TFTC: A Bitcoin Podcast - #202: Adam Soltys

Episode Date: October 17, 2020

Join Marty and Matt as they sit down with Adam Soltys, creator of Coinos.io, to discuss: - Local ISPs - Coinos - Web wallets - UX - Security Tradeoffs - The Lightning Network - Liquid - Tokens - Privacy - much more Check out coinos Follow Adam on Twitter Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse when you download the app.

What's up freaks, it's your boy Marty here to introduce this episode of Tales from the Crypt. Matt O'Dell and I had the immense pleasure of sitting down with Adam Soltis, the developer behind CoinOS, coinOS.io, the web wallet that has liquid and lightning implemented into it. Very fun conversation. Adam's a really cool dude, great Bitcoiner, under the radar. I think you guys are going to like this. I should let you know this episode is brought to you by our good friends at the Cash App. do you know about the cash app son son do you know about the cash app yet let me tell you about the cash i'm going to tell my son about the cash app i don't know if he can understand me yet but

he's looking at me so son the cash app it allows you to stack sats and sats sell sats receive sats and you shouldn't be crying at this fact it's uh it's a really cool thing son being able to stack sats and sats sell sats receive sats on the cash app and we're saying sats sats sats sats because you can make sats the standard son i know you may think you have to buy a whole bitcoin but you don't you can stack sats bitcoin is divisible by 100 million units known as satoshis or sats and the cash app allows you to make sats the standard within their app then on top of that you can dollar cost average in the sats so if you just want to buy a little bit of bitcoin maybe your first communion when you start getting money and stuff like that you can you can dca into

the cash app allow you to download the app i don't know if you have a phone by then yet but we'll think about it uh on top of that if you want to become a young stonk trader it's tax slivers of stonks to be the cash app investing cash i'm investing is a subsidiary square and member sipc uh and as always because this is all connected to your bank account there's no four to five day waiting periods you don't have a bank account yet son but maybe one day you will uh actually probably maybe maybe one day you won't maybe bitcoin will be your bank account i can only hope for that working on it uh cash app may be your bank account though they offer accounting numbers and rounding numbers so your paychecks direct deposited into the app um so go check out

the cash app and when you do use the code stacking sats help papa out you're gonna get ten dollars you're not really helping papa out you're helping owls lacrosse out when you use the code stacking sats you get ten dollars and ten dollars goes to our good friends at owls lacrosse that's owls lacrosse. All right, freaks, enjoy this episode. And son, listen to your father. You've had a dynamic where money's become freer than free. If you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins.

In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. You probably should be. what is up freaks welcome back to tales from the crypt it's your boy marty bringing the mic inside my camera's not picking up the light i'm like going in and out here gentlemen so i'm sorry for that uh but i'm warm and ready for a very interesting conversation about a very cool product that matt and i talked about in rhr a couple of weeks ago

we've reached out to the developer and we're sitting here with him now uh adam soltice the developer of coin os a new web wallet uh adam how you doing today doing pretty good thanks for having me thanks for coming on matt uh how are you are you on the move right now yeah yeah yeah i am on the move this airbnb has horrible wi-fi so i'm using uh 4g internet but this is why we fingers crossed this is why we record locally um yeah like i said we have like a tight hour and 15 minutes here so i want to get in as much as possible i was looking at your website adam you're working on a lot of cool things outside of coin os uh we'll definitely get the coin os but we were talking about the local uh internet that you're trying to create in vancouver uh

let's dive into why you're doing that and why it would be beneficial for your neighbors yeah so i guess i first started getting into the mesh net stuff i found this subreddit called the darknet plan and a project called CJDNS is an interesting one but this project is called Althea and I guess the benefit of having more decentralized meshnet or internet kind of setup or topology for internet is that it's harder to sensor and that's why I got kind of interested in it because you know Bitcoin is great but what if government starts shutting down the internet? It becomes more difficult to use.

So yeah, and internet's obviously a vital infrastructure for so many other things besides just Bitcoin. But yeah, it's important to have like a free and like stable internet. So yeah, the Althea project, it kind of lets you set up your internet it in a way that it's easy to share it out with other people who want to share your connection. And you do that by running a firmware on your router.

So it'll keep track of the bandwidth that people are using from you. So you can let them use your internet connection, but it'll charge them like by the minute or by the gigabyte for how much data they're using. then it can throttle them if they're if they're not paying like i think you can set your own price but the the default is like 10 cents a gigabyte or something and so yeah you got a question marty no i was gonna say that sounds pretty dope is it similar to what's going on with myc mesh with the uh because they're super nodes and stuff like that yeah exactly there's there's different gateway nodes that have like a backhaul connection to the

internet high-speed connection that they've been people would connect to those to get onto the network the difference with like between NYC mesh is that they're not really doing the crypto payments so it's not like an incentivized mesh network I don't think so this it's a little different in that you can earn cryptocurrency if you're running one of those super nodes or gateway nodes and if because that's costly usually like to have a connection that you're allowed to share and resell most people aren't allowed to just sell their home internet like their ISP would have terms of service that prevents

them from doing that so you have to get like a business connection or a direct connection at like a data center or something and those can run into the hundreds or thousands of dollars a month so you want to make sure that if you're gonna be spending that much capital to get a connection like that people are gonna be paying you back for it so this kind of what's what's he managed that like the software on your router will automatically build people and like I said you can set your price per gigabyte and then it'll just charge them for what they use that's pretty sweet and then it's all hooked up to a business bank

account or Xpub? Yeah, it's all done. Right now they're using they support like Ethereum and DAI, like the stable coin. And they're using this network called XDAI.

They wanted to be like currency agnostic so I'd really like to get a lightning network and Bitcoin working for the payments as well. That would be dope. And it seems like you alluded to the fact that bitcoin sort of pushed you towards this mesh network a little bit not the other way

around you weren't into mesh networks and then found bitcoin yeah i found i found bitcoin first and then uh stumbled across this stuff like i said it was the cjdns project that i came across at some point that kind of turned me on to the idea of um yeah having like an alternative network to the internet that's harder to censor yeah and so i guess what what drew you to bitcoin originally i guess to go before that then oh yeah well i got i got into bitcoin around 2011 and uh i was working for the canadian government at the time i'm not anymore you're actually you're actually the second guest to have worked for the canadian in government in the last month really there's a lot of you showing up uh mark uh i'm gonna

butcher your last name mark triard uh triard from a company snappa and they they invested they're up in ottawa i believe could be wrong there and they invested some of their treasury nice oh yeah i listened to that yeah yeah yeah those guys are cool um yeah more companies putting their treasuries into bitcoin every day now it seems that's it's good it's a good trend but um yeah so bitcoin i found it just i don't know i think i may have come across it from a blog post or something and just checked out the bitcoin wiki and the bitcoin talk forums and went down rabbit hole we got hooked pretty quickly oh yeah and so i guess we can just jump into coin os here like what what prompted you to build this web wallet web wallets historically i mean they were

very popular uh back in the early days uh many people warned against web wallets due to how vulnerable they can be to phishing attacks and putting your information on the internet your satoshi's on the internet more importantly could put you at risk but it seems like you build a pretty cool product here and decide to go with a web wallet and just interested why web wallet particularly yeah yeah i started off using like the blockchain.info web wallet when i was first getting into things i mean well first i started using bitcoin core but the web wallets are just convenient like you don't have to install anything you don't have to synchronize the blockchain you don't have to set up your own lightning channels you don't have

to um worry about configuring any settings or anything you just go to a website and you've got an account it's ready to go so so fucking convenient yeah it's convenient so and so there's going to be a trade-off between convenience and security right so for people just wanting to do some payments and uh go to your local coffee shop or whatever that you always hear about then you know spending up to a hundred bucks or something like you would keep cash in your in your wallet you can have a web wallet for for the convenience factor and then keep your savings and stuff in uh an offline cold storage and what i liked here is that it shows really well on mobile too so you know we have like this issue

here where uh especially on on iphones where apple controls the app store with uh an iron fist and you can have you know your spending wallet be coin os and you can you can just easily switch between your you know your desktop or your your phone without having to deal with the app store yeah obviously it is custodial um so it'd behoove us to say not your keys not your coins um but but like adam said i mean i see the place here seems to be like as a spending wallet a small balanced spending wallet um and then the main issue with custodial usually is that it becomes like this massive single point of failure but the fact that you open source the server side makes it a really cool implication that like anyone can run their own coin os server

through tor for their friends or family or whatnot it could just we could have like there could be like a thousand different coin os servers out there at some point yeah and i would love to see that um i know you guys have talked a lot about the kyc and all bullshit but we're kind of being subjected to. In Canada, we had some legislation come in just this past June that now says that anyone who's running a custodial Bitcoin wallet or an exchange has to register with the financial regulator and do all the KYC of your clients and reporting and all that. So it kind of puts up a big barrier for small guys like me who just want to run a little custodial wallet for their friends, you know have to kind of go through all that and that's unfortunate um it kind of puts a chilling

effect on that now someone who did want to run their own coin off server in canada would have to think about that but they could potentially be you know have the the government coming down on them for that and claiming that they're a money launderer so i mean i don't want to put you on the spot but because i wasn't even going to bring that up because i don't want to put you on the spot but like how are you dealing with that considering there's no kyc on coin os right now yeah i'm gonna i'm gonna have to turn it on i'm afraid um which sucks because i really i really think that a lot like a big part of the what makes it attractive is is the convenience factor so just being able to go on there with an anonymous account and start sending a little bit

of bitcoin and liquid tokens around that was like the big draw and like the big use case for it if i start to have to get people to sign up with their their address and like send in their photo id and their financial statements and proof of like utility bills and all that then suddenly it's it's not so easy for someone to just get going with bitcoin then um so what i'm hoping is that we do see like a thousand different people running their own little servers on tor and uh just taking a stand against those regulations and they can't stop everyone so right now i don't want to be the guy who's sticking his neck out and like the only person running this custodial wallet because then it's obvious it can come after me but i'm going to

build the tools and build the software so that i make it easy for anyone to do it so hopefully we can have lots of people doing this yeah hopefully you suffer the same fate that we did have an anonymous person steal your node and throw it behind tor uh then they can operate a good business still these these thieves they uh they wind up doing that but it's a furiating though considering it's actually been a theme and a topic in the bent on rabbit hole recap a lot in the last three weeks, particularly is the KYC AML compliance regulations and more particularly this week and focusing on the overbearing costs that it pushes on builders and

people who want to run services or companies. And it's coming to light that the regulations and the compliance measures that the banking system is taking to be compliant with the regulations that are coming out is doing nothing to stop the flow of money between criminals. I believe something like 0.05% of all the financial activity between criminals was, or I don't want to say all criminals, but particular criminal enterprises was caught by AML procedures, which is it's completely ineffective and it just creates regulatory mode around these financial institutions and and worst of all puts everybody's data on the line which is

yeah insane like imagine you having would you be more worried about storing everybody's personal information or their sats like are you more comfortable securing their sats than their ids and all that yeah exactly they're both bad but yeah the personal information seems even worse we're losing this money yeah on top of all that it adds a ton of friction for the actual product yeah i mean there is um there is this like thing where i think under a thousand dollars you're allowed to service people without having to id them and stuff so that's kind of my thinking for now is i'll just put a limit on because i don't want to be custodying much more than that anyways for people so i'll just put some limit in place that if you deposit more than that i'll just

automatically transfer it into a non-custodial wallet so i can say you know i'm not i'm not custodying any more than that so yeah then you got you got to you got to factor in the complexity of the bitcoin price fluctuations too like what if you put a hundred dollars worth of bitcoin in today and it goes 12x and i get 1200 like is the burden on you to then yeah those limits probably it is like i'll have to i'll have to check every day check everyone's balance and if it's become more than a thousand then i'll you know shave it down and move some of it off to a non-custodial wallet for them that's the nice thing too is that coinos does i do let you have non-custodial Bitcoin and liquid wallets in there. So I can just, I do have access to like your ex-pub.

So I can generate a new address for you and then take money from the custodial wallet that I'm managing and just move it into a non-custodial one and be sure that you'll be able to access it. Yeah. So let's unpack that a little bit. Cause I think it is pretty cool that you can choose whether or not you have a custodial wallet, like the user can choose when they're logged into coin os they can choose if they create a custodial wallet or they create a non-custodial wallet um and it i guess it defaults to custodial in the beginning um a lot of where the magic happens for me you know so the freaks who have been listening to the pod for a while know i've been struggling to basically try and find a use case for myself with liquid um and you know we

talk a lot about lightning on the podcast but we rarely talk about liquid and one of the one of the issues is is like i you have to have like another separate wallet uh for liquid and what's really cool about what you did with the custodial portion not the non-custodial portion but the custodial portion of coin os is that it's one combined wallet like i you can receive lightning into it you can receive on chain into it you can receive liquid into it and you can send out in any of those methods so you can presumably receive a lightning payment and then send it out liquid with like no friction whatsoever um you you that it's like i guess you could probably do that for the non-custodial on sending liquid right because you'd basically just do a peg in while

you do the send pagans take a hundred blocks to be confirmed so it's not really practical to do that yeah that's the beauty the beauty is how smooth it is that you can just like pay any liquid invoice yeah that's that's another big part of the custodial aspect is the convenience being able to go between the different layers but also just being able to like send a payment to another user on the server or like give people a voucher that there's like they can just go to a URL and then it creates an account for them on the fly it can be all these cool things and then it alleviates pressure from the network like if all this stuff is being done off

chain and in a custodial database then all those transactions don't need to be done on chain or on the lightning network even they can just be done completely offline and there's even some like privacy implications there where all that stuff is if we have all these thousands of custodians and they're all their little private islands of different transactions going on then um yeah it's it kind of boosts privacy that way yeah i mean the user has to trust the server with some elements of their privacy i mean and you know they'll see the transaction stuff like that but if it's going through tor they don't have an ip address and the external privacy guarantees are a huge benefit over a non-custodial wallet when

you start to think about it because none of it's on chain yeah yeah so yeah so we're seeing some potential privacy benefits here and i guess with the nature of it being a web wallet but you're able to run many personal servers around the world how how do you view security given the trade-offs that are at play here and how do you like tighten up security the best you can for the wallet is that just lack of interactive code on the front end to reduce phishing attempts or what's your security mindset when building this Yeah, I mean, it kind of comes down to as long as no one can hack the server or meddle with the database records, let's say what everyone's balance is, then it should be secure.

So it's sort of like a very traditional security model. Like if anyone who's running a website backed by a database has had to go through this, sure that um you know you you lock down your server so people can't meddle with it but that's like a a problem that every every company running a website has already had to deal with so yeah yeah because there's it's like cloud mining and web wallets have this weird we'll never go back to them because of how bad they were in the past yeah but again the experience that you've designed here is it's pretty seamless we got like nearly two minutes before we hit record i sent 10 000 sats to to a wild i just created and

happened instantly and now i can go spend yeah yeah it's all about the again like don't you're not going to use this to put all your savings in but for a couple hundred bucks for spending and And the convenience of it, I think that's a fair tradeoff. Yeah. And I guess going back to Liquid for a minute, the other cool thing about Liquid is you can issue your own tokens and trade them. So I do think that tokenizing everything does have some real utility. Bitcoin is obviously going to be the money, the store of value, but being able to issue

tokens to represent fractional ownership in real world assets and trade them around, that's something that Bitcoin doesn't really have to do. Why saddle the Bitcoin network with all that kind of transactions? and um but having like even tokens for stable coins and stuff is is useful because you can self-custody your your stable coins and things so it makes um the potential of like trusting exchanges where if someone wants to put some canadian dollars into an exchange or something or u.s dollars rather than just holding a balance on the exchange if they give you a stable coin and then you can self-custody it in your own wallet then that exchange isn't uh like the sole point

of failure right if they got hacked or something you can still hold your your stable coins so but then you're able to do you're trusting the stable coin issuer instead of yeah so change yeah like so i'm still i don't want to say i'm still a little bit skeptical the token model because it's confusing because right now like i went to like go create a token within the wallet it's crazy how you can easily issue a new asset that's what i hit so i can just create a token marty coin yeah right now which is pretty cool that you can do that in one two three four five easy steps yeah um on coin us like how would those tokens ever accrue value if i created a marty coin right now like what would i need to be doing as the

creator of mardi coin to drive value to that well you could uh you could go to the exchange page on coin os and list your mardi coins for sale in exchange for bitcoin and see if anyone comes and buys them interesting well you could use them as like access tokens or something for ticketing yeah like if you want to give out tokens that every token is a ticket to some event or something there's so many applications for tokens that i think it's pretty cool to to make those easy to create and trade yeah i like the idea of concert creating like a unique authentication token that you pay for in bitcoin then only you can access that that concert well i mean the beauty is that you can resell it right you can like frictionlessly resell it if you

wanted to instead of having to rely on like scalpers right in front of the event yeah it's live is live nation just going to come in and scoop up all the uh the ticket tokens first well if live nation's involved i'm sure it's going to be scammy that's fascinating i want to talk more about liquid but not the tokens as much because i'm i i think it's novel like it could be useful uh these different assets or whatnot uh stable coins is kind of cool like it shifts the trust model around and and i think like the big thing is is basically interoperability basically you can trust someone else with holding your fiat while you're using whatever exchange you want to use you can split those two trusts up um but

liquid doesn't get enough play on this podcast we we rarely talk about liquid to the point where um we had used on uh the podcast and he specializes in lightning and i was i was like panging for some liquid talk so i asked him he was like i don't fucking know um should i get the high level like liquid over me yeah show us liquid why is liquid important can you yeah we are can you give the freaks a show we have and to put more context into this i've said many times that i have no use case for liquid i see it mainly at least at this point in time is a federated side chain to be used mainly by exchanges and traders on those exchanges to move funds between each other yeah that's how it was sort of uh that's how it's been advertised and sold by blockstream

so far but i think it it does have some some benefits for just regular users too so um yeah liquid is a side chain it's open source code that runs it it's called elements which is a fork of bitcoin and it has the same kind of um like security model and stuff as bitcoin where you generate your your private public key pairs for your addresses and you can store those offline and it works pretty much the same as bitcoin but there's a few differences in that um first of all but there's no like competitive mining process it's just run by this federation of different functionaries which are big exchanges or companies that were selected to run the network there's 15 of them and they all control this big multi-sig bitcoin account

basically where you need 11 of the 15 of them to sign off on any transactions from that account yeah is that is that mfn growing is that federation growing um not what was the thing like whiz is like he's a signer or wasn't there announcement like a few months ago that they added like additional members to the federation or whatever um so they've added more members to i guess the liquid like uh organization that um does the governance and And all those members have access to be able to do hangouts. So that means they can take liquid Bitcoin and convert it back into on-chain, like real Bitcoin.

Whereas that's not something that just anyone can do. You need to be able to have the authority to do that. It's granted by the Liquid Federation. But I don't think they've grown the set of the 15 functionaries that actually do like the block creation. But they're working on that. Right, on multisig, on Bitcoin multisig of 16 signers, I'm pretty sure. Yeah, and I think that's something that's going to be changed in the future. But they're actively trying to make it so that that group of signers can be dynamic.

i didn't realize that though just to unpack this just unpack this a little bit the there the trust model of liquid you don't you don't need permission to peg into it you don't need permission to go from bitcoin to liquid bitcoin but you need permission to go from from liquid bitcoin back to to real bitcoin uh and and you could get around that a little bit by using like these swap services but it's not really like a trustless swap you're basically it's just like a shape shift where you like going in between like a centralized swap provider exchange that's right or you could use coin os to do it um yeah or you could go to bitfinex like there's a bunch of places where um you can trade bitcoins for liquid bitcoins at one-to-one

they won't charge a fee or anything so or yeah if you're just wanting to go the one way and pig in then that's something you can do uh but you have to wait for 100 confirmations and kind of have to be running your own like liquid and bitcoin full modes to do that so it's because it's a bit technical but it's possible like i i did that when i was first starting with liquid i i picked in a bit of bitcoin just to see how that worked and then yeah you get your Bitcoin gets locked up into that 11 out of 15 multisig and they issue you the equivalent amount of liquid Bitcoin so that goes to your liquid wallet and then you can start using that on the liquid network so some properties of the liquid network is like the blocks are faster than Bitcoin

so they're every one minute and there's no like variance it's every minute no matter what there's There's no, like, it could be one minute or it could be five minutes. Like with Bitcoin, you don't know. It could be 10 minutes or it could be an hour. So that's nice. It's like blocks happen every minute. And fees are pretty low because there's not as much volume on the network. And all the transactions are confidential.

Or I think by default they're confidential. So that means that if you go to the block explorer and look at a transaction, you can't see the amounts that are being transacted. You can see the addresses that are sending, but you can't necessarily see the amounts. And you can't even be sure that it's what asset it is. So it might have been Bitcoin that was being sent, but it could have been one of these other liquid tokens that Marty's sending his Marty coins around. And no one can see into that on the block explorer. so it's a little bit more private you can see the address you can see the addresses like address address one sent address to money to address two but you don't know what they sent and how much

they sent yeah exactly um so from what i saw fees are like locked in at like 0.1 sat per byte is there like any kind of situation where they ever go above that i'd like yeah they're not locked to that that's that's the minimum and because the blocks are empty there's no reason to pay more than that, but if the blocks started getting full, then the fees would go up. There would be a fee market on the quid fee. And those fees, I think they just go to Blockstream.

That's their revenue model for running the network and developing the software. It doesn't get split up amongst the 15 co-signers. Interesting. So what do you think the problem with, like I was going to say, I'm looking at clarkmoody's dashboard it's got 2600 bitcoin worth of value tied up in that side chain

again a lot of people are skeptical of liquid outside of a few niche use cases what do you think liquid needs to to prove to people that it's actually something worthwhile and something that will gain adoption you think it's software like you're providing just easier access to the network do you think it's a better product market fit does the market just need to develop the traders and exchanges need to Experiment with this a little bit more to make other people more comfortable with it Yeah all that and uh I think that the ease of issuing tokens and and being able to swap them like atomically

is one of the biggest use cases, so um atomic swaps on the liquid network are really cool it means that you can take two different assets like Marty coin and Adam coin. And neither one of us has to, like, if we wanted to trade some, neither one of us has to send first or go through a third party custodian to be trustless. so like we don't have to find someone to escrow those coins and release them and both set them in or anything like that we can create a transaction that swaps both those coins in a single transaction and that opens up a whole possibility of decentralized exchange where you don't have to trust these exchanges to be

custodians to go in and out of different assets like that it wouldn't be trust it'd be trust minimized right they were not it obviously wouldn't be trustless well as long as you're trusting the liquid network to continue functioning for the next couple minutes while you do that transaction this uh this explanation has just this reoccurring thought in my head like is liquid that more like how does liquid uh decentralization compare to something like ethereum it's like ripple without the shit coin adam would you agree with that well feels like it feels like you're able to create erc20 tokens and what you just described in the atomic uh swapping of these assets isn't that like what uniswap serves as a purpose for ethereum yeah but um i don't know

Liquid is being developed by the same kind of brilliant Bitcoin wizards that have continued to work on Bitcoin, right? So I think it's a better platform than all those other ones. It's cheaper and easier to use. You don't have to write a big ERC-20 contract with Solidity. i mean i'm not that familiar with all the different uh shit coin platforms but i know with ethereum it was i did i did issue tokens on there just to try it and it was kind of difficult um with liquid it's like trivial and yeah these atomic swaps are pretty easy to do too so well like like liquid takes different like goes for a different trade-off balance

than ethereum at least pretends to on the surface right is it goes well let's let's not focus on what let's not focus on what they pretend to do let's focus on the actual state what i'm saying is like like i forget who we had on the pod we had someone on the pod at one point who like was a little bit too nice to eos and he was like they went they went very centralized right and he appreciated that they went more centralized instead of this like decentralization joe looney And he said he appreciated it because they were just being completely up front with the inevitability. That's what Liquid's doing without the shitcoin and the ICO that EOS has, right? So it's like you have some trust in the federation, right?

This plurality of signers. So it's not completely trustless. You are trusting them. And as a result there, you're able to iterate on it quickly and improve the network quickly. you have solid uptime and you have low fees right and you're able to keep the fees are paid with the fees are paid with liquid bitcoin rather than some other like yeah yeah so it contributes to the fee market and overall security of the network yeah like bitcoin is the money there yeah now now where my mind's going is like how much notional value can be created on top of the peg

bitcoin like does the total amount of value of each underlying token that's created equal the amount that's pegged in or could you hypothetically have more value in the overall tokens than are pegged in and i don't know if you know the answer to this question it's just where my mind's going right now well the value of the tokens is just kind of up to the market so um but that the peg it peg in liquid bitcoin peg in the liquid pick them at one point well on on ethereum for instance you have this situation where you could have this is just we're going to keep talking about ethereum where you could have like erc20 tokens that end up having more value um than than the security like it could incentivize 51 percent attacks but because it there's more value to

to take away from that token that the chain doesn't really know how much value that token has, but the attacker does. But in this case with Liquid, the trust model is completely different. You can't 51% attack Liquid. You have to basically compromise the signers. Yeah, and they've been carefully selected, so they're all geographically distributed. There's no more than three functionaries in a single jurisdiction,

so that if there's ever a natural disaster or some of the governments start going after them, they have to get at least four of them all together because it's 11 out of 15, right? So if four of them go offline, it's still okay. And all these functionaries are big, like, they're Bitcoiners. They're big exchanges and stuff. So they have, like, an interest in running the network properly

and not misbehaving but the other cool thing is that even if they all did get compromised or or something happened and they did start misbehaving or they got shut down the the code for liquid like the elements code is open source and like us three could start our own liquid networking how people pay again to get you know the tales from the crypt bitcoin and issue their own assets and stuff so

yeah like if you wanted to set up your own federation or anything you can just use that code and do that so I think building building tools and stuff that work with that code is worthwhile because

like I'm pretty optimistic that the liquid network is it's just gonna keep getting bigger and better and more decentralized i think that's sort of where blockstream is trying to push it so but yeah i mean but that's kind of like where i feel about coin os right is that the the the risk the like the main attack vector is obviously that it's it's a custodial wallet right so someone could hit you um you could get regulated you can have to you know be compelled to shut it down or something um same thing with liquid with with the federa it's it's a it's slightly better trust model because you have to hit a plurality of of the

signers but where it really gets interesting on liquid and we haven't seen this yet is if you had a thousand liquid networks and they're being run from like pseudo-anonymous um signers and they all had different reputation scores and stuff and and you know one has been around for like six seven years and no one knows who any of the signers are but they've never done any fuckery yeah like like that's when it starts to get really interesting you can swap between the different chains i'm surprised we haven't seen other ones already maybe i'll start one i think we should if we the sooner we see them the better it is for the original liquid network like i think it makes them more censorship resistant if there's like a 500 of them and it's not like oh you can just

snuff out this one and have an effect yeah so if any of the freaks listening want to want to start a federation with me let me hit me up this is like makes me incredibly bullish like how it seems like they're just like incredibly early for the liquid network but maybe it's like if you build it they will call them type situation Well, anything that takes pressure off the main Bitcoin chain is good too, right? All the transactions on Liquid can be going on and it just saves us from filling up blocks and putting the fees up on the Bitcoin network. It's not as trustless as the Bitcoin network, but for me, it's trustless enough.

I know, like, with CoinOS, I was saying, like, a couple hundred dollars is maybe the limit people should be putting in. But for the liquid network, I'd be comfortable putting thousands of dollars on there. Interesting. So comparing liquid and lightning, which are two similar situations running parallel that are both incorporated into CoinOS, how do you look at the pros, or how do you compare them, and what do you think one does better than the other? right yeah there's there's advantages to both so lightning is pretty awesome because um you can have instant uh finality there like with liquid you still need to wait a minute and it's not too long but it's still a bit annoying with lightning it's it's like

instantly done and it's trustless but uh and like the fees are even lower on lightning like they're they're practically nothing like if you have a direct channel between someone it can be you can send payments for no fees at all and even if you're having to go through the lightning network and and go through a couple routing nodes it's like a lot of them just charge one satoshi for transactions so paying like a couple satoshis maybe to do a lightning payment and but the one issue with lightning is it's a bit it's a bit of a different model in that You have to have your wallet online and watching to make sure that your channel partners aren't misbehaving and you need to set up those channels. So it's a bit more upfront, like you need to yeah be running a hot wallet that you've put some capital into and opened up all these channels

and then you kind of have to manage to make sure that you open channels to the right places so that your payments can get through to where they're trying to go so all these issues about channel management and liquidity management on the lightning network that they're all getting easier and better and like multi-part payments and stuff is is helping and the more people using the lightning network the better it gets but yeah those are some of the trade-offs it's just it's a little bit harder to get going especially like if you want to do it trustlessly on mobile or on the web it's you kind of have to be connecting out to like your own lightning node that you're

maybe running on a on a server somewhere or back at home it's a bit hard to run like a full lightning node on your on your phone or on a website right now yeah no but i agree it feels like things are getting better and improvement is being made slowly but surely and so i guess what is in the product roadmap for coinos how like what do you how do you see these technologies maturing and your service maturing if you can avoid having to spend too much money on compliance uh yeah i want to build out the wallet the just basic wallet functionality so being able to do coin selection and uh being able to let people send to like usernames a bit more easily and have like some social aspects in there

where I can see, like, oh, I got a payment from Marty and then show up in, like, my recent contacts or something and focus on, like, merchant adoption, so letting people use this to take payments in retail settings. And then, like, getting more privacy features in there, like pay join and coin join stuff. And then building up, like, the decentralized exchange aspect, so you can list your own tokens and trade them

and make it easy for anyone to run their own little Bitcoin exchange. And yeah, hopefully see a lot more of these custodians popping up in Uncle Jim's of the world running custodial wallets and exchanges. The ultimate Uncle Jim wallet. Yeah. Well, is Uncle Jim the path to sufficient distribution and decentralization?

Obviously, that's the ideal that we strive for, is that, obviously, best-case scenario, the people connecting to Uncle Jim are also running their own nodes, but Uncle Jim exists because they're not comfortable doing that. Is Uncle Jim going to save the world? Uncle Jim runs the CoinOS server,

and then his little nieces and nephews are able to connect to it through Tor, and you know and it'll be distributed if we have enough uncle jim's um i just wanted to go back for a second to the lightning versus liquid thing i mean just to unpack it to its simplest the the thing that hit me when you don't have to worry about the peg in or the peg out or the swap in or the swap out with because it's coinescent because it's custodial uh the beauty of the liquid payment versus the lightning payment is you don't have routing errors you just will never hit a routing error and anyone who's tried to spend on lightning has seen this where you try and send

like a 400 000 sat payment and it doesn't go through and then you try and send a 300 000 sat payment it doesn't go through so then you try a 150 and it goes through right and you have to like go down or whatnot with with liquid you just don't have that so there is there's something there i like i can't put my finger on it but there's something there in terms of using it as a spending wallet for these like medium capacity amounts you know where it's like an amount where if you try and do it on bitcoin and fees are like at 170 sats per byte because some fucking news came out and everyone's trying to get onto exchanges and all the fees are going up and pricing you out um you have that consistency on liquid where you don't have to deal with the capacity requirements yeah

there's that for sure and the other thing is just the uh like the security model is the same as bitcoin so you can generate like a liquid paper wallet if you want and you've got your keys you put some money in there and you just keep it offline it's easier to custody like with lightning wallets you're basically running a hot wallet so there's more uh security considerations for that well our boys 6102 would crucify me if i didn't call you out on that uh is is that it is a little it's different than bitcoin in that you are trusting the signers to not fuck with you but but it's it's a different trade it's definitely um it's nice that you don't need a hot wallet compared to lightning but compared to bitcoin it's not

really truly cold storage i like you can never truly cold store liquid bitcoin because something could happen to the federation while you're asleep and then they're not your keys anymore or they are your keys but there's there's worthless right yeah yeah but that's unlikely especially if the federation gets big enough fair yeah man why are people so i mean people do get hung up on the on the federation of liquid There's a lot of liquid haters out there. You think they're just being too obtuse in their hard lines

with what they're willing to allocate some trust to. Frankly, yeah, I haven't looked that deep into liquid because, again, I've been under the impression that the best use cases are for exchanges and traders, both of which I'm not. Yeah. Yeah, I don't know. I mean, yeah, I take more just a pragmatic approach.

Like, you know who the federation is. You know that their incentives would be incentive for them to mess with it and do something bad. It goes against their incentives. So why would they do that? It would ruin the network for them. so yeah and then i guess the conversation of side chains in general has been bubbling up a little bit more at least i've been noticing in some circles like do you see any other second layer

types of solutions coming to market any other side chain schemes interest you at all oh well reuben sompson and the state chains idea is pretty cool so that just um kind of takes side chains to an even more trustless level and passing around private keys correct in a state chain type way yeah I don't want to try to explain

state chains because I'd have to go and read about them and listen to them to be able to I haven't explained them to people yet so it's still a bit fuzzy in my mind but yeah if you want to go check out Ruben Sampson's stuff on that it's pretty interesting

so I think like the big thing would be that then you can have like with liquid you get the what the pig ins can be done the pig outs can't be done right now and the federation is kind of it's not dynamic at the moment but when we see the side change where you can go both ways and the federation can grow and change over time and and and state chains are actually like a different thing where you can have like trustless custodians that let you move utxos um yeah without touching without touching the chain right like that's the yeah i think so i don't want to try to explain it yeah go look up state chains people they're they're cool

i just can't explain them right now yeah and then people drive chains are often talked about never never implemented if i recall correctly um they're very controversial as well yeah i feel like the whole second layer beyond lightning network and liquid hasn't been explored in earnest i'm very excited for state chains too just to learn more about it and see what it brings to the table but our lightning and liquid just like the very very tip the top snowflake on the on the top of the iceberg okay we're not even imagining potential second layer solutions that could be popular in the future i'm sure there's other ones out there that no one's thought about yet yeah what do you think matt do you have any other second layer solutions that excite you

well i mean i i thought it was funny because adam used the word pragmatic to explain liquid and in my head that's what i was going to use to explain it if I answered first so I do agree with that I think it's a it's a good way of framing it and I think that's one of the issues that liquid has from its detractors is that it does take this like pragmatic trade-off approach that has some nuance there in what it provides you and what kind of like what the trust model is and nuance is fucking impossible on twitter so it results in all of these back and forths where people argue it past each other while with lightning lightning's almost trying to go for like that perfect you know there's no such thing as a perfect trust model

but it's trying to go for this like this perfect balance where you have you know permissionless uh low fees instant settlement you know as trust minimized as possible uh so it's it's an easier trade-off balance to to discuss almost than than liquid because liquid does try and just hit like for all practical for like most practical purposes like it should get the job done right but there's all this nuance there yeah and with lightning there's a lot of complexity like there's a lot of different attacks and things that um that the lightning protocol developers have to be mindful of and with liquid the model is it's just a blockchain so we've already figured out how to do that with bitcoin

it's just yeah taking some bitcoin off the main chain and putting it onto another chain but there's no like i mean there's confidential transactions and the assets and stuff that is that is innovative and it's different from bitcoin but uh yeah the main like innovation has already been done so it's not as experimental and complicated yeah with that being said if you're running lnd make sure you're uh updated to the most recent release apparently it's a big bug we don't know what the bug is yet no it'll be released on october 20th so next rhr um i i'll tell you it's really cool looking at the blog explorer and not seeing the amounts i like you know that's that's my non-technical two sats right there this is

pretty cool yeah i need to experiment with liquid more go into the block stream go to the block blockstream.info has a liquid explorer that's the same exact uh you know interface as the bitcoin explorer and if you click through there on the transactions you just can't you can't tell what assets or or what amounts are being sent it just says confidential that's dope and so another like stable coins a lot of people are beginning to talk like hey if layer two if layer two is to succeed needs to implement stable coins like in mass like we've seen that's the biggest use case on ethereum is tokenizing stable coins and and sending them throughout the network yeah yeah stable coins like i just uh i issued my own stable coin just the other day on the liquid

network. I put some Canadian dollars in a bank account and issued the same amount of liquid tokens. And now I can sell those liquid tokens. People can receive them, custody them themselves without having to trust me. And I just offered to redeem them back to Canadian dollars at par. So anyone wants to buy some of my canadian dollar tokens they can like send me some canadian dollars i'll put it in the bank account keep it there and you're trusting me but uh again it's like the more people but the easier it becomes to do that for like thousands of people to issue their own stable coins and potentially with multi-sig you can you know you can have like a federation of people who are issuing a stable coin and they'd all have to be compromised or a

certain threshold of them would have to be compromised for that stable coin to be messed up so it just gives people the option to be like well uh even if it's like you were saying that like anonymous people on tour if they've been running for six years and they haven't screwed with things yet maybe it's okay to trust them with like a few hundred dollars and buy like a few hundred dollars worth of their stable coin that's i want i want to see the anonymous federations you know the pseudonymous federations where you have these like web of trust reputation just built up over time like that gets really really crazy in my head pretty quickly with the fiat stable coins you do have the issue with where like banks are getting involved like you have to deal with

bank accounts you could deal with cash yeah or you could have like a gold like a gold token where like they're kept in warehouses in like serbia or something protected by like private guards and you know like we we could have a stable coin where you have to do like this this drop off at some secret location of cash and then every day like we we like post a photo of like all these bills spread out on the floor and we're like this is our auditor and it just like goes up on the on tour somewhere like a photo of like all these bills in a warehouse somewhere that's hilarious it's like our proof of reserves well it's crazy like how creative you can get with this so that could be a way to maybe anonymously dca into bitcoin potentially where you

you would want to buy bitcoin um and you have like 200 cash so you put it up in the stable coin account issued 200 of these stable coins to be redeemed in bitcoin on the liquid network and you just have that bitcoin they have their stable coin the dollars are in the bank account you basically receive bitcoin in a somewhat anonymous fashion obviously they know that they sent you the bitcoin but yeah well you'd have to find someone who trusts you to that would buy your stable coin off you yeah um but yeah well in all these cases right you'd have to trust yeah to a degree i mean in every case yeah of of the you know asset backed tokens yeah exactly you're trusting the asset issuer the person who's holding the actual asset

yeah it's fascinating stuff what's going on in canada it seems like things are getting uh getting pretty dire there pretty quickly well i i think in quebec they're they're under heavy lockdowns they're not allowed to go and have private functions and you can't see like your girlfriend or your boyfriend if you don't live together and stuff but over here it's not so bad yet i'm on the west coast nice what um Yeah, but it seems like, at least from a financial perspective, the Bank of Canada sold all the gold reserves, printing a bunch of money. They sold off all their gold around 2000,

and I just posted a chart on my Facebook page the other day. The Canadian Central Bank, their asset, their balance sheet has exploded more than any other country. like every country in the world they're they're printing like crazy but canada is like leading the pack by about a factor of five so yeah it's crazy we're just get done off the rails printing money but they've just been airdropping money to you guys right yeah yeah we get like two grand a month and i i grabbed uh two grand off them just to try it because i was like i feel like if you're going to print at least give it to the people you know like there's worse ways to print yeah well

in a sense it gives it to some of the people but it's also like when you're printing like crazy and causing that much inflation it's still really robbing from from everyone like anyone who's got any savings and the hack is as soon as they airdrop you the the fiat you just immediately converted into sats and then that's that's how you that's how you solve that problem well yeah everyone needs to convert all their canadian dollars into sats immediately upon receipt you just as soon as you receive it you just convert it right away have you have you felt the effects of inflation like is it noticeable uh on your grocery list on your bottom line like in the last year since covid you mean or yeah oh right uh not yet not yet but it's coming like it takes a while

for that to trickle down to the real economy but uh there's definitely been like massive inflation in real estate and and uh stock prices and stuff like particularly on the west coast of vancouver correct it's vancouver similar new york city a bunch of rich foreign nationals are just piling capital into it yeah real estate's gone up like crazy here over the last few decades uh does bitcoin fix this we shall see i think it does yeah so what do you like outside of the local internet project and what you're building at coinos like what other types of software do you work on you seem pretty well versed on the economic side too um that's all i'm focused on right now just building up coinos more oh yeah

um i got a young family now so i don't have a ton of time to do software these days yeah what um what's the feedback been so far uh have people been contributing have you seen many reviewers come to help you out or yeah i've got a lot of good feedback and people are reporting bugs and pretty stoked on it but i haven't i haven't been putting it out there too much because i still feel that there's a lot of things i want to clean up and tidy up and make sure it's secure so i'm not that comfortable like taking on tons of people's money on my little server so do we blow up your spot at all what's that do we blow up your spot at all mentoring and mentioning how hard you are

It definitely brought a few new people to it, but not so much that I couldn't handle it. It's good. It's been running for a couple years now with no issues, so I feel like probably it's time to start putting it out there and get more people using it and find out whatever flaws it has sooner rather than later. so bring it on hopefully i don't have any like severe issues that i'm going to lose everyone's money but it's better to find out now because i'm planning to like keep going with it like building it and getting more people using it so yeah just hey freaks just load enough sats to buy a few dime bags from tftc.io slash dime dash bag um yeah i have like a dollar fifty on it if you If you lose $0.150, I'm not going to be too mad at him. Marty, install AquaWallet on your iPhone

and send a liquid transaction from CoinOS to AquaWallet and report back on RHR on Friday. Got some homework. And put some of your Marty coins up for sale. Will I be labeled a shitcoiner then? Is this Max going all over again? You'll be labeled a shitcoiner. what uh yeah i don't know if i can i can risk that do you freaks want to buy future equity in

my return in my uh my cash flow we can create a marty token i'm gonna sell i'm gonna work hard for you i'm incentivized um shit corner uh what else is uh is on the top of your mind as pertains to bitcoin or the state of the world what's going on in canada what's going on here in the u.s what's on your mind adam anything else you're focused on the bitcoin world or the world around it uh it always just surprises me how few people have gotten into bitcoin still and that it hasn't just taken over the world and that we are still dealing with tyrannical governments

and paying taxes and all that. So I've been, you know, since I found Bitcoin almost 10 years ago, I thought it was just around the corner any day now. Everyone's just going to catch on and switch over, but it still hasn't quite happened yet. Just waiting. Just playing the waiting game. It happens much slower than people expect.

Do you think that's good at the end of the day, just having the software getting tested out, or do you think Bitcoin should be pressured and stress-tested a bit more than it has been to date? No, I guess it's been just about right. Like, we did have growing pains in 2017, and blocks got full, and everything kind of got pushed to its limits then, and then that spurred on, like, all this second-layer innovation in the last couple years, and I guess that stuff's still not quite ready for prime time yet, so we're probably going at just the right pace, but I like how Bitcoin incentivizes people who do get into it to keep working on it and improve it. Kind of has this self-improving quality where you buy some Bitcoin and you think, well, okay, how can I make this better and easier for people to use and get more people into it? So it's kind of paying us all as Bitcoiners to improve itself.

Yeah, it's a symbiotic relationship. We plug in machines and write software to make sure Bitcoin keeps producing blocks, keeps its heart beating, metaphorically. and in return we get a sound digital currency that we can distribute in a peer-to-peer fashion we're going to get Bitcoin heady talk here to end it out is Bitcoin a living organism

is it part of the singularity are we currently merging with the machine world I think so yeah you know Satoshi Nakamoto origin story it's very mystical

yeah what do you think you think Satoshi is an AI maybe we all are yeah maybe they are we're all in the simulation well Matt do you have anything else you want to wrap up on I really enjoyed this

there's something about CoinOS that just brought back my early days of Bitcoin it was just i i like i can't put my finger on it but as soon as i found it i just got really excited about it it was just like the the lack of friction just how clean it was um so i just wanted to say thank you for that i i really appreciate the work you've done there and i do hope that a thousand coin os servers bloom thanks i really appreciate it yeah thank you for the work and maybe hey this

is gonna get me experimenting with liquid makes it more accessible certainly so i guess i got some homework now i had to download aqua create marty tokens become an official shit coiner yeah i was very skeptical when i first heard about liquid and played with a team and i'm pretty sold on it now marty tokens will be worth two bitcoin one day each marty token worth two bitcoin you heard it here first now you sound like richard hart well adam uh i want to echo matt's appreciation for the work that you're putting into coin us freaks if you haven't checked it out go to coin os.io uh check this out again the ui you've created is very sleek uh very straightforward intuitive adding sats to the lightning wallet at least and

playing around with that so that ux is the hardest part here's the hoping that the canadian regulators don't fuck you over and throw a money transmission uh compliance letter at you so um really appreciate you taking some time to come on as well thanks guys it was an honor to be here all right doing the good work cheers cheers peace and love freaks