TFTC: A Bitcoin Podcast - Rabbit Hole Recap: Week of 2019.01.14

Episode Date: January 18, 2019

In this episode we discuss: -ETH 2.0 -Constantinople bug and delay -LN network analysis https://www.theblockcrypto.com/2019/01/15/the-growth-of-the-lightning-network-has-been-remarkable-but-theres-a-catch/ -Putin bitcoin rumor -Wasabi multi-denominations -ETC was indeed reorged chain wide -China plans on using great firewall to target nodes https://www.technologyreview.com/the-download/612749/china-will-now-officially-try-to-extend-its-great-firewall-to-blockchains/ -Grin launch -Thor from Bitrefill https://www.coindesk.com/new-bitrefill-service-aims-to-make-lightning-payments-easy -Baakt delayed -Genesis Trading OTC volume up 50% YoY, https://www.theblockcrypto.com/tiny/genesis-tradings-otc-trading-volume-is-up-50-year-over-year/

all right that should be good we should be able to sync up there um all right uh i'm in miami you're in hong kong i'm at a shitcoin conference do you want to talk about conference do you want people to know that you're uh what we're talking about right now aren't we recording we're live we are live but what's up freaks welcome to this week's edition welcome to this week's edition of rabbit hole recap brought to you by our friends at blockfi.com you know all about them if you're looking to hold on to your bitcoin ether or litecoin i do not like the the latter two of those those three options you can go to blockfi take out a collateralized loan using your

bitcoin so you do not have to sell it's going to be very very imperative in this upcoming tax season if the tax season actually comes to fruition if the government over opens up again blockfi is the place to go to block fight.com slash tales from the crypt you freaks are getting a special deal you've already heard about it check it out check out crypto collateralized loans if you get a chance if you're looking to hold on to your bitcoin matt what the hell's going on in hong kong what time is it there everyone's everyone's wondering why rabbit hole recaps late it's because you're in miami and i'm in hong kong fucking 13 hour difference over here it is 10 52 in hong kong it's 9 52 a.m in miami i am looking across um victoria harbor there's a huge axa ad

and i'm just i'm just wondering if if it's part of the conspiracy are you have you seen adam back has he been walking around he's probably he probably maintains the uh advertisement i'm not sure about that though yeah yeah um yeah you gotta be careful freaks or some lizard people controlling bitcoin uh axa is there is there's no builders there's no builderberg ad though just an axa ad yeah they try to be discreet with it they don't want to put it all on your face at once just the way to do it matt question for you how is the water pressure in your hotel room oh the water pressure is fantastic they really do not care about the environment here i wish i could say the same about this hotel in miami really disappointing

flush flush pressure and shower pressure um that's one thing i look for in a hotel first first time you go in you gotta you gotta check out the water pressure i'm happy that you have some quality water pressure over there in hong kong yeah i have a rain head shower it's pretty it's a pretty fantastic shower actually sounds pretty dope do you want to tell the freaks why you're over there i think it's a pretty cool story um or would you rather not my my great-grandfather uh built the i mean i guess i guess to start i mean my my family was back in the the 30s and the 40s where they were quite loaded uh french money from alsace lorraine and they moved to hong kong and the japanese took everything and they put them in internment camps

and so after the war in 1952 my great-grandfather built the the first real theater in hong kong he brought the beatles over a bunch of big acts and uh it was supposed to be his big comeback ended up selling in 1957 and now they're thinking of of either knocking down the theater and building a new development or building a development around the theater and and renovating it so they're interviewing my grandmother for a documentary and uh they flew her out here and i'm escorting her pretty fucking cool it's like we have a family historian he's done so much research on all this shit really yeah it seems pretty dope it's uh when you first told me i was uh it was it's a very interesting story very uh and it explains a lot of why you're into bitcoin i never knew that before

a couple weeks ago we we went to their home their old home um it's still there it's owned by the university of hong kong and they have a um like uh cantonese pop singer this really famous pop singer that sings you know in hong kong he he uh rents the place now he completely renovated it and tried to bring it back to it he like did universal records is his uh label he like did uh co-production with rihanna and shit he's like a big deal he brought us into his home well it was like our old home i guess and uh it was a really fun time really interesting really tiring but interesting and exciting how's it feel to get reconnected with your roots what kind of feelings are you feeling right now i just you know i wish my great-grandfather

huddled that theater man probably like uh it's probably worth like 400 mil now or something like that he died poor well you're doing a good job of uh of rebuilding the family name i would say i like to think it i like to think it yeah how's the shitcoin conference going the shitcoin conference it's like the number one shit coin conference of the world it's where ethereum launched in 2014 in a back room it's true the north american bitcoin conference i'm in miami that's what i'm here for uh i have not ventured down to the uh the conference yet i got here last night um met up with some people i work with we got dinner and then actually met with a couple of guys from unchained capital uh from west texas last night so i have not run into any shit coiners

yet my uh experience up to this point has been pleasant i'm not sure how well that'll go i'm gonna go down there after we record this and i post it and we'll see what's happening and uh we'll talk about it next week when we're in person again yeah i mean i've never been this is i'm pretty excited to hear how it goes i know i remember last year they they really they outdid themselves it was pretty uh it was right at the top of the market especially the altcoin market i remember what was it like the dash strip club controversy apparently it wasn't a strip club there's a lot of misinformation around this but dash did throw a banger that had promiscuous dancers at it um well i mean in that in dash's defense and i would never defend dash even though

i'm about to do it i mean i think it was dash sponsored it but uh tnabc they were running organizing right yeah it was like an official after party yeah and then i remember when chain got launched there last year i had a buddy who tried to show that to me uh am i about to go see like shit coins being launched downstairs yeah i mean they they're gonna have they're gonna have tons and tons of uh shit coin presentations for you if it's anything like last year i remember i watched the live stream uh sounds terrible you're gonna love it probably won't yeah i am actually i'm i'm looking forward to it i think krista rose and john seth are here uh i would like to seek them out uh seek out uh some podcaster bitcoin podcaster ogs talk to them

pick their brains uh see if derose tries to to confront bitcoin maximalism in person we'll see yeah i mean like all these other conferences the best part is in the conference right the best part is all the people that come down and you get to network outside of it see a bunch of people that you only know online so that should be yeah and i know you have some good interviews lined up so i'm excited to listen to those i do i did some interview prepping last night and uh We're going to have a good conversation. I picked up a new guest down here, too. Fucking badass.

I'm excited, Marty. Keep hustling. Thanks, bro. You, too. Speaking of hustling, thanks for the segue. Let's hustle into these topics we got lined up. What do you want to start with? It's been a pretty crazy week.

We got a lot of big news. Shitcoin launch. I won't call it a shitcoin. An altcoin launch. A delay in another hard fork in Ethereum. BitMEX new ICO research. What do you want to jump into first? Constantinople, is this Istanbul now, right?

Is that what we're saying? I think Constantinople, Istanbul, whatever you want to call it. Yeah, it seems like they... I think that's kind of a big deal. I think that's the biggest deal, right? Yeah, yeah. So let's jump into this. So for you freaks that don't know or are not aware, yesterday, I believe, the 16th, Ethereum

was scheduled to hard fork uh basically the first step on their transition and a long journey to proof of stake uh would be this constantinople hard fork which would cut the emissions uh the third inning they had some terrible we talked about the third inning last week they had some terrible marketing around that they're going to cut the block reward from three ether per block to two ether per block as well as some other upgrades to make uh the system more efficient A couple days before the scheduled hard fork, a security team found a future potential vulnerability in the forked version of Constantinople. So if they were to fork over to Constantinople, the way Ethereum is structured in the code, specifically with the gas limits and certain types of contracts, an attacker would be able to exploit certain smart contracts on Ethereum in this new version of Ethereum via the Constantinople hard fork. So the security team called it out, and within six hours, they delayed the hard fork, which is – I'm curious to see how they did that.

Yeah, I mean, in a very bad way, right? The exploit – you could have drained funds. People could have lost a bunch of money, which is like worst-case scenario. Similar to the DAO hack. uh yeah i mean that's pretty scary for ethereum stakeholders i uh think it's a great example of why hard forks should be avoided at all costs rather than doing the exact opposite which is what ethereum has been doing which is trying to do as many hard forks as possible it seems like i think monero's got a beat there what was that monero yeah well monero's got like that

six month automatic let's hard fork every six months it's not great either same idea um yeah i mean that's uh i i i don't i don't know what to say except for the fact that you know good for them that they caught that in time that could have been really bad as far as people worrying about whether or not all the nodes were going to upgrade before the hard fork or whether all the nodes could downgrade before the hard fork once they found out it was vulnerable that's not really that much of a problem because their nodes are extremely centralized so all you have to do is send infura an email and they'll make sure that it's it's handled

um i you know the key is when you do these hard forks is all the old clients don't matter anymore so for instance when we had the recent bitcoin bug which is what all the ethereum people are going to counter our discussion here today with um the one the inflation bug the older clients would have immediately realized that there was an issue but with hard forks the older clients don't matter anymore so they're not they're not involved in the process uh so you can have these really sticky situations it's really like worst case scenario situations because you you structure it in such a way that you're you're doing hard forks all the time and this is just a perfect example of why you should avoid those at all costs

and then we already we've already discussed multiple times about how you just willy-nilly switching mining rewards and shit it's just a horrible idea uh because miners have long-term long-term investments they have to deal with right yeah no it's uh i think it's a harsh lesson in the reality of the nature of these blockchains and the externalities that exist like if they were about to hard fork and they didn't even catch that bug until six hours before like imagine what they haven't caught like imagine when does it exist like what zero days exists somewhere else in the code that somebody hasn't got their eyes on um and like who the fuck was the security team right i mean we never no one never heard of them before right i never heard

of them out of nowhere no i never heard of them either so like good thing good thing these guys posted a medium post on it right this wasn't like the core dev consensus or whatever the 10 guys in a room with lubin deciding this was just some randos looked into it and they were like guys you missed this yeah so you missed this pretty big pretty big miss um and then the other thing is you have the difficulty bomb which is designed to force these hard forks right so now the difficulty bomb started ticking i think so now they're like yeah they're like blocks are slower yeah they forgot they forgot to they forgot to hit snooze again bro well this was supposed to be the snooze button so now they're like rushing out a new hard for they got to get the hard fork

out right like whether or not they do a full istanbul hard fork or if they do uh just a snooze bud in hard fork they have to do a hard fork and they put themselves in this situation they think that's a feature but it's really a bug yeah and this the scheduled new hard fork is next monday correct okay it's coming up well i mean i guess because of time travel it's gonna happen i does it happen on tuesday for me or does it happen on sunday i'm not sure i'm like so i'm not sure that there's 13 hours but uh it's gonna happen so we'll see how that plays out that should be interesting yeah and let's jump into like is the is ethereum decentralized like how are they able to make this decision in such haste how was the network able to like coordinate in such a hasty

way like again like you're over in hong kong what if you fucking headed a fully updated node ready for the constantinople fork you fell asleep and uh woke up after the fork was supposed to happen and it realized you were on the wrong chain. I mean, it's not like I'm going to bring my node with me to... Definitely not an Ethereum node like this. I can't bring that to Hong Kong with me. I mean, like we said, Infura just handles that for them. That's true.

I think this is a kind of an Emperor Has No Clothes moment. Obviously, it's not very decentralized, if at all. Yeah, and I'm a contrarian in the sense... but not a contrarian in the sense that I don't like Ethereum or think it's a shittily designed protocol. I'm contrarian in the belief that I don't think it's going to be around as long as people think. People think it's going to be around for years.

I think these critical mistakes they're making are going to sort of swiftly help people come to the realization that this is not the most advantageous way to build these decentralized protocols. i think i'm giving ethereum a less than three year lifespan uh into the future i mean it depends what it depends what you call dead right like if it turns into like a ripple s network that's like pretty centralized is it dead the goal of becoming a decentralized world computer run on a proof of stake consensus protocol i don't think that will ever come to fruition

well so then let's so this is a good segue um james pressed which uh released his uh at his eth 2.0 uh what to expect when ethereum is expecting yeah great great name yeah that's really good title yeah so let's jump in this e 2.0 if you freaks haven't seen it we'll put the link in the show notes james press which works at suma correct suma one um which is and he's very involved with writing smart contracts on ethereum and is probably one of the most respected solidity devs or ethereum devs in the world am i correct in assuming that i mean he's definitely one of the most respected ethereum critics from the ethereum camp themselves right yeah yeah but he's also working on it so he's not just a critic he's also got skin absolutely yeah yes

um and so he came out with what to expect when ethereum's expecting basically laying out their plans uh to transition to proof stake over what seems to be a 10 year period um and there's a lot of empty holes that need to be filled within that plan uh so the only two phases they have pretty bunch fleshed out of a seven phase uh rollout or one and two correct and then parts of three yeah i mean it's all just crazy right yeah well yeah so the future of ethereum like they they're creating a whole new token it's going to be called beacon eth like you'll be able to get what's called a whole new chain yeah it's a whole new chain they're completely giving up on the chain that they started with um and so you're basically i believe it might be after the constantinople

hard fork or one of the other planned future ones in the near future in the next one or two years you'll be able to buy what is essentially a call option on the future potential ethereum network in the form of a beth token and like the the tokens and the smart contracts don't transfer over easily the smart contract languages are are not the same but apparently they're trying to make them uh compatible um it just seems like again it's it's they're trying to figure this out on the go and i again i do not think they will be able to figure out in the long run i mean it just it comes back it comes back to the same thing with the constant constantinople bug like you need And everything with these systems should be as simple as possible, right?

When you add complexity, you make it way more likely that you'll have bugs in your hard forks. And it seems like their ETH 2.0 plan is trying to add as much complexity as possible rather than try and simplify their already complex bullshit, right? And that's the main issue. To simplify the argument is that it's not simple enough. um right and i don't know sometimes i feel like i'm taking crazy pills man like how how does anybody have like how can anybody put any credence into this project they have not delivered on any i don't know i'm not gonna who cares we don't even know what the block reward

is gonna be in a year right like let alone like i that's why we we kind of touched on this last episode a little bit and i was like how can we even speculate on what's going to happen with eth 2.0 we don't even know what's happening with eth 1.0 so it's just right i mean investors don't like this miners are investors as well they don't like this i think stakeholders in general shouldn't like this and hopefully the market will start to come to terms and realize this but we'll see are the powers of decentralized finance strong enough to will it into into existence I mean, I'm less optimistic than you in terms of ETH dying. Like, I think this, you know, it can last like a long time.

Like, look at Ethereum Classic. Ethereum Classic is a dead chain. Yeah, we consider that dead. It was, so we were talking about whether or not it was an Eclipse attack or re-orged full chain wide. Like a true re-org. and it ended up being a true reorg for etc like both gate and yo bit were attacked they uh finally admitted to it um so it wasn't just coinbase getting their nodes surrounded like a lot of people speculated originally so like that chain is fucking worthless like it's not secure and

what it's only down 20 i think i looked and i saw that grayscale you know barry silbert's investment trust they have like 25 million dollars worth of etc uh under management like that's crazy like absolutely crazy they sent out emails to all their people they were like don't worry like our specific funds aren't at risk yeah okay because you're not sending them around so they can't get reorg like ridiculous absolutely so so like ethereum could last for a very long time like you these things don't die so quickly but uh i don't know i don't know i just have a feeling who the fuck knows I have a feeling

I don't know I don't know yeah we'll see so that happened planned next hard fork next week

we'll follow that my my twitter thread that I started in August of 2017 is aging like a fine wine which is great to see

oh that thread great yeah okay so we just did 15 minutes of shitting on ethereum i think that's a that's a fair amount of time considering this is an hour long pod um oh but we we're gonna have to shit on it a little bit more bitmex released um their new ico research uh what they say 25 billion worth of tokens at the peak were allocated to

ico teams themselves yeah something crazy like that the ico teams they double dip right they they sell you the tokens that they pre-mined for ethereum and they automatically cash those out and then they also allocate themselves their own tokens that they can cash out over time um and that's just it's just blatant money grab they just the whole use case of icos 99 of icos the whole point was just to take your money and that's me being fair by saying 99 it's higher than that and you're talking like overtly just yeah like launch a token and cash out pretty mean like that's what that's what the bitmex research proved well actually a lot of them didn't sell their tokens they're worth like five billion now or

something because they were illiquid yeah it was like hard for them to dump them uh but five billion too much still right yeah and and ethereum enabled all this shit they prioritized tokens they launched an ico themselves they set the model and vitalik and co advised and funded a shit ton of these icos projects so like this is the house they built yeah and people shouldn't forget that remember that people fucking don't very proud of it too exactly but they're proud of it it's crazy it's like maybe we're wrong that's what makes me like question like people are proud of it they're excited about it um it seems to me ethically dubious but uh i don't know i don't know we're done shitting on it i mean let's talk about you

can say you can say all you want about bitcoiners but at least we didn't fucking do that you know that's like how can how can you talk how can any of them ever talk shit about bitcoiners when when they literally just stole a shit ton of people's money just with false promises and absolute bullshit like fucking ridiculous man it just people should be mad as hell it makes me so angry i mean i didn't get fucking ripped on that because i knew better but so many people did and that's that's a shame yeah it is it really is and it will happen again just be aware that's why we do this show is to help highlight these uh perceived um ethically dubious actions in this space again this is our this is our take this is my take this is the rabbit hole recap this is what

we think um i believe it pretty strongly we'll see how how time uh treats treats us and and the ico launchers um speaking of coin launches though a lot of a lot of scuttlebutt going on a crypto twitter we had we had one this week and it's actually probably a good juxtaposition of the previous topic because uh some argue this is like if you were going to launch an all coin in today's day and age and want it to be uh seemingly as fair as possible the way grin did it is probably the fairest way but that doesn't mean grin is legitimate we'll get into that uh Matt, what do you think about the Grin launch? Wait, Grin launch this week?

Yeah, you didn't hear that, dude? This has got to be the most hyped launch we've had since Zcash. Everyone's talking about it on Twitter, even so-called, at least people who have been accused of being Bitcoin maxis for a while are all chilling it at this point. yeah you know so uh yeah it's yeah the bitcoin community is split in half um uh let's so let's talk about it was the launch fair in your mind i am very happy about the grin launch because i think that

um i the whole ico bullshit that ethereum created really corrupted the whole space before that all the launches were pow launches without pre-mines um otherwise they were labeled a scam so it's nice to come back to those roots um it's not a panacea like we'll never have the immaculate conception that bitcoin had you love talking about the immaculate conception you know no one knew bitcoin was going to have value when they when it originally launched um so there'll never be a launch as fair as bitcoin but it's uh definitely a huge improvement over uh the ico method right and uh it's good to see that we've come back to that it's true um yeah definitely if you're if you're on a scale from

fair to unethical i think i think uh grins launch is definitely trending far into the fair launch side of it but let's get into so like i wrote about it in the bent this morning uh shout out me i'm gonna pat myself on the back number 400 went out this morning um but yeah like thanks dude appreciate it um but uh again like every altcoin since nade coin has been trying to produce serendipity the serendipity that bitcoin was created in or the serendipitous moment that bitcoin was created in and again i'm gonna get poetic and somewhat uh just like romantic here but i do again i do think there's a romanticism around bitcoin's launch that cannot be replicated and is essential to this long-term success of of uh decentralized

money um again uh i don't call me a bitcoin maximalist call me irrational uh i do have a sort of romanticism romantic relationship with this stuff and i do think narratives and stories are important and i just don't think anybody's going to be able to replicate the serendipitous moment that bitcoin was incepted in am i wrong yeah no i mean i completely agree i mean i don't think altcoins are a threat to bitcoin so i'm i'm happy to see uh a better altcoin right it's true it's it's new novel privacy technology um i think privacy is very important uh i think grin is a very crowded trade but some people were saying that over 100 million dollars worth of vc capital was poured into mining operations to go into it in the beginning um you have a very similar

situation as with zcash where they they have a horrible monetary policy and and the way they set it up was it's really hard to mine in the beginning to try and simulate a fair a fairer launch so it creates this this weird situation where these vcs are pouring a ton of money in and they're not really doing any profit calculations they're just saying fuck it you know let's throw a ton of money at this thing uh so it's probably not going to be a good investment for them they'll probably get wrecked on it at least in the beginning that's what happened with zcash i don't know if you remember with zcash um the price skyrocketed like right right in the beginning and then just collapsed uh but yes you know if we're gonna have future

if we're gonna have future mimble wimble side chains or something like we need them to test this shit out for us so we can see how we're going to do it right so let them go to town like i'm not i'm not mining grin you're not mining grin but let's no i'm not going to completely ignore it i'm going to watch how that this shit unfolds and i think bitcoin will be improved because of it bitcoin will become stronger and better because of it yeah and so let's talk about how mimblewimble can potentially be added to Bitcoin, the consensus, or I don't know if there's even consensus around it, but I think a lot of the strong opinions agree that it would have to be done via federated

sidechain. Is that correct? Uh-oh. I lost Matt. Signal's reconnecting. Maybe he's talking on his end, too. Uh-oh, waiting, waiting, we're at minute 31.50. yo

yo are we back yeah we're back i'll just cut that part out um all right guys sorry about that freaks we're back yeah we're back connection caught remote pods that's why i like to do it in person i never have these hiccups um what were we talking about oh we're talking about oh yeah i was asking i was positing how mimblewimble would be uh implemented into bitcoin potentially at some point in the future and am i right in saying that the strong opinion or the strongest opinion is via federated side chain right that's the easiest federated side chain is the easiest okay and what are and there's some like there's what do you can you describe the trade-offs of implementing mimble and bolt the protocol level i can't uh with any with any uh

virility and argument uh i mean the case right now the i mean the main overview right is that it's really hard to audit the supply right it's the same argument we have um it's that there's two main arguments it's hard to audit the supply and the tech is is brand fucking new we haven't really tested it's not battle tested and it fucks up scripting too right what was that it fucks up the scripting language too oh yeah there's no scripting so we can't do lightning network and shit we can't do multi-sig i'm pretty sure um yeah so that's a major issue the other thing is grin's monetary policy is really shitty uh it just inflates constantly um i think what is it like 400 inflation for the first year or something crazy

uh yeah 400 and then 100 the next year um it's producing a grin every every 60 seconds correct yeah so the other option is like we if you if you make it actually i'm not even sure if you could do it with since it doesn't have uh scripting language i'm not even sure if you could do it but the other option is if if we can make it so you could easily switch between bitcoin and grin you could just use it as like a mixer with a shitty utility token right and then you get the benefit you go into grin you clean your coins and then you go back into bitcoin um but either way yeah i like it's a good test people shouldn't go crazy about it it's like probably the most crowded trade of the year um and let's see how it plays out let's watch let's

watch how it plays out and and and we'll figure out how to go from here it's it's been launched for what like two days beam launched beam beam is the other mimble wimble major in mimble wimble implementation um and they have like a zcash style founders reward uh and what they had like a major ass bug in their in their client yeah but there's also like three there's like three beams so was that the one you're referring to well the beam definitely the one i'm referring to is the Mimblewimblebeam. Yeah, people like that name. It's a good name.

It's four letters. But yeah, so let's just see how this shit plays out. There's no reason to get your panties in a bunch. It's not going to take down Bitcoin. I'm not worried about that at all. Yeah, so let's watch. Right? So let's just watch it play out.

I don't think it's a threat to Bitcoin. It's a threat to the people who speculate on it. And let's see how these... Yeah, let's see how these VCs handle... Oh, and the other issue I have with Grin is that they're trying this whole ASIC resistance bullshit again. And there's no such thing as ASIC resistance. That's not real.

And you want ASICs anyway, so you should be trying to get ASICs as quick as possible, not delaying that, because if you're not the dominant GPU chain, then you're never truly secure. So they have that issue as well. That is true. That is true. Good observation.

Next topic. Enough about Grin. Yeah. I'm sick of it already. Yeah, we'll be watching. We'll keep you freaks abreast at the rolling out of Grin and how it performs in the market. Lightning network analysis by The Block.

Very interesting. Coming at the assumption that there are centralized hubs. Basically proved that Lightning Network is getting more decentralized over time, too. I believe six months ago, the top 10 nodes held 58%. uh of the funds held in channels and since then since july or june i believe it's fallen to 38 so uh or excuse me 35 i'm messing up the percentages in the ballpark in that area a considerable uh decrease in the centralization of the top 10 uh lightning network wallets um but there was also other analysis uh there's one big channel producer in particular i forget the

name off the top of my head uh they're sort of ln big it's lnbig.com lnbig.com which is like an anonymous like black market type dude yeah which is kind of badass yeah um what you put this in the in the topic list what in particular did you want to touch on uh i mean of course it's going to start centralized like it's beating all of our expectations um and the capacity keeps going up yeah it looks like ellen big has um 64 of of lightning networks capacity uh that is not ideal no one wants you know one entity to be you know uh responsible for for over half of of lightning networks capacity but at the same time Like, if you asked me a year ago if our capacity was going to be this high, I would have said that probably wouldn't be the case.

So it's pretty impressive how fast Lightning Network is growing. And as we have more people, as it becomes easier for people to run their nodes and buy hardware nodes and use Pierre's launcher and run it on their computer, you're going to see this spread out. And this is just the bootstrapping phase. and the beauty of of scaling with a layer two network is lightning could completely fail which doesn't seem like that's going to be the case but it could completely fail and bitcoin will be unaffected and then we continue on you know we we we try again and that that's the beauty of layer two that that a lot of people um a lot of the lightning network skeptics uh tend to conveniently conveniently ignore right yeah yeah a lot of people don't appreciate that they feel

like it's uh the lightning network uh just from a prima facie uh stance is uh sort of a centralizing uh centralizing point of failure in bitcoin and or not really bitcoin i do not find those arguments to be convincing but there are people that believe that and like you said i think experimenting experimenting on these things uh on layer two is imperative and probably the most advantageous way to attempt to to scale these systems so lightning network if you're not running a node yet try it um it's been fun i i've actually i've been having a lot of fun using the lightning network spending it using it a lot of fun on satoshi's place uh with the casa node yeah with the casa node um yeah so the casa node makes it easy i think pierre's launcher has gotten way

easier to use if you just want to use your regular computer um the team at noddle sent us their node we we're going to test it out when when i get back from hong kong you get back from miami give you guys a full walkthrough on that so it's getting easier and like like i said like the whole point of layer two is that we can just go to town here and you know if we fuck up it doesn't fuck up bitcoin that's the whole point so it's we just we just keep building and and and we we see where it takes us but this has been extremely impressive growth the excitement around lightning has beaten all of my expectations wouldn't you agree uh yes completely i didn't think it was gonna happen this fast um rain dog dance shout out rain dog dance on twitter uh he just posted

a thread he took a screenshot of uh the lightning network node topology like six hours into the network uh i just retweeted it so if you freaks go to my page you'll find it um what was it the oldest screenshot i have 17th january 2018 uh so a year a year to the date uh there was 19 nodes 28 channels capacity was 11 million uh 302 000 satoshis or 0.113 bitcoin so that's a year ago um oh i'm looking at it now yeah the current state so now there's 2 727 nodes um though some sites are showing more than 5 000 nodes already there's 20 443 channels and capacity is at 52 billion 273 million satoshis or 522.73 btc um so staggering growth over over a year from 19 channels to 2,000 27 20 2,727 channels or some people are even saving more than 5,000

some credible growth from 0.1 bitcoin to 522 bitcoin in a year right fucking badass yeah it's um and also i think there's a caveat here is that it doesn't private channels aren't being recorded and more channels are being private private now they're default to private yeah so you can't just you can't just look at that the the lightning network is growing at like breakneck speed and the the reason that's possible is because it's layer two instead of layer one so we can still be conservative on layer one and uh innovate on layer two faster than ever which is pretty fucking awesome does anything worry you about uh the speed of the growth like what happens if we get a bunch of bitcoin over there considerable amount and it turns out to be a failure is there

a scenario in which a bunch of that bitcoin can get locked in those channels i mean yeah that's why it's still beta right like so you should don't that it's like a catch-22 right like use lightning like play around with it but like don't put a lot of money into it you know it's a hot wallet treat it like a hot wallet yeah exactly so if you freeze out there from and from my experience i've only put i've never had more than 200 on the lightning network um very first world to be to say that's not a lot of money but uh nothing nothing nothing no crazy amount of bitcoin yeah i mean and fees are low right now so like on-chain transactions are really cheap so you know just play with it carefully yeah i i don't think i think you know maybe we'll have a

bit of a pr crisis if it fails but like that's why i'm trying to preempt that just in case it happens right like you should it it won't be a complete failure we'll learn from it and we'll continue this is true um yeah so it's still growing again go out there be reckless but also be safe just be aware be aware okay that's the motto around here for ease um how are you how are you liking this remote recording i feel a little weird it's so weird i'm used to just like being in front of you and making faces at you while i drink my scotch are you drinking scotch right now no i i i've been i've had i i really failed on my scotch acquisition so i'm drinking a heineken right now and i'm not really that happy about it but i am

i i i've been drinking all day i went to the highest bar second highest bar in the world on the 118th floor of this building in hong kong it was pretty badass so i got i got it's flowing it's flowing but i'm not i'm you know i don't have my drink of choice in front of me and i don't have you i don't have my person of choice in front of me we're not even video chatting we're we have we're doing voice chat because we're trying to get get through the chinese yeah yeah we had we had some technical difficulties trying to set up the uh the um face-to-face video chat uh very suspicious very suspicious we had to we had to do some some hacking to make this episode happen and yeah it is a little awkward that's why

on this entails from the crypt and rabbit hole recap i think the personal connection of sitting across from somebody is important for the conversation not that this conversation's uh not enjoyable um putin putin bitcoin rumor is russia gonna buy all the bitcoin matt um i mean i mean putin probably has bitcoin like i would be surprised if he didn't have bitcoin right uh but but you're not gonna hear about in the news he's not gonna tell the world he's buying bitcoin that'd be fucking stupid uh right is that do you have scotch over there uh i thought my scotch just came it didn't um yeah i uh so i it's bitcoin is perfect for russia and this this recent rumor is probably absolute bullshit it

seems like the source is like complete garbage um complete you know it's crazy psycho yeah absolute garbage uh they're not buying the amount people are saying they're buying but uh it makes complete sense for russia they're under sanctions uh they have trouble moving their money you know the u.s government keeps blocking them doing things and putin's fucking loaded so i obviously um he like i i would be really surprised if he doesn't have any bitcoin and so then the question becomes you know do you let putin acquire bitcoin and not acquire bitcoin yourself right like the whole adapt or die narrative um these countries are gonna and these world leaders are gonna need to make a decision are they gonna are they gonna be left behind or are they gonna

actually jump into this thing yeah i think uh michael bitstein or excuse me goldstein i always say that at bitstein had a perfect tweet this week uh and it was a play i forget what movie it's from but we're uh the nuclear war breaks out and the screen says the only winning move is not to play in bitcoin the only winning move is to play so it's the complete opposite of that uh that movie i thought that was is a very short but sweet and descriptive uh statement on bitcoin's incentive network the only winning move is to play yeah it's game theory at its finest everyone's incentivized to jump in otherwise they might get left behind and you never know who has it you know we can speculate all day if putin has it

he can prove if he has it but you can never prove that he doesn't have it so you end up in this thing where you don't want to be the last guy at the table to buy some right um yeah so putin's doing that in china where you are right now um they are planning on using the great firewall to target nodes and miners as well um so this shows the importance of small blocks we would argue um i didn't i didn't even hear this story this is popping up on me right now so the great firewall they're how are they going to target nodes and miners you know i mean i imagine network analysis deep packet analysis uh this is mit who released this so it's not some fly-by-night blog yeah it's mit's technology review um this is what we expected for a long time you know they they it

seems like they want miners and node people to register with their government id otherwise they'll block it and this is you know obviously that goes directly against the value prop of Bitcoin as a censorship resistant money and this is why we need this is the whole point of small blocks keeping the chain as efficient as possible because it's way easier to hide your connections if if the bandwidth requirements are smaller and and also the redundant channels right so like stuff like block stream satellite network you think they can't block they can't block a satellite downlink through their great firewall and and the only

the only reason you can do that reasonably well is is because of smaller blocks and an efficient chain yeah um so that's an important important reminder of why and i think what we've been harping on more recently and a lot of uh others as well is that a lot of people um focus too much on on the data growth of the blockchain like the full state like how much data but uh bigger problems definitely bandwidth um and and that's a very misunderstood problem in bitcoin or misunderstood area of bitcoin would you agree yes everyone thinks it's storage it's not fucking storage guys i've been saying this for fucking years it's it's internet it's hard it's hard and expensive and you know like stuff like running your node through tor

like tor isn't that efficient you can't you can't run large bandwidth applications through tor but you can run bitcoin through tor because we've kept it as efficient as possible and and it's super underrated and if you don't plan ahead then it becomes very very easy to block these things if they decide to right and you don't want to be asking for you know you don't want to ask for forgiveness yeah you just want to be able to do it you want to be able to route around them so bitcoin will be unaffected by this because of the decisions we've made over the last three four or five years well i want to go as far as saying i'll be unaffected the the alternative ways of accessing and relaying transactions on the network aren't as mainstream and are

a bit of a ux hurdle like i don't think i'd be able to set up the satellite by myself right now and do that yeah but if a miner had to you know if it's amazing what people can do when they're forced to do it so the key is that they have they they could be able to do it if if they need to yeah i i agree that it wouldn't be unaffected right but less affected i guess would be a better way of putting it yeah well no i guess it'll be uh a glaring uh case study in whether uh these chinese miners in particular uh have the gall to to sort of do this outside of the government's eyes and sort of go against the the um the official chinese government uh that's potentially a possibility the other possibility other side of the coin is this

action by the chinese government is enough to scare people away um yeah but that could be good too right because it'll it'll help distribute mining geographically so they'll open you know mining will move to more locales because because you know regulations in china make it less profitable less advantageous to mine there yeah but let's also play devil's advocate here china could be uh producing the roadmap uh for how other countries could swiftly uh stifle bitcoin adoption and proliferation i mean i think you can't really effectively stop bitcoin right now in your country unless you just shut down the whole internet just shut down all encrypted traffic and you know encrypted traffic is super important in the internet banks and everything like people

need to be able to use encryption otherwise they have no security on the internet um i mean it should be interesting to play out but this is exactly why it's so important to to prioritize the uh the censorship resistance aspects right that's the whole value prop the whole value prop is is that government shouldn't be able to control this thing um and that's got to be our main priority yeah and let's loop this back to the conversation in the beginning of this episode like that is why we're so hard on these other projects and call out this bullshit because if we earnestly want this stuff to succeed like that isn't like these are obvious failures on the road to making these systems as robust and secure and uh decentralized as possible

exactly it's all yeah all the hate is out of love i do not hate the people involved let's just make that clear it's uh it's it's hate of the the hate's a strong word i just disagree with the path chosen to attain uh what is essential for these protocols to to succeed like let me put it this way if if the chinese government wants to stop all unregistered ethereum nodes in their country they could do it right now the bandwidth requirements are way too high you just can't hide it it's not that's not going to happen you know you're not going to be able to hide it and then And there's no going back. Once you're in that situation,

it's very, very hard to try and pull it back and make it more efficient. You're already fucked. Yeah. Okay, let's switch to a happier topic. Genesis trading volume, OTC, up 50% year on year. That's fantastic. That's a fundamental low-key indicator

that not a lot of people are paying attention to. yeah that's pretty huge i mean that speaks for itself right 50 volume up otc that's where the big guys are playing genesis is one of the the major players in otc in america at least um the other positive news that i really like is wasabi just uh implemented multiple multi-denominations so before you know you had to you could you needed denominations of 0.1 bitcoin now if you have a larger amount they do other denominations it gives you a smaller anonymity set but uh it it does it so it makes it way quicker um for for large amounts that's a it's a very very big upgrade that we've seen um the other big uh that's wasabi wallet wasabi wallet

dot io um it's it's helping bring privacy to bitcoin probably one of the easiest coin join implementations we've ever had definitely the easiest coin join implementation we've ever had you can just any any os you can use it on mac linux uh windows um the other big thing is uh thor by bit refill have you looked into this at all yeah it's pretty dope so you want to explain what it is um i think you can do a better job of explaining it but essentially bit refill has set up a huge uh uh lightning network channel hub whatever and they're allowing customers to use us dollars to get access to the light network directly is that correct i'm not sure if you could use us dollars but i think the idea is that like

me or you could onboard people directly onto lightning i guess presumably you could do something similar with us dollars but bit refill i don't think ever interacts with us dollars okay yes um so basically like the idea is like i pay them bitcoin and then my buddy scans the code he gets and he just automatically has a channel open and he's on lightning and he He never actually interacts on-chain. He just automatically jumps right into the Lightning Network. It makes onboarding way, way easier. And we're back.

And we're back. I lost Marty again. Yeah, it makes onboarding way easier for the Lightning Network. so uh yeah i mean that's that's a huge a bit refill just keeps killing it man they're like one of my favorite companies now sorry i lost you there can you repeat that last part yeah i mean i was just saying yeah i lost marty for a second there this remote thing is really killing me um but at least we're recording locally so hopefully you'll hear us nice and well afterwards um i just think bit refill is like one of my favorite companies right now

they're just fucking killing it yeah no true to the ethos um building dope products putting their head down getting shit done um so it's uh yeah great to see thor's a really cool thing check it out if you get the chance if you want to onboard somebody directly on the lightning and be reckless in that fashion uh bit refill has made that possible so we're seeing innovation just pop up out of nowhere and like specifically like it works with mobile wallets really well so like so the person you onboard they just need the app on their phone they just scan it scan the code and they're in the lightning network bang bang they're there yeah um shout out john carvalho who led that that initiative up at rootville i believe i think he announced

that he joined their team and that was the first product that he rolled out with them yeah they're fucking badass i'm just super impressed yeah at bitcoin analog on twitter if you want to give them a follow um that's all the topics i have on the list or i'm seeing at least what do you want to riff on right now dude are you are you tired how late is it there now did i lose you again i said that's all the topics we have today i lost but what do you want to riff on as we as we end this episode it's so frustrating marty um so should we wrap this up because it's so frustrating um yeah we have backs that delayed they're blaming the government shut down we've told

you over over and over again don't hold your breath on this we've been waiting for these kind of things forever um it'll come when it comes until then we accumulate and get them before them can you hear me marty yeah back yeah don't hold your breath for backed it's uh what i can i can hear you matthew i don't think you can hear me um but we're gonna end this recording thanks you freaks for listening um sorry if there was a this was a awkward episode because we are remote um shout out to you freaks matt any parting words can you hear me he can't hear me um so we're gonna end it here hopefully this wasn't too much of a shit show for you freaks but hey that's what you get here at tales from the crypt peace and love

can you hear me Thank you.