people see that those who are most undeniably genuinely committed to Bitcoin and have dedicated much of their life to Bitcoin are interested in an idea, that tends to foster a greater level of interest and study and understanding and comfort among the so-called plebs, which would describe me, someone who's kind of just like a humble enthusiast.

844
01:06:53,802 --> 01:07:05,802
I think that's absolutely accurate, not that you're a pleb, but that the interest in drivechain over the recent period of time has been increasing.

845
01:07:06,802 --> 01:07:14,802
And I think that Paul Sztorc really does deserve kudos for being committed in his work and persevering.

846
01:07:15,802 --> 01:07:32,802
I think that it's very healthy for Bitcoin to have a kind of a hazing ritual for any new ideas, so to speak, and not hazing for hazing's sake, but specifically putting ideas through the ringer to really critically evaluate them.

847
01:07:33,802 --> 01:07:51,802
Even if the idea is a good idea, it should still be critically evaluated as much as possible, so that anything that finally does end up in Bitcoin ends up being really solid, so that we can ensure Bitcoin's continued dominance in this industry.

848
01:07:52,802 --> 01:07:56,802
What are your thoughts on the third of the tweets I shared, the one that's currently in the nest, Greg?

849
01:07:56,802 --> 01:08:00,802
What do you think about — and by the way, anyone's welcome to come up and also share their opinion.

850
01:08:00,802 --> 01:08:02,802
Anybody can raise their hand, I'll bring you up.

851
01:08:02,802 --> 01:08:15,802
Greg, what do you think about this opposition Luke has suggested between the priorities, one being decentralization, the other being global normie adoption, which I think he's referring there to hyper-Bitcoinization, right?

852
01:08:15,802 --> 01:08:19,802
The idea that Bitcoin becomes the world's money in every sense.

853
01:08:19,802 --> 01:08:21,802
What do you think of that opposition?

854
01:08:21,802 --> 01:08:27,802
Yeah, so I touched a little bit on that in some previous commentary, but I'll clarify it.

855
01:08:27,802 --> 01:08:33,802
The thing that Luke Jr. is referring to I think is really important.

856
01:08:33,802 --> 01:08:42,802
I don't think that we need to sacrifice decentralization in order for Bitcoin to achieve global normie usage.

857
01:08:42,802 --> 01:08:49,802
I think that it's possible to sacrifice decentralization to achieve that, but I don't think it's necessary.

858
01:08:49,802 --> 01:08:57,802
I think it would be far better to preserve Bitcoin's decentralization and achieve global normie usage.

859
01:08:58,802 --> 01:09:00,802
I think that that's really the goal that we should be striving for.

860
01:09:00,802 --> 01:09:12,802
Because if we sacrifice decentralization, then we really sacrifice everything that makes Bitcoin unique and interesting and a worthwhile project and system to rally behind.

861
01:09:12,802 --> 01:09:26,802
If we sacrifice decentralization, we could very well end up — well, we would very well end up with something similar to the existing financial system that has all of these central points of failure.

862
01:09:26,802 --> 01:09:33,802
So the decentralization that Luke is pointing to is very important to preserve.

863
01:09:33,802 --> 01:09:38,802
And we have to look for ways of preserving that and scaling Bitcoin at the same time.

864
01:09:38,802 --> 01:09:41,802
And that's what the whole community is doing its best to do.

865
01:09:41,802 --> 01:09:45,802
And I think that drivechain could be one way of doing that.

866
01:09:45,802 --> 01:09:53,802
It is a theoretically valid approach to scaling Bitcoin while preserving Bitcoin's decentralization.

867
01:09:54,802 --> 01:09:56,802
Cool.

868
01:09:56,802 --> 01:10:09,802
How do you feel in particular about the proposition that decentralization is measured by the cost of exercising the option to have a full node?

869
01:10:09,802 --> 01:10:23,802
In other words, I'm referring to Paul Sztorc's 2015 essay on his website, truthcoin.info, which is titled Measuring Decentralization, as well as others who have expressed the same idea.

870
01:10:23,802 --> 01:10:39,802
That as Bitcoin's full node becomes more expensive to obtain, decentralization decreases because it'll be more expensive for the ordinary user then to have a full node.

871
01:10:39,802 --> 01:10:41,802
So what do you think about that?

872
01:10:41,802 --> 01:10:51,802
In other words, keeping the block size small is what creates decentralization because it localizes the activity of validating the blockchain.

873
01:10:51,802 --> 01:10:59,802
It localizes to the ordinary user rather than expanding it in physical space to include some trusted third party in some other place.

874
01:10:59,802 --> 01:11:04,802
So it literally decentralizes the activity of validating the blockchain.

875
01:11:04,802 --> 01:11:12,802
It decentralizes it maximally down to the actual user, the individual human who it wants to validate.

876
01:11:12,802 --> 01:11:16,802
So what do you think about that metric for decentralization?

877
01:11:16,802 --> 01:11:20,802
I think it's a very valid metric for decentralization.

878
01:11:20,802 --> 01:11:36,802
It's exactly what we need to be looking to preserving the ability for ordinary users with normal capable laptops or servers or whatever they happen to have to be able to run a full node themselves.

879
01:11:36,802 --> 01:11:52,802
And then the theoretical work that needs to be done for scaling Bitcoin is how do we ensure that every ordinary user who wants to run Bitcoin can run Bitcoin and validate the blockchain.

880
01:11:52,802 --> 01:11:58,802
And at the same time, we can have a system that has very high throughput.

881
01:11:58,802 --> 01:12:02,802
So drivechain is one approach.

882
01:12:02,802 --> 01:12:03,802
It's a valid approach.

883
01:12:03,802 --> 01:12:05,802
The lightning network is another approach.

884
01:12:05,802 --> 01:12:09,802
Both are valid approaches, and I think both should pursue.

885
01:12:09,802 --> 01:12:12,802
These are all very interesting projects.

886
01:12:12,802 --> 01:12:16,802
It's why so many people get so excited about Bitcoin.

887
01:12:16,802 --> 01:12:29,802
It's why so many people are dedicating their lives to this project because they see the way that a reliable, trustworthy financial system can really improve people's lives.

888
01:12:30,802 --> 01:12:33,802
And they see that decentralization is at the heart of that.

889
01:12:33,802 --> 01:12:39,802
And so, you know, kudos to Paul Sztorc for exploring one of these paths.

890
01:12:39,802 --> 01:12:43,802
It's the for the DCS triangle.

891
01:12:43,802 --> 01:12:48,802
It's the DC path connecting multiple decentralized consensus systems to one another.

892
01:12:48,802 --> 01:12:52,802
And that's the path that Paul Sztorc is exploring with the drivechain.

893
01:12:52,802 --> 01:12:55,802
And I think it's a path that needs to be explored.

894
01:12:55,802 --> 01:13:04,802
And kudos to everybody working in this space and exploring all of these different ways of scaling Bitcoin while preserving its decentralization.

895
01:13:04,802 --> 01:13:07,802
I agree with that.

896
01:13:07,802 --> 01:13:15,802
I feel that in Luke's tweet, I'd like to just further explore it.

897
01:13:15,802 --> 01:13:25,802
I feel that the assumption here in his tweet, when he says it's more important that Bitcoin be decentralized than its scale to global normal usage.

898
01:13:25,802 --> 01:13:39,802
I feel in that tweet, there is perhaps arguably an assumption that we need to prioritize one part of Bitcoin's program over the other.

899
01:13:39,802 --> 01:13:44,802
That we need to prioritize decentralization over achieving Bitcoinization.

900
01:13:44,802 --> 01:13:50,802
I feel that he's right, but I also think that we don't have to choose.

901
01:13:50,802 --> 01:13:58,802
I think there need not be a prioritization that we can achieve both aims equally and fully.

902
01:13:58,802 --> 01:14:08,802
So the drivechain view is that layer one blocks should remain small and in fact, perhaps be even smaller, which is something that Luke agrees with, as I understand.

903
01:14:08,802 --> 01:14:11,802
Shrinking the block size down to 300 kilobytes.

904
01:14:12,802 --> 01:14:18,802
But secondly, that we're going to just as much as achieve small blocks forever on Bitcoin layer one.

905
01:14:18,802 --> 01:14:25,802
Also importantly, pursue massive adoption of merged mind sidechains.

906
01:14:25,802 --> 01:14:38,802
And in fact, if we don't do both, then Bitcoin in the very long run could be much less successful as a project than it otherwise would be.

907
01:14:39,802 --> 01:14:53,802
Because the sustainability of small blocks on layer one would, I think, require that there be a high fee on the block space.

908
01:14:53,802 --> 01:14:57,802
A high rate of fees paid on that small amount of block space.

909
01:14:58,802 --> 01:15:10,802
And probably I think the best way to try to have high fees naturally on the layer one block space is to engage in merged mining on a vast scale.

910
01:15:11,802 --> 01:15:23,802
So the particular sidechains that are envisioned for Bitcoin, if drivechain is adopted, would include Thunder, which is a big block sidechain.

911
01:15:23,802 --> 01:15:33,802
A Turing complete sidechain for smart contracts, a privacy sidechain that uses the advanced technology of Zcash.

912
01:15:34,802 --> 01:15:49,802
And also a prediction market that uses peer-to-peer Oracle networks to enable Bitcoin users who choose to use the sidechain to engage in a kind of very interesting decentralized finance called.

913
01:15:50,802 --> 01:16:04,802
Multidimensional event derivatives or prediction markets or Futarchy, which is where society uses smart contracts to predict the future and improve political decision making.

914
01:16:04,802 --> 01:16:12,802
So there's a whole bunch of interesting sociological effects of Bitcoinization in the drivechain format.

915
01:16:13,802 --> 01:16:23,802
And I think that if Bitcoin doesn't pursue this path, then in my personal opinion, the very long term growth trajectory is at risk.

916
01:16:23,802 --> 01:16:34,802
And Bitcoin could become digital gold, but only in the lesser sense, which is that gold today is not exactly the growing center of the world economy.

917
01:16:35,802 --> 01:16:43,802
Its multi-trillion dollar market cap of monetary premium in the view of most Bitcoiners will diminish, I think.

918
01:16:43,802 --> 01:16:56,802
And it'll become more of a historical relic, a collectible, a novelty, something that was big in the past at one point, but now its narratives are gone and its growth trajectory is muted and dampened forever.

919
01:16:56,802 --> 01:17:01,802
So digital gold in that sense is actually not a very good thing.

920
01:17:02,802 --> 01:17:12,802
And that's why I object to the notion of Bitcoin, not blockchain, because I feel that if drivechain is to succeed, we have to dispense with erroneous narratives.

921
01:17:12,802 --> 01:17:28,802
And the truth is that while Bitcoin was titled peer-to-peer electronic cash, Satoshi himself from the very beginning in his commentary publicly wrote favorably about blockchain applications that aren't simply cash.

922
01:17:29,802 --> 01:17:36,802
So I think that you and Luke don't really disagree on this.

923
01:17:36,802 --> 01:17:44,802
I think that there might just be a misunderstanding here because I'm pretty sure that Luke would also be very happy to see Bitcoin scale.

924
01:17:44,802 --> 01:17:46,802
I don't think Luke is anti-scaling at all.

925
01:17:46,802 --> 01:17:51,802
I don't think any of the Bitcoin developers are anti-scaling.

926
01:17:52,802 --> 01:18:05,802
I think that they very much want to see Bitcoin adopted and used by as many people as possible and for it to become the global reserve currency, the standard, the Bitcoin standard that's used by everybody.

927
01:18:05,802 --> 01:18:10,802
I'm pretty sure they would not be Bitcoin developers if they didn't feel that way.

928
01:18:10,802 --> 01:18:26,802
But the Bitcoin developers correctly feel that if they do scaling in the wrong way, in a way that leads to centralization, then that is a failure of their mission.

929
01:18:26,802 --> 01:18:29,802
That would lead to a complete failure of Bitcoin.

930
01:18:29,802 --> 01:18:36,802
And so I think that what Luke is just talking about here is that he's saying that we need to not fail.

931
01:18:36,802 --> 01:18:37,802
I think that's all he's saying.

932
01:18:37,802 --> 01:18:42,802
We need to preserve decentralization and prioritize that greatly.

933
01:18:42,802 --> 01:18:52,802
Not at the expense of scaling, but just we need to make sure that we don't lose Bitcoin's decentralization because that would be equivalent to Bitcoin failing as a project and as a goal.

934
01:18:52,802 --> 01:18:56,802
So that's all that I think that he's saying there.

935
01:18:56,802 --> 01:18:58,802
Totally. Totally.

936
01:18:58,802 --> 01:19:13,802
But if I wanted to make my point in the most kind of aggressive way, I would say that suppose a person does want to maintain decentralization defined as small blocks, defined as cheap nodes.

937
01:19:15,250 --> 01:19:22,050
Well, that alone does not guarantee the success of the protocol, because if the protocol has

938
01:19:22,050 --> 01:19:29,330
low economic security, if the UTXOs have low hash rate security, then decentralization

939
01:19:29,330 --> 01:19:33,809
alone does not make the protocol successful.

940
01:19:33,809 --> 01:19:39,629
So we need both decentralization in terms of cheap nodes for the ordinary user, but

941
01:19:39,629 --> 01:19:45,350
also high economic security of the UTXOs for the transactors.

942
01:19:45,950 --> 01:19:48,349
So we need both.

943
01:19:48,549 --> 01:19:53,470
You know, decentralization is, from a logical perspective, orthogonal to economic

944
01:19:53,470 --> 01:20:01,430
security. And the priorities that Bitcoin needs to have, I think, in my humble

945
01:20:01,430 --> 01:20:07,150
understanding, are an equal and maximum prioritization of both.

946
01:20:07,669 --> 01:20:10,990
So the design that would achieve both would be best.

947
01:20:11,669 --> 01:20:16,709
So therefore, I felt like this was of the three tweets I've shared today in The Nest.

948
01:20:17,070 --> 01:20:23,230
This is the one that I'm kind of wondering about in terms of like, it would be great to

949
01:20:23,230 --> 01:20:32,589
hear his thoughts one day on whether he thinks that decentralization is even more

950
01:20:32,589 --> 01:20:35,070
important than economic security.

951
01:20:35,589 --> 01:20:40,750
Right. Like, there's this tweet that drivechainers sometimes point to from Greg

952
01:20:40,750 --> 01:20:45,230
Maxwell. I think it's December 2017 when he says, I'm breaking out the champagne

953
01:20:45,470 --> 01:20:51,790
because fees on Bitcoin are high to pay for security in the future as the Coinbase

954
01:20:51,790 --> 01:20:57,110
declines. That's almost an exact quote of what he wrote, I think, on the Linux email

955
01:20:57,110 --> 01:21:00,070
foundation public discourse list.

956
01:21:00,349 --> 01:21:05,309
So, you know, high fees are very important and that's what Maxwell was expressing

957
01:21:05,309 --> 01:21:12,029
there. So I think that if I would be curious to ask Luke, would you agree that

958
01:21:12,989 --> 01:21:19,669
high income to the miners in the distant future is just as important as ordinary

959
01:21:19,669 --> 01:21:23,150
users being able to download a full node inexpensively?

960
01:21:24,149 --> 01:21:26,990
I think he would agree with you.

961
01:21:26,990 --> 01:21:35,470
I think everybody who will in the future, when the when inflation, when Bitcoin

962
01:21:35,470 --> 01:21:41,710
inflation is close to zero, I think everybody will agree that the miners need to be

963
01:21:41,710 --> 01:21:46,350
incentivized to mine the Bitcoin blockchain and therefore they need to be paid through

964
01:21:46,350 --> 01:21:50,509
fees and therefore the fees are probably going to be higher than they are today.

965
01:21:51,509 --> 01:21:54,029
So, yeah, I'm pretty sure he would agree.

966
01:21:54,029 --> 01:21:58,630
And at the same time, we need to make sure that the ecosystem surrounding Bitcoin is

967
01:21:58,630 --> 01:22:04,070
such that in spite of high fees, people can still use Bitcoin because that would also

968
01:22:04,070 --> 01:22:09,149
hurt Bitcoin's ability to scale if high fees were to prevent Bitcoin usage.

969
01:22:09,589 --> 01:22:14,710
So that's going to be, I think, the next major debate in Bitcoin.

970
01:22:15,990 --> 01:22:20,350
You know, after after drivechain, after block size, after all of these other things,

971
01:22:20,509 --> 01:22:26,589
I think the next major debate in Bitcoin is going to be what to do about inflation,

972
01:22:26,830 --> 01:22:33,990
whether to allow it as originally planned to be to go to zero and to rely entirely on

973
01:22:33,990 --> 01:22:40,949
fees or to increase the number of coins available in circulation.

974
01:22:41,190 --> 01:22:45,429
I think that's going to be a very interesting debate because we're going to see how it

975
01:22:45,470 --> 01:22:51,669
ends up playing out, whether whether Bitcoin continues to be usable in spite of high

976
01:22:51,669 --> 01:22:57,229
fees or not. That's really I think I think that that is going to determine ultimately

977
01:22:57,229 --> 01:22:58,389
the answer to that question.

978
01:22:59,110 --> 01:23:02,229
Before we go to Moonsetter, let me just get a quick retort to that.

979
01:23:02,789 --> 01:23:06,990
Greg, would you agree that if drivechain is adopted, that's a big if.

980
01:23:06,990 --> 01:23:12,750
But if drivechain is adopted and if there is a remarkably high adoption of the drive

981
01:23:12,750 --> 01:23:16,470
chains in terms of the fee revenue paid to layer one.

982
01:23:18,070 --> 01:23:22,949
So if we have drive can adopted and if the drivechains are themselves adopted and

983
01:23:22,949 --> 01:23:27,029
there's billions of dollars in value on the drivechains and they're paying many

984
01:23:27,029 --> 01:23:34,070
millions of dollars a day to Bitcoin miners, would you agree that talk of the need for

985
01:23:34,070 --> 01:23:36,350
inflation in Bitcoin?

986
01:23:37,350 --> 01:23:43,149
Would diminish or stop people would stop saying there has Bitcoin will need an

987
01:23:43,149 --> 01:23:44,750
inflation for it, would you agree with that?

988
01:23:44,989 --> 01:23:46,429
I would I would agree, yes.

989
01:23:46,429 --> 01:23:53,350
If the miners had an alternative source of income other than the fees that they're

990
01:23:53,350 --> 01:23:56,149
getting from the Bitcoin blockchain, I think, yes.

991
01:23:56,149 --> 01:24:04,109
And especially if that other source were significant, then, yes, talk about bringing

992
01:24:04,109 --> 01:24:05,510
back inflation would diminish.

993
01:24:05,630 --> 01:24:07,470
I agree. Cool.

994
01:24:07,589 --> 01:24:13,510
Moonsetter. Thanks for joining, as always, in the last five minutes, you have the

995
01:24:13,510 --> 01:24:15,510
stage to share your comments or questions.

996
01:24:16,829 --> 01:24:24,670
Hi, everyone. So the thing that frustrated me, especially in in what Luke wrote there

997
01:24:24,750 --> 01:24:33,269
is some people seem to be myopically focused on the number of nodes that are running

998
01:24:33,309 --> 01:24:36,750
as a measure of decentralization.

999
01:24:36,750 --> 01:24:41,549
And that is that is like complete bullshit in some regards.

1000
01:24:41,910 --> 01:24:49,429
So obviously, ideally, a hell of a lot more nodes would be running Bitcoin and we would

1001
01:24:49,429 --> 01:24:52,630
have a hell of a lot more decentralization in that regard.

1002
01:24:53,109 --> 01:25:00,869
But that that does not just happen in a vacuum or without economic incentives.

1003
01:25:01,390 --> 01:25:07,829
And I think another very important aspect of decentralization is the number of people

1004
01:25:07,829 --> 01:25:09,070
that hold their own keys.

1005
01:25:10,709 --> 01:25:16,269
This this. So the economic decentralization is not just about the security budget.

1006
01:25:16,750 --> 01:25:23,670
It's about the distribution of Bitcoin globally and and how distributed is that.

1007
01:25:23,709 --> 01:25:31,790
And and it seems to me that if we just decrease the block size, then we increase the

1008
01:25:31,790 --> 01:25:38,709
very, very powerful forces that already exist out there to to basically herd everyone

1009
01:25:38,709 --> 01:25:41,950
into custody and custodial solutions.

1010
01:25:42,790 --> 01:25:49,470
Custodial LSPs basically take over the role of banks in the old financial system.

1011
01:25:49,709 --> 01:25:51,589
And we know that can work.

1012
01:25:51,589 --> 01:25:59,109
We have we have a pretty good idea that Bitcoin can scale to billions of people using it

1013
01:25:59,109 --> 01:26:01,670
that way if they don't hold their own keys.

1014
01:26:01,670 --> 01:26:05,070
But I kind of think that's entirely pointless.

1015
01:26:05,070 --> 01:26:09,309
And and that is not how Bitcoin was supposed to turn out.

1016
01:26:10,029 --> 01:26:19,149
And this this the way Luke talks about it and the way he phrased that sentence just

1017
01:26:20,230 --> 01:26:26,029
made me very frustrated because I know that he completely ignores these things.

1018
01:26:26,029 --> 01:26:35,630
And there is a there is a very mistaken, I believe, very mistaken belief widely had in

1019
01:26:35,630 --> 01:26:44,950
Bitcoin circles that IBD, the initial block download, is is very important and everyone

1020
01:26:44,950 --> 01:26:52,950
has to do it. And they are clearly seeing that that will become impossible if for most

1021
01:26:52,950 --> 01:26:58,790
people around the world, if impossible or extremely impractical, if Bitcoin just keeps

1022
01:26:58,790 --> 01:27:00,070
on bloating and bloating.

1023
01:27:01,070 --> 01:27:10,709
And I think these two together, that somehow it would make sense for someone to do IBD

1024
01:27:10,709 --> 01:27:16,709
and verify everything and came to a different conclusion than the vast economic majority

1025
01:27:16,709 --> 01:27:23,589
of mankind and end up on a chain that is just stalled is somehow useful because that's

1026
01:27:23,869 --> 01:27:30,269
basically the only possible outcome that that can happen from verifying for yourself and

1027
01:27:30,269 --> 01:27:37,630
finding something that others before you missed is that you end up nowhere and you are

1028
01:27:37,630 --> 01:27:43,029
excluded from the the the economic system of mankind.

1029
01:27:43,589 --> 01:27:47,270
So it's I think it's complete nonsense.

1030
01:27:47,270 --> 01:27:49,909
I don't think we have to sacrifice a lot there.

1031
01:27:49,950 --> 01:27:57,309
You just completely throw this IBD notion out and that puts the entire block space block

1032
01:27:57,309 --> 01:28:01,070
size debate into an entirely different perspective and focus.

1033
01:28:01,109 --> 01:28:02,109
So that's one thing.

1034
01:28:02,630 --> 01:28:04,830
And I know Luke doesn't want to hear any of it.

1035
01:28:05,109 --> 01:28:06,390
I know his stance on this.

1036
01:28:07,229 --> 01:28:11,869
And as I said, so people need to hold their own keys or this is not a revolution.

1037
01:28:11,989 --> 01:28:13,909
This is just I don't know.

1038
01:28:15,669 --> 01:28:17,989
I kind of like that perspective.

1039
01:28:17,989 --> 01:28:20,909
I agree that people do need to be able to hold their own keys.

1040
01:28:21,349 --> 01:28:25,510
I'm not sure if this was the point that you were making, but it sounds like it that if

1041
01:28:25,549 --> 01:28:31,789
fees become very high, then fewer people will end up holding their own keys because

1042
01:28:32,989 --> 01:28:39,309
they'll essentially be forced to migrate to custodial solutions where fees might be low

1043
01:28:39,309 --> 01:28:44,669
because, for example, exchanges would be able to afford those fees, but individuals would

1044
01:28:44,669 --> 01:28:45,830
not. Is that OK?

1045
01:28:45,830 --> 01:28:47,030
You gave a thumbs up. All right.

1046
01:28:47,429 --> 01:28:48,710
Yeah, I agree.

1047
01:28:48,710 --> 01:28:53,630
That is a very valid point and something to keep in mind in a world where inflation has

1048
01:28:53,630 --> 01:28:57,869
gone to zero. So drivechain, I think, is going to help if it's adopted.

1049
01:28:57,909 --> 01:29:00,270
I think it can help with reducing fees.

1050
01:29:00,309 --> 01:29:01,590
That's one important thing.

1051
01:29:01,989 --> 01:29:05,989
And the other thing about IBD with the initial block download.

1052
01:29:06,950 --> 01:29:11,390
That is also a very, you know, I haven't actually heard anyone put it quite like that.

1053
01:29:11,429 --> 01:29:13,030
And thank you, Moon Settler, for saying that.

1054
01:29:13,030 --> 01:29:18,989
I think that is very funny that if in the distant future there is somebody who manages

1055
01:29:19,229 --> 01:29:24,349
to, you know, let's say that doing the full blockchain download becomes very difficult

1056
01:29:24,349 --> 01:29:30,270
for some reason and that there is one intrepid individual who manages to do it from

1057
01:29:30,270 --> 01:29:34,030
start to finish and then come to the conclusion that everybody else is wrong.

1058
01:29:36,070 --> 01:29:42,549
That would be, I think, a very humorous and interesting drama to watch play out because

1059
01:29:42,549 --> 01:29:46,150
I honestly don't know what the result of that would be.

1060
01:29:46,190 --> 01:29:52,349
I mean, it would certainly almost be like almost like a new religion would form.

1061
01:29:52,349 --> 01:29:56,869
And there might be two different sets of Bitcoiners and this person might come out as

1062
01:29:56,869 --> 01:30:00,349
like a new messiah of like the one true Satoshi or something like that.

1063
01:30:00,510 --> 01:30:03,190
That would be very comical and interesting to watch happen.

1064
01:30:03,229 --> 01:30:05,030
But it's it's an interesting idea.

1065
01:30:05,030 --> 01:30:06,270
So thank you for bringing that up.

1066
01:30:07,030 --> 01:30:10,229
Greg, when you said that fees would rise as a result, fees would go.

1067
01:30:10,429 --> 01:30:13,549
I'm sorry. When you said fees would go down as a result of drivechain, were you

1068
01:30:13,549 --> 01:30:16,270
referring to layer one fees or layer two fees?

1069
01:30:16,909 --> 01:30:18,830
I was referring to layer one fees.

1070
01:30:19,109 --> 01:30:23,229
It was the same point, Henry, that you were bringing up that because drivechain would

1071
01:30:23,549 --> 01:30:29,270
create an alternative source of fees for Bitcoin miners, that fees on layer one for the

1072
01:30:29,270 --> 01:30:34,549
main Bitcoin blockchain, they should go down or they should at the very least be less than

1073
01:30:34,549 --> 01:30:38,070
what they otherwise would be without something like drivechain.

1074
01:30:38,349 --> 01:30:39,669
That's interesting you say that.

1075
01:30:39,750 --> 01:30:41,390
I hold the opposite view.

1076
01:30:42,349 --> 01:30:50,030
I think that in the long term, the massive adoption hypothetically of merged mine side

1077
01:30:50,030 --> 01:30:55,789
chains would actually cause layer one fees to be higher.

1078
01:30:57,469 --> 01:31:00,270
But I understand why it is.

1079
01:31:02,030 --> 01:31:05,789
Why do you say that, because, OK, wow, that's a really interesting I thought we were on

1080
01:31:05,789 --> 01:31:07,590
the same page there. So, yeah, I would.

1081
01:31:08,030 --> 01:31:09,750
Yeah, these conversations are always interesting.

1082
01:31:09,789 --> 01:31:14,469
You know, people come up here and sometimes sometimes a person will say they like drive

1083
01:31:14,469 --> 01:31:16,909
chain, but for reasons that are quite different than what I think.

1084
01:31:17,349 --> 01:31:22,109
So there's a lot of theoretical reasoning happening here, right, because we're talking

1085
01:31:22,109 --> 01:31:24,869
about an upgrade for Bitcoin that hasn't been done.

1086
01:31:24,909 --> 01:31:31,630
So there's there is logically only theory and also, you know, arguments about what

1087
01:31:31,630 --> 01:31:37,270
history indicates in terms of past data for other projects that that answer these

1088
01:31:37,270 --> 01:31:38,630
questions. So.

1089
01:31:39,869 --> 01:31:45,150
Merged mining, you know, is one topic and then there's blind merged mining, which is

1090
01:31:45,150 --> 01:31:50,429
the adjusted and enhanced, arguably, approach in drivechain.

1091
01:31:50,989 --> 01:31:54,070
And I do think that the way it works is that.

1092
01:31:55,429 --> 01:32:00,630
It it collects fees that are paid on the drivechain and pays them in Bitcoin

1093
01:32:00,789 --> 01:32:08,070
denomination to layer one miners, and it ultimately results in a higher value of the

1094
01:32:08,070 --> 01:32:09,390
block space on layer one.

1095
01:32:10,750 --> 01:32:13,030
And. I feel like.

1096
01:32:14,669 --> 01:32:17,590
I would expect that you were a moonsetter would be able to explain it better than me,

1097
01:32:18,190 --> 01:32:23,950
but I do think that it is it is without a doubt, in my view, based on my reading of the

1098
01:32:23,950 --> 01:32:29,390
drivechain literature, you know, one of the design goals is to achieve a higher layer

1099
01:32:29,390 --> 01:32:31,150
one block space value.

1100
01:32:31,510 --> 01:32:38,229
So we would see ordinary users primarily using drivechains for their small cash

1101
01:32:38,229 --> 01:32:43,070
transactions and layer one for storing their digital gold life savings.

1102
01:32:43,869 --> 01:32:48,590
And there'd be, you know, for the ordinary person, far fewer transactions.

1103
01:32:49,590 --> 01:32:54,270
On layer one than they would have on the upper layers, a moonsetter, what are your

1104
01:32:54,270 --> 01:32:58,590
thoughts on that? Yeah, thank you.

1105
01:32:58,710 --> 01:33:04,270
So there is there is one aspect that people tend to forget that there is a pretty much a

1106
01:33:04,510 --> 01:33:12,349
theoretical limit to how much how many people can self custody on Bitcoin.

1107
01:33:13,429 --> 01:33:17,909
And that can be roughly estimated to about 100 million people.

1108
01:33:17,950 --> 01:33:21,429
And that's it. So Bitcoin main chain.

1109
01:33:22,429 --> 01:33:28,669
Probably cannot even serve the millionaires of the world to self custody, let alone

1110
01:33:28,669 --> 01:33:34,830
anyone else, like the top one percent of humanity is probably not going to be able to

1111
01:33:35,349 --> 01:33:42,429
given other utilization of the main chain block space is already is also happening.

1112
01:33:42,950 --> 01:33:47,830
So I'm very, very skeptical about this idea that people will be able to self custody on

1113
01:33:47,989 --> 01:33:51,390
layer one. That's what I wanted to tell about this.

1114
01:33:52,950 --> 01:33:57,229
Sure, I mean, the the idea is that we're going to have a layered money, which is the

1115
01:33:57,229 --> 01:34:01,510
title of a book that has nothing to do with drivechain, if I'm not mistaken, although I

1116
01:34:01,510 --> 01:34:05,510
haven't read it. But if the blockchain is going to be layered, if it's going to be a

1117
01:34:05,510 --> 01:34:10,390
layered architecture, not everyone's going to be using the base layer all the time.

1118
01:34:10,830 --> 01:34:12,950
One of the analogies Paul Sztorc.

1119
01:34:13,869 --> 01:34:19,789
Mix about drivechain is that drivechain, and I hope I don't say this incorrectly, drive

1120
01:34:19,789 --> 01:34:25,789
chain is like the energy system in that there is a nuclear power station at the base

1121
01:34:25,789 --> 01:34:29,630
layer of an energy of an energy system for a city, right?

1122
01:34:29,630 --> 01:34:34,030
Maybe they have a nuclear power station, but people aren't plugging their laptop and

1123
01:34:34,030 --> 01:34:37,469
their phone directly into the nuclear power station to charge it.

1124
01:34:37,669 --> 01:34:42,109
Instead, you plug your laptop into the wall socket of your apartment and then your

1125
01:34:42,109 --> 01:34:46,830
apartment plugs into the street power line and the street power line plugs into some,

1126
01:34:47,229 --> 01:34:51,190
you know, energy transformers, you know, station at the end of the block.

1127
01:34:51,390 --> 01:34:55,390
And that ultimately has a connection to the power station grid.

1128
01:34:55,630 --> 01:35:01,349
So there is a multilayered architecture in technology in many ways.

1129
01:35:01,710 --> 01:35:03,469
And in Bitcoin is the same thing.

1130
01:35:03,630 --> 01:35:08,669
So the layer one, the digital gold, that's kind of like the foundational layer.

1131
01:35:09,030 --> 01:35:10,830
And we want it ossified.

1132
01:35:11,070 --> 01:35:16,190
We want it used for very large transactions and then in the future.

1133
01:35:16,190 --> 01:35:20,390
And then, you know, so it's fine if ordinary users are so-called priced out in the same

1134
01:35:20,390 --> 01:35:23,989
way that you wouldn't expect an ordinary user to charge his iPhone by going to the

1135
01:35:23,989 --> 01:35:25,590
nuclear power station directly.

1136
01:35:26,109 --> 01:35:32,510
OK, so this is all I think like I agree with this latter stuff that you're saying, but

1137
01:35:32,510 --> 01:35:37,869
it seems to me to be different from what we were talking about earlier, where we there

1138
01:35:37,869 --> 01:35:43,150
was I'd like to clarify, figure out whether we really disagree or whether we just think

1139
01:35:43,150 --> 01:35:50,429
we disagree, because as far as drivechain goes, imagine a world without drivechain.

1140
01:35:50,549 --> 01:35:57,869
If the fees are funded, if the blockchain miners are funded entirely through fees, then

1141
01:35:58,429 --> 01:36:02,830
and the only place where they can get those fees is the Bitcoin blockchain.

1142
01:36:03,510 --> 01:36:08,630
Then and there's limited space on the Bitcoin blockchain, then to pay those fees in that

1143
01:36:08,630 --> 01:36:14,710
limited space, I it would seem to me like the fees would be very high in that scenario

1144
01:36:14,710 --> 01:36:20,910
relative to a scenario where you have fees coming from to the miners from multiple

1145
01:36:20,910 --> 01:36:22,030
different blockchains.

1146
01:36:22,390 --> 01:36:29,189
So like as in drivechain, if there if people can pay fees to miners through many

1147
01:36:29,189 --> 01:36:35,270
different places and there's a lot of space on, you know, let's say the 10 or 20 other

1148
01:36:35,270 --> 01:36:39,989
blockchains that are out there and people would prefer to pay those lower fees, they

1149
01:36:39,989 --> 01:36:42,869
would be going to those other blockchains to pay those fees.

1150
01:36:43,189 --> 01:36:48,390
And that would relieve the pressure from the main blockchain.

1151
01:36:48,469 --> 01:36:52,869
And therefore, it seems to me like the fact that it's relieving pressure from the main

1152
01:36:52,869 --> 01:36:55,829
blockchain that would then lower fees on the main blockchain.

1153
01:36:55,869 --> 01:36:58,030
So that's that's makes sense to me.

1154
01:36:58,030 --> 01:36:59,910
Does that not make sense to you, Henry?

1155
01:37:00,109 --> 01:37:06,829
Well, in the design of drivechain, and I think I think this is true of ordinary merge

1156
01:37:06,829 --> 01:37:11,510
mining, but correct me if I'm wrong, the way that the fees are brought in to the Bitcoin

1157
01:37:11,510 --> 01:37:16,550
layer one miner is by a transaction on Bitcoin layer one block space.

1158
01:37:16,550 --> 01:37:21,189
And that's absolutely true in the case of blind merge mining BIP301.

1159
01:37:21,550 --> 01:37:24,469
So the existence of these drivechains.

1160
01:37:26,989 --> 01:37:33,030
Necessarily involves utilization of Bitcoin layer one block space, and therefore, in the

1161
01:37:33,030 --> 01:37:39,790
long run will actually lead to greater use of Bitcoin layer one block space, it's kind

1162
01:37:39,790 --> 01:37:48,189
of like how if you have an empty space of land and then you build something on it, you're

1163
01:37:48,349 --> 01:37:52,589
increasing the value of the land that you're building on, in a sense, like if I build a

1164
01:37:52,589 --> 01:37:58,709
hotel, where there used to be an empty desert, all of a sudden the land around that hotel,

1165
01:37:59,069 --> 01:38:01,750
as well as the land the hotel is on is all worth more.

1166
01:38:02,310 --> 01:38:10,030
So building on Bitcoin increases the value of Bitcoin and building economies on top of

1167
01:38:10,510 --> 01:38:13,390
Bitcoin increases the value of Bitcoin block space.

1168
01:38:13,630 --> 01:38:17,829
Merged mining isn't just about bringing in fees from.

1169
01:38:19,589 --> 01:38:26,469
Sidechains, it's it inherently does that through Bitcoin's block space on layer one and

1170
01:38:26,469 --> 01:38:29,989
therefore increases the demand for Bitcoin layer one block space.

1171
01:38:30,069 --> 01:38:37,910
In fact, I think that it is the view of drivechain that in the future, 99 percent of all

1172
01:38:37,949 --> 01:38:43,709
the transactions on layer one Bitcoin block space in the very far future would be these

1173
01:38:43,709 --> 01:38:49,109
merged mines drivechains bringing in their fees to layer one for final settlement of

1174
01:38:49,109 --> 01:38:54,150
that architectural kind of, you know, like layered system.

1175
01:38:54,630 --> 01:38:57,270
OK, well, then this must be what I'm not getting.

1176
01:38:57,630 --> 01:39:00,030
Why are people paying?

1177
01:39:01,310 --> 01:39:06,390
Are you suggesting that people are paying fees for the drivechains on the Bitcoin

1178
01:39:06,390 --> 01:39:10,630
blockchain? Because my understanding is that they would be paying fees for the drive

1179
01:39:10,630 --> 01:39:13,989
chains on the drivechains, not on the Bitcoin blockchain.

1180
01:39:14,413 --> 01:39:33,212
You're right. That's right. But the way that the fees happen in merged mining is that the fees are paid by the user of the drivechain, but then that money flows down approximately 100 percent of that money, that value flows to Bitcoin layer one block space.

1181
01:39:33,212 --> 01:39:38,413
How so? How does how does it have anything to do with Bitcoin block space?

1182
01:39:39,413 --> 01:39:41,413
There is a transaction that results.

1183
01:39:43,413 --> 01:39:52,413
On Bitcoin layer one block, I think it's in this context, it's incorrect to say for the block space because you are paying for the slot.

1184
01:39:53,413 --> 01:40:05,413
So you have a slot for the drivechain on the main chain and the people who are trying to get their blind merge mine transaction in that basically represents a sidechain block.

1185
01:40:05,413 --> 01:40:18,413
And so they get the fees on the sidechain if this gets into Bitcoin main chain and becomes part of the longest sidechain, because you can actually pay the fees on Bitcoin main chain and that can be final.

1186
01:40:18,413 --> 01:40:23,413
But you can get reorg on the drivechain and you basically paid for nothing.

1187
01:40:24,413 --> 01:40:27,413
So that's a possibility. But let's say that's an extreme example.

1188
01:40:27,413 --> 01:40:44,413
And most of the times you basically bid for this slot in the main pool and the miners pick out the most beneficial transaction for them and that will be what pays the highest fee for that slot.

1189
01:40:44,413 --> 01:40:53,413
So it's not strictly for block space because it's a very limited and predetermined block space, but it still takes up some space from the Bitcoin block.

1190
01:40:54,413 --> 01:41:06,413
So could you clarify that? How does it how does a transaction that happens on a drivechain take up any space on the main Bitcoin blockchain unless it's a withdrawal transaction?

1191
01:41:07,413 --> 01:41:21,413
No, so you would as someone that assembles block for a sidechain, you would get a bunch of transactions and direct their fees to your address on the sidechain.

1192
01:41:21,413 --> 01:41:26,413
Basically, this is the same as what miners do on Bitcoin.

1193
01:41:26,413 --> 01:41:40,413
So you would get the sidechain fees on the sidechain and you would, from completely unrelated Bitcoins that you have, bid for the block space by making a transaction for a specific slot.

1194
01:41:40,413 --> 01:41:47,413
And that transaction, if there are multiple competing transactions for that slot, then only one can be mined.

1195
01:41:47,413 --> 01:41:56,413
So you either win the block and then you get the fees on the sidechain or you don't win the block and then your transaction can't get into a block anymore.

1196
01:41:56,413 --> 01:42:03,413
So you basically participating as a bidder in an auction for a slot.

1197
01:42:04,413 --> 01:42:08,413
So these are the miners that you're talking about on the drivechain, right?

1198
01:42:09,413 --> 01:42:14,413
I wouldn't call them miners. Anyone can do it, basically, practically anyone.

1199
01:42:14,413 --> 01:42:23,413
And most likely, my theory is most likely that people will specialize if you have decentralized exchanges built on top of this.

1200
01:42:23,413 --> 01:42:34,413
And some people will specialize in extracting the maximum value from these decentralized exchanges and multiple sidechains.

1201
01:42:34,413 --> 01:42:37,413
And those people will compete with each other.

1202
01:42:37,413 --> 01:42:47,413
So I don't think literally anyone will be able to do it, but I think it will be a competition-based market.

1203
01:42:47,413 --> 01:42:52,413
And whoever can extract more value will be able to bid most for the slot.

1204
01:42:52,413 --> 01:43:02,413
This slot that you're talking about, is this slot for, are you referring to the mempool space on an independent drivechain?

1205
01:43:02,413 --> 01:43:06,413
It's a slot in a coin-based transaction, as far as I understand.

1206
01:43:06,413 --> 01:43:09,413
So it's an up-return slot.

1207
01:43:10,413 --> 01:43:17,413
Okay, so is this mining that you're talking about that's happening on the sidechain?

1208
01:43:17,413 --> 01:43:22,413
Or is this a slot to get into the main Bitcoin blockchain?

1209
01:43:22,413 --> 01:43:37,413
So the way you can create a valid block on a drivechain, sidechain, is that you win this slot with the block you assembled on the Bitcoin mainchain.

1210
01:43:37,413 --> 01:43:41,413
That's how the sidechain nodes know that this is the next block.

1211
01:43:41,413 --> 01:43:45,413
And of course they validate it, because it can be bullshit, it can break the rules.

1212
01:43:45,413 --> 01:43:48,413
And if it breaks the rules, then it doesn't count, it will get re-ordered.

1213
01:43:48,413 --> 01:43:59,413
So you're saying that there is a Bitcoin block on the mainchain that is involved in creating a block on the sidechain?

1214
01:43:59,413 --> 01:44:02,413
That is my understanding with blockchain-managed mining, yes.

1215
01:44:03,413 --> 01:44:05,413
Okay.

1216
01:44:05,413 --> 01:44:07,413
Okay, then I must have missed that part.

1217
01:44:07,413 --> 01:44:20,413
That's why I said it's not the same as bidding for block space, because you are actually bidding for a specific slot that takes up very little space by itself on the Bitcoin mainchain.

1218
01:44:20,413 --> 01:44:28,413
But it actually is more scarce than Bitcoin mainchain block space, because it's a specific slot.

1219
01:44:29,413 --> 01:44:36,413
And everyone that assembles blocks for that drivechain is competing for that, I don't know, 32, 33 bytes.

1220
01:44:36,413 --> 01:44:42,413
Okay, so you're saying that all of the different drivechains are competing for that one slot?

1221
01:44:42,413 --> 01:44:44,413
No, no, everyone has their own slot.

1222
01:44:45,413 --> 01:44:52,413
I'm just talking about that this is not a system where some king decides which block will be the next.

1223
01:44:52,413 --> 01:45:06,413
People are competing in assembling these sidechain block proposals by trying to gather as much fees on the sidechain as they can.

1224
01:45:07,413 --> 01:45:14,413
And they will bid on the mainchain with real Bitcoin, real slots for the miners for that slot.

1225
01:45:14,413 --> 01:45:18,413
And they're bidding on it, they're competing with other drivechain miners?

1226
01:45:18,413 --> 01:45:20,413
No, no, no, no, no, no, no.

1227
01:45:20,413 --> 01:45:33,413
Other drivechains have other options, but you are right in the sense that I think you can bid for multiple different slots in one transaction automatically.

1228
01:45:33,413 --> 01:45:35,413
This is theoretically possible.

1229
01:45:35,413 --> 01:45:41,413
I don't know if BIP301 supports that, but it could be modified to support that, that's for sure.

1230
01:45:41,413 --> 01:45:49,413
So you could basically make an atomic bet for 6 or 7 or 12 drivechains at once.

1231
01:45:49,413 --> 01:45:56,413
And if that maximizes the miners' revenue for these drivechains, then they will pick yours.

1232
01:45:56,413 --> 01:46:02,413
Even if you would gather less fees from a specific drivechain and more from another, that doesn't matter.

1233
01:46:02,413 --> 01:46:05,413
The Bitcoin miners will just maximize their revenue.

1234
01:46:05,413 --> 01:46:14,413
Okay, and how many per Bitcoin block on the mainchain, how many of these transactions can get in?

1235
01:46:14,413 --> 01:46:18,413
How many different drivechains can be included?

1236
01:46:19,413 --> 01:46:23,413
By default, 256 slots.

1237
01:46:23,413 --> 01:46:37,413
If we activated the drivechains as per BIP301 proposal, it would be 256 sidechains possible.

1238
01:46:37,413 --> 01:46:38,413
Per block?

1239
01:46:38,413 --> 01:46:39,413
Per block.

1240
01:46:39,413 --> 01:46:47,413
And, of course, you can create an extension system and you could activate drivechains multiple times.

1241
01:46:47,413 --> 01:46:53,413
And basically each of these slots is taking up less than 40 bytes.

1242
01:46:53,413 --> 01:47:02,413
Okay, so up to 256 drivechains can be included per Bitcoin block at the same time?

1243
01:47:02,413 --> 01:47:04,413
Yes.

1244
01:47:04,413 --> 01:47:06,413
Well, then that seems negligible to me.

1245
01:47:06,413 --> 01:47:10,413
I don't think that that would have that specific transaction.

1246
01:47:10,413 --> 01:47:16,413
And this is, by the way, a part of the BIP300 proposal that I have not studied in detail.

1247
01:47:16,413 --> 01:47:18,413
That's why I'm asking all of these questions.

1248
01:47:18,413 --> 01:47:23,413
And I'm hoping that these questions will help others to understand this as well.

1249
01:47:23,413 --> 01:47:37,413
But it sounds to me like from your answers that this has a somewhat negligible impact on the amount of space that would be taken up in each Bitcoin block.

1250
01:47:38,413 --> 01:47:51,413
Yeah, and so if it's really negligible in that sense, then, again, my original argument I think still stands that most of the fees and most of the transactions are happening not on the Bitcoin blockchain, but they're happening on sidechains.

1251
01:47:51,413 --> 01:48:05,413
And because of that, the amount of space that's being competed for, the amount of pressure that's being applied to the main Bitcoin blockchain will be less.

1252
01:48:05,413 --> 01:48:09,413
And because the amount of pressure is less, the fees should be lower.

1253
01:48:09,413 --> 01:48:11,413
That was my original argument.

1254
01:48:11,413 --> 01:48:13,413
What do you think, Moon Settler?

1255
01:48:13,413 --> 01:48:15,413
Is that a reasonable argument?

1256
01:48:15,413 --> 01:48:25,413
I think it's a bit complicated because people start from an assumption and that basically determines where they arrive in conclusion.

1257
01:48:25,413 --> 01:48:28,413
And we don't really know a lot of things.

1258
01:48:28,413 --> 01:48:31,413
We don't know how people would choose to use drivechains.

1259
01:48:31,413 --> 01:48:36,413
How reluctant they would be to opt for drivechains.

1260
01:48:36,413 --> 01:48:43,413
Because basically the drivechains have this property that they don't have subsidy at all.

1261
01:48:43,413 --> 01:48:45,413
They only have the fees.

1262
01:48:45,413 --> 01:48:53,413
And basically the drivechain that can collect the highest amount of fees is the most secure.

1263
01:48:53,413 --> 01:49:08,413
So against reorgs, against any sort of double-spend front-running, you are the most secure on the drivechain with the highest collective fees that you can afford to be on the drivechain.

1264
01:49:08,413 --> 01:49:17,413
And that means that people should, in theory, throw together like news on the savanna, you know, strength in numbers.

1265
01:49:17,413 --> 01:49:27,413
All sorts of benefits in being on a large drivechain, large economic value drivechain.

1266
01:49:27,413 --> 01:49:29,413
You have more social visibility.

1267
01:49:29,413 --> 01:49:38,413
If someone tries to steal, your voice will be heard, unlike, you know, some obscure chain nobody ever heard of.

1268
01:49:38,413 --> 01:49:43,413
So exchanges, liquidity, I could go on.

1269
01:49:43,413 --> 01:49:47,413
There are a lot of benefits and strength in numbers.

1270
01:49:47,413 --> 01:49:48,413
So what do you think will happen?

1271
01:49:48,413 --> 01:49:55,413
Will the fees on the main Bitcoin blockchain, will there be pressure to increase them with more drivechains?

1272
01:49:55,413 --> 01:49:59,413
Or will the pressure be relieved and therefore decreasing the fees?

1273
01:49:59,413 --> 01:50:09,413
So that's what I try to tell you, that we have to assume something about how many people would want to hold their own keys.

1274
01:50:09,413 --> 01:50:17,413
And how many people would be fine with being in custody, which probably would be the cheapest option.

1275
01:50:18,413 --> 01:50:29,413
And how many people would be fine with the security trade-offs and the cost trade-offs of participating in a sidechain?

1276
01:50:29,413 --> 01:50:35,413
Or how many people would be interested in a specific utility a sidechain offers?

1277
01:50:35,413 --> 01:50:40,413
And what are the scalability limits of that sidechain where it becomes problematic?

1278
01:50:41,413 --> 01:50:49,413
And its block space, how much in demand its block space can be so that the fees become significant there?

1279
01:50:49,413 --> 01:50:52,413
And so you have all sorts of assumptions.

1280
01:50:52,413 --> 01:50:59,413
But what I wanted to say, it's not a hard limit that you can only have 256 drivechains.

1281
01:50:59,413 --> 01:51:08,413
It's just pretty much inconceivable that in the next 10 years that would become a source of scarcity.

1282
01:51:08,413 --> 01:51:11,413
These things take a lot of time to develop.

1283
01:51:11,413 --> 01:51:17,413
People will start to trust these chains very gradually, I think.

1284
01:51:17,413 --> 01:51:23,413
And everything can change drastically in 10 years.

1285
01:51:24,413 --> 01:51:38,413
And that's why I think it's impossible to tell if alone the fees would be more or less overall on Bitcoin mainchain from the drivechain adoption.

1286
01:51:38,413 --> 01:51:43,413
Because the most secure thing will still be to hold your keys on mainchain.

1287
01:51:43,413 --> 01:51:46,413
So that will still be in high demand.

1288
01:51:47,413 --> 01:51:59,413
But for the block space that drivechains take up, they can gather a very significant amount of fees for that 40 bytes they take up.

1289
01:51:59,413 --> 01:52:14,413
And one more thing that is possible is basically, like I said, if you have automated matchmaking decentralized exchanges on top of a wider ecosystem.

1290
01:52:15,413 --> 01:52:24,413
Then you basically can create an open auction system for that mile-next table revenue cross-chain.

1291
01:52:24,413 --> 01:52:34,413
And that basically means an atomic bid for these slots with much higher economic benefit to the one who is making it.

1292
01:52:34,413 --> 01:52:35,413
Oh.

1293
01:52:37,413 --> 01:52:41,413
Much higher economic... Can you guys hear me?

1294
01:52:41,413 --> 01:52:42,413
Yes.

1295
01:52:42,413 --> 01:52:49,413
So much higher economic benefit than what the fees net together in that sidechain.

1296
01:52:49,413 --> 01:53:03,413
So basically you could funnel 10 to 100 times the amount of fee revenue that Bitcoin is currently seeing if this ecosystem develops.

1297
01:53:03,413 --> 01:53:05,413
But there are many ifs in that.

1298
01:53:05,413 --> 01:53:14,413
So we can get very optimistic and we can say, yeah, it will 100x the fees that mainchain miners will see.

1299
01:53:14,413 --> 01:53:22,413
But we have no idea if Bitcoin and these sidechains will actually be more popular than the competitor L1 chains of Bitcoin.

1300
01:53:22,413 --> 01:53:25,413
And the decentralized exchange is built on top of it.

1301
01:53:25,413 --> 01:53:28,413
So I think that's impossible to tell.

1302
01:53:28,413 --> 01:53:32,413
I think it can play out in multiple ways.

1303
01:53:32,413 --> 01:53:42,413
And I think if we don't actually try it out in real life on mainnet, then we possibly will never know how it could have played out.

1304
01:53:42,413 --> 01:53:45,413
Because there can be multiple outcomes.

1305
01:53:45,413 --> 01:53:52,413
The simplest outcome is there will be no adequate demand for dark chain space.

1306
01:53:52,413 --> 01:53:55,413
And it gathers no significant amount of fees.

1307
01:53:55,413 --> 01:53:57,413
That is a possibility.

1308
01:53:57,413 --> 01:54:02,413
And as I said, the other end is that miners will 100x their fee revenue.

1309
01:54:02,413 --> 01:54:17,413
The additional source of demand for Bitcoin block space, aside from merged mining, would be the activity of users pegging in and out of the drivechain, Greg.

1310
01:54:17,413 --> 01:54:35,413
So if there are, let's say, 20 drivechains that are very large, then as demand for the drivechain grows, there will be layer one activity in which Bitcoin is being pegged into the drivechain all the time.

1311
01:54:35,413 --> 01:54:52,413
Because every time the demand changes a little bit on the drivechain for the synthetic Bitcoin, that creates an opportunity for arbitrageurs to equilibrate the value of the Bitcoin locked in the drivechain.

1312
01:54:52,413 --> 01:54:56,413
So there could be a lot of activity there on layer one.

1313
01:54:56,413 --> 01:55:02,413
Yeah, that is some of the activity that I did see, is the pegging in, pegging out stuff.

1314
01:55:02,413 --> 01:55:16,413
I don't know how much that would, I think compared to the total activity of potential transactions on the entire Bitcoin network, I think that's negligible.

1315
01:55:16,413 --> 01:55:21,413
So maybe in the end, it'll just be negligible.

1316
01:55:21,413 --> 01:55:26,413
I guess it's a research question or just something that will have to be experimentally seen in practice.

1317
01:55:26,413 --> 01:55:28,413
It's an interesting question.

1318
01:55:28,413 --> 01:55:29,413
I don't know.

1319
01:55:30,413 --> 01:55:34,413
I would like to see how this could be answered on paper.

1320
01:55:34,413 --> 01:55:40,413
Because it seems to me that people are just running with their assumptions and we don't know anything.

1321
01:55:40,413 --> 01:55:42,413
That's what it looks to me.

1322
01:55:42,413 --> 01:55:45,413
I would like to add one more thing.

1323
01:55:45,413 --> 01:55:47,413
That's why I held my hand up.

1324
01:55:47,413 --> 01:56:02,413
There is an interesting relationship between trying to increase the economic weight of transactions on Bitcoin main chain with a diminishing subsidy.

1325
01:56:02,413 --> 01:56:08,413
Because people don't really think about it adversarially enough, I think.

1326
01:56:08,413 --> 01:56:21,413
And they don't see that the larger the value of transactions, the world on Bitcoin main chain, and the lower the income the miners see in subsidy and fee revenue.

1327
01:56:21,413 --> 01:56:26,413
And right now, fee revenue is pretty insubstantial.

1328
01:56:26,413 --> 01:56:29,413
So it's pretty negligible overall.

1329
01:56:30,413 --> 01:56:36,413
And we have seen high defection rate from Bitcoin when the fees were high.

1330
01:56:36,413 --> 01:56:38,413
So a lot of people left it.

1331
01:56:38,413 --> 01:56:40,413
It probably is not sustainable.

1332
01:56:40,413 --> 01:56:46,413
Again, it's something that we will only know for sure if we go for it and try it for the next period of time.

1333
01:56:46,413 --> 01:56:57,413
But you have this dynamic that if the average transaction value goes up a lot and the highest value transactions just keep growing

1334
01:56:57,413 --> 01:57:04,413
and there is fewer of them because we decreased the block space to try to force them to pay a higher fee.

1335
01:57:04,413 --> 01:57:08,413
The truth is it just makes things worse in most likelihood.

1336
01:57:08,413 --> 01:57:17,413
Because the reorg incentive, if you rely on POF for finality, the reorg incentive just keeps growing.

1337
01:57:17,413 --> 01:57:21,413
And the security budget just keeps halving every four years.

1338
01:57:21,413 --> 01:57:27,413
And this is an awful dynamic that people think is actually good, but it's actually awful.

1339
01:57:27,413 --> 01:57:34,413
And there are very few ways that this could be dealt with.

1340
01:57:34,413 --> 01:57:40,413
And I actually don't think that adding a TL emission is sufficient to deal with this.

1341
01:57:40,413 --> 01:57:52,413
If we are talking about a 10,000 Bitcoin transaction, what the hell would even a 1 BTC of subsidy perpetually do?

1342
01:57:52,413 --> 01:58:01,413
If someone wants to double spend 10,000 Bitcoin and he is willing to sacrifice 5,000 Bitcoins for it, it's not his money anymore.

1343
01:58:01,413 --> 01:58:03,413
He is not spending his own money.

1344
01:58:03,413 --> 01:58:05,413
He is paying the fees with someone else's money.

1345
01:58:05,413 --> 01:58:08,413
The whole thing is ridiculous.

1346
01:58:08,413 --> 01:58:11,413
So I don't think that's a good idea to go there.

1347
01:58:11,413 --> 01:58:26,413
I don't think Bitcoiners could ever agree in an inflation that is sufficient to protect a network that is not going into this direction of larger and larger settlement transactions.

1348
01:58:26,413 --> 01:58:32,413
And I also don't think it's a good idea to rally on something else for finality other than POF.

1349
01:58:32,413 --> 01:58:40,413
Because if you rely on the legal system or whatever, trusted parties for finality, which is a very cheap option, by the way.

1350
01:58:40,413 --> 01:58:43,413
So trust is very cheap and scales very well.

1351
01:58:43,413 --> 01:58:51,413
Then that power will accept its influence on Bitcoin main chain transaction ordering and transaction selection.

1352
01:58:51,413 --> 01:58:55,413
So that is a very, very bad idea to go into.

1353
01:58:55,413 --> 01:58:59,413
And I think people are handling this whole thing very nonchalantly.

1354
01:59:00,413 --> 01:59:10,413
And that's what I wanted to inject, a different perspective on this whole speculative budgeting and fees and subsidy.

1355
01:59:10,413 --> 01:59:17,413
Because I think people don't appreciate how bad is the direction that we are just going by momentum.

1356
01:59:18,675 --> 01:59:48,675
Moon Settler, thank you so much for sharing all these thoughts. Greg as well. Moon Settler, just to make sure that we understand your view in a very clear way, are you saying that you believe it is important for the success of Bitcoin that transaction fees grow and you oppose the plan of trying to increase the inflation?

1357
01:59:49,675 --> 01:59:59,675
I'm saying I don't think it would help substantially. So it's probably not. It would do more damage than good. That's my current view.

1358
01:59:59,675 --> 02:00:12,675
Because even if you did like 25 or 50 Bitcoins of perpetual inflation, which is, I think, unthinkable and nobody will ever agree to it with a Bitcoin.

1359
02:00:12,675 --> 02:00:22,675
So it's also an impossibility. It still wouldn't be enough in theory in the future where the block space is extremely scarce. Let's say we fork it down to 300 kilobytes.

1360
02:00:22,675 --> 02:00:35,675
And the settlement transaction values are just huge, like 10,000 to 100,000 Bitcoin transactions would need to find finality. It would still not be enough. It's not good.

1361
02:00:36,675 --> 02:00:49,675
So the basic problem is that fees in the proportion of transacted value versus the finality assumptions we have is just horrible in Bitcoin in the future. That's the basic problem.

1362
02:00:49,675 --> 02:01:02,675
Right. So if I understand you correctly, you're saying right now almost all income to miners is from subsidy, not fees. And you're saying that's very bad if that persists. Is that right?

1363
02:01:02,675 --> 02:01:18,675
No, I'm saying if you initiated a soft fork, that every transaction has to pay 1% fees, 1% of the transacted value, which basically would make almost everyone abandon Bitcoin. Right.

1364
02:01:18,675 --> 02:01:32,675
We know that nobody accepts 10% transaction fees in the world going forward where everything is cheaper and cheaper and cheaper. So nobody would accept that. That's nonsense. But I think even 1% would not be accepted.

1365
02:01:32,675 --> 02:01:58,675
Especially in Bitcoin, you spend UTXOs. So you are not just paying on the $10 ice cream that you bought, you are paying on the whole UTXO. And if block space and the UTXO set is scarce and people are holding these large transactions, so that would become incredibly expensive to pay for anything on Bitcoin.

1366
02:01:59,675 --> 02:02:10,675
And even so, if you force the 1% fee on the network, you would only get roughly 100 block finality.

1367
02:02:10,675 --> 02:02:27,675
So if transaction sizes are roughly equally distributed over blocks, over an epoch, you would get roughly 100 block finality instead of the 1-2 block finality that people seem to assume and like right now.

1368
02:02:27,675 --> 02:02:46,675
In theory, if we are saying that POV and raw miner incentives, without assuming any benevolent miner behavior and anything of the sort, are about securing Bitcoin and providing finality, it's just horrible. The whole thing is horrible.

1369
02:02:46,675 --> 02:03:03,675
I think I understand what you're saying. I'm just trying to make sure I get it on a very basic level. So if I understand you correctly, you are concerned that low fees for Bitcoin in its current form may persist. Is that correct?

1370
02:03:03,675 --> 02:03:18,675
No, no, no. That's not what I'm saying. I'm saying outrageously high fees that we cannot imagine right now on Bitcoin would not be enough to secure Bitcoin in a purely POV perspective.

1371
02:03:18,675 --> 02:03:39,675
Are you talking about high fees that are artificially created by forcing users to pay a percentage of their transaction to the miners or are you talking about a natural capitalistic high fee which arises because of true willingness to pay on the part of layer 1?

1372
02:03:40,675 --> 02:04:02,675
It doesn't matter. It doesn't matter really. I'm talking about percentages. So if you have a network that pays 1% fees on basically the amounts held, so it's more like GBDC where you pay 2% on your holding and not 2% on what you withdraw. So it's crazy.

1373
02:04:02,675 --> 02:04:23,675
But let's say people accept that. I'm saying even that is not enough for good finality. And basically the utility of Bitcoin is finality on settlement. So if the network has worse and worse utility and more and more expensive to participate, I foresee very high degree of defection in the future.

1374
02:04:24,675 --> 02:04:33,675
And that's why I'm trying to think into a direction where Bitcoin network is not secured by fees and not secured by subsidy.

1375
02:04:33,675 --> 02:04:55,675
It sounds to me like you've got some very interesting thoughts on this entire subject that are based on some kind of math that you've done. And I'm wondering if you've put all of your thoughts and math to back up these arguments into some kind of a blog post that you can share with us, maybe like a tweet?

1376
02:04:55,675 --> 02:05:08,675
It's not very well organized, but I'm planning on doing something with this. The point I'm trying to make is I'm skeptical that main chain fees could ever secure Bitcoin because I don't think the math works out.

1377
02:05:09,675 --> 02:05:25,675
If we assume that proof of work is what's securing Bitcoin, and we assume perfectly rational and self-interested behavior from miners, I think it can be proven that miners can be incentivized to do deep reorgs.

1378
02:05:25,675 --> 02:05:44,675
And in the current, I don't know, purist view of Bitcoin and proof of work that we see very much in opposition of anything, any change or whatever regarding Bitcoin, it's complete nonsense, basically.

1379
02:05:44,675 --> 02:06:06,675
But if we can gather more miner revenue, then what the transaction values of main chain Bitcoin would amount to, not the total, the biggest value Bitcoin transactions.

1380
02:06:06,675 --> 02:06:32,675
So in a future where main chain is not really used to do these large settlements, but let's say main chain is used to do relatively small transactions, and those transactions are not much greater in value than the total revenue miners are getting, then we basically have one block finality assumptions.

1381
02:06:33,675 --> 02:06:47,675
It's economically impossible to make it worth anyone's while to reorg those. It doesn't make sense. And I see Bitcoin going in the opposite direction. That's the main point I wanted to put out there.

1382
02:06:47,675 --> 02:07:01,675
This has been very interesting. We're about 40 minutes past the time when we had planned to wrap up, but this has been a great conversation. Thank you very much, Greg and Moonsettler, for the conversation.

1383
02:07:01,675 --> 02:07:20,675
Why don't we continue on if you're interested for another 10 minutes at most. But we do meet every week, twice a week on Mondays and Thursdays is the plan for these drivechain discussions. And everyone is welcome to continue the conversations then at our next one.

1384
02:07:21,675 --> 02:07:35,675
Moonsettler, when you said just a minute ago that if I heard you correctly, you're not optimistic about more inflation securing the network, but you're also not optimistic about more transaction fees.

1385
02:07:35,675 --> 02:08:02,675
So I'm wondering if you are generally pessimistic about Bitcoin's viability, because the only way that miners can get income on chain is by inflation, transaction fees, or something like demurrage, which is economically similar to inflation, where you're just charging people in some way for not moving their coins, forcing them to move them or pay the tax.

1386
02:08:03,675 --> 02:08:19,675
And also when I've asked you in tweets, do you support drivechain? You've said it's complicated. So I'm wondering, what exactly is your view in simple terms on what needs to be done to achieve the best possible path forward?

1387
02:08:19,675 --> 02:08:43,675
Yeah, so I would very much like to get this thing explored. And the one thing that made me unusually bullish for my own pessimistic view was the realization that drivechains basically open up cross-chain MAV, MEV, miner extractable value, on top of Bitcoin.

1388
02:08:44,675 --> 02:09:00,675
And if a sufficiently large ecosystem with a sufficiently large decentralized exchanges would develop on top of drivechains, then it's not inconceivable that similar fee income could be seen or even much greater.

1389
02:09:00,675 --> 02:09:22,675
I don't want to go full on Hopium. I don't want to say 1000 or 10,000 times more fee revenue than currently what we have. But let's say just 100. So let's assume that you get 100 times more fee revenue than let's say the maximum tolerable of 1% that people would go for before defection.

1390
02:09:23,675 --> 02:09:37,675
I'm going with this 1% by feel. I think as a human being, I have a pretty good feel for what I would put up with for something that is considered ultra secure.

1391
02:09:37,675 --> 02:09:54,675
But I think it's overly optimistic in reality in regards to what I said. That's why I'm using this 1% because that's our wildest, best dream that people would define with that. I don't think they would define with that, but let's say they would.

1392
02:09:54,675 --> 02:10:10,675
So if you get 100 times of that, then basically you get normal proof of work and selfish miner assumptions, one block finality. If you can gather 100 times of that fee revenue.

1393
02:10:10,675 --> 02:10:26,675
That is my, I don't know what to call it, napkin mat is suggesting to me. And I would like this to be explored and not got rejected on emotional basis because a lot of people start screaming if they hear MEV.

1394
02:10:26,675 --> 02:10:46,675
And I would very much like this to be explored. And I think the key to this is proving that to maximize the miner's revenue, this market needs to be an open auction for fees and ordering the transactions.

1395
02:10:46,675 --> 02:11:04,675
And this needs to be and can be done with an open auction system for cross-chain MEV. And that can be translated to miner fee revenue almost 100% by simply making that an open auction via BIP301.

1396
02:11:04,675 --> 02:11:29,675
And I am very much interested in exploring this, but to be honest, I'm not sure that it's even worth discussing the notion that fees will somehow sustain Bitcoin's security budget. I don't think that's a realistic outlook.

1397
02:11:30,675 --> 02:11:54,675
So I respect that. I'm optimistic. If we get the entire world, if we get 10 billion people using Bitcoin, including drivechains, then the fee revenue will be 10,000 times greater than it is today. And we'll have a viable system. I am optimistic. Greg, do you want to add to that?

1398
02:11:54,675 --> 02:12:00,675
If we can get 2,000 times, I will say we are very much okay, probably.

1399
02:12:01,675 --> 02:12:07,675
Yes. Greg, why don't you wrap up the space for us with your last words and then we'll adjourn until Monday.

1400
02:12:08,675 --> 02:12:26,675
Sure. Thank you, Henry, and thank you, Moon Settler. You know, all of this talk about fees, that's definitely something I'm not an expert in. Moon Settler, I think that that sounds like a fascinating subject that people would be interested in, especially if you wrote it up very nicely in a blog post. I'd love to share that with my followers.

1401
02:12:27,675 --> 02:12:45,675
And Henry, thank you so much for hosting this. And also thank you to the drivechain developers, Paul Sztorc, CryptAxe, and anybody else working on drivechain and similar systems and all of the people who are working to scale on Bitcoin. Thank you guys for inviting me to talk on this.

1402
02:12:46,675 --> 02:13:00,675
If there's another one you guys want to invite me to, feel free to send me a message. I'd be happy to. I very much enjoyed this conversation with all of you. And I wish everybody a fantastic rest of their day, a fantastic weekend, etc. Thank you.

1403
02:13:01,675 --> 02:13:11,675
Thank you all. Everyone is free to come up. No special invitation needed. Everyone is welcome to come up every time we have these. And I'll see you all on Monday.