TFTC: A Bitcoin Podcast - Tales from the Crypt #31: Matt Corallo

Episode Date: June 5, 2018

This conversation hits on many topics, but focuses on (de)centralization and the types of centralizing risks that exist in the realm of cryptocurrencies. Matt expounds upon his project to decentralize mining, how UASF proved that Bitcoin is decentralized, why there is a somewhat-urgent need to develop a fee market to subsidize the block reward, and calls out some scams. Follow Matt on Twitter: @TheBlueMatt Follow Marty on Twitter: @MartyBent Check out Chaincode Labs: www.chaincode.com

what is up freaks welcome back to tales from the crypt we're here on a thursday night we're drinking again on this podcast excuse me we are drinking again on this podcast i forgot to hand my guest a beer before we started it's poor form on my part it's a bit poor form um and sorry sorry matt it's uh it's it's we've been away from the boozing podcast i feel like the last four episodes have been coffee podcasts in the morning had to take advantage of blockchain week you know everybody wants to go out at night got to get people in here early in the morning um but today we have our first repeat guest you guys have already heard him we've got uh matt corralo back on the podcast matt welcome back thank you thank you for having me you don't have

to go through your tale it's already been said on this podcast but uh just uh there you go now you can tell it's a drinking podcast again um but yeah the first time you're on december 8th is when we recorded i did did a little backtracking to figure that out december 8th 2017 the price of bitcoin was 14 620 dollars uh a lot has happened since then it's may 24th 2018 year of our lord and we live in a different world yeah how would you describe uh the last six seven months that's been a roller coaster uh i think a lot of people have changed their view of the cryptocurrency space i mean obviously over the last few years the name of the game has been moving from well payments and bitcoin and whatever to well we're gonna put a token on everything and build

apps and whatever and so that's changed a lot and obviously that went through its own hype cycle and that drove a whole hype cycle of i mean you mentioned the price was what 14 000 went up to i guess we touched 19 000 and change almost touch 20 on a few exchanges and then yeah there was a little bit of a crash um which has been kind of stable since i mean obviously not stable we've been anywhere from what six thousand seven thousand to nine thousand again we've had a bit of a trough here a little capitulation trough i feel like um things are bouncing between like six and nine thousand yeah yeah they're bouncing a little bit there but that's been kind of nice the hype has died down ever so slightly but there's still a lot of hype there's still a lot

of hype going on a lot of i mean is this week what was it the verge was that the which i feel like that's kind of being that some kind of copyright trademark violation it's like the verge website there's a publication called the verge yeah that was a crypto anyway this is Cryptocurrency is horribly broken, but the price is still relatively robust. It's kind of hilarious. Well, they got 51% of tax, correct? Yeah, because of a bug. I mean, it wasn't that someone had more hash power.

It was because of a bug that allowed someone to pretend to be 51%. Yeah, so what it was with Verge, Verge is a multi-algorithm that lets many, it basically revolves between five mining algorithms and one of the mining algorithm's script, I believe, was given an unfair advantage to be able to fake that it had. I think any of them could have the unfair advantage, but this particular attacker used script just because it was easy to get his hands on.

Yeah, and he 51% attacked the chain and I think he made out like a million and a half dollars from exchanges, right? Yeah, someone was saying like 50k a minute for the duration of the attack or something like that. That's crazy. I mean, you figure what they put in, maybe a week or two of work it's a good roi yeah that seems like a pretty good deal but it uh

it alludes to uh to an interesting problem of centralization and uh that's that's an example of centralization of hash power uh one article that we were talking about before we hopped in the studio here was the medium post gotta love a good medium post that stopped in the crypt uh posted last night i believe or yesterday early morning uh about uh ethereum full nodes and sort of the the mystique around them it's really nobody really knows how many full nodes there are i'm sort of getting lost in what is constituted as a full node on ethereum's network it feels like they're abstracting away everything um so did you read that uh yeah i read i read a good chunk of it it goes into a little bit of detail without describing it in full detail but it goes

into a little bit of detail of all the different types of nodes on the ethereum network obviously there's your standard just client node that doesn't validate anything whatever but they also have a number of different types of full semi-full whatever nodes a lot of them will not actually do any historical validation they'll start up ask their peers what the current state of the chain is download that and then kind of run from there there's a lot of them that do more they actually validate and then throw away the data which is akin to kind of pruning mode and bitcoin and still a full node where you fully validate everything you're not trusting someone else to just lie to you lie to your face but you don't necessarily keep the data and then there's

obviously the nodes that keep all of the data which has become now i guess over a terabyte of data i mean forget full sync but that's the thing like they're abstracting away the definition of a full node and it's like they'll play i don't know if it's like a brilliant like it's like with this Bitcoin maximalism, like Orwellian words speak, but they're just like, you don't need to validate the full state to have the full history. But it's like, at the end, like I always ask,

I've been asking this question for like a year now. Like at the end of the day, somebody has, you have to reference the full state at some point, correct? I mean, someone has to validate the stuff, right? Otherwise you're kind of screwed. I mean, what is somewhat frightening is that I think most of their clients,

they kind of default to this partial, this state where you just kind of download whatever the current state is, you trust miners and your peers. what's really frightening is they had those bugs i don't know it was probably two or three years ago in one of their clients where there was a major dos attack uh it was i guess this was pre-crypto kitties but it was a major dos attack and the nodes were just not able to keep up because of inefficiencies in the software and the solution that people told that was you know told to people

on reddit and whatnot was here just restart your node it'll redo this fast sync thing it'll just trust its peers and you'll skip validating the hard parts well i mean let's imagine for a moment that someone slipped in some money stealing transaction or slipped in something that was actually invalid in these hard parts in these dos attacks well no one would have validated it if it weren't for the fact that they had more than they have this other implementation of course now at this point the implementations are just uh they they're not fast enough to keep up so it's getting to the point where they only have one implementation but you know imagine you saw this attack and everyone was just restarting no one would have validated the chain like oops the miner can just

steal the money uh sorry guys that's just the way it is and this is like so this is one thing with i hate that i have to pick on ethereum again but this is like one thing um that really annoys me they're always like moving the goalpost so like the definition of a full node like the goalpost is moving on that like now you can only you only need to validate block headers to be considered a full node or something like that okay full node and sync mode whatever yeah but somebody on reddit i'm debating whether or not to read this whole thing because i know how like reading on air uh is awkward and this isn't too long but he made a great point jmw74 uh i see people we'll get to the we'll get to the meat of it actually to be to be perfectly frank i get why

people are critical of ethereum it's always adding more complexity to add to address uh people's objections and then when the new complexity has objections even more complexity is added touring complete not scalable we'll do warp syncing not enough good not good enough spoonism there we'll add sharding sharding insecure we'll add fraud proofs fraud proofs not good enough we'll add zk snarks insufficiently specified economic properties we'll add pos pos not secure enough we'll add long range attack mitigation not enough we'll add complex slashing conditions for pete's sake it just never ends and it does never no it really does never end and i like his hit on sharding there because like yeah that the ultimate moving the goal post in

this space was like oh well no one can run a full node because it costs too much and you have to have you know five ssds in your computer all in razor whatever all of a sudden you say oh well we're gonna shard and then oops wait now instead of no one is validating this because they can't It's no one is validating all of this, and when something inevitably happens that's incorrect, oops, no one was validating that particular one. They were validating the other ones because they can't keep up. So when does this come to a head, do you think?

I don't know. I mean, there's so much low-hanging fruit. Like, talk about the Verge thing. It's just, like, horribly broken protocol design, and that thing's been around for years. and has had a relatively high price, relatively high market cap, deep markets, so you can sell your winnings.

And it took this long. I mean, like, you want to talk about someone attacking a more complicated system. You add complexity, and then all of a sudden no one can break it. Not because it's secure, just because it takes so freaking long to analyze the thing and actually break it.

And that's the interesting part we're touching on here. So there's multiple forms of centralization. like mining like verge went down to mining central centralization people are arguing that ethereum's at risk because of full node centralization and um there's so yeah so that's um what i wanted to segue into is a lot of people on twitter are saying this week now that like the ico easy money is dried up now we're going to see like black hats come out and start attacking these networks to profit that way you know whether it be via a 51 attack on on verge or uh i don't know how you would attack ethereum in this case but people are going to start to

find other ways to to make money well there's a particularly gnarly vulnerability in ethereum clients uh maybe a month ago uh where you could be one connection to an ethereum client and blind them to the valid chain so you could just instead of having to have 51 of hash power to get transactions to confirm that aren't actually confirmed, you now have to have, like, I don't know, maybe one, two, five, like, just enough to create some blocks, and you can make them not see the rest of the chain, and you only have to be one peer.

So, like, someone could have used that if you knew where an exchange's node was. You could have used that to just blatantly steal money from the exchange. Holy shit. Potentially in large volume, right? So there's a lot of these really subtle attacks that people spend time worrying about that developers spend time worrying about,

but we just haven't seen anything exploited yet. Maybe, as you mentioned, because the easy money was still there. Yes, we're treading into weird territory. It's funny how these cycles come and go. It'll be interesting to see if the market learns anything. I mean, it didn't learn anything from Verge. Verge got popped twice in a week

because they were incompetent. And the market's still like, ah, you know, the price should be fine. Like, yeah, probably fine. That's the thing. These vulnerabilities, though, might put the onus on exchanges to, like, shut down some of these coins that aren't secure. Because then, to an extent, like, they have a lot of liability if they're holding people's money on their exchanges. I think it's going to be the first exchange who gets sued over something like this before. Like, you know, they have liability.

Cryptocurrency of some kind, like, Verge gets popped. and the exchange just like doesn't turn the wallet back on and eventually, you know, they get double spent or something and then they lose a lot of money. That's going to be the first time anything actually happens here. But, I mean, most of these exchanges, like a lot of these exchanges have kept things listed where the change just like wasn't running, whatever,

and no one noticed, right? Because no one cares. Like, oh, well, here's this other thing with this three-letter acronym and a price and a chart and I'm just going to trade it. transactions who does those especially on the the cryptocurrencies that are just on like one exchange because they're like super esoteric weird shit coin whatever probably on cryptopia they're in like just these random exchanges i just haven't even heard of um a lot of those just like they keep trading even when there's some bug and the thing's like not even running

it's like how did that the fuck how did no one notice this yeah we got a lot to learn i mean that's been going on for years this will go back to 2014 2013 yeah 2013 like i think we'll learn eventually it's going to take enough people to be like stop messing with us uh not worth it i hope so i mean the entire space right now is super high on everything is going to have a token there's going to be a blockchain for everything i don't know i think Everyone is going to put in tons of security effort and secure their own blockchain for their own weird esoteric app.

And that's totally going to result in a secure and mature ecosystem of a ton of different coins, none of which are exploitable like the virtual. Well, I think this wave of shitty ideas is getting called out in earnest in a good way. There's a lot of public shaming going on. Like, no, this isn't going to work. How many times do people have to learn this lesson?

um i could be wrong though maybe that's my bubble i think we're in a bubble we're definitely in a bubble there's like a mental bubble a mental bubble or like a bubble like you know there's the like bitcoiners on twitter who are calling this stuff out and then there's the people trading on the market who haven't even noticed that i had a bug and then there's the vcs you know there's some big name uh popular vcs in silicon valley who i don't want to call out by name but boy they could learn a lesson from this and they probably will i think they will uh i don't know there's so much financial incentive for them not to because they've been pumping icos like i think this is a case made a shitload of money on it too yeah it's true but i think this is a case of

the market i mean like the saying goes the market will remain illogical far longer than you can remain solvent i'm not saying i'm going short or long against these guys portfolios but i think that we're like just in a logical state and it can stay illogical for a time but i think logic will prevail at the end of the day and you guys will just learn a harsh lesson via reality whether it be black hack hackers attacking the networks that they feel are are are secure um but we'll see let's get back to i mean logic go for it go for it one more point the the problem with logic prevailing is logic prevails on the current type of scam right so back in 2012 2013 literally all it was was i took the bitcoin code base i changed the name to something else and i

released it maybe with a pre-mine some trading whatever and made a bunch of money on that and the market was really excited about that for a bit i mean sure it was a tiny market but the market was really excited about that and then eventually yeah the market prevailed and learned its lesson and came around and said i actually know that's utter bullshit why it's like what you haven't done anything why are we buying this crap and then there was a second generation of random altcoin scams and they're like mostly hand wavy technical things and stuff that they just barely made it work actually kind of more akin to icos but on bitcoin on uh you'd take the bitcoin code base change the name and talk about all kinds of fantastical things you're going to do

maybe you'd implement some small fraction of it and rec made like 60 of those spinoffs he's made a few of them um and then after that the market took a while and they eventually learned but by the time the market learned there was already this next generation of ico scam where like okay we're doing these icos they're great we're going to issue a token for the creation of our crazy prediction market that won't of course never actually work and the market is maybe slowly gonna learn that some of those just don't make any sense i mean how a lot of them are outright ponzi schemes and the market still values them bit connect i'm looking at you there's still value to it like i don't understand it even it's absurd but the market learns but the scammers are more

creative than the market at least in my experience we're getting more creative scammers there's scammers everywhere folks they're coming for your bitcoin don't get them up um tend to agree yeah i think again i've been talking about this as well like i think the catalyst for people like sort of consolidating and being like we should probably just focus on bitcoin or one coin in particular uh will be something geopolitical where these these networks are getting attacked whether it be by nation state or uh the geopolitical situation around the world goes to shit and you really need to consolidate around one protocol at that point yeah i mean i think the space has kind of divided into what i think are wholly tangential ideas right there's the

bitcoin view or the monetary view of like we're going to build a new monetary system we're going to build this payment system on like lightning or some other whatever and we're going to build a store of value and it's going to be resistant to government change whatever we're going to build this awesome monetary system and there's also this entirely tangential thing which happens to also be claiming the term cryptocurrency of we're going to build these decentralized apps and you're going to have prediction markets and you're going to have this and that and all kinds of things and the internet's going to be decentralized again and it's going to be great and i think a lot of that a i think they're just wholly separate thing they're they're entirely working towards different

goals. And obviously, I'm incredibly skeptical of almost all of the various decentralized app attempts. I think most of them end up just turning into a centralized app because that's the only way to actually make it work. And now you also just happen to have this token attached to it. But let's not confuse the two. They use the term cryptocurrency, both of them, and they trade on the same exchanges. But honestly, they have almost nothing in common, right? I mean, we're talking about ethereum we're talking about like well you know the ethereum guys like to make trade-offs and like to have a more decentralized network and and some of them complain about it but a lot of the people kind of in charge quote-unquote just don't care they're open to being more centralized

and that may be fine but they don't say it they don't say it overtly though oh of course not and it's never overt it is definitely false marketing there torn completeness was a red herring the d apps are actually c apps they're all centralized as fuck right so let's go into this layers of centralization we have mining centralization full node centralization uh control centralization figurehead yeah exactly figurehead centralization i don't know vitalik's been arguing that he's not a central authority as no the ethereum community will make decisions for themselves and his say won't have a yeah but the precedent is that the developers and honestly it's probably true of italic but there's a very small group of developers who together can decide almost anything in that

community wouldn't fight back against it only because that's the thing they opted into they opted into ethereum where these developers are going to take care of the network and we want that or you know they want that because otherwise they would be using ethereum classic or something of like that right yeah let's play devil's advocate here what would uh the rebuttal be like don't bitcoiners do the same thing with bitcoin core would you say bitcoin core is more decentralized i think bitcoin core is not but i think we have a healthier community uh of people who fight back on everything yeah right i think we have from segwit2x and also especially from the UASF and BIP whatever 148 from that we learned a lot of the community doesn't I mean they care

but also they don't care all that much about what the various Bitcoin core contributors have to say that's true we were almost all against 148 we were almost all against 148 based on the current community sure you know the bitcoin core community of contributors was kind of split as to whether or not it was a good idea in principle but almost everything everyone in that community of contributors to bitcoin core with the exception of one or two people thought that the community had clearly not developed the type of consensus that we wanted to see in order to activate something like bit 148 uasf and yet there was a huge chunk of the community i mean clearly the most vocal part of the bitcoin community online was staunchly in favor of this stuff right hashtags

and the uh twitter the twitter names man the hats i hope you bought stock and hack companies last year yeah they must have done well man uh but but i think that that is a great example of the bitcoin community quote unquote rising up against the developers and bit 148 was written by an anonymous dev wasn't it i believe it shall and fry yeah i was just submitted on this one yeah i mean compare that to ethereum there there is no equivalent here is the community fighting back against the developers trying to do X, Y, or Z. No. There's no equivalent thing.

No. There's a bit of intellectual... What's the word I'm looking for? We're drinking again. I'm losing brain cells on this one. They basically hand off their critical thinking to developers, whereas the Bitcoin community with UASF,

a lot of full node operators were critically thinking for themselves, like, no, we want this. Yeah. and we've said this a bunch of times on this podcast, but the intolerant minority won that battle, and that's what runs these consensus mechanisms. The intolerant minority won the battle by convincing everyone to get together.

The UASF SegWit activation thing kind of concluded by everyone finding a path in which they got to claim that they won. Right. The UASF guys were like, all right, look, the UASF software stayed active. Segwit got activated, we won, and the anti-UASF 2X whatever community got to say like, oh, well, no, no, no, we activated, it was BIP91 activated Segwit. Clearly Segwit 2X won that, and of course fell apart later. So everyone just kind of figured out the way that they got to claim that they won.

Yeah, because BIP91 was what? Segwit first and then 2X six months after or something like that? Yeah, we're locking in Segwit and Segwit 2X, but we haven't finished Segwit 2X, and also it has bugs and oops, well, whatever. It doesn't even work. Yeah. But the Segwit part happened, so, you know.

Yeah, that's here. I was actually talking to Jameson about Segwit last week, and he framed Segwit adoption in a way that I haven't thought about it up to this point, which was it's good. He was happy that Segwit adoption is around 30% because it leaves a lot of upside to sort of scale the network at a steady pace going forward.

Oh, totally. I mean, like with fees where they are and block space not full, you know, we don't want to completely hit a wall like we did last time where it's like, okay, well, crap, we have more demand. Demand is highly inelastic. Supply is completely static. Oops, fees just shoot through the roof. Well, there's a lot of room for people to improve things like batching

and segwit adoption and whatnot so that we can make that a little bit more of a gradual thing. Yeah, and it won't be so much of a... The issue won't be as forced as it was with segwit adoption. Yeah, and with lightning adoption starting to become a practically possible thing, at least for small values, you know, all of a sudden, again,

that makes demand for transactions on the chain significantly more elastic, which means you're not going to see this stupid high spike of fee rates once you start to see more blocks-based demand. Yeah. It's actually a good argument to be made that we might be fighting for smaller blocks at some point

because we need higher fees to subsidize the block reward. Yeah, it's certainly kind of worrying where we are right now where there's just no fees. Let's get into this. We need, so when's the next block reward? 2020 block reward halving. Something like that. So that'll go from 12.5 to 6.25 Bitcoin.

So we probably got like 12 years of having a block reward above one Bitcoin. I mean, yeah, I've been saying kind of maybe we don't need it this block reward, but the next halving, man. You're going to need to subsidize that reward. Yeah, we're going to do something. We're not even a decade in yet. So we got how many block reward? We didn't do two.

We've had two. We've had two halvings. So two from now. Another two having it, or I guess it's at this point one and a half. Yeah. I think it's starting to look, you know, we can't rely on the price doubling every four years. That's kind of an insane security assumption because, you know, another 20 years down the road, oops, we've taken over the entire monetary supply of the world.

Like, okay, maybe that's realistic to some people. 30 years down the road oops we've now like wait what no the math doesn't work guys yeah so like it'll be interesting to see how that pans out it will be it'll be very interesting to see how that pans out onward and i would argue that we have to decentralize the network further before the demand gets that high because the network needs to be as secure as possible yeah certainly i mean the the worry with with the fees not being sufficient to subsidize mining it's not necessarily i mean a it is also that you won't have enough fees to subsidize the value in the network it'll become cheaper to attack the network than necessarily the value in the network

but also if you have less of a reward for miners potentially that means mining gets more centralized that means you just have less opportunity to fill some niche be a small part of the network get a little bit of that reward but fill it because you have you know some slightly more efficient way of getting power maybe you have interruptible power somewhere something like that but that doesn't work if you just

can't reach the scale you would need to fill that niche because there just isn't enough demand there isn't enough reward for miners so potentially that could even make mining more centralized we need higher fees in 10 years people like it or not but let's talk about bcash's approach bitcoin cash excuse me i'll be respectful

bitcoin cash's approach bcash is a new implementation politically neutral bch god i fucking love this space um so bitcoin cash they had a hard fork 10 days ago uh yeah they did 32 gig 32 megabyte but uh blocks opcodes added block size didn't And the practice block size didn't change. The limit changed. Practice block size didn't change. Yeah, they're nowhere near full blocks. They added some new opcodes that, I mean,

has anyone even looked to see if they've used any of them in production? I would be surprised. I mean, they might have tested them. I would be surprised if anyone was planning on using any. There's, like, random-ass opcodes from early on. There's, like, one or two maybe useful ones, and then a bunch of just, like, useless. Why did you add that?

So let's talk about it. how would you describe what Bitcoin Cash did and what are the perceived positives and negatives of that change? I mean, they added a few of these early opcodes, so a little bit of Bitcoin history, right? So there were a number of additional codes that you can, a number of additional operations you could have done in Bitcoin script in version 0.1, 0.2, 0.3.

Turns out there was a bug in a number, or in, I guess, maybe one or two of them, where you could crash nodes because they would eat infinite memory. And so, as a result, Satoshi, being maybe a bit overly cautious, went through and just disabled a bunch of different opcodes to make sure that there was less attack surface, make sure no similar attack would happen again in the future. what the the bch people went and did is they uh re-enabled a number of those op codes and i think they added one or two of their own but that weren't particularly interesting in an attempt to say like ah you know we have more features they also added something for uh potentially for ico issuing on the bch network uh although with the ico craze kind of dying down and also you know they have their ethereum chain they can have much more advanced programs or much more simple to code programs that you know if you want to have a very advanced protocol it's much

you know maybe an order of magnitude or two easier to write that on ethereum than on a bitcoin style chain and so you know it remains to be seen whether any of the stuff they did will have any material users right they wouldn't edit all of these old op codes that no one had no one's sitting there like okay well you know i want to do this protocol but i need this op code before i can do it right no one's doing that no and it's like and no one's sitting there like well you know i'm trying to issue my ico on ethereum and it has like these these rules and i've like written this program and ethereum code and i i really want to issue it on the bch chain that that's the chain i want like no it doesn't exist but even with that being said like i've conceded this in

the past like bitcoin would not be where it probably it might not be where it is bitcoin might not be where it is today without the early evangelism of roger ver and his legs like who knows like he was out buying billboards he bought the bitcoin at the honey badger money bill board i believe in la or something like that put right in the middle of hollywood really brought a lot of positive vibes and like vibes that was a bad word he brought like some pot he brought positive positive vibes but definitely some positive uh upward adoption yeah he helped he definitely helped with adoption early on that being said like this is uh you can either die hero live long enough to see yourself become the villain type situation where it's just like if

you're looking at a lot like i've i've tried to look at i have looked at this objectively it's just like this doesn't make any sense from a scaling perspective it's not it's not an approach that leads anywhere right it seems like you're just trying to throw a bunch of bells and whistles in it's like again like you said satoshi took those op codes out for a reason to they were worrying but more importantly you know even if and i haven't actually looked i assume they did the work to make them more safe but there's no one is trying to use those there are things that people are trying to use there's like the lightning people propose this uh sick hash no input they've proposed various other things there's some other protocols people are thinking about some vault

stuff but the like the none of those are the things the bch folks added no they didn't do the engineering work to say like okay where can we add real value to this so that it's easier for people to use bch instead they said what can we do hey look here's this thing we can do let's do that thing yeah like how is that just uninteresting it's wholly uninteresting but i agree with you like roger there's a number of folks in the bch community who got involved in bitcoin early were big proponents of bitcoin you know made bitcoin what it is today but you'll note none of those people are the technical folks who had an understanding of bitcoin right at the technical level yeah they always had a understanding of bitcoin at the political political level

social level you know whatever it is that they wanted to push bitcoin and that's great but they didn't have that kind of technical understanding of here's how it here's why it works the way it works and here's how we can build something that will keep working that way or outwardly you know two users will keep working that way and will remain as secure and also scale better instead they just said like well that the technical way it worked was working previously let's just keep using it that way i mean sure it doesn't scale and we have a ton more users but let's just keep making it work that way right like a nonsense approach yeah and they're what pissing me off about their arguments is they sometimes not sometimes but like they just

completely neglect the fact that when they were using bitcoin like as everyday cash to buy coffee and stuff there was nobody using the network like there was no demand on the network of course fees were low like yeah it's a nonsense like but with that but without it's a double-edged sword because with that being said as well like bitcoin might not be where it is without them using it in that way at that time oh totally i think yeah no there's no question and that's why that's why the like lightning stuff has come around that's why all of these other ideas have come around because the goal is really that people can keep using bitcoin in the way they were in 2011 and hopefully just as or similarly secure i mean recently bitcoin was horrendously insecure in 2011

there's no miners and not much value to secure and whatever else but But, you know, the goal being, let's make it so that people can outwardly, the way they interact, the way their wallet interacts, the way they think they interact with Bitcoin, the way their wallet displays things and functions, looks the same or maybe better than it did back then. But under the hood, you know, that's for the technical people to figure out. We have a ton of ideas for how to make it under the hood work really awesomely. Let us work on that. just like the the outward interface can be the same yeah it's interesting to see because a lot of people analogize uh bitcoin development with like internet protocol development and it's like a social phenomena i guess because bitcoin development's like out in the open now

we have twitter we have all these communication apps and the plebs can can look in at the at the technical community working on it and comment and i shouldn't say plebs but non-technical people i would i would be a pleb in that definition um but it's interesting like to see because the debate around ip tcp ip um there's ip tp tcp tcp ip tcp ip yeah um it's probably much more like technical it was just probably solely technical people right and now today bitcoin development you have shit posters like me hopping in i mean like this doesn't make sense totally different like decentralized points on that tcpip was actually very political when it was first created it was political in the literally politics there were governments

involved trying to push different viewpoints and everything and it was a shit show and in fact tcpip came around because the other idea and this other concept of way you were to build a global network which was being pushed by the biggest political forces at the time just didn't scale as well tcp ip scaled a hell of a lot better and it won out in the end how long did that battle go for how many years many many years uh i i don't have an exact number maybe five ten something like that i mean it went for a long time um yeah so we learned a bit of history there a little history i was ignorant so thank you for teaching us today matt that's why that's where you're a first repeat guest we learn a lot no but it's interesting being able to like talk

shit to protocol devs on twitter but but i think to your earlier question about you know why is ethereum and the bitcoin community different about whether or not people are second guessing devs well i think that's healthy in some sense sure you know maybe the developers know more about certain intricate details but the onus should be on the developers to prove that their ideas are correct and to prove that the changes they want to make are correct and the bitcoin community is pretty good about having a bunch of trolls call out devs and some of them actually have a fucking point who's your favorite troll oh man i don't know if i have a favorite troll you can't name me but who else uh yeah i've been getting into it into it with a few people this week yeah but

we won't make you name names it's a perfect segue we're going to stay away from being mean again what you're working on you're working on helping I guess you could say in the broad sense decentralized mining that's the goal so I've been working

a bunch recently on thinking about how to take pools and split up pools without splitting up pools just a little bit of an oxymoron so what's the current problem So right now, mining is super centralized in the Bitcoin network. It's super centralized in, in fact, all of the cryptocurrency networks, but also in the Bitcoin network.

Because hash power, the people who actually own ASICs and are running the farms, well, that's kind of decentralized, actually. There's a lot of different people who have relatively medium-sized farms. There's a few people who have very large ones. But in total, it's actually a pretty decentralized group. but for profitability reasons and for practical reasons they all mine on a pool so if you're someone who has 10 megawatts 20 megawatts i visited a farm this weekend that was like 12 megawatts you just point all of your miners at one pool and for the purposes of the network you know for the purpose of centralization the pool is the miner the pool selects the transactions

They could censor transactions. They could choose to selfish mine. They could choose to do whatever they want. So when you say the pool, pool operator. The pool operator. Describe the, if you will, if you could, if you could for the freaks out there, describe sort of the job of a pool operator and how they work right now. Yeah, so the pool operator kind of tells the miners what to work on, right? So the miners are running these devices.

They're trying to create a block. But somehow you have to figure out what the block is going to look like when you start mining. And so that means selecting transactions. You have to find all the transactions on the network. You have to gather them. You have to say, okay, here's a set of transactions that pays the most fees. You have to find what the current chain is and build something on top of the current chain. You have to optimize your block propagate.

You have to optimize a bunch of stuff. It turns out if it's not well optimized, you're going to lose a lot of money. And then on top of all of that, the job that the pool operators do mostly for these clients is they even out the reward, right? So if you have one miner who's solo mining on one little box, they're going to find one block every, I don't know, 10 years. And in the intermediate portion where they haven't found a block, they're sitting there paying their power bill every month with no income. And so you mine on a pool instead, and so you get together a ton of people who have small to medium-sized farms, you all mine a ton of blocks together, the pool receives all the reward, and the pool pays out everyone proportional to how much hash power they have. Now, it's important to differentiate these kind of two jobs, right? So one of them is just splitting the reward.

From the network's perspective, i.e. me as a user of Bitcoin, well, if some pool were to take all of the reward from a bunch of their clients and scam them, I don't care. It doesn't affect me, it affects the miners, and it would be a shame if that resulted in some miners going out of business, but it's ultimately not my problem. if on the other hand some pool were to be censoring transactions or selfish mining or performing some attack on the network which again they're able to do because they part of their job is to do that work on behalf of their clients well that is a problem for me as a bitcoin user and so the stuff that i'm working on right now is to kind of split out these two jobs because there's no reason they need to go together having the guy with one box in the corner or the person with a 10 megawatt farm which it turns out is now kind of small select their own transactions

run their own full node and use that as the basis for what blocks they're trying to generate does not necessarily have to go together with the person who's splitting the reward because it doesn't matter because again at the end of the day an individual miner finds the block is that correct yeah yeah at the end of the day an individual miner is the one who finds the block it's not like the whole pool together finding a block one pays out to the pool right but the individual miner finds the block it pays out to the pool and the pool is responsible for divvying up the money but they don't have to be responsible for fine for generating the block for actually doing all the work of putting together

all the transactions potentially censoring the transactions potentially attacking the network instead you push that onto the users so the pool operator just have to be cognizant of many implementations running within the pool yeah so the pool so instead of the way the pool works now where the pool runs a full node you just have the users run their full node and in fact it actually works kind of the same today either way you prove to the to the pool like hey look i'm doing work that's paying out to you that's something they do today you still do that and then the pool says okay well i have a bunch of people who proved to me they were paying work they're doing work they were they were trying to mine blocks that pays out to me i will accept that as something i should pay

out for and you can do that just as easily if the users are running a full node as if the pool is running a full node it's just a matter of the way things have been done in the past it's easier to implement if the pool is running the full node than if the miners are running the full node but we can change that yeah i was gonna say it sounds like it sounds like it's more practical as a default right why isn't it default that way you said it's easier just to do it well i mean the biggest kind of roadblock there is a lot of the pool operators are either in a remote location or they just don't have the kind of technical know-how to run and maintain a full node that's properly optimized for mining right running and maintaining a full node at home or for an exchange

or for a merchant turns out to be really easy running a full node for mining well you need to optimize things down to the millisecond you have to make sure you have good peers you have to make sure those blocks when you find a block get out to the network within milliseconds i mean really as fast as you possibly can up to the speed of light whereas if you're an exchange if you're a merchant well you get a transaction confirmation one second later than everyone else you don't care like one second it's not going to make or break anything for you maybe a half a second but for a miner well a half a second means a lot of money it's a lot of time so getting it to the point where you can run this kind of setup where the end users are running

full node while it's still optimized for them and it's really easy for them to do this without necessarily having all the technical know-how that the pools have today is really the roadblock and so that's been a lot of the work that i've been working on trying to make sure things are going to be efficient no matter how they misconfigure their full node wow thank you thank you for explaining that and working on it because that seems like that could be huge for decentralization like how does this help decentralization yeah i mean i like personally i think you know we've learned over the last kind of year that the centralization around development and around people and decision making, right? Making changes to Bitcoin is really not centralized at

all. With 2x, with UASF, with BIP 148, all of these things have cemented in the community's mind that no, no, no, consensus changes are something to be fought. There's something to be to happen only when the community is behind it in a broad sense. And that's incredibly powerful and has given me a lot of confidence in Bitcoin's long-term trajectory, but mining centralization right now is still really bad. Yeah, that SciTech article is pretty... David Vork's article last week or two weeks ago.

Yeah, I don't know if I saw that one. He basically went in, like, the economies of scale that are afforded to bigger miners on the network are ridiculous. Yeah, I think that's true now. I think it's unclear how true that will remain in the future. There's a lot of economies of discale in the power markets, actually. Exactly.

Being a small-scale miner, if you can sidestep a bit of the economies of scale of just operational complexity, being a small-scale miner with a small amount of power actually has a lot of economies of discale, which is really interesting. Let's jump into that. What do you mean by that? specifically you know you can go to a utility and say like hey look i'm i i would like one megawatt or five megawatts or 10 megawatts and they're going to be much much much more willing to work with you than if you show up and say hi i want 100 megawatts or 200 megawatts interestingly most utilities in the world at least out in the western world are government agencies or partially government owned or you know tightly coupled with the government and as a result when

you show up and you say hi i want 100 megawatts and i have no jobs i'm gonna like hire one guy to watch the farm and that's it the response is like no no no no no no it's either you or the steel smelter who's gonna have a thousand jobs and as a politician especially on a local level it's all about jobs right like every western politician their number one concern and number two and number three number four number five is jobs like how do i optimize for jobs in my electorate so i get reelected they ticker jibs yeah pretty much that i had to throw it in there um and so there's economies of the scale in that market and then there's also economies of the scale just in you know there's available power that might show up in a location that's there

briefly or specifically power at night is often way cheaper right though the world uses way more power during the day than at night and it turns out you can't take a entire power plant and turn it off in like an hour it takes like a week and so at night well you just have excess power like you have nothing to do with it and so taking something like that and using that to mine on a medium to small scale is actually very doable it's yeah it's become i've been saying this doesn't exist yet it doesn't exist yet and it's like people are like there's mining centralization it's like yes there is let's concede that yes bitmain was one of the i've said this a bunch of times bitmain is the only few companies to take the risk early on in the days they're being

rewarded for that right now but now competition's on the way like the profit motive is there Yeah, totally. I would say Bitmain probably set the floor for ProfitMotive. They paved the way to create ProfitMotive. Yeah, and you can see with Bitmain, they're kind of pivoting into, well, not necessarily pivoting, but definitely spending a ton of time building ASICs for all of the random coins, not just Bitcoin, everything else, because there is starting to be competition in Bitcoin.

And I like to say, you know, if I thought mining decentralization wasn't going to get any mining decentralization wasn't going to get any better than it is today i would have stopped working on bitcoin a long time ago yeah because like how is bitcoin in any way interesting if one company or two companies are signing all the blocks we should just be using paypal paypal works pretty well and if you want a highly censorable really shitty for a lot of minorities payment mechanism or really shitty for a lot of people not in the western world payment mechanism paypal is great and if you have a world where one two companies control all of the mining power in bitcoin that's what you get because some government shows up and says no

no you have to censor this or that or whatever it is and then they have to yeah and so like why would bitcoin be any more interesting than just using paypal and it's not but i think we have a lot of room to play with mining decentralization you know i'm working on splitting up the pools or at least for the network's perspective splitting up the pools which i think is pretty big also you know i mentioned economies of scale in the power markets as that market matures as the bitcoin mining market matures which is just starting to i mean literally in the last six months it's starting to you know now i talk to people getting into bitcoin mining and they are people who are energy experts they're people who are like yeah you know i've been in the

energy markets for the last 20 years i know how to find cheap power right six months ago that wasn't true six months ago i was like yeah you know i'm trying to get money out of china because i you know just want to avoid sanctions and capital controls well it was very different from what this today now it's like i want to make some money and let's start can we put the bitcoin's going to destroy the environment fud to rest yeah i mean so i i admit i am concerned about where things are going in the last six months the percentage of bitcoin mining that is natural gas has gone up significantly um now obviously compared to china where a decent chunk of it's coal that's a huge difference natural gas way better and can i interject go for it from what

i've heard well i've and i would i would say this is one area where i do know a little bit about the markets in particular because i worked in futures markets and had to follow nat gas markets and sort know the mechanics of it what i've heard i'm not sure if this is completely true but what i've heard from some miners using nat gas specifically is that so when you when you do fracking for natural gas you have basically pipes that come up and they let off excess net nat gas that just mostly methane yeah yeah that just goes into the atmosphere no matter what yeah um so what i've heard is they're just taking that excess nat gas oh that's totally what they're doing yeah yeah and it's so the burning of it is is the dirty part of it you would say

sending methane to well i mean atmosphere doesn't matter nasty either way methane is one of the worst greenhouse gases possible is you know i can i think people say it's an order order of magnitude worse than uh carbon dioxide so what's worse for the environment just letting it go to the ozone or burning it you know i don't actually know and i'm kind of curious about this um but but that said a lot of the a lot of the oil fracking and and also oil like in iraq they have a ton of nat gas that they dump into the atmosphere or burn off a lot of it just gets burned off anyway and they don't generate any power from it because they're in the middle of nowhere and there's nothing to do with the power right and that's that's true there's a lot of

bitcoin miners who are going to very remote locations again economies of the scale showing up with one megawatt a few megawatts of power and saying look you're fracking oil you're taking oil out of the ground in some way and dumping methane into the air or burning it off anyway we can take that and actually mine bitcoin with it that that methane you were just gonna have either way the net gas you're gonna have either way so is it a net benefit in in that context it certainly is There are people also who are mining in upstate New York or in Texas off just regular grid power, which is a lot of it net gas, which is not necessarily a net benefit because it does create more demand on the grid. But that said, again, this is still a fairly young market. I think the concern over global warming of Bitcoin mining is well-founded based on how it works today, but because it is such a market that is so razor-thin margin, eventually, because any profit available there is going to be eaten up by someone, and that just makes the difficulty go higher,

which means everyone who has slightly higher operating cost gets driven out, eventually you end up in a situation where the only way you can make money mining is with power that is free or otherwise unused. And that's not to say it won't all be nat gas. In fact, you know, nat gas at night, not necessarily nat gas, but like coal or other power stations that are used during the day that utilities have to run either way at night they might just have excess power and that's something that bitcoin miners can eat up on interruptible power only operate at night

stuff that is literally otherwise going unused it's going to be generated either way and is completely neutral yeah or you look at i mean west texas there's some miners now in west texas well you know 20 of west texas is wind because there's just a ton of wind in west texas there's a ton ton of wind to still be created and you can talk about using mining to equalize the grid so that you can in fact have more wind than the grid operator would otherwise be comfortable with just because you have this highly elastic demand that you know right now bitcoin mining is highly inelastic it just uses the same amount of power 24 7 all the time but it could be made highly elastic you know they could literally get a phone call from the grid operator and say okay

we're turning the farm on or okay we're turning the farm off and use exactly the amount of power the grid wants them to use yeah that's what a lot of people are arguing that's going to help level out the grids which like i had joe looney in here a couple weeks ago dude started rare pepe's um outside of air pepe's he's an electrical engineer at power plants and he's like dude this is going to help like level off the grids across the world which is a net benefit for the world i think it could have very positive influences on that market right which would end up being neutral or almost neutral greenhouse gas wise and emissions wise and and then global warming wise i've been spouting this out without like any data behind it but like just from like a market perspective it just seems

that if bitcoin mining in particular proceeds at the pace that it's on right now and let's hypothetically say they use all fossil fuels well eventually the demand needed to like the demand forced upon the network by the energy needed to secure the network the demand for these fossil fuels be driven so high that the price would be driven up that it would become unprofitable to use them as energy sources so there's gonna be like a natural leveling at leveling out of like economic incentives in general like if maybe i mean there's an interesting question about the way things have gone recently where in the western world you've had a kind of decline of manufacturing right i mentioned i was up in upstate new york this weekend looking at a farm up there that's

mined primarily off nat gas it's just the grid power up there is mostly nat gas where they had a lot of they i guess still have a lot of excess grid power because they've had a lot of like steel smelting and stuff up there you know buffalo area it was all very industrial and all of that is gone all of that's gone somewhere else in the world where it's cheaper and now bitcoin mining is showing up and kind of taking some of those areas where there is excess power and they're considering turning off a plant or maybe not and bitcoin mining can kind of take over some of that but that's just not going to be profitable in the long term it's very very profitable right now but as that market matures that market is literally designed to only allow people who

have the cheapest power to compete yeah fossil fuels are going to get priced out and fossil fuels are already priced out right like what is the cheapest power in the world is hydroelectric and geothermal right behind it if you discount the upfront investment and you have a long time horizon wind i mean these things are the cheapest because there's nothing involved like there is no recurring cost like fundamentally it is renewable energy there's no recurring cost so of course it's way cheaper to operate once you have a long time horizon and so these things are going to they will sort themselves out right now it's not great you know there are there are places that the bitcoin is not helping global warming right now but in the long term if bitcoin is to succeed

and that mining market gets really competitive the way it's designed to and will obviously if bitcoin is to succeed it sorts itself out right that's why i think the art like that's why i hate the media i'm not a part of the media if anybody ever calls me a journalist i'm gonna kick you Yeah, but you run a media outlet. You run like a podcast. That's totally media. I don't know. New media, man.

New media. There's a difference. We're edgier. I hate it. Just talking. No, but that's the thing. With all the mainstream FUD, like Bitcoin mining,

it's got half percent of the world's energy use. Yeah, of course, that's all based on one relatively flawed study. Right? Come on, guys. we will prevail though that's the other thing like the incentives are too perfect like bitcoin doesn't give a shit like if you're gonna scream yeah like what like and and if if anyone reacts to the bitcoin use of power and says like oh well this is harming global warming and it's terrible

then the only way to respond to that is to say well we're gonna like tax net gas usage more like and if you are someone who is you know more into supporting preventing carbon emissions and whatever cap and trade yo i mean like the only possible outcome from people screaming about bitcoin is like cap and trade or whatever regulation in that direction right i don't mean to prescribe a particular political viewpoint to the people screaming in that direction, but like, hey, I mean.

There are other avenues. Yeah, and if you are that can only have a positive impact on global warming. That's true. We're about an hour in. I'm going to go to the Jersey Shore soon. Going down

to the shore tonight. It's Memorial Day weekend, dude. We're about to start I'm about to start fist pumping hot. What, other than your mining project, what are you most excited about in Bitcoin right now? Lightning becoming usable. Yeah. I think that's really exciting.

What are you seeing there? What are you looking at there? I think a lot of it, it's starting to reach the point where it is, you know, it exists. People are using it. People are trying to use it, and people are finally discovering what the actual problems are. You know, instead of people worrying about like, ah, this is going to be a problem or that's going to be a problem. It turns out most of the things people scream about are not actual problems, but people are finally using it in a way where like, okay, we can discover what the actual problems are.

And let's discuss how to solve those problems. Let's figure out, you know, whatever the problems are. Let's figure out what the actual problems are. What's one of the biggest actual problems right now? I mean, I can't say I follow it that closely. But there are issues just with reliability of a few things. Reliability has improved greatly. When it first started, it was a lot of nodes that would go offline and only stay online for a brief period of time.

and that obviously doesn't help reliability now that has improved a little bit but then also now people are staring down the barrel of like mobile apps and trying to figure out how to make it work on mobile and working on some of the scalability issues with our privacy issues also with watchtowers and having these servers that help you if you're not online when you need to be when something bad happens on the chain you need to generate a transaction and talking about fee prediction and predict one of the problems in lightning is you have to predict what the fees are going to be in the future for some of the transactions you create and so they actually came out with this proposal recently it's an old proposal but they've kind of rejuvenated it and

designed a new style lightning around it called sig hash no input which to some extent sidesteps the issue of having to predict what fees are going to be in the future, which is obviously kind of a hard problem. You don't know whether the price is going to be spiking. You don't know what Black Swan events are going to happen. You don't know. You can't predict a market. I mean, that'd be crazy, right?

If you could predict a market, you could make a lot of money. And so they have a number of these things where they're issues they're actually looking at and saying, like, okay, well, let's figure out how to address these. It's interesting to see

the lightning network of all what's it at like uh 21 bitcoin i think it's something like that um and real money real money and a lot of notes too right yeah a ton more than more than bch from what i hear almost certainly not that many people who run bch um did you see the uh What was his name? Udi managed to get a tweet read on CNBC by Brian Kelly. Brian Kelly. Oh, God. What was the tweet?

The tweet was something like... It was like, have you actually ever used PCH as a transactional currency? He's like, well, actually, no. Well, actually, no one ever has. Oops. Wait, shit. TXHighway.cash. Look it up.

Very fun website if you're ever bored and questioning whether or not Bitcoin Cash might have any validity behind it. It was designed to be like, oh, look at Bcash. We're so awesome. We have this really wide highway, and the Bitcoin chain has very few. And then actually things just didn't work that way. And turns out there's no transactions on their really wide highway. None at all. It's hilarious a lot back there.

It turns out that the regular Bitcoin chain, because of price depression and various other things, doesn't have enough transactions to fill the blocks either. And so this is just hilarious, because it's designed to show off Bcash, and it's like, well, actually, they just kind of look the same. You just look like you built a really wide highway for no reason. There's levels to this shit, freaks. the bch team's terrible at memeing bitcoin's got smarter memers that's what you want on your side and the meme wars we have smarter memers but they have simpler arguments they're really good at having the like sound bitey arguments bch yeah like what i mean very the um most of their scaling arguments the like bitcoin angle of well we're gonna build all of these systems on top that are

going to provide really efficient scaling but also are going to have these other weird trade-offs that we think are very manageable but we have to build all these other things to deal with them that's the bitcoin argument the bch argument as well we're going to increase the block size and then the fees are going to go down turns out that's a way simpler argument for people to understand and just kind of go with right turns out politicians are just way more effective when they have soundbites right that's true i think the memes will win out over the soundbites over the years eventually i mean it seems to be like bch isn't going anywhere right they're like hey we did this hard fork during consensus week and no one really noticed i don't know why they did

that it was bad scheduling terrible scheduling and this is actually something i've been telling people in private she's like i don't really want to talk about it like just don't talk about it's not worth it it's just uninteresting right it's very uninteresting it's like fake toshi new zatoshi saying there's a new one there's a new satoshi claimer in the world really he's even worse though he's even dumber what's his name i don't remember his name i've been calling him new zatoshi because he's a new zealander really some new zealand i don't know jesus christ he's really dumb he wrote this whole like fanfic about how he created the bitcoin logo except it was like well documented someone else created the bitcoin logo like what the fuck and

then he went on the he wrote this whole long fanfic about he and how he and uh craig wright created bitcoin and then craig wright was like no this guy's dumb why is he like i'm running my scam here he's gonna make me look bad like stop trying to in stop trying to intrude on my scam man oh my god so bad there's scammers everywhere freaks they're coming after your bitcoin did you see craig wright at the african summit tell i have more money than your country that was the most ridiculous soundbite i've heard in a while also he doesn't he like has calvin ire's money and he didn't raise that much just like the balls to look a cut pretending to be at a conference and be like yo i have more money than your country fuck you bro i don't i think he was

like i don't give a shit what you think i have more money than your whole country i was like whoa you fucking freak the reality is he fucking doesn't either he had to run from australia because of tax evasion yeah he can't even go he's a fucking one can't even go back to his country for fuck's sake he looks like he's in a he looks like he's like in a in a downward spiral he's in a very fast downward spiral every everything that comes out about him recently has been like someone calling him out somewhere and him getting so pissed off yeah who called him out on taiwan the other day jack leo the uh bitcoin gold guy bitcoin gold and lightning asic and various other things.

Didn't Bitcoin Gold get attacked this week, too? Yeah, yeah. Bitcoin Gold also had a problem this week. Yeah. I think they got 51% attacked as well. Turns out these tiny random altcoins don't have any security. Who would have guessed?

Who would have guessed? Well, like we were saying earlier, be careful out there, freaks. If you've got fat bags of low hash power altcoins, they're susceptible to hacking. Yeah. And you can get your coin stolen. i don't know which one in particular it will be but i expect there will be more of these

because the ico money is gone um back on back on the bitcoin what um are you more bullish are you more bearish than when we last met in december how do you let's go back to like this last six months i know we touched on it in the beginning but let's dive into it in earnest like i feel like the people that were new in like september and november just like got kicked in the dick and they're like realizing like holy shit what is this new world i was talking with such certainty three months ago and none of it turned out to be true yeah there's a lot of those people multi-coin they they still talk uncertainty they don't uh they haven't learned anything the i you know i i wouldn't say that i think last time we met i might have been a little bit bearish

uh and and who came in and were like yeah bitcoin has a five percent chance of succeeding I think it still has a 5% chance of succeeding, but that's very different from the market. It's very different from the prey. Success, in my definition, is building the thing I want to see. I want to see this decentralized alternative to the current financial system that people can use if they're in Venezuela or if they're a marijuana dispensary or whatever it is. If you need it, it's there. It's this backstop that provides this alternative for people. Whereas the market can go very, very high

and would probably even go higher if Bitcoin were to fail by my definition. Right? Which is kind of sad. But all that to say, I think I was probably more bearish last time I was on. but i think there's definitely you know i i said that i would be very happy for the price to be kind of on a downward slope for a while and i think that's kind of where we are to some extent

right now the price has been bouncing back and forth but it's definitely ripe in people's minds is this fifteen thousand dollar twenty thousand dollar bitcoin that we're nowhere near in fact we're not even at 10k right we haven't touched 10k maybe we know maybe touch 10k in a couple months not in a while and i think that that's very healthy you know i think obviously right now there's a lot of people who are still very much into the hype they're very into the oh yay bitcoin yay icos yay cryptocurrencies clearly this is a market we need to be in but also if this kind of thing continues for six months whether it touches 10k or not if it doesn't hit 20k if it doesn't go on this like 10x upward spiral like it did last time then there's going

to be a lot of people who kind of to some extent lose interest and reality will set back into the market and i think that's very very healthy for a market like this whatever i think the upside is whatever i think the possibility for awesome alternate financial system and whatever value that might carry with it in 20 years if the entire community are people who bought in because of hype that won't happen no because they're just there for the hype we've gotten this far because of the grassroots movement of people truly passionate about this technology working on it and for idealist I don't want to say

idealistic but oh idealistic that's the right word that's the right word idealistic values and that's why I work on it that's true but

let's comment on this because I feel like as people like this is one thing we talk a lot about on this podcast is the cycles of like you come in

it's like you find bitcoin and it's like holy shit this one's better it's gonna be the next bitcoin let's buy it like then you find

the platform it's like dude it's gonna take off so much more value than all bitcoin let's get into this you get your dick pushed in a couple times you get confused or like dazed in the boxing ring like what the hell's going on then eventually people i'm finding are like circling back to bitcoin and whether or not they came with the sort of idealistic vision that we're

talking about a few seconds ago i feel like i don't know i was talking about this with jameson too converting i feel like people are converting like are starting to see the reason why we are interested in bitcoin um a little bit at a time um but it is a process it takes some time yeah i mean are you seeing that matt i think there's and i don't want to call him out uh but there's a guy who's been at our office for the last few months uh he is kind of he's temporarily in our office he's kind of a volunteer for a few months due to some unique circumstances he has a job somewhere but he can't start for a while and he's been interested in cryptocurrency for a long time he's been like trading he's like a trader he's been like trading random altcoins

and like following that space and he's said repeatedly over the last kind of month that having spent a few months at chain code he realizes that the like bitcoin community spends maybe an order of magnitude or two more effort thinking about all of these nuances of how we build something that's going to last for 50 years than any other community and if you're in one of these communities for 10 years if you really are spending the time digging really deep into some of this stuff you eventually realize this you eventually realize that like, oh, well, the Verge developer, the Verge community is just a bunch of people screaming, no, no, no, this attack is FUD.

I mean, sure, they like stole a few million dollars, but it's FUD. It's totally bullshit. And the Ethereum community is like, no, no, no, we're going to have sharding and we're going to have proof of stake and we're going to have this and that and this and that. We're going to clobber together all of these things and eventually it will be secure and stable and it'll be great. but the bitcoin community is a bunch of people saying well you know we don't really know how to solve this problem it's a hard problem it turns out scaling is hard we have some ideas

we have this lightning thing it probably provides us a few orders of magnitude more than we have today it might not scale all the way to like visa levels we probably gonna have a lot of people who use bitcoin banks you know there's trade-offs here you know switching a bunch of people to lightning it does have trade-offs we think those are really great trade-offs for the vast majority of people but there are trade-offs you compare that to all of these other things where it's just like pure noise it's like ah pump pump pump right pump the value woo make more money also let's exit now because we don't actually give a shit about this exactly eventually if you're really in the space if you're really digging deep into it and it's your full-time job or maybe your full-time

hobby you kind of figure this out after a while and there are people who've slowly starting to come around now we got a ton of people who got really into bitcoin the last 6 to 12 months and it'll take them a year or two yeah but that's why i like this like little price spiral downward thing look if we hit like five thousand dollars if we just chill at five four three thousand dollars bitcoin for a while all of the people who got in the last few months are eventually going to realize this right and and then when we hit the next spike there's going to be an even bigger community of people who are like no i actually understand what's going on here i understand hype i understand pumps i understand pump and dumps and i understand technical limitations exactly it takes time no one

actually knows where the future of all this stuff goes no but so this is the mission i'm on is trying to help people fly through this cycle faster than i did it took me a few years i'm not technical at all it takes everyone a while i it took me like probably like mid to like i got in like late 2012 early 2013 and it took me a few years to sort of realize all right i got in 2011 and I didn't buy any for many years. Right? It's like... I should be retired.

I should be a billionaire. Instead, I'm sitting here working for a living. You're sitting here talking to me at the fucking after hours of the... Yeah, I have to... In order to get beer, I have to show up in a podcast. I can't even buy my own beer.

It's a shit show. But it takes time. And getting back, is there... So that's like... I don't want to say the mission I'm on, but who am I to make decisions for people and say hey you're probably going to learn these lessons this is what i've learned maybe my lessons

are wrong who knows but i don't believe they are what i'm getting at is there do you think what could be done better to help people sort of realize this out of the gate like is there is an educational piece is it is there a big event need to happen like an enron situation we're on the all coins right yeah i mean a big event would help i mean certainly you know a verge you know maybe something in the top 10 cryptocurrencies by market count, you know, arbitrary metric, but something that is considered a stable, large cryptocurrency having such a bug

that it gets delisted from exchanges. The Verge was a good example this last week and a half. It had major, major flaws. Just, like, the entire thing is a shitshow. And yet the value stayed kind of stable. Most exchanges, I'm not aware of any exchanges delisting it. having something like that happen where exchanges actually delisted where the value just gets destroyed, people would learn something.

Now, absent that, which I think is maybe slightly unlikely, or I wish it were more likely, having more education I think definitely helps. Having more people who have been around. One of the problems in this space right now is just there are so many new people. the vast vast vast majority of people in the space are brand new in the last six months let alone the last year let alone the last five years yeah having more education having more people who've been around for a while who've seen the last four different generations of

types of scams in the space explain their viewpoint and say look you know here's what i've seen happen there's a lot of creative scammers here's some of the tactics they've followed previously and now i mean you look at some of the people who are involved in some of the biggest ico scams now they're literally the same people who were there in 2011 2012 2013 literally the same people and they're still raising absurd amounts of money right i think eos has five billion dollars somebody's five billion with a b yeah with a b we'll see how much of that is actual money because they had they have this like whole scheme are they laundering money scam no no fucking scammers like they had this whole scheme that allows them

to take money that was previously invested in them and make it look like they have more investment I mean like all of this stuff is very patent like great scam tactics right it makes it look like they have five billion dollars they probably have hundreds of millions at a minimum but they might not have five billion and yet everyone repeats that number which makes everyone have FOMO which makes everyone say like oh my god fucking EOS clearly it's worth a shitload the markets were valuing it that's so much i should i should buy some eos right have you seen the parallax animations on their website i know the parallax animations god they have such a nice website clearly i should buy wait maybe that's a fucking scam the future is here i think that the trick is

uh if the website looks good it's a scam right if the website looks good it's probably a scam some of the best sites in the world look like shit you ever been on craigslist it's literally just html it is blue links garbage site isn't the worst design ever is it is it i would argue it's not a bad design it's bad aesthetically but ux wise it's pretty it's a pretty good site yeah you can go and find what you need in three clicks yeah then that's true that's true but there's beauty so many apartments there right and there's beauty in the simplicity of just the plain html and terrible aesthetics terrible aesthetics no that goes i mean terrible or good aesthetics maybe that's a good heuristic to use going forward like

maybe these people are focusing more on how the the optics of their website looks maybe they're not really caring about the tech entirely not caring about the tech but i mean And anything that the market reacts to, anytime the market decides, oh, this is the thing we should put more money into, the scammers find a way. Scammers find a way to take that and optimize for that, whatever that is. If the market says, like, oh, you know, actually, terrible website is probably a sign of good tech, so we should invest in terrible websites. That'll happen. The scammers will have the worst websites. They will find a way to build worse websites than we can possibly imagine.

There's scammers everywhere. It's the theme of tonight's podcast. Scammers. What else can we talk about? I'm not done riffing. We got one more beer to finish here. Yeah, let's jump into crypto week. Let's jump into blockchain New York City week.

All right, so you only went to BitDevs and the cranking thing. I went to the crank. I went to one party. I did one night of blockchain week bullshit insanity. I went to... Got home at 6 in the morning. Ooh. I mean, we left the bar at like 4.30.

Yeah, you crypto bro. You're bringing a bad name to the space, bro. Bro. We're at the strip club three nights a week, bro. Yeah, dude. We're going to this burly show. My favorite quote from that week, I think it was Business Insider. The one woman who wore it.

I don't know whose after party it was. But one of the lines in, she was quoting some girl that she met, some crypto. Bra. Bra? Bra. some some crypto basic batch excuse me uh it was like if i give you a little bit of coke will you promise not to write about it write about it right away no shit my favorite line in the week shout out i believe that's impressive zo zo from uh maybe zoe from uh business insider shout out

incredible that's that's actually uh that's a good article yeah the uh the week tends to be insane uh i almost entirely successfully avoided all of the events uh the i went to the coin center dinner which is like you know coin center is a great organization they support having good legal protections in the space i think they go too far sometimes but but i was actually thinking about this the other night sorry to interject but uh coin center is like the palestinian chicken episode of Curb Your Enthusiasm at the end where Larry has to choose between the Jewish deli and the Palestinian chicken.

It's like, ah, ah, ah. Because on one half, I believe Coin Center has Bitcoin and cryptocurrency's interest at best at heart. And they're really putting a good effort forward to make sure. And they're very effective at what they're doing. Exactly.

But at the end of the day, it just ruffles some feathers because it's like, this is decentralized. Like, who are these people to speak on behalf of blockchain and Bitcoin in particular. Yeah, I think they also have a tendency to be very pro, let's have the market figure it out, let's have all the scams be completely legal,

let the scams run their course, and eventually the market will figure it out. Which was definitely my viewpoint a number of years ago. over the course of the last few years seeing the scams run their course. I don't know if that's my viewpoint anymore. But certainly there's no question Coin Center is very effective at getting,

especially in the U.S. and D.C., to not crack down on cryptocurrency, not make Bitcoin illegal, not make Ethereum illegal, not make ICOs illegal. and that's that's that's very you know that is definitely something the space needs the space has not had uh the space doesn't have anyone else fighting for it in dc and you know the coin center people would be the first to point out that i i go head to head with them a number of times and

criticize their approach a number of times but i there's no question that they're someone absolutely worth supporting because we don't have anyone else and they're really good at what they do. Yeah, I mean, Mirage is the best memer in the world. We need to keep paying his salary. Well, memes are not. That's what they pay him for, right?

I think he has an actual job. He just also happens to do memes. You know, they are very effective at what they do And as lobbyists go, they are really smart people who really know who to talk to and really know how to make things happen, and that's great. So all that to say, I went to the Coin Center. Sorry, BeautyOn. So getting into the Coin Center dinner.

So I went to the Coin Center dinner, which I think was good. It's a charity event. It's a charity dinner. You go and, like, whatever. but last year the coin center dinner was like you know i knew maybe a quarter of the people there half the people there was a reasonable sized group it's great you know i got to see some you know people in cryptocurrency who a few people who i hadn't seen in a while it was great to go this year oh my god probably 10x bigger than it was last year looked like an event i knew like

maybe five percent of the people there if that's not even close there's so many people who got in in the last six months last year who don't know anything about cryptocurrency frankly but they're like you know they got in they're like oh this is really cool we should support coin center which i mean hey at least they managed to find the like one good advocacy organization to support but like i don't know who they are and they have like strange viewpoints and i think that was maybe the theme of blockchain week this year like okay sure coindesk and blockchain week is targeted at people who are brand new don't know anything about the space willing to pay three grand for a ticket willing to pay some absurd amount of

money to hear about blockchain something or other from people and that's their target market but there's no question that this year the theme for me was oh my god look at how many people got interested in the space in the last six months don't know anything and just like threw money into diversified cryptocurrency portfolio and are now trying to figure out what the fuck they just invested in now it was interesting to see uh that's why i actually love blockchain week because i never buy a ticket to consensus during the events and i just go to the after parties and talk to cool people i've met online yeah i mean i i did manage to have lunch with a few interesting people i managed to have drinks with a few people i hadn't seen in a while you know it is useful in

that a lot of people come to new york yeah but it's certainly not useful to go to any of the conferences to talk to people aside from just you know reaching out to your network and saying like hey who's in town let's get a drink let's get coffee let's get lunch yeah i had a fun week i didn't go out that much either i did bit devs i love bit devs bit devs is great how to support you bit devs is by far the best technical meetup around bitcoin in the in the world in the world in the world no question i'm that lucky that i get to go to the most technical the fucking like i spoke to probably four or five people that that night who said wow this is the best meetup i've ever been to and people who like literally spend their time traveling the world going to bitcoin

meetups you're like wow this is the best meetup i've ever been to because it's well moderated it's no bullshit let's fucking talk about this pull request it is incredibly technical right like i i don't recommend it for someone to get into it like oh i just got into bitcoin i'm gonna to go to BitDevs, you know, come to the end of BitDevs and come to the drinks afterwards. There's a lot of really nice people who will explain anything you want to know about Bitcoin. You can ask dumb questions all night long, and there'll be a bunch of really drunk people who will answer your questions, and they'll love it. BitDevs is very technical.

You know, they try to make it accessible, and they do a decent job, but if you are brand new, you don't know much about the tech, it's going to be way over your head. I've been going to that meetup for like three years now it's still way over my head but like I said earlier I have to get to the Jersey Shore my wife's about to come pick me up do you have a parting note

for the freaks out there parting note you know let's focus on building a Bitcoin for 10 years from now and ignore everything else put on the blinders say look Bitcoin

has centralization issues today let's be honest and let's say all right let's build the tech that is going to make bitcoin decentralized five years from now ten years from now and you know if people are worrying about scams and building scams and building random icos that might or might not ever go anywhere let them do that let's focus on actually building something real because i didn't get into this to build random ico scams and pump and dump schemes and market manipulation and crazy ass token sales and whatever the fuck i got into this to build an alternate financial system for people who need it so let's build that i love and let's ignore all of the other fucking bullshit i love that you pulled in the jimmy iovine quote i don't know if you saw that

the dr dre documentary jimmy ivine his producer there's like the most incredible quote from that whole series is he's like if you're going to be successful put on the blinders you got to be like a racehorse put on your blinders don't care about what any other protocol or anybody else is doing you will be successful if you just focus on yourself i love that parting note matt it's always incredible thank you thank you for coming by thank you for coming by again i'm about to pee myself though peace and love freaks that for an ending