Why BIP-110 Will Win with Bitcoin Mechanic | Bitcoin Infinity Show #206

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Mr. Mechanic, welcome back to the Bitcoin Infinity show.

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Sure, sure. Nice to have you here.

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Thanks for having me, man. Always a pleasure.

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Likewise. It's been a couple of months since we last spoke.

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You had a bit of a hiatus there for a couple of months.

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But now you're back with a vengeance, being banned and all of this stuff,

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and enjoying all of it, I presume.

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How are you, man?

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Yeah, they're really good. Summer is here, it's beautiful. Where I live in the world, summer is particularly beautiful. I did have a bit of a hiatus, because fortunately, a soft fork war of this type, it lets you know exactly how long the battle is going to be, and how to pace your energy.

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and now we are ramping up into the final stage of it

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and I'm not burnt out.

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I took a sort of gap.

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Like when Dathan initially set the forekite,

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everything, I relaxed.

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I'm like, right, okay,

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this is how it's going to play out over the next few months.

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This is when people are going to say this silly shit.

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This is when this is going to happen.

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That's when people are going to start finding blocks, etc.

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so yeah it's enjoyable it's nice watching a theory come into demonstrate itself in practice

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that um you know that shouldn't be that controversial really for anyone um nodes

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control the network um you don't need a heck of a lot of them minority soft forks are a thing

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they have been in the thing a thing in the past i'm expecting this to re-demonstrate that particular

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mechanic of how this whole network works yeah and and are things playing out like uh

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a bit faster or slower than you expected them to time frame wise for the activation

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i mean they're happening exactly at the speed i expected because the block height is determined

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right i wasn't expecting an accelerated a minor accelerated soft fork right um that's not what

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the A in that term stands for, but the 55% threshold where they can activate bit.10,

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I didn't expect them to voluntarily do that. Miners are not, you know, we can't ask for too

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much, right? All we have precedent for is people saying this fork is silly and it's going to fail,

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and then five minutes before it stops being optional, everyone adopting it. So I expected

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the same to play out here and uh time frame wise yeah i think we just started june um the end of

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july is when everything has to suddenly be there or well we we got the first week of august too but

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if we're um if there hasn't been significant growth between now and then then i would wager

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that that nothing really would change in that final week i would expect the end of july really

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for it to suddenly, for some sort of cascade to begin.

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So yeah, that's kind of been my expectation the whole time.

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I never really held some kind of a quiet hope

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that miners would suddenly start activating Bit.10,

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and I don't really want them to.

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This is my favorite way for things to happen.

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It's very, it's hard and more chaotic,

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but that is a feature, not a bug.

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Like what really, what people like ignorantly want

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is for a couple of the big mining pools to flip a bit and for the soft fork to activate that way.

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But that would be very orderly and very calm and predictable,

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but it would be completely the result of centralization,

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which is not what anyone should want or celebrate.

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And that would set a horrible precedent because then you'd have those same couple of mining pools saying,

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well, wait, can't we activate other stuff then?

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Like if the network's just waiting for our queue, then isn't this our network?

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so I really like the fact that it's just plebs running nodes and every day there's like 15 20

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new people I've never heard of on twitter um that are you know running this thing uh championing it

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clearly dug into the arguments and are talking about it and it continues to grow that way while

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all the businesses are a lot bigger than they were back in 2017 so none of them want to touch it

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um none of them want to they're also risk averse um but at some point a thing becomes unpreventable

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so that's it's rapidly reaching that phase now with the fact that we're finding more blocks

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and once we start finding blocks there's as you know there's no way to fake that proof of work is

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real blocks are real if people are actually mining and finding blocks that say i want bit.10

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you know there's no way to call that a sybil attack or to try and you know seethe and cope

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all around that kind of stuff that's real there's nothing you can do about it it's in the chain those

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people want bit.10 they're not going anywhere so i think uh i forget what your question was

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yeah about uh how this plays out like um so yes if if miners if miners started signaling if we got

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like foundry or antpool on board right now we wouldn't it wouldn't signal to the network that

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user-activated soft forks work.

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Like I remember back in the block size wars,

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sort of the whole BIP-148 thing

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and that whole thing playing out was sort of,

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personally for me, that was the signal

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that told me that Bitcoin actually works.

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It's actually run by node runners.

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We are the decision makers and not them.

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It's sort of the, but we wouldn't, you're saying we wouldn't get that if the miners came on board too early, if I read this correctly.

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Well, the nuances here get sort of whitewashed.

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And I mention this frequently because it's the one, no pun intended, mechanic that I do understand and that most people don't understand and that there is a lot of lying about.

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and it caused me to make a YouTube channel many years ago

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and upload a video where I monologued

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about the whole history of the block size wars

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because I saw, I was there for this war.

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I saw who was doing what and I saw how it went down

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and everyone is pretending it didn't go down that way.

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Everyone, well not everyone,

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but the key players lie about this

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and people listen to them

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because it's too complicated to understand.

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There's no template for this kind of network dynamic

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or hierarchy.

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no one understands how Bitcoin really functions. So the primary culprit of spreading this

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disinformation is Matt Corallo, aka the Blue Matt. And I've debated him personally on this,

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and I've seen him talk about it endlessly. What they say happened in 2017 is that at the last

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minute, the miners decided to activate Segwit for no discernible reason. They didn't like it.

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They wouldn't signal for it. It required 95% activation threshold. They did not like it to

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that extent. You had at some point, I think like one third and then two thirds of the network

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signaling for Segwit. I actually forget, but it was nothing like enough to get to 95%. The dominant

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player in the mining industry is Bitmain and they were against it and they were able to unilaterally

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block it. At the very last minute, well, rewinding a little bit, BIP-148 came around, which was a

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minority soft fork. Very few people ran this. Even people that were in favor of Segwit were against

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Bit.48, such as Giacomo, such as Greg Maxwell, such as Todd, those people spoke out against Bit.10

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and discouraged people from running it. They found it that it didn't have consensus. It didn't have

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all these warm and fuzzy feelings that people like to pretend we have. To this day, people still

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pretend Segwit and Bit.48 had consensus. Neither of them did. And this is obviously true. If Segwit

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had consensus, Bitcoin Cash would not exist. Bitcoin Cash exists because people did not like

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SegWit. It was moving in the wrong direction from their perspective. They wanted to scale another

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way. And they knew that if we had SegWit, we would never get anywhere with that. And Bitcoin 48

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was a subset of people that already did not have consensus that said, we're going to activate

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SegWit whether you like it or not. And that was so stringently pushed as the way forward on the

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various forums like Reddit, and I'll get into the Reddit ban in a minute, that I'd never heard of

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Bitcoin Cash until the day it launched. That's how successful they were. I was plugged into this war.

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This was everything to me. And I spent all day every day arguing with other people about it.

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And I'd never heard of Bitcoin Cash until the day it launched. That's how successful it can be

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silencing conversation around this stuff. So as a brief aside, when I got banned off Reddit the

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other day and people have now started posting there all day about bit.10 just to troll the

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Reddit mods and stuff because they don't allow any conversation of it. But what's really sad is

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sometimes it takes them a while for the mods to realize it's a bit.10 post and delete it.

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And I've seen comments in there from people like, what's this? I'm curious. What are they flipping

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version bit for? Like people want to know they want to have a genuine conversation about it's

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really sad that they can't because of the way it's been moderated out of existence in Reddit.

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but fortunately we have twitter anyway back to the mechanics um we had a minority soft fork

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bit 148 most people spoke out against it most people were most people many people that were

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in favor of segwit were against bit 148 for whatever reason the same as you see now uh

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like with jackamo and like with greg maxwell and stuff um so it said we're going to throw

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your blocks in the trash come August if you don't start signaling for Segwit and activating this

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thing. And most people said it was silly. It started out as a fringe movement with everyone

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pretty much mocking it apart from a couple of nones and weirdos like me. Then Luke came along

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and said, this is not silly. Actually, it's going to activate Segwit. And that lended some

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credibility to it that helped propel the thing forward and make it just that little bit more

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respectable and tolerable for other people that were still pretty fringe to say, all right,

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I support this. Because it started with an Anon, right? Shaolin Frye. And then it slowly got more

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and more credible from that. So BIP 110 is a similar thing. Luke was, in this case, one of

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the initial people working on it. But it wasn't his client. It was Dathan Ohm's client. And Dathan

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is not Luke. He's another Anon that, you know, made something that weirdos ran like me.

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and then eventually it got merged into knots and that was recent and knots is obviously luke's

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client but that you know that has 20 network adoption that's not a trivial thing right a lot

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of people run that a lot of blocks exist in the chain that were created with that uh with uh with

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knots so all that is to say these things grow and they start out looking very silly and then

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they look less silly over time and then eventually they win that's just basically a dynamic that

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exist within Bitcoin when it comes time to enforce stricter consensus rules. And all that

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BIP110 does, for anyone that's curious as a summary, is the UTXO set blew up as a result of

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an unintended consequence of Taproot, which was the last soft fork upgrade. BIP110 fixes the exploit

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that people are trying to use that for. It also closes OperaTurn and limits it down to 80 bytes

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because the only point of OpReturn

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is to write arbitrary data into Bitcoin.

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People have been writing arbitrary data into Bitcoin

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and it's made it impossible in a practical sense

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to run a Bitcoin node on the hardware

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it used to be possible on.

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So we are degrading the network due to bugs.

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Bit.1.10 fixes those bugs on a temporary basis

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because it's quite crude,

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but that was there as a necessity.

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because if we try and make it perfect it will take forever and then the damage will be irreversible

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so that's the motivation for it then the actual upgrade itself it's gaining adoption every

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difficulty period it has more blocks than the last save for maybe the first time some blocks

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were found because that was a lucky period yeah I don't know that's kind of what my perspective is

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on the whole thing so back to the block size wars um in your opinion what what uh role did samson mo

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and the btcc play in this like they were pushing for for uh the the b148 thing right with the hats

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and stuff like like your beautiful hat that you're wearing right now uh and which you no longer sell

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uh well i don't don't have that website anymore so i'm going to try to figure out a way another

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way to sell those hats uh we'll we'll see um but i if i remember correctly they were like the first

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pool to start signaling for for segwit back in in the block size wars or something like that right

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it sounds correct but i don't recall um samson famously sold hats and those things are helpful

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so i appreciate him doing that yeah then samson was uh you know helpful in doing good things

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I could speak to how that's changed now, but I don't really want to.

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No, okay.

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So the reason I asking is like the two most common theories of how this plays out is that either it dead in the water and nothing happens

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and the other one is that it just activates

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because you get the cascade effect in the end

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because the miners get scared that their blocks are going to be...

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They're going to spend all that energy for nothing at the end of the day.

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So, but would that require a big pool to hop on or what does the dead in the water scenario look like?

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It's, I mean, it's over.

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Like the chance for that to have been the conclusion died around November of last year.

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but way too many people have already adopted it and far too few people have come up with any reason

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that it's a mistake to adopt it and there has been no counter movement there isn't an equivalent of

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bitcoin cash to fork off the the segwit user activated soft fork well that's what happened

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before right the people that didn't like segwit or didn't like bit 148 that would force activation

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of Segwit, they didn't sit around on the neutral chain. This is the thing with controversial soft

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forks is you have three paths. You don't have two. Everyone just forgets about the middle one.

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Bitcoin Core, which did nothing around the Segwit period in 2017, nothing happened with that regard.

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That was a chain that people forgot about where Segwit never activated, but they didn't go along

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with Bitcoin Cash either. Now, what happened is a minority client came around that forced the

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activation of a new rule that all the core nodes went along with. And there was a reaction to that,

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a counterfork called Bitcoin Cash, which is necessarily a hard fork off the disliked soft

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fork. That's what's happening here, except there is no countermovement. The dominant majority,

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or the apathetic majority, has no countermovement to go along with, which would be a URSF,

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one where they intentionally don't mine Bit.1.10 blocks in a way where they can't get wiped out.

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And it's necessarily a hard fork off of the Bit.1.10 chain, which again, would have to be a Bitcoin

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cash style reaction because they did that on August 1st. Bitcoin cash started right when

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mandatory lock-in started for the SegWit. And we were going this way, this way, this way,

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then we branched off in two directions at once.

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You had the big block, hard fork,

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and then you had new rules, SegWit.

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And the actual inert chain, that never happened.

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But because a soft fork pulls in all the inert nodes,

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you all go off in the new direction together.

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So for mining pools and the risk they're taking now

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and all that stuff, there's no risk to BIP110ers

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if a mining pool decides not to come along with it.

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There are edge case scenarios where the miners can collude

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and decide to ignore a fork and agree amongst themselves that they never defect and wipe each

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other's work out, that is technically a possibility and it's very interesting to think about, but it's

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not a practical one. Because if I'm foundry and your ant pool and we have an agreement between us,

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hey, let's never mine a bit.10 block because if either of us starts doing that, the other pool

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has all their work wiped out. I don't think like it for me, it's the red and blue buttons

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scenario, right? If we all press the red button, which is just everyone going with bit.10,

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then all of our work continues and everyone survives and we're fine. However, the blue button,

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which is the sort of pointless option where you have to rely on enough other people pressing the

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blue button to keep you alive. That's very dangerous one to press. That's ignoring bit.10

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and pretending you can never get wiped out. And that requires an agreement amongst six or seven

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mining pools. And if one of them ever moves over and says, actually, I'm going to push red,

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then you start getting more and more worried because now you need none of the other pools

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to defect and press red too. And the more of them that do, the more likely you are to die as blue.

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And the minute you go, and it's actually, I feel like that whole analogy was about forks

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because it's so close. They even gave it the 50% threshold, right? They said, you know,

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if over 50% of people push red, then all the blue buttons die, which is exactly how the forks work

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in Bitcoin. If over 50% of the hash rate ever starts mining Bit.1.10, then all of the people

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that ignored it have their entire history wiped out. So again, they either need to actively prevent

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that from happening by counter-forking, which no one is doing, because how are you going to do a

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counter-fork to enshrine large op returns and op-if and taproot, which are just obviously harmful to

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Bitcoin. No one's going to do that. So you end up in that obvious scenario where all the pools say,

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if I go to Bit.10, it does what? Limits op return, limits abusive taproot. Sounds fine to me. And if

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I don't do it, what happens? All of my work can get erased. That seems to me like a very open and

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shut decision. The only thing it has as a premise is, does this thing have some legs? That's it.

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I'm not saying that if one guy shows up with a soft fork, all the mining pools fall over themselves trying to enforce the new rules.

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I'm not saying Bitcoin works like that.

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But there is and this is this concept of thresholds of credulity that I'm trying to introduce.

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Right. I know that one guy cannot unilaterally soft fork Bitcoin because of these dynamics.

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But we know a minority can because of 2017.

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So there is some pretty, the network does cater to minorities that want to enforce rules more strictly.

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That is just a dynamic of how Bitcoin works.

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Yeah, but I think the crux here that I'm trying to get at or fish for to really unpack this for people is how big does that minority need to be?

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because I've been to a bunch of conferences already this year

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and talked to a lot of developers,

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especially now the latest one in Vienna.

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And the vast majority of these developer types, at least,

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either haven't heard of BIP-110 or are against it

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and thinks it's just dead in the water.

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So just for the sake of argument,

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let's say we get to somewhere after the activation period,

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a non-BIP110 block is mined.

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And then the miners will have to decide at that point

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whether to mine, and of course a BIP110 block too,

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and they will have to decide which one to continue mining on.

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And at how many percent of nodes running BIP110

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does it make sense for them to mine on the BIP110 chain?

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and at what percentage does it make sense to just...

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Because the longest chain could still be the other one, right?

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If BIP 110 doesn't get the momentum it needs.

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Yeah, enough people could push the blue button

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that they actually all survive.

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Yeah, exactly.

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But the risk there is if, say, 10% doesn't do that,

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then all of the blue blocks are...

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The red button brushes are surviving no matter what.

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right? Like they could if they will die of old age eventually, which I guess would be the analogy

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for like, you know, people on a bit.10 chain that moves super slowly. But I don't think there's a

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scenario where a bit.10 block exists, where the people trying to ignore bit.10 don't defect,

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so to speak. And I think your your your scenario you're laying out in need, you need to give me

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one additional detail. Because if there's a bit 110 block and and a non bit 110 block,

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then if the bit 110 block arrived first, you know, like 10 seconds before the other one,

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it's over. No, none of the nodes on the network are going to even acknowledge the non bit 110

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block. Okay, so let's say it's the other way around. Yeah, if it's the other, it would have

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to be the other way around. So you get to the fork height, the next block has to enforce bit

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1.10 or has to flip a bit at least signal bit 1.10 and when you reach that height a block is found

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by someone ignoring bit 1.10 and it has a large op return in it that's not permitted by the bit 1.10

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rules or it just doesn't flip the bit because that's the first thing that gets enforced it's

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just version bit flipping in the beginning of august yeah it needs to signal for bit 1.10 it's

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the signal bit 1.10 activation and a block is found that doesn't do that and all of the core nodes

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accept it. So that chain is now longer and we're stuck here. At that point, this one block is very,

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very unsure of itself because unlike normal, where all of the network accepts it, something like if

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the numbers don't grow at all from today, which is, you know, we have around 11% of the network

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running bit.10 nodes, but more like 30% of all the recent nodes are running bit.10, right? So like

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people that actually upgrade their nodes and they're not ancient and forgotten about.

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Let's say like for the sake of, let's give myself the optimistic scenario for once.

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30% of the network, unlike ever before, just told you your block wasn't real and that it broke the

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rules and it might as well have given itself a billion bitcoins. It did something invalid per

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the network rules. So that block is gone. Anyone mining with respect to that, if they just get

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lucky and find two blocks for whatever reason, this block is done. It's just going to be thrown

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away by the rest of the network too at that point if that happens because the BIP110 blocks are

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valid to all nodes. Core nodes will accept BIP110 blocks even though they don't enforce the rules.

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So everyone running a core node is going to have a messier chain in that scenario and everyone

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mining on a core node is going to have any block they find potentially get through. It's definitely

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going to get thrown away by 30% of the new nodes. And it might get thrown away by the rest of the

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network too, should the BIP-110 guys ever get longer than you. So that's the horror of the

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reality for it, for any miner that would try and ignore it. But anyway, to get further into your

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scenario, supposing they find a second block, you know, very quickly, and there's still no BIP-110

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block. And then they find a third one, and there's still no BIP-110 block. I think most people

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consider that like a calling of a bluff scenario for whatever reason in BIP 148 times they didn't

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do that they said it's a bluff until the last minute and then they caved and I ultimately think

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the reason for that is because it's not a number and you're asking for a number which is how many

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nodes does it need to be before they don't consider a bluff anymore but for me that's not right it's

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not about numbers it's about who's running the nodes and how serious they are and people try to

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give weight to nodes by this economic node meme and i don't think economic nodes uh i don't think

294
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you can really make a black and white distinction between an economic node and a non-economic node

295
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i think i always hated that term i validating node is much better but even even that is a bit

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confusing well i think it's the only thing we want to try and dismiss is frivolous nodes that

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spun up in a clearly manipulative way to make stats look misleading. That's all. So back in the

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BIP 148 days, on one day, back I think it was in April 2017, 500 new nodes went online for BIP 148

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in a complete vertical line on the chart. No one believed that, right? For good reason, because why

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would that suddenly happen? It could happen if there was like Umbrell and Start9 or something,

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and they released something that day, and it caused it to go up a lot. But those projects

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didn't exist back then. So it was completely not believable. It was obviously someone using AWS or

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something to try and spoof a bunch of Bitpon 48 nodes. And they might, maybe they were just thinking

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the ends justify the means and this will scare people and people will believe it without thinking

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too much. But it does bring allegations of Sybil attacking from the people against the fork,

306
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right? So, you know, I see ridiculous delusion from people on the other side, like Aaron Van

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weird I'm saying this bit.1.10 is five people on Twitter high-fiving each other and like it

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there've been more than five miners that have found bit.1.10 blocks right and they have multiple

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exahash between them that's like tens if not hundreds of millions of dollars worth of battery

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it's not five people right I agree that it's small and of course it's a minority but it's way more

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than like the people pretend so all that yeah basically my point is the the the heuristics you

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have to use to analyze the seriousness of it and exceed your threshold of credulity for whether

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this thing is going away or not is different for different people. And because it's a consensus

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network, not only do you have your own personal threshold for credulity, you have to guess what

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other people's is too. Because if I'm ant pool and I need to see 40% of blocks signaling for it

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before I take it seriously, it doesn't matter because if I think Foundry's threshold for

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credulity is 20%, then that's more important, right? Because if they flip when we hit 20%,

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then we immediately go past 40 And now it past mine as well So you can say it not real it not real But if other people think it real then you have to treat it as real too And you going to run all it a race to the bottom for what ultimately is tolerance for chaos

319
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And here's why it wins.

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Because plebs, hodling, have the most tolerance for chaos.

321
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Giant mining pools have zero tolerance for chaos.

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Bitcoin exchanges have zero tolerance for chaos.

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And this is obviously true as well, because every single one of them you speak to will say, what do I do about Bit.10? None of them have an ideological commitment to anything in either direction. They just don't want to have their blocks thrown in the garbage. They don't want to send someone a million dollars worth of Bitcoin that disappears.

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or the worst scenario where someone sells a million dollars worth of Bitcoin on their exchange,

325
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they send them the fiat and then the Bitcoin they just effectively bought disappears.

326
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They can't be in those situations.

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So you're playing a game of chicken in effect with a bunch of messy plebs with anonymous names

328
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and all that stuff on Twitter who will definitely never give up.

329
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And they are against the most risk averse, corporate, whitewashed, orange washed,

330
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you know, risk-averse, boring people in the universe who are immediately just going to say,

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well, this is creating issues. The price is falling. You know, the price is falling. We're

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down to 69K. I think the price will fall until the ambiguity around consensus is removed again.

333
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And plebs can handle this all the way down to 5K. They don't care. And they can handle a blockchain

334
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that moves at 10% of the speed for six months. They don't care about that either. They will just

335
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do it because it's all or nothing for them. Bitcoin has to work right. Whereas none of the

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exchanges or mining pools can tolerate that. And none of them are against it either. They're all

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just neutral until the network says, all right, you know, the majority of mining pools aren't

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signaling for Bit.1.10. I'll make this final point. Because there's no penalty for them to

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not signal for it right now. All their blocks are fine. But the minute August hits and they suddenly

340
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have to mine bit 110 blocks that's when they have to make the decision and i'm pretty sure that if i

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tell you hey if you mine a block and don't enforce these new rules there's a two percent chance you

342
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don't make any money at all i'm pretty sure they're going to say well that's a pointless chance

343
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so i'll just enforce the new rules again like if there was like a counter fort where they hated it

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and they had a way of actively opposing it and that was coordinated sure that would be a genuine

345
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thing where i would be like all right we have no idea what's going to happen here but that's not

346
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the scenario ignoring minority soft folks once they've exceeded a threshold of credulity

347
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is not a real strategy all that means is i'll obey it when i have to i just don't have to yet

348
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yeah so so a bit of history here of my my trying to understand their perspective especially in this

349
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last Vienna conference and stuff.

350
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I heard a lot

351
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of people say that first

352
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and foremost this usual

353
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thing about

354
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data can be stuffed into Bitcoin

355
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anyway. This will do nothing. It's all

356
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moot, all of that stuff.

357
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Another perspective I heard is that

358
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filters are not

359
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for filtering out transactions

360
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at all. They are for

361
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predicting what ends up in the block

362
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and have nothing to do with

363
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You know, the whole the mempool crowd.

364
00:31:09,982 --> 00:31:11,162
Yeah, this is horrific.

365
00:31:11,742 --> 00:31:16,602
But the most common one, and I'm getting to a question at the end of this,

366
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is that when I say Bitcoin is money, and my talk was on why Bitcoin needs to be money,

367
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because other use cases don't add value, they leak value.

368
00:31:30,682 --> 00:31:36,782
just like other use cases for gold leaks value from gold as a monetary thing.

369
00:31:36,782 --> 00:31:40,822
But the counter argument was that, yes, but Bitcoin is not money.

370
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It is what it is.

371
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And taking the very narrow perspective that Bitcoin is whatever the consensus rules say that it is right now.

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But I think that's misguided because Bitcoin is not what it is right now.

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It is whatever path we choose to steer it in into the future.

374
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It's like missing the social layer behind all of the proof of work.

375
00:32:04,942 --> 00:32:16,762
So why do you think it's so common for the developer type specifically to just see it from this narrow-minded technical lens that this is what it actually is?

376
00:32:16,982 --> 00:32:22,002
It is actually this database backed by energy and all of what they say that it is.

377
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And it's so hard for them to wrap their hands around it needs to be money and we need to steer it in that direction.

378
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Why do you think that is?

379
00:32:29,142 --> 00:32:35,222
so many of them on that side. I believe the polite term is intellectual phase locking,

380
00:32:35,542 --> 00:32:42,222
which is another polite way of saying groupthink or cowardice. No one wants to disagree with the

381
00:32:42,222 --> 00:32:49,182
big brains, but I don't care. Look at any chart. The UTXO set grows like that, like that, like that,

382
00:32:49,302 --> 00:32:54,642
like that, until someone discovers op-if in Taproot, and then it goes like that.

383
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and suddenly that blew up.

384
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Now you can't run a node on an 8 gigabyte machine anymore.

385
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They will tell you you can

386
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and I'll tell you no one is going to

387
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because it will take a month to sync

388
00:33:04,022 --> 00:33:05,422
and that's just not a thing anymore.

389
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And a $300 Raspberry Pi

390
00:33:07,382 --> 00:33:12,282
and a SATA connected SSD was $299 or whatever.

391
00:33:12,582 --> 00:33:13,662
That's an impulse buy.

392
00:33:14,142 --> 00:33:16,162
$1,000 is not an impulse buy.

393
00:33:16,382 --> 00:33:18,002
That's a commitment that most people

394
00:33:18,002 --> 00:33:20,822
and that threshold there is a very human one.

395
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It's not a technical one.

396
00:33:22,462 --> 00:33:24,242
So when you talk to developers about this stuff,

397
00:33:24,242 --> 00:33:28,022
It's neither here nor there. They're just going to tell you, oh, that's 2.5 times the price.

398
00:33:28,342 --> 00:33:33,782
But that's not that's not the point. The point is, I know Moore's law exists. I know that

399
00:33:33,782 --> 00:33:38,762
transactions are technically data. All these are technical points. None of them speak to the humans

400
00:33:38,762 --> 00:33:44,182
behind it. And as you like to say, a Bitcoin node is a person that is running the software.

401
00:33:44,642 --> 00:33:49,942
It's not it's not a it's not the software itself. It's the human behind it that actually matters.

402
00:33:49,942 --> 00:33:55,182
so it's no longer an impulse yeah it's no longer an impulse buy it's no longer moving in the right

403
00:33:55,182 --> 00:33:59,902
direction you can see a demonstrable difference between how bitcoin was being used and now how

404
00:33:59,902 --> 00:34:05,322
it is being used i'm not talking about store of value i'm not talking about bitcoins or btc

405
00:34:05,322 --> 00:34:11,362
i'm talking about the blockchain the payments aspect of it that is now that is a financial

406
00:34:11,362 --> 00:34:17,842
ledger bitcoins are money bitcoin's blockchain is a ledger which is a history of what has

407
00:34:17,842 --> 00:34:22,502
happened with that money. It's being filled up with doodles and arbitrary data, which is an abuse

408
00:34:22,502 --> 00:34:29,142
and leeching off of the system. And this is Newton's third law as applied within economic

409
00:34:29,142 --> 00:34:37,542
theory. You cannot do something that you used to have to pay money for for free without and ignore

410
00:34:37,542 --> 00:34:43,602
the cost of what it is you're doing if you've just merely externalized it. So buying cloud storage

411
00:34:43,602 --> 00:34:45,762
is a thing you have to pay other people to do

412
00:34:45,762 --> 00:34:48,082
because you're storing data on their computers.

413
00:34:48,742 --> 00:34:50,602
That cost doesn't go away

414
00:34:50,602 --> 00:34:52,242
because you're using the Bitcoin network

415
00:34:52,242 --> 00:34:54,082
and you're tricking people

416
00:34:54,082 --> 00:34:56,562
who are trying to store a history of financial activity

417
00:34:56,562 --> 00:34:58,082
into storing your JPEGs.

418
00:34:58,242 --> 00:34:59,602
That cost isn't gone.

419
00:34:59,742 --> 00:35:02,062
It's just being born by the Bitcoin network

420
00:35:02,062 --> 00:35:02,802
and it's real.

421
00:35:02,942 --> 00:35:05,082
It's more than doubled the cost of running a node.

422
00:35:05,422 --> 00:35:07,922
So you have to re-optimize Bitcoin

423
00:35:07,922 --> 00:35:09,662
and say this is what it's for,

424
00:35:10,262 --> 00:35:12,122
but this is how it's being used

425
00:35:12,122 --> 00:35:16,822
And in comparison to a few years ago, it's worse and moving in the wrong direction.

426
00:35:17,022 --> 00:35:22,942
So what are some things we can do to patch up the tires and move back towards the right

427
00:35:22,942 --> 00:35:23,422
direction?

428
00:35:24,042 --> 00:35:26,342
Okay, here's a hole, the inscriptions hack.

429
00:35:26,622 --> 00:35:30,322
Op return, there's another hole which has just been made intentionally worse by what

430
00:35:30,322 --> 00:35:31,202
Bitcoin Core did.

431
00:35:31,682 --> 00:35:34,742
What if we undo both of those and stop them?

432
00:35:35,282 --> 00:35:36,442
Well, there's another hole here.

433
00:35:36,542 --> 00:35:37,482
You can add arbitrary data.

434
00:35:37,562 --> 00:35:38,182
It doesn't matter.

435
00:35:38,282 --> 00:35:40,342
You could always add arbitrary data to Bitcoin.

436
00:35:40,342 --> 00:35:45,802
But there are two gaping holes that are making the problem obviously worse by a few orders of magnitude.

437
00:35:46,362 --> 00:35:49,522
Close them and then we'll see where we're at after that.

438
00:35:49,902 --> 00:35:51,282
But I can still upload a PDF.

439
00:35:51,462 --> 00:35:52,482
I don't care.

440
00:35:52,842 --> 00:35:54,882
I uploaded the US Constitution using this.

441
00:35:55,162 --> 00:35:56,022
It doesn't matter.

442
00:35:56,222 --> 00:35:58,822
There's always going to be little bits of arbitrary data getting in there.

443
00:35:58,902 --> 00:36:08,362
The point is to close the big holes and to try and make Bitcoin relatively optimized for financial activity because that's going to keep things somewhat sustainable.

444
00:36:08,702 --> 00:36:09,222
That's it.

445
00:36:09,222 --> 00:36:36,382
It's not a perfect solution. It's just let's try and push it in the right direction just so we don't create an incentive nightmare and let it run away from us so that 99% of what is in the blockchain is just junk data that no one wants to store. While everyone does all their transacting off chain, uses Coinbase as a custodian. The whole Michael Saylor school that's come in and just said Bitcoin is a store of value. It's digital credit. It's digital this. It's digital that. It's digital energy. But it's not money. Right.

446
00:36:36,382 --> 00:36:41,022
they keep moving off in the silly direction we're just trying to say look man there's a payment

447
00:36:41,022 --> 00:36:46,642
network it needs to be used for payments it will there are holes in that of course because of

448
00:36:46,642 --> 00:36:53,182
information theory but we have to make some kind of reasonable effort to keep it on track otherwise

449
00:36:53,182 --> 00:37:00,442
this is just a nightmare yeah you could say that bip 110 is the cost like it is the find out part

450
00:37:00,442 --> 00:37:05,702
of the fuck around of putting monkey pictures on the on the blockchain it's been a long time

451
00:37:05,702 --> 00:37:13,602
like the utxo has been blowing up since uh 2023 yeah it's been getting really like we have a lot

452
00:37:13,602 --> 00:37:18,402
of proof to be like this is not alarmism this is not prophylaxis against the thing that might never

453
00:37:18,402 --> 00:37:24,022
manifest we are in a bad state people are not going to run nodes if they could it's two thousand

454
00:37:24,022 --> 00:37:29,362
dollars to run a like a thing capable of mining in canada right that's canadian dollars not american

455
00:37:29,362 --> 00:37:32,442
but that was my real world experience, right?

456
00:37:32,502 --> 00:37:35,662
When we set up Ocean, we set up Datum and all this stuff.

457
00:37:36,142 --> 00:37:38,902
And I was like, okay, so you just need to run a node as a miner.

458
00:37:39,162 --> 00:37:42,442
And we were buying people, you know, people were buying Intel NUCs,

459
00:37:42,722 --> 00:37:44,302
16 gig of RAM or whatever.

460
00:37:44,702 --> 00:37:46,522
And then the AI boom happened.

461
00:37:46,742 --> 00:37:50,122
AI, sorry, RAM shot up, SSDs shot up.

462
00:37:50,182 --> 00:37:51,062
You need an NVMe.

463
00:37:51,562 --> 00:37:53,142
People were mining on cheaper hardware

464
00:37:53,142 --> 00:37:54,942
and they would mine stale shares all the time

465
00:37:54,942 --> 00:37:57,782
because it would just take the thing too long to verify the new block,

466
00:37:57,782 --> 00:38:03,122
let alone get through IBD. And I was like, sorry, man, if you want to mine on ocean and use datum,

467
00:38:03,581 --> 00:38:08,922
this whole decentralized mining, save money, all that stuff. Sorry, you need like 1500,

468
00:38:09,182 --> 00:38:14,782
1600 bucks to do it right. And that's, that's a hit. You know, that's, you can buy a new ant

469
00:38:14,782 --> 00:38:20,102
miner for that. So that sucked telling people that. And we fought the 2017 war specifically

470
00:38:20,102 --> 00:38:24,502
against the big blockers because we didn't want that to happen. So the fact that that's been

471
00:38:24,502 --> 00:38:29,522
forgotten and that we're not prioritizing making nodes affordable and practical for normies

472
00:38:29,522 --> 00:38:35,862
that's a massive blow losing that as a priority in the community because that was everything back in

473
00:38:35,862 --> 00:38:41,122
the the fork wars yeah it's still it's still the most important metric without that bitcoin is dead

474
00:38:41,122 --> 00:38:47,602
yeah we need a million nodes we need a million nodes that's why uh the the biggest argument for

475
00:38:47,602 --> 00:38:54,242
against the bcashers uh against the bigger blocks that was exactly that and they've

476
00:38:54,242 --> 00:39:00,922
that's exactly right they acknowledged it uh roger veer said if the risk of making of scaling

477
00:39:00,922 --> 00:39:07,742
bitcoins for payments is turning it into paypal 2.0 i think that's a risk worth taking and he he

478
00:39:07,742 --> 00:39:15,342
even had the integrity to acknowledge the trade-off yeah right so i i recently listened to parts of his

479
00:39:15,342 --> 00:39:22,242
book for laughs on a flight and and that's one of the things he says in it he says that you know

480
00:39:22,242 --> 00:39:28,082
everyone uses gmail and that's run by a few servers here and there like you don't need to

481
00:39:28,082 --> 00:39:33,042
run your own email server it's like totally missing the point of bitcoin yeah he's he's

482
00:39:33,042 --> 00:39:37,802
flat out wrong about that if you ever end up in a scenario where verification is done by a couple

483
00:39:37,802 --> 00:39:43,062
of big data platforms then the next halving is done because miners will collude amongst themselves

484
00:39:43,062 --> 00:39:47,742
to ignore it and all they need to do is talk to the the google and the microsoft and the yahoo

485
00:39:47,742 --> 00:39:52,082
and the proton or whatever of that new world and say, we're ignoring the next halving.

486
00:39:52,662 --> 00:39:54,942
And we need to pay ourselves enough.

487
00:39:55,022 --> 00:39:57,102
Otherwise, there's not enough security budget.

488
00:39:57,322 --> 00:40:00,562
I didn't use air quotes for that because I'm trying not to use air quotes.

489
00:40:00,722 --> 00:40:03,482
But the security budget is not a real problem, guys.

490
00:40:03,842 --> 00:40:05,942
Bitcoin is fine as a deflationary currency.

491
00:40:06,422 --> 00:40:09,442
Austrian economics is superior to Keynesian economics.

492
00:40:09,642 --> 00:40:10,742
And I will never hear otherwise.

493
00:40:11,142 --> 00:40:12,822
So that's the truth.

494
00:40:12,822 --> 00:40:25,402
That was another thing that baffled me, the ignorance about in Vienna. Let's not call it ignorance, let's call it the difference of opinion to be polite here.

495
00:40:25,402 --> 00:40:38,942
But with the hash renting and mining whatever block you want instead, this new movement that has come up.

496
00:40:40,002 --> 00:40:41,581
And good work, you guys.

497
00:40:42,061 --> 00:40:43,622
I've followed it closely.

498
00:40:43,702 --> 00:40:45,702
I haven't started doing that myself yet.

499
00:40:45,942 --> 00:40:49,602
But I'm following it closely, what goes on with it.

500
00:40:49,602 --> 00:40:56,422
and the whole thing is that on on on an average you would get like a 95 percent return so you will

501
00:40:56,422 --> 00:41:02,842
lose money on it and the argument was that no one will do that because minor there is no such thing

502
00:41:02,842 --> 00:41:11,922
as altruistic mining they just ignore reality whenever it's like i mean the the profit is

503
00:41:11,922 --> 00:41:17,322
the austrian definition of profit is different than the kinsian one because austrians don't

504
00:41:17,322 --> 00:41:24,202
only thinking dollars and cents. Like you do have other reasons to mine than just getting

505
00:41:24,202 --> 00:41:25,202
more dollars.

506
00:41:25,202 --> 00:41:32,702
A sandwich that therefore you lost value. Like, like, I didn't starve to death is not

507
00:41:32,702 --> 00:41:45,602
an economic component right You just have less money because you bought some food and didn die It it the height of ignorance man Like I really hate it because I just I just here is the I not making abstracts

508
00:41:45,642 --> 00:41:48,382
I'm always pointing at empirical reality within Bitcoin.

509
00:41:48,782 --> 00:41:50,462
Most miners lose money.

510
00:41:50,802 --> 00:41:55,742
Whether you're talking about renting hash or buying the machines or whatever, most miners lose money.

511
00:41:56,343 --> 00:41:58,482
They have to, otherwise the system wouldn't work.

512
00:41:58,582 --> 00:41:59,662
We would have seniorage.

513
00:41:59,662 --> 00:42:05,302
like that's like it is there are miners there are like the wild horse miners that bob bonnet

514
00:42:05,302 --> 00:42:12,082
per bob bob's definition those guys can make money but that's about it none of the guys bigger do and

515
00:42:12,082 --> 00:42:17,343
none of the guys smaller do what's a wild horse miner what was the definition of that so he he

516
00:42:17,343 --> 00:42:22,282
talks about like uh he talks i think he calls them rabbits which is like the guys with you know bit

517
00:42:22,282 --> 00:42:27,523
axes and heating their home and stuff all of those guys are way out like they've spent 10 times more

518
00:42:27,523 --> 00:42:31,922
on hardware than they're ever going to mind. Maybe they get lucky and find a block, but this

519
00:42:31,922 --> 00:42:35,742
is playing the lottery and no one's going to pretend that the lottery is economically rational

520
00:42:35,742 --> 00:42:39,282
thing to do. You would do it because it's fun or you're addicted to gambling or whatever.

521
00:42:39,782 --> 00:42:44,823
Then there's the horses. The horses, he says, you can have captured horses or wild horses.

522
00:42:45,162 --> 00:42:50,182
And the whole theory is just to talk about how like cypherpunk it is, because the next rung is

523
00:42:50,182 --> 00:42:54,682
elephants. And he says, you can only have captured elephants. They're too big. They can't operate

524
00:42:54,682 --> 00:43:00,502
freely in the wild, they will immediately be enslaved or, you know, captured or put in a zoo

525
00:43:00,502 --> 00:43:05,162
or used as a tourist attraction. He's like, that's the pub co-miners. They'll never ever do anything

526
00:43:05,162 --> 00:43:08,922
that's good for Bitcoin just because it's good for Bitcoin. They will only ever do what their

527
00:43:08,922 --> 00:43:14,622
shareholders allow them to do. So risk aversion is always 100%. They'll never do anything slightly

528
00:43:14,622 --> 00:43:20,842
risky or controversial. You know, if asked to engage in OFAC compliance or something like that,

529
00:43:20,842 --> 00:43:24,722
The only answer their legal department will give them is, yes, we will do that.

530
00:43:24,802 --> 00:43:25,262
That's it.

531
00:43:25,523 --> 00:43:27,482
That's the entire extent of what they'll do.

532
00:43:28,082 --> 00:43:34,002
And that's why most of them who could lotto mine and have very little variants still use Foundry because they want all that compliance.

533
00:43:34,282 --> 00:43:39,682
They want someone else to deal with the filth that is the Bitcoin blockchain and keep them at arm's length from it.

534
00:43:40,222 --> 00:43:42,563
So the wild horses are like the midsize ones.

535
00:43:42,563 --> 00:43:50,462
He's like, you can go into the middle of nowhere and have a little hydro plant with one megawatt of power and run, you know, a few hundred, a couple dozen petash.

536
00:43:50,462 --> 00:43:52,823
He's like, I can do stuff off grid, right?

537
00:43:52,862 --> 00:43:55,942
And even if the utilities company cuts me off, I have my own power.

538
00:43:56,323 --> 00:43:58,702
He's like, I can be pretty renegade with my stuff.

539
00:43:58,782 --> 00:44:01,602
That's why he was the first guy to find a Bit.1.10 block, right?

540
00:44:01,902 --> 00:44:05,043
Because he has enough hash rate to actually meaningfully find blocks.

541
00:44:05,302 --> 00:44:09,082
But at the same time, he's not, there isn't a bunch of shareholders.

542
00:44:09,502 --> 00:44:12,662
He does have a company with shareholders, but it's not publicly traded.

543
00:44:12,982 --> 00:44:16,323
He's not going to have those kind of guys show up and say, you can't do this.

544
00:44:17,102 --> 00:44:19,662
You know, Mara is not about to mine a Bit.1.10 block.

545
00:44:19,662 --> 00:44:25,502
foundries uh foundries pubco miners are not about to insist that they mine bitpoint 10 either they

546
00:44:25,502 --> 00:44:29,543
will all leave it to the last minute and then it's someone else forcing it on them and then they can't

547
00:44:29,543 --> 00:44:35,462
do anything about it but there's a beauty there somewhere that the more fiat minded you are the

548
00:44:35,462 --> 00:44:41,742
more prone you are to switch to ai for instance if you're not interested in the sats that come out of

549
00:44:41,742 --> 00:44:47,602
mining and the long-term success of them well that's that's the cause of the renting phenomenon

550
00:44:47,602 --> 00:44:51,142
because the people with the hardware don't care what the hardware does.

551
00:44:52,122 --> 00:44:52,342
Exactly.

552
00:44:52,882 --> 00:44:53,023
Yeah.

553
00:44:53,302 --> 00:44:56,642
I mean, this was unhosted Marsalis, who you had, right?

554
00:44:56,802 --> 00:45:01,043
And he said he came up with it when he was fighting with one of these people saying,

555
00:45:01,043 --> 00:45:03,162
why be my enemy when you can be my employee?

556
00:45:03,662 --> 00:45:05,202
Because he wants to rent their hash rate.

557
00:45:06,122 --> 00:45:06,523
Right.

558
00:45:06,842 --> 00:45:11,323
So at the end of the day, the miners have, again, this is the empirical evidence I'm

559
00:45:11,323 --> 00:45:11,802
talking about.

560
00:45:11,922 --> 00:45:16,402
Miners have told us they don't care what goes in the chain because they're all happy to use

561
00:45:16,402 --> 00:45:21,242
the Stratton protocol, which means the pool is the one that cares about what goes in the chain.

562
00:45:21,422 --> 00:45:25,262
And they create work on that premise. And the hashes have no idea what they're doing.

563
00:45:25,402 --> 00:45:30,942
The same way the people running AI HPC facilities don't care what questions you're typing into

564
00:45:30,942 --> 00:45:35,402
Grok. Like I've got an itchy skin on my arm. What does it mean? Like they don't care,

565
00:45:35,402 --> 00:45:41,082
but their computers will figure it out and send you, you know, an answer, right? That's it. Like

566
00:45:41,082 --> 00:45:47,582
they will do the same for hash they will do the same for um you know for for ai questions they are

567
00:45:47,582 --> 00:45:51,762
just finding cheap electricity and plugging machines in and pointing them to servers that's it

568
00:45:51,762 --> 00:45:58,142
so they can point them to compass and nice hash or anyone else that uh you know um well sorry what's

569
00:45:58,142 --> 00:46:02,282
the other one uh hash power the brains thing they'll point them there and they don't care what

570
00:46:02,282 --> 00:46:07,342
work they're working on so a bunch of plebs are like i run a node i'm a bitcoiner and i need hash

571
00:46:07,342 --> 00:46:14,002
rate. So I'll pay someone that goes out into the West Texas desert and gets electricity for three

572
00:46:14,002 --> 00:46:19,662
cents a kilowatt hour and buys all the ant miners. They can either sell all that to Foundry for X

573
00:46:19,662 --> 00:46:26,182
percent, or they can charge me X plus 1%. And that's nothing, right? Like I can either mine

574
00:46:26,182 --> 00:46:30,382
with a bit X, which costs me a hundred times more than the amount of sats it will ever mine.

575
00:46:30,382 --> 00:46:37,702
or I can mine with an ant miner and actually make a profit. But I'm paying like the guy who has the

576
00:46:37,702 --> 00:46:44,262
ant miner. He can sell it to an FPPS pool and be profitable because he's gone and found the cheapest

577
00:46:44,262 --> 00:46:50,262
power and all that stuff. Or you can sell it to me for 1% more. He makes more money. I make more

578
00:46:50,262 --> 00:46:56,082
money than any other realistic scenario. And FPPS becomes undesirable because it's just,

579
00:46:56,082 --> 00:47:03,602
it just doesn't pay as much as the other options no it's a it's a beautiful like beautiful to see

580
00:47:03,602 --> 00:47:09,543
this play out is there so you mentioned three options there like brains and two others uh nice

581
00:47:09,543 --> 00:47:15,602
hash uh what was the third one all of them anyone can sell it is the point like you've got loads of

582
00:47:15,602 --> 00:47:22,282
hosts compass simple mining says all these companies can just approach their hashes and say

583
00:47:22,282 --> 00:47:25,063
if you want to earn an extra 1%

584
00:47:25,063 --> 00:47:26,922
point at this stram server instead

585
00:47:26,922 --> 00:47:28,082
and do you

586
00:47:28,082 --> 00:47:30,862
do these things accept sats

587
00:47:30,862 --> 00:47:32,842
only or can you pay them in dollars

588
00:47:32,842 --> 00:47:33,682
either

589
00:47:33,682 --> 00:47:36,882
it's up to the seller at the end of the day

590
00:47:36,882 --> 00:47:37,902
yeah yeah okay

591
00:47:37,902 --> 00:47:38,782
so

592
00:47:38,782 --> 00:47:41,922
yeah so that's just

593
00:47:41,922 --> 00:47:44,382
yeah that's just super convenient

594
00:47:44,382 --> 00:47:46,362
you say you pay

595
00:47:46,362 --> 00:47:48,182
a 5% premium to

596
00:47:48,182 --> 00:47:49,862
not have to listen to

597
00:47:49,862 --> 00:47:52,043
a miner in your garage all day

598
00:47:52,282 --> 00:47:54,502
or an ASIC in your garage all day.

599
00:47:54,502 --> 00:47:55,602
And it's not a premium

600
00:47:55,602 --> 00:47:58,323
because you also have way cheaper electricity.

601
00:47:58,922 --> 00:47:59,942
Like in my house,

602
00:47:59,982 --> 00:48:02,802
I have to pay 13 cents a kilowatt hour.

603
00:48:03,462 --> 00:48:04,442
There's a guy in Texas

604
00:48:04,442 --> 00:48:06,102
who pays 3 cents a kilowatt hour,

605
00:48:06,242 --> 00:48:07,642
but he can charge me

606
00:48:07,642 --> 00:48:09,462
as though he's paying 5 cents a kilowatt hour.

607
00:48:09,722 --> 00:48:10,523
I save money.

608
00:48:10,722 --> 00:48:11,642
He makes more money.

609
00:48:12,082 --> 00:48:16,063
It's the most no-brainer trade imaginable.

610
00:48:16,382 --> 00:48:17,982
And it's not a pioneering thing.

611
00:48:18,102 --> 00:48:19,082
The only new thing about it

612
00:48:19,082 --> 00:48:20,823
is plebs and datum and ocean.

613
00:48:20,823 --> 00:48:25,063
That's where it all changes because the whole world's hash rate is rented anyway.

614
00:48:25,462 --> 00:48:26,823
All that the hashes are...

615
00:48:27,722 --> 00:48:30,782
This was back at the ocean launch was how I characterized all this.

616
00:48:31,162 --> 00:48:31,823
There was no...

617
00:48:32,382 --> 00:48:35,642
Mining has never been decentralized because of stratum.

618
00:48:36,063 --> 00:48:41,662
Stratum has meant that the actual important bit of mining or all of mining except for hashing

619
00:48:41,662 --> 00:48:46,023
was done by a couple of centralized players because they were the ones that actually ran

620
00:48:46,023 --> 00:48:50,523
a node and had a mempool and constructed block templates and broadcast blocks to the network.

621
00:48:50,523 --> 00:48:55,362
That was where all this potential for censorship came, which the whole point of mining is to make impossible.

622
00:48:56,102 --> 00:48:58,642
So, or re-orging and all those kinds of things.

623
00:48:59,282 --> 00:49:03,762
So Stratton broke all that because the world's miners didn't do any of that stuff.

624
00:49:03,862 --> 00:49:08,402
They just hashed and they didn't know what they, well, they can know what they're hashing on,

625
00:49:08,462 --> 00:49:12,602
but they didn't care about it and became, you know, dismissive of the importance of it.

626
00:49:12,942 --> 00:49:18,023
So there were these people all around the world called Bitcoin miners in all jurisdictions doing interesting things,

627
00:49:18,023 --> 00:49:22,902
but none of them ran a node, which means they're not participating permissionlessly with the network.

628
00:49:23,043 --> 00:49:28,102
That doesn't work. So Datum came around, Ocean came around and said, look, we know you want to pool.

629
00:49:28,342 --> 00:49:32,023
We know you want to split rewards with other miners so you can reduce variance, but you need

630
00:49:32,023 --> 00:49:36,523
to run a node and you need to broadcast everything you do directly to the network so we can't censor

631
00:49:36,523 --> 00:49:43,822
you. So that was the whole concept for it and it works. So all that, I'm just saying that these

632
00:49:43,822 --> 00:49:45,482
These people are just hashes.

633
00:49:45,722 --> 00:49:48,662
They're just selling hashes to some third party.

634
00:49:49,202 --> 00:49:53,882
For most of Bitcoin's history, that has been a couple of giant mining pools that bought

635
00:49:53,882 --> 00:49:54,462
all that hash.

636
00:49:54,762 --> 00:49:56,122
Now it's plebs buying hash.

637
00:49:56,442 --> 00:49:58,942
The same model, it's just been more decentralized.

638
00:49:59,282 --> 00:50:02,142
The buyers aren't the big FPPS pools anymore.

639
00:50:02,402 --> 00:50:04,563
They're your average Bitcoiner.

640
00:50:04,563 --> 00:50:11,563
And people up in arms about this haven't stopped and taken a look at Bitcoin and said, well,

641
00:50:11,563 --> 00:50:17,922
that is how Bitcoin operates on a daily basis is that there are no Bitcoin miners. There are these

642
00:50:17,922 --> 00:50:25,563
hashes that have nothing to do with the network that go out and find, you know, cheap power and

643
00:50:25,563 --> 00:50:29,722
plug in ant miners and buy them a discount and all that stuff. But they're not mining, they're just

644
00:50:29,722 --> 00:50:35,942
selling compute. And now we found a way for plebs to buy that compute rather than assuming it all

645
00:50:35,942 --> 00:50:37,602
goes to the same giant pools.

646
00:50:39,182 --> 00:50:41,802
Yeah, we've done a whole bunch of episodes about this

647
00:50:41,802 --> 00:50:43,842
and had unhosted Marcellus here, for instance,

648
00:50:43,922 --> 00:50:44,902
to talk about these things.

649
00:50:45,262 --> 00:50:46,063
And it's great.

650
00:50:46,602 --> 00:50:50,822
So for all of those who want to rent hash

651
00:50:50,822 --> 00:50:55,482
and point it to their own block templates

652
00:50:55,482 --> 00:50:57,962
or mine on their own block templates,

653
00:50:57,962 --> 00:51:03,523
but have Luke derangement syndrome for some odd reason,

654
00:51:03,523 --> 00:51:06,442
Is there another alternative for them?

655
00:51:06,742 --> 00:51:09,523
Or is Ocean like the only player in town at this point?

656
00:51:09,882 --> 00:51:11,082
No one else supports Datum.

657
00:51:11,342 --> 00:51:15,882
So there's the Phantom Vaporware alternative, which is Stratum V2,

658
00:51:16,342 --> 00:51:18,702
which I like to say is older than Bitcoin at this point,

659
00:51:19,043 --> 00:51:22,942
or it feels older than Bitcoin because it's just not a real solution.

660
00:51:23,382 --> 00:51:27,702
And if it was, it wasn't an egotistical political decision on our part

661
00:51:27,702 --> 00:51:29,822
to write a different protocol called Datum.

662
00:51:29,822 --> 00:51:36,382
that was a practical decision based on not wanting to work with an existing protocol that we didn't

663
00:51:36,382 --> 00:51:41,802
like and make it good but to just write something from scratch because it would be faster and strat

664
00:51:41,802 --> 00:51:48,242
v2 is very very long in the making and there's still demonstrably zero blocks in the chain there

665
00:51:48,242 --> 00:51:55,523
was a rival pool that hilariously launched the day before we did and you know engaged in a bunch

666
00:51:55,523 --> 00:51:58,543
of bad faith business practices I won't get into.

667
00:51:59,063 --> 00:52:01,262
I'm not going to name them because they genuinely,

668
00:52:01,502 --> 00:52:03,462
I'm a bit embarrassed for them at this point.

669
00:52:03,822 --> 00:52:05,322
I shouldn't say this publicly,

670
00:52:05,543 --> 00:52:06,942
but what's the point otherwise?

671
00:52:07,442 --> 00:52:10,182
It was the parallel of Ocean.

672
00:52:10,602 --> 00:52:13,222
It didn't do things like pay multiple miners

673
00:52:13,222 --> 00:52:15,422
in the Coinbase or have transparent stats

674
00:52:15,422 --> 00:52:16,782
or any of the good stuff we do

675
00:52:16,782 --> 00:52:17,662
because it's too difficult,

676
00:52:18,182 --> 00:52:20,782
but it was Straton V2 instead of data.

677
00:52:21,422 --> 00:52:23,102
To my knowledge, it's never found a block.

678
00:52:23,102 --> 00:52:30,502
and that continues to be the case datum is almost uh what are we at now we're at 825 datum blocks

679
00:52:30,502 --> 00:52:35,182
right and we're getting a lot faster because we've grown a lot recently and most of that growth is

680
00:52:35,182 --> 00:52:39,662
using datum so hopefully we'll be a thousand blocks soon that will be a week's worth of blocks

681
00:52:39,662 --> 00:52:45,862
mined by miners in a pooled context but in a sovereign way and that's that's the dream that's

682
00:52:45,862 --> 00:52:51,762
satoshi era mining that is what we initially wanted to bring about back in the day everyone

683
00:52:51,762 --> 00:52:55,402
that runs a Bitcoin node is a miner. You just press this button inside the node and now you're

684
00:52:55,402 --> 00:52:59,842
mining because everyone has a CPU that runs a node and that's all you need. And then we went

685
00:52:59,842 --> 00:53:06,842
down a horrible path because we started making machines separate from that. We were using GPUs,

686
00:53:06,882 --> 00:53:11,563
but then we used FPGAs and then we used ASICs. And the whole ASIC era has been characterized by

687
00:53:11,563 --> 00:53:15,543
let's just get the newest generation, the newest generation, the newest generation,

688
00:53:15,862 --> 00:53:19,422
and pretend the difficulty adjustment doesn't exist and pretend the difficulty adjustment

689
00:53:19,422 --> 00:53:23,563
doesn't exist and keep going that way and leapfrogging, leapfrogging, leapfrogging and

690
00:53:23,563 --> 00:53:28,823
never moving forward. But getting so lost in that race that you don't realize you haven't mined

691
00:53:28,823 --> 00:53:35,002
Bitcoin since 2010 because the Stratton protocol exists. And that meant three people actually

692
00:53:35,002 --> 00:53:41,043
controlled what went in the blockchain. And that finally got fixed when we released Datum in 2024.

693
00:53:41,043 --> 00:53:45,942
We said, all right, guys, you can pool, which is what you've always wanted to be doing and what you

694
00:53:45,942 --> 00:53:53,063
always have been doing but now you get to make your own blocks that's it so huge change um and

695
00:53:53,063 --> 00:53:58,382
it needed to be done in a very very specific way so to answer your question sorry for going off on

696
00:53:58,382 --> 00:54:03,822
all these tangents um no that's why i'm that's why i have you man because you go on the off on

697
00:54:03,822 --> 00:54:08,702
these appreciate it i figure people want to hear it regardless otherwise they can just press the

698
00:54:08,702 --> 00:54:15,082
off button on the podcast but so where else can plebs go they can lotto mine you can lotto mine

699
00:54:15,082 --> 00:54:21,122
with datum instead it's just worse unless you're like 20x ash you're just going to go a couple of

700
00:54:21,122 --> 00:54:28,322
days without you know finding any blocks you know and run out of money to pay the hasher is the

701
00:54:28,322 --> 00:54:33,702
problem so the whole point of being in a pool is that you need to find blocks fairly consistently

702
00:54:33,702 --> 00:54:40,782
you know you want your bad luck to be counted by someone else's good luck right you need to flip

703
00:54:40,782 --> 00:54:48,902
10 heads in a row in order to get any money at all. And supposing you get $100 if you flip 10

704
00:54:48,902 --> 00:54:55,682
heads in a row, but every coin flip costs you like two cents, right? You know, that's going to

705
00:54:55,682 --> 00:55:01,063
not work out eventually, because you're going, you might run out of cents before you've ever

706
00:55:01,063 --> 00:55:07,543
managed to successfully flip 10 heads in a row. But what if you make it so that if you win that

707
00:55:07,543 --> 00:55:10,543
hundred dollars, you split it between 10 other people.

708
00:55:11,262 --> 00:55:14,043
And those 10 other people are also trying to do the same thing and

709
00:55:14,043 --> 00:55:15,262
paying two cents each flip.

710
00:55:15,782 --> 00:55:20,742
Then you'll find those 10 heads in a row more quickly than before.

711
00:55:21,162 --> 00:55:23,823
You'll spend 10% of the time flipping.

712
00:55:23,862 --> 00:55:27,342
So you'll spend 10% of the time running out of money, but you're more likely

713
00:55:27,502 --> 00:55:31,702
instead of getting a hundred dollars to get $10, you'll get $10, 10 times

714
00:55:31,702 --> 00:55:32,922
more often than you would have got a hundred.

715
00:55:32,963 --> 00:55:35,383
but you're spending the same amount of time flipping.

716
00:55:35,803 --> 00:55:37,403
So you run out of money slower,

717
00:55:37,603 --> 00:55:39,603
but you reconcile more frequently

718
00:55:39,603 --> 00:55:40,683
and with greater resolution.

719
00:55:41,183 --> 00:55:44,303
That is why pooled mining is preferable to lotto mining

720
00:55:44,303 --> 00:55:47,043
because you need to find a certain amount of blocks

721
00:55:47,043 --> 00:55:48,723
before the difficulty adjusts

722
00:55:48,723 --> 00:55:50,163
or before you run out of money.

723
00:55:50,823 --> 00:55:53,043
It's much better to get halfway

724
00:55:53,043 --> 00:55:55,203
towards having the chance of finding a,

725
00:55:55,383 --> 00:55:57,523
you know, the probability of finding a block

726
00:55:57,523 --> 00:55:59,323
and getting paid half of what you would

727
00:55:59,323 --> 00:56:03,683
than it is to actually mine 136 trillion shares,

728
00:56:04,023 --> 00:56:08,063
which is the expected amount of guesses to find a block and not finding it.

729
00:56:08,403 --> 00:56:12,243
It's much better to go half than it is to go, you know,

730
00:56:12,283 --> 00:56:13,763
to try and double it or quadruple it.

731
00:56:14,663 --> 00:56:16,263
That's just the way it has to work.

732
00:56:16,603 --> 00:56:18,743
So miners are going to pool no matter what.

733
00:56:18,823 --> 00:56:21,503
But if you put the pools in a position where they become the miner

734
00:56:21,503 --> 00:56:24,063
because they run the node and they have the mempool

735
00:56:24,063 --> 00:56:27,903
and they broadcast the block, then it doesn't work

736
00:56:27,903 --> 00:56:29,903
because everyone is going to use the same pool

737
00:56:29,903 --> 00:56:32,023
because the bigger a pool gets, the better it works.

738
00:56:32,563 --> 00:56:35,863
That's the thing you just cannot escape.

739
00:56:36,123 --> 00:56:37,663
That is the reality of Bitcoin mining.

740
00:56:37,763 --> 00:56:40,083
The bigger the pool, the better it works.

741
00:56:40,503 --> 00:56:43,823
And the more powerful the pool, the more centralized mining becomes.

742
00:56:44,203 --> 00:56:45,823
So you have to have a pool like Ocean.

743
00:56:46,463 --> 00:56:48,303
And unfortunately, there isn't an alternative.

744
00:56:48,763 --> 00:56:52,463
And this is where it gets into the disgraceful, childish politics of the whole thing.

745
00:56:52,463 --> 00:56:57,743
The reason Datum is treated as persona non grata and never mentioned

746
00:56:57,743 --> 00:57:04,443
you know like you'll see announcements i saw andrew chow the other day ava chow the other day say um

747
00:57:04,443 --> 00:57:10,583
you know decentralized mining protocols like stratum v2 right this is the one that's never

748
00:57:10,583 --> 00:57:16,263
found a block right doesn't mention datum which is nearly a thousand now that actually works that

749
00:57:16,263 --> 00:57:21,063
has a pool that supports it that's real with blocks in the chain that's no we're not even

750
00:57:21,063 --> 00:57:27,563
going to mention it okay like i'm not offended by this i'm appalled because you're you're supposed

751
00:57:27,563 --> 00:57:32,803
to care about decentralization of bitcoin mining and politics shouldn't matter like you say there's

752
00:57:32,803 --> 00:57:38,223
luke derangement syndrome and all that stuff but people have implemented other uh you know datum

753
00:57:38,223 --> 00:57:46,863
prime servers right which is what ocean runs on our end that uh you know integrates with our payout

754
00:57:46,863 --> 00:57:53,383
system, Tides, and all that stuff. It's there. People can spin up other Tides pools if they

755
00:57:53,383 --> 00:57:59,623
want. Tides is open. It's specced out. The source code for it is not on GitHub yet. It will be.

756
00:57:59,623 --> 00:58:05,643
It's not closed source, but it's not available yet. Datum is fully, everything's out there.

757
00:58:05,743 --> 00:58:11,983
Datum gateway is fully out there. The protocol itself is open. Other people can implement it.

758
00:58:11,983 --> 00:58:17,903
they can run rival pools if they want there's just no point the ocean is just designed to get larger

759
00:58:17,903 --> 00:58:23,183
and larger and larger to the point where it can function the way a pool naturally wants to where

760
00:58:23,183 --> 00:58:28,463
it doesn't have to commit seppaku when it hits 45 ocean doesn't have to do that because at the end

761
00:58:28,463 --> 00:58:32,963
of the day if everyone's using ocean there's nothing we can really do except steal from miners

762
00:58:32,963 --> 00:58:39,603
like the last i mean if we're the biggest pool we can steal the last hour and 10 minutes worth of

763
00:58:39,603 --> 00:58:44,443
money owed to miners that's it we could never censor bitcoin we could never implement OFAC

764
00:58:44,443 --> 00:58:52,023
compliant blocks or UTXO blacklisting or do any kind of fork enforcement we're just not in that

765
00:58:52,023 --> 00:59:00,943
position okay so so let's look at the numbers here so what have you seen since this whole

766
00:59:00,943 --> 00:59:09,903
renting hash movement started in terms of hashes like how how much bigger it has the pace of

767
00:59:09,903 --> 00:59:16,243
the growth of ocean like have you gained momentum there like what have you seen

768
00:59:16,243 --> 00:59:23,143
it's been enormous like this uh the guy roughnecks well i guess the group roughnecks

769
00:59:23,143 --> 00:59:28,443
that found a block yesterday was it yeah yeah just started following them on x today

770
00:59:28,443 --> 00:59:30,583
pretty cool profile

771
00:59:30,583 --> 00:59:32,263
yes so

772
00:59:32,263 --> 00:59:34,683
they I'm

773
00:59:34,683 --> 00:59:36,143
seeing 650

774
00:59:36,143 --> 00:59:38,643
pedahash from those guys 0.6

775
00:59:38,643 --> 00:59:40,643
exahash so

776
00:59:40,643 --> 00:59:42,583
what's that that's about I guess 6

777
00:59:42,583 --> 00:59:44,423
exahash so it's 0.6%

778
00:59:44,423 --> 00:59:46,223
of the whole network I believe

779
00:59:46,223 --> 00:59:48,563
no sorry it's 0.06%

780
00:59:48,563 --> 00:59:49,263
of the whole network

781
00:59:49,263 --> 00:59:52,623
the collective power of

782
00:59:52,623 --> 00:59:54,623
like rented BIP 110 hash rate

783
00:59:54,623 --> 00:59:56,523
it's kind of hard to know because the biggest

784
00:59:56,523 --> 00:59:58,243
miners aren't renting I think

785
00:59:58,243 --> 01:00:04,003
they're just actually doing it so bob burnett 234 alberta and sov those are the notable big guys

786
01:00:04,003 --> 01:00:09,943
and they're about 2.6 x hash which is point which is a quarter of a percent of the whole network

787
01:00:09,943 --> 01:00:17,903
um then after that you're up to about four four x hash um so about 0.4 percent of the network

788
01:00:17,903 --> 01:00:23,283
including those guys that are just like sovereign miners then you add all the pleb hashes and

789
01:00:23,283 --> 01:00:34,763
they're about 1.6. Yeah, that's right. So you're like 2.6 and 4 total, so 1.4. Around 1.4x hash

790
01:00:34,763 --> 01:00:41,743
have rented Bit.10 stuff. And I don't know, maybe there's people renting hash that aren't Bit.10.

791
01:00:42,143 --> 01:00:46,903
I haven't seen it, and I wouldn't know if it was happening unless I was running the backends for

792
01:00:46,903 --> 01:00:52,083
those rental things. But from the kinds of things I'm hearing, I'm expecting that to be a lot,

793
01:00:52,083 --> 01:00:58,363
like a significant jump i'm expecting it to 10x again at which point it's not 0.4 percent of the

794
01:00:58,363 --> 01:01:03,483
network it's four percent of the network and i think that's probably threshold point where everyone's

795
01:01:03,483 --> 01:01:09,203
like bit.110's at four percent okay let's we have no choice we have to we have to enforce this thing

796
01:01:09,203 --> 01:01:14,403
like and because the minute one guy thinks that then it's no longer four percent it's ten percent

797
01:01:14,403 --> 01:01:19,983
and then everyone else will go well it's ten percent that's no longer tolerable for me so i'm

798
01:01:19,983 --> 01:01:27,183
going to go over there and then it's 15 and it that's how bit.10 cascades but anyway i hope i

799
01:01:27,183 --> 01:01:33,743
yeah so what about the numbers for uh bit.10 signaling which is much harder to measure i guess

800
01:01:33,743 --> 01:01:38,883
uh we got insight into it on ocean because we have to validate all of the proof of work sent to us

801
01:01:38,883 --> 01:01:45,083
right yeah we know what that is with a lot of fidelity the the hashes are unbelievably unlucky

802
01:01:45,083 --> 01:01:49,623
They mined a quadrillion shares without finding a block,

803
01:01:49,623 --> 01:01:52,823
which network difficulty is 136 trillion, right?

804
01:01:52,823 --> 01:01:56,583
So that's like six or seven blocks without finding a block.

805
01:01:56,583 --> 01:02:08,693
And then suddenly they found two You had Roughnecks find one and then you had Peer Money find one Those two blocks showed up yesterday and that broke it right So again this is why you mine in a pool because if they been lotto mining

806
01:02:08,813 --> 01:02:11,893
they would have just had nothing, nothing, nothing, nothing for multiple months,

807
01:02:12,013 --> 01:02:14,833
and then gone, you know, not been able to sustain it anymore.

808
01:02:15,013 --> 01:02:17,473
But instead, they were getting payouts from other miners on ocean

809
01:02:17,473 --> 01:02:18,733
while they were being unlucky.

810
01:02:18,733 --> 01:02:20,153
So that helped sustain it.

811
01:02:20,153 --> 01:02:29,233
So this existence of Ocean and Datum and hash rate rental markets, it really all came together right at the right time.

812
01:02:29,453 --> 01:02:37,333
And it's quite elegant how the network is, how plebs renting hash is being bootstrapped by them wanting to support BIP-110.

813
01:02:37,713 --> 01:02:46,313
And BIP-110 is being bootstrapped by people that are now able to rent hash and use Datum and use the new hash rate markets that are propped up.

814
01:02:46,313 --> 01:03:06,253
It reminds me back of when, you know, the Bitcoin was being bootstrapped by all of the payment networks censoring payments to WikiLeaks and how the war on drugs was helping bootstrap Bitcoin because the only way to buy it, the only way to buy these things was using Bitcoin online.

815
01:03:06,253 --> 01:03:08,533
So you had these like the war on drugs is wrong.

816
01:03:08,633 --> 01:03:09,813
The war on journalism is wrong.

817
01:03:09,913 --> 01:03:12,053
And the weaponization of payment networks is wrong.

818
01:03:12,533 --> 01:03:17,633
And the three wrongs all work together to incentivize people to bootstrap a new system.

819
01:03:18,273 --> 01:03:24,993
Like and I thought like if drugs had been legal and if they'd let Julian Assange say what he wanted, maybe Bitcoin would never have taken off.

820
01:03:25,313 --> 01:03:28,113
Like so like the fact that we needed it.

821
01:03:28,113 --> 01:03:34,073
right? So I just love the way like multiple wrongs can come together and cause solutions that need

822
01:03:34,073 --> 01:03:38,553
all of the wrong things to be wrong in order for us to come up with a solution to any one of them

823
01:03:38,553 --> 01:03:45,173
individually. There's an elegance there that I love. So mining was centralized, core development

824
01:03:45,173 --> 01:03:49,853
was going in the wrong direction, you know, arbitrary data was getting stored too much in

825
01:03:49,853 --> 01:03:55,893
Bitcoin and the two problems work together to bootstrap the individual solution to each of those

826
01:03:55,893 --> 01:04:02,493
problems in parallel i find that just you know beautiful poetic even i mean it's it's the fuck

827
01:04:02,493 --> 01:04:06,933
around and find out thing it's like if you fuck around with the free market and what what people

828
01:04:06,933 --> 01:04:12,013
actually want you're going to find out and you're going to end up with not having a monopoly on

829
01:04:12,013 --> 01:04:19,913
money printing anymore it's just uh fantastic just to uh to um remind people of what these things

830
01:04:19,913 --> 01:04:27,513
mean the numbers here an exahash or a petahash is a one followed by 15 zeros so a million billion

831
01:04:27,513 --> 01:04:34,573
guesses per second a petahash is a billion billion guesses per second when you when you think about

832
01:04:34,573 --> 01:04:39,714
what that actually implies like it's guessing a number a billion billion times per second it's

833
01:04:39,714 --> 01:04:46,273
just blows my mind every every time i actually look it up for like what it actually means yeah

834
01:04:46,273 --> 01:04:48,873
The number of zeros is incomprehensible to us.

835
01:04:48,973 --> 01:04:50,733
It's way outside anything we can intuit.

836
01:04:51,313 --> 01:04:54,253
It's not like when we hit a Zeta hash network wide,

837
01:04:54,573 --> 01:04:57,913
Steve, Steve, simple Steve, the guy behind UTX Oracle was like,

838
01:04:58,553 --> 01:05:00,433
we've never like in a practical sense,

839
01:05:00,493 --> 01:05:02,753
really used these numbers on a day to day basis.

840
01:05:02,753 --> 01:05:04,973
Like you would never have that as a countable thing.

841
01:05:05,393 --> 01:05:09,293
Like, and it isn't strictly countable because the way stratum works,

842
01:05:09,334 --> 01:05:11,253
you do some adjustment, right?

843
01:05:11,253 --> 01:05:14,033
I don't submit a billion shares to a stratum server.

844
01:05:14,033 --> 01:05:19,214
I submit one share at difficulty a billion and then it credits me for having done a billion

845
01:05:19,214 --> 01:05:24,974
shares worth of work so it's not that countable like because the traffic would be insane but

846
01:05:24,974 --> 01:05:32,313
I remember Jan from Brains years ago saying the most common internet message is I'm some I'm a

847
01:05:32,313 --> 01:05:36,834
miner doing some proof of work here it is and sending it to a pool like it dwarfs everything

848
01:05:36,834 --> 01:05:43,873
else bit torrent all that stuff it's just so much traffic is people mining oh yeah I never thought

849
01:05:43,873 --> 01:05:49,573
of it that way before but but like as a part of the internet like bitcoin is bigger than everything

850
01:05:49,573 --> 01:05:57,053
else then yeah it doesn't have to be because we can we can we can you know you can like an mp3

851
01:05:57,053 --> 01:06:02,413
from a wav or an aif you can shave off 90 of it and get basically the same thing you lose some

852
01:06:02,413 --> 01:06:08,094
fidelity but not much so this is why we use arbitrary difficulties as a pool datum will tell

853
01:06:08,094 --> 01:06:16,714
you to mine at difficulty 131 000 and then you do 131 000 times less work submission to the server

854
01:06:16,714 --> 01:06:23,373
and it just multiplies everything you send by 131 000 yeah this got explained to me back in

855
01:06:23,373 --> 01:06:29,094
slovenia the the nice hash conference a couple of years back that that's how it worked like

856
01:06:29,094 --> 01:06:33,873
before that i sort of imagined all of these guesses going through one cable and it's like

857
01:06:33,873 --> 01:06:39,773
of course it's that's not the way it works you just can't do that it's insane like modware is

858
01:06:39,773 --> 01:06:45,714
too powerful yeah it still blows my mind every time when you when you start thinking about it

859
01:06:45,714 --> 01:06:51,974
and and it's also one of the reasons why security budget sounds so ridiculous like what what do you

860
01:06:51,974 --> 01:06:57,533
mean security budget well a billion billion guesses per second from one miner is not enough for you

861
01:06:57,533 --> 01:07:04,533
like well i mean to be fair like it's it's about latent hash rate right i think it's we were more

862
01:07:04,533 --> 01:07:12,673
secure at 1x hash back in 2014 than we would be today with 10x hash yeah because it's centralized

863
01:07:12,673 --> 01:07:18,673
mining well no it's because the machines exist like if there were if we dropped to 10x hash right

864
01:07:18,673 --> 01:07:25,413
now what happened to the other 990 it's out there it's off for some reason but some bad actor could

865
01:07:25,413 --> 01:07:31,714
actually get them and plug them in the machines really exist is the problem like that's okay so

866
01:07:31,714 --> 01:07:36,673
when when china banned mining and the network difficultly halved i'm like right well they're

867
01:07:36,673 --> 01:07:43,653
the act that those machines that were mining are in the world and are off right now so i don't know

868
01:07:43,653 --> 01:07:48,513
what's going to happen with those if some bad actor gets them they can actually do a 51 attack

869
01:07:48,513 --> 01:07:53,273
i still don't find it particularly scary but if the hash rate the point is you can't go down to

870
01:07:53,273 --> 01:07:59,193
very old hash rates like and be like yeah we are secure as we were back the last time when we ran

871
01:07:59,193 --> 01:08:05,673
this yeah that's the point okay so so you uh hash rate volatility becomes a bigger problem the bigger

872
01:08:05,673 --> 01:08:10,933
the network is yeah i think if we drop a lot like in a short period of time that's a little bit

873
01:08:10,933 --> 01:08:15,474
concerning if we drop a lot over a long period of time i don't really care because the old machines

874
01:08:15,474 --> 01:08:22,133
probably stopped working right like isn't that the case with the uh old chinese machines from

875
01:08:22,133 --> 01:08:24,873
Wasn't that like S9s mostly?

876
01:08:24,873 --> 01:08:35,924
Aren they like outdated already I don know I mean S9s famously were like tanks and lasted forever People are still running them and they like at least 10 years old now I think

877
01:08:36,184 --> 01:08:39,704
So I don't know if that's accurate, but I think...

878
01:08:39,704 --> 01:08:45,804
No, I'm pulling it out of my ass, but still, it's quite long ago that that ban happened.

879
01:08:46,684 --> 01:08:49,424
That was summer 2022, wasn't it?

880
01:08:49,484 --> 01:08:50,084
Or 2021?

881
01:08:50,924 --> 01:08:51,264
Really?

882
01:08:51,264 --> 01:08:57,624
i mean china banned mining on a weekly basis but this was like the one time they banned it banned

883
01:08:57,624 --> 01:09:05,584
it and it was like 2021 uh i believe if from a quick google search yeah and there really was

884
01:09:05,584 --> 01:09:10,124
like that was when foundry blew up and became the biggest pool because so much migrated to america

885
01:09:10,124 --> 01:09:14,624
but a lot of it went to like kazakhstan and surrounding countries like that and a lot of

886
01:09:14,624 --> 01:09:19,664
it still goes on in china to be honest so yeah but it was very disruptive like the hash rate did

887
01:09:19,664 --> 01:09:26,184
fall a lot and yeah that's the only time i've ever been like okay well what happened to those

888
01:09:26,184 --> 01:09:30,704
machines i wasn't actually worried about it i didn't sell anything and like like that but

889
01:09:30,704 --> 01:09:35,504
those are the only scenarios where i'm just like it's not enough again it's like what you were

890
01:09:35,504 --> 01:09:39,944
asking with the node count for the thresholds of credulity it's not the number it's the context

891
01:09:39,944 --> 01:09:46,584
so if we like we're at azeta hash today a thousand x hash if we drop to 200 x hash next week that

892
01:09:46,584 --> 01:09:51,984
would mean there's 800xash of hardware that was mining that is no longer mining. That's very

893
01:09:51,984 --> 01:09:56,684
different than when we first hit 200xash and we were only trending up, right? They're very different.

894
01:09:57,064 --> 01:10:02,604
So if I'm like, again, with the nodes for BIP-110, if there's 50,000 nodes enforcing BIP-110,

895
01:10:03,204 --> 01:10:09,224
if they all showed up overnight and it was clearly an astroturfed thing and they weren't real in any

896
01:10:09,224 --> 01:10:13,904
capacity, then that's very different than if everywhere you go, someone's wearing a BIP-110

897
01:10:13,904 --> 01:10:17,624
hat and if every conference has someone talking about it and there are blocks being found,

898
01:10:17,684 --> 01:10:21,624
that's really different. And that's not a numbers thing. That's a social heuristic.

899
01:10:22,124 --> 01:10:27,544
And you have to use those. So a couple of businesses saying, I support Bit.10,

900
01:10:28,024 --> 01:10:32,284
you know, and then being noticeably more prominent in the space than another business,

901
01:10:32,704 --> 01:10:38,164
that tells you stuff. That's a really important signal. And when that starts happening,

902
01:10:38,524 --> 01:10:42,544
again, it's the trend, right? The hash rate is going up. Therefore, the network's getting more

903
01:10:42,544 --> 01:10:47,304
secure. Hash rates going down, therefore it's getting less secure. Like, but it's not the number,

904
01:10:47,424 --> 01:10:52,864
it's the trend, right? And that's why I always use this as an example. The price of Bitcoin at $69,000

905
01:10:52,864 --> 01:10:59,064
is really depressing when you see that it was $120,000 a year ago. But the price of $69,000

906
01:10:59,064 --> 01:11:05,444
when it was an all-time high was euphoric because they are different contexts. So that's how you,

907
01:11:05,544 --> 01:11:10,144
that's basically how you have to evaluate things whenever it comes to trying to make predictions

908
01:11:10,144 --> 01:11:11,984
around what other people are going to do.

909
01:11:12,264 --> 01:11:13,824
Other people are going to watch the trend

910
01:11:13,824 --> 01:11:16,844
and sometimes it hurts you to go against the trend.

911
01:11:17,484 --> 01:11:18,964
So no one has a,

912
01:11:19,244 --> 01:11:21,384
most people are apathetic towards Bitcoin,

913
01:11:21,644 --> 01:11:22,424
Bitcoin 10.

914
01:11:23,264 --> 01:11:25,864
Most people will make decisions based on the trend

915
01:11:25,864 --> 01:11:27,204
and what other people will do.

916
01:11:27,744 --> 01:11:30,644
And that is actually appropriate for miners

917
01:11:30,644 --> 01:11:33,404
because I don't want miners to be ideological here

918
01:11:33,404 --> 01:11:34,924
and say, we're going to enforce this

919
01:11:34,924 --> 01:11:38,404
or reject it because of what we think Bitcoin should be

920
01:11:38,404 --> 01:11:40,084
because mining is completely centralized.

921
01:11:40,144 --> 01:12:09,064
Right. So if they do that, then that's no good that even if they make the right decision, it wouldn't set a good precedent. I'm happy for fork on hard mode, as I called it, right? We got no support from anyone. It's just plebs running Bit.1.10 nodes. If this wins, then the people I most trust with the protection of Bitcoin are the people that we look to for that. And they are capable of doing it. That to me, it spells ultimate health and ultimate decentralization.

922
01:12:09,064 --> 01:12:14,244
like anything else is a stopgap for it. Miners patching up the tires and coming up with a

923
01:12:14,244 --> 01:12:20,184
solution for spam amongst a small group of people, New York agreement style stuff that is nowhere near

924
01:12:20,184 --> 01:12:24,524
as healthy because those guys will just get coerced into doing bad things next time. I want

925
01:12:24,524 --> 01:12:29,124
the plebs to control this network because they have nothing to lose. They just want Bitcoin and

926
01:12:29,124 --> 01:12:34,444
they don't care about anything else. So if they control Bitcoin, it scares the technocrats that

927
01:12:34,444 --> 01:12:41,664
that are scared of you know mob rule and you know things that look like uh you know chaotic and most

928
01:12:41,664 --> 01:12:46,844
people talk about decentralization and hate it in practice like that's a common common thing actually

929
01:12:46,844 --> 01:12:52,284
like ocean blocks were weird they didn't look like my mempool said it should look like and all

930
01:12:52,284 --> 01:13:00,924
that's decentralization dude like yeah ran over yeah the um another thing i hear a lot from from

931
01:13:00,924 --> 01:13:07,504
the other side is uh the the risk of splitting the community and i always find that so funny because

932
01:13:07,504 --> 01:13:13,864
that's that's the whole point yeah exactly like if i'm having a cocktail party in my house

933
01:13:13,864 --> 01:13:18,904
and people are shitting in the garden i want to remove split the community and remove

934
01:13:18,904 --> 01:13:22,784
the intruders who are shitting in the garden it's just a stupid way of saying you're not

935
01:13:22,784 --> 01:13:27,504
allowed to disagree with me that's all that ever is or you're not allowed to ever actively resist

936
01:13:27,504 --> 01:13:31,844
anything. You just have to be passive. Like your arms have to be hanging down by your side.

937
01:13:32,224 --> 01:13:37,764
It's so pathetic. Like you are allowed to defend yourself and Bitcoin is allowed to adapt in

938
01:13:37,764 --> 01:13:42,744
adversarial environments. That's what keeps it alive. It's stupid treating as a dead unthinking

939
01:13:42,744 --> 01:13:48,464
protocol. It's an ecosystem and an organism that does adapt. If we all love Brandon Quittem and

940
01:13:48,464 --> 01:13:54,884
the mushroom analogies and all that stuff, it's allowed to do things like, why is my UTXO set 90%

941
01:13:54,884 --> 01:14:00,744
trash? Why is everything Taproot is being used for sitting at the dust threshold? Why are these

942
01:14:00,744 --> 01:14:05,264
things happening to me? It's making me worse. People don't want to run implementations of me

943
01:14:05,264 --> 01:14:11,284
anymore. It's allowed to look at those things and change itself. And like you can keep anchoring

944
01:14:11,284 --> 01:14:16,164
things in these hardcore principles, but they're always, I'm up for being principled if the

945
01:14:16,164 --> 01:14:21,104
principles actually make sense. But Bitcoin is not censorship resistant in the way people keep

946
01:14:21,104 --> 01:14:26,824
trying to characterize it. It's the strongest sense. You know I disagree with Giacomo, but he

947
01:14:26,824 --> 01:14:32,464
was dead right on this point. Bitcoin is the world's most efficient engine for censorship.

948
01:14:32,464 --> 01:14:39,564
If you want to define having rules as censorship, you can't break the rules of Bitcoin. The consensus

949
01:14:39,564 --> 01:14:44,164
rules absolutely cannot be broken. They can be tightened, but no one has really managed to do

950
01:14:44,164 --> 01:14:49,864
anything by way of loosening them outside of 2013. And that was when everyone agreed,

951
01:14:49,864 --> 01:14:50,864
we have to do this.

952
01:14:51,244 --> 01:15:05,054
And so if you want to characterize having rules to a protocol in order to make it work properly as censorship then you just looking for a completely meaningless empty something that the complete polar opposite of

953
01:15:05,054 --> 01:15:09,174
Bitcoin. One where you can have as many coins as you want, where you don't need to have valid,

954
01:15:09,754 --> 01:15:14,754
you don't need to have private keys to be able to spend money. That's a rule-less, permissionless,

955
01:15:14,874 --> 01:15:19,834
censorship-resistant network. If you want that, go ahead. But the reason you have 21 million is

956
01:15:19,834 --> 01:15:24,594
because it's the most authoritarian structure ever. It's just decentralized. So it's not

957
01:15:24,594 --> 01:15:30,194
corruptible in the same way. I'm fine with rules. I don't want to play games where people can change

958
01:15:30,194 --> 01:15:35,234
the rules arbitrarily because they're a waste of time. I'm just not fine with games where one guy

959
01:15:35,234 --> 01:15:40,734
is able to enforce new rules whenever he wants. That's what I'm not okay with. So when Greg

960
01:15:40,734 --> 01:15:47,694
characterized spam filtration or any anti-spam mechanism in Bitcoin as distributed authoritarianism,

961
01:15:47,694 --> 01:15:53,974
I thought well it turns out you're right but it turns out I never had a problem with authoritarianism

962
01:15:53,974 --> 01:15:59,674
I just had a problem with it not being distributed and that was an amazing revelation for me Bitcoin

963
01:15:59,674 --> 01:16:05,474
is utterly harsh you can't break its rules it is authoritarian it's just that there isn't a ruler

964
01:16:05,474 --> 01:16:09,994
and that's what makes it acceptable because we all have to submit to the same rules and that's what

965
01:16:09,994 --> 01:16:15,794
makes it an egalitarian project where no one gets to take precedence over anyone else that's what

966
01:16:15,794 --> 01:16:22,594
makes it fair like any good game so that's a nice ramble to end on because we've come to the end of

967
01:16:22,594 --> 01:16:28,694
yeah we have but just a final thought i i think we should reclaim the word uh censorship resistance

968
01:16:28,694 --> 01:16:35,794
because i think pip 110 is censorship resistance in action it's stopping people from bloating the

969
01:16:35,794 --> 01:16:42,494
chain making it unusable as as money which is what the censorship resistance is for so it's

970
01:16:42,494 --> 01:16:44,234
part of censorship resistance.

971
01:16:44,834 --> 01:16:51,454
Censorship on a paper is you tried to spend some Bitcoins and all the miners colluded to

972
01:16:51,454 --> 01:16:52,334
not put it in the chain.

973
01:16:52,654 --> 01:16:55,374
And for some reason, you couldn't mine either to put it in the chain.

974
01:16:55,994 --> 01:16:59,114
So that's a superficial way of looking at it.

975
01:16:59,274 --> 01:17:00,894
That's the ideological way of looking at it.

976
01:17:00,894 --> 01:17:04,694
The practical way of censorship is we have a fiat money printer.

977
01:17:05,034 --> 01:17:06,534
People are in a gambling economy.

978
01:17:07,174 --> 01:17:11,994
Pump shit coins and scam coin tokens on top of Bitcoin and flood the chain with absolute

979
01:17:11,994 --> 01:17:16,214
nonsense for month after month after month and make everyone just not use it for transacting

980
01:17:16,214 --> 01:17:21,974
anymore. That's practical censorship. And it's much more akin to the actual meaning of the word,

981
01:17:22,114 --> 01:17:28,234
which is using guns to prevent people or using weapons to prevent people from saying...

982
01:17:28,234 --> 01:17:32,574
Censorship of speech. Censorship of speech is not someone literally taking a needle and thread

983
01:17:32,574 --> 01:17:37,734
and stitching your lips together. It's, ah, you'll lose your job or you won't get that promotion at

984
01:17:37,734 --> 01:17:43,414
the end of the year if you say that. That's practical censorship, right? And this is like

985
01:17:43,414 --> 01:17:49,914
a controversial guy to bring up, but he jumps into my head. David Irving says there is no censorship

986
01:17:49,914 --> 01:17:55,754
of the media. It's all self-censorship. No one is actually going into media organizations and saying,

987
01:17:55,834 --> 01:17:59,974
you have to say this, you can't say that. Everyone just kind of reads between the lines and figures

988
01:17:59,974 --> 01:18:03,954
out what they're allowed to say and what they're not, and they adhere to it voluntarily. That's

989
01:18:03,954 --> 01:18:10,214
what makes it so insidious. And it's the same with Bitcoin. People were using it. It was growing as a

990
01:18:10,214 --> 01:18:15,234
medium of exchange. Okay, Lightning came around and Chris Guida will scream at me for this because

991
01:18:15,234 --> 01:18:20,434
I'm not as confident that Lightning has taken all the pressure off of L1 than he is because, well,

992
01:18:21,074 --> 01:18:25,634
rather than getting that argument with him again about it, like I consider most of the ways people

993
01:18:25,634 --> 01:18:29,894
use Lightning to be not Lightning. It might as well just be in a trusted third-party database

994
01:18:29,894 --> 01:18:35,574
because most people still better than banking right i hate it like strike you know we use

995
01:18:35,574 --> 01:18:40,034
lightning i'm like no you don't like there's nothing about that this who's running a node here

996
01:18:40,034 --> 01:18:46,014
you know so like but i mean phoenix is somewhat legit i don't know like i do have to give a bit

997
01:18:46,014 --> 01:18:51,414
of credit there and a lot of people use phoenix regardless my whole point with that is um i

998
01:18:51,414 --> 01:18:58,254
completely forget sorry i mean custodial lightning is still better than than uh than fiat banking

999
01:18:58,254 --> 01:19:03,474
which is like the worst fucking thing you can encounter in life i fucking hate banks i think

1000
01:19:03,474 --> 01:19:08,714
fiat banking is worse but like cash like i don't want to get into like it shouldn't be comparable

1001
01:19:08,714 --> 01:19:15,594
to cash like anyway we're running out of time here uh mr mechanic uh always a pleasure to have

1002
01:19:15,594 --> 01:19:22,754
you here uh people know where they can find you i think go uh subscribe on youtube too uh he puts

1003
01:19:22,754 --> 01:19:29,694
up a video every now and then and um happy rdts summer gonna love to see how this plays out i have

1004
01:19:29,694 --> 01:19:34,914
my popcorn already thank you it's really entertaining and thanks for being a part of it and

1005
01:19:34,914 --> 01:19:41,594
you wrote you wrote my favorite thing on it which was support bit.10 you cowards because that's all

1006
01:19:41,594 --> 01:19:46,554
it is on the other side it's not it's not opposition it's cowardice that's what really

1007
01:19:46,554 --> 01:19:51,614
drives me nuts about it because no one that doesn't support it is out here saying let's go this is bad

1008
01:19:51,614 --> 01:19:57,194
for Bitcoin and we need to counter fork it or go to any sort of active measures against it beyond

1009
01:19:57,194 --> 01:20:03,694
pretending it might not happen. I'm just like, have some guts, man. You RSF it, be cash yourself off

1010
01:20:03,694 --> 01:20:09,314
or figure out why it's not actually a bad thing. Come to the table, have a debate. I've asked

1011
01:20:09,314 --> 01:20:14,234
endlessly for anyone on the other side to debate. They don't want to do it. And I don't want to get

1012
01:20:14,234 --> 01:20:18,794
accused of, you know, most of the time they're like, you just want attention. I have plenty of

1013
01:20:18,794 --> 01:20:23,834
people watching this thing anyway right it's it's quite observed lots of people are aware of it it's

1014
01:20:23,834 --> 01:20:29,234
grown quite organically um at this point i genuinely would like the other side to defend

1015
01:20:29,234 --> 01:20:34,094
their position i'm definitely capable of having an honest debate with them and it's not it's not

1016
01:20:34,094 --> 01:20:39,314
going to be you know the silly shit you watch with tone vase and roger veer back on a cruise ship

1017
01:20:39,314 --> 01:20:45,294
uh back in you know 27 that has entertainment value though it does i should probably re-watch

1018
01:20:45,294 --> 01:20:50,414
it anyway i do yeah i really got to go thanks so much canoe and thanks for supporting and being a

1019
01:20:50,414 --> 01:20:54,574
part of what's going on here and go read hodlanaught's articles if you haven't if you're

1020
01:20:54,574 --> 01:21:01,334
listening to this if you want to know what went wrong with core back in 2019 and forward yeah so

1021
01:21:01,334 --> 01:21:07,934
yeah i never get into that stuff hodlanaught covers all that beautifully yep all right take

1022
01:21:07,934 --> 01:21:11,454
care man this has been the bitcoin infinity show brush your teeth

1023
01:21:15,294 --> 01:21:45,274
Thank you.