0:02

Alright. Good deal. We should be live. Man. If you wanna Yeah. Kick off the opener. I I will, sir. I'm just fired up from our cold plunge, but, let me do the opener. Welcome Oh, do you wanna talk about the cold plunge first? We're gonna go right into a tangent. Let's go.

0:19

Yeah. We should ask Bob. Bob, do you like cold plunges?

0:23

What does that mean? Like, jumping in cold water?

0:26

Pretty much. But, like, depending on what your definition of what cold water is,

0:31

or degrees.

0:33

But yeah. No. You'd No. My scrotum shrivels up and folds into my body. I said, what the fuck are you doing? Don't ever do that again.

0:42

You and me both? Exactly.

0:44

And then I just want an axe pain.

0:47

I like it the other way around. I like to, you know, get out of a hot tub and go roll in the snow and then get back in the hot tub. That's what I like. Yeah. That actually does,

0:56

work. If you can go, like, sauna state or sorry, sauna, cold Exactly. Saunas, cold plunge.

1:02

Yeah.

1:03

Eco Eco's back in Nashville, and,

1:06

we we got in our buddies, cold plunge before this show. So we're gonna be fired up, ready to go. So we're gonna bring our a game to I'll tell you a funny story on this topic. So Yeah. You know, I'm back in theoretical physics and I have a lot of friends who work, for various experiments, especially the ice cube experiment down at the South Pole.

1:22

And if you winter over at the South Pole, they have a tradition

1:26

where I I I'm not sure when it when it is during the year but I think it's like the coldest day of the year or the, you know, January 1st something like that. They have a tradition where you have to run out naked and tag the pole and then run back. How far is it going on?

1:43

Oh, I don't know. A 100 meters or so. It's not that far. But, so they get into a sauna and they get their skin really, really hot. Right? And they run out, tag the pole, then run back in when it's, like, a 100 degrees below 0.

1:54

Holy god, dude. Dude, Iko, imagine tripping.

2:00

Yeah. Yeah. Oh, you're gonna I mean, they wear they wear shoes, but they're they do naked.

2:05

Holy

2:07

shit. Yeah. What's the ice cube experiment at the South Pole?

2:11

Ice cube experiment is a it's about a cubic kilometer of ice.

2:15

So the the surface of Antarctica is covered about 3 kilometers thick of ice.

2:19

And, you know, a kilometer or so down, it's really tightly packed and very, very clear, very transparent. And so what they do is they use a hot water grill to place, photo detectors,

2:29

in the ice. And so they've got these strings that form a cube

2:32

in the ice. And what they're looking for, they're looking for high energy particles in space to hit the ice,

2:39

knock oxygen or hydrogen atom,

2:41

and then deposit a bunch of energy, which makes a bunch of light. They pick up that light and they see tracks of neutrinos

2:47

coming from outer space.

2:50

Oh, interesting.

2:51

The neutrino telescope, really.

2:54

Wow. But they're Are you into the South Pole? I have not. But there are lots of other stuff down the South Pole too. There's a

3:01

radio telescopes looking from the surface. There's, you know, biology experiences. There's a whole research program itself.

3:09

Awesome. What's the craziest experiment you know of that's going on right now?

3:18

I don't

3:20

can't really think of 1. I mean, ice cube is is pretty crazy. It's been going on for a long time. None of them are really crazy. Scientists are actually pretty

3:28

conservative. I don't know. I don't really think anything terribly crazy. You know, go look where they'll also look before and and that's

3:34

that's always interesting. What's what's crazy is experiments that,

3:38

it's what's crazy is experiments we're not doing.

3:41

Yeah. Tell us about that. What what experiments were we not doing?

3:45

In particular, reproduction studies.

3:48

Right? So throughout science, we, we tend to study something. We get an answer, and then it has to be a novel answer.

3:55

And then we publish it, and then nobody goes back and checks whether we got the right answer.

3:59

And this is less it's less of a problem in physics, but it's more of a problem in other fields like biology.

4:05

Where, you know, somebody says, oh, this drug works. Well, what you don't know is that they trialed 20 drugs and publish the one that works with 95%

4:12

interval. Well, you've got the 95% because of the other 20 drugs you rejected. And they don't even tell you that they did that. Right?

4:20

So, you know, reproduction studies is something that we really need to do across across science, but because of the desire for novelty journals,

4:28

you know, novel is reproductive studies are are not sexy. Right? They're boring,

4:34

but they're very, very important. And it's crazy that we we by and large don't do them. Them. And that strongly biases the sign of results we get and a lot of scientific results, we get are wrong because of it.

4:47

Very well said. So now I'm gonna go into welcome to pod two fifty six, a weekly Bitcoin podcast focused on Bitcoin mining, energy, and proof of work, hosted by me, rod at bitkite on Twitter, and you can also find me on Noster.

5:01

My other co host of pod 2 56, just the one and only and greatest of all time,

5:07

Econo Alchemist. Eko, my friend, how you

5:11

doing? I'm doing good. Still trying to warm up my core from that cold plunge,

5:16

but good otherwise. Man, I'm I'm Bob, I don't I don't think we've ever met, by the way, and I'm just excited to pick your brain on a number of different topics now, especially with this, like, little opener. Okay.

5:26

Well, I just Yeah. Sorry. That was a complete tangent.

5:29

I know. But

5:31

but we're into tangents on this show, believe it or not.

5:36

All tangents. No scripts.

5:38

Full send.

5:40

But maybe, Bob, just to kick it off for the audience, maybe you could give a brief, intro on yourself,

5:47

and then we can get started.

5:50

Sure. So,

5:52

my name is Bob McElrath. You probably

5:54

if you've if you've heard of Brightpearl,

5:57

I do run the the Brightpearl Twitter account. I've I've,

6:00

written about I've written the architecture documents for it and I'm working on it. We'll talk about that in a bit.

6:05

My background is actually in theoretical physics. So I got my PhD,

6:09

wrote a thesis on the Higgs boson, did a couple of postdocs.

6:13

I worked at CERN for a while at the Large Hadron Collider in Switzerland.

6:19

And, you know, after a few years, kind of took a left turn, didn't get a faculty job. We can talk about what's wrong with science more if you like, but

6:26

didn't get a faculty job and took a left turn, and started working on Bitcoin. I discovered Bitcoin,

6:31

when I was at CERN actually, the that's when the Bitcoin white paper came out around 2009, 2010, and I noticed it, like, immediately.

6:38

It might have been this post on Slashdot where I first noticed it,

6:43

but I didn't really do anything with it. You know, my priorities were elsewhere. And I've always been interested in cryptography as well as finance, and so I I said, wow, that's really interesting.

6:51

And so in the intervening years, you know, I I moved up to New York, worked for,

6:56

Solid X. They were the guys proposed the Bitcoin ETF competition with Winklevoss Brothers back in 2015 timeframe

7:02

that got turned down, went and worked for Fidelity,

7:06

helped them build Philly Digital Assets, which is their Bitcoin copy service,

7:11

and, did that for a couple years.

7:13

Since then, I have gone consulting.

7:16

So these days, I consult with a number of, Bitcoin sector companies.

7:21

Some of them are public, and you may have heard of. One is

7:25

Custodia, which is a cable and mongs bank up in Wyoming. 1 is a company called Satoshi Energy. They broke the power contracts for miners mostly in Texas, but they're expanding into other regions.

7:35

And another is, Commerce Block. They're the guys behind the Mercury Wallet.

7:39

They, these are state chain atomic swaps.

7:43

And then there's Brightpool and a few other projects too. So I consult on a number of key topics.

7:48

Just kind of freelance for now.

7:51

Man. Awesome. Dude, I think I I think a few years ago, you and I were talking, and I applied for

7:58

I sent you a resume because I was interested in working for a satoshi energy.

8:03

Oh, did you? Do do you recall that? No.

8:06

Yeah. It was as if it was years ago.

8:09

Okay.

8:10

I I don't know your I only know Econo Alchemist. I don't know your your actual name.

8:15

Yeah. I had I had taken every I had taken everything off of the, resume.

8:21

Okay.

8:22

If you're scared. Good guys. They're doing doing awesome.

8:25

I gotta say, they're probably my most successful consulting client.

8:30

Awesome. Yeah. They're good they're good dudes.

8:33

Can I like, so it seems like each sector within Bitcoin, you're you have your hands on? Now, why in the heck did you want to start or work on braid pool? And maybe you can explain, you know, my question from Twitter was, what's a braid pool?

8:50

Sure. Well, that's,

8:51

so this is an old, old idea. So the first time I talked about this was in 2015,

8:56

the Scaling Bitcoin Conference in Hong Kong.

8:59

And, you know, at the time, this is before Segwit. It was before,

9:03

Bitcoin Cash worked off. It was before

9:06

the the real block size wars was kinda spiked in 20 16, 2017.

9:09

And, you know, a lot of people were thinking about, well, how do we make Bitcoin go faster?

9:13

And one of the things in the back of my mind has always been that, you know, a direct to a cyclic graph

9:18

has a lot of advantages. So there's talks online. If you're bored, you can go look up that talk from Hong Kong scaling Bitcoin.

9:25

And the motivation is to get the block time to be faster. Right?

9:29

So these 10 minute blocks have

9:32

some disadvantages, you know, obviously nobody wants to wait 10 minutes. Can we make it faster in principle?

9:38

But also there there's a reason for that 10 minute block time. If you if you make it,

9:43

faster in a naive way, what you end up doing is creating a lot of orphans.

9:48

We can talk about p 2 pools, kind of a predecessor to upgrade pool as well.

9:52

So the the talk I gave them was really about well, can we make a blockchain with a direct basic graph in first place?

9:58

And how would you do it? Proof of work blockchain.

10:01

So it's kind of the first presentation on that topic. Since then, there have been a number of blockchains,

10:05

that have actually done it. The most successful is right now is probably Casper.

10:10

And I went back and forth with, the off one of the main authors of

10:15

Kasper, Jonathan Sumpolinski

10:18

about it while he was writing the DAG night paper.

10:22

Some of the same authors that wrote those DAG paper which is used in Ethereum. But then they moved on from that to create a proper graph.

10:29

And the grade that I propose is probably

10:32

formally equivalent to what he has done, Although I came about it from a slightly different perspective.

10:38

But yeah. So braid the word braid is just something I came up with that, you know, if you look at a picture of a direct basic graph,

10:44

it's kind of a blob with a bunch of arrows and stuff. I said, well, can I come up with a word that is not a chain? Right? We know what a chain is. That's gotta be something that's more complex than a chain. So I came up with the word braid. Mhmm. So that's where that's where that started.

10:58

And, you know, in the intervening years, this is not really been something I've worked on. You know, from time to time, I'll write a little bit about it or blog about it.

11:05

But things changed about 2 years ago with the advent of the Frost algorithm.

11:10

Now Frost gives us the ability I mean, the big problem with running a decentralized mining pool is that somebody has to hold the funds.

11:17

Where do the funds get held until they get distributed to miners?

11:21

And so you need kind of a decentralized mechanism to do that. What Frost does is allows you to have it basically a giant multisig.

11:27

And this this fundamentally needs the, the Taproot Schnorr signature,

11:31

mechanism. And so we can go into that in more more detail, but

11:36

that's what's kind of the gating thing. And,

11:39

to to build a direct a cyclic graph,

11:41

b, custody through a giant multisig.

11:44

And then there are a few other pieces of this too, like,

11:47

unspent hasher payout mechanism. And I can I can kinda go down down the list if you like?

11:53

But, you know, in the last year, we've we've got 2 developers working on it now.

11:58

My collaborator, Kulprit Singh, applied for a grant and won 2 grants, one from the Human Rights Foundation

12:04

and one from, Satoshi

12:09

oh, what's the name of it? Open. Sorry. That's yeah. Open. That's So we won 2 grand for that. We also have a summer Bitcoin student who's got some froth experiments working with us now as well.

12:20

So things are moving along. I just talked to him yesterday. We get a catch up weekly.

12:24

I'll probably end up writing the braid code itself in about a month or so.

12:28

And in a few months, hopefully, we'll have a beta test version of this ready, so people can actually run it. Hell, yeah.

12:35

Awesome.

12:36

Who are all the signers in the multisig?

12:40

So the the plan is to take the last several people who won blocks,

12:45

and they are the signers. Right? Ideally, you wanna have, like, all miners,

12:49

who remind the block, sign it or maybe even more. But there are scaling limitations as to how many people can actually effectively sign a frost ticket.

12:59

Because the frost protocol itself, I believe it's a 3 round protocol, where you've got a you've got to agree upon a nonce degree upon what you're signing.

13:06

Each party contributes essentially a signature, which comes from a Schmeer share. And then somebody has to aggregate all the signatures. So it's it's a several round protocol that involves quite a bit of network communication.

13:18

It scales probably, like, or n cubed in terms of network communication.

13:21

So as n grows large, which is the number of signers, at some point, this peters out.

13:26

So we don't know right now exactly what n is going to be. We would like to be as large as practically possible,

13:32

given that we need to sign, the payout

13:36

within roughly 10 minutes. Right? So we're gonna we're gonna let that be dynamic. We're gonna evaluate that, you know, once we have code running to do it and say, well, how large can we let this be?

13:47

And is that I'm looking at the Braid Pool Twitter account. Is that graphic in the background?

13:53

The of the profile, is that that chart you were talking about? That graph? Uh-huh. That is that comes from a simulation I did a couple years ago, which, let me pull up that account.

14:04

Yeah. So so the if you go to our GitHub, you can find a link to the simulation I did of

14:11

a braid and came up with basically how to do the difficulty adjustment and things like that. That

14:16

picture is from that simulation.

14:19

And that's that's why. Okay. Some other free pictures on there too. I used a graph library to draw that.

14:25

And then what is it? I I know you you touched on this, but I just wanna

14:31

unpack it a little bit more so I so I completely understand.

14:35

What does it mean when the the blocks are a 1000 times faster?

14:40

So the block time so I I like to differentiate between a Bitcoin block and a block within the

14:47

the share chain, right? So there are several terms here, we could call grateful a share chain.

14:53

We could call it a merge mind blockchain. Okay. Okay. It's a big graph. It's not a blockchain. It's a DAG.

15:00

And it's merge mind with Bitcoin. Right? Okay. Okay.

15:04

So I like to call the the blocks within the the share chain slash DAG beads just to differentiate it. So beads are the share chain, blocks or Bitcoin blocks, just so we don't confuse the 2. But they're conceptually the same animal. Right? In fact, any bead is a valid bit point block if it had hit the difficulty target. That's the only thing wrong with it. Is it's difficult target is too low. And so we by lowering the difficulty target, we can produce blocks that are roughly a 1000 times faster.

15:32

And this will end up being dynamic, exactly how fast it is. We're gonna measure the network latency of how fast those blocks get produced or those beads get produced, and use that to determine, you know, how fast we can actually run.

15:44

It's it's worth taking a look at p 2 pool. So p 2 pool was an old, let's say, circa 20

15:50

13, mining pool that lowered the block time to 30 seconds. So Bitcoin is 600 seconds, 10 minutes, and they lowered it to 30 seconds. So it's roughly 20 times faster, which means, you know, 20 times more minor or 20 times smaller minor can effectively

16:04

tribute to the network. 20 is not that big of a factor. We we wanna get a factor of, like, a1000000. So right? But the 20 is what they could do. And what ends up happening when you lower that walk time and you have a blockchain is that you create orphans.

16:17

So 2 people on opposite sides of the world accidentally mine a block at approximately the same time or a bead in the shared chain. Right?

16:25

And this is not an attack. It is no. Through no fault of anybody's.

16:29

It's just network latency calls. That's right. And then they have to communicate this new beat to the other, parties in the network, and now you have a race condition. Whoever can propagate that new block to everybody else in the share chain faster,

16:42

wins the race condition. And when end up hap when what ended up happening with, p 2 pool is there was a lot of latency games being played.

16:51

The P2P network on Bitcoin and

16:55

p2pool was not very efficient. It takes, you know, order 6 to 6 to 10 seconds to get your your block out to everybody.

17:02

Right? And, you know, what that meant is that people would optimize the connections they had to other peers to reduce their latency.

17:10

And this is a centralizing effect because the way to get the lowest latency is to put everybody geographically in the same place. So we want to get rid of that. We don't want to create this late game. And this late game is fundamentally a consequence of using a blockchain.

17:23

This is why Bitcoin's block time is 600 seconds.

17:26

With, the measurements I did back at the time, back in a while ago, I've given, like, 3 talks on this. If you're if you're bored and go look these up. But one of the measurements I did,

17:35

I measured that the, the mean time to propagate a block through the Bitcoin network with roughly 6 seconds.

17:41

And you can get this number basically directly from the orphan rate. Just look at the, or look at the block times and how often does the block come faster than 6 seconds. And if you've seen the discussion on Twitter about empty blocks recently,

17:55

these are all blocks that happen in quick succession after one another. Right? Right. This this leads into it. Right?

18:01

So you're you're less likely to have an orphan because there's less data to propagate if you make an empty block. Right? But if you try it if you wanna go to the next level, right, this is already a problem in Bitcoin. 10 minute block times, This is already a problem. Right? But if you wanna start decreasing that block time down to 30 seconds or even lower, we wanna get below 1 sec.

18:20

Then then this becomes a much more serious problem. You have to project with a completely different solution. That's what the direct is that provides.

18:28

And so do miners

18:30

mining to Braid Pool, if they're, like, finding these

18:34

these blocks faster, are they getting rewards for it? Is there, like, another token involved? Or

18:40

That's right. So we want to I mean, within any

18:43

pool, centralized or otherwise, there is a notion of a share.

18:47

Right? So your your pool allocate shares to you, and you get paid based on how many shares you contribute. Right?

18:53

So we do actually want to make that a transferable coin.

18:56

At the end of the day, any pool needs to do accounting on these shares. You need to mount,

19:01

sorry, account for and measure these shares for every miner. And because this is a distributed system,

19:07

this database needs to be distributed. So everybody has to know the shares of everybody else to be able to validate if the shares have been distributed correctly. Right?

19:17

So, yeah, that might as well be a coin. Right? Right. Right. And that's what I that's what I propose to do here is actually make it a coin. I wanna call it the Terahash coin

19:27

THC. Nice. It doesn't have to be that. It's just to share. Right?

19:33

And, you know, shares on centralized pools are not fungible with each other. You know, if I go to one pool and get a share there, I can't sell it to somebody on another pool or trade it against a share or another pool, but they're fundamentally kind of the same object

19:47

up to the the fees that that they are charging on the different pools.

19:53

Awesome.

19:54

And so just for listeners, how does

19:59

let's how does Bradpool decentralized Bitcoin mining? Because that's kinda how the,

20:05

the topic of inviting Bradpool onto the show came up just for listeners who missed the interactions on Twitter.

20:13

We had Boris on our last show,

20:15

and he had been monitoring stratum jobs

20:19

and looking at pool centralization. 1 of our listeners

20:23

mentioned that they were disappointed we didn't talk about Braid Poole on the show and so we decided to change

20:29

that. And, and we tagged Braidpool on Twitter, and we got in touch with Bob, and and now we're on the show. So there's all kind of the whole backdrop here is kinda decentralizing

20:39

Bitcoin mining. So can you speak to to how Braid Pool helps decentralize

20:45

Bitcoin mining?

20:46

Absolutely. So the,

20:48

the question of centralization really comes down to the pools. Right? Because the pools are centralized entities

20:54

and among other things they produce the block template. They select the transactions that get into the block.

20:59

And because of that they can not only censor transactions, but they can also, you know, if they get large enough performance with a few percent attack.

21:06

And so we have this kind of nasty dichotomy

21:11

within pools where I mean, the fundamental purpose of a pool is to decrease variance. Right?

21:17

And very if you're a minor, variance is,

21:20

I mean, let's say I have 1% for the network hash rate. Right? Which is pretty big minor.

21:25

So 1% of cash rate means on average, I'm gonna win 1.4 blocks per day,

21:30

or, you know, on average, let's say, 40 to 45 blocks per month. Right?

21:35

Now the variance on your revenue,

21:38

this is a Poisson process. Right? So the variance on your revenue is the square root of that

21:43

over the total number of blocks. And so I calculated a while back that if you want to have,

21:49

let's say, a 1% annual variance

21:51

on your revenue, you need to have 20% of the network cash rate.

21:55

Wow. That's a pretty, pretty big number and 1% annual variance, which is to say, I need to be able to pay my bills, right? So I need to know that I'm gonna make this much money this year. I need that be within 1%. I think it's a pretty reasonable statement for a business. Right? And that corresponds to around a 3 and a half. I remember correctly, 3 and a half monthly,

22:13

variance. Right? So your your profit goes up and down by 3 and a half percent per month. Right? And this is statistics. Right? So sometimes it goes up twice, up and down by twice that.

22:23

So the whole purpose of a pool is to decrease fat variance, right?

22:28

And so you you have this dichotomy where I want pool to be big so that the variance goes down, but I don't want it to be so big that it performs 51% attack.

22:37

So this is why I I hypothesize it. That's why all of the pools kind of land in this sweet spot somewhere between roughly 20%

22:43

50%. As you want to be big but you don't want them to be too big.

22:48

Right? And you know these days there are other things going on like the FPPS mechanism where

22:54

they they reduce they remove the risk in other ways in particular by just paying you no matter what,

22:59

which is a completely different mechanism whereby they have to have funds. They have to have a pool of funds. And if you've been following the,

23:07

discussion, there's a number of tweets by

23:11

0xv10c on Twitter. He's our analysis.

23:14

Yeah. Yeah. Absolutely. I've talked to him a few times about this, and he's been analyzing the block templates and pointed out that most of the pools

23:22

have the same block template, like all the transactions are the same,

23:26

and in the same order. And what's what appears to be going on there is bit main is essentially subsidizing other pools.

23:33

So those smaller pools, even with, you know, only 10% of the hash rate, the pool itself can't handle the variance. Right? I mean, it's it's a large capital cost, and he's got estimates of the capital cost to do this.

23:45

It's a large capital cost to run that run that pool, and it's just a it's a pure risk. Right?

23:51

The miners don't wanna take that risk. Right? They've got other risks. They've got, you know, power production risk. They've got the, you know, equipment failure risks. They've got a bunch of other risks. They don't wanna take on this financial risk of how many blocks am I gonna win? Because there's no there's no good answer.

24:05

Right? I can't this isn't a it's purely statistical process. It's pure lottery.

24:10

So I can't do anything to optimize that. Right? Right.

24:14

So they want to outsource that. Now I propose to do something completely different within grateful.

24:20

And we mentioned before the the the shares being tradable.

24:24

In order to to have somebody take this risk for you, all you really have to do is send your share to a counterparty. Your counterparty sends Bitcoin.

24:32

Right? That is a forward contract. So I'm getting I'm getting Bitcoin now, and the grateful protocol will pay whoever is holding share Bitcoin in the future.

24:41

This is a called a forward contract. Futures are basically standardized forward contracts,

24:47

where they all have kind of the same structure and makes them tradable amongst each other.

24:52

This is a hash rate future. And, you know, what miners could be doing is they could be essentially

24:58

paying someone to take this risk. And that risk taker is, of course, gonna charge a fee. There's gonna

25:06

be a spread between the, the share price and and the Bitcoin price. And some of that's gonna do with fee estimation. Some of that's gonna do with

25:12

the the rate of rate of blocks are coming. Some of that's gonna do after the cash rate futures, but fundamentally,

25:17

they want to outsource this risk. This is what futures markets are.

25:23

You know, long time ago we figured out corn farmers and oil oil

25:27

drillers figured out that they could get other people to take this risk for them. And so they hire professional firms like Citadel and Susquehanna. And what what those companies do is

25:37

they build fancy models of the weather. They wanna know the precipitation

25:41

for, for corn. They wanna know how cold the winter is gonna be in there or how much heating oil is gonna be used by the oil industry. They do things like they fly drones over the the oil storage containers near ports and look at the level of the oil in the in the container because the the lid on those things basically goes up and down with oil.

26:00

And they try to find other ways to figure out and model these things,

26:04

and then they come up with a professional prediction. And they say, we've we've done the risk analysis, and we think

26:09

it's gonna be this, and we're gonna make a bet on it. And therefore, they sell futures, on the futures markets.

26:14

Corn farmers buy there, buy them, and then the corn farmers and oil drillers can lock in their profit and not be subject to this risk.

26:21

And so what I propose to do is do the same damn thing for Bitcoin. Right? We have an a a different kind of

26:28

variance going on here, a different kind of risk, and that is hash rate as well as b risk. But none nonetheless, these are just risks. They're professional risk takers that do this. The only thing we need to do to enable this is allow shares to change hands.

26:41

And if it's a coin and operates just like Bitcoin, it's easy peasy. Right?

26:47

Right.

26:52

Just

26:53

go ahead, Heiko.

26:56

No. I was just I was just gonna go back to the the decentralizing

27:00

aspect, like, so it's Sorry.

27:05

I didn't I didn't I got off on tangent. I didn't answer your question. Let me ask you a question about how is it decentralized?

27:09

There, do you wanna enter that quick?

27:11

No. Go ahead.

27:13

How does it decentralized? Okay. It decentralizes.

27:17

So I I just described one way it decentralized because the,

27:20

the pool so centralized pools are already taking on this risk management function.

27:25

And if the analysis of b 10 c is correct,

27:28

this risk management function is something they don't want to do, and they're essentially all outsourcing this risk management function to Bitmain.

27:35

There's one thing that may knows that nobody else knows. And that's how many Bitcoin mining devices they produce in this in some timeframe. Right. And that's one of the things that needs to go into a proper risk management.

27:46

But this is kind of a bad deal. So,

27:49

if we decentralize that by having there be lots of market makers

27:53

who can all buy and sell shares, I mean, you and I could do it. Right? If you have the right market, if this was a coin listed on exchanges, I could go buy share coins, and and sell Bitcoin for it. Right?

28:04

The other way it decentralizes mining is,

28:08

the pools also create the block template in select transactions.

28:12

What we will do with Great Pool is actually have every single miner run their own Bitcoin node and their own Great Pool node and construct their own blocks. Right?

28:21

The only requirement here is that, any of your shares you create must have could have been a Bitcoin block if it is difficult to target. Right? And so that's something we have to verify about. So

28:35

by having more people producing blocks, more people selecting transactions,

28:39

it makes it much more difficult for, let's say, a government to come in and say, okay, you you can't

28:45

pass this transaction or you can't pass that transaction. Right?

28:48

Right. Yeah. Because everybody

28:51

is distributed, and they're selecting their own transactions from their own nodes.

28:56

Yeah.

28:57

So we wanna get pools out of the business of trucking blocks. Right? That's one way of decentralizing.

29:03

We also wanna get pools out of the risk management function, which and decentralized that as well. This is something that people don't talk about very much. But the the analysis of b 10 c is really highlighting how important that risk management function is.

29:15

So by decentralizing both of those things,

29:18

we we hope to allow centralized pools to continue to operate and continue to buy those functions that they want on top of grateful, because there's not going to be a fee for running on top of grateful. So they're gonna be able to provide bread better services at lower costs,

29:31

and continue to do what they're doing if they choose to. But miners will also be able to run braid pool themselves.

29:38

And so, like, in theory, the

29:41

the pool braid pool wouldn't even have to be handling

29:45

the Bitcoin payouts for the miners. Because I could if I'm mining with Braid pool, I can take my shares and sell them to somebody for Bitcoin now, even before

29:56

a block is found at a valid difficulty that gets it on the Bitcoin main chain. Right? That's right. And then once

30:04

once braid once a braid pool miner does find a block

30:08

that meets that difficulty requirement, then that's when that braid pool multi sig

30:14

kicks in. Right?

30:16

That's right. So it is necessary that the, the shares get turned into Bitcoin at some point. Right? The share shares are not a shit point. Right? There's not gonna be a presale of them. The only way to get shares is to mine. Right? So you're gonna have to mine,

30:29

what would be bad valid Bitcoin block. And the only way that shares get turned into Bitcoins is if we successfully actually mine actual Bitcoins. Mhmm. Right?

30:36

And so if if I were on the other side of that transaction and I bought Braid pool shares from somebody mining,

30:43

then when when that multi sig gets activated,

30:47

then I get my Bitcoin back.

30:49

Right? That's right. Okay. Yeah. So what I propose to do is essentially have a 2 week time window

30:55

where we aggregate those shares. And the 2 week time window is 2016 blocks, it corresponds to the difficulty adjustment.

31:02

And the reason for this is that within that 2016 blocks,

31:06

the difficulty is the same. So if you want to create a hash rate derivative instrument, what you're doing is you're comparing the difficulty within 1 2016 block epoch Mhmm. And the next 26 block epoch. I mean, they call them finance derivatives for a reason. They are they are functionally mathematically at the river. You know, it's a it's a discreet difference between 2 different time intervals.

31:26

The the hash rate in one time or not, you know, the hash rate in another.

31:30

So, by lost my train of thought.

31:36

Well, while while you're trying to find it, actually, Rob on this thread,

31:40

hit us up in the the the chat.

31:43

Yes. Thank you, Rob. He says, you 2 are looking more handsome than ever. Rod is 10 years younger, and Encano is twice as anonymous.

31:53

So thank you, Rob, for that. And congrats on, publishing

31:57

that awesome book, man. I can't wait to get my hands on it.

32:00

Question. How does this differ from the Luxor product? Is this a different product or a new competitor in this in that space? So Luxor has a derivatives product. I don't know, Bob, if you're familiar with that that product. I'm familiar with it. I'm not that familiar with it.

32:15

Look, there are many different ways to do

32:17

derivatives. Right? And Luxor is not the 1st party to have tried this. There there have been a number of companies who've tried to make Hashtag derivatives.

32:27

Do it real quick. And, you know, fundamentally, what you want is is a large liquid market

32:35

of, the, you know, the futures instrument you want to do. Now

32:39

the the most liquid we could make this market

32:42

is to have all of the shares. If everybody was mining on Brightpool, and all of the shares were actual Bitcoin, and I could trade all of those futures.

32:49

That would be the largest we can make it, Sort of.

32:53

You can actually make it large. And this actually happens in the gold market,

32:58

where the the number of outstanding,

33:01

derivative instruments on gold is larger than the spot gold market. Mhmm.

33:06

I think it's a terrible fucking idea. Mhmm. Because it puts you on a tail wags the dog situation.

33:11

I don't think people should be trading instruments which are

33:15

not tied to the underlying. I think I think this is just fundamentally a bad idea.

33:20

It's it's, you know, you might call a rehab application.

33:25

Trading paper Bitcoin because there aren't enough Bitcoin or shares out there to correspond to the amount of futures. Right?

33:31

But there's a lot more capital out there to fool with the market. So I I don't want that to happen.

33:38

We want, you know, everything to be correlated to the other ones. So every,

33:42

user's instrument needs to have corresponding Bitcoin associated with it. And I think that's kind of part and parcel of of one of the thesis of this entire market that's different from traditional markets.

33:51

And I believe Luxor's product because Luxor is a relatively small pool.

33:58

I believe their product is indexed, which means that they,

34:02

you know, they they measure the the hash rate. And so the question is, like, how do you measure the hash rate?

34:07

And then, you know, from that, they make an they make an index and then you can bet on it. Right? There are a lot of products out there which operate this manner. In fact,

34:15

the the Bitcoin futures product on the Chicago MercTeal Exchange is of such a such a character. Right? No Bitcoin actually changes hand on that product.

34:24

It's it's indexed. Right? And so

34:27

because of that, you can it's it's kind of like paper Bitcoin, basically.

34:32

So the Luxor product, I believe, is indexed in that manner. Now,

34:36

people could be using it. Nonetheless, it's a hedging instrument. Right? It is a useful hedging instrument. So if you're a miner, you wanna protect yourself from variations from how much you might or the hash price going up or down,

34:47

you could be doing that. My experience with miners has been that fewer are actually doing this.

34:53

I think as this market kind of professionalizes,

34:56

more and more people are gonna do this. Mhmm. I mean, no professional

34:59

corn farmer or, you know, oil driller

35:02

is not trading futures. They're all trading futures. Right? Because that it's risk management. It's hedging. It's just a smart thing to do. Everybody's doing it. Yep. So the follow-up question here is, like, how do you manage counterparty risk, I. E. A miner sells forward their hash rate but does not deliver?

35:20

That is a problem we are not gonna solve.

35:23

So there are several Easter bunnies already in this project.

35:28

What you're really describing there is a decentralized exchange. Right?

35:34

And fundamentally, for cryptographic perspective, this comes down to a protocol called the 2 party fair exchange,

35:39

which means I'm gonna give you, my shares and you're gonna give me Bitcoin. Now there's a paper computer science paper out there proving that this problem does not have a solution without a third party. That doesn't matter whether we're talking about PDF files, shoes, or dollars and cars, Doesn't matter what you're trading. There's fundamentally no solution to this problem where 2 parties exchange some,

36:01

atomic. Right? And so that's really we're talking about. There's an atomic swap.

36:05

Now we can do atomic swaps on on Bitcoin. And there are many protocols to do that.

36:11

The tier Nolan originally put out another one, but I want in the beginning.

36:17

What's her name? Sharon Goldberg has a refined to that,

36:20

that she published and and give a talk about it at MIT BIC and Expo, I believe, 3 or 4 years ago.

36:26

So this is one answer to your question. You can do an atomic swap. Right?

36:30

Those atomic swaps, the way they work is they have a set of timeouts,

36:34

whereby, the if I so you have 2 blockchains, essentially. Right? So we could do a Bitcoin Litecoin

36:41

swap today. This has been done. You can you can Google it. People have done this. Right?

36:46

Somebody has to go first. They send the transaction to the chain. Right? And then somebody has to go second, and then there's a time out where if the other party doesn't go, I can get my points back. And so it's a little bit of a complicated protocol.

36:58

Within chains like Ethereum, where you're trading ICOs

37:02

or an ICO for ether, it's the blockchain itself that makes it atomic because they're they're kind of actually the same asset because they're both on the same. Right?

37:13

So that provides atomicity. So so your question is, how do I handle counterparty risk? What you're really saying is how do I achieve atomicity

37:21

on a decentralized exchange? Well, one answer to that is to use atomic swaps, decentralized exchange. And there are some lightning decentralized exchanges that are beginning to come up now. There's also just simply center centralized exchanges. Right? So they they essentially handle this counterparty risk for you.

37:38

But this is, you know, this is an Easter bunny we are not gonna solve. This has been solved by other people, and it's gonna be solved by other people. It making a decent dollar exchange is something I've worked on before. I'm gonna grab a hole if you want, but, it's just too much for this project right now. We're gonna let it be solved. The share wouldn't be valid unless the miner had

37:58

already contributed

38:00

the work to generate that share. Right? Right. The issue is not whether the share is valid. I mean, I'm not gonna be able to send you an invalid share. It's a blockchain like just like Bitcoin. Right? So I can't send you an invalid Bitcoin either. Right? That's just the concept doesn't even make sense. Right?

38:14

Give me a fake address, and then I'll immediately know it's a fake address. So,

38:19

the the question is, is counterparty risk. In other words, I'm gonna send you shares, you're gonna send me Bitcoin. And generally, this is gonna be a private agreement. So I'm gonna go to you. You you are gonna be a professional risk taker, and you and I are gonna be hammering out a contract. We're gonna sign with wet ink in a legal jurisdiction.

38:35

And so if you don't pay me, I can sue

38:37

you. That's another solution to this this problem is that we have to make a a way to do this where I'm gonna send you the shares, and then you're obligated to send me the the Bitcoin app.

38:47

Right? And you have to keep up your end of the bargain. Right? Or you're gonna go to court. And this allows,

38:53

people who are mining to have a counterparty in the appropriate jurisdiction

38:57

such that a legal option is available to them. Because if you think you're gonna sue Bitmain,

39:02

you're not. If you don't like what they're doing,

39:05

you're you're chill out of luck. You're not gonna be able to have much progress in court on that.

39:12

I guess I'm still just a little bit confused because, like,

39:16

I just don't see where the the counterparty risk is. Right? Like, if the shares are tokenized

39:22

and that's traded for Bitcoin, then,

39:26

like, when the when Bradepull finds

39:29

a block, that share is gonna

39:32

is gonna earn me that Bitcoin back.

39:35

That's correct. So if you just mine and you hold your shares and you wait the 2 weeks and then that gets turned into Bitcoin,

39:40

there is no counterparty. You're correct. Yep. It's on the future side. It's only

39:45

it's only if you want to

39:48

have payouts faster than once every 2 weeks, which by all indications is actually very desirable by basically all miners.

39:55

And you want this risk management function, which by all indications is very desirable by basically all miners,

40:00

then then you have counterparty risk. And counterparty risk is defined as I send you my stuff, but you don't send me your stuff or vice versa.

40:07

Mhmm. It's one on one with the atomicity of a of a 2 party exchange.

40:11

Shares of Bitcoin.

40:14

Yeah. Okay. Iko, to be cognizant of Bob's time and and,

40:19

like, a 315, stop, should we get do you think and there's some really good questions I just perused as well. Do you think we should just get into some of these questions as well?

40:28

Yeah.

40:29

You wanna skip the state of the network?

40:32

What do you think?

40:33

Let's just blaze through this real quick. Okay. Go for it. Alright. We're and and, Bob, feel free to jump in anytime if you got a comment on any of these points. Yep.

40:43

Okay.

40:45

We are at block height 849603.

40:51

And according to our friends at new hedge dot i0, Bitcoin difficulty is 83.6

40:56

trillion set to decrease roughly 5% at the conclusion of epoch 421.

41:02

Let's go. It should be which should be on Independence Day or the day after.

41:07

Over at Kaboomrax Marketplace, miners around 18 jewels per terahash are selling for roughly

41:14

$20.58 per terahash.

41:17

And moving over to mempool.space, Hash rate has been taking a nosedive down to 577

41:24

exahash on the 14 day moving average.

41:27

That's down from the all time high of 639

41:30

exahash

41:31

set on April 27, 2024.

41:35

And then taking a look at insights.brains.com,

41:39

hash value is currently 80,000

41:41

sats per petahash per day and hash price

41:45

is $49 per petahash per day.

41:49

And then the halving is due in 1,389

41:53

days according to coin wars.

41:56

And, Bob, this segment of the show is where we have our guest

42:00

read out the names of the Hashers who've been pointing us hash rate,

42:06

over the last couple of weeks. So I'm gonna copy this list

42:10

and then I'm gonna put it in the chat on Riverside,

42:13

which you should be able to access. And so if any of our listeners are interested in supporting the show,

42:21

you can point us hash rate, go to,

42:24

pod 256.org, and click on the support page, and then you'll see all the instructions there on how

42:32

to support the show with your hash rate.

42:36

Also, Bob, before you read out the miners for the last week or 2,

42:41

I wanna give a big shout out to Rob Warren who's writing the Bitcoin Miner's Almanac. Huge.

42:48

Co publishing it with Bitcoin Magazine.

42:51

I do believe it's available on the

42:54

Bitcoin magazine website right now.

42:56

And he has graciously

42:59

offered to, contribute 10%

43:03

of his profits from that book, or is it overall sales?

43:07

Oh, that's a good question.

43:09

Profits are sales. And, by the way, it's available on Amazon too. So you can just click click and just buy it.

43:17

Okay. Yep. Yep. I see that in the note.

43:20

So, yeah, thank you, Rob, for doing that. That's amazing. And,

43:24

that support is going to, help the 256

43:28

Foundation. So thank you. And more to come on that later. Hundo percento.

43:35

So you up for this, Bob? Each of our guests, read out the the names. It's in the chat right now if you wanna go for it.

43:43

Alright. I see why you want me to do this. You want me to stumble over all the crazy names

43:52

and and I assume I assume you mean shout out to our Bitcoin miners here. Yeah. Yeah. There's a typo. Hey. Alright. Shout out to our Bitcoin miners. Oh. The draw Sorry. Lintcoin lintcoin is the mining pool. Yeah. But he's got a competing mining pool, so he wants to just call it mining, Bitcoin miners.

44:07

Okay. Oh, well, I invite you guys to run on top of a free pool when we're ready. Alright. We're not ready yet. But,

44:13

yeah. You just no worries you can't keep doing what you're doing and run on top of There you go.

44:18

LimCoin. K. Shout out for our LimCoin miners.

44:21

Dot the DROT, bytes and Bitcoin mainly brains in the plains of pain.

44:26

After 1. Bitax wanna be just Ant 17 pro.

44:33

Bizzabler, don't mind me just stacking web testing as

44:38

Google Miner. A stealth miner.

44:43

So good. Miners are not for profit

44:45

and Bitcoin Bay Barn miner. Nice. And also shout out for public twin miners, Boris.

44:50

Awesome.

44:51

Thank you, Rob. Good job. Good job.

44:54

Hell, yeah. Well done. Alright. Let's get into some questions from the audience.

44:59

Alright. So we got into Go ahead. My what is a braid pool. So well done there.

45:05

I'll start with the first one, Iko. From Constantine,

45:08

can you ask them what are the main things that are that differentiate braid pool from p t p to p pool?

45:16

Also, any idea what the hardware and bandwidth requirements will be for running a Braid pool node?

45:22

How does this fare against block withholding attacks?

45:25

So 3 part question. Great.

45:28

Let me answer the first one, then remind me what the second one is. Sure. The first one was,

45:33

Rami?

45:34

The first one is, can you ask them what are the main things that differentiate break pool from p to p pool?

45:40

So the first one I already talked about, and that's

45:43

time, right? So p two pool had a 30 second block time.

45:47

And it used a blockchain, which resulted in, you know, this this game between

45:51

miners optimizing latency, and I've heard informally from a number of miners that they were able to double their profits by playing this latency game, optimize it with peers they connect

46:00

to. So we solve that problem by using a direct basic graph to the blockchain.

46:05

Now this should allow us to get to individual share times, speed times below a second.

46:12

The Casper protocol, or the or the Dagnite protocol,

46:16

published, they have benchmarks saying they can get down to a 150 milliseconds.

46:22

I think that's optimistic. But, you know, somewhere between, I think,

46:26

150 milliseconds and 6 seconds, I think is a reasonable target.

46:30

So, you know, on order of a 1000 times faster.

46:33

That's the first major difference. The second major difference is is in how the payout works. Right? So,

46:39

p 2 pool paid every miner in every block,

46:43

And this resulted in very large Coinbase transactions.

46:47

Because, you know, instead of withdrawing your your funds once per day or once per week or whenever it is,

46:53

you get paid in every block of harvest. This consumes a lot of block space, which competes against fee paying transactions.

47:00

And and as time goes on and we're we get away from the, block subsidy and toward a fees of fee subsidized market,

47:06

this is a bigger and bigger problem. It was already a problem back in p two pool days.

47:10

The ocean protocol, which is a reboot of the Elegis

47:13

pool, has the same problem. Their estimates are that on average,

47:17

every miner will get paid roughly 8 times,

47:20

wherein a centralized pool they would get paid from. So they're they're using roughly 8 times more blocks based to pay miners than a centralized pool, would. That's one of the reasons we are gonna aggregate over a 2 week time window,

47:33

is because we want to aggregate, and we don't wanna pay people on in every single block. We wanna pay people infrequently

47:39

to allow there to be block space for,

47:42

for transactions because those transactions pay fees, and that's one of the ways buyers rep. So those are, I think, the 2 major differences.

47:49

3rd major differences is just a complete reboot.

47:52

The p two pool code base was widely

47:55

known to be terrible, written

47:57

in Python, very poorly documented, very difficult to,

48:02

to modify. And so we're starting from scratch using Rust.

48:07

Nice.

48:10

And then the second part of that

48:13

question was, also, any idea what the hardware and bandwidth requirements will be for running a braid pool node?

48:21

The bandwidth requirements and hardware requirements is basically the same as running a Bitcoin node.

48:27

So, you know, for whatever reason, most miners are not doing this today, but it's not huge expense. I mean, technically, you can do it on a Raspberry Pi. Our

48:36

requirements will be a bit higher than that. But we're we're looking at, you know, on

48:42

order, the same as Bitcoin bandwidth.

48:45

So the the largest part of Bitcoin bandwidth is actually the peer to peer network.

48:49

And so our peer to peer network is gonna be basically the same because you're really looking at the set of transactions, and our set of transactions is gonna be the same Bitcoins

48:57

Plus, you know, one block header per

49:03

per second, let's say, if we get down to a second, but that's not a very that's like a kilobyte or something.

49:09

The larger contribution is going to be from the frost protocol.

49:12

So if you want to do this, you can anticipate in the cosigning of

49:16

custody part and actually paying people. That's a multi round protocol that is going to require a bit of bandwidth, but it's still gonna be on order,

49:24

the amount that Bitcoin has. Right? So

49:27

this shouldn't be onerous to anybody who ever run a node of any kind. Another

49:33

thing to note is that grateful is not going to have history.

49:37

So once a 2 week window is done, and we've collected a bunch of shares, counter those shares, paid it in Bitcoin,

49:43

we can then dump that history. So it's not it doesn't keep history forever like Bitcoin does. It only keeps for that 2 week window, possibly 2 2 week windows, depending on some features we've we've discussed.

49:54

But it's not gonna have as much disk space requirement. It only needs all the, you know, at most months worth of blocks of data, DAG data.

50:06

And then how does this fare against block withholding attacks was the final part of that question.

50:12

Oh,

50:19

have to jog my memory about this. I'm caught up in a little while.

50:25

So the block withholding attack. So there's there's 2 things here. 1 is a share withholding attack, the other is a block with full factory.

50:35

So share withholding attacks basically don't make any sense because of the direct basically graph structure.

50:42

You know, share withholding attacks. We might wanna pass on this one. This is a deep topic. There's like, there's actually 2 questions implied by this.

50:59

One is block withholding, one is share withholding, and one is

51:04

the selfish mining attack. And then there's are you attacking the pool? Or are you attacking?

51:10

It's a complicated question.

51:12

That's fine. We can And maybe, like, a a written, like, a respond like, you know, writing this up because I do think some people would be interested in knowing that. It's an it's an important question. I do wanna answer it. I'm just not gonna do it off the cuff. Totally. Completely fair.

51:25

Do you wanna go to the Boris question, Iko?

51:29

Yep. This one comes from our last guest on pod 256,

51:32

Boris. Could covenant enabling opcodes,

51:36

like, for example, op_checktemplify

51:41

check excuse me. Opchecktemplate

51:44

verify, for example, potentially affect braid pools design.

51:51

Yeah.

51:52

Okay. Go ahead. Go ahead.

51:54

The sorry. He's got 33

51:56

questions in one. Do you want me to just wait till you answer? Yeah. I'll answer. Let me just answer them in succession because I'm not gonna remember all three questions.

52:05

So, yes, for those that don't know, I've actually written 2 academic papers about covenants on Bitcoin.

52:11

While I was at Fidelity, I collaborated with Brian Bishop, some of you may know, as Kanzure.

52:17

And another Fidelity employee to write a couple of papers about this. And this is pre CTV

52:23

and pre Segwit. Right? And so

52:26

I'm a fan of covenants. I've not gotten involved in a lot of the politics. I did attend Jeremy Rubin's,

52:33

first CTV meeting in San Francisco, and that was a lot of fun. And since then, everything just kinda went south.

52:41

Yeah. I think Germany hates me. But nonetheless, covenants, I think, are a good idea.

52:46

And, you know, exactly how we get the covenants or how we do the covenants is a tedious conversation that a lot of people are are engaging in.

52:53

Actually, you guys spurred me to think about this because,

52:56

so one of you posted from this last podcast

52:59

that if we only had, I think, like, 300,000,000

53:02

of of those future bit home miners, we could secure Bravepool against 51% attacks. Somebody put something like that. Yeah. The Bitax miners. Yeah.

53:10

Yeah. So that's not quite true.

53:13

So if you there there are 2 kinds of 51% tax here. Right? So if everybody was mining on top of Great Pool, which is safe,

53:20

what it does is it transfer 51% attack to the Great Pool itself. Right?

53:25

So it still has that that attack vector. And if that attack vector ever happened, the whole thing goes down.

53:30

But then you, you know, you distributed the got a larger set of the spinning parts, whereas 51% attack when you have these centralized pools, much more risky. Great pool, it's gonna be much less likely to

53:42

happen. The the other is, let's say break pool is small. Let's say it's early days and it only has 1% of the hash rate,

53:48

and you wanted a 51% attack it,

53:51

you would only have to add, you know, another 1% of hash rate, which there are parties out there that do,

53:58

to attack grateful itself and steal the accumulated funds on freight.

54:03

Right. That's a bigger problem That can be solved by covenants.

54:09

Because what we're really doing here is we are we're taking the Coinbase, when we win a Bitcoin block, we take that Coinbase and we use the l two protocol, e l t o o,

54:19

to roll that up, among different blocks. Right? So the l two protocol is the same. If you've heard of any pre vial or no no input Mhmm. In the context of, like, the lightning network,

54:29

that's the way, the lightning network basically invalidates previous state.

54:35

What we're doing is basically an on chain version of l two. So we invalidate the last payout because we have new information of a new block. Right? We invalidate the last payout we created. Right? Now we do that with every block that we've been.

54:47

And we have to sign that with a a giant multisync.

54:50

Right? If you're able to be most parties signing that in the multistig,

54:57

you have full control of that. Right? And that is 51% attack against the pool itself. Mhmm.

55:02

Now that can be solved with a covenant

55:05

because payout from the pool, if I can commit to that payout

55:09

and I can say, the the payout has to have this structure and must pay these miners, and I commit to that at the time I mined the Bitcoin block, I've solved that problem.

55:18

So we are planning on building something that uses,

55:21

frost dead of a covenant because we don't have covenants.

55:24

However, if, the community agrees upon some covenant mechanism, we will most likely use it for exactly this reason.

55:31

Gotcha.

55:32

And he goes on to ask, could something like this enable more efficient or secure implementations

55:48

leverage such opcodes to enhance its decentralization

55:51

and scalability?

55:56

Just by being more secure and making sure everybody gets paid. I think that's the answer to that. Yeah. Just making sure you can't get 51%

56:03

attack with with Yeah. I mean, it doesn't have a direct impact on scalability or decentralized innovation itself. It does have an impact on

56:11

whether it works. Yeah. Right?

56:15

You know, that we I was bouncing around with culprit yesterday, some other ideas we could, we might be able to use in the absence of covenants. You know, what I really want is a feature where we detect that this is going on. And we just shut that we have other methods to detect failure modes.

56:30

And if that happens, basically, everybody reverse solo mining, and we take the last known good payout and pay everybody with that. Mhmm. That's a lot difficult to do in the 51%

56:39

tax scenario, and covenants may be the right answer there. But if we can figure out a way to do it, that's ultimately what we want. We want to pay out the last known good, and then everybody becomes a solo miner after that, because everybody can see this happen.

56:50

If the 51% attack happens, and the funds go to some funny place, everybody in that works gonna say, ah, this thing is broken.

56:57

I'm I'm just I'm just with fools. Right? Right.

57:01

And, you know, it's not we don't have the problem of hard fork. So we can just spin up spin down the whole network, say, you know, we we we're gonna hard fork, but we've decided there's a fatal bug. Spin it down and spin up another one once that bug is fixed.

57:17

Alright.

57:20

Okay.

57:20

Boris is back,

57:23

with another question. He's a big brain.

57:25

Today's dominant mining pools, like Ample, f 2 pool, via BTC, and Foundry,

57:31

benefit from out of band transactions and centralized transaction selection,

57:35

which dire directly impacts their revenue.

57:38

These pools seem to have little incentive to adopt or support a decentralized model like Stratum v 2 or Braidpool,

57:44

which could potentially reduce their profits and control.

57:47

How does Braidpool create incentives for major pools to transition to a decentralized model?

57:54

Great question.

57:56

So I occasionally run a, spaces on Twitter,

58:00

which I call Friday night fights. If you want to go look through my history and look for Friday night fight.

58:07

A few weeks ago, maybe a month ago, we had the guy from Marapool who wrote the soccer do this

58:12

on, and he had a lot to say about this. And it was a very interesting conversation.

58:17

I'm not a fan of doing this, but I think I I held my tongue with him and let him let him tell us what he was doing. So that's a very if you wanna get some insight as to how they're doing it and why they're doing it, go go listen to that.

58:28

But long story short there are

58:31

2 notions of consensus, right? 1 is the consensus that goes into a Bitcoin block

58:35

and the allowed set of rules that that can be in a Bitcoin block. Right? The other notion of consensus is in the peer to peer light. Mhmm. So I'm because hard forks suck and could create altcoins.

58:47

We didn't wanna make, hard forks. And so a number of problems that were found in Bitcoin,

58:53

were solved by essentially making it illegal to relay those transactions on the peer to peer network.

58:58

They can still be mined in Bitcoin blocks.

59:01

And if you go listen to that, space on Twitter,

59:04

the Mara fellow, forgive me, I forget his name,

59:07

goes into some of the things he had to do. There's, you know, quadratic caching attack,

59:13

like, too many pub keys and too many, signature checks, things like this. So there's a there's a whole list of these. So it's like a dozen of these kind of attacks on Bitcoin. They're solved by the p two p layer, but can be in a Bitcoin block. And so if a malicious minor wanted to publish a block, they would basically make all Bitcoin nodes go into La la land. That is possible.

59:31

And it would require a hard fork to fix it fully.

59:33

So, you know, in between that right? So the set of transactions we definitely don't want no matter what. So break pulls is gonna do the same thing that we're gonna say we we can't allow you to mine, acquired a caching

59:45

bug problem like this. We we can't find those. And the mar Marapool guy, I think, did probably did did a good job of kind of enumerating those and saying, okay, we're not those kind of transactions.

59:55

But there's still a wide window between,

59:58

what is what is allowed in the peer to peer in art and what's allowed to pick up a clock.

1:00:02

Ultimately, the answer is gonna lie somewhere in the middle. You know, as time goes on, we're gonna have to look at those transactions and say, well, is there a good reason to omit this transaction? Now

1:00:13

my bias is to, let this be as broad as possible and let people,

1:00:18

mine out of band transactions. Because

1:00:24

there's a more serious problem of transaction censorship here. Now on the one hand, it might be an outbound transaction. On the other hand, it might be a transaction that some government says, we don't want this party

1:00:35

receiving funds, you know, and in some countries, this might be a political opponent. It's like, we don't want you to make donations to our political opponent Or the guy today who paid half $1,000,000 to Julian Assange for his plane ticket to fly. You know, government might say, we don't want you to pay that. We we wanna make sure that nobody sends once they see

1:00:52

doing this on his Bitcoin address, the US government could have said, okay. Miners don't mind anything goes to this address because we don't want that to happen.

1:01:00

So my my bias is to let this be very broad because,

1:01:05

as soon as you start putting in filters and clamping down on this and saying, okay, we don't like these contracts. We don't like those kind of transactions.

1:01:12

Your lawyers are gonna tell you to check every single one of those boxes you can possibly

1:01:17

Don't mind, you know, don't mind,

1:01:21

Oh, I see your type transactions. Don't mind, what are they called? What's the ruins? You know, ruins are essentially illegal securities issuance and minor where we'll tell the minor, I don't want you to be involved in that. I don't want you to be implicated.

1:01:34

From a legal perspective, this gets you in trouble. Don't mind ruins. Okay? Don't mind graffiti just because because it's spam. Okay? Well, I I I don't think people should mind graffiti, but at the same time, I don't think great bullshit stop them from doing it. So as far as accepting out of band trans out of band fees for transactions,

1:01:51

miners will still be able to do it. And in fact, we're gonna end up having essentially an alternative mempool.

1:01:58

Because within break pool, in order to get transactions into blocks,

1:02:03

we have to first mine them into a beam. Right? And then the block, I I have a post

1:02:09

on building Bitcoin and on our GitHub about deterministic block selection. Right? We could do deterministic transaction selection.

1:02:16

And this has a very serious advantage in that everybody knows what the block block is before it's published,

1:02:22

which means you don't have to transmit it, which decreases our bandwidth, decreases our our latency substantially.

1:02:28

I think it's a really interesting idea. The idea being that if you send me a transaction, I will mine it into a feed, And then once it's in a feed, it's guaranteed to end up on a Bitcoin block eventually.

1:02:37

Mhmm. Right? Now I can take it out of hand feed for doing that. I don't really see anything wrong with doing that.

1:02:45

And so you're are you saying

1:02:48

a person wouldn't necessarily have to broadcast it over the Bitcoin peer to peer network to get it included in a block that way?

1:02:57

It needs to be before it's in a Bitcoin block, it needs to be in the grade pool them pool essentially. Right? So it needs to be mined in grade pool beam.

1:03:06

Yeah. So it has to be known. So it's not gonna be what's not gonna be possible is withholding transactions,

1:03:13

until a block of mine. Right? So that big blob of graffiti transactions that that Mara published,

1:03:20

if you did that on Brightpearl, everybody has to know that's coming. Everybody has to know that. Okay.

1:03:25

So it's not gonna be possible to withhold them until the last second. And this is a good thing because it also means that you can't create blocks that take a long time to validate.

1:03:35

Again, you can precompute the block. You know, if I know everything that goes into it and I have any kind of deterministic algorithm which selects the transactions,

1:03:43

I know what's gonna be in that block. I've already seen it. Right? So I I don't I'm not hit with, a huge validation time when I see the block because I've already pre validated all of that.

1:03:55

Awesome.

1:03:57

This one comes from longtime listener, Cortic.

1:04:01

He asks, did Satoshi design Bitcoin to be solo mined?

1:04:07

Ask that. Yep.

1:04:09

Ask that. Yes.

1:04:10

Yeah. Yes. I don't think Satoshi saw

1:04:13

fools. He didn't have an inkling that fools

1:04:17

would would have. And it's a it's a bit of an oversight on his part, you know. If we were to go back and rewrite Bitcoin

1:04:24

today knowing what we know, I would create something closer to a freight pool.

1:04:29

Mhmm. Right? You you have faster blocks. You have direct acyclic graph,

1:04:34

and you kill this. You can look at other protocols that have faster block time. So look at the go look at the before Ethereum shut down

1:04:41

and, became a complete shitcoin when it went through a stake.

1:04:46

You can look at their mining pool distribution, and it was much more distributed than than Bitcoin money.

1:04:51

And I believe that is because of the,

1:04:54

the variance issue. Right? I I calculated so they had a 15 second clock time, and I believe I calculated that, if you had it as

1:05:02

a 1% pool this is in one of the talks I gave a while back. If you had a 1% pool,

1:05:07

1% of the hash rate, you'd have effectively a 1% annual variance on your revenue. Whereas in Bitcoin, that needs to be a 20 percent. Oh, wow. So just by having faster block times,

1:05:17

essentially solves this variance problem.

1:05:19

Now it doesn't fully solve it. Right? Because, you know, estimates are there a few million mining devices

1:05:24

on the port. So if I have just 1 s 17 or s 19 or whatever,

1:05:29

I am too small to mine,

1:05:31

even a braid pool bead on any kind of reasonable time skip. So within our proposal, you can go read it. I also have proposal sub pools, which is a braid pool made under a braid pool. So I I otherwise, it's completely identical, which should allow you to get another factor of a 1,000,

1:05:47

in the faster block rate or more block, but real product,

1:05:52

to let you get and we can make subsub pools as well, which lets us get down to the individual.

1:05:58

Although, I know there are a lot of home miners who list this have these bid access and things like this. I've talked to the guys at Futurebit about this with respect to Grainpool, and frankly, I don't have a great solution.

1:06:09

I don't think Great Pool is the solution for you because

1:06:12

your payouts are so darn small. If you're if you're just earning pennies per day,

1:06:18

it just doesn't make sense. Not on Bitcoin. You I I think the best solution for you guys actually have a centralized

1:06:25

party who's gonna send you a penny a day over lightning, something like that. And because the amounts are so small, it's gonna have to end up being centralized, unfortunately.

1:06:34

That said, your centralized party who is essentially providing the service to future bit miners,

1:06:38

could be running on top of break pool. And therefore, you could achieve

1:06:42

variance reduction at the level of a large miner,

1:06:45

and get data for Lightning because this this centralized pool

1:06:49

invests in Lightning or eCash or whatever kind of new payment that comes up or Arc,

1:06:54

and pays you however you want.

1:06:59

Yeah. I mean, that makes sense because

1:07:03

your mining rewards are just gonna be so low if you if you've only got, like, 2 Terahash.

1:07:10

I mean, yeah. What what are you gonna do? Get paid once per year? Right.

1:07:15

You know, in practice, this is not gonna be we can't get down to that level of resolution. Right? I mean, I'm And you just think about, like Unless you're solo minded,

1:07:23

and you Well, you hit a block.

1:07:26

Well, if you're if you're treating the whole thing like a lottery, which I think a lot of these bid x minors are Yeah. And,

1:07:32

It's a lottery with slightly better odds. Smaller payouts, but more frequent payouts. Right? So you're, you're still playing a lottery, if that's what you think of it.

1:07:40

You know, instead of playing the, you know, $100,000,000

1:07:44

lotto, now you're playing the $10,000 lotto. Right? Right.

1:07:51

Do you think do you think someone with the bid act should still mine with braid if they're just coming at it from, like, a lottery perspective?

1:07:59

Well, that's up to you. If you're treating it like a,

1:08:03

a lottery, you know, are you gonna play the 100,000,000 jackpotter, or you do play the 10 $10,000

1:08:08

scratch offs? You know, that's both are valid markets.

1:08:12

I'm I'm not a gambler myself. I know way too much statistics, and I have a degree in physics and math, so I don't gamble. That's,

1:08:21

I don't know if you can see my camera

1:08:23

behind me, Bob, but that's a bit ax back there. It's kinda small on the screen. But Right. That where's that bit ax pointed, Rod?

1:08:31

That's a good question. Where is that bit ax pointed? I think it's

1:08:36

Did you set it up or did No. Scott set it up. I think p two b pool.

1:08:40

Oh, okay.

1:08:41

Yeah.

1:08:43

Or public pool, you mean? Yeah. Public pool. Sorry. Sorry. Public pool. Yeah. Yeah. Public pool.

1:08:48

So fun fact, back in the day, I used to have one of those,

1:08:51

21 co miners. Oh, really? What was company? Apologies company?

1:08:59

They got they got bought by somebody, but Coinbit. Right? They would they were the first one to make a mining

1:09:04

Raspberry Pi device. What were they called? It's 21 something. I think it's just 21, the name of the

1:09:11

company. I don't remember. That was before my time.

1:09:15

This is back, like, 2015 or so.

1:09:19

Yeah, 21 inc. Yeah. Finally revealed its secretive product, a Bitcoin mining chip,

1:09:25

May in 20. So I had one of their devices. It might very, very slowly.

1:09:32

And, yeah, I mean, I'm happy to see a reboot of this this market. It's it's great fun.

1:09:37

I think what's more important to me is, that you run a Bitcoin note as well. But you're on blocks.

1:09:43

But that's a lot to ask. If you're just playing the lottery and you just wanna do a scratch off and spend 5 minutes and then, you know, go on your go about your business, Asking you to install a Bitcoin note is

1:09:52

a a lot to ask, especially if you are unlikely to win a block

1:09:57

ever. Right? Right.

1:10:01

But, you know, if you're doing this because you like the hardware, you like software, you want you wanna actually involve the ecosystem, run a Bitcoin note. You should be doing that anyway.

1:10:10

Yeah.

1:10:13

We got our last question. By the way, this ripped like that hour plus ripped like this, Bob. Thank you so much, man.

1:10:21

I know it's Like, I hope it was enjoyable for you. But let me, like, get get this last, question from are you at Noster, by the way?

1:10:30

I am.

1:10:31

Dig through my Twitter post, you will find a Noster link there somewhere. I'm just curious. What do you think about Noster?

1:10:41

I have not been following it closely, to be completely honest.

1:10:45

I think it's probably a very naive protocol. Ultimately, it's just a way to send messages, and there are a 1,000 people in a 1,000 of ways to decide if they got a message message if you tell them they all think they're clever.

1:10:57

I I yeah. Which message do you get sent? Now I gotta make filters. Now I gotta aggregate those filters. Now I gotta get it. It's not a scalable problem. I

1:11:07

this may be a very naive for those who know a lot more about NASA, it may be a very naive approach. But who remembers

1:11:13

new tele? Back in the days of now.

1:11:17

Oh, shit. Yeah. Yeah. There was a protocol called the new tele. Yep. And Nutella did

1:11:23

and and both of these got displaced by Bitcoin, right, back in the day. And what Nutella did is it basically had an everyone to everyone publication model, somewhat of Bitcoin. Like, I have this file to share. I'm gonna send that message to everybody. Now this scales for shit. Right? It's an n squared,

1:11:39

scaling. Right? So the more stuff there is to share,

1:11:42

the more it goes and goes like n squared, the more messages get sent. Because of this, there were these search engines where you go look for files and people would make aggregators with high bandwidth,

1:11:53

colocated hosts that would aggregate all these new tele files. Right? But ultimately,

1:11:59

at the end of the day, the the broadcast everything that everyone model doesn't scale. Right?

1:12:05

It doesn't scale for Bitcoin and doesn't scale for any other form of messages either, like Twitter or Nasr. But I think I think Nasr is probably gonna you know, if it it sees any kind of success, it's gonna fall down for some reason. Because you can't send every single message, every single, you know, every brain fart everybody has, everybody in the world. It doesn't scale.

1:12:24

And, you know, I'm sure there are people working on mitigating that, but I I

1:12:28

yeah. I I don't it's not that interesting for that reason. Fair enough.

1:12:34

Alright. Last question from Byzantine

1:12:36

on Noster or from Noster. Please ask about latency with oh, and we've kinda touched on this, but I'm gonna,

1:12:44

repeat it anyways. And I know we're gonna expand, maybe another write up as well for this question.

1:12:49

Please expand on about latency with template building by the user versus template building by the pool, and how that could lead to uncompetitiveness

1:12:58

with building on prior blocks as compared to a centralized pool that can even take it to an extreme with a block withholding attack.

1:13:07

Okay. So,

1:13:09

from a latency perspective, Greatpool will be more competitive here,

1:13:14

Because what's going on is that if you if you're using a centralized pool and they're building your block template, right, so they receive a new block,

1:13:23

and they say, alright, I need everybody to stop by where it's working on right now. Start working on something else. Right?

1:13:28

And there's a window of time there where miners may still be working on the old work,

1:13:34

and haven't come to get a new piece of work, or I haven't finished validating the block. So this is where the empty block phenomena comes from. There's a lot of good posts about the empty block phenomena. I don't wanna repeat that discussion right now, but go go read them. It's not a problem for network. But it is caused because I have an additional source of latency

1:13:52

between my minor and the pool. Right?

1:13:55

And that latency one of the reasons the pool send empty blocks is because when they receive a new block, they have to blast out a new work unit to

1:14:05

tens of thousands or hundreds of thousands of devices,

1:14:08

maybe millions of devices. A lot of miners have each of their individual, you know, s 19 minuteing devices pointed directly at the pool, making it their own independent TCP connection to the pool. So if I have a farm with 10,000 devices in it and 10,000 TCP connections of the stratum protocol to the pool,

1:14:26

that's a huge hit in terms of bandwidth and latency where I have to when I receive a block, I could instantaneously

1:14:32

send out this work unit. So not only that mine with 10,000 devices, but this other mine of 10,000 devices, other mine up to, you know, the largest pools, you know, let's say 20, 30%. You're talking a 1000000 devices. So I've got to send a 1000000 individual

1:14:46

stratum packets to a 1000000 individual devices.

1:14:50

This is the source of the, you know, the this empty block cannot because that takes at a minimum a couple seconds,

1:14:56

And the difference between the work unit that contains the block template and then doesn't contain a block template is a factor of 2 or so. But that factor of 2 is enough

1:15:04

to where, they don't wanna do it. They'd rather send out,

1:15:08

an empty work unit than, than a full one. Now this is solved by using a proxy.

1:15:15

So if I hide all of my minors behind a proxy, and that proxy looks like just one minor, then that prop distributes that that load to all the minors.

1:15:24

Now I I only have to

1:15:27

do that redistribution once on my site. Right? And we're talking about a microsecond communications latency between my proxy and my buying devices as opposed to, let's say, a 100 millisecond

1:15:39

latency between my buying devices and the upstream pool. Right?

1:15:43

Break pool operate in a similar manner. You'll have your own on-site Bitcoin node and break pool node, and that's the guy that's responsible for sending work units to your miners.

1:15:51

Right? Your your

1:15:54

the other people on the break pool network are not gonna know what kind or how many kind of mining devices you have. Your individual mining devices, individual,

1:16:02

Bitmain, what's minor devices are not gonna be connecting to other

1:16:05

breakable nodes or other mining devices. They're all going to be hidden behind the breakable node. Right? And so, in a way this acts as a proxy.

1:16:14

So this means that Brightpearl have the advantage here. We will be able to construct a full block template.

1:16:21

This can be done fairly fast. It's the latency between the,

1:16:24

the mining device and the, the pool. And the fact the pool have to do this for millions of devices all at the same time that causes that problem. Right?

1:16:34

If the you know, if I receive a block and my own local device does this, it can do it in milliseconds.

1:16:41

So much so we will have a significant advance there. We will be able to mine full blocks immediately after

1:16:47

receiving a block and not mine a few blocks because we don't have this.

1:16:51

Hope that answered your question. I think there are other parts of this.

1:16:56

I think you did well.

1:16:58

Yeah. No. That was great. I learned a lot about Braidpool. Is there anything about Braidpool that we didn't talk about that you that you wanna

1:17:08

that you wanna take this opportunity to speak to?

1:17:13

No. I think I think that's it. I I often get the question, like, how much hash rate do I need to be useful for this? The that the answer to that is that none. There is no lower limit. BrightView will operate with just one miner running CPU mining. Won't win any blocks, but it'll operate. It'll build the DAG, and it'll do all the things we need to do.

1:17:34

I often get the question, can I contribute some hash rate? The answer is not yet. We will have a test net up and running in a few months. And when you see that, you know, we would love to have people contribute.

1:17:45

I often get a question like, what do we need now? Now we need developers. If any of these ideas have interested you, and or you know, Rust or want to learn Rust,

1:17:53

there are detailed specifications on our GitHub. Please read them, comment on them,

1:17:59

ask questions. You can send them to me or the great bull account on Twitter. Happy to discuss them.

1:18:04

And, yeah, we're happy to receive contributions. It's an open source project just like Bitcoin. It's not a company.

1:18:10

We're not doing any kind of fundraising or any ICO. The the developers we have are either volunteers or paid through grants, and we tend to keep it that way. We want this to we want the development of grateful

1:18:20

to to be democratic distributed as well.

1:18:25

Awesome. Rock and roll, man. Well, Bob, thank you so much for joining us. I think, there's gonna be a lot to unpack here. And,

1:18:34

I'll make the we invite you to Nashville, Tennessee,

1:18:38

to Bitcoin Park, whenever you want. Come visit us.

1:18:42

And I mean, actually, the weather is terrible in January. And not terrible, but, like, it's not good.

1:18:49

But we host a a a energy and mining summit here, and, we'd love to have you come and and and and speak to Bradepool on a number of other topics as well.

1:18:59

Yeah. I think, I have heard of that.

1:19:03

That's July. I I will say that my collaborator, Kalfreet,

1:19:07

just won a ticket to, Bitcoin, 2024 in Nashville, July 25th.

1:19:12

Oh, good. Oh, nice. So he's got a yeah. He's he's got a grant from the

1:19:17

HRF Human Rights Foundation. Yeah. And they also sponsored free tickets for developers. Yep. He won one of those. He's he's gonna be attending and he will be on the open source stage talk about Anybody's gonna be in Nashville with that,

1:19:29

go talk to Koprete.

1:19:30

Great. How do you spell his name?

1:19:34

K u l p r e e t.

1:19:37

His last name is Singh, s I n g h. Perfect. Kolpreet Singh.

1:19:41

Awesome, man. Well, thanks again for get a free pass, so I'm not gonna be there. But

1:19:46

Well, if we I mean, we're we're not yeah. We can we'll sort something out.

1:19:52

But, Bitcoin Park, we we host these meetups pretty much,

1:19:57

2, 3 now we got, I think, 4 meetups that we host regularly,

1:20:00

focused on Bitcoin and Bitcoin adjacent technologies.

1:20:05

So, if you're ever in town or wanna come by, we get you got a place to to work from and hang.

1:20:11

Yeah. Absolutely. We'll talk. I'd love to do that. I'll be, I'll be around this summer, so, it's it's a possibility.

1:20:16

Awesome.

1:20:17

I I would love to go to Nashville or really spend time.

1:20:22

Thanks, Paul. You could probably go to bit devs as well. Right?

1:20:25

So we do. Yes.

1:20:27

Go ahead. I've done in my life. I used to co host,

1:20:30

BitDevs with the guys in New York.

1:20:32

Oh, Jay and those guys?

1:20:35

Yeah, Jay.

1:20:36

I used to co host what I call white paper Wednesdays

1:20:39

in New York, like, 2015, 2016. So we would, you know, have a close reading of a cryptography

1:20:44

paper and then test it. That's besides

1:20:48

project to the what j it does.

1:20:51

So Steve Myers, who's a contributor to the BDK project, Matthew Ramsden, who's a contributor to BDK as well now, and LDK,

1:20:59

They both host the bit dev or we call it NASH bit devs here, which is the 2nd Tuesday of every month. And then we have a more of a

1:21:07

social, meetup, but it's still topic based.

1:21:12

Yeah. Open house on that the day after on the 2nd Wednesday of every month. And then we have a Rust Bitcoin meet or Rust meetup

1:21:20

the 3rd or 4th Thursday of every month.

1:21:23

And then Yeah. We may host a monthly mining focused,

1:21:27

mining energy,

1:21:28

meetup, as well. Yeah. The bit dev is really my jam. You know, I've been I hosted 1 in New York. I've been from Miami, Austin, and 2 other places.

1:21:37

I really love the Socratic structure that that Jay follows and Yep.

1:21:41

Yeah. It's a great meetup. Awesome. We'll see you soon. Thanks again, Bob.

1:21:47

Yeah. Thanks, Bob. It was great to meet you virtually, finally, and

1:21:52

hope to see you again and see you around Nashville sometime.

1:21:56

Yeah. Absolutely.

1:21:57

Cheers.