CD142: BITCOIN AND SATOSHI WITH ADAM BACK

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Transcription provided by Podhome.fm
Created: 10/23/2024 20:51:58
Duration: 4779.028
Channels: 1

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Let's talk about taxes, though. Okay. Because that's how the money is gonna get raised one way or the other. Correct. I think we have a screen, if we could, that I puts up a little bit of a menu here

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of I don't know if it's options. Actually, they may not be options at all. There are plenty of options. There are plenty of options. There's there's not many ways to get where you need to go unless you start to do some of these things. Correct.

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So the question is, of the of what's on the screen, you can you can let the tax cuts expire that gets you to your new screen. Yep. You have to let the tax cuts expire. You have to. Yeah. You have to let those expire. That's 390,000,000,000.

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We're gonna have again, we're

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we're gonna we're gonna be

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broke

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really quickly

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unless we get serious about dealing

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with our spending issues.

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And and unless we and the only we can either I I don't know if we'll be able to cut spending that much. 60%

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of our spending are transfer payments. But if you if you're if you think we're going broke for and and you think Trump is gonna be the president, he's not gonna let those tax cuts expire if he can avoid it.

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The thing is He does not want the corporate tax rate to go, to 25% Yeah. As you're suggesting it'll have to. He's suggesting it should go to 15%. I'm saying that to just to get us to the point where we stabilize debt to GDP at where it is right now, here's what you need to do. You need to let the Trump tax cuts expire. That's 390,000,000,000

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You need to raise the payroll tax on every single working person, 1%.

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That's another big slug.

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You need to What do you think that does to jobs?

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We're clearly gonna have a period of contraction, which hopefully that's why I was gonna say it's gonna be really important for the Fed to be able to offset

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the fiscal contraction area that's gonna come.

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Then you wanna increase the individual tax rate in all the way to the top rate of close to 50%.

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Now hold it. Yep. I don't wanna do any of this stuff.

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What I'm telling you is is that we've gotta be serious

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about where we are fiscally.

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And so I'm giving you there's a whole set of options. Right? We could go in and cut 25%

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of the of the federal workforce.

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Some people may do that.

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There's there's a whole there's a website where you can go look and play with all the options. You can raise the capital gains rate from 21 to 28%. That only gets you

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$10,000,000,000 a year. It actually doesn't

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get you what you need. So I'm simply showing Right. Some of the things that you can do. Yes. You'd have to raise

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the tax rate on the top I think probably everyone over $200,

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probably have to raise that to 49 a half percent. If you do all these things

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all these things, ray raise the social security from 65 to 70. If you do all these things, means test, Medicare. If you do all these things,

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all you do

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is you get to a primary balance. What that means is you stabilize debt to GDP.

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You're still actually increasing your debt. Right. You're still actually increasing it because it excludes the interest cost, which, oh, by the way, the interest bill this year

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is larger than every single line item except Social Security. It's larger than defense spending, larger than Medicare.

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I wanna talk about, why you're here, which is Robinhood, and this conference. But before I do that, is this given all of the things you're saying, are you off buying gold and Bitcoin

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and and how can something work?

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All roads lead to inflation.

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We're gonna end up if you so But does all roads lead to inflation? Therefore, gold is a good investment? Is Bitcoin a good investment to you? I I I'm long gold. I'm long Bitcoin. I think commodities are so ridiculously

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under owned. So I'm long commodities.

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I think most young people find their inflation hedges via the Nasdaq. That's also been great. Probably some combination.

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I probably have some basket of gold, Bitcoin, commodities, Nasdaq, something like that. And I would owe 0 fixed income.

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If I had my cash, it would be very short term. The playbook to get out of this, you see it in Japan right now. They have 2% inflation, 30 percent 30 basis points overnight. They don't wanna raise rates. The playbook to get out of this is that you inflate your way out and and you have a small tax on the consumer

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and you run interest rates and nominal growth rate interest rates,

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below inflation and nominal growth,

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above inflation. And that's how you reduce your debt to GDP. So you're gonna have the Fed be they should be easy. They should be They should be easy. You want them They should You want them to cut. So just real quickly. Yeah.

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Every 100 basis points, given where our debt to GDP right now, every 100 basis points is worth about 90,000,000,000 a year to the deficit.

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90,000,000,000.

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So, yes, if we're trying to stabilize debt to GDP, we wanna run the most dovish monetary policy that we can without letting inflation become too much of a tax and acesary. So, yes, all roads lead to inflation. That's historically the way every civilization has gotten out is they've inflated away their debt.

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Thank you, Adam. I was muted.

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Now we gotcha.

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Adam gave me the the sign that he couldn't hear me.

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Happy Bitcoin Wednesday, freaks. It's your host Odell here for another serial dispatch, the interactive

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live show focused on actual Bitcoin and Freedom Tech discussion. That intro was a prolific

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investor and billionaire, Paul Tudor Jones,

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talking about

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runaway inflation

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and how the US government

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has no choice but to lean into it.

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He says he's long Bitcoin. He says he's long gold.

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I think he says a lot of things that a lot of Bitcoiners have been saying for a long time now.

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I have a great conversation lined up for us today. We have doctor Adam Back, cofounder and CEO of Blockstream here,

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streaming out from Lugano. How's it going, Adam?

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Pretty good. Yeah. It's, just gearing up for the plan b conference in the next couple of days,

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Friday Saturday,

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and some pre event tomorrow, which I'm here for.

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How robust is it there?

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Yeah. I mean, it's,

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it's like Bitcoin central over here. Right? They've got

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point of sale terminals and Bitcoin stickers in pretty much all of the shops.

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And

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they have

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a Bitcoin

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summer school at the

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local university

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and some initiatives from,

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I guess, Tether and

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Fulga, one one of the VCs, to

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try and bring

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Bitcoin startups

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to to the area. And,

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they've got some

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participation

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and

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encouragement from the local mayor,

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who's who's involved in the project. So

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I think it's good. And,

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I think it also helps to

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keep people in the region. I think this otherwise tend to suffer brain drain where people get educated. They look to university and then they move to Zurich for finance jobs. So now they can move on to digital finance and stay

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in this region.

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Yeah. That makes sense. I mean, to the freaks that aren't aware, Zurich's about, like, a 2 hour train ride,

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north from Lugano. Lugano is is closer to the Italian border.

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I actually taught at the summer school that

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Adam just mentioned,

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back in July.

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It's really cool. It's a beautiful it's a beautiful location. The people are super nice.

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There's great food. It's expensive. It's a very expensive city.

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I always joke that, you know, most of these Bitcoin circular economies that we start to see pop up are popping up in the developed world.

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Well, Lugano is, like, the rich is, like, the rich version of that.

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I think they have I think they have 300 restaurants and stores now that accept Bitcoin,

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and that's just cool. You you can literally you can you can pretty much live your life on a Bitcoin standard if you're out there.

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So

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that's awesome. I mean, I I was looking at the cast of characters that are gonna be speaking during the conference.

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It's quite the lineup. It should be it should be a really great week, and I think you're basically you're basically just getting started. You're there a little bit early. Right?

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Right. Yeah. There's some, pre events like the day before the conference because people are gonna be here anyway. So if if people wanna do some

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kind of Bitcoin layer 2 stuff

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or, you know, application things.

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It's convenient.

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Yeah. Well, there's still time freaks. If you are in the European area,

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consider jumping on the train and

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heading over to Lugano. It should be it should be a really fun week.

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And if you're in Italy, it's actually really convenient. I mean, I flew into Milan,

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and I took the train from there when I came in.

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And considering, I think their government just recently,

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proposed a Bitcoin specific tax,

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in in Italy. So I wouldn't be surprised if we see more Italian Bitcoiners move up to Lugano. Yeah. I I saw some of the Italian Bitcoiners saying it's it's nice at this time of year and,

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you know, to see the the this region, right, just across the border. So

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they're feeling it.

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Yeah. But they are. So, Adam, you just recently announced,

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I guess before we get there, I saw your documentary. I saw your big screen debut,

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Money Electric,

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on HBO.

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I think probably

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the most high production quality Bitcoin film we've seen to date.

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You know, 15 years after Bitcoin was created or invented or discovered, however you wanna put it.

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We finally have a full featured

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documentary,

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and you were heavily heavily in it. It was, you know, you, Peter Todd, Samson,

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like the main characters.

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We got some appearances by Amir Takhi,

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some other individuals.

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What what were your thoughts on the documentary?

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Well, I mean, I saw it afterwards. Of course, you can't tell what they're gonna you know, what story they're gonna assemble before because, you know, they ask lots of questions. They came to a number of conferences.

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And I guess in between

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times when they're filming, they thought of more questions they wanted to ask people,

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more potential directions to take things, and then they,

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you know, can sense it down into a story arc. Yeah. And it's it's kinda cool, like, I mean,

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from the point of view that,

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you know, it it exposes more a more general audience to Bitcoin.

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And, of course, by participating, we hope they're gonna do something

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informative and

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that captures

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what makes us excited about Bitcoin. You know, sometimes it doesn't get captured accurately, and I think the documentary

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producers made a number of other documentaries, one which was about online privacy.

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So I think he was actually getting it and, like, getting into it. So I think he did a reasonably good job of,

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you know,

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explaining

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where it you know, the history,

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what people find exciting about it,

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and,

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you know, the nation state arc.

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And,

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of course, they gotta do it because

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everybody's curious, the who is Satoshi arc, which is, you know, not the most,

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productive thing.

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But but it's a entertainment valley too. Right? They gotta, like, provide the entertainment. So I just hope it doesn't, you know,

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cause too much fallout for Peter Todd. That's that's what I'd say because, you know,

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obviously, now he's

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sort of busy

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birthday. He he was interviewed by Wired,

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which is kind of big quite big,

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online magazine that's been around for years. And,

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I think he was able to provide some kind of proof a little bit like,

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Jameson Lopfand for Hal Finney, which is, like, you know, Satoshi is busy emailing and

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sending transactions to somebody. In his photographic evidence, Hal Finney was running a marathon. Right? So people are pretty convinced. Okay. I guess it's not Hal Finney. Right? So so I think Peter's been rummaging through

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old photos and actually,

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you know, found some contradictory things with with this theory.

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The problem is it's all speculation. Right?

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You know, you you could pick anybody that's, you know, participate in bitcoin that was interested in electronic cash. I mean, you know, sometimes even there's a programmer who will do it. Right? And,

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you can make a pro or con. Right? And it it's a fun game that people like to play. But,

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you know, I don't I don't think we're gonna find out because,

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you you know, it's been a lot of years since Satoshi

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stopped posting on the forums. Like, I wasn't on the forums until myself until 2013, and he'd already left by, like, 2011, I think, is the is the year.

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So, you know, there's no new information since then, and people have been fascinated

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for all those years. Right? It's like, you know, what, 13 years now? So I don't think we're gonna find anything. So the rest of it is just

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speculation, really.

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Yeah. I mean, it was it was,

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like, the first half an hour of the documentary

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was I thought or or they did a really good job of, like, explaining how Bitcoin works, why it exists. Like, they did a really good job at that.

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And then

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and they they did a decent job with the block size war. And, you know, if you weren't around in

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in 2016 and 2017 and 2018, it's it's really hard to explain what exactly happened if you didn't live it. And I think they did a decent job with that.

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Obviously, they they brought in, like, Roger as, like, the Bitcoin cash guy to give his side of the story.

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But I thought they did a pretty good job with that. Then a lot of it was a lot of it was the Samsung show. I presume Samsung was one of the main ring leaders, like, bringing it all together. Right? Like, traveling around with Samsung,

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convincing small countries to adopt a Bitcoin.

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Yeah. I mean, I think that was the kind of what's next adoption arc.

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Yeah. You know, going into the mom's dream.

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Yeah. So I guess I guess, like, basically, what they covered is

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what they thought was interesting

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to tell the story because I I'm pretty sure they woulda had

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you know, they interviewed a lot of people in multiple

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locations

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over over time. They were filming for a couple of years on and off, so they were in Riga. They were in in Lugano for for Lugano conference. They were in a Miami conference.

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So they went they worked they did a lot of traveling. Right? And,

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so,

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you know, it's

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I think they had all the footage to to tell most of the major points. So I think the story they told us is the story they wanted wanted to tell. It's really so it's kinda interesting that

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they wanted to cover the nation state

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kind of adoption arc as well.

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I,

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and then, of course, they had their hype, right, which was the the quote, unquote Satoshi reveal.

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Yeah. I mean, to be clear here, you don't think Peter Todd was Satoshi?

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No.

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I mean,

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Peter has been doing

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you know, it's public information. Right? But he's been doing

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consulting for a lot of different people. Right?

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And,

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you know, he's he's trying to, you know, make money to pay rent. Right? So

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it's pretty clear that he doesn't doesn't have,

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you know he's not a wealthy guy. Right? And,

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but also, you know, it's,

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it's all, like, circumstantial,

213
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I might say.

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And I think he he also sort of,

215
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showed some photos to Wyatt

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showing he was

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he likes, what he like, caving or spelunking? Like, climbing around inside clay caves and stuff, and he found some expedition for us,

218
00:17:08.755 --> 00:17:14.135
right, a period of time where presumably Satoshi's busy doing something. I sit on the forums or something. Right?

219
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Right. Yeah. I mean, a lot of it a lot of the interviews were in caves with him.

220
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Yeah.

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I,

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I mean, I guess

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but what I just wanted to say, like, one of my favorite parts of the document. So I I

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I sat down with,

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my family, my my wife and my my son, and we we watched the documentary together.

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We we try and we try and keep him

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we try and reduce screens as much as possible with him, but we made an exception, for the documentary because it felt like a important occasion. And one of my favorite parts was during the reveal just like yours you're in the background just like your straight face, like, a little bit add them back smile. It was just, to me, it was very positive. And I I mean, I was what was going through my mind is Yeah. Go on. Change the I I was like, man, can you change the topic? Can we talk about something more productive?

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So

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yeah. Yeah. I mean, the whole point is it doesn't matter who Satoshi is.

230
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Right. Exactly.

231
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Yeah.

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Well, you know, I mean, I I you you mentioned in the out in our intro that,

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you know, discovered versus invented. I like I like discovered because,

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you know,

235
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it it's,

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you know, something

237
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like that

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can eventually get discovered

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because it's a it's a thing. Right? So it's like people realize that gold was good money,

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and now we have digital gold. And so,

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you know, the fact that you can

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sometimes make better versions of things in a digital world. Right? You can, make a digital ignition for a car like, you know, mapping

243
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the car, buses,

244
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you know, physical

245
00:18:58.575 --> 00:19:02.275
governor, and all that kind of stuff. Right? So it's it's a pretty common concept that you can

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improve an analog system like digital. And

247
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so the concept that that there could exist digital gold, which

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robustly represents

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physical gold

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analog

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is, you know, in a in hindsight, of course, right, it it looks like, yeah, I guess that should have existed. We should have seen that coming, but, you know, we didn't.

252
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Right? But I think, you know, the incentive for that to exist was there, and people were

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sort of fumbling around

254
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trying to figure out how to do it since

255
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at least 1997. Right? It was just tricky. And, you know, Bitcoin, now that we have it,

256
00:19:41.789 --> 00:19:51.045
it looks elegant, and we you know, you could understand it at lots of different levels. So people like, yeah. That's that's that's simple. I mean, yeah, it gets a little more complicated as you get under the hood.

257
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But,

258
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yes. That's why I think it could it could eventually have been rediscovered. Right? And you you see,

259
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you know, people talking about surprisingly Bitcoin like ideas

260
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in 9 98 and stuff like that. Right? You know, the the b money, the bit gold.

261
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And, actually, Peter Todd is on,

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like,

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a mailing list about

264
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a peer to peer file sharing system. I think it's a Freenet

265
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topic, which is kinda like a deterrent like thing for

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storing encrypted fragments of files, being hard to censor,

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and it happens to use HashCash for, like,

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protecting against an all service. So then he was talking about HashCash and how Fiddy was in there

269
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talking about it too. Right? So it's another another one of those conversations. But it seems like lots of people were

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arriving at similar idea or trying to figure out how to make it work, and it looked hard. Right? And so I think, you know, kudos to especially whoever it is for

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being ingenious enough to figure out the last mile that everybody else felt today.

272
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Right. And put it all together.

273
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Yeah. Yeah. I mean, I had I had Fran Finney,

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on the show

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a couple months ago, and I I asked her

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what what was it like when when Hal first discovered Bitcoin

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and, like, he first told you about Bitcoin. And she was like, at that point, like, he had

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it was just another, you

279
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know, another e cash project or another money project. Like, I he had been talking about these things for decades.

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At at that point, you know, there was it was not it was not anything particularly interesting to me

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or or or novel or new from her perspective. Right? Because there's just all these things are are compounding over and over on time,

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until they all came together. I mean, he implemented,

283
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his own kind of

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prototype e cache system called RPAU

285
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in, 2004.

286
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And the other thing about how is

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is, like, you know, they they say Cypherpunks write code. He's the he's the code writer guy that's always tinkering with something. Right? So he reads a paper,

288
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and then he explains it so that other people can don't have to read the paper. Right? So he he did that.

289
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And, actually, that's I didn't read the Bitcoin paper. I read Hal Finney's summary of, trying it out. Right? So that's a typical Hal Finney thing that he's

290
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he's got his fingers in everything figuring it out. Right?

291
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So,

292
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yeah, it's,

293
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it's in keeping. So she probably saw him doing the try it out and figure it out. Right? But the other kind of

294
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funny thing about Hal Finning it figuring it out is he

295
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probably in 2009, he posted something saying, hey. Maybe you should buy some of this. If it if it takes off,

296
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it could be worth 10,000,000 a coin because, you know, there's 21,000,000

297
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coins and all the things are worth 200,000,000,000 at that time. And people are like, wow. This this guy was like

298
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you know,

299
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people now will say that, like,

300
00:22:55.294 --> 00:23:03.050
15 years later, but he said it before even at a a price or a user rate. Yeah. I mean, people think you're crazy when you say it now, and he said it

301
00:23:03.430 --> 00:23:07.210
like, that was, like, a couple months after Bitcoin was launched.

302
00:23:07.590 --> 00:23:08.890
Yeah. I mean, it's before,

303
00:23:09.430 --> 00:23:13.990
I mean, before the Bitcoin pizza even by a long time. Right? So it's pretty much

304
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And

305
00:23:15.855 --> 00:23:18.835
am I correct am I correct that when you originally

306
00:23:19.215 --> 00:23:21.795
learned about Bitcoin you dismissed it at first. Right?

307
00:23:22.575 --> 00:23:24.495
Well, now what I was thinking is,

308
00:23:25.695 --> 00:23:27.695
well, firstly, I was thinking, man, it's

309
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because it there are the some of the previous electronic cash systems were centralized,

310
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had extremely strong privacy, but you had to trust the server. So firstly, there's a mind shift. Right? Okay. This doesn't need to trust the server,

311
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and we saw the centralized system, DigiCash,

312
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failed due to centralization.

313
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So they'd figured out

314
00:23:46.755 --> 00:23:53.015
the the solution had to be decentralized. Right? It's already back in 98, but they know how to do it. And

315
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so my thought was,

316
00:23:55.570 --> 00:24:11.110
pity about it. It doesn't have more privacy, but it it's hard to do that harder to do that in a decentralized system, in a central one, so that is what it is. And then, like, okay. Well, at least he's solved the remaining he's made it real. Right? He's solved how to do it in a decentralized way, which is cool. But then I was like, well,

317
00:24:12.425 --> 00:24:16.445
is it gonna bootstrap? You know? Let's wait and see. Right? So I was like,

318
00:24:16.985 --> 00:24:20.845
you know, kinda sitting around checking in once in a while. And I think in 2013,

319
00:24:21.225 --> 00:24:23.245
it popped up on Slashdot that it

320
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broken through a dollar. So then I was like,

321
00:24:26.620 --> 00:24:27.980
it's I guess it's,

322
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maybe it's gonna happen. Right? So

323
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and, so I started getting more

324
00:24:33.980 --> 00:24:37.679
you know, start trying to figure out the technical details in 2013.

325
00:24:37.980 --> 00:24:52.295
So I went and read all the stuff that was available and there wasn't much at that time and then I found the IRC and asked all developers lots of questions, like, about how it actually works. And that's the only one I realized it has smart contracts because it doesn't say that in the paper. Right? So I was like, oh, that's that's really cool. Right?

326
00:24:54.020 --> 00:24:58.360
So, yeah, then I did what people do. You know, they they get down the rabbit hole and they

327
00:24:59.700 --> 00:25:00.200
get

328
00:25:01.140 --> 00:25:16.715
super animated and captured by this idea and then they that's that's where you stay in the zone sometimes. Right? Which is the case for me. So it wasn't it wasn't so much like, oh, this is a bad idea or anything because we were trying to solve the problem. We just managed to make it work. But it's like, okay. Finally, somebody solved it.

329
00:25:17.575 --> 00:25:21.435
But, okay, next hurdle is, are people gonna adopt it? Because a lot of things,

330
00:25:22.039 --> 00:25:24.140
like, how Phineas RPAO got implemented,

331
00:25:24.760 --> 00:25:26.700
and there's another one called Magic Money,

332
00:25:27.080 --> 00:25:28.299
they were they were just kinda

333
00:25:28.600 --> 00:25:31.240
demos or toys, and they never took off. Right?

334
00:25:32.600 --> 00:25:35.980
And so that was the question. Right? You know? Will it stay the hobbyist,

335
00:25:36.595 --> 00:25:41.255
you know, sending each other I I the the the good one to to read is,

336
00:25:42.835 --> 00:25:43.654
Drew Adam.

337
00:25:45.955 --> 00:25:46.434
What's,

338
00:25:47.075 --> 00:25:49.095
the guy's name? One one of the early

339
00:25:51.990 --> 00:25:53.450
guys that was into it,

340
00:25:54.870 --> 00:25:55.770
Bitcoin mining

341
00:25:56.790 --> 00:25:58.490
in 20 not to 2009,

342
00:25:58.870 --> 00:26:04.890
and then he kinda got bored and went away and kinda half forgot about it. But he, did an interview,

343
00:26:09.005 --> 00:26:09.905
Dustin Trammell.

344
00:26:10.285 --> 00:26:12.785
So he did a he did a podcast more recently,

345
00:26:13.725 --> 00:26:14.225
and

346
00:26:14.684 --> 00:26:34.830
it's, like, super interesting him describing the experience. Right? Because he was there when it was, you know, the tumbleweeds were blown by and Right. He was, like, user number 3 or something. Yeah. And there's, like, nothing really happening. They were on IRC. They did because I I was, like, you know, I I didn't look at it at that time. Right? I read I read some of the stuff. I read how Finney's thing. I was like, oh, let's see if it bootstraps. But these guys actually got in there and, like,

347
00:26:35.195 --> 00:26:40.095
you know, at least operate it for a while till they got bored. And then the other one that's really interesting as well

348
00:26:40.875 --> 00:26:41.375
is

349
00:26:43.995 --> 00:26:44.495
the

350
00:26:45.195 --> 00:26:51.920
some of the the emails that came out during the COPA trial. So you got you got tons and tons of messages

351
00:26:52.220 --> 00:26:52.720
from,

352
00:26:53.340 --> 00:26:56.080
the guy that was actually helping Satoshi with the,

353
00:26:56.860 --> 00:26:58.000
you know, with the forums.

354
00:26:59.260 --> 00:26:59.760
His

355
00:27:00.300 --> 00:27:02.000
his IRC handle is Sirius,

356
00:27:03.215 --> 00:27:05.635
but he's into lost Loston now. Right?

357
00:27:06.575 --> 00:27:09.715
And so so there there's yeah. Yeah. So so it's like

358
00:27:10.575 --> 00:27:18.195
it it's interesting because you see the you know, because I was just like, oh, let's see the bootstraps. Right? But Marty and Satoshi, if if you read all those emails,

359
00:27:19.830 --> 00:27:24.570
they're trying to figure out how to bootstrap it like it's a startup. Right? Like brainstorming about applications

360
00:27:25.030 --> 00:27:27.290
that might entice people to try it,

361
00:27:27.990 --> 00:27:29.370
what's confusing people

362
00:27:29.910 --> 00:27:31.690
about how it works to write an FAQ.

363
00:27:32.470 --> 00:27:33.530
It's like typical,

364
00:27:34.365 --> 00:27:38.945
like, early stage startup things. So the fact that it boost wrapped is because people, you know,

365
00:27:39.405 --> 00:27:40.625
try to help it. Right?

366
00:27:40.925 --> 00:27:52.860
So we never we never saw that, or, like, most people didn't see that and until this kind of internal discussion came up. So that's pretty cool. The Marty emails are fascinating. I think they came up as part of the

367
00:27:53.320 --> 00:27:54.460
the CSW

368
00:27:54.840 --> 00:27:55.340
lawsuits.

369
00:27:55.799 --> 00:27:59.820
Exactly. Yeah. Yeah. So they they did a huge kinda email dump,

370
00:28:00.759 --> 00:28:06.085
that and somebody, like, read it all and summarized what it was about. It's, like, very cool. Yeah.

371
00:28:06.465 --> 00:28:08.804
That was, like, part of the documentarian's

372
00:28:09.345 --> 00:28:19.299
claim that it was Peter Thomas, Satoshi. Was there, like Satoshi said retarded in an email, so it must have been a young person, which I thought was a hilarious piece of evidence. Well, I mean,

373
00:28:20.400 --> 00:28:30.720
I've been known to say that about NFTs and stuff. So, you know, like, we all say it right. Are you telling are you telling us something? I, Adam, I feel like part of the reason you had a smile on the back of your,

374
00:28:31.200 --> 00:28:33.914
like, on the back of your mouth while you're in the background

375
00:28:34.294 --> 00:28:42.235
of the reveal is because you you thought they were gonna pin it on you. You'd I I think it's I mean, I was hoping they wouldn't, but you never know. Right?

376
00:28:42.615 --> 00:28:44.955
I mean, you've had your own fair share of accusers

377
00:28:45.335 --> 00:28:45.835
or

378
00:28:46.270 --> 00:28:49.809
allegedgers or whatever saying that was you. Right. Right. Right.

379
00:28:50.590 --> 00:28:52.770
Just to be clear, you're not Satoshi. Right?

380
00:28:53.150 --> 00:28:55.809
No. I mean, I I understand, like,

381
00:28:56.190 --> 00:29:00.930
you know, in 2013 when I was going down the rabbit hole at some point, you know, after

382
00:29:01.755 --> 00:29:15.295
that, it it dawns on me that, oh, shit. Maybe people would think I'm Satoshi. This is not good. Right? So, you know but then then I realized, well, there's, like, really not much I can do about it, so I kinda rolled with it. Right? But but,

383
00:29:16.370 --> 00:29:18.630
yeah, you don't you don't really wanna be,

384
00:29:19.250 --> 00:29:22.070
you know, suspected of, being so shitty because,

385
00:29:22.610 --> 00:29:29.270
people might get the idea you have a lot of coins. Right? Yeah. You don't have the money to do you know, you don't have the money to, like, move house or to,

386
00:29:30.050 --> 00:29:32.695
you know, give Put the target on that.

387
00:29:33.235 --> 00:29:42.935
Yeah. I mean, I remember Jameson Law posted a lot about he got he got swatted. Right? Right. Some crazy guys sent a SWAT team to his house, which coulda ended badly. During Beacon.

388
00:29:44.309 --> 00:29:51.529
Yeah. It was that. Right? So it's the some of the big blockers maybe. It's just kinda activity. And, then afterwards, he took all these kind of

389
00:29:52.149 --> 00:29:59.130
elaborate measures and was blogging about how to do it. You know? You gotta, like, buy the house through the shell company. You gotta, like,

390
00:29:59.615 --> 00:30:05.315
take yourself off the registers and etcetera, etcetera, etcetera. It's a lot of work. Right? And it costs money. So

391
00:30:06.015 --> 00:30:06.515
yeah.

392
00:30:08.255 --> 00:30:09.135
Yeah. No. It's,

393
00:30:10.335 --> 00:30:11.635
I mean, first of all,

394
00:30:12.700 --> 00:30:15.919
the whole point is that it doesn't matter who Satoshi is.

395
00:30:16.299 --> 00:30:16.799
Right.

396
00:30:17.340 --> 00:30:18.960
2nd of all, Satoshi,

397
00:30:19.740 --> 00:30:20.880
whoever he is,

398
00:30:22.139 --> 00:30:22.639
has

399
00:30:23.019 --> 00:30:28.165
some of the best object I've ever seen in, like, the history of of of digital humanity.

400
00:30:29.105 --> 00:30:34.325
Right. And it it takes it takes quite a big ego as I think a documentarian to

401
00:30:34.625 --> 00:30:39.365
think that you crack the you you were the one who figured it out after after everyone

402
00:30:39.985 --> 00:30:41.365
everyone has thought this question,

403
00:30:41.750 --> 00:30:43.530
and you were the one who figured it out.

404
00:30:43.910 --> 00:30:58.975
But third of all, like, false accusations, like, have real world effects. Like, I when I was talking to Fran, I mean, Fran is Fran and Hal, especially as Hal's health declined towards the end, like, it became a real a real problem for them. They were getting blackmailed and,

405
00:30:59.755 --> 00:31:04.975
they were getting dragged. So it was, like, the last thing in the world they they needed to deal with while his health was declining.

406
00:31:05.435 --> 00:31:06.895
Yeah. For sure. Yeah.

407
00:31:09.195 --> 00:31:09.695
So

408
00:31:11.010 --> 00:31:22.390
you'd kind of just you look at Bitcoin. You're like, oh, maybe it doesn't get bootstrapped. You know, maybe it's just another one of these, you know, cumulative innovations that's happening in the space. I I

409
00:31:23.010 --> 00:31:24.630
and then you come back to Bitcoin,

410
00:31:25.865 --> 00:31:36.365
and you fall down the rabbit hole. I think this happens to a lot of us. Right? It's like it takes it takes 2 or 3 touch points before you're like, holy shit. And then once you're in, you're you're in in a real way.

411
00:31:36.985 --> 00:31:40.045
And then you pretty quickly launch Blockstream. Right?

412
00:31:41.070 --> 00:31:42.510
Yeah. So so,

413
00:31:44.190 --> 00:31:45.090
I was thinking,

414
00:31:45.470 --> 00:31:49.170
you know, because I've worked on electronic cash systems before, and I'd implemented

415
00:31:50.190 --> 00:31:51.650
the DigiCash algorithm

416
00:31:52.365 --> 00:31:53.505
and another one,

417
00:31:54.445 --> 00:31:57.345
called dish what's it? It's like digital credentials

418
00:31:57.645 --> 00:31:59.985
by a a friend of mine who was

419
00:32:00.525 --> 00:32:05.425
Chorn's PhD student. He made a he made a better ecash protocol. So I implemented both of those,

420
00:32:06.270 --> 00:32:06.770
And

421
00:32:07.070 --> 00:32:07.470
I,

422
00:32:09.550 --> 00:32:10.530
the the DigiCash

423
00:32:10.830 --> 00:32:11.330
company,

424
00:32:11.950 --> 00:32:20.210
which is David Chorn's company, is operating out in the Netherlands, and they they set up a demo server. They promised they'd never issue you more than a 1000000 tokens, and they would

425
00:32:20.815 --> 00:32:23.795
email you the tokens if you ask for them, like, airdrop them

426
00:32:24.335 --> 00:32:26.195
and, like a faucet, basically.

427
00:32:26.895 --> 00:32:28.355
And so, you know,

428
00:32:28.975 --> 00:32:38.820
some of the guys on the Cypherpunks list, including myself, figured, like, well, how hard could it be to bootstrap a value if this gets right? So we start selling stuff for,

429
00:32:39.360 --> 00:32:46.420
you know, assuming they're worth a dollar, and there's only there's a million of them, so we figured, you know, if a few hundred people start trading stuff like t shirts and

430
00:32:46.755 --> 00:32:51.895
I had those RSA t shirts, so I was selling those for for these I mean, they had no market value,

431
00:32:52.355 --> 00:32:57.895
but if I sold a few for a dollar and all those other people sold stuff, we figured eventually there'd be a circular trade,

432
00:32:58.435 --> 00:33:22.945
and you could give there's no bank interface to it, right, so the demo. So we kinda had a go at bootstrapping, and it and it ended badly because Digicash went bankrupt. And then the Yeah. It centralized the double spend database disappeared, so you couldn't prove if the coin was spent or not. So it kinda all blew up. So, you know, that that was the kind of context in my, I wonder if this one will bootstrap because, like, we actually tried to proactively bootstrap the previous one, and it all fell apart. Right? So clearly,

433
00:33:23.965 --> 00:33:26.065
you know, what Stoches cracked is

434
00:33:27.005 --> 00:33:35.810
the immediate reaction to Digicash failing because it's centralized was, we need some decentralized tech, but we know how to do it. Right? So now here it is. He's built it.

435
00:33:36.670 --> 00:33:40.610
So this time around, I just kinda, like, watched rather than

436
00:33:40.990 --> 00:33:45.490
be the guy trying to, like, sell stuff to Right. Bootstrap it. Right?

437
00:33:47.395 --> 00:33:53.655
Yeah. Right. But but so then yeah. I mean, I think the key here, right, the key here with Bitcoin was that it

438
00:33:54.275 --> 00:34:01.415
that first of all, it wasn't centralized and that it was scarce. Right? And and it was a it's a different trade off model. Instead of going for

439
00:34:02.170 --> 00:34:08.190
better privacy guarantees, it went with better security assurances in terms of rights.

440
00:34:08.650 --> 00:34:09.950
And that's what really

441
00:34:10.330 --> 00:34:16.270
bootstrapped it. Yeah. And and, I mean, so when I went down the rabbit hole, I figured, well,

442
00:34:17.244 --> 00:34:19.905
okay. It's bootstrap. It's bootstrapped. It's bootstrapping,

443
00:34:20.605 --> 00:34:34.480
and, of course, you know, you get super excited about digital I mean, people were excited about digital bear cash back in the DigiCash days even though it was like a stable coin intentionally. Right? It didn't it didn't quite get to market, but it was the design would have been a stable coin effectively.

444
00:34:34.940 --> 00:34:37.119
So Bitcoin is more than that because you've got,

445
00:34:37.420 --> 00:34:44.240
you know, potentially an investment dimension. People can speculate on it, and I think that adds that's another kind of adoption,

446
00:34:44.895 --> 00:34:48.595
another another reason people might adopt it. But people were plenty excited about

447
00:34:49.455 --> 00:34:54.915
just bare unseasonable cash even if it was dollar denominated. Right? So, of course, to me, that is

448
00:34:55.295 --> 00:34:59.040
awesome. Like, you know, I I find that stuff fantastic. So

449
00:34:59.420 --> 00:35:01.520
so now I thought, well, maybe I can,

450
00:35:02.780 --> 00:35:05.200
you know, figure out a way to improve your privacy.

451
00:35:05.579 --> 00:35:07.680
So I spent, like, months

452
00:35:08.060 --> 00:35:09.280
trying to figure out,

453
00:35:10.300 --> 00:35:10.960
you know,

454
00:35:11.675 --> 00:35:14.575
how to make what became known as confidential transactions.

455
00:35:15.195 --> 00:35:19.455
So, eventually, I figured that out, posted it on a Bitcoin talk forum, and then I go and ask the,

456
00:35:20.075 --> 00:35:22.255
like, Bitcoin, was it IRC guys?

457
00:35:22.715 --> 00:35:33.970
Yep. You know, do you think Bitcoin would adopt this? Like, I figured it out. Scrape it. I'm like, you know, that's it became apparent that it's hard to get Bitcoin to adopt complicated things. Yep. So rather than,

458
00:35:35.010 --> 00:35:44.365
you know, rage quitting, which is what people do when they don't get their way, I was like, okay. I understand. That makes sense. So I figured let's try and make find a way to make Bitcoin modular

459
00:35:45.145 --> 00:35:45.805
or layered

460
00:35:46.505 --> 00:35:47.964
so that people can implement

461
00:35:48.984 --> 00:35:55.150
in a permissionless way in a in a, you know, in a sandbox or a layer so it doesn't have to change the base layer. So

462
00:35:55.450 --> 00:35:57.549
so I was like, you know, for a little while,

463
00:35:58.010 --> 00:35:58.910
figuring out

464
00:35:59.210 --> 00:36:02.750
different types of side chain ideas, and we got two way side chain.

465
00:36:03.369 --> 00:36:08.935
Now the full version of it needs an opcode, but you you know, that's back to square 1. Right? It's hard to get opcodes,

466
00:36:09.555 --> 00:36:12.775
get consensus for opcodes. So there's a kind of simplified version

467
00:36:13.395 --> 00:36:15.415
in this paper that we'd worked on.

468
00:36:16.035 --> 00:36:16.535
And,

469
00:36:16.835 --> 00:36:21.710
yeah, then I tried to recruit, you know, the, Bitcoin Wizards guys because the the the the brands have,

470
00:36:22.510 --> 00:36:23.410
had to extend

471
00:36:23.790 --> 00:36:24.849
and improve Bitcoin

472
00:36:25.710 --> 00:36:26.210
to,

473
00:36:26.750 --> 00:36:27.250
you

474
00:36:27.630 --> 00:36:32.369
know, come work with me at Blockstream and, you know, recruited a friend of mine who is

475
00:36:33.585 --> 00:36:35.845
now a VC to help us raise money.

476
00:36:36.225 --> 00:36:36.725
And,

477
00:36:37.345 --> 00:36:39.445
so, you know, there there was somebody actually,

478
00:36:39.985 --> 00:36:41.525
who offered us $500,000.

479
00:36:42.145 --> 00:36:44.325
This is back in 2013, just a Bitcoin

480
00:36:45.345 --> 00:36:45.845
person

481
00:36:47.380 --> 00:36:48.040
to implement

482
00:36:48.340 --> 00:36:50.200
the the core tech. Right?

483
00:36:50.660 --> 00:36:57.720
Like, I was thinking, well, that's that's actually not anywhere near enough because you don't you can't just implement a piece of a library.

484
00:36:58.340 --> 00:37:00.920
You need, like, wallets. You need a block explorer.

485
00:37:01.645 --> 00:37:04.145
You know, you maybe need hardware wallet integration,

486
00:37:04.845 --> 00:37:05.905
and you need somebody,

487
00:37:06.605 --> 00:37:12.305
you know, to design user interfaces. Like, all the all the people that I knew, like, or on my wavelength, right,

488
00:37:13.085 --> 00:37:14.145
the network programmers,

489
00:37:14.710 --> 00:37:18.490
crypto people, they can write crypto libraries in UNIX back end code. They

490
00:37:18.790 --> 00:37:20.170
they can't write, like,

491
00:37:20.630 --> 00:37:23.050
user interface on Android or something. Right? So

492
00:37:23.670 --> 00:37:26.565
you need you need, like, a range of skill sets, and so you need

493
00:37:27.125 --> 00:37:31.785
to be able to hire, like, a wider set of people. So, yeah, so we we got it

494
00:37:32.805 --> 00:37:33.464
and started

495
00:37:33.845 --> 00:37:35.944
with the seed round and started implementing.

496
00:37:36.244 --> 00:37:36.744
And,

497
00:37:37.925 --> 00:37:41.545
that became liquid, and along the way, the lightning concepts,

498
00:37:42.470 --> 00:37:44.650
came together. So we we thought, well,

499
00:37:45.349 --> 00:37:52.569
that's good because blockchains don't scale. Like, even if it's a layer 2 kind of side chain, that's still a blockchain. It doesn't scale. So we figured,

500
00:37:53.190 --> 00:37:53.750
well, let's,

501
00:37:54.869 --> 00:37:56.650
let's participate in lightning.

502
00:37:57.190 --> 00:37:57.690
So

503
00:37:58.365 --> 00:38:03.585
that could be a scaling solution. So we did that as well with, one of the implementations.

504
00:38:05.325 --> 00:38:06.705
I mean, to be clear here,

505
00:38:09.245 --> 00:38:14.230
saying it doesn't scale is is is is from a technical point of view.

506
00:38:15.090 --> 00:38:16.150
The the the

507
00:38:17.250 --> 00:38:17.750
obviously,

508
00:38:19.410 --> 00:38:22.470
more people can use it over time. But this idea that,

509
00:38:23.650 --> 00:38:29.625
with blockchains, this idea that every node effectively has the entire global state of every transaction that has happened.

510
00:38:30.484 --> 00:38:39.305
It means that you are you're like in you're limited by physics, basically. Right? And Right. And so liquid is is effectively just another blockchain.

511
00:38:40.210 --> 00:38:44.630
Right. That is tied to Bitcoin through what effectively amounts to a multisig.

512
00:38:44.930 --> 00:38:52.470
So liquid shares a lot of the same scaling constraints at a high level as as the main Bitcoin chain does. But something like lightning,

513
00:38:53.845 --> 00:39:01.865
individual nodes don't have to have the global state of Lightning transactions. They're they're basic payment channels. It's a protocol for batch payment Bitcoin payments.

514
00:39:02.565 --> 00:39:08.105
Yeah. It makes that really novel. And you guys have done a lot of work in that space in terms of maintaining Corelightning

515
00:39:09.339 --> 00:39:09.839
specifically.

516
00:39:10.619 --> 00:39:13.359
Yeah. Yeah. And, actually, core lightning works

517
00:39:13.900 --> 00:39:19.200
on the main chain, but it also works on top of liquids. So you can, in principle, have,

518
00:39:20.460 --> 00:39:22.640
I mean, informally, they're calling it LOL,

519
00:39:23.339 --> 00:39:24.855
liquid lightning on

520
00:39:25.155 --> 00:39:26.915
liquids. It doesn't have a proper name. But,

521
00:39:27.395 --> 00:39:27.895
Breeze,

522
00:39:28.755 --> 00:39:34.375
who does a does a lot of, SDK work for to make it easy for wallets to integrate lightning,

523
00:39:34.835 --> 00:39:36.615
has announced that they are gonna

524
00:39:37.315 --> 00:39:38.375
work on adding

525
00:39:38.970 --> 00:39:40.190
lightning on liquids

526
00:39:40.890 --> 00:39:41.869
on liquid Bitcoin

527
00:39:42.570 --> 00:39:45.470
as a kind of another trade off to sort of

528
00:39:46.010 --> 00:39:53.130
help people when the fees get high or Right. You know, if they start staying high. Right? I mean, if we get into a bull market, that usually

529
00:39:54.010 --> 00:40:10.610
you know, we had the JPEGs, and they subsided, and that caused a fee spike. But if you get into a bull market or more mention because because people are doing, you know, cold storage and sensitive resistant transactions on the chain, and they kinda need a UTXO. Right? So,

530
00:40:12.670 --> 00:40:14.370
it could be that UTXOs

531
00:40:15.550 --> 00:40:19.570
I mean, UTXOs are basically kinda scarce. Right? Only 70 per block.

532
00:40:19.950 --> 00:40:21.890
So onboarding in a way is,

533
00:40:22.670 --> 00:40:26.085
can you get UTXO to cold store the Bitcoin you bought?

534
00:40:27.205 --> 00:40:29.145
So, you know, that that opens a prospect

535
00:40:29.645 --> 00:40:30.145
that

536
00:40:30.645 --> 00:40:32.265
maybe lightning could be,

537
00:40:33.445 --> 00:40:35.065
you know, for low values

538
00:40:35.765 --> 00:40:39.945
happening on top of a kinda layer 1.5, like a liquid side chain.

539
00:40:41.600 --> 00:40:48.660
And maybe it's an okay try trade off. Right? It's not censorship resistant like the main chain or not as good for cold storage, not as unseasonable.

540
00:40:49.600 --> 00:40:56.065
But, you know, if the amount of money you're transacting you know, with Lightning, you already have a trade off, which is it's a hot wallet. Right? So

541
00:40:56.545 --> 00:41:04.645
it has to be interactive. Like, it has to be online. It has to be online, etcetera. Yeah. So so, you know, it's it's not such a big difference to

542
00:41:05.345 --> 00:41:07.525
sort of take that trade off,

543
00:41:08.230 --> 00:41:09.050
and it could,

544
00:41:09.750 --> 00:41:10.410
you know

545
00:41:11.110 --> 00:41:14.250
it's a little bit faster, a little bit cheaper, a little bit more

546
00:41:14.630 --> 00:41:15.130
scaled,

547
00:41:15.830 --> 00:41:16.330
but,

548
00:41:17.110 --> 00:41:17.770
you know,

549
00:41:18.550 --> 00:41:23.605
liquid is also gonna have blockchain scaling problems once the adoption picks up.

550
00:41:23.985 --> 00:41:24.485
Right.

551
00:41:26.785 --> 00:41:35.925
Yeah. And, I mean I mean, in practice, what that kinda looks like is is what Samsung is is building out with Aqua or,

552
00:41:37.240 --> 00:41:42.220
and and the Amboss guys have an app called, Mi Banco, like, my bank in Spanish.

553
00:41:42.600 --> 00:41:46.780
But this idea that basically, if you're if you're interacting with smaller amounts,

554
00:41:47.960 --> 00:41:58.125
you settle on liquid. And then as those amounts get bigger, you can move to Bitcoin on chain, and then you use you use Lightning as kind of this this glue that allows you to make,

555
00:41:59.065 --> 00:42:01.885
easy payments and and cross between the chains.

556
00:42:02.825 --> 00:42:03.325
Yeah.

557
00:42:03.630 --> 00:42:12.130
And that that kinda makes sense to me. I I I think that makes sense. I think I think you kinda hit the nail on the head earlier in this conversation where you're like,

558
00:42:12.430 --> 00:42:22.045
a lot of this stuff is, you know, is okay. Is it technically possible? And then it's you actually need the tooling out there that is actually easy to use for people. Right.

559
00:42:23.305 --> 00:42:23.805
Yeah.

560
00:42:24.105 --> 00:42:26.445
I mean, part of that as well is the

561
00:42:27.305 --> 00:42:28.845
the Boltz Exchange APIs.

562
00:42:29.225 --> 00:42:30.845
Yeah. So they have

563
00:42:31.520 --> 00:42:34.099
an API that lets you trustlessly swap

564
00:42:34.800 --> 00:42:43.380
a Bitcoin UTXO for lightning balance so you can sort of suck money off your lightning balance and get UTXO, or you can send them a UTXO and they swap it for lightning balance.

565
00:42:43.760 --> 00:42:44.160
And,

566
00:42:45.835 --> 00:42:47.615
then during one of the fees spikes,

567
00:42:48.155 --> 00:42:52.335
it it became difficult to offer that service. So they implemented the same thing

568
00:42:52.715 --> 00:42:53.855
for liquid Bitcoin,

569
00:42:54.715 --> 00:43:04.400
and that that was sticky. Like, people kept using it even after the fees subsided because, hey, you know, they're power users and they found something that was cheaper and faster. And,

570
00:43:06.640 --> 00:43:09.380
and then, like, the thing that's kind of organic and fascinating

571
00:43:09.760 --> 00:43:12.180
is wallets started using their API

572
00:43:12.984 --> 00:43:14.365
as a way to implement Lightning.

573
00:43:14.665 --> 00:43:22.205
So it became a new kind of wallet architecture, and I think Aqua was supposed to do it, but there are a number of them now. Like, Bull Bitcoin has a wallet. They've started doing it.

574
00:43:25.560 --> 00:43:26.060
So

575
00:43:26.680 --> 00:43:31.820
I think Peach Bitcoin is doing it, and there's a couple more wallets in development doing this model.

576
00:43:32.120 --> 00:43:35.240
So it's an alternative to, you know, LDK, which is,

577
00:43:35.560 --> 00:43:36.940
the block spiral,

578
00:43:38.345 --> 00:43:40.125
API for doing wallet stuff

579
00:43:40.505 --> 00:43:47.964
or the l and d stuff that Lightning Labs does or Greenlight, which is the other Blockstream thing. So Blockstream has kinda got,

580
00:43:48.505 --> 00:43:50.045
you know, part a footprint

581
00:43:50.425 --> 00:43:50.925
in

582
00:43:51.250 --> 00:43:54.710
2 competing ways to do lightning there. And it's actually 1

583
00:43:55.490 --> 00:44:10.525
so and, basically, what you have is a liquid wallet, and maybe it's a Bitcoin wallet too. And when you wanna send somebody lightning, you just, you know, you call the Bolt's API. And you you in in the wallet, you can't really tell. It just looks like your wallet supports Lightning, but, actually, it's every time it's swapping

584
00:44:12.105 --> 00:44:16.765
and it's, of course, it's very simple for the wallet. You don't even have any channels. You don't have any Lightning

585
00:44:17.065 --> 00:44:20.285
intelligence in the wallet. Right? You just call APIs and it and stuff happens.

586
00:44:20.905 --> 00:44:21.405
So

587
00:44:22.180 --> 00:44:25.640
just kind of, you know, one of the examples where

588
00:44:26.180 --> 00:44:27.240
people build things

589
00:44:27.540 --> 00:44:31.480
and inspire somebody else to, like, find a new use for it. Right? Right.

590
00:44:31.940 --> 00:44:34.740
Build on top of it. That's cool. Yeah. Yeah. So,

591
00:44:35.605 --> 00:44:42.105
The trade off being that, like, it's it's obviously centralized. You need bolts to be online, but it's it's

592
00:44:43.205 --> 00:44:56.849
they use atomic swap, so bolts can't steal your money in the process. Exactly. Yeah. It has a curious side effect. So, you know, the the this thing you mentioned that you gotta be online to receive a lightning payment. Right. So with these Bolt's wallets, you don't.

593
00:44:57.390 --> 00:45:00.450
So you can receive an offline lightning payment because what's happening

594
00:45:01.230 --> 00:45:01.730
is

595
00:45:02.285 --> 00:45:15.185
the Bolt servers are online, and they receive your Lightning payment, and then they automatically send you the liquid Bitcoin, which can be offline like with Bitcoin because it's just UTXO based. Right? So as a as a, you know, convenient side effects,

596
00:45:16.040 --> 00:45:17.660
those wallets actually have

597
00:45:17.960 --> 00:45:19.020
very simple type

598
00:45:19.560 --> 00:45:21.180
of offline lining receipt.

599
00:45:22.760 --> 00:45:23.900
Yeah. That makes sense,

600
00:45:24.440 --> 00:45:27.500
because Volts is handling the online requirement for you.

601
00:45:27.880 --> 00:45:28.380
Yeah.

602
00:45:29.240 --> 00:45:30.119
So would you say

603
00:45:31.505 --> 00:45:42.325
I mean, it's kinda simple, but would would you say that the reason Blockstream was was created to begin with was to try and bring privacy to Bitcoin or or stronger privacy guarantees to Bitcoin?

604
00:45:42.945 --> 00:45:49.320
Yeah. It was to I mean, the reason I was trying to figure out how to make a modular thing like side chains was

605
00:45:49.859 --> 00:45:56.260
so I could get confidential transactions into into Bitcoin. So we got them there indirectly. Right? So it's one of the

606
00:45:57.060 --> 00:45:58.119
yeah. People use

607
00:45:58.580 --> 00:46:01.480
tech for different reasons. So with liquids, you have

608
00:46:01.905 --> 00:46:08.085
generalized asset support. So you've got, like, stable coins and even securities like MicroStrategy shares,

609
00:46:08.465 --> 00:46:10.065
all this kind of stuff, and some,

610
00:46:10.625 --> 00:46:11.925
bonds, so, like,

611
00:46:12.225 --> 00:46:19.380
promissory notes, which is kind of business loan. In Mexico, it's a 1,000,000,000 and a half of those. But, yeah, it it's all covered by confidential transactions.

612
00:46:19.760 --> 00:46:27.060
So if you go on a liquid block explorer, like the mempool, guys have 1. We have 1. I think Blockchain has 1 now too.

613
00:46:27.600 --> 00:46:35.595
You you just see a lot of stuff that says confidential, and you can't you can't read it. You can't tell. You can see, like, the UTXO flow. Like, you know, this

614
00:46:36.055 --> 00:46:36.795
this UTXO,

615
00:46:37.655 --> 00:46:39.674
you know, had changed the way in there,

616
00:46:40.055 --> 00:46:41.275
but you don't know

617
00:46:41.734 --> 00:46:45.674
how much or even what it is. You know? Was that tether? Was that liquid Bitcoin?

618
00:46:46.180 --> 00:46:46.840
And so,

619
00:46:47.620 --> 00:46:48.900
you know, that that that's,

620
00:46:49.300 --> 00:46:53.400
interesting to people. You know? You get it's a formal privacy, like, confidentiality,

621
00:46:53.780 --> 00:46:56.600
and it's that's also important for safety. You know? If you,

622
00:46:57.940 --> 00:47:01.125
you know, flash a big UTXO, that's a security risk. Right?

623
00:47:03.525 --> 00:47:05.305
So you you solve that problem,

624
00:47:05.845 --> 00:47:06.345
and

625
00:47:07.445 --> 00:47:07.845
it's,

626
00:47:08.645 --> 00:47:12.745
it's a it's a form of privacy. Like, Bitcoin's had a lot of, incremental privacy

627
00:47:13.569 --> 00:47:18.470
improvements over time, and this this is one of them. Now, of course, it'd be it might be interesting

628
00:47:19.490 --> 00:47:19.990
eventually

629
00:47:21.089 --> 00:47:21.589
if,

630
00:47:23.170 --> 00:47:24.309
you know, if Bitcoin

631
00:47:25.490 --> 00:47:25.990
itself

632
00:47:27.015 --> 00:47:28.795
integrates something like confidential transactions.

633
00:47:30.694 --> 00:47:32.875
But there there is a bit of a debate about

634
00:47:33.255 --> 00:47:35.734
the trade off, you see, because there's there's a sort of,

635
00:47:37.174 --> 00:47:38.315
a long term question

636
00:47:39.335 --> 00:47:41.515
about what happens if

637
00:47:42.360 --> 00:47:45.580
discrete log gets broken. Like, if if Schnorr signatures are broken

638
00:47:46.120 --> 00:47:49.900
and and this complex of transactions is using Schnorr signature like tech,

639
00:47:50.680 --> 00:47:53.020
then, you know, either you lose the privacy

640
00:47:53.560 --> 00:47:54.460
that you had

641
00:47:55.080 --> 00:47:56.460
or you create a risk of inflation.

642
00:47:56.920 --> 00:47:57.660
And so,

643
00:47:58.085 --> 00:48:02.744
you know, that that's a awkward trade off because you don't really like either of those things. Right? Right.

644
00:48:03.444 --> 00:48:09.625
And so and and the other thing with confidential transactions is they're big, you know. They take a few kilobytes per transaction.

645
00:48:10.085 --> 00:48:10.585
So,

646
00:48:12.350 --> 00:48:16.110
Bitcoin itself, you know, the the transactions are very small. So

647
00:48:16.590 --> 00:48:19.170
It would make the scaling situation even worse.

648
00:48:20.030 --> 00:48:21.970
Yeah. I mean, so so effectively,

649
00:48:22.510 --> 00:48:25.890
what happens on liquid is the block size is the same

650
00:48:26.595 --> 00:48:27.575
as on Bitcoin,

651
00:48:27.955 --> 00:48:30.055
and it has the witness discount the same.

652
00:48:30.435 --> 00:48:36.695
And the the the big part of the confidential transaction is a kinda range proof, and so that goes in a witness space.

653
00:48:37.075 --> 00:48:44.849
But the blocks are every minute, so you've got 10 times capacity. And it approximately cancels out so, you know, you get about the same transaction volume

654
00:48:45.710 --> 00:48:48.849
per 10 minutes because you've got 10 times as much data. Right?

655
00:48:49.150 --> 00:48:52.424
But, you know, if you do that in the main chain, you know, now now,

656
00:48:53.125 --> 00:48:59.625
if a lot of people start using that, your transactions available, your UTXO is available, it goes down. So that's the other problem.

657
00:49:01.045 --> 00:49:04.345
I mean, you said something fascinating in one of our earlier conversations,

658
00:49:04.805 --> 00:49:07.145
which I never really considered, which is

659
00:49:10.030 --> 00:49:12.690
that one of the concerns about increasing

660
00:49:13.310 --> 00:49:14.930
block size on Bitcoin is,

661
00:49:16.510 --> 00:49:21.410
the this idea that it would it would lead to node centralization and it would lead to minor centralization.

662
00:49:22.955 --> 00:49:34.895
And and the core of that issue at the end of the day comes down to censorship protocol level censorship and selectively deciding which transactions are getting confirmed and which transactions aren't getting included in the block.

663
00:49:35.589 --> 00:49:38.010
And confidential transactions, although they're bigger,

664
00:49:38.869 --> 00:49:42.730
because you can't actually see what the amount is that's being sent,

665
00:49:43.349 --> 00:49:46.730
the selective censorship would be more difficult in that situation,

666
00:49:47.109 --> 00:49:48.170
which is an interesting

667
00:49:48.470 --> 00:49:49.930
thought process to think about.

668
00:49:51.275 --> 00:49:54.255
But I I mean, would you would you agree that I think it's,

669
00:49:55.115 --> 00:50:00.975
I mean, I think it's incredibly unlikely that we ever see confidential transactions on Bitcoin? I mean, Bitcoin's incredibly hard to change.

670
00:50:02.475 --> 00:50:06.040
Yeah. Yeah. Possibly not. I mean, there are there are a few things

671
00:50:06.900 --> 00:50:08.600
that were in liquid before

672
00:50:08.980 --> 00:50:09.480
Bitcoin.

673
00:50:09.780 --> 00:50:14.680
Like, it had a Segwit like solution before Bitcoin because it was a new network,

674
00:50:15.060 --> 00:50:19.145
so we didn't have to soft fork or hard fork anything. We just implemented

675
00:50:19.525 --> 00:50:21.465
a malleability fix in the beginning.

676
00:50:21.845 --> 00:50:24.985
And then but it's a similar concept. And then, I think

677
00:50:25.525 --> 00:50:29.385
CLTV, one of the things Lightning needed, we added that first, and

678
00:50:30.670 --> 00:50:31.330
it has,

679
00:50:32.190 --> 00:50:35.810
it had Schnorr signatures early as well, the the open source.

680
00:50:36.190 --> 00:50:42.210
So there's 2 parts. There's Elements, which is an open source library for building liquid light networks and there's liquid. So Elements

681
00:50:43.145 --> 00:50:43.964
library had

682
00:50:44.265 --> 00:50:45.645
Schnorr signatures first,

683
00:50:46.025 --> 00:50:48.525
but, you know, they were improved before they went in Bitcoin.

684
00:50:49.385 --> 00:50:56.925
So I think sometimes it's useful for people to be able to program with things and try things and maybe even improve them

685
00:50:57.490 --> 00:51:03.270
and then put them in liquid. So you've seen people and and and liquid also has covenants. So it has APACAT.

686
00:51:03.810 --> 00:51:06.710
It has checksick from stack, which is another one. And then

687
00:51:07.250 --> 00:51:12.710
a few years after those were introduced, we added about 30 helper functions to help you,

688
00:51:13.674 --> 00:51:20.095
make it easier to program covenants by serial help like, serializing things that you need to create on the stack to, like, compare.

689
00:51:20.635 --> 00:51:21.135
And

690
00:51:21.835 --> 00:51:22.734
so some

691
00:51:23.115 --> 00:51:24.335
like ARC, for example,

692
00:51:24.635 --> 00:51:25.135
Turo's,

693
00:51:25.914 --> 00:51:27.110
ARC company,

694
00:51:27.410 --> 00:51:29.030
they implemented it on liquid

695
00:51:29.330 --> 00:51:32.550
because, hey. You have covenants, and we can you know, they can do the,

696
00:51:33.250 --> 00:51:34.390
more efficient version.

697
00:51:34.770 --> 00:51:35.170
You can

698
00:51:35.730 --> 00:51:36.710
you know, the new,

699
00:51:37.250 --> 00:51:43.335
lightning variant, LN Symmetry is the latest name for it. That needs something like APO, which Bitcoin doesn't have.

700
00:51:43.875 --> 00:51:44.275
So,

701
00:51:46.115 --> 00:51:47.575
somebody who used to work at Blockstream,

702
00:51:48.275 --> 00:51:49.575
like, managed to implement

703
00:51:49.954 --> 00:51:52.775
APO using about 200 opcodes and covenants.

704
00:51:54.605 --> 00:52:00.760
So, you know, the extra, flexibility, you can try stuff out, basically. And sometimes you you don't really

705
00:52:02.339 --> 00:52:06.119
really know if something works until you try it. Right? You know, people come up with theory.

706
00:52:06.579 --> 00:52:11.215
But when you actually implement stuff, you know, the thing you didn't think about

707
00:52:11.595 --> 00:52:12.415
bites you,

708
00:52:12.875 --> 00:52:16.815
and then you realize that doesn't work and you have to fix it. So it is useful to

709
00:52:17.595 --> 00:52:18.075
sort of,

710
00:52:18.635 --> 00:52:23.775
preview things or try things on Liquid as well. And then the other thing which, you know, which

711
00:52:25.160 --> 00:52:26.540
I think is a promising

712
00:52:27.800 --> 00:52:30.300
Bitcoin long term thing is Simplicity itself,

713
00:52:30.920 --> 00:52:32.300
which is a next gen

714
00:52:33.000 --> 00:52:35.180
smart contracting system that was originally

715
00:52:35.640 --> 00:52:43.035
proposed for Bitcoin back in, I think, like, 2012 or something by Russell O'Connor on a one of the Bitcoin channel IRC channels.

716
00:52:43.575 --> 00:52:44.315
And so,

717
00:52:44.694 --> 00:52:47.335
you know, it's been a long time coming, but we have,

718
00:52:47.655 --> 00:52:48.714
released, like,

719
00:52:49.255 --> 00:52:50.714
we're gonna add it to liquid,

720
00:52:51.270 --> 00:52:55.850
and we have a release candidate for actually doing that in test net for the first time.

721
00:52:56.150 --> 00:52:58.730
So, you know, it's it's happening. I mean,

722
00:52:59.190 --> 00:53:03.770
you know, hopefully, this year, but they have and if you if you look online, there is

723
00:53:04.974 --> 00:53:18.435
slightly higher level language that you could program in that translates into Simplicity. Simplicity is like a microcode, like, very low level. So there's a kind of, you know, programming language that looks like a programming language you can type and a bunch of example programs and ID

724
00:53:19.280 --> 00:53:20.580
on, on the website.

725
00:53:21.520 --> 00:53:25.619
And so I think, you know, why I think that could be interesting for Bitcoin

726
00:53:26.400 --> 00:53:28.740
is it's sort of self extensible.

727
00:53:29.760 --> 00:53:30.260
So

728
00:53:30.815 --> 00:53:36.835
it could be the loss of fork is the way I was thinking about it. But if if Bitcoin has simplicity,

729
00:53:37.695 --> 00:53:38.755
you wouldn't need

730
00:53:39.215 --> 00:53:41.155
to debate trade offs for opcodes.

731
00:53:41.455 --> 00:53:42.355
You could just

732
00:53:42.990 --> 00:53:43.890
implement them.

733
00:53:44.350 --> 00:53:45.650
And then if they were

734
00:53:45.950 --> 00:53:47.410
heavy, like, they used

735
00:53:48.030 --> 00:53:51.230
a lot of opcodes and were became a space

736
00:53:51.710 --> 00:53:53.010
like, an efficiency problem,

737
00:53:53.550 --> 00:53:54.530
then you could

738
00:53:55.565 --> 00:53:56.204
implement them and then

739
00:53:57.005 --> 00:54:00.545
and see. And because of the way Symplicity is designed to be

740
00:54:00.924 --> 00:54:01.744
formally verified,

741
00:54:02.845 --> 00:54:21.050
you can prove that the c code does exactly the same thing as the Symplicity code. And then your soft fork isn't really a soft fork because it doesn't change the behavior. It just makes it more efficient. Right? And you can prove it's the same. So, you know, if you if you're not mining and your machine's fast, you don't even need to upgrade. Right? So,

742
00:54:21.510 --> 00:54:23.690
you know, like, if if Bitcoin had

743
00:54:26.845 --> 00:54:27.345
simplicity,

744
00:54:28.285 --> 00:54:30.224
Schnorr signatures could have just been implemented,

745
00:54:30.924 --> 00:54:35.184
like, in line in a fairly efficient way because it exposes, like,

746
00:54:35.645 --> 00:54:36.944
loads and loads of,

747
00:54:38.060 --> 00:54:47.360
like, library calls into, like, all the all the crypto library, the big num library, the serialization, like, all of like, a bunch of useful stuff, basically, so that you can call it

748
00:54:48.140 --> 00:54:52.320
without implementing it from scratch in a in a in a script system. Right?

749
00:54:54.674 --> 00:54:55.494
So it actually becomes surprisingly

750
00:54:55.795 --> 00:54:58.295
compact to do useful things in it.

751
00:54:59.714 --> 00:55:01.335
So, anyway, like, you know,

752
00:55:01.875 --> 00:55:03.414
the time frame between,

753
00:55:05.120 --> 00:55:05.620
Elements,

754
00:55:06.320 --> 00:55:12.020
just the library behind Liquid, having Schnorr signatures and them arriving in Bitcoin, I think, was 8 years.

755
00:55:12.560 --> 00:55:15.940
So, you know, it doesn't these things don't happen fast. Right? But Right.

756
00:55:16.240 --> 00:55:20.260
I think it's it's very interesting to be able to also buy Bitcoin

757
00:55:20.795 --> 00:55:22.175
because, you know,

758
00:55:22.555 --> 00:55:24.575
we don't we don't wanna, like, cut off,

759
00:55:25.355 --> 00:55:26.815
you know, future layer 2

760
00:55:27.515 --> 00:55:28.015
capabilities

761
00:55:29.115 --> 00:55:31.775
or, you know, better cold storage tech.

762
00:55:32.155 --> 00:55:37.299
But, like, frequently changing the base layer is a is a risk that people feel too. Right? So

763
00:55:37.680 --> 00:55:38.799
this could potentially

764
00:55:39.680 --> 00:55:41.460
yeah. So this this could potentially

765
00:55:42.720 --> 00:55:45.460
sort of solve both problems because it has

766
00:55:46.105 --> 00:55:47.085
formal security

767
00:55:47.385 --> 00:55:49.805
semantics, so you can prove things about it. So, arguably,

768
00:55:50.745 --> 00:55:51.965
it's a more secure

769
00:55:52.745 --> 00:55:53.565
and verifiable

770
00:55:54.585 --> 00:55:57.085
scripting system than the current Bitcoin scripting system,

771
00:55:58.025 --> 00:55:59.485
and, yeah, it's self extensible

772
00:56:00.345 --> 00:56:01.565
so that you could,

773
00:56:02.480 --> 00:56:08.420
yeah. Actually, there's there's a Satoshi comment on Bitcoin talk somewhere if you Google for Satoshi quotes.

774
00:56:09.119 --> 00:56:15.059
It's basically also an argument a plea for ossification. Right? He says, like, he rushed the Bitcoin scripting system

775
00:56:15.585 --> 00:56:17.925
so that Bitcoin could be frozen for all time.

776
00:56:18.545 --> 00:56:21.605
And, like, it's it's pretty impressive actually that he,

777
00:56:22.224 --> 00:56:26.484
you know, he had this concept that that it you should he shouldn't change the base layer,

778
00:56:27.345 --> 00:56:30.645
because this is before softwalls were even invented. Right? It's, like, right at the beginning.

779
00:56:31.440 --> 00:56:35.220
Right. Anyway, the that that didn't work out because there

780
00:56:35.520 --> 00:56:38.339
were bugs and they disabled some opcodes early on,

781
00:56:38.640 --> 00:56:39.780
and it turns out

782
00:56:40.320 --> 00:56:42.500
that it's not expressive enough to do

783
00:56:42.880 --> 00:56:46.325
types of the the 4th you know, the types of things we wanna do,

784
00:56:46.625 --> 00:56:48.485
but without making a, you know,

785
00:56:49.105 --> 00:56:55.365
any a VM like mess, which a number of old coins have done. Right? So it's it's designed in a Bitcoin

786
00:56:56.065 --> 00:56:58.805
UTXO model. So even though it's low level, it's still

787
00:56:59.369 --> 00:57:00.190
all UTxo

788
00:57:00.970 --> 00:57:01.470
organized

789
00:57:01.930 --> 00:57:02.750
kind of system.

790
00:57:03.769 --> 00:57:08.670
So, you know, maybe in the longer term, we'll get there. Like, there's a pretty big gap between,

791
00:57:10.010 --> 00:57:12.750
you know, soft fork opcodes these days. So

792
00:57:13.355 --> 00:57:14.174
I was thinking,

793
00:57:14.635 --> 00:57:18.255
well, it's a it's a bigger change. It's a soft forkable change.

794
00:57:20.714 --> 00:57:22.174
And, you know, it it's

795
00:57:23.355 --> 00:57:30.840
people will say simplicity is not simple because it's it's like a different programming system. Right? But the what Russ Russell means by

796
00:57:31.140 --> 00:57:35.720
simple is that it's it's very low level. So it has, like, 9

797
00:57:36.260 --> 00:57:36.760
operands,

798
00:57:37.540 --> 00:57:45.485
which are like, you know, and and or and, like, very low level things. So those are very easy to understand in isolation, and then everything is built using them.

799
00:57:45.865 --> 00:57:51.725
So that's what makes it you know, you you have formal definitions, formal semantics of what's happening because

800
00:57:52.185 --> 00:57:54.845
it's all built out of building blocks that are,

801
00:57:56.070 --> 00:58:00.810
you know, super clear mathematically exactly what this does. Right? And then

802
00:58:01.110 --> 00:58:02.730
everything is built out of them.

803
00:58:03.590 --> 00:58:04.090
So,

804
00:58:05.990 --> 00:58:07.290
yeah, I think it's

805
00:58:07.990 --> 00:58:08.970
it's a potential

806
00:58:09.910 --> 00:58:10.410
that

807
00:58:11.565 --> 00:58:14.065
when we have discussions about opcodes,

808
00:58:14.445 --> 00:58:23.505
apart from people, like, debating whether they even want the applications it enables, like, some people actually don't want an application, so they don't want the opcode, or they try to, you know,

809
00:58:24.140 --> 00:58:27.280
restrict the opcode's flexibility so it can't quite do the application.

810
00:58:27.980 --> 00:58:31.200
Right. A lot of the debate usually ends up being about

811
00:58:31.820 --> 00:58:35.360
the different the different options like the bike shedding. You know? There's, like,

812
00:58:35.740 --> 00:58:36.640
half a dozen

813
00:58:37.255 --> 00:58:44.315
covenant Might do this one if we could do this one, but it's not worth the rest of this one. Yeah. So then you get people get stuck in, like,

814
00:58:44.695 --> 00:58:46.075
you know, comparison,

815
00:58:47.734 --> 00:58:49.035
dilemmas. You know?

816
00:58:49.590 --> 00:58:58.490
So so in a way, Simplicity wouldn't have that problem because, you know, the question is, do you want extensibility or not? Do you think it's secure or not?

817
00:58:59.030 --> 00:58:59.530
And

818
00:59:00.630 --> 00:59:04.890
that's it. Right? It has 9 operators. Like, you don't need anymore. You can do everything.

819
00:59:05.305 --> 00:59:05.805
So

820
00:59:07.865 --> 00:59:17.885
we'll see. It's like this is a this kinda debate is a long way out, but it might. Yeah. Yeah. I mean, and, basically, simplicity and all these other things are live on

821
00:59:18.579 --> 00:59:25.079
Liquid right now. Right? So they're being tested? Yeah. Yeah. So the other things are Simplicity is live on a test net,

822
00:59:25.460 --> 00:59:27.079
but that's a release candidate

823
00:59:27.380 --> 00:59:32.680
for going live on the network proper. So we're pretty excited to finally get that thing, you know, to get the Simplicity

824
00:59:33.220 --> 00:59:33.720
live.

825
00:59:34.055 --> 00:59:36.075
And It's not live on Liquid yet?

826
00:59:36.455 --> 00:59:45.275
No. It's on a test on Liquid Testing it, but it is a release candidate, the first release candidate for actually going live. And part you know, apart from it being

827
00:59:45.575 --> 00:59:47.195
comp you know, a lot of work,

828
00:59:47.810 --> 00:59:54.150
the other reason we took we took a bit of delay on is we implemented this higher level programming language so you can

829
00:59:54.850 --> 00:59:56.609
express the scripts in

830
00:59:57.330 --> 00:59:59.270
you know, with variable names in

831
00:59:59.570 --> 01:00:02.984
English, whereas the the low level stuff is almost like a mathematical

832
01:00:03.285 --> 01:00:05.865
logic language. So it's quite hard to,

833
01:00:06.325 --> 01:00:10.025
you know, program in. Right? And it just translates into that. So

834
01:00:10.484 --> 01:00:13.704
you can you know, people can try that out and look at the example programs.

835
01:00:16.329 --> 01:00:16.910
Got it.

836
01:00:19.050 --> 01:00:21.630
So I'm I mean, I wanted to ask you about

837
01:00:22.250 --> 01:00:29.470
what are what are your thoughts on these new bit Bitcoin powered eCash protocols like Casio? Have you have you looked at them at all?

838
01:00:30.565 --> 01:00:31.045
Yeah.

839
01:00:32.725 --> 01:00:33.305
So, actually

840
01:00:34.325 --> 01:00:37.065
I mean, there's a couple of them. So Casu is,

841
01:00:37.525 --> 01:00:40.585
like, kinda single single signer. Right? So it's actually

842
01:00:41.445 --> 01:00:48.880
pretty similar to the DigiCash thing in the past, except the way you get money into it is not with the stablecoin, but with Bitcoin in a

843
01:00:49.280 --> 01:00:55.695
I guess, like, effectively, it's an IOU. Right? Because it's a single operator and it's software only, so there's not really any

844
01:00:56.335 --> 01:00:57.235
tamper resistant

845
01:00:57.535 --> 01:00:58.675
hardware kind of stuff.

846
01:00:58.975 --> 01:00:59.715
And then,

847
01:01:00.815 --> 01:01:04.035
you know, so there's an interesting trade off with e cash.

848
01:01:04.495 --> 01:01:04.995
So

849
01:01:05.935 --> 01:01:07.155
you get is

850
01:01:07.695 --> 01:01:10.355
it's, you can't audit it, so you,

851
01:01:10.770 --> 01:01:13.670
you know? Well, I guess that's negative. Let's start with a positive rate. So

852
01:01:13.970 --> 01:01:14.950
it's very scalable,

853
01:01:15.330 --> 01:01:16.790
and you get very strong privacy.

854
01:01:17.570 --> 01:01:19.670
Downside is you can't audit

855
01:01:20.530 --> 01:01:26.435
it basically because of the privacy tech. It's a side effect, right, which doesn't seem like you can fix. And the side effect

856
01:01:27.375 --> 01:01:30.195
is the e cash issuer could issue another coin.

857
01:01:30.895 --> 01:01:32.595
And because the coins are not linkable,

858
01:01:32.895 --> 01:01:34.035
you can't prove it.

859
01:01:34.415 --> 01:01:42.500
And, you know, the the issuance is not like, on Bitcoin, the issuance is public. Right? You see Right. All the mined coins on this, you can't see them. So

860
01:01:43.360 --> 01:01:45.940
you can see how many coins are held in escrow

861
01:01:46.960 --> 01:01:47.860
for the IOU,

862
01:01:48.400 --> 01:01:48.900
but

863
01:01:50.000 --> 01:01:57.255
you can't prove that they didn't issue more tokens and they they could get away with that for a long time, right, until, like, basically, too many people took

864
01:01:57.715 --> 01:02:06.615
coins out and yet people are still transacting that there's even even though there are no coins left in there. Right? That would tell you. You do basically have to empty it to find out. You'd like run that thing?

865
01:02:07.100 --> 01:02:08.540
Yeah. You need to run. So

866
01:02:09.180 --> 01:02:12.060
yeah. So Trace Mayer used to try and start a run on the,

867
01:02:12.940 --> 01:02:17.660
on the Bitcoin exchanges in January of a year, right, to see if they see if they have clothes on.

868
01:02:17.980 --> 01:02:19.600
That's a good good idea.

869
01:02:20.140 --> 01:02:20.640
So

870
01:02:21.115 --> 01:02:22.875
so it's that. And then the other one is,

871
01:02:23.275 --> 01:02:26.175
Feddy. And so, actually, that was

872
01:02:29.435 --> 01:02:30.415
the Blockstream

873
01:02:31.515 --> 01:02:32.495
research guys

874
01:02:33.579 --> 01:02:34.079
implemented

875
01:02:35.740 --> 01:02:39.920
the kinda library level, like, like, the the network levels protocol.

876
01:02:40.220 --> 01:02:43.520
Fedimed. It was Eric Sirion. Right? Like, you guys Yeah. Yes.

877
01:02:43.980 --> 01:02:47.119
So Eric was in the Blockstream Research, and then

878
01:02:47.495 --> 01:02:52.975
there's a startup that formed around it. So Eric went on to be the CTO, I think, of of,

879
01:02:53.415 --> 01:02:55.195
of that company. He's a cofounder.

880
01:02:55.495 --> 01:02:57.675
I think he mostly focuses on their protocols

881
01:02:58.135 --> 01:02:58.635
still.

882
01:02:59.015 --> 01:03:03.390
Right. Right. And then that was, that whole thing was kicked off by Obi who had

883
01:03:04.190 --> 01:03:05.970
sold his, UK exchange

884
01:03:06.430 --> 01:03:09.329
and, wanted to do some more bearer stuff. I guess

885
01:03:09.630 --> 01:03:17.730
the experience of running an exchange and dealing with banks and regulators kind of made him come back to the big Bitcoin roots. Right? Heaped you up in the dark.

886
01:03:18.414 --> 01:03:22.434
Yeah. Yeah. So he he had to, like, redress the balance of commerce so,

887
01:03:22.894 --> 01:03:25.954
you know, to feel good about Bitcoin again. So he,

888
01:03:26.974 --> 01:03:27.474
figured

889
01:03:27.855 --> 01:03:34.950
they'd use that version, and it and it has a bit of a better trade off. I mean, it's still fundamentally the same thing, but at least you've got, you know, you've got federation.

890
01:03:36.770 --> 01:03:43.109
So it's it's actually the federation is basically the same concept as Liquid, right, except that the payload is not a side chain

891
01:03:43.645 --> 01:03:45.505
that's auditable because it's a blockchain.

892
01:03:45.805 --> 01:03:47.985
Right. It's a it's a e cache system,

893
01:03:48.605 --> 01:03:50.785
except this one is federated. So

894
01:03:52.445 --> 01:03:53.825
you with a single one,

895
01:03:54.605 --> 01:03:56.625
the the server is,

896
01:03:57.660 --> 01:03:58.160
like,

897
01:03:58.619 --> 01:03:59.599
blind signing.

898
01:04:00.299 --> 01:04:06.400
So it's signing in an unlinkable way. The coins when you when you deposit them, getting back, you know, when you spend them. And here's,

899
01:04:06.780 --> 01:04:10.640
like, a threshold of these servers are gonna blind sign it. So it's a way to

900
01:04:11.365 --> 01:04:16.025
ever elevate the trust so you need, you know, the threshold of them have to include

901
01:04:16.965 --> 01:04:20.105
to inflate and do that stuff. Right? Right.

902
01:04:20.965 --> 01:04:23.225
But the other twist on on FIDI,

903
01:04:23.605 --> 01:04:25.305
unlike Liquid so Liquid is,

904
01:04:25.685 --> 01:04:26.425
you know,

905
01:04:26.990 --> 01:04:31.809
a bunch of exchanges and wallets and different Bitcoin companies. Right? Whereas,

906
01:04:32.589 --> 01:04:35.809
Feddy is community. So the the operators are,

907
01:04:36.430 --> 01:04:38.130
you know, proposed to be

908
01:04:38.670 --> 01:04:40.049
different community groups.

909
01:04:41.095 --> 01:04:48.875
So there's pros and cons to that. You know? I mean, I mean, the pro is you can get involved and you can start one. But the con is, you know, maybe eventually

910
01:04:49.895 --> 01:04:53.275
somebody tries to rug pull it. Right? They start a fake,

911
01:04:53.990 --> 01:04:55.770
you know, they start one with the intention

912
01:04:56.390 --> 01:04:57.369
to all of the,

913
01:04:58.790 --> 01:05:00.410
federation members are them.

914
01:05:00.950 --> 01:05:02.809
There'll be rug pulls for sure.

915
01:05:03.270 --> 01:05:07.369
Yeah. I mean, in both protocols, Cashew and Fedimint,

916
01:05:08.984 --> 01:05:11.404
it was very important at at the base

917
01:05:11.865 --> 01:05:16.684
the base level that anyone could run these things and that you'd have basically a

918
01:05:17.224 --> 01:05:20.765
hopefully I mean, hopefully, at scale, what you see is you see this

919
01:05:21.119 --> 01:05:27.539
this robust free market of effectively all these different mints. These banks that are are competing on reliability

920
01:05:28.000 --> 01:05:28.500
and

921
01:05:28.880 --> 01:05:29.380
reputation

922
01:05:30.240 --> 01:05:31.059
and fees.

923
01:05:33.055 --> 01:05:39.075
I mean, I I I particularly I'm kinda curious on your opinion just because to me, it's fascinating that you had

924
01:05:39.375 --> 01:05:44.115
effective and you lived through this. You know? I didn't live through this. But, like, you have, like, DigiCash,

925
01:05:44.975 --> 01:05:46.115
which was was

926
01:05:46.415 --> 01:05:48.595
Charmony Cash before Bitcoin existed.

927
01:05:49.690 --> 01:05:57.710
It had good really good privacy guarantees, but it was centralized and and and you couldn't tell if there was hidden inflation or if there was a rug pull happening.

928
01:05:58.090 --> 01:06:02.110
Then Bitcoin came around and Bitcoin has, you know, a cap supply.

929
01:06:02.465 --> 01:06:05.525
It's completely auditable. It's transparent. It's decentralized.

930
01:06:06.225 --> 01:06:08.485
It's very difficult to change by default,

931
01:06:09.265 --> 01:06:13.285
but doesn't have any privacy. It doesn't have very strong privacy guarantees.

932
01:06:13.665 --> 01:06:19.420
And then now all of a sudden you have Cashew and Fedimint that came out afterwards that basically linked the whole thing full circle.

933
01:06:19.799 --> 01:06:20.700
It's like DigiCash

934
01:06:21.160 --> 01:06:22.140
on top of Bitcoin.

935
01:06:23.000 --> 01:06:25.339
Yeah. Well, I mean, it is it is

936
01:06:26.839 --> 01:06:30.220
doing some extra things, which is the DigiCash,

937
01:06:33.095 --> 01:06:35.994
it needed a you know, ultimately, you needed a bank account.

938
01:06:36.375 --> 01:06:43.595
Right. That's what DigiCash was going for. Right? So that you could send a you could transfer in euros or dollars or what have you and get your eCash

939
01:06:43.895 --> 01:06:44.395
tokens,

940
01:06:45.279 --> 01:06:49.619
and then, you could transfer them. Right? But they were table stable coins. So at least with

941
01:06:50.480 --> 01:06:51.299
with this,

942
01:06:51.680 --> 01:06:52.420
you have

943
01:06:52.799 --> 01:06:53.700
Bitcoin denomination.

944
01:06:54.160 --> 01:06:57.299
And, of course, we like Bitcoin now because it exists. Right? So

945
01:06:57.865 --> 01:07:04.445
what it is kind of, ironic that you've got, you know it's come full circle or what have you. Right? Now you've got

946
01:07:04.985 --> 01:07:05.485
DigiCash

947
01:07:05.785 --> 01:07:07.725
denominated in Bitcoin, basically.

948
01:07:08.985 --> 01:07:17.400
But I mean, the federated version, I think that's new. I don't know if the DigiCash era guys had thought about Yeah. Making a federated version. The original federated,

949
01:07:20.019 --> 01:07:21.559
e cache, actually, Greg Maxwell

950
01:07:22.819 --> 01:07:25.000
wrote some library code to do it in,

951
01:07:25.380 --> 01:07:31.015
I don't know, 2015 or something, but he didn't he didn't, like, do the network part. He just had the idea that you could,

952
01:07:33.475 --> 01:07:34.135
you know,

953
01:07:34.675 --> 01:07:35.175
sign

954
01:07:35.475 --> 01:07:37.255
do the blind signing with a federation.

955
01:07:40.089 --> 01:07:41.310
Hang on just a second.

956
01:07:41.930 --> 01:07:46.270
I'm gonna need to get some more power. My battery is getting low. One sec.

957
01:07:46.890 --> 01:07:47.550
You're good.

958
01:08:03.065 --> 01:08:08.840
Sarah, you went really crazy with the smiley faces. I was about to meet you in the Nostra chat.

959
01:08:09.300 --> 01:08:10.520
Huge shout out to

960
01:08:10.900 --> 01:08:21.400
the freaks in the Nostra chat who have joined us and who have zapped the show. I see EZ, I have no bullshit Bitcoin, has has zapped 10,000 sats, the highest zap of the day.

961
01:08:22.020 --> 01:08:23.240
Appreciate you all.

962
01:08:25.175 --> 01:08:26.155
We good, Adam?

963
01:08:27.335 --> 01:08:30.795
Yeah. For a bit. Yeah. Okay. We're gonna wrap shortly.

964
01:08:31.175 --> 01:08:38.554
I mean, I I think the other thing with, like, the FEDIMENT, cashew stuff is is FEDIMENT, because it has the federated element,

965
01:08:39.060 --> 01:08:41.000
isn't is way more complex.

966
01:08:42.020 --> 01:08:49.239
Yeah. Like, Cashew the Cashew ecosystem has been moving way, way quicker, and there's been this, like, organic really strong

967
01:08:49.780 --> 01:08:51.960
developer ecosystem that has

968
01:08:52.485 --> 01:08:53.145
that has,

969
01:08:54.325 --> 01:08:59.465
come to existence. And we haven't really seen it on the Fedimint side. And and just in general,

970
01:09:00.245 --> 01:09:02.665
as a result, what you start to see happening,

971
01:09:04.085 --> 01:09:07.145
is and and, you know, maybe it's just because it's early,

972
01:09:07.600 --> 01:09:25.114
and it's it's still very early days for both of these protocols. But what you're kinda seeing happening is there's a lot of cache humans. There's many different cache humans you can choose from. There's not many Federman instances that you can choose from, because they're so heavy to run and because it takes a a certain level of technical

973
01:09:25.574 --> 01:09:28.954
competence to run one without accidentally rug pulling people.

974
01:09:29.335 --> 01:09:29.835
Yeah.

975
01:09:30.454 --> 01:09:33.434
And Cali specifically, who's kind of been like this

976
01:09:33.895 --> 01:09:36.235
you know, he's, like, the lead maintainer, the

977
01:09:36.570 --> 01:09:41.070
head head head visionary guy over there. He doesn't have control over the protocol. It's an open protocol.

978
01:09:41.930 --> 01:09:47.630
They've done a lot of creative things. Like, you can have a wallet that has, like, a single front end on Cashew,

979
01:09:47.930 --> 01:09:49.390
but it in the background,

980
01:09:50.864 --> 01:09:57.125
your your money is actually being held in many mints. Right? And then you can pay a single lightning invoice with a multipart payment

981
01:09:57.585 --> 01:10:04.324
from the many different mints. And then if 1 mint rugs or it has some inflation or something, you don't lose all of your money.

982
01:10:05.320 --> 01:10:07.020
Like, he has this round robin

983
01:10:07.880 --> 01:10:09.980
liability checker that's, like, basically

984
01:10:10.600 --> 01:10:13.580
testing payments out of Mints. You know, it's not perfect,

985
01:10:14.040 --> 01:10:18.620
but it Yeah. It does increase the trust model because it's Bitcoin, because you have lightning.

986
01:10:19.155 --> 01:10:22.455
There's there's a lot of creative things you can do to try and

987
01:10:23.235 --> 01:10:27.255
minimize some of that trust, some of that rug risk that you see with a single

988
01:10:27.955 --> 01:10:31.335
Yeah. Admin. I mean, it's it is possible

989
01:10:31.635 --> 01:10:32.295
to do,

990
01:10:33.670 --> 01:10:34.250
you know,

991
01:10:35.269 --> 01:10:36.570
that kind of privacy

992
01:10:37.349 --> 01:10:38.250
with auditability,

993
01:10:39.750 --> 01:10:40.489
which is,

994
01:10:43.349 --> 01:10:43.849
the

995
01:10:44.630 --> 01:10:47.690
0 coin, which was our academic paper by,

996
01:10:48.665 --> 01:10:49.705
Matthew Green and some other people.

997
01:10:51.705 --> 01:10:52.205
But

998
01:10:52.905 --> 01:10:57.165
then it becomes expensive. Like, those coins are, like, 40 kilobytes of coin or something,

999
01:10:57.705 --> 01:10:59.405
so your blockchain gets big.

1000
01:11:00.750 --> 01:11:03.970
But, you know, so maybe that that kind of thing could get optimized too. Right.

1001
01:11:04.430 --> 01:11:08.290
Well, it's it's fascinating to watch. Okay. Adam, last topic before we wrap.

1002
01:11:09.230 --> 01:11:14.530
You used Nasr in the early days, but you haven't really used it, you know, since last year.

1003
01:11:15.875 --> 01:11:19.895
Why? What are your thoughts on nastr? What do you what do you how do you think about that project?

1004
01:11:20.515 --> 01:11:23.255
Well, I mean, I like that it's it's happening because

1005
01:11:24.195 --> 01:11:25.575
while Elon has,

1006
01:11:26.355 --> 01:11:28.375
you know, exposed some

1007
01:11:29.550 --> 01:11:30.449
very bad

1008
01:11:30.909 --> 01:11:31.409
political

1009
01:11:31.790 --> 01:11:37.150
censorship games. I mean, I call it censorship. Again, people will argue, whether censorship is possible if it's a

1010
01:11:37.949 --> 01:11:42.770
anyway, they they they were interfering with, like, the election process, and that is, like, purely

1011
01:11:43.665 --> 01:11:46.165
criminal activity. They should be doing it.

1012
01:11:46.704 --> 01:11:54.165
And, you know, the obvious thing to do so so Elon's fixed it, but he's he's still, you know, got people working on,

1013
01:11:56.145 --> 01:12:00.460
moderation related stuff, and people still get banned, you know, for spurious reasons.

1014
01:12:00.920 --> 01:12:11.900
So so the honest thing is, like, okay. Let's just take the central system out of it. So, you know, I should get onto it get back onto it. I think the the challenge with any social media network is people have got the

1015
01:12:13.125 --> 01:12:17.625
the network effect, and, so there's a lot of chatter on Twitter. But

1016
01:12:18.165 --> 01:12:18.565
there's,

1017
01:12:19.684 --> 01:12:20.905
maybe more focused,

1018
01:12:21.445 --> 01:12:24.264
narrow chatter on Nostra. Right? There's more Bitcoin centric.

1019
01:12:24.700 --> 01:12:26.800
Yeah. I mean, we've been we've been growing.

1020
01:12:27.500 --> 01:12:39.680
There's there's more and more people using Master every day, and, there's some really strong Bitcoin discussion there. So, I mean, we'd love to have you more active on it. Let me put it that way. It'd be great to have you more a part of it.

1021
01:12:40.345 --> 01:12:41.885
Yeah. I should get on that.

1022
01:12:42.425 --> 01:12:42.925
Awesome.

1023
01:12:43.705 --> 01:12:52.765
Adam, thanks for your time. I know time is scarce. I know a lot of things are going on in Lugano, so, it's particularly great that you carved out some time for us.

1024
01:12:53.199 --> 01:12:56.420
Do you have any final thoughts, for the audience before we wrap?

1025
01:12:59.119 --> 01:13:01.059
Yeah. I mean, I think it's,

1026
01:13:02.400 --> 01:13:05.219
like, I'm a technology optimist, so I think,

1027
01:13:06.000 --> 01:13:06.659
you know,

1028
01:13:07.215 --> 01:13:11.235
all good things are happening for Bitcoin, and it's here to stay. And,

1029
01:13:12.335 --> 01:13:14.915
you know, we can keep chipping away at decentralization

1030
01:13:15.295 --> 01:13:15.875
and privacy,

1031
01:13:16.175 --> 01:13:16.675
and,

1032
01:13:17.135 --> 01:13:20.115
you know, there is a use it or lose it on a lot of this stuff. So,

1033
01:13:20.830 --> 01:13:22.690
you know, use cash,

1034
01:13:23.230 --> 01:13:27.650
like paper cash if if you can. Use Bitcoin if you can. Use privacy tech.

1035
01:13:28.350 --> 01:13:38.045
And if a lot of people are using it I mean, the privacy tech works better if more people are using it, plus it becomes politically harder for, you know, politicians to be able to interfere. Like, some countries

1036
01:13:39.065 --> 01:13:40.765
are very heavy users of cash.

1037
01:13:41.225 --> 01:13:42.925
Other countries try to, like,

1038
01:13:43.225 --> 01:13:47.245
you know, phase it out. Right? So Yep. Similar kind of thing.

1039
01:13:48.665 --> 01:13:53.360
Wonderful. Well, Adam, thank you for your time. Thank you for everything that you're doing in the space.

1040
01:13:53.740 --> 01:13:54.960
We appreciate you.

1041
01:13:55.500 --> 01:13:55.980
And,

1042
01:13:56.540 --> 01:13:58.400
until next time. I look forward to,

1043
01:13:59.180 --> 01:14:04.535
our chats are always great. I always enjoy them, so thank you again. Thanks for having me on. Awesome.

1044
01:14:05.155 --> 01:14:12.855
And huge shout out to our listeners. Thank you guys for listening. Thank you guys for sharing the show. Thank you for supporting. We are ad free.

1045
01:14:13.635 --> 01:14:25.150
We have no sponsors. We're supported purely by Bitcoin. And a huge shout out to the freaks who joined us in the Nostril live chat. Thank you all. As always, you can find any information about the show at sil dispatch.com.

1046
01:14:26.170 --> 01:14:27.949
Thanks, Adam. Cheers, guys.

1047
01:14:38.535 --> 01:14:40.315
Our world is chaotic,

1048
01:14:40.775 --> 01:14:45.115
but life found its way by channeling energy to bring order to chaos.

1049
01:14:45.540 --> 01:14:49.880
It is in our nature to seek signals amongst noise because it is through communication

1050
01:14:50.180 --> 01:14:55.720
and exchange that we evolve beyond the darkness of chaos into the dawn of civilization.

1051
01:15:10.220 --> 01:15:25.680
To efficiently shape the world with our voice. Now let the market speak. So we build, we sow, we trade, we grow to meet our wants and needs. We specialize and drive from the mind, our creations, into reality. We make progress in our process to get more for less, advancing society.

1052
01:15:26.195 --> 01:15:30.615
Forth dawn of the age of technology that harnessed the energy to reach prosperity.

1053
01:15:31.075 --> 01:15:41.735
Our money embodies the power to reap what we sow, so the market becomes a channel for our collective energy to flow. When value is traded for value, we are aligned and so we evolve.

1054
01:15:42.170 --> 01:15:43.790
This is how amidst uncertainty,

1055
01:15:44.330 --> 01:15:45.869
life continues to grow.

1056
01:15:46.409 --> 01:15:54.030
But the dawn of tech gave rise to light speed information exchange. So to transact fast, we further abstract money from energy constraints

1057
01:15:54.409 --> 01:16:01.935
and became more aligned on a few large entities to coordinate trade, concentrating the power, resources, and authority to create

1058
01:16:02.315 --> 01:16:09.775
more and more of our money, distorting its signals, eroding its worth, and throwing us back into the darkness of chaos.

1059
01:16:25.050 --> 01:16:25.949
When we destroy

1060
01:16:26.329 --> 01:16:31.575
the mechanism of money, we destroy our ability to navigate through uncertainty.

1061
01:16:32.275 --> 01:16:43.575
And when we can't trade value freely and directly, we must trust the few to govern the many. What happens when all our means center around an authority? Complexity fills

1062
01:16:44.010 --> 01:16:44.510
coerce

1063
01:16:45.050 --> 01:16:54.510
our actions. Can there be true innovation when there's no freedom of expression? What happens to our voice for one set? Shape social discourse, now whose ideas gets created and which problems get solved. Because our progress depends on hearing

1064
01:16:59.034 --> 01:17:15.119
and which problems get solved. Because our progress depends on hearing many sides to resolve, then why would we suppress the voice that shapes how humanity evolves? When we cut off the perspectives that make up society, we lose sight of the truth that forms our entire reality.

1065
01:17:15.579 --> 01:17:22.239
Each person's contribution builds up. Our resiliency, did we forget these differences are what strengthens humanity?

1066
01:17:23.500 --> 01:17:37.415
When communication breaks, our words tend to silence. Our acts become violent and the world is divided the world is divided, and its darkness truth is twisted by our pain and our bias, eroding the common ground, making us more and more fragile.

1067
01:17:38.675 --> 01:17:41.400
To navigate uncertainty, we must solve for robustness,

1068
01:17:41.700 --> 01:17:52.515
so everything gets tried and tested by various efforts, until we discover the system that best coordinates us. Mirrors life's process of channeling energy to create signal from chaos.

1069
01:17:53.235 --> 01:18:07.895
In the era of technology, we transform energy into computational power to process the noise of free markets into structured order, and just by looking at numbers, we can derive how much power is required to reduce chaos and inscribe a flow of value for order verify that our transactions happened in line with shared rules. We don't need to seek trust.

1070
01:18:08.500 --> 01:18:23.864
Transactions happened in line with shared rules. We don't need to seek trust when we can see proof. It is real time consensus that our lines is to evolve. This is how amidst uncertainty, our lives continue to grow when we uphold our own rules, we preserve our own work and

1071
01:18:24.165 --> 01:18:34.824
defend our own voice, which lets the true market emerge. The strength of the design lies in each of our participation since we are the nodes of channel our energy end to end. As we claim

1072
01:18:35.220 --> 01:18:40.040
responsibility to uphold our own rights, we radiate the power that brings our truth

1073
01:18:40.420 --> 01:18:41.239
into light.

1074
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And when that dawn of light touches all parts of the glow and it ripples throughout society, and it returns us the hope that becomes the power that sparks humanity to thrive, that same power that fuels the creation of the mind. And when our mind and our money are truly set free and they transcend the limits

1075
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of past boundaries,

1076
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now knowing becomes owning and ideas become wealth. What happens now? We can all push to expand the edges of our existence and assume evolution when things are the hardest. As we hang for the light, we have to push through the darkness that is in these moments. We do what we do best. We take the chaos in the darkness and use our power to create. It is in these moments when we're all in alignment and afraid of a difference, ascends us to a highest and distant depth of it all. Know that hope is not gone. It is always the darkest before dawn.