TFTC: A Bitcoin Podcast - #569: Building A Scaling Solution For Bitcoin With Alex Bergeron

Episode Date: December 30, 2024

Marty sits down with Alex Bergeron to discuss Ark Labs. Alex on Twitter: https://x.com/bergealex4 Ark Labs: https://arklabs.to/ 0:00 - Intro 0:36 - Will the strategic reserve stop soft forks? 15:50 - Unchained 16:50 - Ark 25:10 - Zaprite & SOTE 26:43 - How Ark works 1:03:57 - Product market fit 1:13:31- Things take time to build 1:20:31 - Meta protocols 1:26:35 - Wrap up Shoutout to our sponsors: Unchained https://unchained.com/tftc/ Zaprite https://zaprite.com/tftc Salt of the Earth https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

You've had a dynamic where money's become freer than free. When 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 probably should be alex berg will we ever get away from the drama around bitcoin i mean can we accept success i guess that's the question it will come to uh

bite us in the ass every cycle it looks like um but i think the drama we're seeing right now is I liked, I very, very much liked David Bailey's tweet just yesterday, I believe, which was like, Bitcoiners, your favorite band has gone mainstream. You need to start coping with it because this is the way things are going to be going forward. And I think it puts a lot of people into this very uncomfortable situation with regards to their identity and the fact that they've branded themselves as Bitcoiners and considered themselves part of this sort of posse of renegades and outsiders. And the fact that it is indeed going mainstream is having them reconsider their role in all of this. And I think it seems that a lot of them are trying to clutch to relevance by grasping onto drama as a way to find any place where their voices can be heard, really. because you're not going to i mean going around promoting bitcoin is not really something that the average bitcoiner or telling people to buy bitcoin is just like well you're just one of a

thousand people uh that everyone's heard say uh or heard uh heard that so it's like you're not special anymore and uh i think people are still longing for the times when uh yeah they felt they felt special being part of the bitcoin community people warn people about this for for many years i remember vividly like 2017 to 2021 era everybody who's bullish on bitcoin is like it's going to get to a point where everybody has bitcoin and the concept of quote-unquote bitcoin community or just a bitcoiner generally is going to fall to the wayside because everybody's going to get bitcoin everybody's going to or many people are going to adopt it it's going to go up in price and that's what you want yeah it's happening it's

i mean it's happening um i think it's you can always see it like the places where it's more so like inner groups or just subcultures uh that are a little more relevant nowadays uh you can look on socials and twitter and whatnot we're gonna have the ordinals people you know and then there's some more technically inclined people just the sort of like just the general bitcoin let's pump our bags uh and we have something unique to offer and we you know we we understand something that others don't um it's just not the case anymore so if you're trying to stand out you're gonna have to bring a little more to the table than just preaching to the choir yeah

Bitcoin's growing up freaks get used to it don't cling drop your ego it's funny everybody warned like Bitcoin's bigger than your ego at the door yeah it is fun to watch though that's what we were discussing right before we hit record

I saw you tweeting this morning a lot of worry in the broader Bitcoin community about or not in the broader Bitcoin community some members funny I'm saying the Bitcoin community some Bitcoiners are worried that if the united states comes out and explicitly states that they want to acquire strategic bitcoin reserve that that could prevent the protocol from upgrading the way in which

many would believe is advantageous in the future i think you were making some good points that this doesn't make much sense the government is just another user in the network well i mean it's it's like when you ask when you ask people to actually break it's easy to make sort of like those overarching statements uh so like paint this like very broad statement or you know it's going to ossify bitcoin but when you ask people to kind of like lay down the actual process of like what would happen um you find a lot less answers than uh people that are willing to make noise about it Because realistically, I mean, you know, there are some cases to be made about changes to Bitcoin that would maybe improve privacy. I don't think there's ever going to be consideration for something that, you know, necessarily improve privacy at the protocol level in a way that, you know, Zcash has or something like that.

I don't think that most, I personally wouldn't support something where, you know, every transaction would be shielded in a way that Zcash is. So I think you'll never really find consensus, even if you ignore the presence of the US government there. So what else are we looking at? Well, we're looking at improving the security of Bitcoin, improving the scalability of Bitcoin here. um and i think if an idea comes around you know if we somehow find a solar bullet to bitcoin's scalability or something that uh significantly improve the security for users for um self and that's that's the other concept right is this this idea that the powers that be will not allow for the improvement for example of self-custody technology um and i think the

issue here is just really that this it's it's really just a u.s centric point of view where they ignore that uh bitcoin is on a global stage um there is this perception almost there's been this perception almost that um only institutions have large sums of money and only you know the The idea that, you know, in the scaling conversation that Bitcoin will become too expensive and therefore will be captured by governments and banks, it still ignores the fact that largely wealth creation and, you know, it happens. I mean, we're talking about individuals that have large amounts of wealth. The capitalists in the world remain corporations and individuals. And I think in the prospect of allowing them to secure, especially in different places in the world where perhaps the rule of law is not as strong as it is in the US, they'll certainly look towards solutions that will improve the ability for them to remain sovereign and preserve access to their capital. And so if there is a silver bullet, and I don't think there'll be a silver bullet, but let's pretend for a second that there is, and everyone in the industry seems to agree that it's a good idea, and there's some sort of rough consensus around this.

i find the notion that the u.s government would somehow you know some people have been made the argument that they would just trend to sell their bitcoins which seems like a very weak hand uh it seems it appears to me to be a very weak hand to play um in the context where you know we're talking about like post strategic bitcoin reserve right so the government has already um openly admitted that there's some sort of value to uh to bitcoin and uh proclaimed on the world stage that they're going to accumulate uh bitcoins which i mean it seems inevitable and apparently i mean the rumor seems to be that it is already the case that other uh nations are perhaps even ahead of the game and so the notion that the u.s would threaten a soft fork by saying

well if you guys do that we're just going to sell we're just going to dump our bags seems like a very weak hand to play because uh anyone else that is a competitor to the u.s or any other large entity is going to be i think very willing to come and sort of like pick up this uh glut in supply that just showed up on the market especially if it comes at a discount and therefore kind of like weakening the you know financial like i think position of uh you know you could see a chinese government or russia or anyone else that has access uh to the capital to scoop up those bitcoin to uh really jump in that opportunity and so what else uh what else could they do i think i think the argument comes from the fact that okay well they might

like muddy the water in terms of like actually trying to reach a rough consensus um but i think there's only so much you can do there depending on like what proposal you're talking about so it seems a little short-sighted to me um i but then again then again i think you know the runway for it seems certainly that uh the scale that bitcoin i think it's not so much a matter of who is adopting bitcoin whether or not it's the u.s government i think it's simply the scale of coordination required uh for bitcoin at this stage is making it so that yes even if you have a very solid proposal and something that seems you know simple like a ctv something like that

it's becoming very hard to just coordinate all of these stakeholders and making it so that um everyone agrees on on the way forward there and so i think it will require and we can then we can we can get into that uh but you know i think it'll require something that is a little more compelling uh than what's been put on the table um at the moment um i was actually listening to a an excerpt of uh a bitcoin optic uh i don't know if this is a podcast or just a space that recorded just this week or something like that where they commented commented on the uh you know the chart that's been going around where developers are basically uh practically voting or just giving their opinion and and and rational on uh perspective uh opcode and there were a couple of comments made

by um by gloria uh and who's the other guy uh another core developer who just forgetting the name uh right now a chain code um anyways that did i think the gist of what they were saying is that well you know i think people have a an idea of what they want to use those op codes for you know everyone is propping up covenant covenant as a potential solution to a sort of like future scaling improvements bitcoin but there hasn't really been a very compelling story about how exactly this is going to be executed and i think the counter argument to that is well we just you know well the classic counter argument to that is just we just want those primitives because we think that you know we should have those primitives available within

bitcoin therefore we'll find out along the way um how exactly we're going to be using it they're just kind of adding uh one tool a couple of tools uh to our toolbox but while i mean i i mean i empathize with this argument but i think if you're trying to rally an entire ecosystem in an entire industry um you gotta you you kind of like have to add a little bit more uh meat to um to to the storytelling that you're uh that you're doing here um and i think this is why you know like you know opcat and uh what the wizards are doing they've had some success there because they they were able to kind of create a narrative around it create a story around uh what they were trying to do and i don't think that this has been really the case for a lot of the uh proposals

i used to be you know i'm still supportive of something like ctv for example um but revisiting some of the quote-unquote use cases that were that that have been promoted throughout the years around ctv um i'm increasingly of the opinion that they're they're just not very compelling um i think you know uh another core developer antoine was uh commenting on this i think at this point like the most compelling use case for ctv is actually improving arc um and some of the other stuff around you know lightning and and non-interactive channel uh used to sound to me like a very like it used to sound to me like a brilliant idea uh but talking to people that are you know you look at lightning a little more talking to people that are actually running

lightning infrastructure you know um it's it's it has never been something that you know and they're the ones that are actually dealing with thousands of lightning users and whatnot and providing services to them um there's a point where it's like well if that hasn't compelled them to kind of like champion this and be like yeah this is that this is exactly what we need to bring our services and our applications to the next level well you gotta kind of like ask yourself okay well uh it seems like a direction that we want to take you know it seems like something like ctv and covenant is a direction that is going to improve things but you know the other i think the other side of the argument is kind of like a more like a rusty russell

thing where it's like okay if we're trying to do um those things where we want to really be able to leverage bitcoin script uh to make it flexible and and powerful enough to achieve all that we think will be necessary in the future to build uh more self-sovereign use cases and applications and services let's go about it the right way and and do a comprehensive review of like what we'll need. And, you know, obviously that's going to take more time. So some people are a little more eager to do something now. So those are kind of like the two different, the different sort of like factions, I guess, in this conversation. This rip was brought to you by our great friends at Unchained. As Bitcoin's role in the global financial landscape evolves, understanding its

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security of self-custody. In any future state, maintaining direct control of your keys remains fundamental to your Bitcoin strategy. Go explore the potential futures at unchained.com slash TFTC. Bitcoin is going up. Make sure you're protecting it the right way. Make sure you have a good partner that is Unchained. Go to unchained.com slash TFTC. I was telling you, I had a conversation with John Carvalho about some of this stuff yesterday. And I think for me personally, i'm more of the let's just wait and see uh we got tappered in and so very now he's like new to bitcoin listening to this we're talking about like upgrading bitcoin and um there are many ideas around how we can better scale and add better security insurances to the protocol but we've

done some soft forks in the last seven years segwit and then taproot and i think for me personally as somebody who on this podcast and rabbit hole recap was championing taproot um after it got uh merged into the protocol and started to get adopted you saw things that i did not foresee was not even aware of happening on the network like ordinals and inscriptions which i'm okay with but i think the emergence of of that caused me to pause in terms of championing any future of software because like bitcoin is arguably the most important distributed software protocol on the planet at the moment and i do not feel comfortable pushing for things that i don't understand the full ramifications of and have really over the last couple years come to the

conclusion that we should just try to do as much as we can with the tools at our fingertips right now that already exist in the protocol and see how far we can take that and then if we hit limitations and you find compelling use cases that a new soft fork would enable and it's very clear what that soft fork would enable in terms of everything it can do and um the edge cases that it wouldn't enable then yeah we can have that discussion but until then i think we pushed the limits on on how we scale this and layers and that's part of the reason why i brought you on why i'm excited about arcs i think arc's an incredible example of something that only two years ago wasn't wasn't even a part of the the mind space within bitcoin and rather

quickly um the idea was brought to market now you've got two um implementations of arc trying to to prove that um it could add to what we're doing as it pertains to scaling bitcoin and scaling payments and there are these unknown unknowns that can arise with the protocol in its current state i think we should just need to be patient and i'm not too worried about like you said the government preventing softworks in the future like we should do the most with what we have yeah yeah i mean you know it's not i mean i would say i'm not one of the person that's overly worried about like potentially what could happen um what negative impact the soft fork would have i think i think most of the upcodes that are being proposed are rather harmless i would even

you know i've been on the record for saying that like the whole conversation about mvv is kind of uh honestly not not at least in bitcoin or circle uh not very impressive uh i think it's just bitcoiners really uh just haven't really caught up with the uh state of i don't want to say state of the art because it's a weird thing to say but um you know this is why i think i've been fortunate to kind of like follow ethereum and all of this and i think i've managed to get a a bit of a of an edge in terms of understanding those issues so anyways all that to say is like I'm not really overly worried. I don't think that anything,

I'd be fine with having Opcat on the network. For me, it's more so about just the fact that, you know, we're seeing it right now that coordinating a soft fork is a grueling thing. And I don't think the, I really don't buy this notion that this is, it's kind of like a muscle that we can work, right?

And that if we get good at like, you know, doing those soft forks, then we'll just be able to have them more regularly. I totally don't buy that. i think it's very very unlikely and and so i for me it's like well if we're going to go through that grueling like consensus building um exercise let's just make sure that we get the most bang for our buck right so yeah it's using patience and uh this it's it's very clear that the cut the covenant conversation to me hasn't even really matured yet um it you know every other month we're seeing

sort of like new twists and turns uh there's kind of like a accumulated knowledge of people that are there's certainly been you know in terms of mind share a massive uptake in terms of comprehension of what covenants even are and what they can bring to the table but it still feels like even from in technical circles like we haven't really brought everyone up to speed and so it feels to me like unwarranted to start making decisions about this at the moment but anyways you know I agree like I think you know with regards to ARK it's unfortunate because a lot of the people that are having those conversation uh it seems to me have just simply not uh taken the uh the time to properly understand uh what's what's on the table here um in terms of the art

protocol i think one of the reason why that is so is that there's a bit of a baggage with the way that uh the protocol was originally communicated you know it was originally pitched as this thing that would need covenants and so i think that led to a lot of people kind of like filing that in some place in their cabinet and be like you know i'll just ignore this i'll revisit whenever we get covenant really right now because it seems like it's it's just not possible uh until then and uh yeah i mean the progress over the understanding of what exactly arc is and the challenge in communicating exactly what arc is because it's such a novel concept um certainly it hasn't uh contributed to the fact well it's it's it's been kind of like a

it's been kind of a grind to get people to really wrap their head around it even very technical people you know i've met uh this year at conferences or at least ever since i've joined the the arc labs team i've i've met countless very very competent bitcoin developers who thought they understood how uh arc works and uh they just did not and it's it's not because you know um it obviously they're just wicked smart people far far more intelligent than i than i am but uh i mean i think just the the you know the documentation has been sparse uh we're ourselves trying to put together better documentation uh the the approach of you know shared utxo the notion of shared utxo it was originally pitched as um i think led to a bit of confusion so we got

a lot of work to do but yeah i'm usually i'm usually bullish on the prospect of arc sort of massively uh contributing to the the near-term and long-term uh scaling capabilities of of bitcoin even without uh covenant um and covenant really covenant would help arc uh to scale uh only uh and and and when i'm talking about scaling i mean okay well if we get to a point where we have like hundreds and thousands of users of ARK, then yeah, it'll make things a little easier in terms of protocol. So like overhead and how perhaps improvement to the UX, but those are not things that we need right now to be able to ship the protocol and put it in production. This rip was also brought to you by good friends at Zaprite. If you're a Bitcoiner and run a

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you're gonna love this stuff we hung out in riga at the baltic honey badger earlier this year and i got excited with how excited you are by uh by arc and the potential that it provides the network you're somebody i've been following on twitter for um probably almost 10 years now at this point i've always respected your your views on bitcoin and to see you this excited about this project um piqued my interest and to be honest i think this is the first episode we've done a deep dive on arc and until you explain it to me i i did the um the the first transactions on the second arc protocol the art it's confusing because it's called second but um uh second the company building their arc implementation that was pretty mind-blowing it just worked and it was really cool

to see we were able to do in-round payments um move bitcoin from on-chain into the arc from the arc back on chain and it worked and it was somewhat magical um but for the benefit of the listeners who may be curious what arc is and building off what you just described is the fact that many people are confused about what arca is even highly intelligent core core developers and developers in the space why don't we take this opportunity to reset the stage and give an arc 101 high level explanation from your perspective um yeah yeah um let's try um let's try that i mean you know i i will say ever since since i saw you in riga um my my own understanding and i think our even our common understanding of the protocol internally has evolved uh at a very

fast pace um and so we've been kind of like struggling even ourselves internally and how do we talk about those things uh but i think fundamentally what we've landed on is that just arc is simply uh a sort of like transaction batching technology um what it allows you to do is that, you know, think of batching in a way that exchanges do transaction batching when there are withdrawals from exchanges on-chain, right? They'll just get a bunch of withdrawal requests and instead of doing a single one-for-one transaction

for every user, they'll create a transaction where they distribute to their users a bunch of different outputs going to different addresses in a single bitcoin transaction so that's a form of batching um what we do with arc though is that rather than kind of unfolding all of those outputs all those transactions going to individual users um on chain into different outputs we batch them into a single output and so we have a one out one input one output transaction but within that single output you have what we call those virtual utxos that are going to

their individual owners and are just as legitimate as a bitcoin on-chain utxo so you can think of it as, well, rather than putting transactions into block in the way that Bitcoin does, ARK is almost kind of like a UTXO chain where we have those on-chain outputs and we nest a bunch of transactions into it and and then you use and and then from that point on it's a it's a it's a client server relationship right you have this relationship with an arc server this arc server allows you to batch your bitcoin operation into those outputs that it creates and you can use the server to make off-chain swaps which are again amortized into those single outputs so that can be used for payments obviously um but we think payments are so like really a tip

of the iceberg here um and you know a very easy example uh that we can use which is our upcoming ARK node product is something that allows you to basically rebalance your Lightning channels without having to do on-chain transactions every single time, right? So we can imagine having a bunch of Lightning operators. They join an ARK. They basically receive ARK virtual UTXOs. And whenever they need to rebalance their Lightning channel, get inbound liquidity, for example, for them to manage their operations, they will use a swap service. So we know we're working with Bolts. bolts is one of the most popular um and honestly one of the rising bitcoin company in the space uh who have a killer product uh have actually never taken vc money uh and are just and not

that i have anything against vcs but they've just been just like killing it honestly um and so you know they've and bolts i think one of the most popular product lately has been doing exactly this this rebalancing of of lightning uh wallets basically using uh liquid right so how would that how would that work is that you'd have bitcoins on liquid uh within the secured by the bit or you know by the liquid federation um and whenever you'd want to have inbound liquidity you just basically do a swap so you send uh bolts uh some of your liquid bitcoin and in exchange they would provide you with liquidity on lightning and what what happens there is that obviously you're skipping the bitcoin on-chain transaction uh which allows you to so liquid has very cheap

transaction cost um bolts being a member of the liquid federation is able to accept the risk of receiving liquid bitcoin and that exchange that that that swap of your bitcoins against their lightning liquidity happens in an atomic way so it's completely trustless uh you don't have to trust bolts again for for anything either it works it goes through or it doesn't um and so we're doing the exact same thing uh but with with arc and so you can imagine just uh really sending again in the same way having those virtual utxos sending them to uh bolts on uh arc swapping them uh to to bolts on arc and and give them uh and and for them to give you more more liquidity on lightning so i think what happens there is that well you know this is not a pure bitcoin payment

use case right uh what we're doing is we're bolstering the lightning infrastructure and allowing lightning operators to better manage the liquidity. And probably in the long run, I think it's going to have a massive impact on the lightning infrastructure because, you know, we've seen it, you know, completely practically fail earlier this year when the fees on Bitcoin were extremely high. And, you know, the cost of purchasing inbound liquidity was just, it was unsustainable. And a lot of the infrastructure right now on Lightning was built around the fact that, well, you can rebalance your channel cheaply, splice in and out on chain. But we know that this is not going to be the case in the future.

So this is a use case that we think is going to be one of the killer use case probably of ARK. And we think that this whole sort of like paradigm of being able to swap off-chain and basically batch all of those swaps into single Bitcoin outputs on-chain is going to have consequence for every sort of layer that comes around that is not Lightning, that is a sidechain perhaps. or if some of those BitVM roll-ups pan out, regardless of what comes out in the future that sticks and that gains market traction, the main way for people to access those different services and those different applications

will be through swaps. BitVM, for example, has been, I think a lot of the BitVM builders have been very explicit in saying that the actual BitVM bridge will not be something that's sort of accessible, approachable for the average retail user. They expect large, so like market maker

and liquidity provider to go through that bridge. But the average user to kind of move in and out of, for example, a roll-up that might be built on top of that bridge to move in and out of that roll-up using swaps. um and the prospect of using swaps i mean it's a good idea but again if you're going to be moving out of a roll-up um into onto bitcoin by doing a swap that involves a bitcoin transaction and so that's going to be that's going to be prohibitive so you might end up in a situation where people

are you know you my my concern and the reason why i'm so optimistic about this use case is that up until now we didn't have a good solution for people to you know move out of of lightning or move out of of liquid without having to incur the on-chain cost of bitcoin and that would have resulted in scenarios if we project ourselves in the future where people have access to those scaling solution but you know the moment that they use one they they peg their bitcoin into one they're kind of like almost like locked in because well if they cannot afford to swap out if they cannot afford to you know get out or close the channel or whatever well they're kind of like perpetually locked in and so you create those silos and you start fragmenting the liquidity

you start fragmenting the network effect of bitcoin and so the way that i'm looking at this now the vision that i have is that arc becomes sort of a so like a buffer layer in between the main chain and every other application services side chain layers whatever you want to call it that people are going to be using um arc is this way for remember how people used to say that well you know your your bitcoins in the lightning channel are not really locked into the channel they're actually the most liquid or whatever it's like that that's actually true of arc is like if you're not if you don't if you have coins that you're going to be deploying in some way whether it is to use a payment service a payment application the payment layer or to do some more

advanced financial stuff trading whatever it may be you know unless your bitcoin are going to cold storage because you're not going to touch on you're not going to touch them for for a year two years or a decade then most likely you want to have your bitcoins sitting into arc outputs to have virtual utxos because those virtual utxos are kind of like almost they're just much more liquid i've been calling it kind of like this unified liquidity layer that allows people to be able to tap into all of the cool infrastructure that people will be building on top of bitcoin you know that financial system that we're trying to build on top of bitcoin whether it's dlc based again whether it's more trust based even if it's side chains multi-signature schemes and whatever

you need a way for users to um jump in and out of those services if they want to and not be locked in and i think arc is the perfect uh tool for us to be able to do that and um so you know i try to avoid uh bringing in all of the technical details and then the technical nitty-gritty of like how exactly like arc works and like what is in the arc around and because i think people this is where people start getting uh very um confused uh about uh they they start thinking of it as kind of like this monolithic construct where every arc is going to operate in the same way you know arc is not it's not something like lightning where there's a spec that uh everyone every implementation needs to follow um you know you talk you've been talking about second and it's very likely that

the arc servers uh the arc implementation that second builds is going to be different it is different than the one that we're working on um in terms of different parameters and and all of that stuff in terms of the use cases that targets and that's the cool thing about it because uh it creates this very versatile you know it's just this this client server uh relationship and and then the server has different features that it can implement that are going to be best suited for different use cases and the beauty of that obviously is that well i mean if it needs to be stressed out our virtual utxos are unilaterally controlled by you uh by by the users uh in the same way that a lightning um you know your money in lightning is uh controlled solely by yourself

you can always uh withdraw your uh our uh virtual etx so unilaterally on chain if the server uh for whatever reason goes away um and so you preserved most of the you know security properties of bitcoin but uh you you make your assets you make your capital a lot more almost fungible and sort of like deployable and i think you know one of the one of the thing that we hope to achieve really is to contribute to moving bitcoin towards an asset that is not solely you know the store of value um and i we respect uh and i i respect the the store of value use case and i think it'll remain the prevalent use case for bitcoin uh for for a number of years but i do see an opportunity now with ARK to create things like Bitcoin native capital markets

where we're going to have tools to be able to build the type of stuff that perhaps people have looked at other chains that might have been able to implement more permissionless Without it necessarily being completely decentralized or completely trustless, more permissionless applications that will compete on the market, they might require trust in a threshold of different validators. And that might be fine. I'm increasingly of the opinion that this is perfectly fine. This is actually what the market is demanding. I think it's becoming very risky. I think teams that are trying to pigeonhole themselves into building perfectly trustless protocols, I mean, those are very unlikely to pan out in the first place.

And, you know, when you look at the state of the market, what people are doing outside of, you know, holding Bitcoin and preserving it as a store of value. there are a lot of use cases where people are fine making trust trade-offs and i think that that's that's okay so you know going a bit of a tangent here obviously we're quite far apart from from the actual explainer of arc but this is kind of like my vision if you have specific questions i'm kind of happy to answer them but again i think it's important to for people to understand what the protocol can achieve uh and the details of how exactly it works i think once they're really once people are really interested in this idea that we can now batch bitcoin transaction in a way that's much more efficient than it ever has been possible

and we can do that today without any soft work um i think when you hook people with that kind of story uh then they'll be able to figure out for themselves down the line and i'm happy to help anyone that's willing to kind of get into the details about how all of this stuff works um but you know i think this has been kind of a more successful way for me to hook people into arc uh than than just giving a complete breakdown of uh the technicals because uh yeah it can get a little overwhelming uh unless you're kind of like very deep in the weeds of bitcoin technical stuff yeah and i think to to try to succinctly reiterate what you just said it's just like you view arc as this buffer layer

as many to one or excuse me one to many to all the other protocols being built on top of bitcoin and because of the way that the virtual utxos work and the the vtxo batching works like that batching is dynamic and where it can be somewhat stationary you can switch vtxos in and out before ever needing to make an on-chain transaction so you have this sort of dynamic ability to use switch vtxos in and out between arc and different protocols well the vtxos won't go to the different protocols but they'll change balances commensurate between the protocols without having to make an on-chain transaction so it's similar to lightning in the sense that you lock utx's up and you can move sats around but it makes everything more dynamic and helps glue everything else that's

being created on top of bitcoin together exactly i mean you know lightning is uh it's it's just a way for people to core it's just a way for us to coordinate on-chain activity between bitcoin users and you know you look at the very first so like implementation almost of of of a system like that and not that this is very much what we're building i think you know uh it has it had a different uh uh purpose but coin join is is you know naturally a way for people to coordinate over their on-chain activity using a server right and uh that was that coin join is designed to improve privacy um arc is a way for bitcoin users to coordinate over their own chain activity using a server to improve scalability um because we're just you know we're again we're uh we're

batching all of our transaction by putting them into an output and then you know that output well well what is this output okay well it's a taproot tree and in that taproot tree well you have what is effectively a covenant right what is a covenant a covenant is a way to specify how bitcoins within a bitcoin output is going to be able to be spent uh and so you can say you can put uh 10 bitcoin into a bitcoin output and say well one bitcoin is going to go to marty one to alex and one to alice and one to bob right this is what a covenant is you can you you can say like the only way that you can spend those coin is by having those coin go to the these these people and uh so this is a way for us to to be able to to batch those uh those transactions right because

instead of having the full outputs as i was saying earlier when coinbase makes that batch withdrawal they put the full outputs on chain and say okay at the coin one one to marty one output to marty one output to alex well this is very inefficient how about we just put them into a single output and the distribution we have it nested by having this this covenant within the the spending condition of of this certain output right instead of having the outputs on chain what we do is we restrict the way that a single output can be spent and then it goes to individual people so this is really like how it works fundamentally and um yes this can obviously you know the first use case was for payments um we've done a lot of work on proof of doing proof of concept around

payments with arc and what this might look like um and what the user experience might be like Because we want to be sure that ARK does not suffer the same fate that Lightning did in the sense that, you know, the original picture on Lightning was, well, you know, we've solved retail payment. We have this perfect system. It's going to be amazing. It's going to be fast, cheap and no pain. You know, we know now that it's not exactly the case. We know that there's a lot of challenges in terms of suiting Lightning to consumer mobile wallets.

And so we want to make sure that we don't pigeonhole ARK and make sure that the pitch around ARK in terms of payment is not exaggerated in the sense that there are UX challenges also to uh being able to achieve great you uh payment ux with arc um you know you did a couple of uh you know transactions yourself some attempts as you said with the second team and um you know for transaction to be um to be fast you need some trust trade-offs right this kind of like new this idea of the out-of-round transaction. The out-of-round transaction, until the recipient has fully settled the money that they received into a new virtual UTXOs that they unilaterally

control, there's some trust relationship here with the server. And so how do you deal with all of that stuff how do you present you know we had a we have an app that's called arcade where we've proof of concept uh the whole thing and you realize that well i mean it's going to be a challenge we i think personally i think that payments um because you're dealing with consumers because you're dealing with mobile uh mobile wallets uh cell phones and whatnot payments is probably the hardest um you know use case to really nail in terms of like what arc can do uh we think it can be it can be done uh but it's going to require careful really considerations and and uh ux research uh because you know we didn't even get into the fact that well those outputs

those virtual utxos they expire at one point right uh and so how how do you present that to users obviously obviously you're not going to tell them hey your money is going to expire you know like better we refresh it or whatever so you got to create those uh yeah i mean you can kind of like have it done in the background and whatnot but okay if you have it done in the background it needs to be done when the wallet is not sleeping or whatever or can it be done when the wallet's sleeping in the same way that you know lightning is trying to do this uh offline receive where you We know there's some background process. So those are still question marks.

And it's going to be interesting to find out how we can tackle those issues. But as far as we're concerned, we think that in the meantime, there are things like this lightning rebalancing use case where you're kind of routing around a lot of the issues because you're not dealing with cell phones. You're dealing with servers. Lightning node operators have servers that are online 24-7. So all of the interactivity requirements, it's not a big deal anymore, right? The rotation, the refreshing of the virtual UTXO, you know how the original pitch was, well, the virtual UTXO is going to last like four weeks, a month. And then you need to rotate it. You need to send it to yourself, basically, right?

So that you get a fresh virtual UTXO. And then you get into the liquidity implications of that and whatnot. If you're dealing with servers, you can have a virtual UTXO that expires in 24 hours. And a server at the 23rd hour is going to rotate it automatically. Because the server is always online. You don't have to worry about the server going offline. And so you can solve a lot of the liquidity implications, right, by shortening the VTXO, the virtual UTXO lifetime.

So that's what I mean when I say like, you know, in terms of how ARK, ARK is an idea of how you can use basically servers and taproot trees and batching basically to be able to perform different operations. And everything else, every other parameter around the implementation is subject to what exactly, what use case you're trying to nail.

And one of the things that we've explored that I think a lot of people felt really, I think, well, I mean, it had pretty big impact and good reception is this idea of okay well how about we revisit uh payment channels i'm not talking about lightning channels i'm talking about strictly unidirectional payment channels right and this is something that you know came about even before lightning was a thing this is something that kind of like even satoshi himself had kind of like written uh as this this this not a spec But he had some code on how you could execute those off-chain transactions between two parties by exchanging pre-signed, you know, transactions.

And it was eventually implemented in BitcoinJ by Matt Corallo and Mike Earn, I want to say 2014 or something like that, I don't recall. And, you know, payment channel is very simple. you know you don't have the routing you don't have the liquidity issue of lightning because it's just like i you know i have a merchant or i open a channel with you marty and i say i'm going to put like one bitcoin into that channel and it's only going one way it's only going towards uh in your direction and so i'm just handing you pre-signed transact uh assigned transaction of the updates of the channel and then whenever you know we want to close it uh you take whatever is the updated balance on your end and we close the channel and if i have some money left on my end

i i get the money and you you know those payment channels they were never really considered i think because well they happened to come just before the whole conversation around uh bitcoin scaling block size war where everything was precipitated into us having to find this solution and you know lightning came about and everyone was like okay we need to focus 100 on lightning and um but they also from the fact that well you know um pain channels they're not they're not interconnected you know like lightning channels are right so it's only one channel between uh me and marty one channel between me and bit refill and and so on and on right and so obviously um there's kind If you're having to open those channels on-chain, there's a limit to how that scales, right?

Because those are all on-chain transactions. But if you can open those channels within an ARK, if you can open it, because ARK virtual UTXOs are just like on-chain UTXOs. So every script capability that is available with on-chain UTXO, you can do with virtual UTXOs. So what we demonstrated, what we did a proof of concept is that you can actually open a unilateral channel with someone, a unidirectional payment channel with someone on ARK. And therefore, you start thinking about all of those use cases of Lightning where payments are only always going into one direction. This is a big problem for Lightning.

This is something that regardless of all of the improvements that we do to the protocol and all of the great research that is being done about improving liquidity flows and whatnot, I think if we insist on having those use cases where I open a channel with whatever, say like a service provider and I'm just sending money one way and there's never money going back my way. well what do you end up creating is those liquidity uh hogs around the network right those liquidity sinks all of the liquidity is going one way and then they have to rebalance however they see fit a lot of that rebalancing happens you know off chain or whatever they're doing this circular stuff but it never addresses really the problem that the underlying issue is that the flow of those lightning channel where lightning should be bidirectional channel right it should be ideally what's the ideal lightning channel is one where i send you money you send me money in a way that basically we don't have to rebalance like we have this like a business

economic relationship where uh we're trading back and forth uh and you know we don't have because every time that you're hitting the chain every time that you're doing those rebalancing operation you're creating a cost and that cost uh you know is has an impact on the entire lightning network so if we're insisting on using lightning for all of these unidirectional use cases and creating those liquidity sinks and those entities that always have to rebalance one way or another or actually just increasing the cost of lightning really because the the rebalancing eventually has a direct impact on the cost of Lightning transactions. Right now, it's not so clear that, you know, I think the economics of Lightning right now

are kind of like a little muddy. I think there's a lot of things that are being subsidized. I think a lot of the Lightning infrastructure is kind of like being run as sort of like a loss leader by different businesses as a way to, you know, benefit their users, say like a river who has a brokerage service. They don't really care if they make money or if they lose a little bit of money. running their lightning infrastructure, at the end of the day,

they're providing a service to their users that they believe is valuable, right? But, you know, I think this is not sustainable at scale. So we need to find ways to optimize how we use those systems and those scaling protocols. And so, you know, one of the things we've been thinking is, well, what if you just have like a unidirectional channel

going to someone like Bitrefill, right? i spend a hundred dollar refill buying gift cards every month i open a channel that lasts a month with bit refill on arc and whenever i need to buy gift cards i just spend it directly it's instant settlement uh unlike unlike regular arc transactions right regular arc transactions are not instant settlement until you've rolled that into your own virtual utx so again you have kind of like a it's trust minimized you could say but you you have this this distrust implication with the arc server and so if you're dealing with digital goods instant settlement is important right if you if you're selling gift cards you kind of like really want to have instant settlement

that that confirmation and so i could open channels you know and i don't have to have a lightning wallet to do i don't have to uh have concern about uh you know liquidity and whatnot and and liveness and all those things so you know again this is just exploration this is proof of concept but uh we think that just generally speaking the ability to do bitcoin operations bitcoin transactions bitcoin swaps in a way that is much much cheaper than on chain especially you know in a way it kind of grows cheaper the more people are using it right because you're advertising the cost of these operations uh across the number of people that are basically participating in your in your batch output right so the more people in your batch output the cheaper

it becomes so we think that this allows us to completely it reopens the playbook of like okay well what are the things that we dismissed before in terms of bitcoin operation bitcoin's financial applications that we thought well it's going to be too expensive we can't possibly do that on chain well now we can do it relying on the same bitcoin security the same bitcoin consensus security but you know by sharing the cost with uh everyone that's kind of like in the same batches as us right um dlcs um you know a bunch of uh meta protocol stuff um you know it's it's going to be interesting we're going to continue to push uh i think thing that are going to be very eye opening for people and ultimately again it's just this ability this excitement that i have to be

able to build things that yes do not require permission or do not require uh having to fight it out on twitter about which software we need to get because you know i cannot achieve what i'm trying to achieve without uh improvement to the bitcoin protocol like no we can do it today so that's extremely extremely exciting and we think that next year is going to be a big one for ARK and I think people are going to start rallying around it

and you know perhaps at least the last point for this is just like ARK certainly benefits from Covenant so and ARK is the one thing that people can focus on right now that is tangible that can get to production

and if we make ARK successful and grow the adoption and attraction of ARK, it's then going to be a no-brainer to say, like, everyone's going to be like, oh, well, obviously ARK has product market fit and ARK can be vastly improved if we have Covenant. So let's do Covenant now.

Now we have a solid case for Covenant, a more compelling story for Covenant. And if I understand correctly, what would lead to, like, ARK gets product market fit, it's helping people managing Lightning channels, do their channel balancing more seamlessly and less costly you have these unilateral payment channels that that materialize and people are using it's saving them money from what i understand and i believe it's after a conversation with you may have been somebody else but the

if arc gets product market fit and widespread adoption the they're scaling limitations within rounds within a singular arc service provider correct i mean there is a bit of an overhead in terms of the information that needs to be passed between arc users and the server right when you're coordinating those batches the server is going to say okay i'm creating a batch who wants to join this batch and then a bunch of users are going to say i want to register for this batch i have a i have a virtual utxo yeah it's a bunch of signatures it's a lot of data right yeah exactly it's a lot of data and indeed if you have something like covenants

then you don't have to mind so much what else is it's it's like to put it shortly it's just like there's a lot less data that you need to sign uh to be able so the process is much more quicker um and and but honestly this this this mostly helps things like consumer wallets um because in terms of dealing with server like servers are built for interactivity and and you know passing information quickly and and reliably uh so the bottleneck is not there the bottleneck is really like yes when you want to involve uh consumer applications and consumer wallets and and into your mobile phone uh yes our uh then then covenants are going to make a big difference to um to the to the user experience

there's a couple of other things you know uh maybe in terms of improving um the liquidity requirements of Arc and whatnot, but it's not going to be a game changer for Arc to get Covenant. And I've been kind of like almost making a point to kind of dissociate Arc from Covenants altogether because ARK can be built today and every use case that is pre-signed transaction in Bitcoin can be improved by covenants. ARK is a pre-signed transaction protocol. So obviously it can be improved by covenants.

But it's not something that, you know, if we don't get covenants ever, I think ARK is going to be still a foundational piece of the Bitcoin infrastructure. You know, maybe we'll need to find different ways to improve the user experience, and maybe it'll come through some trust minimization, some trust trade-offs. And it's not such a bad, you know, it's not such a bad deal. You know, you look at what LightSpark is doing with the state chain model, and this is effectively the trust model that ARK is with out-of-round transaction, right? You're trusting that the server is not going to double spend in the server and the sender of the transaction is not going to collaborate to double spend you.

And, you know, in the context of using those servers that are service providers that are building a business around, you know, facilitating those batches of transaction and making money out of it. You know, it's kind of like. The likelihood of them colluding is very low. Well, I mean, are they going to ruin because all of this, you know, this collusion is provable. And so the moment that they try to double spend someone, and that's the thing, right? It's kind of like the risk model is isolated. It's not like a bridge where if the keys are compromised, everyone in the bridge gets robbed. You know, all of the funds get stolen.

With ARK, it's kind of like isolated to a specific transaction. where a state chain is the same, you know, the risk is isolated to specific transactions, it's more targeted, right? And so the risk reward for a malicious actor is very diminished. And so the return on their ROI on trying to cheat with those kinds of protocol, you know, the incentives are very well aligned. And so I think for things like payments, you know, um, I think most people will have to settle on, on kind of like out of round style models because, uh, yeah, like, like doing the full, uh, settlement is, is going to, it's going to be hard to, uh, to create, create user experience around this, but that's fine. And that, that's completely fine. And, uh, you know, there are ways, different ways to improve this.

You can potentially involve other actors than the Arc servers who could potentially, you know, be used as an escrow, maybe to co-sign even. It's a, you know, it's a blank sheet in terms of like the design space. We're continuously exploring how this can be leveraged. And yeah, I think some Bitcoiners are going to kind of scoff at the idea that some of the things that are going to be built on ARK are not perfectly trustless. But regardless, I think that people in the market that are demanding specific thing and are willing to make certain trade-offs are going to be very happy that we're creating this infrastructure that allows certain applications to be built that are much more

Bitcoin native, do not require bridges, do not require, you know, getting stuck into this silo that fractures the network effect and all of that. So it's going to be very, very interesting. Yeah. And I think leading and leaning into the channel management problem that exists on lightning is a very smart idea because to me that makes intuitive sense it's a massive problem uh lightning usability over the years has gotten better but you've talked to lightning developers and channel liquidity is a pain in the ass for everybody so if you can create a way to create interactivity with arc to easily rebalance channels you can imagine a scenario again since lightning nodes are online all the time and you've had that interactivity

out of the box you can just create apis that automatically rebalance channels once they hit a certain threshold and it just works and that makes everything way better it's going to make the the ux the cost we're not going to run into those you know we're not and you're seeing it already right it's it's again it's the same you know the breezes uh node less implementation which leverages liquid right has created it has created kind of like uh lightning wallets that inherently have kind of better user experience uh you don't necessarily need to deal with all like the channel management and then for the infrastructure the service provider the rebalancing is a lot cheaper and all of this but obviously it comes with the trust trade-offs of having to trust the liquid

federation and i think a lot of people at scale are not necessarily going to be uh necessarily willing to do that and so arc it really becomes sort of like this this perfect complement to uh to to to lightning um because i think ultimately for me in the end you're going to see wallets that are arc based where you're going to be able to do lightning payments but in the same kind of like nodeless way where what you're going to do what you know the way i see it is you're just going to be swapping in and out of lightning you know you want to pay someone a merchant that accepts lightning you're going to have arc vtxo and you're just going to swap with bolts who's our infrastructure partner right and you you're

not you don't have to have channels open you're receiving a lightning payment it's going to go through bolts they're going to credit you in in art vtxo and so you're going to be in yeah i was gonna say is this similar to what we're seeing materialize with ecash lightning connectivity where you sort of like a lightning gateway between yeah yeah exactly it's the same exact same thing exact same thing yeah exact same thing but uh obviously without the the trust trade-offs of uh of e-cash yeah that's fascinating you can see and that's and going back to what i said earlier i think a lot of bitcoiners i think a lot fall prey to what you described earlier is this existential moment of i'm not that important anymore and then there's others who

expect that bitcoin needs to be all the things all at once but rome wasn't built in the day it's going to take time to build all this and as we hit the the edge cases of the design space you go back to the table and you think creatively like all right how do we solve this and something like arc merges and you plug it in it's going to take time and um if you have i mean i will say yeah i mean i i will say like i don't like i mean i empathize with a lot of these people Because if I would still be on the sideline, as I have been, you know, I have not been throughout my Bitcoin career too much in this builder seat. And I think it has had a massive impact on my perception of things. because you know you've this this i i think this insecurity that you feel is is when you don't feel

in control of your own destiny right is when you you don't you you kind of like it's it's up in the air uh you know you're looking at the developers fighting it out on twitter you you don't know what's happening you'd like to have some kind of like positive impact and whatnot uh but you know your options are limited uh you don't know how to go about it and so yeah it's easy it's very easy them to get jaded uh and and to start going down this downward spiral of like just do something guys figure it out or whatever do something uh and that is often just because the fact that you're not in a position where you feel like you know you can do something and for so that's why i've been like you know i've been encouraging people like a lot of again a lot of the people i think

that are having those conversations right now they would be well served to take a double take a look again at what arc is uh doing and what the potential of it might be because you know all this conversation around well you know we're not going our bitcoin is going to fail because you know self-custody is going to be unaccessible to uh most people on the planet it's like well if that's your concern you know again arc is the one material uh avenue that is that it's it's just tangible it feels like it's it's there there is code it's being built there's two teams working on it and you know everyone is like oh well we need covenants to all of that utxo sharing stuff and channel factories and it's like well you have the literal

first protocol that is actually achieving those things you don't need soft force you don't need covenants like why aren't you like paying more attention to it why why aren't you trying to find ways to contribute to it offering help in terms of testing it and whatnot um so obviously you know i'm saying all that at the same time you know we still have yet to put all of that stuff in in production it's going to um it's going to happen sooner than later but um we're super excited about this um we're at the i think the arc node is is going to again uh come pretty quickly my understanding is we're pretty much finalizing the integration with uh with bolts right now and the moment that this is done um it's going to uh the pace is going to pick up

significantly and so i'm looking forward to um what happens there next year i'm looking forward to there's even another i mean we said there's two teams there's another guy um in i think a china in china uh there's a guy ben i don't know if you've seen him to disco collabs or something like that um he's apparently working on an arc implementation uh i think he has a team they're working on something and so i think people are starting to see uh the value there and i i would hope that um you know there's some of the people that are making a lot of noise uh on socials yeah we just take a step back and and look at what's being built because it's the white for me it's the white pill it has been the white pill i feel so bullish on on uh on the prospect of

of of bitcoin right now of scaling bitcoin and of creating an entire financial infrastructure on bitcoin that's going to be so much better than everything that exists in the industry at the moment i think everything that's valuable that might have found product market fit on every other chain and whatnot i think we can do it on arc in a way that's a lot better and that is sitting on top of the most liquid asset on the planet um and so i'm just like you know we're we're picking it apart right now and and still creating our mental model for all of this stuff but we have some crazy wild idea uh on um on the way forward and um yeah we need we're gonna have to you know pick up some others uh people i mean if if there are developers out there um that are

interested in contributing to it please reach out because uh we're definitely going to be uh opening up uh the team and and looking for more talent because we're going to need more people to be able to build all of that stuff and then also other people that are building different products where if you think that you're able to leverage arc in some way um we're going to start putting together um some kind of outlet for us and the entire team to be able to provide so like resources and however we can to uh smaller teams and smaller project to try and integrate them within the arc ecosystem because we think that this can help it's not again it's it's not only about payments it really is all about like every financial application of bitcoin you know

dlcs um you know dlcs dlcs are not going to scale on chain you want to build the derivatives market using dlcs it's not going to happen on chain but it's going to happen on arc and so um we're we're pretty bullish about this and we're looking forward to collaborating with the rest of the the industry um around this yeah no like i said your excitement was palpable in riga when we last saw each other in person and that got me excited so i'm happy we're finally able to hop on here and i know i've only got seven minutes left but you mentioned arc node coming out next year what do you think people are going to see that's going to be immediate like aha holy shit this is something that we need to begin implementing widely you mean specifically for the arc node or

or it's your implementation like or arc arc in general yeah um listen uh i i don't have i think the holy shit moment is not going to necessarily come from um the usual bitcoiner crowd but i think the the holy shit moment and kind of like my wild card right now and something i've been really obsessed with is uh is meta protocols um and i don't know if there's going to be something in production early next year um but i think we're going to be doing a little bit of forays into um what uh the implications of arc might be for uh for meta protocols because you know fundamentally meta protocols are not you know they're not a terrible idea um you know because they're they're they would

What is a meta-protocol? Well, a meta-protocol in the sense like something like RGB or, you know, Omni or, well, obviously Runes and Ordinals and all that stuff. But a meta-protocol is just something that uses the Bitcoin blockchain, right, as a way to store some data and creates sort of like an adjacent consensus protocol of like, you know a different protocol that looks at this uh data that's indexed onto bitcoin and derives uh you know and is able to execute higher level uh applications and services and contracts on top of it right um on the uh counter party is another example right and and the problem with those meta

protocol has always been well you know they're putting they're putting shit into uh onto onto the bitcoin chain that we don't really want it to be there it's kind of like you know some people have been considering considering it spam um but really uh you know i mean this is an intuition that i have and we haven't really uh you know spent too much time internally uh looking at this but i think that when you consider uh the intersection of arc and meta protocols you You start looking at something where you can build financial primitives, financial systems that are much more Bitcoin in line and that certainly are not as trustless as on-chain operations and whatnot. But the cool thing with meta protocols really is that they avoid having to build additional blockchains to do something else with Bitcoin, right? Because when you look at every other scaling solutions or every other solution that claims to be able to bring more utility to Bitcoin, they're just creating other blockchains.

A sidechain is another blockchain. A rollup is another blockchain. It's all just other blockchains. And you're connecting those blockchains through bridges and whatever and all of that, right? And then you're creating also all these issues with the fragmentation of the network effect. And this is something that I've been very vocal about. I want us to avoid taking this path because it has been an absolute disaster in the Ethereum ecosystem in terms of that, in terms of network effect. This is why Ethereum is lagging behind is the scaling model that they've decided to roll up has created this complete fragmentation in their ecosystem where the incentives of everyone else are not aligned, of the different parts of the ecosystem are not aligned with the main chain anymore. You know, Coinbase at this point, the base roll up, they practically could not care less about Ethereum, you know.

um and so this is a path that i want us to avoid and i think that uh there's something about meta protocol where like they're kind of like the other dog here um and i there's i'm looking forward to continue exploring what this might look like again i don't know if it's going to be um if it's going to be early next year because otherwise you know like okay well you have the payment use case you have the challenge channel rebalancing what can you do well you can scale uh dlcs for sure i think this is a uh but again you need dlcs to pick up in the first place so uh what my buddy shazan at lavo is building i think is a good step forward you know like he's finally kind of like really hitting the market in stride and and trying to scale uh this

technology and so once he once he gets to a point where okay maybe it starts being expensive to create and sell those dlcs on chain and we can talk about moving them to uh to to to art but that's not going to happen overnight right and so what are the other use cases well you know it's like uh the the the set of unless you you're going really full financial uh services trading perps derivatives and all of that that can happen but that's going to require a bit more creativity and imagination and it's never going to happen in a trustless it's never going to happen in a trustless way um and but but it can happen in ways that are trust minimized and that are in my opinion perfectly fine um and so uh i'm i'm really really really curious to see what we can do

there um and and we'll we'll probably be sharing some stuff uh pretty soon in terms of like proof concept of like what uh what this might look like yeah well i'm excited for you i'm excited for bitcoin and uh we'll have to keep this conversation going because i'm sure a lot is gonna not unravel but um a lot's gonna be be happening over the next couple years and so yeah check it i think once people yeah i think i think just like the most exciting thing is yes it's just like when the arc nodes gets released and people can finally put this because i think people still have this idea that arc is kind of like a some sort of uh vaporware almost right they're not going to say it explicitly but they're kind of like yeah like you know like i'll we'll see it you know when it's

there it's it's kind of like well maybe we'll pay attention to it when it's there because they they feel like it's a it's a very complex system you know i mean i think john carvalho has been on record saying that you know shared utxos are more complex than lightning which is like really not the case at all um and so so you know people are kind of like still skeptical because of it's it's a new novel concept new novel technology once either team or once we release a production implementation people are going to be like oh okay you know it's not necessarily going to be about the arc node and the actual use case of the rebalancing all of this i think it's going to be more like oh shit like this thing is real and like okay maybe we need

to pay attention to it because yes it is one of the answer to the bitcoin scalability concern that we have and we finally have something to hold on to that we can try and see how it fits and it applies to other use cases that we're interested about you know we're not going to be the ones or at least we hope that we're not the ones dictating what arc needs to be used for we want to provide the infrastructure for all builders to come to us and be like, hey, can I do this with Arc? Yes, you can do this with Arc.

Let's work together to make it happen. Hell yeah. All right. This has been great. Thank you for taking some time to walk us through this. This is the first Arc deep dive we've done on TFTC. Long time coming, but excited to see

everything that you do at Arc Labs. What Second's doing. i do think what you guys are doing can push the conversation into a better place you have to stop complaining about what isn't happening and start focus on things that are actually happening and see what you can do there that's right all right all right well i appreciate your time marty always a good time to uh catch up always peace and love freaks Thank you.