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Hey, thanks everyone for joining.
Sorry about the hiccup there where we had a link and then it rugged, so I had to
to create a new Twitter spaces.
here we are.
Hopefully, it won't create too much disruption.
had a large number of people who had registered to attend in terms
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Thanks everyone for being here.
It's Thursday, February 2nd, and we're going to discuss Drivechain, as we'd love to.
One thing I had in mind for this space is chatting
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Henry.
Yeah.
I'm just recovering from a cold, apologies if I'm coughing or
anything like that, clearing my throat.
But yeah, I've been interested in Drivechain for
a while because like you and everybody else here, I'm interested in scaling
solutions for Bitcoin, ways to get sidechains
implemented. And I think that the research that
Paul Sztorc has done in this area is very important and useful.
But I've also been somewhat critical of the idea for specific technical reasons.
about four years ago or something like that, wrote a I just called anyone
Can Spend Transactions Creep Into Bitcoin.
That post talks a little bit about some of these technical issues with Drivechain.
Since that time, seems like Drivechain has changed a and has made some improvements
to the concept.
so I'm interested in chatting about that and anything else you'd like to discuss.
is cool. is exactly why we're here.
certain technical aspects, I think, have slightly evolved over
an increasing amount of technical
refinement and formalization in terms of the creation of a test
environment where technically speaking Bitcoin is forked in order to test
you know in a real world kind of however experimental kind of test
context how things would work so people are able to download software
and see how things work in kind of like a testnet version.
yeah, in the process of all of that, I imagine there's been some tweaks to this or that
technical issue. I, by background, like a philosophy.
major and a lawyer.
So I grok Drivechain primarily from an economic theory standpoint.
People like you who are highly technical and come at it from a
coder's mindset, in addition to the economic mindset, I think provide a valuable
critique perspective.
and it's so cool when people like you opine whether negative, positive, or a
mixture on the whole topic.
Does that make sense?
Yeah, I think it's really important for people to understand about
these solutions is that there
are certain trade -offs that have to be made one way or another, no matter how
sidechains are implemented.
And people also really need to understand from a kind of marketing perspective
so that people are not misled.
when people are talking about Bitcoin, word Bitcoin
is
a
And the idea behind sidechains is that Bitcoin
is
going to usable on not just the Bitcoin blockchain, but that there will be all of these
other blockchains out there that are connected to the Bitcoin blockchain, where you can
use your Bitcoin.
However, the problem is that this concept of Bitcoin
on these other
chains, depending on how it's implemented, will either more or less resemble
actual Bitcoin on the original chain.
And in other words, it will not have the exact same properties as the original Bitcoin
on the original chain has.
so we need to think about this
this because if and when all of these sidechains are going to start coming online, they
are going to be marketed as Bitcoin.
And it is unlikely, I think, based on just human nature and behavior
for there to be very many disclaimers on these other chains
that say, know, hey, you can use your Bitcoin on this chain, just
be aware that this isn't actually Bitcoin.
It's slightly different than actual Bitcoin.
It's not exactly the same.
Like, they're not going to say that.
They're going to say, hey, you can use Bitcoin on this new chain and your Bitcoin will
be better and your Bitcoin will have all these additional features.
It'll be more private.
It'll have this, it'll have that, it'll be faster, cheaper, more private, more secure,
etc. That's most likely how people are going to market this stuff.
And we need to make sure if we're going to do this that that marketing is actually true
and accurate. if it's not, then we need to make sure that people understand
that this Bitcoin does have certain aspects to it that are not
the same as the Bitcoin that you have come to know and love.
That's exactly right.
It is absolutely important that everyone
involved in Drivechain in any way, especially as an advocate
or a user, understands and expresses its features,
its risks perfectly, as best as they possibly can.
I couldn't agree more with everything you said.
in
a future, hypothetically, every blockchain
is either the layer one of Bitcoin or a sidechain on Bitcoin's layer one,
then
the whole culture around crypto would be very different.
And one of the
differences would be that although it would not be a perfect world, the net
would be probably much better in terms of quality of communication.
right now in the crypto world, we have a morass of misinformation and
misunderstanding, unfortunately, there are like 20,000 not
a hundred thousand crypto currencies floating around and the vast majority of them are
unfortunately part of a speculative mania pump -and -dump money grab that
just operates on the greater fool and insiders sort of preying on people.
The well -known projects aren't
those things, there's like 99%, unfortunately,
of the total crypto sector in terms of just individual projects aren't entirely
legitimate. So I feel that if we had a drivechain feature, while of course there
wouldn't be perfect information and understanding
understanding because that's just not part of human life.
do think there would be an enormous diminution in the misunderstandings
and the hazards that the ordinary person would succumb to.
For example, imagine if every major crypto project that anyone really heard
about was
a Bitcoin sidechain in which the native token, the main
token that's used is a synthetic Bitcoin, which
is a phrase I've been lately using rather than saying stablecoin on Bitcoin because
people think of fiat when of Staplecoin,
but from a Bitcoin -centric mindset, something is one -to -one pegged with Bitcoin, it's a
Bitcoin stablecoin. we should avoid the use of the word stablecoin because it's almost
always in reference to dollars.
people should say, well, say synthetic Bitcoin, meaning it's not true
Bitcoin, but it's one -to -one pegged.
And the idea, as you know, probably better than me, the whole idea of Drivechain is
that you get the unit of account of Bitcoin, One Bitcoin worth of
purchasing power is by design the goal, but with different software, like maybe
Monero's privacy or, you
Bitcoin Cash's scaling,
Ethereum's Turing completeness.
So you have different software, same unit of account.
In other words, the quantity of Bitcoin stays the same, but its quality changes.
it's economically the same experience in terms of purchasing
power and monetary policy.
But everything else might change like privacy or fees.
that's the idea.
if we had, instead of 20,000 altcoins, just had maybe 25
different Bitcoin sidechains, your point would remain that they wouldn't have the same
guarantees. There's a really great tweet just recently by Moon
Settler, who's in the audience, about that.
there'd be different, I don't want to misquote him, different security assurances on
these sidechains.
And that's one of the ways in which the sidechains are
different than the main chain.
think the phrase he used was property rights or property quality, the quality of the
property interest, which is exactly right.
You don't have the same economic security, There could be like an attack on a side
chain under certain circumstances.
That would be much easier than an attack on the main chain.
But at least there wouldn't be a pump and dump, right?
You're not gonna see people saying, hey, buy this, you know, like, you know, for
example, let's just take the Thunder sidechain.
It's a big block sidechain that's been proposed.
a drivechain of the future.
So it has big blocks, Bitcoin's monetary policy.
So no one's going to buy that with the expectation of making a huge gain over Bitcoin's
value, because the whole idea is you can exchange one for the other.
So if that becomes a major part of the crypto world, is everyone is
using synthetic Bitcoins, then maybe that would lead to great reduction in
the pump and dump problem.
So there's like an ethical achievement that Drivechain could effectuate
if its optimistic vision is fulfilled, which is
that people will be just doing lots of different software on Bitcoin without all of
this pump and dump stuff, at least much less of it maybe.
What do you think of that?
that too much of a kind of an optimistic dream or do you think there's some merit that
in 10 years from now we could see that narrative play out?
What do you think,
Greg?
Just to clarify the question a little bit, you
asking me what I think about a world or a future
where Drivechain is adopted and
there are more...
Can you clarify the question in a little bit of a shorter sentence?
Sure. You were talking about accuracy in describing what
Drivechain aims to achieve.
And I was saying that's important, that's vitally important.
And it's also worthwhile to understand that if Drivechain were to be very successful in
terms of not only being adopted by the Bitcoin community, but the Drivechains became
enormously successful in terms of many billions of of market
cap being added to Bitcoin through
I think that would necessarily mean that the crypto
community at large had achieved to some extent a
reduction in the pump and dump Ponzi -nomics that
are present in the
altcoin space in parts of it because people will be using, if drivechain is very
successful, will be using synthetic bitcoins on Bitcoin sidechains
instead of holding altcoins, which inherently have the possibility
of outperforming Bitcoin, unlike the
synthetic Bitcoins.
Andrew, Bailey, welcome to the stage.
you to chime in?
But yeah, just to answer your question regarding pump and dumps,
think that there might be a reduction in pump and dumps, maybe.
I think
Bitcoin could help at least draw more attention to itself and away
from competitors if it started
promoting more sidechains.
I think that's a reasonable hypothesis.
Here's one reason to be skeptical.
this working? can't tell.
Hey,
Here's one reason to be skeptical.
There are wrapped Bitcoin products, to use Henry's terms, synthetic Bitcoin products,
already. billions
Billions of dollars worth of wrapped Bitcoin on Ethereum.
And you can deposit it and borrow against it and deposit it into a tornado cash
style contract and so on.
So you can get more programmability or more privacy and maybe some other things too.
That doesn't seem to have done much to
make the world more of a Bitcoin world, nor does it seem to have reduced pump
and dumps or the things that, Henry, that you rightly find ethically dubious.
I'm suspicious. I see it the opposite way, Andrew.
I think that, well, let's examine that.
Let's examine the
economics, the economic theory of
wrapped Bitcoin. So when people demand wrapped Bitcoin, when they
buy it and hold it, they are increasing the value of Bitcoin indirectly
because demand for wrapped Bitcoin creates demand
for LayerOne Bitcoin.
when people demand wrapped Bitcoin, instead of
buying Ether,
they're increasing the market cap of Bitcoin.
Now, when they transact in wrapped Bitcoin,
Bitcoin, they're probably creating transaction fees for Ethereum
system participants instead of Bitcoin miners.
I think that it's exactly wrong, in my opinion, as far as I can
tell, to say that Demand
wrapped Bitcoin is not somewhat aligned with
Bitcoinization of the crypto space at large.
that the success and proliferation of wrapped Bitcoin is not an
example of people logically
logically avoiding the price volatility of altcoins.
What they're doing is exactly not investing in an altcoin.
They're investing in a synthetic Bitcoin which I think should be differentiated from
altcoins because the whole idea of
an altcoin is that it has a different monetary policy and it has a different purchasing
power. the exact goal by design, of course they can fail
because of their trust model, but the design of a wrapped Bitcoin is that it is a
synthetic Bitcoin, which is
which is tethered to the monetary policy and price and purchasing power, the
value of layer when Bitcoin.
I feel that your example is really toward my point.
I mean, imagine hypothetically that the utilization of wrapped Bitcoin were to be the
most successful
successful thing in all of crypto, just hypothetically, an extreme and unlikely
hypothetical.
the future, in the next five years, the only thing that grows in crypto is wrapped
Bitcoin. What would that do for Bitcoin?
would mean that Bitcoin were growing in market cap.
Demand
Demand for Bitcoin was growing.
It would mean that all coins weren't growing.
It would mean that pump and dumps weren't growing.
So I feel that your example of wrapped Bitcoin tends
to support a pro -Drivechain view,
it? Drivechain.
I think I agree with nearly all of that, Henry, and it helps me sharpen my point.
Wrapped Bitcoin, or demand for wrapped Bitcoin does capture some of the demand for
Bitcoin, but it's not paying fees to the Bitcoin layer.
This is a drivechain talking point.
There is an important economic difference in the long term between the effects of
people buying wrapped Bitcoin and using it, and people buying real Bitcoin and using
it, transacting in the bitcoin based layer.
So that's where I would see the difference.
Sure.
But pump and dump.
have nothing to do with
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generate for Bitcoin miners is much smaller.
terms of like, you were to 10X the activity in stacks, the value that would accrue
to Bitcoin miners would be much smaller than if you were to 10X the
economic activity
of merge mining.
chime in. jump in any time.
We don't have to even be so polite here.
can just go for it.
Okay.
So while we're talking about
using the word Bitcoin, I want to just kind of go back to some of the earlier things we
were talking about in terms of the security of Drivechain because I do not see people
in the future, let's say hypothetically, that Drivechain becomes
adopted
into Bitcoin. If that were to happen, do not see people
taking the time to modify their speech and
say synthetic Bitcoin or wrapped Bitcoin or anything along those lines.
think that people are just going to call it Bitcoin.
that can lead to one of two things.
Either they are calling it Bitcoin and using the mental model of Bitcoin to
refer to coins on sidechains that have similar security properties to Bitcoin and so
it's it's okay to call it Bitcoin or it's
are radically different.
And if that were the case, then that's where the potential for
explosions happens. And my background is in security.
work in information security.
So that's always what I'm thinking about.
It's not how, you know, something, uh,
go well or like, I'm not exactly, I don't become hopeful about anything
until all of the potential problems or ways that something can go wrong are addressed.
how can Drivechain explode?
Here's one scenario.
If
If the security issues with Drivechain are not addressed, then we could arrive
in a situation where Drivechain is adopted, lots of people are using it.
it's a scenario that Paul Sztorc and many others have talked about where suddenly
there is a
to reduce the likelihood of of the mechanisms that it uses
to reduce, and actually for those who are not familiar with this entire topic of theft,
should backtrack a little bit and just give a quick overview of what I'm
talking about. Drivechain, what is happening is that when you want to transfer your
coins from the Bitcoin blockchain to a sidechain, first what you do is you
give your Bitcoins to the Bitcoin miners.
You literally give
miners, you give them to everyone.
You put them in an address or to an account that is
called, it uses something called an anyone can spend a transaction.
And that is literally what it sounds like.
Anyone
from being spent in drivechain is miner consensus.
So if somebody tries to spend those bitcoins, then the miners themselves will say,
well, we have some additional rules for spending these coins that need to be followed.
And this particular transaction that someone's
if the miners, and here again we need to be very specific, who are these miners that
we're talking about?
We're talking about the group of entities that has at least 51 %
of the hash
approve or disapprove the spending, then that determines
whether or not those coins are safe and whether or not they follow the drivetrain
rules. That's kind of a simplification of what's going on, but that's the general idea.
so
potentially go wrong here is that the majority of the miners are dishonest and decide
to take all of Bitcoins that are given to them for themselves.
They know that they would wreck the Bitcoin blockchain doing this, but maybe for
whatever reason they want to
wreck their Bitcoin blockchain.
the miners get compromised.
some, know, for example, back in the day, the Chinese miners
were the biggest miners.
I don't think they are anymore because I think the Chinese government, you know,
cracked down on them.
But let's
let's say that they were still, and the Chinese government decided, we would like to
destroy Bitcoin in this specific way,
well, then that could potentially happen.
And that would be disastrous for Bitcoin, even if for a period of time, the sidechains
were working really well.
interesting, Greg. think that I agreed with a lot of what you say, but I'd like to also
rephrase it in a way that I feel is just as compelling or more, which is that
when the participate in Drivechain,
do it in a way in which multiple months goes by, in which the
activity of the miners is completely public.
if the miners were to, by a majority of the hash rate decide to
a drivechain.
That is to say, discontinue one of the merged -mined sidechains on Bitcoin.
That uses BIP300 and Then the decision
six months in a way that is completely public, I think is logically possible, but
practically unlikely in the extreme.
I want to just also elaborate a little more.
Thank you for that clarification because that is important.
As part of
BIPs that are being proposed.
yes, apparently. to land my plane on this interjection, I also want to say that
we've known from the beginning of Bitcoin that in Satoshi's original writing that
the 51 % honest majority of miners has been one of the
fundamental ideas in Bitcoin.
So Drivechain is resonant with that idea.
some have said, some critics as well as proponents of Drivechain
have said that what Drivechain does is not so much introduce a
lesser standard for
Bitcoin users with respect to their security, but instead make very
explicit what is already implicit in the design of Bitcoin.
like, yes, the miners can exert control and that control
can be either malfeasant
or it's also important to understand that since the very beginning of Drivechain, back
in 2015, designers knew or designer Paul,
that the BIPs have two authors.
The designers understand that there is actually scenarios in which it's
good
for the majority of the hashrate to be able to discontinue a Drivechain.
For example, if there is a Drivechain that is diminishing the value of Bitcoin
or interfering with other Drivechains,
in those unusual circumstances, it's actually good that the
community of Bitcoin can express its will through the miners to discontinue that
problematic drivechain.
So it's actually good that Okay.
go ahead. Can I respond?
you. Okay. All right.
that last part that you were talking about, specific drivechains and whatnot, You
that's a somewhat different subject to what I was talking about earlier, is stealing
from the general pool of drivechains that's available to the miners, which includes
one or all of them or anything like that.
And yes, thank you for interjecting and pointing out that with the way that the BIPs
are written, As
as far as I know, there are hard -coded rules for the miners to
wait a certain period of time before withdrawals from that pool
of funds can be made.
That does improve the security of Drivechain.
It definitely
does.
to the point that is Drivechain's security model strictly
not a reduction in Bitcoin.
I think it is strictly a reduction in Bitcoin's existing security model.
because with a 51 %
attack on Bitcoins today over either a period of a few minutes or a few months or
whatever the case may be, the miners are not ever able to steal anybody's funds,
whereas with the drivechain, theft actually becomes a possibility.
as far as I can tell, that is strictly a reduction in the security
of Bitcoins. right.
I agree with that.
a way of expressing that crystal clear to fully concede to you your point, which
is exactly right in my personal understanding, is to say, if you would ask me, Henry,
suppose there were to be a Drivechain which has identical code to
to Bitcoin's main chain, would the users holding a drivechain
token of that sort have an inferior security
assurance than users who hold instead Bitcoin
main chain token?
And the answer would be that those who are holding the token of
this synthetic Bitcoin would I think strictly have an inferior
user experience, you know, all else equal.
of course, the fees on that Drivechain would probably therefore be lower and therefore
maybe they would, you know, there's that to think about.
yeah, you're exactly
right. know, Bitcoin main chain is digital gold.
Nothing is ever going to be more digital gold than that.
So yeah, you're right.
Okay. we should talk about like what additional steps can be taken
to improve the security of Drivechain because I think it is possible to improve on
Drivechain
Drivechain's security beyond the steps that it has taken, which is this long
transparent time window.
And one of the reasons why I'm nevertheless skeptical of the long transparent time
window
is because in the existing world, with the existing financial system,
There are you know banks that will you know, it's it's happened where banks
have stolen client funds And this theft has taken place
over, you know A long period of time and then months go by and that person or
company or entity does not get
their funds back.
I'm specific, like one recent example that comes to my mind is Bitchute, HSBC bank took
their funds and as far as I know they still have not gotten them back.
So something like that could happen with the drivechain and I want to make sure that
that does not happen with the drivechain if drivechain is adopted.
So one of the ways that it's possible to reduce the likelihood of such theft occurring
is to increase the pool
of entities that are participating in the consensus and that make up that
51%.
One of the major problems right now that we have with the Bitcoin mining
is that a lot of the mining power is concentrated in the hands of a very small number
of entities. And one of the ways to fix that problem is by
pushing the mining
out to the edges to create mining pools that are composed of actual
members, thousands of members, and for the selection of transactions that are
happening in those mining pools to happen at the edges as well.
If that happens, your mining pool, then it's
much more difficult to conduct this kind of 51 % attack because there's a large number
of miners. It's kind of like Bitcoin early days, back in the good old days when there
was a large number of miners.
And there are protocols that can achieve this.
And one of those is called Stratum version two.
So one of the things to do maybe with the drivechain would be to push
it in tandem with kind of I don't know, marketing push or something to promote mining
pools that use Stratum v2 and to out -compete the existing mining pools
that don't use it because that would significantly improve the security of Drivechain.
That
is a very interesting idea.
And I appreciate you mentioning that project, I have retweeted
after you tweeted it.
So I'm going to to study that.
And I really appreciate everything you said.
think I agree with basically every single sentence
you've said today.
So it's cool to have you chatting here.
Thank you for being here, Greg.
It's my pleasure.
Thank you inviting me.
One of things I posted in the nest here is a tweet from our favorite champion, Fiat
Joffe, drivechain enthusiast
extraordinaire and famous creator of Noster, he
wrote four days ago some people have been criticizing Drivechain because it somehow
puts shitcoins in Bitcoin, which is not true in any sense at all.
I agree with what he's saying.
The main
main idea of Drivechain is to make every single crypto user in the world
using Bitcoin. When you're
Drivechain, are using a protocol, a
sidechain, native token of
of which is a synthetic Bitcoin and your transaction fees are paid in Bitcoin,
not in altcoins but in Bitcoin to the Bitcoin miners.
So drivechain increases by design the value of Bitcoin and
the
value of Bitcoin's block space.
it's really the opposite of shitcoin to read.
Now of course on some Turing complete drivechain such as, know, Rootstock
were to become a drivechain or if, you know, ETH side, which is the of the Ethereum
clone in the drivechain testnet
was to a real, live drivechain, not in a test environment,
but the real thing.
There could be all kinds of security tokens and other tokens that would have a free
floating exchange rate against Bitcoin.
However,
because of nature of drive
Drivechain, discussed earlier, think that an enormous diminution of
Bitcoinery would occur, an enormous reduction, and the whole idea of
printing money, as it were, would be gone.
There's nothing inherently wrong with having a on a blockchain that has a free -floating
exchange rate to
The token is
a
would accrue value to the token that would have nothing to do with price of Bitcoin
necessarily. So I think there's legitimate possibilities for such tokens.
But unfortunately today, I think because of the lack of Bitcoin advanced sidechains,
there's this theme
that people launch altcoins and they use the rationale.
And we can see this in the Ethereum white paper and probably the white paper of every
other altcoin. It says right there in the white paper of Ethereum.
This is a paraphrase.
It is difficult to build on top of Bitcoin, if
not impossible. So since we can't do our project on top of Bitcoin, we're doing an
altcoin. And there you have it.
That's like the rationale that altcoins so often use.
And that's why I think we've seen this enormous growth in altcoins.
It's because it's in the view of the founders
hard to build on top of Bitcoin or impossible to, they have to use a federated side
chain. And of course the question with a federation is who's gonna hold the keys?
Should it be me?
it be you?
Who's gonna be this trusted party?
So what Drivechain does is entrusts the Bitcoin miners, of course
no one's perfect, but trusting the Bitcoin miners is probably one of the most
reliable systems you can have involved in a trust model because it would take billions
of dollars to attack it, and there's billions of dollars of incentive for them to do
the right thing.
the Bitcoin miners are going to, I think, be
Bitcoin
because the Bitcoin miners would like to see that fee income from the drivechains
in perpetuity. So I feel the drivechain uses economic design to
create a synergistic and sustainable system, just like Bitcoin
itself relies on incentives to operate.
The miners in Bitcoin are presumed to be anonymous, mutually distrusting, and
self -interested, and yet the system works.
And that's what drivechain also assumes.
And I think that's why...
it would also work.
So I love that quote from Fiatjaf that I put in the nest.
The next one I would like to put up is from Adam Back.
The reason why I like this quote is he uses the phrase peer to peer sidechains.
He writes, like peer to peer, he uses the words
P2P, I like P2P sidechains as useful
modularity for faster, more permissionless Bitcoin innovation.
I thought that is a fantastic quote.
And what he's saying there is an idea that I have seen in other very brilliant people
with Blockstream talk
about, Greg Maxwell, has, if you read his writings over the years, as I like
to, he has, Maxwell and Beck have talked for years about the idea that it would be
very valuable for Bitcoin potentially to have peer -to -peer sidechains.
This means a sidechain
in which there is not a federation that is controlling the out from the
two -way peg.
So what we'd like to do, in my view, in Bitcoin is have a
ability for the user to opt in to a sidechain
and when
they're enjoying the software on the sidechain, come back to Bitcoin LayerOne.
And that's really the ultimate goal of the whole sidechain idea, is to enable
different software on top of Bitcoin without affecting Bitcoin mainchain.
yeah. Yeah, go ahead.
Oh, sorry.
ahead. I've already spoken for a little bit.
I'd like to hear more from you, but also let's invite Andrew to chime in.
anyone else, Andrew, what's your thoughts on this quote or anything else?
Henry, I like this language, and I didn't know that you got it from out and back, so
that's good to know.
It sounds better to say that
that Drivechain implements P2P sidechains.
when you described and explained what Adam Back was saying, contrasted a peer -to -peer
implementation of the peg -out mechanism with a federated mechanism.
But as I understand it, Drivechain does involve a federated mechanism.
It's just that the federation is more than half of the miners.
then I guess I don't understand what the difference is between a federated peg out and
a peer -to -peer peg out.
Yeah, the reason why I'm showing this quote is that in our last Drivechain
conversation, we had a little debate among
the speakers where I asked Super Testnet and Paul Sztorc if they
agree with me that drivechains involve peer -to -peer
arrangements that a federated sidechain peg does not.
neither of them, in my understanding, fully agreed with my
view. But I feel that this quote from Adam Back just a few months ago supports
what I said, and that's probably where I got it, because I read probably every tweet
he's ever written over the last few months.
And I'm just an Adam Back fan,
as well as a Greg Maxwell fan.
like to read their
writings. And I feel that among the leadership of Blockstream, has been an
understanding that it would be good in the long run for Bitcoin, one way or another, to
achieve these sidechains that are more aligned with the
technological themes of Bitcoin, more aligned than federated sidechains
are.
And I think the Liquid Project is an outstanding effort to achieve what can be achieved
without a soft fork.
But I do feel that in the history of statements on sidechains, such as this one from
Adam, from Dr.
Back, there is an expression of the difference between
a peer -to -peer sidechain, which is what he's talking about here in a thread on
Drivechain, think,
yeah, that thread is about Drivechain,
and the arguably lesser arrangement, which is a federated sidechain.
So when people say, as we discussed last time on
those Twitter spaces, when people say, well, the Drivechain peg is controlled by just a
bigger federation than an ordinary federation, I think that's not true.
I think the fact that there is a real categorical difference is what he's talking about
here when he says, I like P2P sidechains because, and he uses
the word permissionless.
So I think that one of the categorical differences is it's not simply the case
that trusting 51 % of Bitcoin miners is trusting more
people or trusting a stronger degree of assurance than what
we get
with 15 parties controlling a multisig, which is an ordinary federation.
When we're trusting the Bitcoin miners, you're trusting a set of people that is
fully dynamic and completely replaceable.
So the nature of Bitcoin mining is that the parties are totally anonymous,
mutually distrusting, anyone can enter that set of people who simply have the money to
buy a Bitcoin mining machine.
So it's a dynamic set, whereas a federation in the ordinary sense,
a federated sidechain peg, know, has a bunch of, you know, so -called functionaries
or federated members, are, as I understand, typically
in the ordinary implementation, about 15 people or fewer,
they're appointed in a social, not economic manner.
So they're chosen and designated kind of like the Federal Reserve members, right?
There's
like a body of people and they're appointed socially.
They're not able to, you can't just like raise money tomorrow and say like, I'm gonna
buy my seat at the Federal Reserve, you know, unless you're quite sensible.
That is a spicy comparison.
know, I know.
And the block stream may not be totally happy
with it, but that is very spicy.
love it.
I think it's an accurate description, very accurate.
The federated model consists of identifiable individuals
who,
it's more of a fixed set.
And as you were saying,
Henry,
the Drivechain model allows for the miners to be that set.
And the miners is not a fixed set.
It can change over time.
So that's one of the big advantages of Drivechain over a federated approach to side
chains. I was wondering if you had
time to discuss this point that Paul brought up in one of his talks that I watched on
YouTube, where he talks about drivechain misconceptions.
He brings up this interesting point that I actually agree with, which is
that one
that one of the, I guess, he puts me in a camp of people who
wants theft to be impossible and that's exactly right.
And he makes this point that if you make theft
impossible, then doing a sidechain
requires a kind of mandatory change to Bitcoin and it's
no longer opt -in.
what he likes about Drivechain is that it's opt -in.
I kind of want to drill down into this point a little bit more if you
have time for that.
let's do it.
first thought before you continue is it resonates with what I was saying earlier, I
think, which is that if the miners can express the will of the community to
discontinue a particular Drivechain because it's interfering with the value of Bitcoin
value or the operation of other drivechains, then it's actually a good thing that the
miners can exert that control, you know, as the will of the community to put an end.
imagine if you adopt something else, imagine if we adopt something else like a system
in which the miners have no power to discontinue a
Drivechain, that introduces to Bitcoin a system in which
the community can't rid of something that might
be good for the miners to be able to exert that control.
See what I mean?
We don't want to have innovation that can't ever be discontinued
if the majority of the community wants it to be discontinued.
For example, some Bitcoiners say, I don't think there should be a privacy sidechain on
Bitcoin. Some Bitcoiners say that.
They think that would invite scrutiny from the government.
Well, I say, I think your opinion is valid.
But I also think that if the
majority of Bitcoiners would like there to be a privacy sidechain Let there be one
shouldn't the community decide isn't that the way that a very successful?
would be designed that the community has the power to to Adopt innovation
on it and to express, you know express that innovation.
So that's my point.
um, yep, I hope that wasn't too much of a segment.
no, no, I completely agree.
You're Yes, that's, that's a very good point.
So the idea with this mandatory versus opt in
and theft
possible versus not Paul is right that like there are different
ways of implementing sidechains and The ways that make theft impossible
do require
Certain changes to Bitcoin that I'm not really
sure if they would be hard forks or if they could be done via soft fork or not,
but they would require serious changes to the way that Bitcoin works.
For example,
one method of doing sidechains that I proposed
is rather simple, but at the same time,
changes Bitcoin. It requires a change to Bitcoin that's somewhat fundamental
because the way that Bitcoins are created would be changed.
currently the way that bitcoins are created is
when a miner successfully mines a block, and then those Bitcoins are
introduced as part of the coinbase, and then we have new Bitcoins.
But in this alternative universe where we have theft -proof sidechains,
there is a new way of creating Bitcoins.
the way that it works, I called it a generalized sharding protocol
for blockchains in general, is that when you want to
transfer coins from blockchain A to blockchain B in either direction, whether
it's from the main chain to the sidechain or from the sidechain to the main
You want to have a fixed supply of tokens.
When you're transferring the tokens, burn them on the first chain, ones you're
transferring from, and then you mint them the same amount on the other chain.
And
so, that is called a one -way, like people assumed when I proposed this that
I was proposing a one -way peg because that's actually how a one -way peg with Bitcoin
can be done today is you burn Bitcoins on the Bitcoin blockchain and create them on
some other blockchain.
not this is actually a two -way peg if you modify Bitcoin because you can do the same
exact thing on the Bitcoin blockchain.
When on some other blockchain the Bitcoins are burned, you can then mint them
back on the Bitcoin blockchain.
so there would be two ways of creating, quote -unquote, creating Bitcoins.
You're not really
creating any new Bitcoins.
You're recreating Bitcoins that have moved, it would be, you know, that's a fundamental
change to the way that Bitcoin works.
maybe for that reason, because it's more of a, more of a significant change to the
underlying way that Bitcoin works.
Maybe people would object to that.
I don't know.
But that's one example of how theft -proof chains can be done.
I have not fully explored this idea, but it might be the case that
this other sidechain would have to be kind of like approved
to work with Bitcoin.
because you can
imagine if we had a system that worked this way, if anyone could create a sidechain,
then maybe there would be opportunity for creating Bitcoins out
of thin air, because in order to create Bitcoins out of thin air, you create a
sidechain, you claim that you've destroyed
some Bitcoins, and you then create them on the
original Bitcoin blockchain.
You would need some kind of a proof that that had not happened.
And maybe it's possible to construct that.
That's for any cryptographers in the audience.
I'm not exactly sure how
that would be possible, or maybe you would have to have a fixed set of sidechains that
was agreed upon, that were trusted.
I don't like that personally.
Hopefully there's a trustless way to do that.
that is an example of how sidechains can be done
where theft is
guaranteed to not be possible.
I was advocating for these kinds of ideas to be explored.
I don't know how much of them they have been explored.
I'm hoping other people are exploring them.
Because if we could have something like Drivechain, but at the same time, with the
exact same security properties of
Bitcoin I think everybody would be happy with that so yeah that's that's just something
that I wanted to bring up that's very interesting yeah feel free to DM me further about
that so I can think about it more I personally do like the idea that
the drivechains can be discontinued by
the miners because, as I say, it's my understanding that there could hypothetically
be a problematic drivechain and therefore it's good for the community of Bitcoin users
to be able to express their will through the miners to discontinue a drivechain that,
for example, is interfering with
interesting
and interesting computer science hypothetical in which a drivechain or an altcoin could
be designed using certain kinds of contracts to interfere with operation of Bitcoin
or
certain drivechains.
So it's good if the miners can turn off drivechains, if they're problematic.
The third and final tweet that I wanted to share for conversation today, after we have
now discussed Fiatjaf's tweet in the Nest and then Adam Back's tweet, is Luke Dash
Jr.'s
tweet. So here it is, it's in the nest now.
He wrote a few days ago, it's more important that Bitcoin be
decentralized than that it's scale to global normie usage.
I felt this tweet was very interesting because
it seems to assume, and perhaps correctly, there are trade
-offs between achieving global normie usage, as he says, and
decentralization. However, do feel optimistic that Luke, perhaps,
in the years or months to come,
may see the merit of
the idea that there doesn't have to be such a trade -off.
So as I understand it, decentralization has a lot to do with whether ordinary users can
download a full node.
and therefore decentralization
is very much aligned with the goal of keeping Bitcoin's layer one blocks small
and that's something on which Luke believes
and also drivechain is aligned with so you
know drivechain is very much aligned with the idea of the small of small
blocks on LayerOne, I think that's something Luke cares about a lot from reading his
tweets.
But global normal usage, his phrase, I think can also be achieved if we have large
block sidechains that are very popular.
So I think the system of Bitcoin, including all
sidechains, can potentially serve both the aim of decentralization, meaning
defined as small blocks on LayerOne, as well as global normal usage histories,
defined as the replacement of all altcoins with Drivechains.
So I was wondering if anyone else sees it
that way. you know, when I read Luke's tweets from 2017, he actually expressed interest
in drivechain and said, you know, let's look at this, this could be good.
He wrote, he wrote tweets to that effect.
In more recent years, he's been more of a skeptic, as I understand from his tweets, but
I'm, I'm optimistic that advocates for smaller blocks, we'll, we'll
see how drivechain facilitates that.
I think they'll come to that view, I hope.
Yeah, this brings up the idea of the
DCS triangle, which is
the idea that you can have at most two out of three properties in a
system. And with the DCS triangle, it's decentralization, consensus, and scale.
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.
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.
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.
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.
So it's a solid, theoretically solid approach.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Bitcoin has a bunch of interesting topics within its discourse that are ripe for investigation, analysis, and discussion.
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.
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.
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.
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.
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.
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.
It's something a lot of people want.
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.
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.
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.
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.
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.
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.
And I think that Paul Sztorc really does deserve kudos for being committed in his work and persevering.
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.
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.
What are your thoughts on the third of the tweets I shared, the one that's currently in the nest, Greg?
What do you think about — and by the way, anyone's welcome to come up and also share their opinion.
Anybody can raise their hand, I'll bring you up.
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?
The idea that Bitcoin becomes the world's money in every sense.
What do you think of that opposition?
Yeah, so I touched a little bit on that in some previous commentary, but I'll clarify it.
The thing that Luke Jr. is referring to I think is really important.
I don't think that we need to sacrifice decentralization in order for Bitcoin to achieve global normie usage.
I think that it's possible to sacrifice decentralization to achieve that, but I don't think it's necessary.
I think it would be far better to preserve Bitcoin's decentralization and achieve global normie usage.
I think that that's really the goal that we should be striving for.
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.
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.
So the decentralization that Luke is pointing to is very important to preserve.
And we have to look for ways of preserving that and scaling Bitcoin at the same time.
And that's what the whole community is doing its best to do.
And I think that drivechain could be one way of doing that.
It is a theoretically valid approach to scaling Bitcoin while preserving Bitcoin's decentralization.
Cool.
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?
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.
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.
So what do you think about that?
In other words, keeping the block size small is what creates decentralization because it localizes the activity of validating the blockchain.
It localizes to the ordinary user rather than expanding it in physical space to include some trusted third party in some other place.
So it literally decentralizes the activity of validating the blockchain.
It decentralizes it maximally down to the actual user, the individual human who it wants to validate.
So what do you think about that metric for decentralization?
I think it's a very valid metric for decentralization.
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.
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.
And at the same time, we can have a system that has very high throughput.
So drivechain is one approach.
It's a valid approach.
The lightning network is another approach.
Both are valid approaches, and I think both should pursue.
These are all very interesting projects.
It's why so many people get so excited about Bitcoin.
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.
And they see that decentralization is at the heart of that.
And so, you know, kudos to Paul Sztorc for exploring one of these paths.
It's the for the DCS triangle.
It's the DC path connecting multiple decentralized consensus systems to one another.
And that's the path that Paul Sztorc is exploring with the drivechain.
And I think it's a path that needs to be explored.
And kudos to everybody working in this space and exploring all of these different ways of scaling Bitcoin while preserving its decentralization.
I agree with that.
I feel that in Luke's tweet, I'd like to just further explore it.
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.
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.
That we need to prioritize decentralization over achieving Bitcoinization.
I feel that he's right, but I also think that we don't have to choose.
I think there need not be a prioritization that we can achieve both aims equally and fully.
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.
Shrinking the block size down to 300 kilobytes.
But secondly, that we're going to just as much as achieve small blocks forever on Bitcoin layer one.
Also importantly, pursue massive adoption of merged mind sidechains.
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.
Because the sustainability of small blocks on layer one would, I think, require that there be a high fee on the block space.
A high rate of fees paid on that small amount of block space.
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.
So the particular sidechains that are envisioned for Bitcoin, if drivechain is adopted, would include Thunder, which is a big block sidechain.
A Turing complete sidechain for smart contracts, a privacy sidechain that uses the advanced technology of Zcash.
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.
Multidimensional event derivatives or prediction markets or Futarchy, which is where society uses smart contracts to predict the future and improve political decision making.
So there's a whole bunch of interesting sociological effects of Bitcoinization in the drivechain format.
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.
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.
Its multi-trillion dollar market cap of monetary premium in the view of most Bitcoiners will diminish, I think.
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.
So digital gold in that sense is actually not a very good thing.
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.
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.
So I think that you and Luke don't really disagree on this.
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.
I don't think Luke is anti-scaling at all.
I don't think any of the Bitcoin developers are anti-scaling.
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.
I'm pretty sure they would not be Bitcoin developers if they didn't feel that way.
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.
That would lead to a complete failure of Bitcoin.
And so I think that what Luke is just talking about here is that he's saying that we need to not fail.
I think that's all he's saying.
We need to preserve decentralization and prioritize that greatly.
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.
So that's all that I think that he's saying there.
Totally. Totally.
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.
Well, that alone does not guarantee the success of the protocol, because if the protocol has
low economic security, if the UTXOs have low hash rate security, then decentralization
alone does not make the protocol successful.
So we need both decentralization in terms of cheap nodes for the ordinary user, but
also high economic security of the UTXOs for the transactors.
So we need both.
You know, decentralization is, from a logical perspective, orthogonal to economic
security. And the priorities that Bitcoin needs to have, I think, in my humble
understanding, are an equal and maximum prioritization of both.
So the design that would achieve both would be best.
So therefore, I felt like this was of the three tweets I've shared today in The Nest.
This is the one that I'm kind of wondering about in terms of like, it would be great to
hear his thoughts one day on whether he thinks that decentralization is even more
important than economic security.
Right. Like, there's this tweet that drivechainers sometimes point to from Greg
Maxwell. I think it's December 2017 when he says, I'm breaking out the champagne
because fees on Bitcoin are high to pay for security in the future as the Coinbase
declines. That's almost an exact quote of what he wrote, I think, on the Linux email
foundation public discourse list.
So, you know, high fees are very important and that's what Maxwell was expressing
there. So I think that if I would be curious to ask Luke, would you agree that
high income to the miners in the distant future is just as important as ordinary
users being able to download a full node inexpensively?
I think he would agree with you.
I think everybody who will in the future, when the when inflation, when Bitcoin
inflation is close to zero, I think everybody will agree that the miners need to be
incentivized to mine the Bitcoin blockchain and therefore they need to be paid through
fees and therefore the fees are probably going to be higher than they are today.
So, yeah, I'm pretty sure he would agree.
And at the same time, we need to make sure that the ecosystem surrounding Bitcoin is
such that in spite of high fees, people can still use Bitcoin because that would also
hurt Bitcoin's ability to scale if high fees were to prevent Bitcoin usage.
So that's going to be, I think, the next major debate in Bitcoin.
You know, after after drivechain, after block size, after all of these other things,
I think the next major debate in Bitcoin is going to be what to do about inflation,
whether to allow it as originally planned to be to go to zero and to rely entirely on
fees or to increase the number of coins available in circulation.
I think that's going to be a very interesting debate because we're going to see how it
ends up playing out, whether whether Bitcoin continues to be usable in spite of high
fees or not. That's really I think I think that that is going to determine ultimately
the answer to that question.
Before we go to Moonsetter, let me just get a quick retort to that.
Greg, would you agree that if drivechain is adopted, that's a big if.
But if drivechain is adopted and if there is a remarkably high adoption of the drive
chains in terms of the fee revenue paid to layer one.
So if we have drive can adopted and if the drivechains are themselves adopted and
there's billions of dollars in value on the drivechains and they're paying many
millions of dollars a day to Bitcoin miners, would you agree that talk of the need for
inflation in Bitcoin?
Would diminish or stop people would stop saying there has Bitcoin will need an
inflation for it, would you agree with that?
I would I would agree, yes.
If the miners had an alternative source of income other than the fees that they're
getting from the Bitcoin blockchain, I think, yes.
And especially if that other source were significant, then, yes, talk about bringing
back inflation would diminish.
I agree. Cool.
Moonsetter. Thanks for joining, as always, in the last five minutes, you have the
stage to share your comments or questions.
Hi, everyone. So the thing that frustrated me, especially in in what Luke wrote there
is some people seem to be myopically focused on the number of nodes that are running
as a measure of decentralization.
And that is that is like complete bullshit in some regards.
So obviously, ideally, a hell of a lot more nodes would be running Bitcoin and we would
have a hell of a lot more decentralization in that regard.
But that that does not just happen in a vacuum or without economic incentives.
And I think another very important aspect of decentralization is the number of people
that hold their own keys.
This this. So the economic decentralization is not just about the security budget.
It's about the distribution of Bitcoin globally and and how distributed is that.
And and it seems to me that if we just decrease the block size, then we increase the
very, very powerful forces that already exist out there to to basically herd everyone
into custody and custodial solutions.
Custodial LSPs basically take over the role of banks in the old financial system.
And we know that can work.
We have we have a pretty good idea that Bitcoin can scale to billions of people using it
that way if they don't hold their own keys.
But I kind of think that's entirely pointless.
And and that is not how Bitcoin was supposed to turn out.
And this this the way Luke talks about it and the way he phrased that sentence just
made me very frustrated because I know that he completely ignores these things.
And there is a there is a very mistaken, I believe, very mistaken belief widely had in
Bitcoin circles that IBD, the initial block download, is is very important and everyone
has to do it. And they are clearly seeing that that will become impossible if for most
people around the world, if impossible or extremely impractical, if Bitcoin just keeps
on bloating and bloating.
And I think these two together, that somehow it would make sense for someone to do IBD
and verify everything and came to a different conclusion than the vast economic majority
of mankind and end up on a chain that is just stalled is somehow useful because that's
basically the only possible outcome that that can happen from verifying for yourself and
finding something that others before you missed is that you end up nowhere and you are
excluded from the the the economic system of mankind.
So it's I think it's complete nonsense.
I don't think we have to sacrifice a lot there.
You just completely throw this IBD notion out and that puts the entire block space block
size debate into an entirely different perspective and focus.
So that's one thing.
And I know Luke doesn't want to hear any of it.
I know his stance on this.
And as I said, so people need to hold their own keys or this is not a revolution.
This is just I don't know.
I kind of like that perspective.
I agree that people do need to be able to hold their own keys.
I'm not sure if this was the point that you were making, but it sounds like it that if
fees become very high, then fewer people will end up holding their own keys because
they'll essentially be forced to migrate to custodial solutions where fees might be low
because, for example, exchanges would be able to afford those fees, but individuals would
not. Is that OK?
You gave a thumbs up. All right.
Yeah, I agree.
That is a very valid point and something to keep in mind in a world where inflation has
gone to zero. So drivechain, I think, is going to help if it's adopted.
I think it can help with reducing fees.
That's one important thing.
And the other thing about IBD with the initial block download.
That is also a very, you know, I haven't actually heard anyone put it quite like that.
And thank you, Moon Settler, for saying that.
I think that is very funny that if in the distant future there is somebody who manages
to, you know, let's say that doing the full blockchain download becomes very difficult
for some reason and that there is one intrepid individual who manages to do it from
start to finish and then come to the conclusion that everybody else is wrong.
That would be, I think, a very humorous and interesting drama to watch play out because
I honestly don't know what the result of that would be.
I mean, it would certainly almost be like almost like a new religion would form.
And there might be two different sets of Bitcoiners and this person might come out as
like a new messiah of like the one true Satoshi or something like that.
That would be very comical and interesting to watch happen.
But it's it's an interesting idea.
So thank you for bringing that up.
Greg, when you said that fees would rise as a result, fees would go.
I'm sorry. When you said fees would go down as a result of drivechain, were you
referring to layer one fees or layer two fees?
I was referring to layer one fees.
It was the same point, Henry, that you were bringing up that because drivechain would
create an alternative source of fees for Bitcoin miners, that fees on layer one for the
main Bitcoin blockchain, they should go down or they should at the very least be less than
what they otherwise would be without something like drivechain.
That's interesting you say that.
I hold the opposite view.
I think that in the long term, the massive adoption hypothetically of merged mine side
chains would actually cause layer one fees to be higher.
But I understand why it is.
Why do you say that, because, OK, wow, that's a really interesting I thought we were on
the same page there. So, yeah, I would.
Yeah, these conversations are always interesting.
You know, people come up here and sometimes sometimes a person will say they like drive
chain, but for reasons that are quite different than what I think.
So there's a lot of theoretical reasoning happening here, right, because we're talking
about an upgrade for Bitcoin that hasn't been done.
So there's there is logically only theory and also, you know, arguments about what
history indicates in terms of past data for other projects that that answer these
questions. So.
Merged mining, you know, is one topic and then there's blind merged mining, which is
the adjusted and enhanced, arguably, approach in drivechain.
And I do think that the way it works is that.
It it collects fees that are paid on the drivechain and pays them in Bitcoin
denomination to layer one miners, and it ultimately results in a higher value of the
block space on layer one.
And. I feel like.
I would expect that you were a moonsetter would be able to explain it better than me,
but I do think that it is it is without a doubt, in my view, based on my reading of the
drivechain literature, you know, one of the design goals is to achieve a higher layer
one block space value.
So we would see ordinary users primarily using drivechains for their small cash
transactions and layer one for storing their digital gold life savings.
And there'd be, you know, for the ordinary person, far fewer transactions.
On layer one than they would have on the upper layers, a moonsetter, what are your
thoughts on that? Yeah, thank you.
So there is there is one aspect that people tend to forget that there is a pretty much a
theoretical limit to how much how many people can self custody on Bitcoin.
And that can be roughly estimated to about 100 million people.
And that's it. So Bitcoin main chain.
Probably cannot even serve the millionaires of the world to self custody, let alone
anyone else, like the top one percent of humanity is probably not going to be able to
given other utilization of the main chain block space is already is also happening.
So I'm very, very skeptical about this idea that people will be able to self custody on
layer one. That's what I wanted to tell about this.
Sure, I mean, the the idea is that we're going to have a layered money, which is the
title of a book that has nothing to do with drivechain, if I'm not mistaken, although I
haven't read it. But if the blockchain is going to be layered, if it's going to be a
layered architecture, not everyone's going to be using the base layer all the time.
One of the analogies Paul Sztorc.
Mix about drivechain is that drivechain, and I hope I don't say this incorrectly, drive
chain is like the energy system in that there is a nuclear power station at the base
layer of an energy of an energy system for a city, right?
Maybe they have a nuclear power station, but people aren't plugging their laptop and
their phone directly into the nuclear power station to charge it.
Instead, you plug your laptop into the wall socket of your apartment and then your
apartment plugs into the street power line and the street power line plugs into some,
you know, energy transformers, you know, station at the end of the block.
And that ultimately has a connection to the power station grid.
So there is a multilayered architecture in technology in many ways.
And in Bitcoin is the same thing.
So the layer one, the digital gold, that's kind of like the foundational layer.
And we want it ossified.
We want it used for very large transactions and then in the future.
And then, you know, so it's fine if ordinary users are so-called priced out in the same
way that you wouldn't expect an ordinary user to charge his iPhone by going to the
nuclear power station directly.
OK, so this is all I think like I agree with this latter stuff that you're saying, but
it seems to me to be different from what we were talking about earlier, where we there
was I'd like to clarify, figure out whether we really disagree or whether we just think
we disagree, because as far as drivechain goes, imagine a world without drivechain.
If the fees are funded, if the blockchain miners are funded entirely through fees, then
and the only place where they can get those fees is the Bitcoin blockchain.
Then and there's limited space on the Bitcoin blockchain, then to pay those fees in that
limited space, I it would seem to me like the fees would be very high in that scenario
relative to a scenario where you have fees coming from to the miners from multiple
different blockchains.
So like as in drivechain, if there if people can pay fees to miners through many
different places and there's a lot of space on, you know, let's say the 10 or 20 other
blockchains that are out there and people would prefer to pay those lower fees, they
would be going to those other blockchains to pay those fees.
And that would relieve the pressure from the main blockchain.
And therefore, it seems to me like the fact that it's relieving pressure from the main
blockchain that would then lower fees on the main blockchain.
So that's that's makes sense to me.
Does that not make sense to you, Henry?
Well, in the design of drivechain, and I think I think this is true of ordinary merge
mining, but correct me if I'm wrong, the way that the fees are brought in to the Bitcoin
layer one miner is by a transaction on Bitcoin layer one block space.
And that's absolutely true in the case of blind merge mining BIP301.
So the existence of these drivechains.
Necessarily involves utilization of Bitcoin layer one block space, and therefore, in the
long run will actually lead to greater use of Bitcoin layer one block space, it's kind
of like how if you have an empty space of land and then you build something on it, you're
increasing the value of the land that you're building on, in a sense, like if I build a
hotel, where there used to be an empty desert, all of a sudden the land around that hotel,
as well as the land the hotel is on is all worth more.
So building on Bitcoin increases the value of Bitcoin and building economies on top of
Bitcoin increases the value of Bitcoin block space.
Merged mining isn't just about bringing in fees from.
Sidechains, it's it inherently does that through Bitcoin's block space on layer one and
therefore increases the demand for Bitcoin layer one block space.
In fact, I think that it is the view of drivechain that in the future, 99 percent of all
the transactions on layer one Bitcoin block space in the very far future would be these
merged mines drivechains bringing in their fees to layer one for final settlement of
that architectural kind of, you know, like layered system.
OK, well, then this must be what I'm not getting.
Why are people paying?
Are you suggesting that people are paying fees for the drivechains on the Bitcoin
blockchain? Because my understanding is that they would be paying fees for the drive
chains on the drivechains, not on the Bitcoin blockchain.
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.
How so? How does how does it have anything to do with Bitcoin block space?
There is a transaction that results.
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.
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.
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.
But you can get reorg on the drivechain and you basically paid for nothing.
So that's a possibility. But let's say that's an extreme example.
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.
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.
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?
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.
Basically, this is the same as what miners do on Bitcoin.
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.
And that transaction, if there are multiple competing transactions for that slot, then only one can be mined.
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.
So you basically participating as a bidder in an auction for a slot.
So these are the miners that you're talking about on the drivechain, right?
I wouldn't call them miners. Anyone can do it, basically, practically anyone.
And most likely, my theory is most likely that people will specialize if you have decentralized exchanges built on top of this.
And some people will specialize in extracting the maximum value from these decentralized exchanges and multiple sidechains.
And those people will compete with each other.
So I don't think literally anyone will be able to do it, but I think it will be a competition-based market.
And whoever can extract more value will be able to bid most for the slot.
This slot that you're talking about, is this slot for, are you referring to the mempool space on an independent drivechain?
It's a slot in a coin-based transaction, as far as I understand.
So it's an up-return slot.
Okay, so is this mining that you're talking about that's happening on the sidechain?
Or is this a slot to get into the main Bitcoin blockchain?
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.
That's how the sidechain nodes know that this is the next block.
And of course they validate it, because it can be bullshit, it can break the rules.
And if it breaks the rules, then it doesn't count, it will get re-ordered.
So you're saying that there is a Bitcoin block on the mainchain that is involved in creating a block on the sidechain?
That is my understanding with blockchain-managed mining, yes.
Okay.
Okay, then I must have missed that part.
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.
But it actually is more scarce than Bitcoin mainchain block space, because it's a specific slot.
And everyone that assembles blocks for that drivechain is competing for that, I don't know, 32, 33 bytes.
Okay, so you're saying that all of the different drivechains are competing for that one slot?
No, no, everyone has their own slot.
I'm just talking about that this is not a system where some king decides which block will be the next.
People are competing in assembling these sidechain block proposals by trying to gather as much fees on the sidechain as they can.
And they will bid on the mainchain with real Bitcoin, real slots for the miners for that slot.
And they're bidding on it, they're competing with other drivechain miners?
No, no, no, no, no, no, no.
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.
This is theoretically possible.
I don't know if BIP301 supports that, but it could be modified to support that, that's for sure.
So you could basically make an atomic bet for 6 or 7 or 12 drivechains at once.
And if that maximizes the miners' revenue for these drivechains, then they will pick yours.
Even if you would gather less fees from a specific drivechain and more from another, that doesn't matter.
The Bitcoin miners will just maximize their revenue.
Okay, and how many per Bitcoin block on the mainchain, how many of these transactions can get in?
How many different drivechains can be included?
By default, 256 slots.
If we activated the drivechains as per BIP301 proposal, it would be 256 sidechains possible.
Per block?
Per block.
And, of course, you can create an extension system and you could activate drivechains multiple times.
And basically each of these slots is taking up less than 40 bytes.
Okay, so up to 256 drivechains can be included per Bitcoin block at the same time?
Yes.
Well, then that seems negligible to me.
I don't think that that would have that specific transaction.
And this is, by the way, a part of the BIP300 proposal that I have not studied in detail.
That's why I'm asking all of these questions.
And I'm hoping that these questions will help others to understand this as well.
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.
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.
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.
And because the amount of pressure is less, the fees should be lower.
That was my original argument.
What do you think, Moon Settler?
Is that a reasonable argument?
I think it's a bit complicated because people start from an assumption and that basically determines where they arrive in conclusion.
And we don't really know a lot of things.
We don't know how people would choose to use drivechains.
How reluctant they would be to opt for drivechains.
Because basically the drivechains have this property that they don't have subsidy at all.
They only have the fees.
And basically the drivechain that can collect the highest amount of fees is the most secure.
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.
And that means that people should, in theory, throw together like news on the savanna, you know, strength in numbers.
All sorts of benefits in being on a large drivechain, large economic value drivechain.
You have more social visibility.
If someone tries to steal, your voice will be heard, unlike, you know, some obscure chain nobody ever heard of.
So exchanges, liquidity, I could go on.
There are a lot of benefits and strength in numbers.
So what do you think will happen?
Will the fees on the main Bitcoin blockchain, will there be pressure to increase them with more drivechains?
Or will the pressure be relieved and therefore decreasing the fees?
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.
And how many people would be fine with being in custody, which probably would be the cheapest option.
And how many people would be fine with the security trade-offs and the cost trade-offs of participating in a sidechain?
Or how many people would be interested in a specific utility a sidechain offers?
And what are the scalability limits of that sidechain where it becomes problematic?
And its block space, how much in demand its block space can be so that the fees become significant there?
And so you have all sorts of assumptions.
But what I wanted to say, it's not a hard limit that you can only have 256 drivechains.
It's just pretty much inconceivable that in the next 10 years that would become a source of scarcity.
These things take a lot of time to develop.
People will start to trust these chains very gradually, I think.
And everything can change drastically in 10 years.
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.
Because the most secure thing will still be to hold your keys on mainchain.
So that will still be in high demand.
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.
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.
Then you basically can create an open auction system for that mile-next table revenue cross-chain.
And that basically means an atomic bid for these slots with much higher economic benefit to the one who is making it.
Oh.
Much higher economic... Can you guys hear me?
Yes.
So much higher economic benefit than what the fees net together in that sidechain.
So basically you could funnel 10 to 100 times the amount of fee revenue that Bitcoin is currently seeing if this ecosystem develops.
But there are many ifs in that.
So we can get very optimistic and we can say, yeah, it will 100x the fees that mainchain miners will see.
But we have no idea if Bitcoin and these sidechains will actually be more popular than the competitor L1 chains of Bitcoin.
And the decentralized exchange is built on top of it.
So I think that's impossible to tell.
I think it can play out in multiple ways.
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.
Because there can be multiple outcomes.
The simplest outcome is there will be no adequate demand for dark chain space.
And it gathers no significant amount of fees.
That is a possibility.
And as I said, the other end is that miners will 100x their fee revenue.
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.
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.
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.
So there could be a lot of activity there on layer one.
Yeah, that is some of the activity that I did see, is the pegging in, pegging out stuff.
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.
So maybe in the end, it'll just be negligible.
I guess it's a research question or just something that will have to be experimentally seen in practice.
It's an interesting question.
I don't know.
I would like to see how this could be answered on paper.
Because it seems to me that people are just running with their assumptions and we don't know anything.
That's what it looks to me.
I would like to add one more thing.
That's why I held my hand up.
There is an interesting relationship between trying to increase the economic weight of transactions on Bitcoin main chain with a diminishing subsidy.
Because people don't really think about it adversarially enough, I think.
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.
And right now, fee revenue is pretty insubstantial.
So it's pretty negligible overall.
And we have seen high defection rate from Bitcoin when the fees were high.
So a lot of people left it.
It probably is not sustainable.
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.
But you have this dynamic that if the average transaction value goes up a lot and the highest value transactions just keep growing
and there is fewer of them because we decreased the block space to try to force them to pay a higher fee.
The truth is it just makes things worse in most likelihood.
Because the reorg incentive, if you rely on POF for finality, the reorg incentive just keeps growing.
And the security budget just keeps halving every four years.
And this is an awful dynamic that people think is actually good, but it's actually awful.
And there are very few ways that this could be dealt with.
And I actually don't think that adding a TL emission is sufficient to deal with this.
If we are talking about a 10,000 Bitcoin transaction, what the hell would even a 1 BTC of subsidy perpetually do?
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.
He is not spending his own money.
He is paying the fees with someone else's money.
The whole thing is ridiculous.
So I don't think that's a good idea to go there.
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.
And I also don't think it's a good idea to rally on something else for finality other than POF.
Because if you rely on the legal system or whatever, trusted parties for finality, which is a very cheap option, by the way.
So trust is very cheap and scales very well.
Then that power will accept its influence on Bitcoin main chain transaction ordering and transaction selection.
So that is a very, very bad idea to go into.
And I think people are handling this whole thing very nonchalantly.
And that's what I wanted to inject, a different perspective on this whole speculative budgeting and fees and subsidy.
Because I think people don't appreciate how bad is the direction that we are just going by momentum.
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?
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.
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.
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.
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.
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.
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?
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.
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.
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.
And even so, if you force the 1% fee on the network, you would only get roughly 100 block finality.
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.
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.
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?
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.
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?
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
If we can get 2,000 times, I will say we are very much okay, probably.
Yes. Greg, why don't you wrap up the space for us with your last words and then we'll adjourn until Monday.
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.
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.
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.
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.