BTC Sessions - Mario Gibney On Bitcoin Fees, Layer Two and BTC In Space EP107

Episode Date: October 15, 2020

On today’s show I talk with Mario Gibney, head of customer service at Blockstream and co-host of the Unhashed Podcast. We cover the ins and outs of Bitcoin miner fees, the future of block rewards, and ways users can save on fees through optimization and secondary layers. We also dive into the feasibility of interplanetary Bitcoin transactions. Mario on twitter: https://twitter.com/Mario_Gibney Unhashed Podcast: https://www.unhashedpodcast.com/ Mempool statistics: https://jochen-hoenicke.de/queue/#0,1w Fee data: https://whatthefee.io/ Peter Todd’s mining in space talk: https://www.youtube.com/watch?v=0WCaoGiAOHE SUPPORT THE SHOW: LEDN offers Bitcoin backed loans – Sign up and get $50 free https://bit.ly/34FeT2f Get Wasabi wallet and enjoy your Bitcoin privacy https://wasabiwallet.io/ Buy a Cobo Vault to secure your Bitcoin! https://bit.ly/2GgMFlH Cobo Vault Tutorial https://www.youtube.com/watch?v=JnRjvZKulrA Crypto Cloaks: Get the BEST Bitcoin swag out there (code “btcsessions” gets you 5% off) https://www.cryptocloaks.com/shop/ If you value my work and would like to send me a tip, they are always appreciated! LIGHTNING tips: https://tippin.me/@BTCsessions Join my Telegram channel! https://t.me/btc_sessions

Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC Sessions. Today I sat down with Mario Gibney from Blockstream. He's the head of customer service there and he's also part of the unhashed podcast. And so we got to talking about Bitcoin fees. And we dove into the dynamics of how fees actually work and their function and the eventuality of Bitcoin being fully dependent on fees to pay the miners. We got into the dynamics of dealing with secondary layers or side chains.

So things like Lightning Network and Liquid Network about how they impact fees and how they can help alleviate and allow people to transact for cheaper fees and more quickly. And then we even got a little bit cosmic and started talking about interplanetary and off-planet Bitcoin and how that might work and how fees play into that. So it was a really fun conversation. I hope you guys really enjoy it. And this is Sips with Sessions. Huddled their Bitcoin.

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or my go-to desktop wallet Wasabi or my go-to mobile wallet, blue wallet. So be sure to check them out. There's a link in the show notes down below if you want to grab one. And just for reference, I'm using the Kobo Vault Pro, which has the fingerprint scanner and has the rechargeable battery.

So be sure to check them out. And by the way, they're doing giveaways that continue to do giveaways on my show throughout the end of November. So if you want to win a Kobo Tablet Plus, which is a steel seed plate, which can hold the backup to any Bitcoin wallet you may have, all you need to do, retweet the show,

tag myself and Kobo in that retweet and just let us know why you want one. And with that, let's dive into the interview. We are recording. Welcome, friend. How are you? Great, how are you? Pretty good, pretty good.

So Mario, Mario, I'm always careful with last names because there's always a call. It's not that hard to pronounce. Gibney, right? There you go, yeah. Okay, all right, because you never know. It's actually Gibnay or something. But, yeah, okay, I'm always super self-conscious about trying to see.

You nailed it. Okay, perfect. So, Mario Gibney, you do some work with Blockstream, correct, friend? Yeah, I'm customer support feed there. Awesome, awesome. And I guess before we get into anything, what you're sipping on. This morning, I'm sipping on Soylent.

Just what I often have for breakfast nowadays. Because it's, you know, just a wholly nutritious drink. I'm sure all our Bitcoin of friends out there will be very approving of it. Yeah, it's great. You just mix powder with water and then you have everything the body needs. Literally everything. Well, I mean, in theory, yeah, like you look at the, I mean, according to their nutritional labels, and we all know they could never make a mistake or lie there.

Yes. Is it good? I like it. I do actually like it a lot. Yeah. And it's like, I think it's probably not healthy to have too much of this stuff. Like there are people who apparently lived on only it. I wouldn't recommend doing that. Probably better. I'm drinking coffee. That can't be any better than what I, well, yeah. I mean, I don't think coffee is supposed to a meal supplement, though. I mean, maybe it is for some people, but no, no. I do want to highlight my mug, though. So this is my shit coin mug. And every time I pull it out, I find it hilarious because it's like this wonderful reminder

of how many projects have come seeking relevance and then disappeared into the ether. You're the first person I've met who's had a matching coffee mug and toilet paper. Yes. Yeah, you saw that. Bill Fonnell. Yeah, well, no, that's our podcast. We made that. The Bill Fottle guys, I do the unhack, oh, I can show I do them. The unhash podcast is a show I do with them.

And so if you look on the toilet paper, that's, so go on there. Is it weird that I value the toilet paper more than I value the underlying token in that I don't even want to wipe my ass with it because I find it funny? Well, I think the entire point is that it's more valuable as toilet paper than as light paper. But that's great. I mean, if you want to keep it, you know, especially, you can put it on a shelf somewhere and show it off to your guests. Yeah, maybe I'll save it for occasions where I make high time preference diet decisions. There you go. I, I forgot we made this. We made those like, I think a year ago or something like that. And shockingly, they didn't sell.

They've been a fun marketing gimmick. Like, people seem to think, They're hilarious when they get them. Oh, yeah. I was over the moon, like literally when I, when I got it, surprised. Very excited about it. But as much as I'd love to continue talking about wiping my ass with you, I wanted to chat to you today about Bitcoin fees. And the reason behind this is I saw and kind of partook in a little bit of an exchange on Twitter. and there was a discussion around the Bitcoin fees and potentially a market forming to a point

where one Satoshi per byte may never clear and the Mempool just never clears. But before we dive like deep, deep into that realm of thought, what I did want to do is because there tends to be some newbies that watch the. channel and they may not have like a full full grasp on even just Bitcoin fees in general some of the things around them and and how they're calculated things like that so maybe maybe we could start and just maybe bounce off each other wherever we want to chime in back and forth but about let's start with Bitcoin fees how they work in the first place how they're calculated how a fee kind of is decided

Sure. So when you send a transaction in Bitcoin, it needs to get included in a block before it's actually confirmed and is sent. And blocks are created by miners. On average, every 10 minutes, there's a new block which can be, I mean, the upper limit now is roughly 2.2 megabytes. And you need to include a fee with your transaction in order for a minor to include it in the block. Now, what happens is there is limited space. So if there's a period of high traffic where many, many people are trying to get transactions confirmed, they cannot all fit inside a given block. So what happens is that the centers of the transaction bid higher fees against each other, because the miners get to keep any fees from the transactions included in the block they create.

So they're, you know, exceptions aside, they're going to always choose. the the fees that or the transactions that include the most fees per per byte basically like the yeah the highest fees depending on how much space transaction takes up so periods of high traffic yeah you'll you'll generally pay higher fees now if you're like an everyday user and you send just using your wallet you'll the wallet most good wallets will calculate fees for you and we'll give you an estimate like, you know, low, medium, or, you know, slow, medium fast. And if you've used Bitcoin long enough, you'll know that those aren't always

accurate because, you know, you can't predict the future. You don't know, like, you know, next six hours, there might be tons of, tons of traffic, or you might set a low fee. It confirms really quickly because, you know, there's a burst of blocks found. But yeah, that's where you come from. Cool. And obviously, well, I guess not obviously to newcomers, but fees are not in any way related to the value sent, but rather on the amount of space computationally that will be taken up in a block. Yeah, exactly. Yeah. Now, we, you kind of touched on it a little bit, but wallets are not always the greatest at predicting that kind of stuff. How do wallets often come to a conclusion as to what they estimate the best fee to be?

Oh, okay, well, yeah, first of all, I agree that there's, I think it's pretty universally agreed upon that there's a lot of room for improvement to fee estimation software. I mean, the right now, I mean, ooh, I wish I'd known this question in advance. I looked into it more deeply. I mean, I don't know the precise mechanics behind it, but we essentially look at the, like, I know it's mempool that is like how many transactions there are in a backlog. and you can make a guess based on expected, you know, blocks being created over the next time period. And, you know, if you have, you know, if you create a transaction with, you know, 30 Satoshis per byte, you can be like, okay, well, there's, you know, you know, 10 blocks worth of transactions paying higher fees than that. So you're probably going to have to wait at least like two hours, for example.

So they basically take data of, you know, see the backlog, how many transactions are waiting to be confirmed, how much they are paying in fees, and they'll do the best estimate. It's not, it's not, yeah, like there's definitely room for improvement there. If you want to do it manually yourself, there's a great website called a what the fee.io. And what it does is it's got this chart where it kind of breaks down into different percentages. like, you know, if you want your transaction confirmed the next hour with 95% certainty, it recommends, you know, this level of fees. You know, if you want like a 50% chance your transaction affirms in the next, like, you know, six hours, you know, recommends this level of fees.

And that tends to be quite a bit more accurate. Well, I can probably say this. I've actually been talking with our, one of our designers at Blockstream. We'd come up with what I think is a kind of a new way to a new user, for providing more precise fee levels for the wallet. And that should be coming out relatively soonish on Blockstream Green. So I'm pretty excited to have that in user's hands. Awesome, awesome.

How has Blockstream Green been going? Obviously, you guys have the desktop version now. How has that been received by everybody? Yeah, I mean, the new UI, which I guess we launched, you know, originally it was called Green Address. So when I joined back in early 2018, that's what it was. And I guess it would have been in, I think it's spring 2019. We launched Blockstream Green, which was the UI overhaul.

And yeah, the UX overhaul. And that was very well received. People, green address, if you've ever used the original app, it's still available if you look at it on like GitHub. It's pretty old school. Actually, I think the first time Hugh and I chatted was when you did an instructional video for Green. Yes, yeah, yeah, back when it had just launched

And there were, I'm trying to recall, I don't think that there was yet liquid functionality in it. That's correct. Yeah, liquid didn't come until later. Yeah, yeah. But yeah, I really enjoy it. Like I find it, it's got advanced features in it, but they're not in your face enough

to confuse a newcomer, I feel. But you guys also recently launched Aqua, correct? That's right, yeah. So we're gonna divide it between like, Aqua's going to be the more new friendly wallet. It's very stripped down and basic and simple. It's a single wallet handles, you know, Bitcoin or liquid assets. And it's supposed to be, it's kind of the one designed for your grandma.

You know, really, really basic, no of the frills. And then power users can be over to a blockchain green, which has, yeah, all the bells and whistles. And we're kind of happy now that Aqua's launched a lot of the, because it's the same team, the, that built both apps. So now we're going to be able to ship focus back over to, to green again add a bunch of features. I know people have been waiting for a while. Like coin control is a big one that has kind of become a must have for the power users. And so we're going to get that out soon.

Cool. I'm on a bit of a segue here, but or a bit of a tangent. But is there any chance that you guys will be looking at implementing pay join? Yeah. I mean, it's not something where we did you work out, I don't think. but that's definitely something we intend to add. It's on the list of things that there's always so much to do, right? Yeah, yeah.

And, you know, the guys building Blockstrom Green are also, like, they do, they, yeah, now we got Aqua and Green. Like, page join, yeah, I can't give a timeline, but I know that's something we want to have. It's on the radar. I mean, that's going to be ideal, like, you know, for people don't know pay join it's essentially like it came out of this attempt to make the a minimalist coin join and uh once um yeah once that kind of that's more widespread like

it's going to be a massive boost of privacy without like user hassle which is huge like i mean coin joins are cool but the fact that you actually have to kind of set it up and divide your coins in smaller amounts and like you know go through this extra process uh it's kind of a big hindrance Like the great thing about pay join is, you know, once we've, once that's more broadly developed, you'll have people, you know, paying each other using this protocol. And there's no burden of convenience provided both parties are online. So yeah, I'm really excited to see that working. Yeah, that's, it's very, very exciting.

The, I guess this is is quite relevant given that recently we had Bitmax crackdown upon and then we had change. analysis label coins from Bitmax as high risk. And I saw a couple tweets the other day from people now I can't fully fully confirm of this was the reason, but somebody who had taken their bitmax coins, put them on Coinbase and then tried to withdraw and was not allowed to. So you have instances like that where having a more broadened, almost like, it's, I want to say taint, but it's not really taint because it just kind of obfuscates exactly what's going on without looking strange to an outsider. Is that? Yeah. Well, I mean, because it's, um, I think, I think they call this a stenographic transaction, if that was the term, which is, um, uh, you want,

something that enhances your coin's privacy without being obvious that it is doing that. The problem with Bitmax is that everyone knows which are the Bitmex addresses. You don't really want that to be a situation. You know, it's the same thing with most coin joins as they're implemented today. You can just, you can look at that transaction on a blockery's part, like, oh, it's coin join. With paid endpoint, that won't be the case. It will look identical to a regular payment with, you know, two inputs, two outputs. And yeah, so I guess a stentographic transaction is a transaction that, you know,

manages to enhance your privacy and isn't and isn't clearly doing so. So I guess it's kind of meta-privacy, I guess I was calling it before I was correct on the term, but yeah. Fair enough. Yeah, it's a big boost, yeah. So I'm going to reel it a little bit back in towards the the fee aspect that we're talking about. So obviously there's a number of things that users can do to try and minimize the fees that they're paying given, I guess, recent upgrades to Bitcoin protocol in the past few years. So, you know, things like using Segwit enabled wallets, which most are Segwit enabled, but there are, there's rap segue, and then there's Beck 32 addresses.

Would you want to tackle just describing the difference between the Segwit and like a Beck 32? Oh, sure, yeah. I mean, well, Beck 32 is native Segwit and, yeah, RAPT segwit is, it uses the, I don't know how much detail we want to get into. I mean, it's essentially, it uses the PAY to scriptash format to take advantage of Segwit, but because it's not, I guess because it's nested inside P2SH, it doesn't take full advantage of it. So if you use rapid sequit, you'll get like, you know, something like 30% of the gains or something like that. But if you use native secret, you get more gains. And this essentially makes the your, it doesn't make the transaction actually smaller,

but it makes miners treat the transaction as smaller, which means that whatever fees you pay, because fees are paid based on the amount of space the transaction takes up, It will, you can view it as, it essentially makes the transaction cheaper to broadcast. Yeah. And for anybody watching that's unsure to tell if you're using RAPS Segwit or Native Segwit, wrapped addresses would start with a three, and Beck 32 or Native Segwit start with BC1. BC1 will save you more on fees.

And actually, the blockstream, blockstream. info will actually show you if you look up a transaction, you know, if what type of transaction it was and how much you could have saved on fees had you used Beck 32 or native Segwit, correct? That's right. Yeah. Well, we have a little, I guess it's a little privacy analysis section, which will, or, or, oh, no, that's a bit separate. But yeah, no, no, like if you look at the transaction on the Boccusport, yeah, we'll tell you, you know, whether how much you saved if you used Segwit, how much you saved if you used Native Segwit, how much you could have saved if you didn't. It's also worth noting that the savings, the reduced fees, they don't come from sending to that type of address. They come to spending from that type of address. So in order to take advantage of these cheaper address types, you need to set up your wallet to receive to that type of address. Because if I'm spending, from like, you know, a regular, you know,

a paid public cash address. I'm still gonna pay the regular fee amount even if I'm sending to a VEG32 address. So yeah, you're gonna wanna wallet, yeah, except Segward format, at least one of those two formats. And so I guess, and maybe you can correct me if I'm wrong regarding this.

So people that are confused that in regards to why it's not cheaper to send to a Beck 32, but rather to send from. It's because the fees that you pay are associated with kind of the state of the coins or the UTXOs that you've received and where they've come from. And so if you've received Bitcoin from a,

if you've received Bitcoin from a legacy address, one starting from a one, then that UTXO effectively, in order to send it at that point, then it essentially is going to take up more block space to send it even in concert with other ones. Or how exactly would you best describe, it's more of an implication of where the coins were

in the previous transaction or like the state of the ut? How would you word that? Okay, so when you're sending coins to an address, what an address is is it is a set of its instructions for how that coin can be spent again. And in the vast majority of situations, the way that coin gets spent again is by providing a digital signature. And that's basically what Bitcoin wallets do is you have a private key, and that private key can generate a bunch of signatures that allow you to spend funds that have been sent to addresses generated by that wallet.

Now, the signature is the largest part of a transaction. It's the largest inside. I forget exactly what the portion is, but generally like it's over 50% of the transactions data is just the digital signature. Now, Segwit addresses allow you to include your signature in a part of, in a way that doesn't take up as much space. What's said what is called segregated witness, which just means the witness data, that is the signatures, are included in a separate part of the Bitcoin block where that is, less space constraint. So if you're spending from a Segwit address, that means you can provide a Segwit signature.

You can provide a signature that gets stored in this less space constraint part of the block. And so it doesn't take up as much of the scarcer space. So the miners are more willing to include it, essentially. So it all comes down to, yeah, where you're placing the signature. A wrapped Segwit, I believe, I'm not 100% sure in this, but I believe the reason it isn't quite as efficient as Native Seiglet is because it has to include a few more instructions, which is part of the witness data, before directs kind of the instructions down to the signature in the business data.

But yeah, it's basically where the signature goes. Okay. Now, as far as other methods that people could use to save on fees, I'm talking mostly main chain. Are there any that pop out to you that would be a good practice for? people to utilize sure I mean yeah so there are there are kind of three main things you can do the first is as we said use Seguet the second thing you can do is I should say four things second thing you do is choose when to time your transaction so this I guess will probably lead into a conversation later that we're going to later on but the the there is less traffic on weekends because

people aren't working. Like pretty regularly, traffic picks up, you know, office hours New York City time. There's all, you know, tons of transactions at the network and they have to be against each other. So if you're sending transactions on the weekend, you can probably include a very low fee and they will get included pretty quickly these days. You know, there are periods when you do see a couple of weeks when the backlog doesn't clear. but in general, cheaper fees on the weekends, cheaper feeds and evenings, North America time. The other thing you can do is there are two more methods called Replace by Fee and Child Pays or Parent. And these are ways to speed along transactions that are kind of stuck. Child Pace or Parent, I guess, is it, it's a bit more advanced where you have a transaction that hasn't been confirmed yet.

And if you spend from that transaction, including a higher fee, miners will be more willing to include the first time because they can see if they include the first low fee transaction, they'll also get to include this, you know, juicy higher fee transaction, which spends from it. And then replaced by fee is probably your best bet, provided your wallet that supports it. You do want to have a wallet that supports replaced by fee.

So what that is, let's say you broadcast a transaction and you're expected to go through it an hour or two, so you pay, you know, 10 Satoshes per Vibite. and then suddenly traffic spikes in that work and it's in this big backlog and it's probably not going to confirm the next day but you need it um confirmed sooner replaced by fee is a is a method where your wallet will re-broadcast the transaction again with a higher fee so if your wallet supports this then uh you basically go in uh with blocks stream green you just find the unconfirmed transaction there's a button that says increased fee you choose how many fees you actually want to pay and then it sends that again with a higher fee Now that's actually a useful strategy, especially if, you know, if something that's not too

urgent, but let's say it needs to get converted the next day or two, and, you know, you're not sure you think maybe the men pool, you think maybe the backlog will clear the evening or not, you can start by broadcasting a very, very low fee transaction, and then if it doesn't clear, over time, you can just gradually increase the fee until it, you know, and if it suddenly becomes urgent, you can infase the fee quite a bit later. So yeah, I mean, like for the average user, I strongly about, yeah, use a wallet that supports Seguet, use a wallet that supports replaced by fee.

Check out that what the fee.io website. It's pretty good. And it's very simple, it's just a little graph. And then, yeah, low ball your fees and gradually increase with a place by fee. Awesome, cool. Now obviously there are solutions for if you're in need of either low,

you know, low, what's the word, small transactions that are very quick. There's, there's second layer solutions or I guess layer 1.5 solutions in the case of liquid. So there's lightning and liquid and that can kind of help alleviate, theoretically alleviate some of the congestion on chain. Now, in how do you, how do you see this having played out so far? Do you see it helping at all with on-chain or do you think that we just haven't gotten to that point where it's super necessary for people to be using these things? Oh, that's a good question. I mean, it's hard to say with Lightning because the data is public so we don't have like with Bitcoin, you can see precisely how like what the transaction activity is.

You know, all that data is public. With Lightning's Gate isn't as public. You know, if two people have a channel, for all we know, they've made hundreds of transactions between each other, they might have. I made none. So it's a bit hard to say. I mean, my personal guess would be most people are using lightning are doing it for, I mean, I think a lot of people use it because it's interesting and fun and the instant confirmation is quite handy. For saving on fees, yeah, I mean, it might be having a benefit. I think, like, long term, I mean, I mean, I have no idea, to be honest, this is kind of a short answer.

I remember seeing some data from a year or two ago. I'm not sure if it's still relevant, but that an extremely large proportion of transactions on the Bitcoin network were between custodians, between exchanges. And until they've got quite an infrastructure of lightning payments between them, which I think is the long ways away. There are some challenges with that, since lightning is better for smaller payments. I would expect that it probably hasn't had a massively negative effect on fees. From a personal user standpoint, it's pretty handy.

If you're going to be making regular payments under $200, I think it's very worth your time to open up a couple lightning channels. We've been using it on the blockchain store for, I think we were one of the first stores online to accept lightning payments. I bought stickers. Yeah. Oh, yeah. Let's, yeah, well, we had the one on the I got Lightning working, but all I got was this sticker.

I think that's probably one of people's most popular purchases once they get it going. Yeah. But, yeah, so people really seem to prefer it for things like that for retail. Long term, and this maybe will tie in stuff we'll get into later, I think that Lightning will ultimately drive up fees on the main chain. once because it kind of increases the value of what you can get done in a transaction. If you can spend a transaction to open the Lightning Channel and make hundreds of transactions with that, you're going to be willing to pay a lot more for that transaction on chain. But yeah, I guess that's kind of a separate question of whether or not it's been beneficial today

in terms of reducing fees on chain. Yeah, well, let's dive down that now. So again, the initial reason I messaged you was, because of a conversation that was kind of going on on Twitter. And it had to do with the Mempool, seemingly filling up pretty regularly now. It doesn't clear nearly as often as it used to. And by clearing, I mean the transaction backlog is effectively non-existent or within one block. And you can easily get through with a one Satoshi per byte transaction fee.

Well, yeah, in simplest terms, it's just if there are periods where blocks aren't full. Yeah, yeah. And so there's a conversation going back and forth and I'll give a shout to Denver Bitcoin because he was involved in conversation. And actually he tagged me and he was like, hey, this would be a good conversation to have. So it was in regards to, and funny enough, before we jumped on, I was like, oh, well, you seem to be of the opinion that a fee market will develop. And you said, well, I mean, not necessarily. Like you're kind of, you're not necessarily. I'm optimistic. I just don't think it's a foregone conclusion as many other people do.

Okay. Yeah. So what he was getting at was he believes, at least my understanding, hopefully I'm not misquoting him here, but as I was reading through the thread, it seemed that he believed that in an instance where fees became prohibitively expensive on chain for extended periods of time, it would drive people to second layer solutions like light,

like liquid or whatever else, or maybe even custodians. And in turn, because of people being driven out to other options, it would give relief to on-chain fees, thus kind of hitting an equilibrium, allowing the men pool to eventually clear again, and that cycle would kind of repeat. That was my understanding of it. Now, I don't know what is your position on

if a fee market will develop, we'll get to a point where one sap per bite just no longer clears. Okay. First, I want to just make a comment on terminology about something that really triggers me. I hate the phrase fee market. Like, it should be called the block space market because you're bidding for block space. That's what the demand is for. And just, I'm like the lone man trying to fight this battle, but we shouldn't be calling

the fee market. It's called a block space market. But, yeah, I mean, if you're new to this topic, a lot of people use term for market and I'm sorry I've gotten the question you're asking like how convincing I find his arguments well I think just in general for yourself do you believe that a fee market will or a what redo do you believe that a block will eventually develop to the point where one stoshy per bite where we get to a point where transactions with one sat per byte will just feasibly never clear again.

Do you think we'll get to that? Yeah. Not only do I think we'll get to that point, I think that if we don't get to that point, Bitcoin is kind of screwed because, you know, we have this, like right now the security is like the security budget, I guess, something we're referred to is just the reward for miners to continue producing blocks is provided by newly minted Bitcoin.

Every four years, it gets cut in half. And eventually that reaches a negligence. amount. And at that point in time, we need to have fees supply a sufficient reward for the miners to provide security for the network. And if that does not happen, then the security model starts to break down. So I am quite optimistic that we will get to the point where once those two superbyte fees don't confirm because there's just too much demand. And I also think that's a very, very good thing. It's a really, really important that we get a robust block space market developing. Yeah. Quick question. Okay. I can't do the mental math right now. Maybe you might be able to tell me.

If everybody in a single block that was full paid one sat per byte and there are kind of average size transactions, how many sats roughly would that be for a minor if the, if the Oh, okay. So, I mean, if it's full, let's say, let's round, let's say two megabytes. I mean, you know, it might be 2.3, but let's say two megabytes. So that should be two million bytes, right? So one stoci per byte, it's 2,000 stoci's. So that's 0.0 to BTC. Okay. Which is, yeah, not enough. We're going to need more than that. Well, I guess it's a question of the purchasing power of those stats, correct? correct? Not necessarily the dollar value of said stats. That's correct. Yeah. I mean, like, but the thing is if, if the dollar value goes up such that that becomes a significant amount, then you also have a situation where there's a greater incentive

for either state actors or kind of very powerful institutions that maybe do not, maybe have reasons to want to take down Bitcoin, the incentive kind of grows. If, if Bitcoin, become so valuable that, you know, once those you provide is actually worth like, you know, ends up being worth, you know, cost you $10 to send a transaction. In that kind of situation, we're going to need more security, although that's a good point. Like maybe I shouldn't talk about once we should provide. I think more precisely what I should, what I'm talking about is we need to get to a point where we don't have empty blocks. If we get to a point where actually once those are bite is quite expensive and maybe there's demand for, you know, point, you know,

0.5 Satoshi per byte transactions, then, well, the protocol will probably be upgraded. Remember, the fact that there's one Satoshi per byte as a minimum fee is not actually part of the consensus protocol. That's just something that nodes can set themselves, and most nodes do not broadcast transactions that are greater than 0.1.2i per byte. It's kind of a spam prevention mechanism. But there's no reason, like, let's say we get to a future where, you know, a whole bunch of, like, there's empty blocks and a bunch of people want to pay, you know, 0.02 Stoches per byte. Yeah, like nodes will probably just upgrade, you know, so that they allow those transactions to go through.

Interesting, we already did this on liquid. We, like right now you can, you can broadcast transactions that are of 0.1 Satoshi's per divide. Interesting. So, yeah, I guess when I kind of look at the argument, of off chain will, you know, lessen demand for on-chain transactions and kind of constantly strike that equilibrium. I also kind of think that there's a lot of potential for value to flow onto the Bitcoin main chain.

And as you were kind of alluding to, that a single on-chain transaction can be representative of millions of off-chain transactions and thus paying, you know, a large number of Satoshis per byte to get that transaction established, especially when you get into the realm eventually, potentially of not only large corporations, but potentially nation states settling this way down the road, then them paying 100, 200, 300, 400, 500,

Sats per byte or more to settle, you know, cross-border payments for nation states. It's it, then it becomes like, well, sure, whatever, we're settling billions of dollars. Yeah, like if you're sending a transaction for $100 million, you do not care whether or not you're paying like 10 cents or 200 bucks to get that confirmed. It's nothing compared to the overall size. Yeah. Yeah. And so do you, do you see it eventually getting to the point where?

where, you know, $100 transaction is never done on the base chain ever again? Ooh. Yeah, I think it's plausible. I mean, yeah, I mean, like, you know, a question like that requires you see like several decades out in the future. And, you know, to be honest, like, you know, that's multiple times the age that Bitcoin is right now. So it's really hard to say. I, like, okay. I'm going to go back to the original and just like describe the idea I was trying to convey in that tweet because it might make this bit clear.

So there was there were kind of two tweets I put out. One, I just looked at the data from Bitcoin's backlog over the past six months. And there's a great site. I should give you a link for it. It's Yelhin dash hoonik. I don't know to pronounce it, you know, dot Z.m me it and I'll put it in. Yeah, yeah. But and you can go there and it just shows like how many transactions are in the backlog.

what fees are paying, right? And I looked at the data over the last six months, and it was really cool. You could see where the weekends were, because the member would clear, or if it was a big spike, it would kind of partially clear. And you could just kind of see where each weekend was, and every Monday, there was a spike in traffic. I thought that was kind of cool. And I kind of already, I went looking for this. I figured it was going to be there because the way I use Bitcoin right now, I almost never need to send a transaction that needs to be confirmed day of. So I have always been sending like, you know, once does you review by transactions. And I'm like, all right, well, it'll confirm on the weekend if it doesn't confirm today, you know. And so yeah, and it was kind

of cool. You could, you could see this in the data. You could see where the Sundays and Mondays were. So I tweeted this out. And then I was thinking about this more. And like, I, um, well, another thing that happens is a lot of, like, you'll see companies are starting to realize this. Like some companies will do UTSO consolidation. So if there's like an exchange, for example, that has received a whole bunch of tiny little deposits, what they'll sometimes do is they'll create like really, really big transactions, spending all of these small deposits into like a bigger one. And they just broadcast this at like the lowest fee possible, once they push your fight, and just wait for the mental to clear, and then that gets consolidated. Because then if they never need to spend a bunch of that money at once, and quickly, it's only in one UTIXO to spend from instead of many, so it would be cheaper.

them. And that's just one example of how people can say, okay, well, I'm going to use, because I know the one Satoshi per byte, because I know the backflow is going to clear, eventually, I can broadcast a subject transaction to take advantage of that later. And I think over time, we're going to see more and more companies and entities taking advantage of this, because it's, it's just a really good deal. Getting like, you know, if you just think about what block space is, you get data stored for, like, on the most robust database on Earth for like a few cents. That's crazy, you know? And if you're, you know, mostly it's gonna be doing payments,

but you can also, you know, take advantage of it to, I don't know, like, you know, mix your coins, for example, do coin joins if that's, you know, you need to do if you're not, if that's not urgent. You can do it to, you know, consult the UTIXO, like I was saying. And so I think that like there's a tremendous amount of value just being left on the table when blocks are empty.

And over time as, you know, the Bitcoin ecosystem grows and more and more players get involved, that'll become recognized. And there's gonna be like just a massive line of people who would love to get transactions confirm for one, stucer bike, that they're not in a hurry to do. And I don't think there's anything

that Lightning can do to change that. Because I mean, when I'm talking about, I think that if like, you know, we'll only see this for a few more years, MNPOO's clearing regularly. It's not because I think that like, in a few years, everybody's gonna like do their online shopping on the weekends.

I don't think that's gonna be the case. I think that it's just, there's gonna be a lot of, yeah, non-urgent stuff that people are content waiting for and saving money on doing. And so that's what I meant specifically when it comes to, yeah, backlogs or yeah, cleared backlogs becoming a thing of the past. How do you think? So if we were to see another mania like 2017, like I recall, things have improved a lot for, for wallets since then.

I remember near the peak in 2017 sending a transaction. I think I pay like $100 for a transaction fee. And there was no way to change the sats per bite or anything. Just because the wallets didn't even, some of the wallets just didn't even bother with that. They would just by default, pay the maximum fee to get it through quick because they didn't want to deal with customer service.

Yeah. And so obviously that's changed. quite a bit. Now, there are still some wallets that either minimize those types of options and settings or have very, very poor fee estimation or have, and I think we both know who I'm talking about, but have neglected to even bother implementing Segwit, even just rap Segwit. Yeah. Yeah. And so do you see us even potentially like let's say in the next 18 months we went through another 2017 um does the influx of new people then in that environment price out many regular type small transactions for people like

if somebody goes and buys a hundred dollars on an exchange and they want to withdraw um and that exchange or or that wallet perhaps doesn't have have have segit or does they don't do batching things like that. How quickly can these companies pivot around stuff like that? Like what does an environment like that look like? Do you see? Okay. Well, I mean, okay, so I've never worked at an exchange. So it's hard to be to comment on how quickly they can do that. But I would imagine that if there's a massive bull run, they've got tons of fire that they're always putting out. So I would expect that the exchanges that get their shit in order in advance are going to do better. Because if you're dealing with like, you know, a bull run and tons of people trying to sign up,

yeah, you're not going to, you're not going to have a lot of time to spend on like, yeah, implementing sector with then. So I strongly recognize and exchanges are listening, like start doing this stuff now. Yeah, like over time, what I think will eventually happen is like, I mean, okay, what's happening is if you're a service, if you're a wallet provider or exchange and you don't provide people options and you just like have them broadcast ISB so you don't deal with customer service, like you're essentially passing on this cost to your customer. And over time, the market should favor services and wallets that allow people to save money on fees.

I mean, we get people complaining to us about why they had to pay us such a big fee on wallets. And I'm like, and I have to tell them, like, we don't actually collect fees for this. We are trying to minimize these for you. Like, here are our options how to do it. And I would imagine that's got to be even worse for, you know, companies that just automatically broadcast a high fee. So, yeah, I think over time, there should eventually be market pressure towards services that are better about this kind of thing. There's a tremendous amount of stuff they can do. They can use Segwit, which more of them are starting to. They can use batching, which is like if you're an

exchange and you have to issue like 100 withdrawals, do them all a single transaction instead of doing them all individually. You'll save space like that. And there's even like Jeremy Rubin is working on a protocol upgrades, Bitcoin called, I think it was called Secure the Bag. I think it's called something else now, check. It's annoying, I forgot what it's called. Yeah, it was called, yeah, I'll secure the bag or, but it's basically a way that you can kind of divide transactions into two pieces

and get the more urgent part broadcasted sooner and then get the less urgent part broadcast or confirmed later on when transaction fees are low. And so all of these are essentially methods where, you know, back in 2017, we sell these massive spikes in fees. And these are all methods for kind of reducing the size of those spikes and evening them out over time. If you, you know, UTXO consolidation, which I mentioned earlier, which is something, you know, these services can do to take advantage of low fees.

That essentially is moving transaction space from periods of high traffic to periods of low traffic. So it's evening out these big spikes. And there's kind of two effects there. One is that given the same rate of traffic, if you didn't have these limitations, that means there'll be lower fees during the spike. but it also means that there will be reduced periods of a limited backlog because more of these transactions are moving to the to the less busy time period. Yes, there are all sorts of things they can do. I mean, as a customer, just demand more tools for this stuff. I mean, I would expect there are good reasons even beyond just customer service because I haven't found an exchange yet that lets me choose my transaction fee for withdrawal, which really annoys me.

care if it takes a week. I just want to pay like a few cents instead of like seven bucks to withdraw and they won't do it. But yeah. Yeah. It's bad when. Demand it. So that I, and it's bad on both in both aspects.

So there's a few different like here in Canada. There's there's a number of different exchanges, but some are still eating the fee when they send out transaction. God bless them. Oh man. I don't know how. Who does that? Shake pay and Bull Bitcoin still do that.

Oh, Bill Bitcoin. Oh, yeah. Yeah. Yeah. I don't know how that's going to be sustainable. I don't think it will be. Yeah. And so if it's not, then the option to set your fee upon withdrawal will be necessary as well as honestly. I don't see how exchanges can't eventually offer like lightning withdrawals, things like that.

Like I feel like that's going to have to be an option for people that want, you know, want to do a $50 buy and then withdraw it to custody. Like I feel like that's an eventuality that everybody's going to have to deal with. But then on the opposite side of the spectrum, you do have the exchanges that, well, obviously don't give an option for your fee because like you said, I haven't seen anybody do that yet. But then on top of that, they set the fee so high that it's even in times, like it's just a default static amount of Bitcoin. And like I've seen, I've seen ones that were like 0.001,

you're like in Canada, that's like $15 to withdraw. And so, and like, and Bitcoin's only, you know, like Bitcoin is is half of its previous all time high right now, well, a little bit more. But, but still like, so that goes up to what, eventually 30, 30 bucks, 20 something in the US. if we get even just back to the level of, and if we had another run or something, you see 100K Bitcoin, you're $150 to withdraw or something like that. If they use that static.

Yeah, they'll have to adjust. Yeah. Yeah, I mean, like over time, the market should favor services that actually build proper tools for this. I mean, ideally you want to do batching, you want to let the customer choose, the fees to withdraw.

I'm going to take some option to show liquid. I think more exchanges integrating liquid is going to be great, especially if you're doing custodian to custodian transactions. Like, if you're, if you are sending, you know, funds from one exchange to another, fundamentally there's no real reason you need to use the, the Bitcoin base layer for that. Because, you know, when you're using the Bitcoin base layer, like you're paying, you're paying for a service that lets you transact trustlessly. You, you know, you don't need to, and you're paying to, you know, your transaction recorder for all time, right?

You're sending from one custodian to another, like what's a great option for that. Like we don't actually encourage people to use it for like everyday payments. Like you can't use it on our store, like especially if you just want to get familiar with it, you know, or it's good if you want to use like, you know, like a tether, for example, is on liquid. But if you're doing custodian's, custodian transactions, liquid is a great option. It's also like a lot faster. You know, transactions confirm within less than two minutes every time. And so yeah, I would strongly recommend if you want to have faster and cheaper withdrawals or movements

between exchanges, ask your, you know, ask your service to implement liquid. We'll be happy to help them get set up. And right now, what you've got, Biffinix, Bitsy, what places are utilizing liquid right now? Like have integrated? Oh, there's quite the list at this point. Here, I'll work it up. But yeah, I know there's Bifenex, Bitsy, I believe will be. I mean, bull Bitcoin uses liquid.

Yeah, well, Bitcoin uses liquid. And who else do we have here? BISC uses it. BTC pay server allows you to use it. BTC Turk and frozen turkey, Bitsi, coinut, go Pax, local hotel, liquidity, market coin, renminbit, side shift AI, the rock trading and wire. They all provide support for liquid in one way or another. And more coming to you soon.

Sweet. Awesome. Okay. So I, okay, I want to take us down this tangent. This is kind of a random thought that I had. Maybe we'll, this will kind of be the, the topic that I, we'll get a little cosmic here, if that's okay. All right. Great. Okay. So I was thinking about fees and limited block space and like the reason for limited block space feasibly is, is obviously the economics of being able to pay minors. after the block subsidy is gone. But it also has to do with latency of the network and being able to run your own node and sync with the network without constantly being behind while also getting new information and new blocks.

And so that works all well and good when you're on Earth and you're transacting with people. But, okay, let's go a ways out. Let's get however many years, however quickly Elon Musk can work. Let's say in a situation where you have people off planet, but relatively close, like Mars, perhaps. Okay. In an instance like that, obviously the latency between the network with Earth and Mars,

like you can't you're not going to be able to sink and then keep on top of blocks and feasibly be transacting across the regular Bitcoin network peer to peer correct yeah I love that you're asking this question you've you've asked the right person I well I think that Peter Todd might be the the correct person to ask but he's done the stuff but we actually went into this with um we had Sansom-Mowe on our podcast last year and we actually started talking about yeah interplanetary interstellar cryptocurrencies and how they would work. And also we released in April Cool's video last year for the, or it was here for the lava network,

which is liquid network for Mars. And he actually had myself and Groobles, like do research into actual like, you know, orbital periods and like maximum or minimum broadcast time or latency between, I believe like at minimum you're gonna see four minutes of latency between Earth and Mars and maximum it's 12 minutes if I remember correctly.

And so you actually can still use Bitcoin. That's actually like you're just gonna have an extra 12 minute delay knowing whether or not your transaction is confirmed. So that's actually- The risk of double spend there. But that you can address that by just simply waiting an extra 12 minutes. Like the way you immediate double spends now is you wait for,

you know, six transactions or six confirmations has become kind of standard. You just don't wait for six confirmations on Mars. It's just going to take an extra 12 minutes, you know, at, you know, when planets are supposed to part of each other to confirm that it's been, you know, that it's got at six confirmations. So it's still usable in that way.

Interestingly, lightning network will work. You could have a lightning network. The Mars would have to have its own separate lightning network, but it would function at the same, just as well. as on Earth. You would just, again, need to when you're loading and unloading or opening and closing payment channels, you know, same thing. You just need to wait the extra four to 12 minutes to confirm that it's been, you know, that transaction has been confirmed. But once you're actually

good to go, a Lightning Network on Mars, because all the participants are on Mars, they can do all of their payments just as easy as they could on Earth. Okay, wait, wait, wait. I've got, I'm going to toss an attack vector your way. Sure. And I just, okay, you said potentially a 12-minute latency between Earth and, like, as a maximum. Right. Right. Okay, let's say there's a set of private keys that exist simultaneously on Earth and on Mars.

Somebody on Mars spends a transaction. So basically, I guess this is, I'm kind of disproving myself at the same time. In my head, I'm like, okay, well, if somebody, you, there's literally no way you could accept a zero-comf transaction, obviously, because technically there could be a transaction spent on Earth simultaneously as on Mars, and it would be, in essence, accepted both places, but the one on Earth would be confirmed first officially on the Bitcoin network, and you wouldn't see that confirmation till later. But how does that play with lightning network? Like, let's say somebody closed the channel. Wait, they would have to be a separate lightning

network then? That's why it's, that's why? The entire point of lightning network is, is that the participants have to be online, have to be able to communicate with each other, essentially in real time. And that can't happen if some participants are on Earth, some participants are on Mars. That's why I say Mars that type of its own separate lighting network. What about, so you were talking about liquid. So technically, if you were to build kind of like, again, like a federated model for like a liquid network and lock up Bitcoin on Earth and then bring the keys to that federated model with you to whatever planet, then you could transact as long as those keys weren't duplicated on Earth. and then bring the keys to that federated model with you to whatever planet, then you could transact as long as those keys weren't duplicated on Earth before you left.

Yeah, but you can even have the keys duplicate on Earth. You can even have the federation running on Earth. And, I mean, okay, you wouldn't want that. But, like, yeah, a side chain for each planet, I think it's a great idea. Like, because, like, right now, if you want to peg coins in or out of liquid, It's like, you know, you can exchange it using services, you know, instantly, but if you're actually, for one of the larger players, pegging coins in and out, takes, like, I believe it's like 102 transactions or something, you know, which is the better part of a day. So an extra 12 minutes on top of that is negligible, right? But yeah, so you could run a federation, a federated network on Mars. Like the love of network, you know, is kind of a joke, but it's, well, it's not completely a joke. Like, you could actually see something like that sort of work in the future. feasible. Now, of course, like, you know, I should put important caddiet out there. Like, you know, liquid is a federated bottle. It doesn't have the same, you know, properties as, as Bitcoin does.

It's not completely trustless. It's, you know, you have to trust that the majority of the federation is, is, you know, performing the duties properly. So, you know, that's not an ideal solution. If you really want trustlessness, you go with lightning on Mars or you just do regular Bitcoin, but you just wait an extra period of time for confirmations. Does it get to a point where you're too far from the base chain, like in distance, where it just becomes? Yeah? Well, once you get to other stars, forget about it. Because, you know, if like the nearest stars are with roughly four light years away, you're not going to wait four years for transaction confirmed.

So, yeah, once you get to other stars, you probably are going to want your own currency at that point. Like, yeah, you would have to have your own chain. I guess you could still lock up. If you did a careful enough creation of a multi-sig for us. You could do a federated chain for another star, but then you need to have your time lock for pecking coins in and out. would need to be greater than the light speed distance to that place. So you'd need to have like something like more than a four year time lock. And like four years is also assuming there's no breaks in communication between you and the home system,

which, I mean, I guess we're talking about a far future where we actually travel there. So who knows, maybe we do a really reliable communication community to. But I wouldn't count on that. Imagine a civilization that that locks up Bitcoin, even a few Bitcoin. Bitcoin into a federated model, travels the stars, and then because of relativity, returns to Earth, hundreds of years later, Bitcoin somehow has survived. Yeah. And they become the richest overrulers of the entire planet because they control so much Bitcoin

independently. Yeah, who knows, man? Well, also, once you get into really fast time travel, time will pass more slowly for people traveling at a higher speed. So you could travel for, I don't know, if you have an officially fast spaceship travel for 10 years, come back, it's been 100 years on Earth. Who knows? I guess at that point, yeah, like once you get into those distances, the fact that relativity comes into play, I, oh, I haven't thought too much about that, but I would imagine that a lot of the assumptions about Bitcoin will start to break down if time passes at different speeds for different

locations. That's, I mean, within our solar system, you're good. Like, you know, the different speed, Earth and Mars in terms time passing is negligible as far as I understand. But yeah, once you get to other stars, you're probably going to want your own proof of work chains. Somebody's got to try though. Somebody is whoever wants to hop on a ship with McConaughey and and brave that black hole with a federated side chain of Bitcoin. And I mean, what better way to hoddle, right? Yeah. We're leading the way. You saw Chris Hadfield got his Bitcoin from us, right? I did. I know. Canadian. Yeah, that's that's, that's, that's,

I was super stoked to see a Canadian astronaut do a Bitcoin transaction from a satellite. Be a satellite, that's right. Yeah, incredible. Okay, I think I'm, I think after that little dive down the interstellar rabbit hole, I think I can, we can wrap it there. But, Mario, I've got to say, thank you so much for this. I had a lot of fun with this Chad. Yeah, man, anytime.

This is good. It was a lot of fun. I got to meet you briefly while you were checking out my own stomping grounds. So that was really cool. I'd love to run into you again at some point. Hey, man, you come to the West Coast, man. I would love to do that. And for people that are looking, feel free to take the moment to shill, whether it be like

Twitter handles, whatever you want them to check out. Yeah, well, I mean, related to our conversation, yeah, I mean, if you're, you're, you and exchanges, you want cheaper fees. Tell people you want liquid. Definitely do that. If you want to hear more of me and rants with the Bill Fogel guys and Ruben Somson, we have an R-rated Bitcoin podcast called the Unhashed podcast. So give us a look there.

And yeah, just look up unhashedpodcast.com. That's us. And you can find me on Twitter. I am Mario underscore Gibney. Awesome. Well, thank you so much for being on. And guys, be sure to check out Mario. and I will have all of these links down below so you can click them there.

Thanks for being on, man. Thanks for having me. Thank you guys so much for watching and or listening. If you're here on YouTube, please do hit like, subscribe, and share. All of those things really do help, so be sure to do them. If you want to help out the show in another way, you can hit up the sponsors I mentioned down below. That was Ledden for the $25 bucks into your savings accounts. If you get a loan, check out Crypto Cloaks, code BTC sessions.

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