0:03

Within the Bitcoin mission, all

0:06

of that stuff is a lot. There is no

0:08

gray. It is entirely black and white. You are

0:10

either self-sovereign or you are not. And

0:12

if you want to have conversations about

0:15

banking technology, custody technology, if that's your

0:17

interest, great. Just leave it out of

0:19

my Bitcoin conversation. Hello

0:21

there. How are you all doing? Crazy times

0:24

at Bitcoin, right? Look at that price. I

0:26

think we tagged 47k yesterday. It's

0:29

crazy ETF week. Danny

0:31

and I are off to New York tomorrow. We're going to go and hang

0:33

out in Pubkey, hang out with

0:36

Bitcoiners, talk about what this means for our

0:38

crazy little world. Also our conference

0:40

is coming up. Cheek Code is

0:42

happening in April in Bedford. Tickets are sending well.

0:44

I'm really, really excited about that. It's going to

0:46

be a conference, but we're going to have football.

0:48

It's going to be a great couple of days.

0:50

If you want to find out more about that,

0:52

please head over to cheekcode.co.uk. Anyway,

0:55

welcome to the What Bitcoin Did podcast, which

0:57

is brought to you by the legends of

0:59

RS Energy, the largest NASDAQ listed Bitcoin miner

1:01

using 100% renewable energy. I'm

1:04

your host, Peter McCormack, and I have an

1:06

amazing lineup for you today. I've got Giacomo

1:08

Zuko, John Carvalho, and Matt Corrillo all on

1:11

the pod together to try

1:13

and answer a question I've had for some time. Right.

1:16

If you've been following the podcast, you will have

1:18

heard me ask a few people if you can

1:20

ever be fully self-sovereign. If you don't own a

1:22

UTXO, and this has opened up

1:25

a wide range of discussions for me

1:27

regarding scaling Bitcoin. I

1:29

had a conversation with John Carvalho recently about this.

1:31

Most of it was offline, and we decided we

1:34

wanted to make another show. We got Giacomo in,

1:36

we got Matt in, and we

1:38

got down to some very important questions

1:40

about scaling solutions for Bitcoin, the role

1:42

that the Lightning Network will play, newer

1:44

scaling options. I mean, we've

1:47

got FediMint, we've got Covenants. You

1:49

can even make an argument that an ETF is a

1:51

scaling solution, although I know some of you won't like

1:53

that. I even ask the very

1:55

difficult question, can we consider increasing the

1:57

block size? Anyway, look. a

2:00

great show. It cleared up some items for me, but

2:02

look, Matt, John, Jack and I

2:04

don't agree on everything. It shows how discord

2:06

it is scaling Bitcoin. It is a real

2:08

challenge. But look, a real pleasure to get

2:10

all three on the show. If you've got

2:12

any feedback on this or anything else, please

2:14

do hit me up with hello at what

2:16

Bitcoin did.com. All

2:20

right. Hello, everybody. It's been a

2:22

while since I've done one of

2:24

these remote shows where I get a bunch

2:26

of people together. But John

2:28

and I had a conversation recently.

2:30

And afterwards, when

2:32

we stopped recording, we had an interesting chat

2:34

about scaling Bitcoin. So we talked

2:37

about getting a few people together to talk about

2:39

this because it's been a

2:41

hot subject recently. So yeah, welcome.

2:44

Jack, I'll start with you. Haven't seen you for a while.

2:46

Good to see you. How are you? Good to see you

2:48

too. I'm fine. I'm fine. Thank you. I was better in

2:50

Salvador, but even here in Europe, it's still fine. It's

2:53

good. Okay, Matt, yourself. I've seen you

2:55

more recently. Yeah,

2:58

doing good. Busy as always, but yeah,

3:00

doing great. All

3:02

right. And John, we spoke recently, but I'm glad

3:04

we're following this up. How are you doing, man?

3:07

Oh, pretty good. I just finally got healed

3:10

from my two week flu. I got this

3:12

bad type A flu thing or whatever that's going

3:15

around when I visited the US, but that

3:17

kicked my ass, but I'm back. Good,

3:20

good. Well, listen, we're here to talk

3:22

about scaling Bitcoin. Lots of things have

3:24

been coming up recently. Bitcoin itself is

3:26

popping right now with its newest scaling

3:28

solution, ETS. I'm sure that'll come up.

3:31

I want

3:33

to start with a question I've been asking on the

3:35

podcast for a while, and I've still not got a

3:37

solid answer. And I will direct questions

3:39

to people. I'm going to start this one

3:41

with you, Jack Mo. I've been asking a

3:43

lot of people recently,

3:46

can you be self-sovereign with Bitcoin if

3:48

you do not control a UTXO? Well,

3:52

the answer is yes, but not

3:54

in a simple way. Self-sovereign means

3:56

that basically you can take decisions

3:58

about your spending without other people

4:00

being able to stop you from spending

4:03

or take the decision to not spend

4:05

without other people forcing you to spend.

4:07

This is possible with a complex mechanism

4:09

like lightning channel, but

4:12

the more this mechanism of

4:14

utics sharing can allow more

4:16

people to enter at a better conditions, the

4:18

harder it is for you to keep this

4:21

mechanism working without

4:23

messing up. So yes,

4:26

you can. For example, I have many

4:28

lightning channels where I do not own

4:30

my own utics. So I have to

4:32

share it with another person. And these

4:35

lightning channels are so so rare. They

4:37

cannot they cannot basically prevent me from

4:39

spending my part of the channel. This

4:42

can be scaled up to more users,

4:44

probably not to everybody. And

4:46

that's another discussion which is more

4:48

aggressive. And

4:50

with that, Jack Mo, is

4:53

this something that you would have

4:55

to be quite skilled in Bitcoin to understand the news

4:57

and set up? Not really. For

5:00

example, if I don't want to be a routing

5:02

node, I can just

5:04

install Fenix and I can

5:06

just open a channel with Fenix. I will

5:08

spend money to have that, of course. But

5:10

I will receive or like we have John

5:12

here, I installed Bitkit. It's super easy. Non-technical

5:14

people can do it and they can receive

5:16

a lightning channel. They can be so so

5:18

rare to the degree that they trust the

5:21

software or can verify the software to

5:23

the degree the software is open source

5:25

and not back door. They are so

5:27

sovereign and they don't know

5:29

anything about lightning as a protocol.

5:31

Of course, when you get to

5:33

some specific conditions and

5:35

edge cases, you start to feel that

5:37

you are non-technical. For example, if you

5:39

don't have increment liquidity and you need

5:41

it, if you don't, if routing

5:45

doesn't exist at the end point, you

5:47

want to pay, if you want good

5:49

privacy and your LSP is tracking your

5:51

IP, every time you go to edge

5:53

cases, you may feel that you are

5:55

not technical because you cannot understand why

5:57

the LSP is charging you something or

5:59

not. But to a good degree

6:01

a Phoenix user right now can use

6:04

the lighting network without any technical Effort

6:07

of course they have to pay money to do that

6:09

because for example on boarding we require Renting

6:11

some liquidity or opening channels on change,

6:14

so it's not free, but it's simple

6:16

enough Matt

6:18

do you do you have anything to add to that? No,

6:23

I mean, I think that's basically true I think

6:27

Lightning is obviously the simplest example here There

6:30

are a lot more forward-looking examples

6:32

where we're gonna talk about many

6:34

party UTxO ownership Or it's not

6:36

just one And

6:38

then it really does it becomes a gray area

6:40

right where? Enlightening you can

6:43

make a more clear argument that you have

6:45

the money certainly if you're on chain on

6:47

chain as you fully own the UTxO there's

6:49

no there's no risk lightning has a slightly

6:51

different security model You have to be online

6:54

to make sure you your counterparty

6:56

doesn't cheat in some way When

6:59

we start talking about much much different

7:02

UTxO ownership models We might start talking

7:04

about like a unilateral withdraw in

7:06

these cases where like yeah, okay There's many

7:08

people in this UTxO and we're updating it

7:10

But maybe you can't afford to pay the

7:12

fee to withdraw your part of the balance,

7:14

but in theory you have Ownership

7:17

of this UTxO so

7:20

it becomes very quickly becomes a gray area, but

7:23

I think

7:25

It's hard to argue

7:27

that you're not self

7:29

sovereign if you you know

7:31

have a small part of

7:33

a large UTxO and you can unilaterally withdraw it

7:35

as long as you're willing to pay the fee

7:37

like that That's as good

7:39

as any other form of self sovereignty when it

7:41

comes to Bitcoin So are

7:44

you saying if somebody was part

7:46

of that kind of UTxO? They

7:48

could could they could build up their stack within that

7:50

eventually get to the point where they can afford to

7:54

Yeah, potentially and I mean you see this now Mutiny

7:57

and some others are starting to

7:59

go this direction where you

8:01

have potentially study mint or something

8:03

that's clearly not self-sovereign for low

8:06

value balances. And then the wallet

8:08

may be able to upgrade you to lightning

8:10

if you have a larger balance and then

8:12

maybe you'll store something in

8:15

fully owned UTXOs. If you have an

8:17

even larger balance and you want kind

8:19

of a savings account. And

8:21

so we're gonna see these gray areas start

8:24

to get built up more and more

8:26

based on your balance level. Because for

8:28

very small balances, there's just nothing

8:30

you can really do on chain. But

8:33

then as you build that up potentially, you can withdraw

8:35

and you can get to the point where it becomes

8:37

self-sovereign because you can afford the fee. Hopefully

8:40

in the future we'll have better technologies than

8:42

things like Fedi-Ment. So they're less clearly

8:46

custodial, like

8:48

Fedi-Ment's clearly custodial. But

8:50

we can build up to things like payment

8:52

pools where it's not as custodial. It's really

8:55

just, yeah, I mean, you could take your

8:57

money but you have five satoshis and the

8:59

fee is gonna be 100 bucks. But

9:01

as you get more and more money, potentially

9:04

nothing changes, you just suddenly could afford the fee. And

9:07

John, do you wanna throw anything into this? Yeah,

9:10

I think I want to bring up

9:12

a few things. One, that you

9:15

have to appreciate the amount of

9:18

complexity that we're assuming when we

9:20

start having this kind of degrading

9:22

system for going from custodial to

9:24

self-custodial, going from on chain to

9:28

Lightning, to multi-party, to Fedi-Ment, to

9:30

all these grades and trying to

9:32

integrate them into a user experience

9:35

is possible. And

9:39

that's the problem really is that everybody

9:41

just says, well, it should be possible.

9:44

But they don't actually care too much about

9:46

what the result looks like when you make

9:48

it possible. And this is a big concern

9:50

for me as, I'm

9:52

not an engineer myself, I'm more focused on the product

9:54

and we're trying to make products that are easy to

9:57

use. I'm also trying to make sure that

9:59

I'm not like... that I'm just

10:01

pretending that this is like, oh, we're going through

10:03

all these lightning motions and all of these things.

10:06

But really, the user isn't

10:08

really enforcing their channels. And

10:11

so if we really were a

10:13

bad actor, we could censor them.

10:15

We could steal their

10:17

money, et cetera, because there isn't a,

10:19

for example, other complexity that

10:21

is healthy, which is a watchtower environment

10:24

where people can get a watchtower easily

10:27

within their app from someone else other than us,

10:29

because that's what it would take. All

10:31

this stuff is possible, but the complexity

10:33

required, it makes everything very delicate and

10:35

actually ends up resulting in a pretty

10:38

horrible user experience in the interim. And

10:40

if we make the interim perpetual, then

10:42

the user experience will always suck and

10:44

nobody will ever use it. So we

10:46

have to be careful about piling

10:48

on as to how I see it. And

10:51

so I have no

10:53

intention of delivering

10:55

a user experience that does

10:57

something like combine lightning and

10:59

fetiment or combine lightning and

11:02

CTV for lightning covenants or

11:04

combine lightning with even multi-party

11:06

UTXOs. I am more skeptical,

11:08

so I use that rant as a segue to

11:10

another topic, which is I'm

11:12

not totally sold on UTXOs

11:15

sharing for multi-party. In other

11:17

words, the nuance of it

11:19

being two people in the party is

11:21

what allows it to truly be self-sovereign

11:24

and practical and not overly

11:26

complex. Uggly really is overly

11:28

complex at this point, but we're going

11:30

with it anyway. But

11:32

to now pile on and have a whole game within a

11:34

UTXO, this

11:37

worries me a lot more. Supposedly,

11:40

I'm not expert enough to know

11:42

whether there's nuance here. Multiple

11:44

UTXO ownership and being able

11:47

to unilaterally exit with the only problem being whether

11:49

you can afford to do so is

11:51

possible. It doesn't actually exist. We

11:54

don't have covenants on Bitcoin. There are other trade-offs to talk

11:56

about covenants on Bitcoin. So all of this said, I'm not

11:59

going to talk about it. we don't actually

12:01

know the amount of scale this would

12:03

even tap into and you know what

12:05

it would really unlock for Bitcoin in

12:07

a scaling solution and it could just

12:09

turn into like like with Lightning 10

12:11

years of just trying to get there

12:13

you know what I mean and I

12:16

think we'll get there but how long will

12:18

it take what will look like when we're

12:20

done I'm not entirely sure and then finally

12:22

I think my other thing was I already

12:24

hinted at it with there's a centralizing aspect

12:26

to Lightning where it's not just about

12:28

the LSPs and the hub and spoke

12:31

that I think is acceptable but like

12:33

I like I joked seizing that like

12:36

if our users our users other

12:38

you know self custodial Lightning node

12:40

mobile users don't actually like open

12:43

their app and enforce their channels it's

12:45

a little bit of a larp to

12:47

like because there's just mobile problems where

12:49

mobile operating systems don't allow you to

12:51

operate like beyond all the

12:53

time be available all the time these

12:55

kinds of things so without this watchtower

12:58

ecosystem etc and there are other trade-offs

13:00

like this you are kind of

13:02

just faking it till you get there and replicating

13:05

something like everybody likes to point that

13:07

two things currently Breeze SDK which is

13:09

using green light in the background I

13:11

don't know how much detail you want to

13:13

go into what those are but also there's

13:15

there's that and then what's the

13:17

other thing that they're they're harping on sorry I lost

13:20

my train of thought but with green light SDK we

13:22

don't really know if that's going to work out to

13:24

be that much better so yeah

13:27

oh and that Phoenix just works right

13:29

but the thing with Phoenix is this

13:31

is a whole company that is dedicated

13:33

and focused on providing lightning and they

13:35

use only their stack and

13:38

so they limit their problems to

13:40

basically whether there's

13:42

some incompatibility with other implementations and

13:45

that allows them to achieve a pretty good

13:47

user experience but for other

13:49

people to replicate that for everybody

13:51

to just do what Phoenix is

13:53

doing is also a tensorizing factor

13:55

so making lightning interoperable despite using

13:57

multiple implementations is much easier said

13:59

than done So sorry for the rant, but

14:01

there's those nuances there to bring up. Before,

14:05

I've got four notes on that, which

14:07

we should explore them all. But before

14:09

I do that, John, is

14:13

there any other solutions that you think

14:15

can work, should be worked on, should

14:17

be considered? So

14:21

yeah, this is a bit biased

14:23

to my own philosophies on Bitcoin

14:26

and on the future. But

14:28

I would say one on the trusted

14:31

side, if we're going to

14:33

do custodial, I would like to see more interest in

14:35

being able to do some sort of centrally

14:38

issued bearer instrument that doesn't use a

14:40

blockchain. I don't think it's actually necessary

14:42

to have tokens on a blockchain. And

14:45

more particularly, I think

14:47

tokens are the simplest expression

14:49

of trust. And so I'm

14:51

much more interested in this than things

14:53

like stable channels and, you know, complexity.

14:55

I think that just having a central

14:57

issuer putting their name behind something is

14:59

as simple as you can get, and

15:01

have being able to pass that thing

15:05

without necessarily always needing permission from the issuer

15:07

is the tricky part. And I think that

15:09

more research should be done. We have people

15:12

in our family of companies doing

15:14

research on that in regards to

15:16

using, you know, DHTs and append

15:18

logs for this. But I think

15:21

it could be done. I think it should be

15:23

done. And I think what's more interesting is issuing

15:25

this credit denominated in the

15:27

product and services. So

15:29

as to really make it clear that this

15:32

is about something that any

15:34

business would do, the government shouldn't be able

15:36

to regulate and stop businesses from issuing digital

15:39

representations of their products and

15:42

services. And I think

15:44

that's the long term hack to get

15:46

this all acceptable and flowing and appropriate.

15:49

As far as actual technical things like

15:51

ARK or covenants or these kinds of

15:53

ARK of the covenants, sorry. As

15:57

far as all these things, I don't really believe in

15:59

any of them. to be honest, I think

16:01

they're all just the curiosities

16:04

and things that keep engineers busy

16:06

and keep them interested, then they

16:09

could be harmless, they could be helpful,

16:11

but most of it is just kind

16:13

of spinning our wheels and experimentation. So

16:16

I think in the end that we

16:18

should focus on optimization, it's good to figure

16:20

out how much use we can make of

16:22

the blocks piece we have, but that we

16:24

also need more research into being ready for

16:27

when Bitcoiners are ready to increase the block

16:29

size. So

16:32

that last thing you said, it sounds a

16:34

little bit like almost like a Bitcoin bank.

16:37

Like if some kind

16:39

of institution or company was holding the

16:41

Bitcoin, they could then issue tokens backed

16:43

by Bitcoin, is that what you're saying?

16:46

That's not what I'm saying. I do think that

16:48

Tether should also have a Tether Bitcoin, why not?

16:51

I just think it's the simplest way to express trust. You

16:53

know, if you're going to trust somebody to hold your assets

16:55

for you, I think that what Tether has done has already

16:57

proven to work pretty well. Okay,

17:02

well let's start with complexity. I'll start

17:04

with you on that one Matt, you

17:06

are an engineer, you do

17:09

work a lot on this stuff. One

17:11

of the things I worry about when

17:13

people start explaining things such as channels

17:15

and balancing and liquidity, I tend to

17:17

stay in the camp where my

17:19

friendship circles are and the people I know

17:21

are and I'll already have lost them on

17:23

that. I can win them when I

17:26

show them a custodial wallet, I can say, here look, there's

17:28

your Bitcoin and I can get them to download wallet as

17:30

a social and send it to me back and forth and

17:32

not have to think about anything. That can work. Once

17:34

they have to start thinking about opening their own channels, there

17:37

is a leap of faith required there. There is

17:39

an educational piece. So the complexity piece worries me.

17:41

I don't know if that's something you share

17:44

the concerns of or maybe John? Yeah,

17:46

definitely. No, I mean, lightning

17:48

is super complicated and

17:51

getting obviously,

17:53

to your point, no one is

17:56

going to or really ever should use a lightning

17:58

wallet that has, exposes your wallet. users to the

18:00

concept of channels or different types of balances and

18:02

all this kind of nuance that the engineers have

18:04

to worry about. You

18:06

know, Lightning wallets only make sense

18:09

if you can hide that. Right. And

18:11

I think Giacomo mentioned previously, or maybe

18:13

John mentioned that, you know, you start

18:15

hiding that too much and suddenly, oops,

18:18

you're paying this huge fee, where

18:21

this fee come from and why does other transactions not have a

18:23

fee, you know, these are challenging problems

18:25

to address at a user experience level.

18:27

I think they're very doable. But

18:30

there is a limit to it. And certainly, lightning

18:32

is kind of at that limit in terms of complexity.

18:34

You know, there's lightning, you

18:37

know, I would say lightning, beta has

18:39

shipped, you know, the lightning that exists

18:41

today is

18:44

really beta. And we're really working on this

18:46

lightning, I mean, call it

18:48

lightning 1.0 or lightning 2.0, whatever

18:50

you want to call it, where there's a

18:52

number of new features that enable

18:55

us to much better hide the complexity. So we

18:57

eat a little more complexity, we add things like

18:59

splicing, we add things like anchor

19:02

outputs, we add things like potentially

19:04

taproot, we add all these other

19:06

other pieces, both 12, all

19:09

these other things when we improve privacy, we improve the

19:12

ability to hide all the technical nuance,

19:14

because we can simplify what the interface

19:16

looks like. And this is really bringing

19:19

lightning into, you know, building a

19:21

lightning that we're actually proud of and proud

19:24

to use and proud to have people use.

19:26

But lightning is kind of at that limit.

19:29

And I don't think there's a lot more,

19:31

you know, people talk about lightning channel factories,

19:33

where you have multi, we have more than

19:35

two people in your lightning channel, or you

19:37

have, you know, some of these other design

19:39

ideas, you know, I've seen people trying to

19:41

argue that we need to activate CTV or

19:43

some other covenant software now so that we

19:45

can do channel factories and other similar things.

19:48

No, no, I

19:50

don't know that we're ever going to want to

19:52

build those things just because of the amount of

19:55

complexity we'd bury ourselves under. But

19:57

certainly if we do, it won't be for 10 years. So

20:00

so there's a little art interrupt, but I just

20:02

want to say it's really difficult to get people

20:04

that aren't building lightning things to appreciate That like

20:06

you just you try to talk with for example

20:08

shinobi at Bitcoin magazine He's really been impressed with

20:10

the ctv and trying to get people to like

20:13

come around and be more interested in it But

20:15

you try to say something like that to him

20:17

and he's like no you just do this you

20:19

just do that It's really really hard for people

20:21

to know how hard it is to implement and

20:23

run lightning products. Sorry. Go ahead. Yeah,

20:25

I mean There's

20:27

yeah, and there have been a lot of really smart people

20:29

working on lightning for a very long time And we're

20:31

only just now getting to the point where we can say

20:34

like oh, this is Lightning the way

20:36

it should be with all these other new

20:38

changes that are have started shipping and

20:40

will ship over the next year And

20:43

we've been working on lightning for how many years now so

20:45

it really is there's a limit I think

20:47

it's worth pointing out however that

20:51

as we take more steps into this

20:53

gray area away from fully

20:55

self custodial or fully fully self

20:58

sovereign Things

21:01

can get a lot simpler So when

21:03

we talk about some other designs

21:05

around multi-party you tick so ownership around

21:08

payment pools around some of these other

21:10

things They're further

21:12

from They're certainly further

21:14

from kind of fully self sovereign

21:16

you always have your funds whatever But

21:19

they also Can get a

21:21

little simpler and certainly when we start getting

21:23

all the way over to the far side

21:25

of that spectrum when we start Talking about

21:27

things like, you know, Fettie meant or custodial

21:29

services liquid, whatever it is things get really

21:31

simple really fast So

21:35

I don't think the fact that lightning is

21:37

so complex is an indication that we can't

21:39

have other things in this gray area And

21:41

we can't have more of a middle ground

21:44

But if lightning is any indication These other

21:47

things are going to take a very long

21:49

time to build unless we want to build

21:51

things that are just fully on The other

21:53

side fully custodial fully trusted Jack

21:56

I'll bring you in there to add any comment you want

21:58

and also just ask Are

22:02

you still very pro-lightening

22:04

or with

22:06

time and understanding, is

22:08

it potentially a solution that we're still trying

22:10

to make work but perhaps was

22:13

the wrong way to scale Bitcoin? No. More

22:15

and more, I think from two points. The

22:17

philosophical point is still the same, basically. Blockchains

22:20

cannot scale. The idea that every single

22:22

user will download and validate the store,

22:24

every change of state by any other

22:26

user forever, is an idea that is

22:29

intrinsically from a mathematical complexity point of

22:31

view, unscalable. Sure, you can try to

22:33

scale it a little bit better with

22:35

better hardware, but then with better hardware

22:37

will come more economic growth and more

22:40

usage and more requests for users. So

22:42

it's unscalable. Maybe there is this

22:44

idea that Satoshi believed in, this idea of

22:46

using some kind of

22:49

fraud-proof protocol in order to

22:51

only store the hash headers. So

22:53

maybe something like that with zero knowledge

22:55

magic, but I think it's not

22:57

possible. So the philosophical idea is

22:59

your alternative is between sharing the

23:02

unshaded XOs in some sovereign way,

23:04

so it's basically lighting. And then

23:06

the alternative is half-in-a-idea of Bitcoin

23:08

banks. So you have these

23:10

two. I think we

23:12

don't have to demonize the idea of Bitcoin

23:14

banks. Bitcoin banks don't have to

23:17

be ETFs of Wall Street. They

23:19

could be darknet markets. When you

23:21

go on a darknet market, you

23:23

do use a Bitcoin bank. They

23:27

will just provide you with an address and

23:29

you do internal transfers. So it's possible to

23:31

have no KYC, fully pirated

23:33

Bitcoin banks, even if trust is

23:35

difficult to build with the permissionless,

23:37

anonymous stuff. It is possible. So

23:39

you have that idea. And then

23:41

you have lighting. Lighting is basically

23:43

a collection of two ideas. One idea is

23:46

you can share your OTSO among more people.

23:49

Like Lisa was saying just a couple of

23:51

days ago on Noster, she was saying, a

23:53

channel is already UTXO sharing. It's already that.

23:55

The point is that it's just a matter

23:57

of time. among

24:00

two people and we can make it among

24:03

several people. The second concept of

24:05

lighting is routing. So since UTXO

24:07

sharing will never reach the kind

24:09

of network

24:12

effect that you need because you cannot

24:14

share UTXO with every people you will

24:16

interact with, then use the routing effect

24:19

in order to reach other people outside

24:21

of your sharing. Lighting is the union

24:23

of these two ideas, UTXO sharing and

24:26

basically trustless atomic routing.

24:28

And this is basically

24:31

even if you change the channel

24:33

from the current DREAPOON channel to

24:35

a future L2 channel and you

24:37

change your routing without HTLC to...

24:41

Everything you do is still basically lighting as

24:43

a design. And from the practical and not

24:45

philosophical point of view, I just spent

24:47

two months literally paying everything with Lighting

24:50

Network all day long with my family

24:52

as well. And it

24:54

was not always like this. Lighting payments

24:56

was failing all the time. It

25:00

does just work. I did

25:02

pay with trusted custodial, Chivo

25:05

wallet receivers or wallet of Satoshi.

25:07

I did use fully sovereign stuff

25:09

like Breeze and Phoenix. It does

25:11

work. I have a few routing

25:13

nodes. Okay, they don't route very well.

25:16

The failure rate on the routing nodes

25:18

is incredible. But as a payer, Lightning

25:20

experience is starting to become

25:23

very, very easy. One could say that

25:25

the high fee environment was a challenge

25:27

to Lightning. That's true, but it's only

25:29

half of the story. Getting into Lightning,

25:31

if you are outside, so

25:33

putting money inside the network, it's

25:36

pretty painful when fees are very

25:38

high. And that's true. But once

25:41

you are in, high fees, if

25:43

it's possible, are even making Lightning better

25:45

to an extent because more people are

25:47

forced to use it. And unlike the

25:49

blockchain, which as a scaling crisis

25:51

where more people are using it, Lightning Network

25:53

in some ways gets better as more and

25:56

more people are using it because you just

25:58

find more routes with better liquidity. So,

26:00

from a philosophical point of view, there is no

26:02

way around like a network. You will have UTXO

26:05

sharing and you will be happy and you will

26:07

have a routing and you will be happy. And

26:10

on top of that, you can have a custody. That's the

26:12

only other way to go. Everything

26:14

else Matt described is like

26:17

payment pools. It's just a replacement

26:19

for the simple concept of a

26:21

two-party channel. You can replace that

26:23

instead of the typical DreaPoo

26:25

channel on Bitcoin. You can have

26:27

a DreaPoo channel on

26:30

Liquid, but it's still a channel. You can have

26:32

a FediMint, which is still a channel, but in

26:34

this case, there is more trust involved. You

26:37

can have a KASHU, Matt mentioned

26:41

Mutiny, which will make you

26:43

use FediMint for small amounts, but you

26:45

have Aqua letting you use Liquid for

26:48

small amounts, or for all amounts, actually.

26:51

Minibits, which is a wallet

26:53

that makes you use E-KASH,

26:55

Chaomian means like KASHU for small

26:57

amounts, and then you can go up. And

27:01

everything is integrated through a

27:03

Lightning as a routing system.

27:05

So I don't see any

27:07

way around. Of course, there are degrees, but

27:10

these degrees that Matt was describing

27:12

are all different kind of channels

27:14

in a way, more trusted, less

27:16

trusted. And as Matt noted,

27:19

it's not like complexity is increasing

27:21

in the direction of less

27:23

sovereign. It's the other way around. The

27:25

simple solution is the non-sovereign one, is

27:28

the Alfini solution. It's just trust me,

27:30

bro. It's wallet of Satoshi. And

27:32

in a way, Bitcoin on Chain, which is

27:34

the most sovereign, is not necessarily simple as

27:36

a solution. We think that

27:39

layer one Bitcoin is a simple

27:41

UX. But because we are used

27:43

to that, but it's not, sending

27:45

Bitcoin in layer one on Chain

27:47

is terrible. We have a utexo

27:49

selection problems, fee estimation problems. It's

27:51

hell. Bitcoin base layer

27:54

is not simple. In a way,

27:56

for example, for a sender, Lightning UX

27:58

is even simpler. than Bitcoin and

28:01

JUX. For a receiver, maybe it's the other

28:03

way around. So it's not really linear, this

28:05

complexity stuff. And to finish my

28:07

point, I disagree

28:09

a little bit with John that

28:11

every current proposal about changing the

28:13

Bitcoin consensus go in the direction

28:15

of more complexity. Actually, you can

28:18

do payment pools right now with

28:20

the punishment mechanism, but the complexity

28:23

of those, of the Arctic channel with

28:25

the current construction, the complexity of that

28:27

is incredible. If you switch to an

28:30

L2 channel, even if you had to

28:32

change, for example, the consensus, but now

28:34

the complexity of a multi-part L2 channel

28:37

is lower than the complexity of a

28:39

current year article channel structure. So some

28:41

of the proposal changes, I agree with

28:44

Matt, we will not see any or

28:46

use any of that for many, many

28:48

years. It's too early. We don't even

28:51

get right the UX of

28:53

lighting, which is the easy part. And it's

28:55

too early to do something

28:57

like that. But eventually, if something

28:59

like a consensus change will happen,

29:01

it may be to reduce complexity,

29:03

for example, moving from year article

29:06

channels to L2 multi-party. Okay,

29:11

I just want to flip back to

29:13

you, John, are you still massively pro-lighting?

29:17

I don't know what that means. We

29:20

have a company, we support lightning technology

29:22

in our products. I do

29:24

think that they're a use case for it. I think maybe

29:26

the nature of your question, I'll answer, which is, I don't

29:30

feel as magical about lightning as I

29:32

did when I first started promoting it.

29:34

So when I worked at Bitby Fill,

29:36

and I was trying to promote them

29:38

doing Thor, the first LSP that was

29:40

selling channels, I

29:43

was like, use lightning now, it's ready.

29:45

What's everybody waiting for? Be reckless, let's

29:47

go. But now having

29:50

been kind of in the trenches for a few

29:52

years, that's not how I feel. I think

29:55

there's a pretty high chance I'd

29:57

like to avoid it. And I'd like to not live in

29:59

this. spectrum of pessimism but this

30:01

is a pretty high chance that lightning

30:03

will just end up being only used

30:06

for like business like

30:08

B2B settlement for actual high-frequency

30:10

relationships. That's possible and the

30:12

lightning network just might be

30:15

large businesses that do high-frequency

30:17

transacting because it's just

30:19

cheaper for them to settle with each

30:21

other dynamically on lightning than to worry

30:24

about on-chain transactions or to establish credit

30:26

terms. That I think is like

30:28

the core use case of lightning that will never

30:30

go away. The rest

30:32

of it I think is now to me more

30:34

of an experiment and not

30:36

something that we can say is

30:38

guaranteed. The idea of using lightning

30:40

to bring Bitcoin to retail, to

30:43

bring it to merchants, this kind of thing which

30:45

is a big part of why I'm interested in

30:48

it. Not so

30:50

sure anymore. It's really expensive.

30:54

It's really complicated. It's a really

30:56

bad user experience to some people.

30:59

The edge of how great we can be for user

31:02

experience just won't be tolerable to some people and

31:05

they'll just use custodial stuff and which will

31:07

mean they're not really self-sovereign and they're not

31:10

using real scaling solutions and

31:12

opportunities. I

31:15

think there's

31:17

a... I strongly agree with you in general that

31:20

it may just be the case that lightning

31:22

won't have a good enough UX. The

31:24

problem is we

31:28

don't know how to build anything better. Lightning

31:31

fundamentally, even if lightning, all these

31:33

hard problems

31:35

that people talk about, the US

31:37

challenges, we can solve many of

31:39

them, we're working on it, it'll

31:41

take time, whatever. But the

31:43

fees, at some point somebody's got to pay a

31:45

fee to put some money in the channel and

31:51

who pays that fee and whether those fees are low

31:53

enough, maybe that just makes the

31:55

UX too bad. It

31:57

is worth pointing out, I think, that lightning feels...

32:00

fees will always be cheaper than

32:02

the prevailing

32:05

on-chain fees because you can always, you know,

32:07

at the end of the day, you're getting a compression ratio, right? You're

32:10

getting some reduction

32:13

in total blockchain space usage by

32:15

using Lightning compared to just doing

32:17

the same transactions on-chain. So

32:21

there's always some advantage

32:23

and for people who would otherwise,

32:26

who really need self-sovereignty, who really

32:28

need to do transactions

32:30

in a way that can't be censored, you

32:33

know, clearly the best option right now

32:35

is Lightning because the only other option

32:37

is on-chain and it's not

32:40

clear that any of the technologies people

32:43

are talking about

32:45

building really solve the problem

32:47

in a way that's more compelling than Lightning. I

32:50

think there are designs that people have that

32:52

solve the problem in a very compelling way

32:54

but that are a long ways away and

32:56

have a lot of complexity involved and may

32:58

never get there. And

33:02

certainly the things that are kind of being built in the

33:04

short term, things like setting, things

33:06

like that are custodial, they

33:08

just won't see the kind of self-sovereignty and certainly the

33:10

kind of censorship resistance that some people are going to

33:12

need. And so the question in my mind is always

33:15

how can we make Lightning as good as we can

33:17

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33:19

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35:59

let anyone know. one choose to take them as they want.

36:02

Do we potentially overrate

36:04

self-sovereignty in that we

36:08

can build a system whereby there are people

36:10

who can own UTXOs, they can have Bitcoin,

36:12

but most people don't really care and they

36:15

would be happily with some kind of trusted,

36:17

centralized version whereby somebody's custody is in for

36:19

them and that will still be good enough.

36:22

With that, can we build a way of

36:26

making that trust model work in that these... I

36:30

don't know if it's between some kind of shared

36:32

custody that builds a banking system on the front

36:34

of it or if it's... I

36:36

don't know the actual answer, but should

36:38

we treat owning a UCXO and

36:41

being self-sovereignty as a privilege and

36:44

look at solutions where it still gives people exposure

36:46

to the asset? Because that's essentially what an ETF

36:48

is really. It's the same thing. I

36:50

think two

36:52

things. There's two separate use cases

36:55

of Bitcoin. There's people who want to invest

36:57

because they want to hedge other

36:59

risk, whether that's they don't trust the Fed or

37:01

they don't trust existing macroeconomic policies, whatever

37:04

it is, and then there's those who want to

37:06

transact with it. For

37:08

those who want to transact with it, self-sovereignty is maybe

37:10

not always critical, but certainly

37:12

censorship resistance is. The problem

37:15

with all of the custodial

37:17

and federated and whatever solutions

37:20

is regulatory. I think in

37:22

theory, if we could

37:25

remove the regulatory issue entirely, then

37:27

in many cases, we would be

37:29

fairly happy with users using these

37:31

kinds of solutions, whether it's a

37:33

federated trust model, liquid, sediment, whatever,

37:35

or a fully custodial

37:38

one, volatile Satoshi, what

37:40

have you. We'd be very

37:42

happy with many users using those, especially

37:44

for moderate to small value balances. But

37:46

the reality is today, you can't build

37:49

that and serve a very large

37:51

segment of the world's population. I

37:54

would like, if you allow, John, I would like

37:56

to directly connect here because I would disagree a

37:58

little bit with you, Matt, about this. The

38:00

problem, in my opinion, is that you can use

38:02

Willetos Satoshi in a way that seems

38:04

completely without

38:07

any kind of governance and regulation

38:09

problems for a while. And that's

38:11

the problem. I connect back to

38:13

the comment by John about LARPing.

38:15

The reason we are LARPing about

38:17

self-custody and users don't care is

38:19

that in most cases, they still

38:21

have the privilege not to care.

38:23

Basically, there is no anybody yet

38:26

actively trying to stop Albi and

38:28

Willetos Satoshi outside the US. And

38:30

I mean, custodials are

38:33

still basically allowed without

38:35

strong travel rule enforcement

38:37

and KYC enforcement. This is

38:39

getting worse and worse every year.

38:41

So every year, there are more

38:43

risks involved, more obstacles, but that's

38:45

the trend. But for now, people

38:47

just want custody because custody is

38:49

simple and is permitted.

38:51

But then the best ally

38:54

for sovereign Bitcoin is just

38:56

the state making it not permitted.

38:58

So if custodials are permitted

39:02

to serve the market, then there is

39:04

no problem. Just go and use custodial.

39:06

Sometimes there will be a ragbull,

39:10

but in other moments, it

39:12

will be fine. So the problem is

39:15

only when the state tries

39:17

to censor self-custody. But

39:19

if that's the case, you will see

39:21

that incentive to do self-custody will suddenly

39:24

increase. So people that get censored

39:26

and excluded from Willetos Satoshi, from

39:28

Albi, from everything else, they will

39:30

rediscover the importance to pay for

39:33

self-sovereign. So we

39:35

don't need to sponsor it as a

39:38

solution for them right now. They don't

39:40

want it because they have simple alternatives

39:42

for now. But then eventually, these simple

39:44

alternatives go away. What we may try

39:46

to address is the fact that this

39:48

change in permicial

39:52

levels may be sudden, may

39:54

be abrupt, may be too

39:56

fast. And so many people could get

39:58

hurt snapshot censorship in

40:01

which basically you just up to

40:03

a moment you are free and

40:05

then you are not and then

40:07

you have this shotgun KYC

40:09

things or stuff like that. So this is

40:11

the problem. This is why the design that

40:14

Matt was talking about about degrees

40:16

in which the wallet will guide

40:19

the user across different degrees is

40:21

very nice because you will stay

40:23

on the simple good

40:25

UX low fee kind of

40:27

design as much as you

40:29

are allowed to stay as long as you

40:31

are allowed and then if it falls you

40:34

may easier fall back on other use cases

40:37

because your money is more

40:39

or because your external conditioning

40:42

to become so sovereign

40:44

becomes more important. So what we

40:46

need is not to keep self-sovereignity

40:48

always at the maximum because self-sovereignity

40:51

cannot compete with the simplicity of

40:53

the custodians of trust. Trust is

40:55

the simplest thing. What we need

40:57

is to build a system in

40:59

which attacks

41:02

on trust fall back

41:04

gracefully into trustlessness which

41:06

has a cost. It will never be comparable

41:09

to trust. It will always be

41:11

more expensive, more clumsy, more complicated

41:13

because trust is very very simple.

41:16

So it's a little bit like we need to

41:18

build a system that if needed can

41:20

go back to the in the in

41:23

the spectrum of self-sovereignty but it's natural

41:25

that users will stay there. It's not

41:27

a failure mode. It's just a natural

41:29

thing because they can and as much

41:31

as they can. I even like for example I

41:34

tend to use self-sovereign lighting

41:37

wallets all the time. I did it all these

41:39

two months to pay but when I'm on

41:41

nostril and I have to receive a

41:43

zap the use case is very difficult

41:45

to enlighten right now because it's basically

41:48

asynchronous payment. I'm not online to receive

41:50

that tip so to do that I

41:52

do use Albi but because I can't

41:54

nobody's censoring me yet. Yesterday I received

41:56

an email from the friends from Albi

41:58

which I I basically reach my

42:01

limits of tips

42:03

on the on the on the

42:05

custodial version. So okay, I have

42:07

to make the effort to really

42:09

connect my CLN node, which is complicated, but

42:11

I can do it with with the rune

42:13

and command or something. I never had the

42:16

time to do it, I will have to

42:18

do it because now I'm forced. So

42:20

I think there's

42:22

a lot of cognitive dissonance on this level.

42:24

And even in this call, like you guys

42:26

keep referring to this gray area or this

42:29

degrading. Well, I think the context is

42:32

important here, because on one hand, you

42:34

have people saying, Bitcoin is uncensorable, Bitcoin

42:36

fixes this Bitcoin, the

42:38

supply cap can't be changed, blah, blah,

42:41

blah, you know, it's just unchangeable, you

42:43

know, anti fragile thing. And on the

42:45

other hand, you have people quoting how Finney

42:47

saying Bitcoin banks are the way that Bitcoin

42:49

will be in the future, that Fedemann is

42:51

amazing, because it's scaling Bitcoin. And you have

42:53

all these people that like, are

42:55

taking things that aren't actually Bitcoin that

42:58

are custodial, and they're, they're complicating it

43:00

with the Bitcoin mission. And I think

43:02

within the Bitcoin mission, all of

43:04

that stuff is a larp, there is no gray,

43:06

it is entirely black and white, you are either

43:09

self sovereign, or you are not. Now, that doesn't

43:11

mean that I think that banks

43:14

as a concept are evil, that trusting this evil,

43:16

I don't believe that at all. I think trust

43:18

is awesome. A big part of our work isn't

43:20

finding ways to digitize trust to help people make

43:22

better decisions and more relevance in what they do.

43:25

But it's not Bitcoin. And the problem

43:27

with any future where we accept that

43:30

any significant portion of Bitcoin is within

43:32

custody, and that's part of the design,

43:34

then what we're doing is larping, because

43:36

all we're doing is we're saying, well,

43:39

the old system was fine. And all

43:41

the except instead of elites, you know,

43:43

running federal banks, they're just going to

43:45

run a Bitcoin. And that's,

43:47

that's the inevitable end. So we really

43:49

do have to figure out how to

43:52

get as many people in here as

43:54

possible using Bitcoin on chain, off

43:57

chain with lightning, whatever, self sovereign in a

43:59

self sovereign. way because there is

44:01

a hard line to once you once you

44:03

start to trust it doesn't matter how it

44:05

doesn't matter if it's with Bitcoin or fiat

44:08

or shit coins it just matters who that's

44:10

the only thing that matters when you're trusting

44:12

so but just this

44:14

is treat respect that line and if

44:17

you want to have conversations about banking

44:19

technology custody technology if that's your interest

44:21

great just leave it out of my

44:24

Bitcoin conversation another issue with

44:26

all sorry just one last one quick thing

44:28

I'm going to mention earlier was another issue with all of this

44:30

is you get a lot of payment

44:32

incompatibility so you don't actually solve any of

44:34

the problems because every different payment protocol you

44:36

use and every different asset within every different

44:39

payment protocol you use is an incompatible payment

44:41

format and so now you just have to

44:43

include in exchanges you have to include centralization

44:45

as conversion points those are totally sensible so

44:47

you have all this and if you don't

44:50

use changes you have coordination problems so you

44:52

just have a lot of problems where if

44:54

you try to use many things you're just

44:56

always going to have a bad user experience and

44:58

never get mass adoption so

45:01

I think there's a few points to be

45:03

made here you mentioned that there's

45:05

no gray area between self sovereign

45:08

and not and I think maybe

45:10

we need to use different terminology here there's a

45:12

gray areas in terms of security model you

45:14

might be using so lightning is clearly a

45:17

different and I would say lighter

45:19

or darker depending on which way you want to make

45:22

the shades go security

45:24

model the non-chain Bitcoin no you have to be online

45:27

you have to check regularly maybe you have to use

45:29

a watchtower or whatever it is the very

45:31

different security model but I would argue

45:34

it's still censorship resistant I

45:36

think to your your broader point here was kind of

45:38

that this isn't Bitcoin because

45:41

Bitcoin must have certain properties and

45:43

I think chief among them

45:45

you would rank censorship resistance right that

45:47

that people must be able to transact

45:50

without any third party being able to

45:52

stop them I would

45:55

state in Bitcoin's mission a little more

45:57

broadly right the coins mission is to

46:00

remove trust in

46:03

some way that you need it. So someone

46:05

chooses to use Bitcoin because they are choosing

46:07

not to trust some third party that they

46:09

might otherwise need to trust. And

46:12

that doesn't necessarily have to mean censorship

46:15

resistance. It doesn't necessarily have to mean the ability

46:17

to transact. It might mean they don't trust

46:19

the Fed. It might mean they don't trust their

46:21

central bank, whatever country they're in, and

46:25

they want to use a different,

46:28

simply a different payment rail that's denominated in

46:30

a different currency, but are happily willing to

46:32

trust some bank or some other system. That's

46:36

not a use

46:38

case of Bitcoin I spend time building software

46:41

for. I don't care too much about that.

46:43

I think that's a well-served use case of

46:45

Bitcoin. People are gonna have options there. But

46:49

it is, I think, a valid use case for

46:51

Bitcoin. If you're choosing that you're avoiding

46:53

trust in some way that you couldn't

46:56

avoid in the existing system Bitcoin is

46:58

providing material value to your life

47:00

or investment portfolio in one way or another.

47:02

And I think that's cool. Bitcoin's still providing

47:05

you value. But

47:07

the censorship resistance, you're right. I

47:09

don't think censorship resistance is

47:12

super filled with gray areas. I think

47:14

it, you know, at the

47:16

end of the day, your transaction went through where your transaction didn't

47:18

go through. And that's not

47:20

super gray. That's pretty black and white.

47:24

But the trust models required

47:26

to get to that point are filled

47:28

with gray areas. I

47:32

would simply argue that 100% of the qualities of

47:34

Bitcoin are lost in custody. So I

47:37

get what you're trying to say that somebody

47:40

may only want a certain quality of Bitcoin

47:42

and that quality might not be censorship resistance.

47:44

It might be some other quality. But all

47:46

the qualities are lost in custody. Even the

47:48

supply cap. Like

47:51

I don't think there are inequalities left in

47:53

custody because you're just making the leap to

47:55

trust it. And so if you're making

47:57

the leap to trust it, you are trusting all of the

47:59

qualities. of Bitcoin to that person,

48:02

not just one particular one. You

48:05

absolutely are. The difference is you can choose

48:07

who you trust. You know, the

48:09

existing system you often can't. Right. I'm just

48:11

kind of on a mission to get people

48:13

to focus on that that's the problem, is

48:15

who to trust, not how. That's

48:18

my interest. Let's just stop talking

48:20

about and getting all excited about

48:22

all these new ways to trust people. It's

48:25

just not as interesting as Bitcoiners want it

48:27

to be. You're

48:29

right. It's not super interesting. I think it

48:31

is still valid and I think people should absolutely use Bitcoin

48:33

in that way if it's adding value to their life. I

48:36

think that here I am unofficially agreeing

48:39

with Matt, but officially agree with

48:41

John in this sense. So basically,

48:43

I think that a realistic discussion

48:45

will basically see a

48:47

lot of gray areas because even

48:49

Bitcoin on chain is not a

48:52

perfect security model against confiscation

48:55

or even against inflation. There

48:58

are some failure modes in everything,

49:00

including blockchain, the

49:02

Bitcoin time change. So layer one,

49:05

single address Bitcoin is not

49:07

a perfect security model,

49:09

perfect censorship resistant. If

49:11

the miners start to mine empty chains

49:13

for three years, your on-chain address will

49:15

be censored,

49:18

basically. So it's never perfect.

49:20

It's very, very good at censorship

49:22

resistant and adding inflation control, but

49:24

there are inflation bugs and stuff

49:26

like that. The more

49:29

you move toward custody, the more

49:31

you are exposed to these security

49:33

model failures. In the case of

49:35

a bank of somebody telling

49:38

you, just trust me, bro, the probability

49:40

of a fractional reserve is very, very

49:42

high and the probability of censorship is

49:44

very, very high. In the

49:46

case of the ETF, they already told

49:48

you that it will probably do fractional

49:50

reserve and censorship. So it's not even

49:52

a question. In the case of Ueda

49:55

Toussato, you can rely more or less

49:57

on something. So the realistic discussion is

49:59

that this spectrum. does exist

50:01

and we should just push

50:03

the users on this part

50:05

of the spectrum how

50:07

much is possible whenever possible, wherever possible.

50:10

But we cannot pretend it doesn't exist

50:12

because Bitcoin layer one is not even

50:14

at the end of the spectrum. It's

50:17

just at the end of the realistic

50:19

spectrum but it's not at the end

50:22

of the ideal spectrum of perfect censorship

50:24

resistance. But officially, I agree with John

50:26

for one single reason. Going

50:28

in this direction, the direction of trust

50:31

is instinctively simple. It will

50:33

happen spontaneously. We don't even need to discuss

50:35

it. We don't even have to really push

50:37

for it. Going in the other

50:40

direction is usually expensive and painful and

50:42

you have to be patient. It

50:44

entices a lot of more complexity.

50:46

So in a way, the idea

50:48

that Bitcoin push everybody in

50:51

this direction even with

50:53

no realistic is reasonable

50:55

because cultural discussion is

50:58

not about representing everything

51:00

but it's about pushing

51:02

toward the long-term low-tempo

51:05

preferences. When you

51:07

discuss, you don't tell your children,

51:09

yes, you have to find the

51:11

job and work hard but you

51:14

also have sometimes to get stoned.

51:17

That's true. You have to stay in the balance. But

51:19

the only part that you tell them

51:21

is the hard part because it's the

51:23

part where it's needed for you to

51:25

try to push. So we don't need

51:27

to push people in the center. We

51:29

need to push people to an extreme

51:31

in order to achieve the center as

51:33

a result because it's not realistic to

51:35

achieve the extreme that doesn't even exist

51:37

in the later one. Yeah,

51:40

I like that. I would say the direction

51:42

should always be to unbank the banked, not

51:44

to bank the unbanked. Yeah. When

51:47

we discuss engineering and people will come

51:50

up with failure modes in which

51:52

you can make better custody,

51:55

that's naturally happening in the engineering

51:57

discussion because you have to be realistic. So

52:00

the official branding should be always

52:02

self-custody, no discussion. It's like the

52:04

mid-width curve all over again. The

52:10

low IQ people will just tell you,

52:12

it's always self-custody, Bitcoin is perfectly censorship

52:14

resistant. Then the mid-width will start

52:16

to tell you, ah, but actually, Alfine predicted that

52:18

we will have, which is true, but it's not convenient

52:20

to tell in public. And then

52:23

the Galaxy Brain will understand that in

52:26

very intellectual situations

52:28

like these in which

52:30

Peter's audience is the intellectual elite

52:32

of Bitcoin, we can afford to touch

52:35

nuances. But every time we go out

52:37

from this secluded place and we have

52:39

to talk with the actual users, we

52:42

have just to always be annoying and

52:44

pushing for self-custody. You're

52:47

giving away the plot there, Giacomo. It's

52:49

the Bradley Listened podcast. You can't give

52:51

away the plot then. Is

52:54

it a... It's one of the challenges

52:56

that we have is that as Bitcoin

52:58

has grown and adoption has grown, we

53:01

essentially have decentralized narratives. We

53:03

have decentralized ideals and decentralized

53:06

education. And therefore,

53:09

people can hear a whole host of things. And without

53:11

that kind of consensus of opinion of what's

53:14

right, it can be confusing. Absolutely.

53:18

Should we elect a leader, Giacomo, the great leader

53:20

of Bitcoin? This is what you should do. I

53:22

don't like democracy. I would just self-appoint. I

53:25

definitely get fatigued. Like, you know, there

53:27

are times when I'm happy to be

53:30

on Twitter defending my mental model for

53:32

Bitcoin and defending self-sovereignty and all these

53:34

ideals and things like this. And there

53:36

are times where I'm just like, you

53:38

know what, I get much more reward.

53:40

I was just working more. And

53:43

that's most... And the longer

53:45

I'm in Bitcoin, the more I trend towards being

53:47

much more interested in building and much less interested

53:49

in what people on Twitter think. And

53:52

so if you're not there, you know,

53:54

in the trenches with the

53:57

new people learning about Bitcoin, teaching them,

54:00

then you're going to get newer people teaching them, or

54:03

more fragmented. And even

54:05

if I had the time to spend

54:07

all my time trying to educate people

54:09

in public, I still would only reach

54:12

a small portion of people. So there's

54:14

no way to centralize and idealize Bitcoin

54:16

education and experience. It's just something that

54:18

just takes years, and it takes years

54:21

for everybody. And nobody in their first

54:23

year thinks it takes years. And

54:27

at the end of the day, people are going to use what works for them.

54:30

If we build the right solutions, if we build the

54:32

solutions that our censorship resistant,

54:35

and our self-sovereign, and

54:37

meet the ideals that we want, and

54:39

we improve the UX as much as

54:41

we can, and we hopefully have really

54:43

good UX with these solutions, then people

54:45

will use them. And that's all that matters. So

54:48

should we not worry too much? Is it a bit

54:51

like that shitcoin-rider passage that people have sometimes? They go

54:53

down the shitcoin rabbit hole, and they end up realizing

54:55

they should have just held Bitcoin and not traded it?

54:59

Is custody similar in that some people may

55:01

start with the worst custody solution. They might

55:04

leave it on the exchange, or they might have

55:06

it in ETF over time as they get

55:09

exposed to rug pools where the person you're seeing in

55:12

the news, they start to realize, oh, hold on

55:14

a second, maybe I need a hardware wallet, or

55:16

maybe I need a multi-sick solution, or whatever

55:19

new solutions come down the road. Is it just a

55:21

right of passage? Yeah, I mean,

55:23

we've certainly seen that with a lot of

55:25

users. We've certainly seen people buy on

55:28

Coinbase or something, and then they hold it there

55:31

for a while. And then six months later, they

55:33

say, oh, yeah, actually, I want to

55:35

get my coins off of here. I

55:37

think it is with a caveat now. We

55:40

have to accept that people mostly learn from

55:42

mistakes and from pain. I did it with

55:44

shitcoins in 2013. Most

55:46

people did it with shitcoin custody

55:49

or whatever. We

55:51

learn by making mistakes and suffering.

55:53

And this will always be the

55:55

way, always. What education is about

55:57

is trying to shorten. with

56:00

a little bit of that learning process in order

56:02

to use the pain of people

56:04

of the past to diminish a little bit

56:07

the pain of people of the future. So education

56:09

is basically, at

56:11

first I just eat all the berries and then

56:13

some of us will die in our tribe and

56:15

now we try to pass down the knowledge in

56:18

a way that you can actually know that these

56:20

berries are poisonous without

56:22

dying first. So we are just trying

56:24

to reduce the pain by passing down

56:27

the message. So this is inherently

56:30

some kind of

56:32

endless effort that will never

56:34

work 100%. People

56:37

will basically try, people will get robbed,

56:39

people will get scammed and you cannot avoid

56:41

that or get too mad at that. What

56:43

you can try to do is just to use

56:47

your past experience to try to

56:49

shorten some learning path for somebody

56:51

else. And in this sense, of

56:53

course, good coordination

56:56

among Bitcoiners is precious. Like

56:59

one of the problems we are trying to address

57:01

with the Plan B network is that in

57:04

a decentralized context of educators, everybody is

57:06

reinventing Bitcoin 101. So it's very difficult

57:08

to build on other people's stuff and

57:10

to do the second step, the third

57:12

step because everybody starts from scratch and

57:15

everybody tends to reinvent the wheels. So

57:17

we're trying to put people together and

57:19

to create one single place where you

57:21

can have all the summer of Bitcoin

57:23

education plus all the Lisa's and Jimmy's

57:26

courses plus all the stuff in one

57:28

single place. But that's,

57:30

you know, centralization is always

57:33

efficient but fragile. So if you

57:35

centralize education a little bit, you

57:37

can cut the noise a little

57:39

bit, you can become more efficient,

57:41

cut the redundancy and the waste.

57:43

But then when these group

57:46

of educators start to go on the

57:48

wrong path, they will be basically they

57:50

will do it. They will basically be

57:52

unstoppable for a while. And you will

57:54

need another group of educators taking over.

57:56

So centralization is efficient but dangerous. Can

58:00

I ask my most controversial question? And

58:03

John's going to be expecting this one. I

58:05

think Giacomo will as well. Have

58:09

we written off the entire idea

58:11

of ever scaling on layer

58:14

one? Is this

58:16

too sensitive a topic to even bring

58:18

up? Is there too much PTSD to even raise that

58:20

as a point? I'm going to start with you, Giacomo.

58:23

And then I'm going to get a Matt and come

58:25

to you last, John. Because we've spoken about this. I

58:27

again have to be a little bit new about the

58:30

answer. I think that technically speaking, not at all. Most

58:33

of the small blockers during

58:35

the scaling wars were mostly

58:37

OK with the future possible

58:40

increase of the block size. It was never really

58:42

a matter of is

58:44

this possible or desirable. It will

58:47

probably come at a time in which

58:50

four megabytes blocks that we have now we stick

58:52

with. And every 10

58:55

minutes are unreasonable

58:57

considering the latency

58:59

of the network, the propagation rate,

59:01

and the validation CPU bandwidth kind

59:03

of constraint. The discussion was

59:05

always not even when and how

59:07

much, but always about the method and

59:10

always about the way to

59:12

get there. In a way, SegWit2x

59:15

was about doubling with a

59:17

hard fork the block size.

59:19

And SegWit02x, which was the

59:21

small blocker field, was basically

59:23

making for four x the

59:25

actual size, which is

59:27

what we have now. It's just a

59:29

theoretical limit, but with spam, we did reach

59:32

it, a four megabyte block. Jacomo,

59:34

just to interrupt very quickly, are

59:36

you basically saying if any solutions come as a soft

59:39

fork, they're a lot more palatable?

59:41

Is the idea of a hard fork which

59:43

becomes more jagged? Who decides

59:45

the hard fork? New York

59:47

Agreement was a list of business, influential

59:49

American and Chinese business trying to force

59:52

feed something. So it's a matter of

59:54

process of narrative, like are you honest

59:56

in the narrative? Are you screaming

59:58

that the sky is falling? so enforced to

1:00:01

upgrade or you're just honestly debating

1:00:03

pros and cons. So it's a

1:00:05

matter of methods. The problem is

1:00:07

that this matter of methods is

1:00:09

not just about soft work and hard work. It

1:00:11

could also be about the impossibility

1:00:13

to coordinate consensus change, changes

1:00:16

anymore without a very strong,

1:00:18

at least moral authority. Back

1:00:22

then, during the skating wars, the moral

1:00:24

authority was the somehow

1:00:27

co-used group of Bitcoin

1:00:29

core developers with few exceptions that basically

1:00:31

cut themselves out like Mike Hearn and

1:00:33

Gavin Andreessen. So it was we had

1:00:36

the moral authority. Right now, we

1:00:38

could be at the level in

1:00:40

which we all think that actually

1:00:42

a block size increase may be

1:00:44

reasonable at a certain point, but

1:00:46

getting consensus for that

1:00:49

will require a level of

1:00:51

coordination that we cannot afford

1:00:53

anymore and which is an

1:00:55

attack vector in itself possibly.

1:00:58

So I think that from an engineering

1:01:00

point of view, the idea that four

1:01:02

megabytes is some holy limit is stupid

1:01:04

because also it's not even one megabyte

1:01:07

anymore. We did increase the block. So

1:01:09

it's like a fetish that again, the

1:01:12

low IQ people will defend it like

1:01:14

a fetish. The mid-width will

1:01:16

say, oh, but it's just a fetish. We can just

1:01:18

change it. And the Galaxy Brains may realize that

1:01:20

the process to change it may become

1:01:23

so hard in the future that may

1:01:25

we end up with four megabytes blocks

1:01:27

forever, not because it's the right decision,

1:01:29

but because we don't have a process

1:01:32

in place to change this decision in

1:01:34

an effective way without collapses

1:01:37

of the consensus model. Yeah.

1:01:39

I mean, I think I largely agree with what

1:01:41

Giacomo had to say. I

1:01:44

don't know what the process would even look like. I don't

1:01:46

even want to begin to think about the process would look

1:01:48

like in theory. It's

1:01:50

not something that's out of the question. I

1:01:54

think it's important to recognize a few things.

1:01:56

I think it's important to recognize that, first

1:01:58

of all, we will... never scale via

1:02:01

any kind of on-chain blockchain. Block size

1:02:03

increase. There has to be a compelling

1:02:08

multiplicative factor on top. Lightning is

1:02:10

one where you can do a

1:02:12

lot of transactions, and it only ends up being

1:02:14

one on-chain transaction, potentially. We talked

1:02:16

about fees and the LSP overhead.

1:02:19

Maybe that multiplicative factor is

1:02:21

fairly small. Maybe

1:02:23

we'll need something bigger. Right? That

1:02:27

because I think Giacomo mentioned previously,

1:02:29

it doesn't take a computer science degree

1:02:32

to understand this concept that if every

1:02:34

computer in the Bitcoin network needs to

1:02:36

see every single transaction that happens in

1:02:38

the Bitcoin world, it doesn't

1:02:40

scale. That's not a complicated concept

1:02:43

to understand. That's like you can't copy everything

1:02:45

onto every computer and expect this to work.

1:02:49

So we need factors on top. It's

1:02:52

also important to recognize that we

1:02:55

shouldn't think about increasing the block size

1:02:57

in response to shorter-term

1:02:59

changes. I

1:03:02

would say the biggest limiting factor in the block size has

1:03:04

nothing to do with scalability. It has to do with paying

1:03:06

fees. We have in

1:03:09

Bitcoin decided to have a limited

1:03:12

fixed amount of Bitcoin.

1:03:15

And if we want to maintain that, we

1:03:18

absolutely have to have a limited block size

1:03:20

in order to force people to pay for

1:03:22

the security budget of Bitcoin. We have to

1:03:24

pay miners. While

1:03:27

we cannot scale technically

1:03:29

to a large number of transactions

1:03:32

via on-chain block size increases, we

1:03:34

also probably

1:03:36

could increase that number relatively

1:03:39

higher than we might otherwise

1:03:41

just based on the fact that we have to pay miners. So

1:03:44

we also can't do changes

1:03:46

to the block size on

1:03:48

the basis of the fees are

1:03:50

too high right now, we have to do it on the

1:03:53

basis of where the fees are going to be in a

1:03:55

decade or two decades. And

1:03:57

I think it's hopefully fairly clear that very.

1:04:00

C20 and this concept of like people

1:04:03

creating tokens by proving that they

1:04:05

can pay miners' fees is not

1:04:08

something that's going to be here in

1:04:10

a decade. This

1:04:13

isn't, you know, the current fee

1:04:15

rate run-up has lasted

1:04:17

quite a while, but suggesting that it's going

1:04:20

to last a decade or even last

1:04:22

another five years is kind

1:04:24

of absurd to me. So it's not, sadly,

1:04:26

not something that, you

1:04:28

know, we can respond to with these kinds

1:04:31

of responses. So,

1:04:34

you know, I don't know, Bitcoin

1:04:37

fundamentally only works if there is material

1:04:39

demand for block space and that that

1:04:41

demand, you know, I would

1:04:43

say at least marginally outstrips the

1:04:45

supply in some way that generates

1:04:48

real revenue for miners. And I

1:04:50

don't think we are at the point where that is

1:04:52

true today of Bitcoin, of people

1:04:54

using Bitcoin in a sustainable way. So

1:04:59

it's not a conversation that makes

1:05:01

sense to be had right now, even just on

1:05:03

a purely technical level. If we ignore all of

1:05:06

the points Giacomo raised about consensus

1:05:08

and how we discuss changing

1:05:10

the block size. Yeah. Sadly,

1:05:16

that means a lot of pain right

1:05:18

now in terms of on-chain fees. And

1:05:20

it has caused a lot of real

1:05:23

issues for people trying to use Lightning

1:05:25

and trying to use Bitcoin in general.

1:05:27

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1:08:42

John, we discussed this. This was the starting

1:08:45

point of why we're having this conversation. I know

1:08:47

you've got some unique views on this. So

1:08:51

I think there's a lot of nuance needed in conversations

1:08:53

like this. I'm glad that these are the people you

1:08:55

invited and we were able to speak with so much

1:08:57

nuance so far. I think

1:08:59

that this kind of

1:09:01

nuance is definitely required for this part

1:09:03

of the conversation and for Bitcoiners that

1:09:06

want to be, I guess, good Bitcoiners

1:09:08

or educated Bitcoiners or useful, helpful, etc.

1:09:11

For me and I think what

1:09:14

should be for everybody, the difference

1:09:16

between like prescribing a

1:09:18

solution and speculating on a

1:09:21

solution. If I came on Twitter tomorrow

1:09:25

and said, I demand blocks be eight

1:09:27

megabytes, I demand that we

1:09:30

should use this format of extension blocks

1:09:32

to do it or whatever. Everybody's going

1:09:34

to reject it and be against it and

1:09:37

there will be no nuance and it'll just

1:09:39

be dead. But Bitcoin has

1:09:41

these things that are called magic numbers

1:09:43

inside and people tend to think of

1:09:45

them as arbitrarily set or set once

1:09:48

in the past and never to be

1:09:50

thought about again. But they

1:09:53

can be informed. They can be rationally chosen

1:09:56

numbers and as we've learned, they can

1:09:58

also be changed sometimes. and they

1:10:00

can be changed with software schemes. And

1:10:03

so we have to be mature

1:10:05

about this kind of thing and

1:10:08

basically facilitate and encourage research into

1:10:10

the actual costs of running nodes,

1:10:12

the demographics of the costs of

1:10:14

people that would run nodes in

1:10:16

different areas of the world, different

1:10:18

classes, etc. So we

1:10:20

can identify where we actually are with

1:10:22

Bitcoin scaling and say, look, Bitcoin has

1:10:26

reached a kind of limit here where

1:10:28

we have, like, say, the whole global south

1:10:30

would use it if the

1:10:32

fees were maybe 20% less because looking at

1:10:34

the demographics, this is where

1:10:36

it would be affordable for them

1:10:39

to actually have a computer and

1:10:41

disk space and bandwidth, etc. And

1:10:43

so we can actually research this

1:10:46

information. It would in the end

1:10:48

be trusted because somebody has to collect

1:10:50

and compile the information, so we can

1:10:52

develop a kind of culture of

1:10:54

understanding which people are being

1:10:56

excluded by Bitcoin costs and which people

1:10:58

could be included where certain costs to

1:11:01

be adjusted. And it's not just

1:11:03

about transaction fees, but some people want to say,

1:11:05

well, I can't use Bitcoin because they can't afford the fees,

1:11:07

or we don't want to make it so people can't use

1:11:09

Bitcoin because they can't afford to run a node. Well,

1:11:12

these are two very different cost

1:11:14

perspectives, like saying I can't, like,

1:11:16

a $25 fee is extremely exclusive.

1:11:20

It excludes a lot of people, it excludes

1:11:23

a lot of activity. A

1:11:25

$25 a month fee to run

1:11:27

a Bitcoin node, but $1

1:11:30

fees for transactions is less exclusive.

1:11:32

And so we have to actually

1:11:34

compare these dynamics and say, are

1:11:37

we biting off our nose despite

1:11:39

our face, you know, by being

1:11:41

overly worried about node costs when

1:11:43

the real problem is that transaction

1:11:45

costs are exclusive. And so

1:11:48

we have to weigh these things and be

1:11:50

informed about the nuances of these things so

1:11:52

we can actually see when we are reaching

1:11:54

the limit. I agree with Matt

1:11:56

that I don't actually think that ordinals have

1:11:58

proven that we found the limit, I don't

1:12:00

think we need a block size increase right

1:12:02

now. I do think that

1:12:05

there's a certain weather aspect to this and

1:12:07

the supply and demand in this overly unusual

1:12:10

amount of demand right now. But

1:12:12

I think we'll reach a point where it's just like, okay, it's

1:12:14

stupid now. You know what I mean? Everybody

1:12:17

is going to be excluded at some price. If

1:12:20

the price keeps going up, you're just going to exclude more

1:12:23

and more people, whether it be the cost to run a

1:12:25

node or the cost to send a transaction. But

1:12:28

both are real and the cost to run

1:12:30

a node is actually a much, like

1:12:32

we talked about complexity earlier, to

1:12:34

calculate the cost of implementing

1:12:37

Lightning and doing all the research and development and

1:12:39

all of the work that's put into it so

1:12:41

far in the past five, six years. The

1:12:44

cost of doing the transactions, blah, blah, blah.

1:12:46

All this like industry cost to compare it

1:12:48

to, say for example, if we had chosen

1:12:50

a route of formalizing

1:12:53

specifications for zero confirmation transactions

1:12:55

to enable merchant payments to

1:12:57

be something where they can

1:12:59

limit their exposure, increasing

1:13:02

the block size to where we kept transaction

1:13:05

fees down to a reasonable level. If

1:13:07

we compared those costs, I think you

1:13:09

would probably find that the overall costs

1:13:11

at least are much lower in the

1:13:13

on-chain scaling version. Now this

1:13:15

is all within a context, right? At

1:13:17

other contexts, that would be totally wrong.

1:13:19

There's just all of this kind of

1:13:21

tolerance measuring that we have to be

1:13:23

aware of and respectful of to see

1:13:26

that, okay, it really would be

1:13:28

silly not to increase the block size at some

1:13:30

point. I think we won't necessarily need

1:13:32

all of that research and awareness because the market

1:13:34

truly will just demand it. It'll just be obvious.

1:13:36

There'll just be like, look, Bitcoin fees have been

1:13:39

$1,000 a transaction for six months and

1:13:43

the Bitcoin price is plummeting and there's all

1:13:45

kinds of bad vibes

1:13:48

about Bitcoin throughout the community. It's just it's a

1:13:50

dying thing. We have to fix it. The

1:13:53

trick is between prescription and speculation

1:13:55

that if you solve the problem

1:13:57

early, then you don't have the

1:13:59

payment. But if

1:14:01

you speculate and solve the problem early

1:14:03

and are wrong, you create tragedy of

1:14:06

the commons and cost to the existing

1:14:08

user base. So it's a delicate

1:14:10

thing that requires nuance, that requires maturity,

1:14:12

that people should be looking at very

1:14:14

closely. And I think

1:14:16

this area of research is way

1:14:18

more interesting than custodial solutions and

1:14:21

considerations and such. It's

1:14:25

more taboo, but I do

1:14:27

think that there is meaningful,

1:14:30

realistic, scientific, mature, intelligent

1:14:33

stuff that could be researched there that is

1:14:35

not. I think pretty much James Lop is

1:14:37

the only one even looking at all at

1:14:39

Bitcoin this way when he does his research

1:14:42

of doing initial block downloads,

1:14:44

checking all the different implementations, things like

1:14:46

this. Sorry,

1:14:48

that's the end of my rant, I'm losing my voice. Yeah,

1:14:52

I think you're right. We

1:14:54

may reach that point. I think it's

1:14:58

very unclear. I think the

1:15:00

most interesting... So

1:15:03

I should avoid making

1:15:05

it sound like I speak for other engineers

1:15:07

in the broader Bitcoin community, because I

1:15:09

know there are many who are much

1:15:12

more concerned about the long-term UTXO

1:15:15

growth, right? That

1:15:17

the block size can create long-term

1:15:19

UTXO growth and that this

1:15:23

can outpace the

1:15:25

reduction in cost and storage. I'm

1:15:27

not as concerned about that. I

1:15:30

know others are, you know, to each their

1:15:33

own, whatever. But I

1:15:35

think, you know, to your point, in terms of

1:15:37

research, we would need to see

1:15:40

kind of where we're going in

1:15:42

terms of on-chain fees and whether the block size makes

1:15:44

sense. You know, I think at

1:15:46

some point we need to

1:15:48

have a serious conversation about modeling where transaction demand

1:15:50

comes from. And,

1:15:53

you know, right now, obviously, there's hype around

1:15:55

ordinals and all kinds of other things that

1:15:58

probably don't have staying power search. Certainly,

1:16:00

BRC20, whether you think that ordinals or

1:16:02

inscriptions have staying power is one thing,

1:16:04

but this kind of just pure

1:16:07

shit coin, fair minting by

1:16:09

paying Bitcoin on-chain fees, protocol

1:16:12

probably will not have staying power. So

1:16:15

the question is, where do we

1:16:17

get the transaction fees? And what

1:16:19

will blocks-based demand volume and what

1:16:21

does that blocks-based demand curve look

1:16:23

like? What is the demand at

1:16:25

different price points? And

1:16:28

that's something that's super complicated to

1:16:30

answer. I don't think anyone could even

1:16:33

answer that question today. But

1:16:36

there is some research that

1:16:38

some people have done, people have tried to answer the

1:16:40

question a little differently and say, if

1:16:44

every person in the world were to

1:16:46

get a Lightning Channel, how much blocks-based

1:16:48

do we need? Every

1:16:51

person in the world were to need to splice

1:16:54

in X amount of Bitcoin or splice

1:16:56

out X amount of Bitcoin from their

1:16:58

Lightning Channel on a yearly or monthly

1:17:00

basis, how much blocks-based do we need?

1:17:05

And the result of some

1:17:07

of those models has been surprisingly

1:17:09

little to me, that we need

1:17:11

fairly little blocks-based in total to

1:17:13

get everyone a Lightning Channel.

1:17:17

Not so much everyone a Lightning Channel

1:17:19

that they're going to splice in and

1:17:21

out of a lot. And so you

1:17:23

make certain assumptions around the liquidity of

1:17:26

LSPs and availability of capital to make

1:17:28

those Lightning Channels very long-lived and not

1:17:30

need a lot of on-chain transactions on

1:17:32

a regular basis. But

1:17:37

I've always been surprised when you do the numbers there

1:17:39

that the total blocks-based doesn't

1:17:41

need to be that high. But

1:17:43

we have to see where demand comes from and

1:17:45

what demand looks like and what that demand curve

1:17:48

looks like specifically. I

1:17:51

don't think we have even

1:17:53

a reasonably good guess as to what

1:17:55

Bitcoin looks like in five years,

1:17:58

in ten years, certainly. as to how

1:18:00

people are using Bitcoin. So on

1:18:03

one hand, I agree with you

1:18:05

that more research would

1:18:08

be nice. On the other hand, I'm not even sure

1:18:11

how one would go about doing

1:18:13

some of that research today. Yeah,

1:18:15

I'm just kind of hoping if the whole culture was moving

1:18:17

in that direction, the answer

1:18:19

is, be emergent. You know what I

1:18:21

mean? As long as we're being nuanced

1:18:23

and being mature and being intelligent, we'll

1:18:25

see what makes the most sense and

1:18:27

there will be some sort of rough

1:18:29

consensus about it. But if we just

1:18:32

treat it all as taboo and focus

1:18:34

on narratives that say,

1:18:36

well, Bitcoin banks are part of

1:18:38

the solution, then you just deter

1:18:40

that research. Okay,

1:18:43

let me be a little bit contrarian here. While

1:18:45

I do agree that from

1:18:47

a prescription point of view, screaming

1:18:49

that the sky's falling, we need

1:18:52

the giga blocks is craziness, but from

1:18:54

a speculative point of view, it will

1:18:56

be mature to get over the knee-jerk

1:18:58

reaction from the from the fork war

1:19:01

and to just start discussing stuff. I

1:19:03

agree with John that the magical numbers

1:19:05

are magical and so are to a

1:19:07

degree arbitrary and it could be a

1:19:09

little bit off in one direction or

1:19:12

the other. One interesting field of research

1:19:14

would be to try to move away

1:19:16

from magical numbers in general. For example,

1:19:18

there is an old proposal from Manny

1:19:20

Rosenfeld about elastic

1:19:23

block size, which will not converge

1:19:25

over a specific goal deluxe zone,

1:19:27

but will basically try to find

1:19:29

a dynamic way to react to

1:19:31

fill levels, which could

1:19:34

be more interesting. It was

1:19:37

a proposal that was not very easily

1:19:39

gameable by miners. So it could be

1:19:41

more interesting. So I agree that

1:19:43

it shouldn't be taboo, at least in technical

1:19:45

discussion. It could be taboo in memes because

1:19:47

memes are more simple and they're meant to

1:19:49

convey a simple thing, but in serious discussion, it

1:19:52

should not be taboo and the

1:19:54

size or the process

1:19:57

to get to the size. sorry,

1:20:00

not flexible. Elastic block size is

1:20:02

nice because one of the problems

1:20:04

with one-off increases or with time-dependent

1:20:07

increases is that we are assuming

1:20:09

a technological direction for our civilization.

1:20:11

When we have a technological shock,

1:20:13

then we have problems with our

1:20:15

assumption. We may not

1:20:17

have it, but so the Elonistic thought

1:20:20

before the Elonistic Dark Ages

1:20:22

and everybody was

1:20:24

finding Terra before the Vulcan exploded

1:20:26

and everybody was back to the

1:20:29

Stone Age. So, flexible and elastic

1:20:31

solution may be a thing. But

1:20:33

I disagree with both that the

1:20:35

main source of research

1:20:38

should be the demand because the

1:20:40

demand will always be as

1:20:42

much as they can. The

1:20:45

demand is possibly unlimited while

1:20:48

the realistic supply of good UX

1:20:50

and good security and good level of

1:20:52

censorship resistance is limited by reality. So,

1:20:54

I think that I will flip it

1:20:56

around. How much can we

1:20:58

afford to decrease the

1:21:00

fees is possible from a security

1:21:03

budget point of view, from a latency point

1:21:05

or from rate point of view, and from

1:21:07

a selfish mining point of view. I

1:21:10

think one of the characteristics of

1:21:12

the small blockers in the past

1:21:15

war was starting not from what

1:21:17

users want, but starting from what

1:21:19

is possible to give them without breaking

1:21:21

Bitcoin. Because if we do break Bitcoin,

1:21:24

it's true that what John says that at

1:21:26

a certain point, we are pricing out everybody,

1:21:29

even if there is a caveat there that

1:21:31

I would mention. But it's true that we

1:21:33

are pricing out from the on-chain transaction more

1:21:35

and more people. But if we break, for

1:21:38

example, Bitcoin decentralization in the process of

1:21:40

giving the market what they want, then

1:21:43

there is not even the last elite

1:21:45

of people remaining with this tool. So,

1:21:51

if the realistic choice is between

1:21:53

a very small elite

1:21:56

having Bitcoin and all

1:21:58

the world getting into something which is

1:22:01

closer to PayPal, there is a realistic debate

1:22:03

to be had about

1:22:05

preferring the first solution over the second.

1:22:07

I think I would probably prefer the

1:22:09

first solution. I would prefer a few

1:22:11

banks being able to

1:22:14

keep censorship resistance as opposed

1:22:16

to everybody losing it to a degree.

1:22:18

The second disagreement would be that if

1:22:20

we want to check demand, if

1:22:22

we want to be as much as

1:22:25

able as possible

1:22:28

to concede to the demand, we don't

1:22:31

have to just look at, transact of

1:22:33

the demand of people that want to

1:22:35

send Bitcoin, but also at the demand

1:22:37

of people that want to receive Bitcoin.

1:22:39

And in this particular case, I disagree

1:22:41

with John completely, because I think right

1:22:43

now sending Bitcoin, it

1:22:45

may be expensive, like putting

1:22:47

Bitcoin in a lightning channel could be 50 bucks.

1:22:50

If it's a lot for basically

1:22:53

the global South, it's a lot.

1:22:55

But running an order is

1:22:58

actually more expensive in terms of resources

1:23:00

right now. You need a kind of

1:23:02

computer and connection that most of the

1:23:04

people that cannot afford 50 bucks to

1:23:07

open a lightning channel cannot afford as

1:23:09

well. If we think about how

1:23:11

many people cannot spend Bitcoin right

1:23:14

now, and so they move

1:23:16

to custodial solutions instead, instead, there is

1:23:18

a large amount of people, more and

1:23:20

more every year are priced out and they

1:23:22

have to use custodial solutions. But we think

1:23:25

about how many people are outpriced from the

1:23:28

possibility to receive Bitcoin trustlessly, which

1:23:30

is just as important as sending

1:23:32

them. If you don't run an

1:23:34

order, you are basically trusting

1:23:36

as much as a wealth of Satoshi

1:23:38

users, you are trusting miners that they

1:23:40

are telling you gracefully, if you are

1:23:42

receiving or not. You are still trusting

1:23:45

basically five companies instead of

1:23:47

one. So if you receive money on

1:23:49

wealth of Satoshi, you trust one company. If

1:23:51

you receive money with SPV, you trust five

1:23:53

mining pools, but that's not a great improvement.

1:23:56

So receiving is as much important as sending.

1:23:58

And if you don't have money, If

1:24:03

I talk with people right now in a

1:24:05

Salvador or in Switzerland, and I ask

1:24:07

how many people can't spend on chain, there are

1:24:09

a few people that are priced out. If

1:24:12

I ask how many people can't with

1:24:14

their realistic cost-benefit

1:24:17

analysis run a Bitcoin

1:24:19

node, many more people

1:24:21

are just using a

1:24:23

cell phone app that

1:24:25

cannot run a full node because

1:24:27

nobody is running a Bitcoin on a normal

1:24:29

cell phone. So everybody's basically,

1:24:32

they are all trusting somebody else to receive

1:24:34

Bitcoin. This is equally important. Let's say

1:24:37

the last point would be, it's not

1:24:39

true that eventually we will price anybody

1:24:41

out of Bitcoin. I think it's true

1:24:44

that we will price anybody out of

1:24:46

moving single UTXOs alone. I think that's

1:24:48

inevitable for the reason that Matt said

1:24:51

before. There is no way such a

1:24:53

system with N-square kind of cost

1:24:57

growth can scale to anybody. You

1:25:00

can change off a small cost and

1:25:02

factor. You can improve a little bit,

1:25:04

a little bit less, but it's still

1:25:06

not scaling. So the only way to

1:25:08

scale, as Matt said before, will be

1:25:11

UTXO sharing. I hope it will be

1:25:13

trustless or seriously trust-minimized UTXO sharing because

1:25:15

in that case, we can scale in

1:25:17

a very open way. For

1:25:20

example, Matt

1:25:22

said, every time we open a Lightning channel,

1:25:24

we save fees because we have to pay

1:25:26

for the open and for the close, but

1:25:29

we don't pay for everything in between. So

1:25:31

we are basically batching, but there is more.

1:25:33

We are also, in theory, able to share

1:25:35

the opening and closing fee among two, especially

1:25:39

if we are both consented to the

1:25:41

closing. In theory, we both want to use

1:25:43

this channel so we can share the cost

1:25:45

among two. So among two people, the amount

1:25:48

of batching and the amount of fee

1:25:50

sharing is reduced, of course. But if we

1:25:52

go to three, four, five people, we can

1:25:54

actually, or 100 people, we

1:25:56

can share not only the opening

1:25:58

and closing fees. So, for example,

1:26:01

assuming that, for example, we have to

1:26:03

open a channel and we are 1000,

1:26:07

$1000 fees in theory could be shared among 1000 people with

1:26:09

$1 of fee. Of

1:26:13

course, it's tricky because now you have to

1:26:15

get the OTXO from these people entering, so

1:26:17

you create a lot of complexity. But

1:26:20

let's put it this way. We

1:26:22

increase the surface of cases

1:26:25

in which people can and

1:26:27

is incentivized to share the fees. Like

1:26:30

everybody will magically share these

1:26:32

fees trivially, but basically the

1:26:34

collision events in which people

1:26:36

can be interested in sharing fees can grow,

1:26:38

not with a number of participants but very

1:26:40

close to that. You

1:26:43

went a lot of tangents and I didn't

1:26:45

want to interrupt, so I took notes. But

1:26:47

first of all, fee sharing is such bullshit.

1:26:50

Like this is one of the reasons why

1:26:52

I just don't believe in UTXO sharing. If

1:26:54

you think that you're going to create user

1:26:56

experience where you can coordinate fee sharing across

1:26:58

many participants and have that actually reach some

1:27:00

kind of scale, you're crazy. It's never going

1:27:02

to happen. It's just a symmetric. I know

1:27:04

it's possible. It's like lightning though. It's

1:27:07

just past lightning. The

1:27:11

idea that you're going to coordinate all of this and

1:27:13

actually make it true, it's only going to be

1:27:15

done in a very, very centralized way. Like that's

1:27:17

the only way. Yeah, that's true. That's true. It

1:27:19

will be LSP based. It will never be totally

1:27:21

built up here. And I just like,

1:27:23

I don't know how to make a bet with you on

1:27:25

this. I don't even like making real bets. A gentleman's bet

1:27:28

that if we do ever have such a thing, more than

1:27:30

80% of the closes will be

1:27:32

single unilateral exits and they will not in

1:27:34

less than 20% will be coordinated multi-party

1:27:37

exits and multi-party changes. I

1:27:40

just don't think that's realistic to look at that

1:27:42

that way. I also want to mention

1:27:44

that you portrayed

1:27:47

the gap between SPV

1:27:49

wallets in custody as being only like

1:27:52

five steps away. I think it's a

1:27:54

huge gap. I think that holding your

1:27:56

own keys, although running and you're not

1:27:58

running a node. way,

1:28:00

way better than custodial. They're not

1:28:03

even comparable. That's how I see

1:28:05

it. And then finally,

1:28:09

ideals are about directions.

1:28:11

They're not destinations. And a lot

1:28:13

of your argument presents ideals as

1:28:17

the only acceptable outcome. And

1:28:19

so I think it's more about saying, for

1:28:22

example, Bitcoin is just not interesting to

1:28:24

me if it's for elites. If Bitcoin

1:28:26

banks and how Finney's vision of

1:28:29

the future and Bitcoin fees being thousands

1:28:31

or bajillions of dollars is the way

1:28:33

it plans out. And that's what the

1:28:35

consensus is taking Bitcoin towards. I'm not

1:28:37

interested anymore. I just don't think it's

1:28:39

interesting at all. It's like, okay, cool.

1:28:41

We made a digital asset, made a

1:28:43

digital commodity. Well, digital commodities in themselves

1:28:46

can be printed, lives that we've seen with shit

1:28:48

coins. So it's just like, it just becomes like

1:28:50

a lot of bullshit if it's

1:28:53

centralized. And so I think the

1:28:55

direction always needs to be about inclusive.

1:28:57

In other words, rather than excluding things

1:28:59

and moving towards higher and higher fees

1:29:01

and fewer and fewer participants, we should

1:29:03

always be trying to figure out how

1:29:05

to move to increase the quantity of

1:29:07

participants. And as long as, and

1:29:10

that's behind all of my arguments in my

1:29:12

mental model is the assumption of that direction

1:29:14

where we're trying to make Bitcoin a solution

1:29:17

for everyone. It doesn't mean that we'll be

1:29:19

able to include everyone. It just means that's

1:29:21

the direction we're going in. And so that's

1:29:24

why I'm so against all this

1:29:26

custodial conversation and bringing

1:29:28

it into this conversation because of,

1:29:31

to me, it is black and white and it's going

1:29:34

in the other direction. I don't want to

1:29:36

go in that direction. We're leaving that direction. Just

1:29:38

a flash before you, Matt, so I can leave

1:29:41

you for the full response, just a small flash

1:29:43

of response here. I think that if

1:29:45

we want to focus on the

1:29:48

possibility of increasing a little

1:29:50

bit of a small factor,

1:29:52

the access to on-chain spending,

1:29:54

which would be always a

1:29:57

super elite because of the entire discussion. I

1:30:00

don't believe it's even conceivable to have scaling

1:30:02

on a global consensus system. But if we

1:30:04

want to go in that direction a little

1:30:07

bit for a little bit for a constant

1:30:09

factor, a better research area

1:30:11

than analyzing the demand, which I

1:30:13

think is the no-go because the

1:30:16

point is the realism of supply and not

1:30:18

really the demand, will be actually

1:30:20

centralized zero-sync. So if

1:30:23

we can make syncing with compact

1:30:25

proofs as almost as secure

1:30:27

as running an old or indefinitely

1:30:29

close to running an old, then

1:30:31

the discussion about block size changes

1:30:33

completely. If you can run a

1:30:35

compact zero-knowledge proof that can prove

1:30:37

you the block headers without just

1:30:39

trusting five pools, I think there

1:30:42

you can have a total change

1:30:44

in the amount

1:30:46

of acceptable block

1:30:49

size increase of proposals. But that would be the

1:30:51

direction I will look in if it

1:30:54

was realistic and when it became realistic.

1:30:57

Sorry, Matt. Yeah, I don't have anything

1:30:59

against the idea. I agree that more

1:31:01

research in more types of on-chain scaling

1:31:03

improvements, aside from just changing magic numbers,

1:31:05

should be part of that, part of

1:31:07

the research. I think

1:31:09

that, for example, I know

1:31:12

there are edges to this, but

1:31:14

I think snapshotting on-chain shouldn't

1:31:16

be taboo and something that is probably something

1:31:18

that could be pulled off with a good

1:31:21

design, meaning that the concept

1:31:23

of a full archival node is merely

1:31:25

a curiosity and not a necessity. It

1:31:27

would require, at some point, generations

1:31:30

trusting old generations for the snapshot.

1:31:32

Weird mountain fantasy. You

1:31:34

are very close to say weird mountain fantasy. Well,

1:31:38

in other words, it's just a fractal

1:31:40

design comparing to pruning your own nodes.

1:31:42

You get the quotation, like a mountain

1:31:45

man, a weird mountain man fantasy, right?

1:31:47

No, I don't. Oh, yeah, weird mountain

1:31:49

man fantasy. This is a... Vitalik.

1:31:52

Vitalik, yeah. But

1:31:54

I think there's possibilities still there. I'm not

1:31:56

qualified to say there's none there or it's

1:31:58

definitely there, other than... that there's probably a

1:32:01

lot of areas of interest that open up

1:32:03

once you open up your mind and allow

1:32:05

yourself to do that kind of research. That's

1:32:07

all. I'm

1:32:09

conscious of time and it's been

1:32:11

fascinating. I haven't understood all of

1:32:13

it but what stands out to me is

1:32:16

one that there needs to be

1:32:18

a lot of research done for various solutions and

1:32:20

ideas and two it feels like

1:32:22

well I'll put this as a question so you can

1:32:24

all finish up or start with Matt. Do

1:32:28

you feel like this is just the natural cause for

1:32:30

Bitcoin? We're just at one of those times where we're

1:32:32

figuring things out because it is this new decentralized system

1:32:34

for value transfer and this is

1:32:36

going to keep happening during the lifestyle of

1:32:39

Bitcoin. Or do you think we're a very

1:32:41

tough spot and therefore there should

1:32:43

be much more focus

1:32:45

on increased investment in research and finally

1:32:50

just kind of what do you hope to see

1:32:52

coming up with regards

1:32:54

to scaling in the near future? Yeah,

1:33:01

no I do think this is a tough spot because

1:33:04

not necessarily

1:33:08

technically. The

1:33:10

ecosystem has spent a lot and invested a lot

1:33:13

in scaling better whether it's

1:33:15

simple things like better batching of

1:33:17

transactions from exchanges to investing in

1:33:20

lightning and supporting we're

1:33:23

in a good spot technologically and

1:33:25

I'm glad we've made all the

1:33:27

investments we have but Bitcoin is

1:33:31

in a place right now where people

1:33:33

are looking more and more to adopt

1:33:35

it. It has brand recognition almost globally

1:33:38

and getting whacked in the

1:33:40

face by this nonsense

1:33:43

of BRC20 and related

1:33:45

projects driving up

1:33:47

fees in a non-sustainable way is really hurting.

1:33:50

It's really hurting people trying to adopt Bitcoin

1:33:52

who might have adopted

1:33:54

Bitcoin and are now instead just using Tether or some

1:33:56

other system that's

1:33:59

even worse. So

1:34:01

that sucks. That

1:34:04

said, I don't know that there's

1:34:06

a lot I would think we should do

1:34:09

differently. So the ecosystem

1:34:11

has, again, it's invested a lot in

1:34:13

these different types of scaling technologies, whether

1:34:15

it's just smarter wallets on chain, whether

1:34:18

it's investing in Lightning, or whether it's,

1:34:20

you know, there's increased discussion of what

1:34:22

can we build with Covenant. I

1:34:25

continue to be a little disappointed by the conversation

1:34:28

focusing on like, how do we activate

1:34:30

Covenants now and not very focused on

1:34:33

what can we actually build with these things and

1:34:35

let's actually like gameplay a bunch of different things

1:34:37

we could potentially build that

1:34:40

would really scale Bitcoin and then try to figure out

1:34:42

what Covenants we should try to activate. But

1:34:45

you know, I think that that conversation is

1:34:47

really important. Things like payment pools, things like

1:34:50

I think both John and Giacomo

1:34:53

agreed that as we

1:34:55

move towards many party UTXO ownership,

1:34:57

it will probably in large

1:34:59

part be fairly centralized. And

1:35:03

I think some of that's okay, you know, centralization

1:35:05

with, you know, if we can really pull off

1:35:07

centralization where you can actually take your money and go home,

1:35:09

and no one can stop you from taking

1:35:11

your money out and like starting your own

1:35:14

Lightning node subject to on chain fees. That's

1:35:17

a great system, you know, and we can potentially

1:35:20

get a lot of the benefits of centralization, a

1:35:22

lot of the lower complexity system

1:35:24

designs, while also having, you know,

1:35:27

censorship resistance, true censorship resistance that someone

1:35:29

can take their money in and do

1:35:32

whatever they want with it, subject

1:35:34

to on chain fees, as long as we have

1:35:36

have reasonably priced on chain fees. You

1:35:38

know, there's a lot of research that is ongoing there, I

1:35:40

want to continue to see more of it. I

1:35:44

think these kinds of designs are going to end

1:35:46

up being where we end up, but it might

1:35:48

take a while because actually building

1:35:50

these things, you know, John talked

1:35:52

about the complexity of building these

1:35:54

user experiences where things gracefully degrade

1:35:56

from one technology to another is

1:36:01

a massive amount of complexity, so tonic complexity and lightning,

1:36:03

and then we add these other layers on top that

1:36:05

each have their own complexity, and then we have to

1:36:08

do all the bridging, and it has to

1:36:10

be low fee, and users have to be

1:36:12

seamless. It's really

1:36:14

hard, and it's gonna take a long time before

1:36:16

we get there. So, yes,

1:36:18

I'm very frustrated with the situation we find

1:36:20

ourselves in. I'm not happy about it, but

1:36:24

I am happy that there is

1:36:26

investment available for engineers

1:36:28

to research these topics that people are researching

1:36:30

these topics, that hopefully

1:36:33

we will come to some conclusions

1:36:35

about other things to build besides

1:36:37

lightning that are somewhere in between

1:36:39

the custodial, pheiment

1:36:41

or liquid angle and

1:36:44

lightning, and that we will start building in

1:36:46

that area. But

1:36:49

that is going to take a lot of time,

1:36:51

and for now, I'm just frustrated, and there's not

1:36:53

a lot I can do to change that. There's

1:36:55

not a lot any of us can do to

1:36:57

change that aside from fund open sets, fund brink,

1:37:02

learn if you're an engineer, do research

1:37:04

in this space. If your

1:37:06

friends with engineers encourage them to do research in this space,

1:37:09

if there's engineers who aren't in Bitcoin yet, go

1:37:12

do the Chaincode Lab seminar to

1:37:14

learn more about Bitcoin and be able to contribute

1:37:16

more in this space. But,

1:37:19

yeah, kind of where we are. Yeah,

1:37:21

same with you, Giacomo, your kind

1:37:23

of view on where we are currently, this kind

1:37:25

of crossroads of scaling, you'd

1:37:27

like to see happen. So everybody,

1:37:31

including me, was mentioning Alfine

1:37:33

in December 2010 about

1:37:36

the Bitcoin banks. But actually the first answer

1:37:38

to the total on scalability of

1:37:41

the own chain layer was

1:37:43

already given by James A.

1:37:45

Donald in November 2008 to

1:37:48

Satoshi. It was the first

1:37:50

answer. It was like, this is very cool,

1:37:52

but cannot possibly scale. I think that

1:37:55

I understood it thanks to some Bitcoin

1:37:57

friends, like Laurence and

1:37:59

others. around 2014.

1:38:01

And so I'm

1:38:03

not surprised about some people

1:38:05

probably after SegWit and Lightning,

1:38:07

they were thinking that the

1:38:09

new piece achieved with the

1:38:12

low fees was forever. But

1:38:14

that was just forgetting a

1:38:16

fundamental problem with global consensus

1:38:19

systems. They cannot scale, possibly.

1:38:21

Also, they also have terrible privacy. So

1:38:23

Lightning is also a way to increase

1:38:25

privacy. They have

1:38:27

some censorship surface attacks, like miners

1:38:30

paid by the government to mine

1:38:32

empty blocks or even worse, spam-fitted

1:38:34

blocks, which are the same as

1:38:36

empty, but they also wait

1:38:38

more on your node. So basically, we have

1:38:40

this problem that censorship from

1:38:42

miners, it cannot affect directly

1:38:45

Lightning transaction, only the opening and

1:38:47

closing of channels. So there are

1:38:49

so many reasons to move away

1:38:51

from global consensus that high