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- [00:03]
A
Big mining pools and big businesses and exchanges don't want to play games of chicken with consensus with plebs, because plebs ultimately are the ones that won't compromise. That's the network's greatest strength as a payment network. It's fallen into complete neglect. No one is using it. We don't have that much time. And I think it's more just like, who's driving this thing? What direction are we going to? It's grabbing the wheel and saying, all right, we're turning around. I don't want the network to be, like, held to ransom by trolls unless people can actually coalesce around resisting it. Your best strategy is ignoring it and hoping it goes away. And the problem with ignoring it and hoping it goes away is that other people might not. Whoever blinks first wins. Basically, you have to be prepared for the nuclear option all the time. Most failure scenarios, there's no recovery from.
- [00:57]
B
All right, let's get into it then. Mechanic, good to have you back on the show, man. I. I text you like, I don't know, six months ago when I think it was still called bit444. Being like, if you want to come on and talk about this, give me a shout. And last week you text me, so why now? I guess is the starting point. Why is now the time?
- [01:15]
A
That's a good question. And I know. I feel like I'm not really meeting the responsibility of it. It's kind of laziness on my part. In an ideal world, no one needs to champion anything. Everyone can just, what is it? Rational consumers making informed decisions. Nothing actually works like that, does it? Like, people have got to be motivated to actually learn about it and figure it out. And something like a soft fork in Bitcoin. You need people to pay attention to it and you need other people to go, oh, maybe I should listen and figure out what this thing is. Because right now, most people aren't. Most people are not against it. I will concede that it doesn't have a great deal of support, but the people that don't support it typically are ambivalent or have never heard about it, rather than are actively thinking it's a bad idea or against it. So that means I should get off my butt and actually make some effort explaining it to people and furthering the conversation. Because who knows? Maybe it's terrible and I didn't realize. And the last thing I want to do is make the kinds of mistakes I've made before where I've advocated for things like segwit and taproot. And they did have issues, and I would never have noticed them at the time because I was so gung ho about supporting them.
- [02:30]
B
I mean, there's definitely a sort of vocal minority that are very loud about this. Like, under my video, I get tons of comments being like, why aren't I talking about this? And truthfully, like, probably for the last six months, I've completely checked out the conversation. Like, I got sick of all the personal attacks. Like, I felt like it wasn't really going anywhere. And so I haven't really spent any time getting into it. So maybe we should start with, like, catching me up. Like, since last time we spoke, what's changed? Like, where are we at now?
- [02:55]
A
Not a lot, technically. So on a technical level, nothing's really changed from what it was before. All it does is crudely look at the ways in which people are stashing arbitrary data in bitcoin at the moment and make them impossible for a year. It doesn't pretend that they won't find other ways of doing that, and it doesn't pretend that it's been done in such a careful and considered way that it's something we could permanently do to bitcoin forever. Now, that's a relief for me because every single bitcoin, every single upgrade in bitcoin I've been excited about has always had something up with it that I didn't anticipate and that we all didn't anticipate. So temporary soft forks are a nice way for, for once where we can finally go, all right, if something about this sucks, don't worry, the rules are going away after a year. So to be honest, that's about it for the technical elements of it. It puts limits on taproot, broad strokes. No one is using the things it does in taproot, apart from inscribers. To be honest, most people aren't even using taproot. I can't remember the last time someone gave ME a taproot address. Most people just use native Segwit as opposed to nested segwit. That's basically it for where it's at the 444 numbering thing, that was just amongst the BIP editors. That's not bitcoin core. Right? That's a different group of people. We call it rdts. That's what it's referred to in the latest release of Knots that merged it, which means reduced data, temporary soft fork. And you can refer it to that. It's kind of like the artist formerly known as Prince at this point, it's the bit formally known as 444 for it's whatever. 110 is what most people know it as at the moment.
- [04:42]
B
Yeah. And give me the timeline. What are you proposing now? Because I think you only have a few months left until this activates, Right?
- [04:50]
A
Yeah. So around the 7th of August is when miners must signal for it according to the rules of people running it. That's not the thing coming into effect, but it's effectively the start date of it. In early September is when the actual full rules come into effect. And at that point you can no longer make giant OP returns, but the rules effectively come into effect in early August, because if everyone's signaling for it, then that amounts to the same thing, because the policy mirrors the incoming consensus changes, where if you have giant OP returns, they remain consensus valid in August, but no one's going to be relaying them at that point. So they wouldn't really get around the network, assuming people are actually running it. So it kind of soft activates around that time. But I don't mean to imply that it's a thing a miner could ignore, should it get enough enforcement. A miner would be crazy to mine blocks that don't comply with it, because then they risk, however many people are enforcing it, throwing their block in the garbage, which no miner wants. And it's why they. It's why miners do what they do, it's why they respect halvings, because at the end of the day, they want a network that will accept their block. And that's how soft forks can win, even if miners aren't really particularly interested one way or the other.
- [06:20]
B
So I want to know what you think the chances of this actually going ahead are, because in my mind, six months ago, or whatever, it kind of reached fever pitch. It was a big, big talk on Twitter. And I don't know if it's because I checked out and then the algorithm stopped feeding me stuff, but I see this a lot less now. And I know in terms of signalling for this change, the number of blocks mined with signalling for this is something like six. It's very, very small. Is there still demand for this?
- [06:45]
A
Yeah. Among node runners? Not really amongst miners that we've seen. But the miners aren't a great indicator of much because of how centralized mining is. For the purposes of indicating consensus changes, you only really have a few miners because it depends how you define miner. Right. There's a lot of hashes around the world, but most hashes have nothing to do with this, they just work on templates that are sent to them by their pool, and there's only a few pools. So for all intents and purposes, the incoming signaling for a consensus change to Bitcoin with regard to miners is basically only down to a couple of companies, Foundry and Bitmain, F2, Pool and Viya. So it's a little bit. It's a little bit of a stretch, but it's a philosophical point I like to make anyway. If Foundry and Bitmain said, all right, we like this fork, and they started indicating that it should go ahead, a lot of people in the space would be like, okay, let's. We're doing this, then that's a foregone conclusion. And I think that's wrong. That's why I haven't been yelling at these guys to activate it, because. Because it's genuinely not. It's a convenient stopgap solution for it. And this isn't me trying to pretend that Foundry would listen to me if I did yell at them. I'm not saying that. I'm just saying that if. If a couple of companies unilaterally decided to change Bitcoin's consensus rules and most of the space went, yeah, all right, we'll just go along with that. That wouldn't bode well for the future of Bitcoin. And I like the fact that this thing has gotten. I called it soft fork activation on hard mode because there is no support from miners, pretty much. But we know that's a very, very small handful of people. Businesses have said pretty much nothing about it, including ones that are sort of formally quite activist in the space, like Bull Bitcoin, and, you know, the more based but smaller companies, so they've been quiet, but there's a lot of plebs out there that will run it. And those guys are the ones with nothing to lose, really. They will run those nodes and they will throw blocks in the garbage that don't comply with it. And that was. We've got some precedent for that with bit 148. Right. So, like, people called it a bluff or whatever, but at the end of the day, big mining pools and big businesses and exchanges don't want to play games of chicken with consensus with plebs, because plebs ultimately are the ones that won't compromise. And. And I think that's the network's greatest strength because those are the people that will never bend in ways that could compromise the network in bad ways. They will always stick to these absurd things that Saylor would characterize as paranoid crypto anarchism. Right. And I think that just encapsulates it there because Saylor and that sort of what he represents within the bitcoin space is very risk averse to doing things with bitcoin and wouldn't ever do these kinds of controversial and activist endeavors. But the people that would are the people that keep 21 million safe on his behalf. And it's funny that he doesn't make that connection.
- [09:57]
B
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- [12:39]
A
Yeah, my issue with Bitcoin at the moment is and there's so many ways to come at this and attack it, I feel like we had a war in the past and everything in Bitcoin comes down to not understanding that it's two things at once. It's the Bitcoin like you have the dollar, which is the currency that people love. It's limited to 21 million, it's deflationary, all these, you know, it's unconfiscatable, it's, you know, uncounterfeatable, all that great stuff. But Bitcoin is also the name of a payment network where you move that currency around. So that's. There's a million payment networks where you can move dollars around, but none of them are their own currency. And the dollar doesn't depend on those payment networks. Exactly, but it's nothing without them. And similarly, Bitcoin is nothing without its payment network. And that's the blockchain. The blockchain is kind of this commons that serves a specific purpose that's to facilitate this permissionless money, this censorship, resistance and all that. But it's very, very neglected. So with that framing, I'll go back to the priority blow up and civil war in Bitcoin where you had Roger Vere and the big blockers who primarily loved Bitcoin because of this freedom to transact and peer to peer payments, which is an entirely a celebration of Bitcoin as a payment network, which is Beautiful. But they saw it being limited grossly by the size of blocks, and they wanted to make blocks larger to facilitate more cheap, easy access, you know, financial activity for the world. Very admirable goal, but it came at the cost of decentralization, of verification of the rules. And that's a compromise, just not worth doing, because it unravels everything, including the store of value element of it. Because it. And he famously said, roger, the champion of that whole movement, if we risk Bitcoin becoming PayPal 2.0 in order to scale it, I think that's a risk worth taking. Apologies if I got the quote slightly wrong. Obviously they forked and bitcoin cash and all that history and all that, but this was a fight between prioritizing the two different use cases. But the point I'm going to make is that you need both. They reinforce one another. Fast forward to today and you have the opposite war. You have Michael Saylor. You have. Sorry to keep dunking on Saylor, but he definitely represents a kind of mentality where he will on Pizza Day, the legendary pizza day, which we sort of champion as the initiation of bitcoin as a way of paying people to do things rather than just, you know, what can I really do with this? You know, on bitcoin pizza day, MicroStrategy said, you know, we bought all these pizzas with dollars. Don't ever spend your bitcoins. Keep your bitcoins, spend dollars. And that's the opposite approach of Roger, right? It's, don't spend bitcoin. It's not a payment network. Ignore the blockchain. Just hold it and use it as a hedge against inflation and the fiat system dying and all that stuff. But the problem is the life of bitcoin is in its payments, and that's what keeps 21 million alive. Every single payment is a reaffirmation of the fact that there's only 21 million bitcoins and that because that's not a law of physics, it's a rule that needs constant reinforcement and people to assert that that's true, because otherwise it can slip away. So what's happening today, I feel, is that bitcoin is being treated as an amazing store of value without an understanding of where that comes from and what reinforces that. And it's reinforced by the other aspect of what it is, which is this payment network. Now, the payment network is the blockchain. And the activity on the blockchain is no longer being treated as something that facilitates financial activity. It's being treated as A way of storing data on other people's computers for free as long as you can pay a miner to do it. Now, that's a misunderstanding of what it's there for and a misunderstanding of what would motivate a person to store it and actually maintain decentralization. So all that context is how I view the problem, because I've looked at crypto and I've tried to ascertain why is Bitcoin good and crypto isn't. Why do we get to say Bitcoin, not crypto? Why do we get to make that distinction? And it was always something around decentralization. And the decentralization in Bitcoin is around the enforcement of its rules, which is done by the people running nodes who have to store the blockchain. So we have to be honest with ourselves about what motivates them to do that. And they're definitely not motivated to store other people's data for free. And bitcoin is also an anonymously uploadable data. And you have some. There was some questions obviously, around the kind of content people would put on cloud storage that you could use anonymously. I'm not going to go into that because it's. It's just horrible to talk about, but it's also a distraction because it's so inflammatory. I don't really want to harp on about it too much. All I'm saying is that crypto has an incentive problem. None of the cryptos that compete with bitcoin are genuinely decentralized because it's really hard to motivate people to keep them decentralized. And Bitcoin, while I don't think arbitrary data just kills Bitcoin overnight, if you turn a blind eye to it, if your incentives become warped, like Rogers were when he said, let's just make blocks huge, or like, you know, the store of value. Maxis, I'll call them so I can stop dunking on Sailor endlessly. If your. If your values come go in that direction instead, then you neglect the payment network aspect of what it is and you forget about who's actually going to maintain the decentralization. So, example, you have this new stretch, srrt, srtc, whatever it is, Sailor's new thing. They are egregiously using Bitcoin as a way of recording history of someone moving stablecoins around on Bitcoin. I have no interest in storing that. No one who runs a node does. That's not what the blockchain's for. And the only reasonable assumption you could make for a Network where that kind of stuff goes on is that a node is something someone else runs, not a thing I need to run. I spoke to one of the biggest bitcoin exchanges in the world a few days ago and they told me they don't run a node. A third party does that on their behalf and it wasn't even a thing that they felt like silly about. And I couldn't believe this. You don't run a node. Like if you're listening to this and you know, you spoke to me a couple of days ago, I'm not trying to dunk on you, you're awesome person and I like your company, but you don't run a node and that's becoming a thing that someone else does on your behalf. That just turns bitcoin into everything we're used to with the Internet. It's third parties, it's big data companies running things on your behalf and then they become the gatekeepers of the whole thing. So you already have that in mining. You have crazy centralization with what goes in the chain in the first place due to how centralized mining is. Then you have centralization of enforcement. And that comes as a result of very specifically treating the blockchain like something someone else has to deal with on your behalf. And then you just need a username and password to access whatever it is you need to do. With Bitcoin as a payment network, for me, that's, that's going to only trend towards the crypto centralization end of things. And it stands to reason that we would go down that path at some point, but we didn't back in 2017 and we need to not do that now. So I'll, I'll paint the positive picture of it just to kind of wrap it up. The reason I support Bitcoin 10 is that it quite crudely looks at some of the things that have gone over the, gone on over the last couple of years since 2023. And it says so we made data carrier size bigger, which allowed much larger OP returns. Granted, not a lot of people have ended up using that because you can do witness stuffing with taproot stuff more cheaply. But it was the wrong direction. And everyone knows the trend is much more important than where you are. Like I would much rather watch bitcoin go from $10 to $20 than I would watch it go from $100,000 to $90,000 because the trend is much more important. Right. So the trend towards abuse of the and usage of it for non monetary activity and resignation to people that would do such a thing is an issue because that only compounds and gets worse and worse over time. You set precedent as you go. And we have a long history of being hostile to arbitrary data. We fought wars over it. We kicked Vitalik out and made him do Ethereum elsewhere because of spam filters. So when we started getting rid of stuff like that in 2023, to me it spelt the beginning of Ethereum. And Bitcoin would have just been one thing rather than separate. And for me, I'm like, that cycles back. It informs development. Bitcoin just becomes infected with everything that made crypto crypto, and then it becomes very difficult to defend it because it's kind of dead on an identity level at that point. What even is it? And interestingly, there was some conjecture from Epstein in the Epstein emails where he was talking to Peter Thiel and saying, we can screw with Bitcoin because there's confusion about what it actually is. Some people view it as this, some people view it as that. More when I see you. And there's nothing more on that topic, but it was very reminiscent of if you want to destroy something, undermine its identity so that people don't actually know what it is. And promise. Final point in this rant, which is Bitcoin is money has been the mantra, a very crude sort of slogan of the people on my side of the debate. And it's been said in response to people on the other side who are like, no, it's a database, it's just a database. It's just a chain of blocks. It's just a crypto, any of these things that denature it and make it a very difficult thing to identify and define and place sensible boundaries on.
- [22:52]
B
But I think there's some semantics in that, because I don't think the people that say bitcoin is a database would disagree that it's money, but technically it is a database, but it's a database that acts as money. But there's a few things in that, because I agree with you in terms of the store of value side of things. Like, I think that has been a dominant narrative and it's one that I don't agree with. Like, I think bitcoin is money and should be used as money. But I feel like that's changing. Like, some of this needed technical improvements to become usable money. And I think the stuff that like Cash app have done with all the square terminals, awesome. That's going to allow bitcoin to be used as money more. And like, as bitcoin is used as money more. Does that not then solve the spam problem in the sense that they just get priced out of transactions? Because like right now you can send a bitcoin transaction for less than a SAP of ebike. Like it's. It's insanely cheap. And as more monetary transactions happen, does that not just price spam out anyway, rather than trying to like gatekeep, who can send Bitcoin for what reason?
- [23:45]
A
I think so. Two points. I don't think there's gatekeeping involved. I think bitcoin has been optimized. It is a database, as you say, but it has been heavily optimized for financial activity. There's lots of annoying things that would get in your way if you were trying to use it for other stuff. It's why spammers pay 546sats per output more than they need to because of the dust limit and things like that that say you're not using this for financial activity. So gatekeeping is a perspective, but I don't think it's that. I think it's not. There are different kinds of databases for different purposes. And Bitcoin is useless if you want to upload like a Blu ray rip of some of Jurassic park or something. It's just not designed for that. But you could do that on a different database. So it is a question of optimization and I would never look at that as, as gatekeeping. And your other point about pricing out the arbitrary data use case, that has been an assertion that's been made many times and I just don't see any evidence for it ever becoming true because the trend again is the opposite. I'm stunned at how much of a ghost town the blockchain actually is. And like we're paying 014 cents, sorry, 0.41 sats a V byte to get transactions in the chain and that's reliably getting in. And there are miners that are still keeping the limit of one sat a V byte and you're paying only 14% of that. And another miner will just pick it up and put it in. And this is so nuts because a lot of nodes don't. I'll get a little bit technical here. A lot of nodes don't relay transactions that are below 1 sat per V byte, which means if you mine a block that has transactions that are that cheap in there, your block runs the risk of taking a little bit longer to verify and getting thrown away. So you're risking 3.125 bitcoins, you know, 250 grand worth of fresh bitcoins for the cheapest transactions possible. I mean, we're talking about like 30 bucks worth of stuff, which is usually just up returns. And the trend here has been really worrying. First off, I don't know why anyone thinks bitcoin would naturally, only why the people that would pay the most to use it for storage would be people engaging in financial activity rather than people looking to store data on other people's computers. I don't know why you would make that assumption. Lots of people do. And it's just because it's a monetary network, so you'd expect that. But second off, the trend is just wrong. Like five years ago, there was higher fees, people were paying more, and most of the stuff was economic activity. The Trend is since 2023, has only gotten worse and worse and worse. We had a massive peak of spam, and around the halving it went, it reached fever pitch. And, you know, there was like millions of dollars of transaction fees over a tiny little period. And then it just dwindled and it seems to be dying. And I'm just stunned by it. Like on a Monday morning when historically you'd pay a lot for a transaction fee. There's just no competition. Like, the only time you'll see expensive fees is if there's like an anomaly block where it took an hour and a half to find a block or something. Outside of that, people are just not using it. And to me, that just means like, yeah, it might be at $77,000 a bitcoin. The store of value aspect is doing fantastic, undeniable. This is historically one of the bear years as well. But as a payment network, it's fallen into complete neglect. No one is using it. And the optimistic stance there is, okay, well, they're using lightning instead or something. And I hope that's true, but I really just don't. I don't think it is. I think people would much rather just use centralized third parties. We know that's what happened with El Salvador. Like, they'll just use stuff where they're moving money around off chain because it's easier. It was cheaper. Bitcoin's cheap now. But I don't know. I don't see any evidence for the idea that bitcoin wouldn't just become a tragedy of the commons or the blockchain, at least where, you know, you can buy 100,000, 100,000 bitcoins and it's one on chain, you know, one on chain event, and then you never touch the blockchain for Years after that, unfortunately, that's just not going to work.
- [27:54]
B
But why do you think that is? Because it'd be easy to say, like, this is just like the monetization phase of a new asset. And you could make that argument if fees had always been low. But fees, like you said, have been much higher in the past. So why do you think it's dwindling so much now? Because even if bit 110 happens and it's not going to fix that problem.
- [28:12]
A
I agree. I think this, and this has nothing to do with my stance on Bitcoin 10 or data or anything like that. It's a cultural shift. Back in the day, like, I'll speak from my perspective, I got into Bitcoin because of the payments, not because of the Austrian economics. I didn't have a clue about any of that stuff. I wanted to send money to Julian Assange and I wanted to buy drugs on Silk Road. And all of those kinds of things were. You could only do them with bitcoin because it was. Everything else was Visa or PayPal on, and you couldn't use those kinds of networks for those things. I didn't know anything about deflationary economics, so. And I think Roger and all those early guys felt the same. It was an amazing. It was money on the Internet. It was. It worked like a network. You moved stuff around, like emails. It was incredible. And I think, you know, and it had no interest to the people, to a guy running a hedge fund that wanted to stop, you know, losing money to inflation and stuff like that. It was way too risky and way too tainted with illegal, this, that and the other. So after a while, we fought and fought and fought and managed to make the thing appear a bit more legitimate on the world stage. And then you have a very friendly US Administration to crypto rather than bitcoin. Exactly. Mainly just because Trump and his kids want to scam as many people as possible. But I digress. So now we've got the money here, and the money guys, they don't care at all. Everything they do is so. Is so publicly obvious. If you've got a billion dollars worth of Bitcoin, you're not. You're not flying under the radar using a permissionless payment system for that. It's completely no interest to you. So I understand why it's a blind spot for Saylor, but unfortunately, that, again, is an essential part of it. And I just think it's a cultural shift. So, again, this isn't me wearing my bit110 hat and advocating for that, that's a different topic. I just think we've completely changed into this. We want a deflationary currency. Fiat's broken. We can store in something that isn't a melting ice cube in our hands. Wonderful. But this thing was a payment network too, guys. And you've never acknowledged it as being one and you've never used it as one. And if you continue to champion only 50% of the story, then you'll find out we have nothing. It necessarily goes away. You have to have both elements of it to reinforce one another. I don't know if you agree, but that's been a cultural shift, I've definitely noticed.
- [30:38]
B
No, I do agree with that. And I guess maybe, I don't think. I hope that that sort of shifts. And I think stuff like Cash app allowing all square terminals to accept Bitcoin as payment, maybe that's like start of a change. I think it's going to probably be a long road, but I hope it's start of a change because I want to see Bitcoin uses money. And I guess it is going to come down to merchants demanding to be paid in Bitcoin. People like actually actively using this thing as money. But again, that's kind of not really tied to the bit 110 stuff. But to get back into that, like you said before, most nodes aren't even allowing less than 1 SAP V by transactions, but they're still getting into blocks. And this was always kind of the argument about knots before the BIP110 conversation was that even if you get to 80% of nodes running knots, it's still not going to stop spam getting into the blockchain. So was that basically the realization or the thing that you acknowledged to then move forward with an actual consensus change to Bitcoin?
- [31:31]
A
No, It's a good question and it's very logical. I see why you'd see it that way. But the BIP itself says, look, after this thing activates, we're right back to having spam filters again, because this is not how you fight spam. You can't have a fork every time someone's doing too much of an activity that's causing harm to the network. It's not realistic and it's not practical as why filters are there in the first place. So that is acknowledged in the BIP itself. It's not something I wrote, but I do agree with the sentiment in it. I think that it's a very good point that the intolerant minority or the tolerant minority as they're referred to can punch a hole through the network and say, right, none of you are relaying this stuff. Don't worry, I will. But that's more indicative, I would say, of how centralized mining is. So sub sat per V byte. Summer that happened last year, which was a group of people decided, all right, Core has this spam filter of 1 sat per V byte and if you pay less than that for a transaction fee, it's not getting relayed and no miner will mine it. So they sort of colluded. A group of people. I'm not sure who they were. Most likely the Libra relay guys. So Riordan and Peter Todd and
- [32:52]
B
I
- [32:52]
A
don't know, probably Portland Hodl and a couple other guys and I guess F2 Pool and Mara decided, all right, we're just going to start putting this stuff in blocks. I don't think F2 Pool participated actually, but definitely Mara. And the problem is Mara is enormous. They're probably the biggest miner in the world, depending on how you define miner. So you very quickly can make what nodes are doing look very silly with regard to what they relay. That's the first point. You can punch a hole through a network. And Peter Todd first did this with full rbf, right? And this kicked off that whole argument between him and John Carvalho who was like, no, we can't have full RBF because we use unconfirmed transactions and we consider people having paid us and our business based on that. And full RBF breaks that because people can double spend much more easily. And you know, Peter Todd made his point and went, I don't care. Core aren't getting rid of that spam filter. So I'm going to blast through it and take advantage of the centralized nature of mining and get one pool to accept it. And that blows open the spam filters. And then the filters at that point might as well just go. So that's, that's point number one is that if you have centralized mining, you can make spam filters look ridiculous very quickly. However, bitcoin doesn't work if mining is centralized. So we know that already. I know it is working today. But the reason that we don't trust it is because we know it's not sustainable. Eventually Foundry and Antpool can come under the kind of pressure where they can do things that we don't want them to do and they're just going to do it and their miners are just not going to leave. It's not 2015. So mining needs to be decentralized. And spam filters work much more effectively in an environment where mining is decentralized and we should be going in that direction. That's point one that I'll mention in disagreeing with this idea that you can just, you know, spam filters are useless, which I hope is a fair characterization of what you're getting at. Number two is that it's beside the point because I don't want to relay certain stuff around regardless. And that's just the end of it. And that comes down to a more sort of moralizing position where, where, you know, there's $20 fell on the floor. It's not mine. I'll pick it up. I can either walk off with it or just go, excuse me, someone dropped this and figure out who they are. Like you can always tell yourself, oh, you know, someone else, someone else will just pick it up. If I don't like, I might as well just put it in my pocket and walk off. I don't want to do that and I don't want to contribute to making bitcoin worse. And it's no skin off my nose if I have sensible mempool policies that take stuff that's obviously people doing NFT scams or whatever, you know, clogging up the network, trying as good as possible to run some sort of affinity scam where, you know, they would have got laughed out of town in crypto, but they come to bitcoin and pretend it's somehow, you know, legit at this point and immutable and all that stuff. I don't want to participate in that. It cheapens what bitcoin is. I really do think bitcoin is a beautiful, important technology and I don't like denigrating it with, with this kind of stuff. And I don't want to participate in it and I'm not going to and I don't have to. And that's like I said, it is. People can call that sanctimonious if they want, but if you want to have any kind of quality of life, you do have to have people adhere to these kinds of, I don't know what you would refer to it as, but. These kinds of not race to the bottom ethics. That's all I'll say. You want to live in a town where people just don't litter. It's not illegal. You're not going to get in trouble for doing it, but just don't do it. Stop making the place worse. I know that's maybe not sustainable in a thing with bitcoin if it becomes huge, but I'm not going to actively participate in making it worse. And it's undeniable that what happened with the utxo set in 2023, where it went from like 80 million to 160 million, that messed up stuff and it made it way harder for people to run nodes and I didn't want to participate that. And that was when the beef started with core because they just completely fell down in front of it and were like, all right, we'll just tolerate this. There's nothing we can do about it. And I really don't think that was true.
- [37:17]
B
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- [39:57]
A
No, you can.
- [39:58]
B
Okay, so what can't you do?
- [40:01]
A
The limits of bit1.0 are big op returns, so you can't make an OP return bigger than 83 bytes. OPreturn itself remains because it's completely how Segwit works. Taproot. It puts a bunch of guardrails on taproot. So op if and notif, which you know this conditional element that you can put inside a script that doesn't need to be in taproot. I made a video saying, if someone actually has a use for this, come and tell me I'm wrong about it. But as far as I can tell, there's no use for OP if. And I had a conversation with Nunchuck who make a pretty awesome wallet, and they're pretty pissed off about this whole thing and they're saying, look, miniscript can compile to have op ifs in it. And I was saying, all right, that does seem to be the best argument you have for it. But you're not saying you need it, you're just saying that it might accidentally show up in some of your scripts, in which case fix miniscript so that it doesn't do that. Like you don't want to have wallets that accidentally generate consensus invalid stuff, or that you can't spend and it be consensus valid. I'm kind of going off Way too far, too fast. It basically says, here's how Taproot is actually designed, which is that you have these different spending conditions, and rather than reveal them all when you go to spend your utxo, which is really expensive for transaction fees because you've got to show all the different ways you can could have spent it, including the one you did. The genius of Taproot as scaling technology was I only have to reveal the one leaf, the one condition that I actually chose to execute, and the others might as well have not existed. So, but if you're using if statements instead, then all of the other options, like if this happens, then that, if something else happens, then that. When you're executing things in that more traditional way in Bitcoin, then everything gets written to chain. So the reason Taproot was scaling tech in the first place was that you only need to reveal one leaf. That's why it's good for privacy and it's good for scaling. So there was an assumption that people wouldn't use it. People might push back on that, but I think it was just an oversight. But then Casey Rodimore, inventor of inscriptions, figured out, oh, we can use this to stash a bunch of data that gets ignored because it's after a false. So you put OP false, then you put OP if, and then everything in the if condition gets ignored. That's what an inscription is. And that all gets disabled. So you can't use OP if anymore inside Taproot. You still can use OP if, but you can't use it in Taproot.
- [42:35]
B
Let me ask you one quick question on that, because this is where I think you've had some pushback, because for people who are using Taproot in a pretty obscure way, I'm sure it's a very, very small number of people. But there are the conditions where you can be using Bitcoin in a real way that is going to get essentially frozen after this soft fork or hot fork or whatever it is.
- [42:54]
A
I think the technically true answer is yes, but it'd be misleading for me to just say that, because no one actually is. I think the conditions in which bit 10 could activate and a bitcoiner could suddenly find themselves unable to spend their funds are so unbelievably contrived that I have to acknowledge it. I can't just say no, because that would technically be a lie. But if I say yes, it's definitely going to give you the wrong impression. First off, everything gets grandfathered in. So if you have a taproot UTXO with no key path, which already is one subset of taproot outputs. And then the only way you can spend it requires revealing something that a condition with an if statement in it. You can still spend that UTXO provided it was created before the activation height of bip110. So you're talking about a UTXO that very likely does not exist, but can still be spent. The only way you can get locked out of your fund if you're sending money to a taproot address due to bit 10 is if you create the UTXO after the fork happens, and then you just have to wait until it expires before you can spend it again. So it's an. And here's the thing that I'll say is that there are zero people in the world that know how to make the kinds of Taproot outputs that BIP110 forbids, who aren't well aware of how BIP110 works. Most people are just not even using taproot at all, let alone the last condition, which I didn't mention yet, which is you can't have a tree depth greater than 7, which gives you 128 leaves. You can't go deeper than that because then you get a control block that's bigger than 257 bytes, if I recall correctly. And that's the final condition. There's no OP success. There's no OP if there's no op, not if there's no big op returns, and you can't have more than 128 leaves. That's it. But all I'm just saying to round off that point is no one using Taproot in that sophisticated degree is going to be unaware of what's going on here. And if for some reason they are, the rules expire so they will be able to spend the UTXO again.
- [45:15]
B
So this is kind of a hard circle to square. Square to circle, whatever. Because I agree, I'm sure the people who are technically capable of making a transaction like that do know this is happening. And I'm sure that people are going to make those transactions because this is happening to say, look, you're freezing me out, locking me out of my Bitcoin, and Bitcoin changes to Bitcoin shouldn't make people's coins invalid to spend. So, like, how do you try and square that circle?
- [45:41]
A
Well, it depends how you want to look at it, because I can ruin any soft fork. I can make a UTXO today that if you activate CTV makes me unable to spend that utxo. I can do that just to mess with people. And I can annoyingly grandstand on principle and say, you're not allowed to do this because you're violating a principle of bitcoin by making a UTXO unspendable. And I will say the people that are most concerned about that also have floated the idea about the quantum computing fork where they take all of Satoshi's coins, which is a million bitcoins worth of real UTXOs. So I'll point out the hypocrisy there, but I will just say adhering to that as a principle is too crude in my opinion, because you can mess with people and you can't have bitcoin be so principled that those principles can be weaponized against you from making the system work properly. You have to be quite pragmatic with it. It's not being done in a gratuitous sense where we're saying, you know, here's a fairly normal use for taproot or even something that happens occasionally that we're making impossible. But also I'll further say, if I did troll you and you were a CTV advocate or, you know, whatever, it is, like any one of the, any one of the soft forks that people are excited about in the Covenants camp, if you were an advocate for one of those soft forks and I decided to make UTXOs that made it impossible for you to activate it without making my UTXO unspendable, and you then took the extra step to grandfather in all existing UTXOs. I don't think I'd have much left at that point. And that's what BIP110 did, right? So when it first came out, people said, this is technically confiscatory. There are UTXOs that are going to be rendered unspendable by this. So Dathan implemented a UTXO height checker which said, if you created the UTXO before this thing activates, then you're exempt. So to me, that was a good enough back and forth with the community saying, all right, if this is a problem and a sticking point, I'll address it with this. And I think that was reasonable, and I think it's reasonable to be reasonable here rather than adhere to principles to the point where we just can't ever do anything, even if it's quite beneficial in other ways.
- [47:59]
B
And so the other thing on that is, like you say, they'll unlock after a year because this is a Temporary software. But like, is that a bit of. Trust me, bro, in the temporary side of things?
- [48:08]
A
Not at all. That's a very common one because it feels like a government measure. And there's nothing more permanent than a temporary government measure. But there's no unilateral extension of it. It is what it is. If people accept BIP110, they accept the time limit of it too. I have no special power. If I had the power to extend BITP1 0 unilaterally, or a small group of us did beyond the 12 months, then I would have activated it today in the first place. I don't have that kind of power or influence. Bitcoiners ultimately would have to agree to it and enforce it beyond the 12 month period. And if they do that, then it was probably really good and it wasn't breaking anything. But the expiry to me is just so we can get something done in a timely capacity that doesn't get bike shed for, you know, for the next 10 years because we don't have that much time. And I think it's more just like, who's driving this thing? What direction are we going? It's grabbing the wheel and saying, all right, we're turning around. Like, it's not. It's not. It doesn't need to be the most elegant thing ever. And that's why it's works and that's why it's capable of establishing a shelling point and for people to go, you know what, this is good enough. And I don't think anyone should sit here and pretend that it's a beautifully elegant fork that does everything that needs to be done. It's crude and that's why it's temporary. But it is temporary. And I don't. I think at the end of the 12 months, if people decide to continue certain aspects of it, there will be another fork proposed that would do that. So, yeah, I really do want to stress, I do not have. I wish I did, but I do not have the power to unilaterally say, all right, we're carrying on past 12 months, boys, and then everyone just did it. I don't think anyone could do that unless it genuinely just was good and lots of us agreed that it was good.
- [49:56]
B
And so when is. So at first you could try to do this as like a minor activated soft fork. Let's actually start with that because you have a. Is it a 55% threshold that you're trying to hit that?
- [50:09]
A
Yeah. If you hit 55% in any difficulty epoch Then it activates.
- [50:13]
B
So why have you gone 55 when normally it's like an overwhelming majority of like 90 plus percent.
- [50:20]
A
I mean, I will stress that wasn't my decision. Like, so it's not a thing.
- [50:25]
B
When I say you, I'm talking about
- [50:26]
A
like the broader you. I don't know because it gets enforced as a user activated software. Regardless of that. And I think the bigger you go with it, the trouble is like Foundry regularly hit like 35, 40%. So the problem with mining being so centralized is that if you have like these very comfortable thresholds that are like near 100%, you just get one guy like Wang Chun from Eftipool who's like, no, I'm not activating, Screw you. Or they even like what he did in Segwit, he started signaling for Segwit and then turned it off again and was like, troll o L ol. Like, he's just. I don't want the network to be like held to ransom by trolls. Like, I can't. I don't think it's good. I don't think that's a good idea. Like, if mining was decentralized, then I think it would make sense to have a much higher threshold. But in its current state, it's kind of a farce anyway. A miner activated soft fork, like I said at the beginning of the rip, if Foundry and Antpool decided to go, all right, 55% and we'll do it and turn it on, and there was clearly massive pushback rather than ambivalence from the community, I would not consider that a good precedent at all. And I would consider that a Faustian bargain. And if people said, you know, you're working for Ocean, you're against centralization of mining, and here you are using a fork that was activated by two companies, I would say fair dues. That's a fair thing to call me out on. So I'm not pushing for that. I think minor thresholds, it's just an artifact of Bitcoin. You always have this beautiful, graceful way of activating a fork where miners can do it by flipping version bits and then, then it's so much more objective and everyone agrees it started at block height. X. This is very elegant and it's why we always do soft forks with that kind of approach. It wasn't always done that way, but it almost always is now. And. But you never want to put them in a position where they have too much influence over the rules of the protocol, because miners can't. The whole reason Bitcoin works is because they don't get a Choice in their 50% pay cut every four years. They have no say in the matter. And when we start giving them a say in the matter, it creates problems. But we still do it because we can't help ourselves because it's so elegant. If they all decide it's active at block height X because we signaled with 55% within this epoch, then there's just no ambiguity around it. And we like that because it's elegant. But with BIP110, unlike Segwit and unlike how Taproot was, you know at least how Core activated it with a speedy trial, there is no option for miners to say no. There is just the option for them to activate it whenever they like if they decide. But they can't delay it beyond August 7th.
- [53:13]
B
Okay, I'm going to come back to this. I'm sorry I'm jumping around a little bit, but I meant to ask a follow up question on the Bit VM thing before because you said they still will like can operate on this how, like do they have to get their proofs under a certain number of bytes and like is that actually going to be possible?
- [53:29]
A
So I'm not an expert in BitVM as far as I know from SupertestNet, who has self declared him, he's pretty respected and he's a self proclaimed expert in bitvm. He told me not only does it not break bitvm, it makes no difference to it at all. So I think it breaks bitvm1, but no one cares about that anymore because we're on to bit VM2 and bit VM3. So in bit VM3 I think everything is, I think it's all done client side, all of the proofs and calculations are done client side and it all gets wrapped up into one leaf. I might be talking out on my rear end here, I don't know, but I'm deferring to people like Supertestnet is not in favor of bit 110 and he's told me it does not break bit VM because I came out and said it was a trade off and an unfortunate aspect of bit one 110. And he said you're wrong about that. It doesn't break bip 110. So I'm very happy to take him at his word there. I think it breaks old versions of it, but I don't think anyone cares about those.
- [54:27]
B
Okay. I just wanted to clear that up before we moved on. All right, so when it comes to this, like minor signaling. It doesn't look likely that you're going to get 55% anyway. Is that fair?
- [54:37]
A
No. I have no idea what's going to happen there. I think soft forks are one of those things that just look insane and stupid and then suddenly they win. Like I wouldn't. That's the game theory of it. And we also have practical ramification of not ramification. We have sort of a case study of that. BIP148 really did look really stupid. A lot of people have kind of. That didn't have much to do with it at the time. May celebrate it today and wear UASF hats and things like that. But at the time it really was just a few of us looking like idiots, just like BIP110 does now. The burden of the whole thing is I have to look really stupid. Stupid because everyone's saying your fork's going to fail, you're a loser, all this stuff. That's fine, I'm happy to carry that. But I'm just saying that's how Bitcoin 48 went as well. Everyone was laughing at us. You're stupid. There was more support amongst smaller businesses and like the one I mentioned before, Bull bitcoin, they did support it. And there was a few statements from meetups and things like that. But again, I'd hark back to the comment on culture. The businesses are a lot larger and a lot more risk averse these days. And again, it's not that they think bit 110 is bad, it's that they do not want to touch it because it's reputational kryptonite. If, you know, if Bull Bitcoin comes out today and says we're running a bit 110 node, then they have to deal with flame wars and trolls and people attacking them all day on Twitter and they got work to do. I understand why they want to avoid that, but it doesn't mean they're against it. So I think it looks crazy until it doesn't. That's what happened with BIP 148. And there was that famous sort of political concession where James Hilliard wrote bip91, which replicated bip148 and then the miners all ran that instead. And then they complied with BIP148. And in the final weeks of July, suddenly BIP148 won when it looked like it wouldn't. And there was only like 500 nodes running bit148 back then. It was tiny. There's way more than that running bip110. And I mean, I know the node stats are not fully reliable, but I know a lot of people that genuinely run it and I know that a lot of the lesser statistics as well that are ignored, like the Umbrel downloads for example, who's paying attention and gaming the Umbrel downloads of the latest version of Knots. I don't think anyone is. And I've watched it grow quite organically. We released the last version of Knots on Friday which finally contained BIP110 because it was always a third party implementation until Friday. Now it's in Knots proper and Umbrel finally released the, you know, the option to update to that last Friday and there's been around 1700, 1800 downloads of it since then. I consider that mostly sincere. I don't think that's people sybil attacking because people sybil attacking the node counts on the bitcoin network do so in a vps and they, you know, they're not going to use stuff like Umbrel and Node in a box is way too inefficient. So I think those are real users and you can say they're not economic nodes, but I don't know how you define that. Do they have a lightning node? Are they using it? Do they have a Sparrow Wallet? They connected, that's an economic node. They might not be coinbase, but they're still real. So there's thousands of people running Bitpoint 10 and that's real. And those people, depending on how committed they are, are quite prepared, presumably to throw blocks in the garbage come August if they're not enforcing bit one zero. So on the other side you don't have any kind of we hate bitpointen and we're going to resist it and we're going to actively oppose it. You don't have that on the other side. You just have ambivalence. And every large miner I've spoken to when it comes to bitpoint 10 just says, what's this? Do I need to do anything? They're never like, we hate this and we're against it and we're going to URSF it. So that being the case, once you get a few miners, like we had a block today from a new miner called Sov and we've had, you know, 234 Alberta and we've had barefoot mining. These are small but not insignificant miners. Sov has a couple of exahash, right? They're sitting at 0.3% of the whole network. That's not nothing. And I don't know if that's the whole fleet or not. Maybe they have, you know, single digit percentages of the whole network. Once a few of them go for everyone else, they might as well go on board too, because otherwise they're just running a bunch of pointless risk for in order to oppose something that they don't actually have any quarrel with. I don't think there's any. Most bitcoiners, if they are not advocates of Bitcoin 10, don't care. So that means they'll just go along with it because they have no. Yeah, I'll round up there.
- [59:18]
B
I think we look at this the same thing from a different perspective. Like, I think you see silence as potential support and I see silence as potential resistance. And the truth will be in the middle, like some people will be on either side of this. But what I want to know is what happened. So let's just assume, and you might say I'm wrong here, but I'm going to assume that you don't reach 55% and get this as a minor activated soft fork and that you end up doing a user activated soft fork. And what happens after that? If you don't have many people building on top of this chain, do you get orphaned off the network? What happens?
- [59:53]
A
So the chain split scenarios are like technical rabbit holes and they're fun to go down, but I think they're really unrealistic. I think the two most likely scenarios are bip110 completely dies and there's never a block on that UASF activated chain. But I think that's the lesser of the two scenarios. I think what happens is as you come up to that height, the tension rises, the temperature rises, more conversations start happening and the prisoner's dilemma type scenarios start kicking off. Because at the end of the day, if your foundry or ant pool, you need to be ready for it to activate, because if the other pool activates it and you're not ready to activate it, you're mining on a chain that can get wiped out. And this is a very important point about the asymmetry of soft fork enforcement. So when you said what I view as ambivalence, you view as resistance, the problem is resistance is not the same thing as ambivalence, because ambivalence to any consensus rule in Bitcoin means you're going along with it. If you don't like a consensus rule in Bitcoin, not talking about how enforced they are, for the moment, you have no choice but to go along with it. You might not like the 1 megabyte block size limit, but that doesn't mean you get to pretend it doesn't exist. You have to, to get along with everyone else. So this is a very important point of it.
- [61:15]
B
The pools can just ask question that. Because why, why, why do they have to go along with it? Why wouldn't they just keep like, keep going on bitcoin as we know it today?
- [61:23]
A
Because they need everyone else to agree to do that too. And if they don't, then they can end up on a dead chain.
- [61:28]
B
But the vast majority does agree with that.
- [61:32]
A
Agree with what? Ignore.
- [61:33]
B
Agree with Bitcoin as it is today. Like the vast majority of people are not in support of Bitcoin.
- [61:38]
A
You have to, you have to just project forward a bit. If your foundry. I don't know how close these companies are, right, let's just talk in game theory abstracts. If your foundry and Antpool's looking for a way to screw you. If Antpool's ready for bit one zero and they activate it, say they're 25, 30% all right. Antpool's actually more like 40% with all its little sub pools. If the fork height hits and unbeknownst to you, they now start enforcing this, then your blockchain, where you are ignoring it, slows down to 60% of what it was, which means the minute Ant pool gets longer than you, it wipes out your chain. Because you will accept all the bip110 blocks, they don't break any of the existing rules. That is an enormously risky position to put yourself in. So if that scenario were to happen, you want to be the one that brings it about. And if either side has done this calculation, they realize they have no choice but to go along with it.
- [62:37]
B
It.
- [62:38]
A
That's. I don't know if that is well enough explained, but you can't. It is a classic prisoner's dilemma situation where you need to be sure that the other person is going to do the thing that doesn't cause you to risk having your blocks wiped out. And if you can't be sure of that, then you need to be the one putting them in danger. And then they assume you're putting you that. That you're putting them in danger and they want to put you in danger. And then all that happens is everyone enforces the rules of BIP110 because no one wants to risk being on a chain that can get wiped out. And if there's no indication about anything, like Even if the CEOs meet and say, don't worry, we'll ignore this stupid fork, we don't like it. The minute the backs turned, they might just think they were lying to each other. And this is a very real fact of the matter about the dynamics of soft fork activation. And there has been concern raised about this, because what if someone comes up with a really awful soft fork? Can a minority always get a soft fork activated in Bitcoin just because of these dynamics? And I'm saying, yeah, actually they can. And that's why you have to be prepared to actively resist it, which no one is doing. You need a URSF to commit to a chain that cannot be wiped out by the bitpoint10. And there's no energy around that. So it's either. It kind of wins in all scenarios. And it sounds crazy to say that, given what a fringe movement it seems like at the moment, but unless people can actually coalesce around resisting it and saying, we can't get wiped out by bitpoint10 because we are going to intentionally reject that soft fork with a counter fork, unless you can get energy around that, your best strategy is ignoring it and hoping it goes away. And the problem with ignoring it and hoping it goes away is that other people might not. And if they don't, then you get these last minute, like I said, super charged emotional conversations in late July where everyone's throwing things at each other. Some people choose to start activating and then at that point everyone else just goes, all right, well, do I hate this thing enough to actually URSF it, or shall I just go along with it? And then the price stops falling? I think that's realistically the scenario we get into.
- [64:48]
B
So you're obviously optimistic on your side of this works. Personally, from my side, I can't see it. I think people will just ignore it. But time will tell. If they do ignore it, what happens? Do you hard fork?
- [65:03]
A
I don't know what people would want to do in that scenario. If everyone ignores it and their chain carries on, if there's nothing suspicious going on, if Foundry ignores it when we hit the block height and there's suspiciously no blocks from Antpool for four hours or something like that, then that's not enough to concede defeat. And that's going to be extremely uncomfortable for Foundry. If the major pools are all mining blocks and carrying on as though nothing happened, I think I would be in a very disillusioned state. Because at that point the miners essentially said there's a bunch of nodes enforcing a rule. We decided not to care about those rules. I don't know what threshold the nodes have to hit before they become respected, but clearly bit 10 wouldn't have been high enough. And unfortunately, you can extrapolate from that and say the nodes actually don't matter. And a lot of people really don't think they do. They just say, look, if the miners activate it, it's a rule. If they don't, it's not. At that point, the next halving is done, in my opinion, because the miners are just going to do what they did in 2012 and say we're ignoring the halving and we don't care about a bunch of nodes telling us we can't, that we have to have a 50% pay cut. I'm pretty sure that the next halving would be called into question. And because you also have developer entity,
- [66:20]
B
I think so strongly on that, though, I think that's a way too big extrapolation to make because if the miners did that, like, they. What they care about, obviously they want to make revenue, but what they care about is the price of bitcoin going up as well. And like, if they did that, they have basically completely broken bitcoin. What is the, like, what happens to the price of bitcoin? What happens to their business? I think that's a way bigger risk than anything else.
- [66:43]
A
I don't think they would have broken it. I think they just would have called the networks bluff and said it is broken. Because the only reason we accept this pay cut is I don't. First off, I don't think miners are really that cognizant of what keeps the network appearing healthy. Sorry to say. But there's also developer push for this stuff, right? The transaction fee argument didn't work out that miners aren't making any money. They're making 250 grand in subsidy and 50 cents from transaction fees. I'm exaggerating a little bit, but it's ridiculous. And you have Peter Todd, who was one of the main brains behind blowing out spam filters, saying 21 million is a stupid meme and it's something that idiot bitcoiners have tattooed on themselves. But it doesn't work. Satoshi made a mistake economically. Okay, so he's getting pushback from people like Greg Maxwell and stuff, but he maintains that just because it's politically impossible today to break 21 million doesn't mean it will be in the future. And if people can be given a sufficient scare story about, hey, look, hash rate, death spiral, blah, blah, blah, from you Know, the subsidy is too low. People can be scared by things like that. And people are compelled by having a very, very high difficulty as a result of very, very high hash rate. And you maintain that by throwing lots of money at miners. And if you're not getting that from subsidy anymore, I don't know. I can see, I can see a new generation of bitcoiners not having any kind of like, it seems inconceivable to you today, I get that. But I can see in 4 years, 8 years, 12 years, the culture completely changing to the point where everyone's like, no, no, bitcoin needs to have a steady inflation rate, otherwise the miners won't get paid and you know, there'll be no security for the network. The security budget is a meme. Like, it's not that big yet, but it's a meme.
- [68:34]
B
But I just like, I see this as fear mongering. Like I think you're trying to say that like bitcoin is like existentially broken if this doesn't happen. Because like when, even when you say like developers are talking about this, I think that's way too broad a brush. Like Peter Todd is talking about this. I don't think anyone else is and I don't think anyone's taking it that seriously. And if anyone did try and change that rule, then that would take, that would have some serious backlash. Way bigger than like bit 1:10.
- [69:01]
A
I think that you'd be surprised. Like I, I honestly just think in 10 years a lot can change. And I honestly. The fear mongering comment, I view it, the fear mongering is the concern around security budget. I don't think there is a concern around security budget. I think bitcoin is long term Hodler's Mining. I ultimately think that's what's going to secure it. I don't think mining is fundamentally supposed to be a profitable thing. And most of the giant companies that do it are in the red. So it's basically how cheap credit can you access and how much can you scam shareholders? It's never. Oh, we actually made some calculated decisions and we're able to turn a profit every month. Most like companies that can mine can produce bitcoin for, you know, cheaper than buying its spot by paying less in electricity. They just usually bamboozle you by never telling you the cost of the hardware. Like it's kind of that nuts. But look, point taken. I don't mean to pontificate in that too much. It could never happen and bitcoiners could be very adamant that the next halving must happen and they could never fall for some political narrative about how it should be canceled and we should reintroduce Keynesian economics and all that stuff. I'm pretty black pilled so I can see people going down that path but I'm not going to like you could, you could very well be right about that and I could just be being overly pessimistic. So back to the point around what happens if it fails. Yeah, I think that would, that would herald the failure of the hierarchy in bitcoin. I think if a bunch of pleb node hodlers can't bring about the activation of new rules because they can't get over the inertia of the general bitcoin, I think it would have lost something and I think it wouldn't be immediately obvious overnight. I think bitcoin would carry on like nothing happened for a while and then five years from now everyone would just be like do you remember when we used to say bitcoin not crypto? And now the blockchain is just one long, you know, history of stablecoin transactions. And like, like I just think it would those things you never get there in one night. It's always just how did it get so shitty? Like the center of your town? It was good five years ago. It sucks now. No one really knows what law changed or what happened, but it just sucks now. But I think that's basically what my assertion would be for bitcoin.
- [71:17]
B
So if, if you make this change and the miners don't come across. So there's obviously a few people mining signaling for bip1 10 now but it's like I don't know, let's say it's 1 2% of the network of the hash rate.
- [71:28]
A
Like that's optimistic. I'll be honest. It's not even that but it's suddenly it went up to 2x a hash from like 200 potash. So it 10x last night.
- [71:38]
B
So is that, is that people like renting hash rate? Is that where that's coming from?
- [71:44]
A
Sov, which was the miner that found a block last night. I, if I did know who they were and what they would like. Ocean's permissionless. Right? We don't have accounts or any of that stuff. So it's not appropriate for me to talk about unfortunately I can talk about, you know, some useful heuristics. A lot of people have rented hash rate and they've been unbelievably unlucky and you're just Gonna have to take my word for this because this is all Ocean's back end. They found between the last block 234 Alberta found and the one Sov found last night, they found a quadrillion shares, which is enough to find around seven or eight blocks. And they found none in that time, which was super unlucky. So realistically, with the hash rate around 4 exahash at the moment, which is about half a percent of the whole network signaling bip110 at least through Ocean, there might be more signaling for it in lotto pools and stuff like that, we don't know. But there's around 4 Exahash pointed at bit 110 at the moment, around, you know, 0.4% of the network. If you assume a zeta hash, that should give you a couple of blocks a week. Right. And that's enough for people to say, all right, I'll pay attention to this thing. If it grows, I'll need to pay attention. And I do think that most of the, if it were to activate, most of the people that would go along with it aren't going to be die hard bit 110 fans. They're going to be people that are like, oh yeah, this, I didn't want to think about it anymore. And this made it, this, this got rid of all the ambiguity. It just made everything a lot simpler. And I think that's what happened with bit 148. I really do. Like, segwit could have just been ignored and expired, but people forced the issue and everyone went, all right, well if you're going to force the issue, I'll just go along with it. I do genuinely think that's how things play out.
- [73:32]
B
But the people renting hash rate, they're like, they're making a statement, they're putting the money on the line to try and like signal for this. But they're going to be losing money. Right, so that's not going to be sustainable in the long term.
- [73:42]
A
No, because like I said, I think the network is ultimately secured. Not like A, I don't think bitcoin mining is profitable because the minute it is profitable, the difficulty goes up and it's not profitable anymore. It's designed to lose money. And that's an uncomfortable truth, but a truth nonetheless. B, I want to mine. And if you've ever met anyone that owns a Bitax, they want to mine as well. And renting hash rate is like a thousand times cheaper, you know, per terra hash than, than buying a Bitax. Obviously it's not a Sovereign. But that's the final point, which is that's basically how. Yeah, right. Everyone has a bitax because it's fun and you want to mine.
- [74:21]
B
Like, yeah, I mean, I do it knowing that this is almost certainly never going to make me any money. I just do it because it's kind of a little cool.
- [74:28]
A
But so do Mara and so does. So does everyone else. That's the problem. Like if, if, if you can buy a bit axe and it costs you 200,000 sats and you only ever mine like 50,000, you're exactly the same to me as Mara, who will post a quarter losing $200 million. Like it's the same thing. It's just that you don't get to split it up into chunks and be an executive that can walk away with a bunch of money while the shareholders all eat it. Like, mining is lossy and it's necessary to secure the network. And plebs want hashrate and they're sick of, look all love to Scott, 9,000 in the Bitax project. But I need some actual hashrate and I have no ideological issue. Well, I do have ideological issues with everything on the hardware side of mining, but I have no practical issue with renting hashrate because it's how mining works. Every foundry is a miner by any reasonable definition. And they're paying people to point compute at their servers. Foundry runs the node, they make the templates, they have the mempool, they broadcast blocks to the chain. They pay miners for high performance compute, who couldn't care less, and we call them hashes. And those guys can all move into AI if they want. And many of them are, because they don't fundamentally care about what they're crunching in their centers. They just want to be told what to do. Burn a bunch of electricity and get paid for it. That's it. And that's why should the people who want to mine bitcoin that live in cities, who have no access to cheap electricity, not be able to take advantage of the fact that there's someone out there, a hasher, who will go to Odessa, Texas and get cheap power and set up a bunch of ant miners and instead of pointing them, an FPPS pool charges 1% more than they do to the pool to make a pleb mine and have them point an exahash at their node. This is unbelievable power. If you go on braiins and they're a rival pool, right? But if you go on braiins hash power, they've got 3x a hash there, that's 0.3% of the whole network. You rent the whole lot for Fun, maybe burn 5 grand for fun and rent 3 xash, rent 0.3% of the entire bitcoin network for a few grand for fun and have it go through your umbrella sitting on your desk. You're just never going to experience that kind of power. And if you're talking about percentages of it, that's temporarily coming into custody of 150,000 bitcoins or something, that ratio versus 21 million, that's how much hash rate you can have. And people say, well, it's not yours, it's not sovereign. That's the norm for mining, unfortunately. And it would be great if everyone was running open hardware and all that stuff, but no one actually is. Like even the bit axes themselves, they still use the closed design bitmain ASIC chips on them because there's no other game in town. You can't beat that. It's just so efficient.
- [77:27]
B
Yeah, but so in the scenario though where this happens and you'll have some of the hash rate, I'm sure Bob Burnett, he's going to be doing bit 110 compliant blocks. Like there'll be the people renting hash rate, you'll have an amount of the network. Let's just say it's like 1%. What happens then? Because like blocks are going to be found every, I don't know, 15 hours or something and like difficulty adjustment period will be huge. Like what, what happens? Like, what do you do? You must have thought about this.
- [77:51]
A
Yeah, for sure. Again, I do think these are all theoretical scenarios. I don't. If it comes down to dire straits like that, I think, I think some of the bit 10 miners might just go, I can't do this and go back. Like that's very real scenario. But I also don't think if it's like plebs renting and stuff, like at the moment they've managed to get forex ash. Right. So that's a couple of blocks a week. So you're looking at 50 weeks a year before you get a downwards difficulty adjustment of 25%. Right. It's going to be difficult, but at the same time they're mostly hodlers and the transaction fee pressure can build up enough like people are going to laugh at this. But the problem is these are theoretical scenarios so it makes sense to go over it. It the transaction fee pressure would be insane if you're only finding two blocks a week. So miners could make a fortune. But is there even an exchange that Lists it. How would you even separate them? Because it's not a hard fork. So having an exchange track both tokens would be pretty complicated. And I don't know that any of them would. So I don't know, man. Like, I really don't think it's that likely. I really do think that if it's like, okay, we're finding a few fairly common amount of blocks now, like there's three or four bit 10 blocks a day. I don't know. I think they all just start looking at each other and they go, whoever blinks first wins, basically. Like, I know that sounds crazy, but if we didn't have Bitcoin 48, I would be like, no, you can't be right about any of this. But we do have Bitcoin 48. So I'm like, maybe we get lucky twice and the network works the way we actually think it does and think it should.
- [79:24]
B
In that scenario though, would you do something like an emergency difficulty adjustment? Would you even potentially change the algo. Like, I know Luke has talked about firing the miners. Would you take one of those more drastic steps?
- [79:36]
A
I don't know. Because first off, it's kind of a question of what everyone else is prepared to do as well. There's no point forking off by yourself. Right? That's too reckless. And it depends if it's failing in that kind of way where you'd have those conversations. To be honest, I think discussions around power changes, they're totally valid. If Bitmain turned hostile to the network and we found out their stuff was backdoored again and they were jerry rigging stuff so that other pools were suffering and Antpool wasn't. You have to be prepared to do a proof of work change just to say, no, you're not in control of the network. You have to be prepared for the nuclear option all the time. Time. Right. I think that's. And if you're scared of doing it just because you want stability and, you know, reliability and all that stuff, then you're, you know, you're turning in your firearm, so to speak. That's not a good idea. You need to remain willing to push the nuclear button if the time ever calls for it. Like, you have two miners that can do 51% attacks at the moment. They are not big enough to do it successfully for long, but they're big enough that they can really mess with things that they want. And if you're not prepared to say, if you do something like that, we will take the network back by force, then you're kind of just waiting for that day. Right. And I don't want to. I don't want to not have a trump card up our sleeve. So I'm not trying to be evasive. I don't know what I would do in that scenario. And like I say, it really would depend on what other people do, because I don't. I believe bitcoin is a community, and that's the only thing that makes it strong. And I wouldn't want to be completely on my own with it because it's money, and money's useless unless other people use it too. So I don't know. I would love to give you some sound bites, fun stuff like, I'm gonna do this, I'm gonna do that, and. But I don't like being. I don't. I don't want to posture about it. I don't want to sit here and be like, I'm gonna do this and screw anyone, like, and beat my chest about it. I'd rather just be honest with you. I don't know what's coming in that circumstance.
- [81:40]
B
I'm genuinely not, like, I'm not after sound bites here. I disagree with you on the bit 110 stuff, but I think you're good for bitcoin. I don't want to see you end up hard forking and rage quitting bitcoin. That wouldn't be a good outcome, I don't think. But if it did go that far, if this hard forks, would you sell your bitcoin and move over to this
- [81:58]
A
new thing, to the hard fork? Again, it would depend. There might not be a lot of point. I think, to be honest, most failure scenarios, there's no recovery from. I think if bitpoint10 fails, I don't think there's any way to salvage anything from the wreckage. I think bitcoin itself would just carry on, but I think the foundation would be gone in a way that's not immediately obvious. And this is a painful thing to admit, but I think I basically would just withdraw from the space because it's increasingly becoming a thing that I don't resonate with. And I don't like I'm in bitcoin because I love it, not because of anything else. Right. I really love this thing, and I'm very grateful to the people in it that have made it what it is, and that's why I fight the way I do. So if it were to come to that kind of situation where I think something really did need to be done and it Failed to pick up adoption, and we just carried on like nothing happened. I think that would spell the end for me. I don't know. Like, I have a job in the space. I don't know what the ramifications with that would be and all that stuff. But at the end of the day, like, I have a YouTube channel. I don't. It's not monetized. I don't. I don't make any money off it. I. I'll make a video once every six months if I feel like it. It's not like a. I only do it because I'm compelled to do it. And I think the compulsion would stop at that point. Right. So I think it would be sad is basically the point of it. I wouldn't. I'm not going to sit here and be like, oh, we're all going to die immediately. I think it can be a thing that carries on in perpetuity, but I just would lose the love for it.
- [83:45]
B
I think you kind of answered partly. One of my questions I was going to ask is, like, if, let's say this doesn't go the way you expect it or hope it to go, like, do you have to. Do you leave ocean? Like, if this. If, like, Bitcoin isn't the thing that you want it to be, like, do you carry on that job? Like, how. How does your life change after this?
- [84:01]
A
I don't know. I'd have to reanalyze it. I mean, if. If I can find a silver lining, I'll try and work with it. You know, like, if there's a way, like, there is a lot of unknown unknowns here. And I'm very, like, call it, like, sort of wisdom or whatever, like, rather than technical knowledge or anything. I'm pretty sure that something is going to happen in the next couple of months that's going to be very humiliating for the people supporting bit1zero and the people against it. I'm sure there's going to be something that emerges that no one could have predicted that's going to change the conversation and my entire purpose. This is why I haven't been on here telling you we need to do bip110 right now. Right now. It's the best thing ever because I want to have the humility and openness to the idea that there are better solutions that might enter the fray. And I don't want to be, like, blocked from. From noticing and picking up what they are. And I'm. I just feel like historically that kind of thing is what comes along and you never know what it's going to be. But the point is to be able to, you know, to not be too egotistically attached to one idea that you can't listen to other good ideas. So all that is to say I'm not going to like, make a commitment with regards to what I'll do specifically. I can just tell you how I'll feel when it all goes down, if it goes down in the worst way possible. But with regards to what happens to Ocean, what I would do within Ocean and what other bit 110 supporters would do, I think everyone just needs to look and be very, very careful and pay attention to what everyone else is doing and remain as agile as possible so that, you know, there's some nasty stuff that can happen. And I don't like talking about it because it makes it more likely. And I really hope it doesn't. People can read between the lines on that. But you know, if you're thinking of doing sabotage on either chain, please don't be that person because that's just mutually assured destruction if we're in a chain split scenario. And I'm not going to say any more than that.
- [86:13]
B
No. But like, just to. Because I know, I obviously know what you're saying there. That's something that I really don't want to see happen. Because like, like we were talking about before with the taproot addresses where people are going to do it because they know that they're going to essentially become confiscated coins for a year or whatever. Like, I think you could see a false flag on the other side, which is just not what anyone needs. Like, I really hope people, people act a bit better than that, but they
- [86:37]
A
probably won't, I hope. No, I think we're saved kind of by how risky it is. Right. Like if you did try and do something like that, you better be very confident in your coin joining or whatever it is that you needed to make you anonymous. But I don't want to even reason about this anymore because.
- [86:57]
B
Yes, I agree. Well, is there anything like on this bit 110 stuff, as I say, I've not been following it super closely. Is there anything we've not spoken about in there?
- [87:06]
A
Probably a fair few elements of it. There's just, there's endless perspectives on it and I'm always realizing new and different things about it every day. But I think, I think we've gone over pretty much everything I'd like to have talked about and I appreciate you taking the time. I know that you're not a Fan of it. But I also know that you. You're not dismissing what me and others have to say on it, you know, frivolously either. I know you're prepared to listen and I appreciate that.
- [87:38]
B
No, I'm glad you came on. Because, like I say, like, even though I disagree with you, I like you. I don't want you to rage quit bitcoin. So it's going to be an interesting few months anyway. And, like, I think the block size wars proved that even the people who were not necessarily on the side of the battle that won still came back to bitcoin.
- [87:56]
A
So some of them.
- [87:58]
B
Some did.
- [87:58]
A
Roger never did. Well, he kept all his bitcoin. But I don't know, are you going
- [88:04]
B
to be the Roger or are you going to be the Mike Belshi?
- [88:06]
A
No, because Roger really was, like, he. His heart was in the right place, but he was wrong, right? And he just can't admit that he was wrong. Like, if I'm wrong, then it's me making a mis. Like, if I'm wrong about Bitpoint 10, hey, I'm open about there being mistakes with it that need to be fixed and if it expires within a year, relief. I'm not telling you. It's like, I've done it enough now that I've advocated for a soft fork and it had a mistake in it, and then I look stupid. I did that with Segwit and I did that with Taproot. I'm not going to do that with BIP110, where I'm like, this is the perfect thing. Everyone needs to adopt it. And then, you know, then you just have to eat humble pie years later. Like, if you stay humble, then you can fix it when it goes wrong and no one has to humiliate you over it. Right? So, no, I'm not going to be like Roger about it. Right, because he can't admit the mistakes he made is the problem. Right. Everyone would welcome him back in five minutes if he was to eat humble pie over it, but he won't. And he's busy inventing conspiracy theories about, well, stuff that actually comes out of a lot of the bit 110 supporters mouth these days around Blockstream and Epstein contamination and all that stuff. Some of that did end up being a bit more accurate than we'd have liked. But, you know, anyway, I appreciate the kind sentiment. I wouldn't rage. Quitting is not my style. I think it's genuinely just a passion thing for me. I've always loved bitcoin and I've always loved advocating for it, and I don't want to be advocating for something if I feel like it's not. If it lost its sort of moral conviction or, you know, purpose and it just became like a thing that a bunch of Wall street guys were really enjoying getting super rich off. I'm like, this is. This is nonsense now. There's no way to passionately advocate for that.
- [89:53]
B
Yeah, no, I mean, I agree with you on a lot of this stuff. I think we need to see Bitcoin be used as money more. I don't agree with you on the bit110 stuff. I can't say I hope you win, but thank you for coming on and talking about it. Anyway, it's been cool and hopefully, well, we're going to see what happens. I'm sure there'll be another podcast in it at some point.
- [90:11]
A
Yeah, I think in late July is when everything comes to a head, because you can totally ignore this fork. No one's going to throw your block in the trash until late July comes. And then you need to be like, what if, like, every miner is going to ask himself that question. What if another giant pool goes along with this? We don't have any infrastructure set up with it. Right. I didn't quite finish making this point before. I know this is a natural place to end it, but I do want to make this one point. If your foundry or if your ant pool and you're concerned about the other pool going with the fork, then you can't console yourself with the idea that if they do, I can just flip a switch and I'm way over. You need to do a bunch of testing and build it out and make sure it works. And that takes enough time and energy that once you do it, it's kind of a foregone conclusion that it goes that way. Does that make sense? Like, some things are, like, if there's. There's an analogy for this, but if you. If you prepare for a scenario, you make that scenario more likely, and you can't afford to not prepare for it. I hope that sort of condenses it down. Like certain things that you can't. Like, it can happen just due to people preparing for it, even though it wouldn't have happened if they'd never bothered preparing. If everyone just ignores it, it's not going to happen. But I don't think they can. I don't think they can afford to do that.
- [91:38]
B
I totally understand what you're saying. And you know how these, like, mining pools work far better than I do. Like, my. My gut is that they're not even going to prepare for it and they're going to ignore it. But I guess this is one of the things that only time will tell. Like, one of us will be right.
- [91:52]
A
We will see. And I'll be watching, just like you.
- [91:56]
B
Awesome. Well, thank you, man. I appreciate you coming on. And, yeah, I'm sure we'll speak again soon.
- [92:00]
A
Thanks. Thanks for having me.
- [92:02]
B
Thanks, mate.