Unchained - Bitcoin’s BRC-20 Mania: Is It Sustainable? - Ep. 493

Episode Date: May 16, 2023

Ordinal theory has unleashed a new wave of NFTs, memecoins and innovation on Bitcoin — but not without controversy. Bitcoin educator Dan Held and Bitcoin Frontier Fund Managing Partner Trevor Owens join the show to discuss the breakneck rise of BRC-20s and why they’re both bullish on what memecoins mean for the original blockchain. Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform. Show highlights: what ordinal theory is and how it enabled Bitcoin “NFTs” how the Ordinals Protocol differs from the ERC-721 token standard used by many Ethereum NFTs how BRC-20s work by relying on some off-chain mechanisms why Bitcoin is not a “dinosaur chain,” according to Dan why Trevor says BRC-20 memecoins are superior to those on Ethereum what the practical utilities of BRC-20s are, if any why transaction fees in Bitcoin rose so much and why it’s healthy for the network  whether innovation is coming back to Bitcoin whether Satoshi Nakamoto would have approved of Bitcoin NFTs the role of speculation in fueling bitcoin adoption  the current and future state of layer 2s on Bitcoin why Dan says BRC-20s “absolutely” solve the problem with Bitcoin’s security budget why it’s hard to determine an “appropriate” amount for the security budget of Bitcoin how the NFT market could be shaped after the rise of Ordinals and BRC-20s what needs to be developed so that BRC-20s can flourish Thank you to our sponsors! Crypto.com Guests: Dan Held, Bitcoin educator and marketing advisor at Trust Machines  Trevor Owens, managing partner at Bitcoin Frontier Fund Previous coverage of Unchained on Ordinals: Bitcoin Ordinal NFTs Are Hot and Getting Hotter. What's the Hype About? - NFT Crypto Links Unchained:  How to Create a Bitcoin Ordinal Bitcoin Core Developers Mull Getting Rid of BRC-20 Transactions Binance Briefly Halted Bitcoin Withdrawals Amid Network Congestion Domo’s thread on BRC-20s  Anita Posch’s comments.on the high fees Nic Carter: There's No Such Thing as High Fees on Bitcoin Nic Carter’s MIT presentation: MIT Bitcoin Expo 2019 - 10 years of Bitcoin: Evaluating its Performance as a Monetary System Decrypt: Michael Saylor: Bitcoin Ordinals Are a ‘Catalyst’ for Adoption [bitcoin-dev] [Mempool spam] Should we as developers reject non-standard Taproot transactions from full nodes? Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, welcome to Unchained. You're a no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto eight years ago, and as a senior editor, Forbes, was the first Mainstream Meteorporter to cover cryptocurrency full-time. This is the May 16th, 2023 episode of Unchained. Buy, trade, and spend crypto on the Crypto.com app. New users can enjoy zero credit card fees on crypto purchases,

in the first seven days. Download the crypto.com app and get $25 with the code Laura. Link in the description. Today's topic is BRC20s. Here to discuss are Dan Held, Bitcoin Educator and Marketing Advisor at Trust Machines, and Trevor Owens, managing partner at Bitcoin Frontier Fund. Welcome, Dan and Trevor. Thanks, Laura. Thanks for having us, Laura. BRC20 tokens are generating a ton of interest, plus they're causing a bit of a furor in the Bitcoin community. Before we dive into the topic of VRC20s, we need to define a few terms and give some background. And I personally feel like people need to understand a bit more about ordinals before we can even get there. So why don't we start by explaining what Bitcoin

ordinal theory is? Sounds good. So I'll start with the basics and Trevor's. You know, he's really deep in this space so he can cover the even more technical stuff. Ordinals refer to the ordering of Satoshes. So it's essentially a shared social consensus over the order of Satoshes and it gives them, assigns them an order value. And that's why it's called ordinals. It's an ordering of the of the Satoshes. Then you have something called inscriptions, which is the process of inscribing data onto a particular Satoshi. So that could be a video, audio, or JPEG, or code. So that could be any type of data set.

And so when you think about ordinals, when people refer to ordinals, they're actually referring more to, I would say, generally Bitcoin NFTs. But with BRC 20 now, we're talking about meme coins. And so ordinals, ordinals are simply meaning the ordering process, but that term ordinals has become all encompassing for everything like Bitcoin defy-esque. And then I'll hand it over to Trevor here to you a little bit more technical. Yeah. So great intro, Dan. So Ordinals is essentially, or Orinal theory is essentially a colored coin model to take the UTIP. model of Bitcoin and be able to trace or to identify a serial number for specific Satoshis. And so what that allows you to do is by using a first in, first out model and sort of

tracing the UTXOs back through the blockchain history, we have created a way to say, hey, Satoshi in my wallet, the specific UTXO and SaaS in this wallet goes all the way back to the block where it was mined based on this first in, first out serialization. Just one second. UTIXO for people who don't know is unspent transaction output, which is like, you can think of it as like change from any transaction. Yeah. So Bitcoin and Ethereum, for example, handle balances very differently. Like Bitcoin is a UTXO model. Ethereum is an account based model. And so what that means is like a UTXO is like a specific, almost like a package of Bitcoin that can be sent from like one place to another. and that allows it to be more trackable and less fungible. I mean, it's still fungible, but by adding a serial number to it,

we can then say that a specific image or inscription or file is tied to essentially a pointer. So a pointer meaning you look at Ethereum, the image is not hosted on Ethereum. It's actually hosted on IPFS, but we have a token that we send back and forth that says this token is connected to this image or this file. And so we've been able to replicate the same concept using ordinal theory. And one other thing. So you started to mention like on Ethereum data stored elsewhere. And what's interesting about Bitcoin is the data is actually stored where?

Fully on chain. So that's one of the cool things is that ordinal theory and ordinals and inscriptions took a very different approach of the typical ERC 721 standard, which as we've seen ever their blockchain, they just said, this is working on Ethereum. Let's copy the same standard. And these standards are design decisions. And ordinals and descriptions took a completely different design decisions that I think made the right tradeoffs. Or, you know, if you look at the blockchain trilemma, for example, you know, like you can pick which corner you want to be on of the triangle. And typically, if there's already someone else who's really successful in one corner, you want to go to the opposite corner.

And that's exactly what Ornals and Inscriptions did. They said, ERC 721 is working great. We're going to go to the opposite corner of the tradeoffs that we can make that users care about. And that's why it found a product market fit. And to build on that, I think, you know, Trevor, I think very eloquently puts it like, everything is a series of design tradeoffs, right? And that's where I'd consider myself more of a Bitcoin moderate these days where it's like, you know, Bitcoin, I think, has made a lot of the right tradeoffs for a money, right?

It preserves decentralization at the cost of higher throughput, a lot of other fun things you can do. And so I think ordinals do a very, very elegant job, especially around like NFTs, of actually building what I would argue is maybe a superior platform. So for example, you've got the graphic asset on chain instead of it pointing to an IPFS file or being a hash, which means the data persistence or that image or a graphic asset surviving, you know, for an NFT, like having the original asset on chain. I think is hugely valuable. But that's only particularly, you know, for like NFTs that are community or artistic focused versus, you know, I'm not talking about, you know, NFTs that represent real life things like Links Dow or something like that, right? And then also with the UTXO model, you know, it's that there's not a smart contract that issues the NFT collection. So you can't go back and update the smart contract and change ownership or or number of ones created. these are inscribed upon Satoshis, and so it's immutable and unchangeable.

So I think that it's interesting to see NFTs come back to Bitcoin because, you know, Bitcoin, NFTs did originate on Bitcoin back in the day. But seeing them come back, I think, in a Bitcoin-esque tradeoff, I think, makes a lot of sense. And I think that's what Trevor was touching on is that it's really interesting to see the surface area of design decisions here and how this might yield different interactions with Bitcoin protocol versus, like, Ethereum's interactions with their NFTs. Yeah, two points. One is that one of my favorite early Bitcoin NFTs is one by the artist Ria Myers.

And it's something like her actually now that I think my, I think it like wasn't exactly a Bitcoin NFT bomb. I'll tell the story anyway because it's so funny. She took a hash of her 23 and me result. And then she put it on like a fork of some. It was called like Doge party. And it was like some mash between doge coin and counterparty, which is just hilarious. And then like the blockchain isn't even functioning anymore.

So she is this hash of her soul over there. And then the other thing I wanted to say was because of the differences in storage, like I think there have been so many rug pulls with NFT projects. Like one of the kind of snarkiest ones was when somebody swapped out the images that they, the JPEGs that they had promised for like images of. actual rugs. So, you know, that kind of thing. Obviously, it's impossible in this situation. So now this gives us the backdrop to explain what are BRC20s? So BRC20 is an attempt, and I would say an attempt with significant fraction and kind of proven demand now. I think we're up to over 500 million in volume traded. It's been like a few weeks here since it really took off to create a fungible token standard.

So with ordinals and inscriptions, it's a non-fungible token standard, which means that non-fungible assets like art, media, things that are not interchangeable, versus a fungible token standard, like Bitcoin, Ethereum, uniswap token, blur token, like these type of protocol tokens that are used throughout the Web3 space. And so it was a very, maybe kind of an interesting model, because what people are doing is they're using the same inscription lock space on Bitcoin, and they're using it to record any type of arbitrary data. And so I think the first project to do this was the dot SATs namespace,

which is kind of like an ENS or dot BTC or dot ETH. They were inscribing these registrations for names. And then an individual named DOMO had this kind of fun project said, hey, what if we created a BRC20? And he just made a simple Gitbook project. And from there, it kind of organically took off to the point where we now have like major centralized exchanges listing the most most popular BRC20 token. And so kind of the theme of this new design space that's created by Ordinals is the concept

of adding smart contracts, for example, to Bitcoin through node software as opposed to on-chain logic like an EVM or, you know, solidity, what we see on Ethereum. And so when people run the Ordinals node, that sort of enables Orinale theory and also reading the inscription space for BRC20s. They run a Bitcoin node and they run a separate node. And this paradigm can be extended, well, we're finding out how far this paradigm can go right now in real time with BRC20s.

And so there are certain situations where, from a technology perspective, like you don't need the whole EVM smart contracts. You don't need turning completeness. And for simple assets, like a non-NFT that doesn't have programmability to it or or a fungible token like a BRC20 doesn't have programmability to it. Perhaps it's just an asset and indexer is sufficient as opposed to all smart contracts, which could actually be added to Bitcoin through other layers. Yeah.

And just to explain that in an even slightly less technical way for people, and correct me if I have this wrong, but this was my understanding from the research is that obviously on Ethereum with the smart contracts, like everything can be read by the blockchain in terms of like how these tokens should function, et cetera. But what you're saying is that's not what's happening here. It's that people have come to an agreement that's sort of like off chain about this is how we're going to run this system. And so then they're running these nodes, which I guess is like some combination of both hardware and software. That's not intrinsic, yeah, to the blockchain itself in order to make this work.

Right. The Bitcoin coding language, Bitcoin script cannot recognize or deal with. deal with any of these. However, some of the key ways that people are dealing with it, for example, or it is utilizing the Bitcoin script, is for the trading aspect. So some of the key aspects of what you would need where there's risk are using Bitcoin script. And then other areas are using the additional node or the additional indexers. And that's kind of the interesting, I think from a technical perspective, one of the most interesting parts is that this is kind of pushing the boundary of what people might think is viable.

And I can chime in on kind of a more non-technical perspective. So BRC20s hit a market cap of a billion dollars. And I would say, I mean, BRC20s have been around a little bit longer, but in terms of being popular, in a matter of weeks, it hit a billion dollar market cap. This is pretty insane. I think it also represents the speculative fervor and interest that people had pent up on over, you know, on other chains that they wanted to bring back to Bitcoin. So hitting a billion dollar market cap in aggregate. representing all of these new BRC20s was a really interesting phenomenon to see how fast it happened. And when we look at the minting process of BRC20s, it's very interesting because this isn't,

you know, when you create a BRC 20, it's basically whoever comes up with that four character, you know, four character BRC 20 first. And then the and then everyone agrees that that's the original version. So if it's AAAAA, that's the original version. And then the individual who creates that BRC 20 for the first time can set the parameters of the total supply, how many tokens are minted per on-chain transaction, but these mints were

collaborative, which is actually quite interesting. So unlike, you know, other types of tokens where the creator can create all they want and they can give themselves 100% of it, to mint a BRC-20 meant you had to use on-chain transaction fees in order to mint it.

And so the BRC-20 was perceived more or less fair, depending on how many participants it allowed to participate. And that was usually dictated by like the max mint per on chain transaction value. So basically these were open mints. So thousands of people came together to mint a BRC20, which is a really interesting phenomenon because this is a very fair way to launch something. And I think again, you know, really highlights like back to Bitcoin's ethos and Bitcoin's culture around that, around that fairness.

So it was really interesting to see both the minting dynamic. The huge surge in adoption, also the volume. So on gate.io, they were the first ones to let. It was the first exchange to list Ordi, which is the first BRC 20 to be created. And it had volume of like $100 million, day one, which is pretty insane for a new asset class. That's literally a meme. It's mind blowing. So that was really cool to see.

And then, you know, Trevor was talking about some smart contract functionality. You know, you've got partially signed Bitcoin transactions where Unisat. which is an exchange and website oriented around ordinals. They've got a Chrome extension wallet that you can use. And we already have a working decks for trading these ordinals, which is pretty impressive and really cool to see it. A lot of people, I think, I thought of Bitcoin as a dinosaur chain. But both Trevor and myself, I think for a long time now,

I've been mentioning that, you know, you can bring some of this functionality back to Bitcoin. Of course, it can't do a lot of the things that Ethereum and Solana can do, But I can do some things like, you know, you can have dexes, you can have NFTs, you can have all sorts of tokens on top of Bitcoin. And so we're starting to see that all come back to Bitcoin. So one thing is, you know, as you mentioned earlier, that the, I guess all of them or at least the vast majority are basically meme coins. So is it really that they're more kind of like these cultural objects or because like for instance, Dogecoin is. a meme coin, but people also talk about how it could be used as a currency. So I was wondering,

like, are there other functions or is it really more of this kind of collectibles, like, you know, cultural type of product? Yeah, it's, it, there's no there's no other functionality yet. I mean, people are starting to use it in a way where they can incentivize use of a, of their product or application. But it's really just, I mean, we're in a, we're in a bare market right now. There's not a lot of innovation in terms of like new types of tokens and I think the market's still a little bit immature. But what BRC20 did is they just created a superior meme coin protocol to Ethereum. And the reason being because as what Dan mentioned, number one, there's no crowdfunding with BRC20s. It's all fair launch. Like the person who creates it, once they submit the transaction,

everybody, including the person who created, has the same opportunity to claim the BRC20s. 20s and it can't be rugged by a smart contract. So if you're out there like jumping into the ERC 20 Ethereum meme coins, there's quite a bit of research we need to do to figure out where is the contract, who controls it, what is the distribution, can they rug me? And then there's like even confusion over they gave up the contract. I think, you know, like there's kind of what people say. But with BRC 20, all that's removed.

And so it's created a simplicity by having less function. And you actually see in the unique holder distribution, for example, for the ordi token, which is the most popular one, like the largest holders are in the like 1, 2% of holdings. And so, you know, objectively, and you know, it's kind of saying like someone who is, you know, 5 foot 2 is taller than someone who's 5 foot 1, objectively it's their, it's they're taller in this situation. And just to understand that, so essentially it's almost like there are no whales. in this in BRC 20s. Is that what you're saying? Well, there's no ability to pre-mine. There's no ability to get all the supply unless, as Dan said,

there are some ways. And a fair launch can always be gamed in certain ways. But the default, like the starting point, makes it more difficult. And so I think that objectively makes it better. The whale would have to spend a lot of on, a lot of money on-chain transaction fees to become a whale. So yes, there are whales.

but they have to do the proof of work. There's no way around it. Okay, yeah, you know what's so funny. This whole BRC 20 thing is, I mean, it's literally echoing the ERC 20 ICO craze that happened in 2017, which was the focus of my book. So I obviously know that era very well. And what I'm just realizing is so there was this one particular ICO that kind of practically broke up there.

I mean, there were a number of them, but one of them was the status ICO. And the reason was that they tried really hard to prevent whales from getting a ton of tokens. And so there were like these crazy ceilings of like how much you could get in any given time. And the ceiling kept dropping over time. And then hilariously, like when I interviewed them about it, they were like, you know what? The whales ended up getting a ton of tokens anyway. It's just that they had to pay a lot more in gas fees. So, you know, yeah, you're right.

I guess a lot of these things can be gamed. But so to go back to like my questions about usage, I was just kind of curious, like, you know, obviously we're talking about tons of mints and a lot of trading volume out of the gate. Like these market caps are climbing super fast. And what is it exactly that people are excited about? Because like if we're saying that, you know, the kind of, or you tell me, but my understanding is that the financial possibilities that's, you know, available to BRC 20 tokens is much more limited than in Ethereum or Solana D.5. for instance. So what is like the value that people are kind of seeing in them? And Trevor, I hope you don't mind them. I'll take this one first.

Ethereum and Salana, I think, showed the Bitcoin community that there are a lot of financial primitives and a lot of financial innovation that can occur from unknown and unexpected places. I don't think anyone in those communities as well could have predicted the outcome or the emergence of these different, you know, financial types of transactions, these financial primitives. And so I think in the same vein of that, that spirit, we don't really fully know what will come out of BRC20s or out of ordinals. So I think, you know, right now, I think a lot of a lot of crypto started with very silly origins, right? So BRC20s for sure are just, are just meme coins at the moment. And what do meme coins bring in terms of raw utility? I mean, we've all seen

those, these meme coins aren't necessarily tied to. real world utility. However, a lot of the beginnings of new financial primitives in the space have started with very silly things, or what we might subjectively view as silly, but objectively the market decides to value it. And people like, you know, people, if people want to buy memetic coins and meme coins, they're free to buy them, right? And if society values those as valuable things, then who are we to say it has real world utility or not? You know, in a similar vein, or beanie babies are good or bad thing? Do they have any real world utility? You can't really eat them. You can't use them to build anything, but people like them and I'm, you know, people want

to trade them. And so, you know, humans subjectively like to value different things. Long story short, I think there's, you know, a lot of different financial primitives that will emerge from here that we have not predicted or that we don't. We can't fully, you know, express right now. So I'm just interested to see how it plays out. Yeah. And on this point, one thing I wanted to call out, you sort of referred to it earlier or somebody did, but the creator, Domo, even like when he announced it, he literally was like, oh, these are going to be worthless. Like, that was the exact word that he used. So that's kind of hilarious that this person was like, I made this thing. It's going to be worthless. I think it gives a certain humility or innocence to the protocol, in fact, which I think is

always kind of a good thing if you look at the origin of like bitcoin with Satoshi Nakamoto and that the myth and the myth and story there, the narrative, that's sort of innocence. And I think a really interesting thing is that like what I'm, what I've been saying to, you know, troll some of my Ethereum friends is that it's like Bitcoin is doing to Ethereum what Twitter did to Clubhouse. I always get frustrated with Twitter because I don't think, I think it has a lot of bugs. I've hosted so many Twitter spaces that got rugged. You know, it's not a bet as good a tech as, let's say, Clubhouse was, but the network effect, the liquidity, etc.

You can launch a subpar technology, and it's not, it's not the best product that wins in the market. It's the good enough product with the most distribution. And so if you have like something that's maybe, you know, a little bit subpar or you can't do all the things that you want to do, but it has enough momentum behind it and enough resources are attracted to it, it will eventually become the best technology. And so the user interest, the user demand, the developers that we're seeing come to Bitcoin are like oxygen for this fire or gasoline for this fire. Yeah, I probably will.

I think there's just going to be different. I don't know, for a long time now, I viewed them as just being different. And I feel like this is just another example that they're different. But we'll see how this all plays out. So one thing that I did want to ask about is all of this. activity, you know, we've talked about some of it, but like they're already accounting for like 50% of all Bitcoin transactions, which is obviously insane. Even like a few days ago, it was actually accounting for 65% of all Bitcoin transactions. So all of this is pushing up transaction fees,

which are at a two year high due to BRC20s. So I wonder, you know, this has been causing some controversy. People are saying, oh, you're making it impossible for people. people in Africa or El Salvador to transact on Bitcoin. So what's your take on whether or not that's a good or bad thing for a Bitcoin? Yeah, I'll jump in here. Trevor and I have discussed this privately quite extensively. So when we look at scarce block space, like Bitcoin's scarce block space, it was entirely intuitive and agreed upon by the community that during the block size wars,

that a more limited block space would keep the level of decentralization. that we required as a community. And then the idea would be that we scale in layers. Lightning being a prime example of that, liquid stacks, root stock, etc. These are all different layers built on top of Bitcoin's L1 or the base layer. So this was generally and widely accepted by the remaining Bitcoin community on Bitcoin versus the community that forked off into Bitcoin cash. This community also shared the value that Bitcoin's purpose and a large,

of its large portion of its value appreciation and network effect came from its speculative gold 2.0 type value rather than payments or, you know, peer to peer, you know, peer to peer cash sort of idea that it's this daily payment method. And so because of that, you know, the Bitcoin network and the Bitcoin community of largely thought of scaling and happening in layers where L1 would represent very economically dense transactions. What does that mean? common terms, that means that the transactions would be very valuable. It would be large value transactions. And those large value transactions would be willing to pay a higher fee because those transactions on L1 likely represent many more transactions on L2.

And so essentially like when you open and close a lightning channel, there could be millions of transactions that occur on L2 on Lightning that then are net settled on the Bitcoin network. And so because of that, because of all the transaction and economic activity, that happens on L2, when that's compressed into an L1 transaction that allows that L1 transactor to have much more price elasticity. So, you know, when we look at transaction fees over time, it was entirely intuitive that they would rise. Transaction fees should grow higher and higher on L1. This represents a functioning healthy fee market, which eventually transaction fees have

to replace the block subsidy and the block reward for Bitcoin miners. And so this represented very healthy and anticipated activity on Bitcoin L1. So I think, as Gregory Maxwell puts it, popping the champagne, if you will, to see a healthy functioning fee market or, you know, people bidding for Bitcoin block space to such a level that we see it replacing the subsidy. So this is a good thing, an entirely anticipated thing. However, there were some very dishonest and dishonest individuals in the Bitcoin community who either willingly ignored technical issues around how Bitcoin would scale and or use their own subjective, I would say, virtue signaling to say, hey, Bitcoin is meant for cheap transaction fees in Nigeria. It's not true. It's not technically how it will work. It's not technically how the network would scale.

This was always going to be an issue, and we all knew about it, that transaction fees would rise in L1. Now, is Bitcoin useful for those who want to transact in Nigeria or some other country on L2? Absolutely. But they had dishonestly marketed Bitcoin to these South American African countries in Southeast Asia as this cheap way to send payments, and that's just not true. It was never going to work that way. When you're saying this, are you referring to you? referring to somebody like Roger Veer? Is that what you're?

I would say a newer cohort. Roger was from the seven, you know, Roger kind of exited the community in the Bitcoin Cash Fork. This represents Bitcoiners that came after that wave, after the hard fork and after the block size wars. Because I don't know if you saw like the recent comments about this were from Anita Posh, who I don't know if you'd put her in that category. I would, yeah.

Oh, you would. Okay. She was the one who made. I think some of the most prominent comments, because she's in Africa right now traveling around teaching people about Bitcoin, and she was someone expressing frustration about the fees. She should not be frustrated in the slightest. This was all anticipated by the community, widely accepted as the way Bitcoin is going to scale.

There should be zero complaints. There should be no whining about it. It's exactly how the network should be built. And what do you say to her response, which was that because people, I guess, were saying, they should use lightning. And then she was like, yeah, you need a transaction to create a lightning channel. So this is, again, not feasible. So what would your response be to that?

Entirely anticipated and obvious to anyone with a pulse. So this was entirely anticipated. And like, yes, L1, we should encourage them to go use it. L1 was going to be expensive. So L2 is where that activity would occur for cheaper fees. But she's right. You know, you have to open and close a lightning channel. So it would be more of like custodial lightning or something like that.

These were entirely anticipated though. So, you know, it was up to her. and others who are championing that narrative to have set expectations. Yeah, I think it's important to add you could, you know, in theory, have, we're not there yet, but the idea that innovation is coming back to Bitcoin and people are starting to think differently about the tropes and ideas that we've had over the past three to four years, there's now interest in other types of L2s like ZK rollups on Bitcoin that would actually require a soft work, but people are now having that conversation.

And you could have a situation like a ZK roll up on Bitcoin or people could enter from the L2. You don't need to send a transaction to enter it. And you could even have a situation where you have a Lightning Network on top of a ZK roll up. And that's something that people are investigating because they're saying having lightning on top of a ZK roll might actually make more sense on top of the base layer. You've got like root stock and liquid as well. These are L2s.

And, you know, well, again, this terminology, I'm roughly using the term of L2 just to be overly simple here. Root stock and liquid allow you to transact and, you know, with basically almost no fees. And then once you accumulate enough, you could go, you know, peg out and move that Bitcoin to an on-chain Bitcoin address. So there are methods to where you don't have to open and close. You know, you don't have to have two transaction fees to transact in an L2. That's just how lightning works, but there's multiple L2s. Okay. Yeah. And I don't know to transact in those is that super simple. I don't know why. I feel like I never see people talking about either of those. I think that until like these other layers are really for scalability, right? So even if you look

at Ethereum, I paid so much money in gas during the NFT bull run of Ethereum like I could have bought a new car. And, you know, but the adoption for the L2s, as soon as gas goes down, the adoption of the L2s also goes down. So it's really a factor of like what are the network fees? and right now we we saw it with BRC20s it was 500x what it was before ordinals it was like the minimum one sat per V byte cost and we were over 600 during the kind of craziness with BRC20 and now it's back down to like it's gone down quite a bit and so just to find V byte yeah it's like it's like the cost in Satoshi's per byte of like what you know bits and bytes like kilobite megabyte what you're storing on Bitcoin And so that went up 500x and then it went back down. But I think at that level, that's when we felt a lot of pain. So until it gets to that level, that's when we'll really see the L2 race take off in a meaningful way.

I think Trevor brings up a good point. It's basically a load balancing, right? Like you've got, you know, transaction fees as the increase should push that activity to happen on L2s. And then, of course, when those transaction fees come down, maybe more activity happens on L1. So it's, yeah, I definitely see it as kind of a load balancing function. All right. So in a moment, we're going to talk more about the discussion around BRC 20s, but first a quick word for the sponsors who make this show possible.

The scorebed app here with trusted stats and real-time sports news. Yeah, hey, who should I take in the Boston game? Well, statistically speaking. Nah, no more statistically speaking. I want hot takes. I want knee-jerk reactions. That's not really what I do. Is that because you don't have any knees?

The score bet. Trusted sports content, seamless sports betting. Download today. 19 plus, Ontario only. If you have questions or concerns about your gambling or the gambling of someone close to you,

please go to conicsonterio.ca. With Amex Platinum, almost every purchase made with your card can be covered with points, including new tastes, new fits, and virtually everything in between. That's the powerful backing of Amex.

Conditions apply. Local news is in decline across Canada. And this is bad news for all of us. With less local news, noise, rumors, and misinformation fill the void. And it gets harder to separate truth from fiction. That's why CBC News is putting more journalists in more places across Canada, reporting on the ground from where you live, telling the stories that matter to all of us. Because local news is big news. Choose news, not noise. CBC News. using crypto.com, one of the easiest places to buy, trade, and spend over 250 cryptocurrencies.

With the crypto.com visa card, you can spend your crypto anywhere and get rewarded at every step. Up to 5% cashback instantly, plus 100% rebates for your Netflix and Spotify subscriptions, and zero annual fees. New users enjoy zero credit card fees on crypto purchases in their first seven days. Download the crypto.com app and get $25 with the code Laura. Link in the description. Back to my conversation with Dan and Trevor. So as we were just discussing, the trading of the BRC 20 tokens is spiking transaction fees. It's pushing up even the number of unconfirmed transactions that are waiting in the mem pole. And that is actually at high levels that have never actually before been seen. So it's super intense.

in that regard. Even Binance had to pause Bitcoin withdrawals, which obviously that's also pretty bonkers. However, some people in the Bitcoin community are looking at all this activity. They're calling it a denial of service attack on Bitcoin. So, you know, obviously you're both here. And from the discussion, it seems like you guys are pro-ordinals and pro-BRC20s. But can you characterize the anti-position? What that side of the argument is trying to say is they're trying to say that these are spam transactions because they are not your typical transaction type, which it's hard to play devil's advocate for their side because it is really hard to really conceptualize what they're saying here. But I mean, because when you say it out loud, it's pretty ridiculous. They're saying subjectively that they can decide what transaction type is valid. So they're claiming these are not valid transaction types, even though these.

These transactions are 100% legitimate based on the protocol and are completely allowed by the code. They are saying subjectively that we think these are non-valent transaction types that are spamming the network. Well, I think what we could say is that these are not in line with the original purpose and vision of Bitcoin. Would you agree with that? And I think maybe that's kind of where they're going. I definitely wouldn't agree with that. I think it's really hard to know what the original intention was. was and any disruptive product evolves over time.

And I think this is part of the underlying flaw in logic that some of the developers or people who are against this make is that they're of the opinion that the use case is just payments and that it's working for payments already and we just need to come better at that one use case. But I think where Dan and I differ is we think the use case is store value. And in fact, in order to become, in order for the payments use case to be viable, people need to store a majority of their wealth in Bitcoin. And so what Dana said to me is like, you could snap your fingers today.

And if every single merchant in the world accepted Bitcoin, sure, there'd be some more Bitcoin adoption and use because of the advertising. But until people hold the majority of their wealth in Bitcoin, they're not going to have a strong need to pay for it every single day. So, you know, coming from like the Silicon Valley world, you come into the Bitcoin world. And the idea is like kind of what is the end state that we want to get to? And we can just walk backwards to figure out what the starting state is.

And so if like you look at, and that's not how innovation works. With Twitter specifically, like it started at South by Southwest as a way to figure out like what parties people were going to and to update people. It was used by a lot of bloggers. But if you started with the idea in mind of like creating a platform where presidents are going to use it, where the most important journalists in the world are going to use it. It's going to be a real-time, fastest real-time information exchange. You probably wouldn't have started

in terms of like a conference where people can say what parties are going to. Yeah, but also to be clear, Twitter, it didn't start at South by Southwest. It started in the Bay Area, and it was actually supposed to be some like... I'm sorry, launched at Southwest, right? I don't know. I mean, I think Jack made the first tweet,

and it was about him eating lunch or something. I think it was just in the Bay Area. But regardless, it might have taken off there. But one other thing is, like, earlier you said that you disagree that the money use case was the original vision for Bitcoin. And actually, interestingly, in doing research for this episode, I did see that apparently early on someone had suggested to Satoshi, oh, we can do domain names using Bitcoin. And he had rejected that notion.

And that's essentially saying we can do NFTs. with Bitcoin and he had been like, no, no, no, no. So, I mean. There's a couple. I can hop in here. You know, the first Bitcoin block has a message from Satoshi text message. The UK chancellor on the verge of second bailout for banks. So Satoshi himself used the protocol to inscribe a message onto the Bitcoin blockchain.

So that does show in the first Bitcoin block, you have essentially this message from Satoshi himself. In addition, when we look at, you know, the origins of Bitcoin and the, you know, the people who came before like Hal Finney, Al Fini and others were huge advocates of, you know, digital trading cards as Hal Finney put it, which were a precursor to NFT, the idea of NFTs. You've also got something where Satoshi refers to the original growth strategy for Bitcoin. Satoshi didn't, he goes, I don't really know how this is going to take off. Basically was his vibe. I mean, Satoshi, I think, was pretty humble in knowing. that he didn't know. And so Satoshi encourages developers to explore different types of use cases.

One is, of course, your classic merchant one because he wasn't sure. And that's where a lot of people, I think, take those quotes very much out of context without looking at any of his other quotes. So he refers to like merchant activity. But he also refers to it as like a speculative gold type instrument. And he goes, you know, refers to it as Bitcoin could be just viewed as a collectible, a digital collectible in a way, because this is before Bitcoin's worth a penny. Right? And he goes, well, I think the origins of Bitcoin's adoption originally might just be for collection purposes. People collect it as a digital oddity, like a digital, digital collectible. And when you look at Nick Zabo's origins of money, most money or at least the his agreed upon thesis that a lot of people also agree upon is that, you know, money starts first as a collectible. And that's the kind of origins of it. So, you know, collectible, we could call that NFT-esque, where, yes, it's fine. which is different than a non fungible token, but collectible is in a kind of silly shared aggregate belief that this thing, this digital thing is worth something. So I don't think Satoshi really, you know, he had his vision of I built this thing and I bring it out to the world as this new money.

But money is just a collection of data. Like this isn't this is a new type of money. This cryptocurrency had ever existed before in what is money? Like is money just simply the underlying coin value or is it other economic activity? I don't think that if Satoshi was around today, he would go, no, only the only economic activity that can ever occur on a blockchain can only be the native asset. You know, I think he would probably widely agree with how the space has flourished. And since he was very encouraging of developers to explore all use case types, I think you'd be really excited and surprised to see Bitcoin used in creative ways like this. So, you know, one thing is I just wanted to draw this conversation kind of created a bit of a firestorm on the Bitcoin mailing list where people were talking about, you know, whether or not to even like censor the blockchain and stuff like that. And so I wondered just like, do you even see any merit on that side? Because like people are, you know, just talking about how this is kind of, yeah, it's causing all these issues like with congestion and the high.

fees and the memple being, you know, having all these unconfirmed transactions. So do you just think this is all fine or do you see like any reason for concern? Let me add one more point here, Trevor, before we hand it over to you. You know, people, I think the complaints as well are that these transaction types are highly speculative and therefore are less legitimate because it's greedy speculators. I'd like to call out that Bitcoin's entire adoption cycle in 13, 17, and 2021 was due to speculative fervor. As we all know, that's where, you know, when the OGs like us who've been around in the bear markets know that everyone leaves in the bear. And then in the bull, you've got this huge surge of interest. And that surge of interest isn't because Bitcoin's being

used as a payment method in Africa or anywhere else. It's because spot trading volume is going up. You've got the price going up. People become aware of it because the price is increasing in value and that kicks off the adoption cycle. And so that's why we have these big spurts of adoption and kind of the lulls and the bear market. So come for the speculation, stay for the sound money is sort of the way that my thesis of user acquisition versus retention, right? And so when we look at on-chain transaction fees, of course they were going to go

higher because of speculative nature of people, because people inherently are speculative and they want to use blockchain technology for speculative purposes. So I think they deride these transactions. says, hey, these aren't coffee payments in Africa. But in reality, most transaction types on Bitcoin for its entire existence have been usually between exchanges to go speculate or people moving money from their coal storage to an exchange to go speculate. So that was most of Bitcoin's economic activity.

And that's not necessarily a bad thing. Yeah. I think it's a great thing that people are talking about this. I think the discussion is really healthy. And I think that people being opposed to this is totally fine. The thing with Bitcoin is that it's very. hard to stop anyone from using it. It's very hard to change things. And it's set up in a way where the people who pay the fees get to do what they want with their Bitcoin. And there's nothing

anyone can do about that. And I think in order for us to get to a future world where we have everyone using Bitcoin as a medium of exchange or as a global digital currency, we have a kind of a chicken and egg problem to solve here between like if you think about like, users who want to send Bitcoin and like people who want to receive Bitcoin. And so when we think about chicken and egg problem, the idea I like to use is lions and deer. So if you can bring the deer to, you know, the savannah or, you know, the gazelle, right, then the lions will come. Right. And so when we look at this two-sided marketplace, it really comes down to store value and giving users new ways to store value on Bitcoin so that they will hold more of their wealth in Bitcoin.

And that's going to unlock merchant adoption and acceptance of Bitcoin as a medium of payment. And so ordnals, digital art, inscriptions, BRC20s provide new ways for people to store value on Bitcoin that may provide a different kind of portfolio than just holding Bitcoin alone. And in the same time, it's bringing more users, it's driving up the network fees, increasing security. and it's, you know, leading to more innovation. Like we saw in 2022, something like $25 to $30 billion in VC went to the Web3 space at large. When it comes to Bitcoin, Nick Carter has famously said, there weren't enough startups in Bitcoin for him to invest $100 million a year and two. And so now that a new design space has opened,

we've seen a ton of developers coming in, and we're starting to see the venture capitalists as well. Nick has actually even changed his mind now that Ornals has opened up a new avenue. Yeah. So I know you guys agree with him, but I just thought this was a very pointed criticism of the side that wanted to censor these transactions. He wrote in an article on CoinDesk, and he's characterizing the anti-group. Their perverse framework is one in which it's more a little. acceptable for North Korea to use Bitcoin for sanctions evasion, but unacceptable for an artist

to issue their NFT on the Bitcoin block space. So that was a pretty strong way to put their position. So we kind of mentioned layer twos, but I wanted to ask, have you guys seen that all this activity in BRC20s has increased activity on layer twos? I think so. Yeah, I think, well, it's definitely accelerate the conversation for developers. I think a lot of the L2s on Bitcoin or other layers, you know, people like to be pedantic about the definition of an L2. So I'm just saying like Bitcoin layers is a better approach. They're not mature yet.

They're still, and I think, you know, Ethereum, other layers are also not completely mature yet. You see like, Polygon has been the main, you know, L2, which is technically a side chain. Now they're introducing the ZK roll up aspect to it. That the whole space is immature. And I think that the, the fees. are not high enough yet to push significant demand there. But we will see in the next few years that this is going to be a very important place to

play. Yeah, I think Trevor hits it on the head here where he's like, if transaction fees stay high, then we see people pushed by the market into cheaper, you know, cheaper, you know, L2, side chains, et cetera. So yeah, I think with a sustained high fee situation, we should see the L2 economic activity flourish due to people kind of being forced over there out of necessity. So one other thing I want to ask about was that for a while now, people have been talking about how in the long term, Bitcoin's security model is broken or at least faces peril at some

point in the future. And I wondered if you thought that BRC 20s and ordinals would help resolve that? Yeah, absolutely, I think is the answer. Any economic activity that's happening on L1 that pushes transaction fees higher, that leads to transaction fees slowly replacing the subsidy declines through the having schedules. So I think this is an extremely encouraging sign. Well, we'll see how long it's sustained, right? We'll see if this economic activity is sustained.

I do think it will be. I think there's a lot of folks that are really interested in building on top of ordinals and building all sorts of things. So I think this economic activity will be, will be persistent. And if it is, that does, I think, put a pretty good nail in the coffin around the Bitcoin security model. where people had long argued because transaction fees have not compensated or risen in, you know, not in response, but to offset the decline in the block subsidy that Bitcoin had

a long-term security model issue. And so I think this really kind of hammers the point home that no, people will transact on Bitcoin L1, and that transaction fees will climb higher in the future. Yeah, I think Dan, you know, covered it really well. Like in order for Bitcoin to be, like, there's only going to be 21 million Bitcoin. So eventually right now, one of the purposes of Bitcoin as a, as a token, people don't realize, is to subsidize the security.

So every Bitcoin block, whoever wins it, is given 6.25 in Bitcoin. And that has been going down by 50% every four years, the happening. And so what that does is that it, when we want to go to is a future world where minors and security is paid for by fees. So people have to spend electricity in order to run miners.

And these are like revenue and cost basically for miners. And so the more profit they make, it becomes an efficient market where more miners are coming in. And then the security gets stronger. And for like the first time since 2017, we saw a block where the fees were greater than the subsidy. and there was actually three blocks almost in a row where the fee was greater than the subsidy. And so what that means is that miners are more profitable. They're not going to go out of business because the margins can be quite thin. And more miners have room to come in to also compete for some of that additional profit.

And we're moving towards a way, a place where every having that subsidy goes down, which means the security budget goes down. and we can already compensate for that decrease in security budget. Of course, if the token goes up by 2x every happening, which we've talked about the stock to flow model not being like, you know, not being fully scientific in terms of like, you know,

we need more demand for the price to go up, not necessarily the supply to go down. That covers us if we can get more fees, right? So we're in a place where we're de-risking the long-term security of Bitcoin thanks to demand for block space. There's one other part that I think touched on that I want to hammer home. The subsidy is the newly minted Bitcoins. And Trevor's right.

We've had exponential increases in the price of Bitcoin. So that has offset, you know, in terms of Ross dollar spend on security budget, the security budget over a long period of time has gone consistently up exponentially just due to the appreciating price of Bitcoin. So even though the halving, you know, halves the amount of new coins produced in each block, the value per coin has increased dramatically. So, but that won't last for forever. And so that's where we're talking about transaction fees eventually need to replace the subsidy.

And one last point here, too, no one knows what an appropriate level of security spend should look like. Is it $100 billion a year? Is it a billion? Is it a percentage of flow or stock? We don't know. Nick Carter had a really great presentation at MIT in 2019 that I saw. And then I also wrote a long form paper on this. we just simply don't know what an appropriate level of security spend is.

Bitcoin security spend has historically been much lower, you know, back in time, and it wasn't 51% attacked. So technically lower levels of security spend, the Bitcoin network has been okay. But that doesn't necessarily mean that the same security spend number would be appropriate in the future. So I just wanted to make that point because I think a lot of people, I think there's a lot of dishonesty on folks attacking Bitcoin and saying, hey, it's broken, long-term security model is broken. And I'm like, a quick question, what's the appropriate level of security spend?

And they're like, well, I don't know. So I'm like, well, you can't call it broken if you don't know what the appropriate level should be. So I think that's a very important thing to call out because a lot of people will look at just the decline in subsidy and the lack of offsetting transaction fees, but they don't actually call out what an appropriate aggregate level of security spend should be. Yeah, I remember back in the day, like literally 2015, Chris Berniske, even back then was trying to figure it out. And the way he did it was, I don't know what this is called, but like in other parts of finance would be called like Monte Carlo simulations. And he had kind of a full range of like where it gets in the red, but then it gets a little lighter red. And then it's like in another color. And then it's like in the great. So you're right. It's sort of a spectrum. And I don't think there's like one magic number. So one. trend that has been kind of interesting to me is that even as we speak, which is Friday morning

Eastern time for people who are listening to this, I was doing research for this last night. And even as of Thursday night, it seems like the media had died down. Like I noticed, for instance, the total BRC 20 market cap was at about $500 million on Thursday night and on Tuesday had been at $1 billion. Even like the price of Ordi, which is that original BRC20, we mentioned, that had plunged. It had originally, sorry, the high had been around 29, and as of Thursday evening, it was about 1250. So I was wondering where you thought things were going with this, is this just kind of a classic speculative fervor that's just going to die down? Or do you think the trend has

longer term staying power? I think it definitely has staying power. Like the way I think about it is, like I generally try to have the idea that I don't know what the right answer is. I try to come up with a thesis and look for disconfirming evidence. And BRC20 was not something I thought would work. And I still have thoughts about how the technology has issues. But with enough resources in demand, I think these issues can probably be solved. And so, like, every day the demand sustains, the odds of it being a fad for me go down. Right.

And then what other dominoes can get knocked over in a big way? like, will developers come in and start building it? Yes, a lot of developers are coming in. Our exchange, our centralized exchange is going to pick it up. Yes, we've seen a ton of centralized exchanges coming in and picking up. As these additional dominoes go down and as every day the demand sustains, the ability for shortcomings to be fixed by, you know, the community, by developers, and for this to have a stronger network effect,

just make it much more likely to exist in the future. And to echo Trevor sentiment, I don't think that we're going to see this go to zero. I don't think we're going to see, as we've seen with many other speculative type, new financial primitives in the crypto space, there's always the naysayers who want to cling the bell. And I've been there before and I've been proven wrong. So I want to call that out before where the naysayers will cling the bell and be like, look, all this economic activity is over for it to, you know, six months later surge back up 100. So you never know in this space the ebbs and flows of interest and enthusiasm are totally market dependent. I think that these financial primitives, these aren't going away. The demand for these financial primitives will fluctuate.

And as we've seen with previous market cycles, it'll ebb and flow. But anecdotally, if we look at, you know, when I talk to like, you know, Bitcoin NFT folks, they're waiting for transaction fees to come down so they can start to produce and inscribe their NFT collections on top of Bitcoin. So I know that there is demand as those fees go down. And since this is all a marketplace, everyone's going to see, you know, as they start to go deploy, you know, more NFTs or other types of financial primitives, you know, it seems to me anecdotally that there's a healthy active market of bidders for block space, whether that be BRC20s or, you know, Bitcoin NFTs that are, you know, JPEG inscriptions. I think that these, I don't have to see

that activity going away. I see people already making plans to, you know, go and scribe if fees drop a little bit more. So I see a very healthy, healthy bid for Bitcoin block space. So if we were to kind of see all these different trends play out that we've been discussing in this show, I'm going to put out a scenario there. And I'm interested for your thoughts on this. As we mentioned, the meme coins are what's really taking off in BRC 20s. And due to, you know, the issues that we talked about with the data being stored offline for Ethereum-based NFTs, but then also for, because there are certain like limitations on the types of financial activity, you can use BRC20s for, would it be fair to say that we might see kind of like more NFTs and.

more, or certain types of NFTs, I should say, not all types, but certain types. And then also the meme coin section of the ERC20 sphere to maybe shift more to Bitcoin, whereas like the more kind of defy-ish type of coins would, you know, continue to flourish in the ERC20 world. But then I think what's interesting to me about that is like if those trends continue to play out, because I do agree the two coins, they're different. They have different features that lead, you know, a certain use case is to be superior on one or the other. Then I feel like what we end up with is Bitcoin, which it traditionally has been thought of as the chain for sound money. And, you know, this kind of more what I call money crypto world will live on the same blockchain

as the meme coins and then these more, yeah, like collectibles type objects. Whereas like it feels like on Ethereum, you might have more of that true defy world where it's like a lot of composability and stuff. Am I wrong in thinking that that's how we might see the trends play out? I think, you know, what Trevor brought up earlier around the design surface area, we just don't know exactly how this is going to play out, but we do know they're very different design surfaces and tradeoffs that have been made on either or. So I, you know, this is totally speculative, right, which I think that's the whole theme of this conversation. I mean, I think NFTs on Bitcoin is a superior platform due to the graphic asset existing on-chain and due to the UTXO model versus the account model and smart contract model of how the NFTs are deployed.

That's a little less subjective. It's, I think, a little bit more objective in terms of like the technical design decisions. But as we've noticed, retail and network effects don't necessarily occur just because of technical design considerations. It can sometime occur just because there's a network effect there. So yeah, deciding right now what's going to end up on each one, I think that's really hard to do. Personally, I think NFTs would be better on top of Bitcoin due to Ordnals design architecture. But yeah, again, I think for any of these, it's really hard to say. You know, the composability, you know, composability is a blessing and a curse, right?

So when you build these defy Legos, the idea that they can interact with these other smart contracts and you can build this, you know, really expressive sort of process of building Legos on top of Legos and having all these work together. That's great in all until like USTC is frozen and then that base Lego breaks and shatters. And so compose ability is fantastic in terms of the expressiveness and the ability to build really exotic and fun things. Bitcoin, you know, of course, can do things like that, but it's more single purpose DAPs, if you will, which is a good and bad thing. It limits the expressiveness of Bitcoin.

But then again, you don't have struck. huge structural potential failures that could occur due to that that defy Lego breaking the defy Lego doesn't have other dependencies built on top of it. So yeah, it's TLDR super complex. Hard to say what's going to manifest on either chain. It just depends on the design architecture. Yeah. I would agree with Dan. We don't know where the design space for this ends and where the limitations lie and we're kind of finding out in real time. Like Laura, you mentioned Doge Party earlier, which is the counterparty on Dogecoin. Counterparty was created in January 2014, and Counterparty has a Dex for trustlessly swapping. It has, you know, semi-fungeable tokens.

It has a lot of features that Ethereum have, not to the same level of functionality, but that's been around since 2014. And there's been a narrative that you can't build any of these things on Bitcoin, that you can't build a uniswap, that you can't build OpenC, and you can't build OpenC, And we have both of those on ordnals already. And so to figure out where defile will take off, I mean, we also haven't had the level of venture capital interest, right, or the level of developer interest. So there's other tools. There's more sort of juice in this fruit to squeeze.

Like when it comes to discrete log contracts as a technology that has been around for many years that people have not really explored on Bitcoin. The partially signed Bitcoin transactions was actually the key to creating the open on Bitcoin and the uniswap on Bitcoin. And so these technologies are very under explored. And now that there's actual developer interest and venture capital interest, we're going to see in the coming months where this design space ends and where other layers that may be Turing complete or have a different virtual environment, it could be

EVM, it could be another, actually need to come in. And so let's continue on that theme. What are the different things that you think need to be? be developed to see this ecosystem truly flourish. Like, you know, we don't even have simple things like exchanges and wallets, really being able to interact with them in a big way. So I just talk about some of the little signposts that you would want to see on that roadmap. Definitely integration into different wallets, you know, when we look at, um, Ordinals,

it's they haven't, they only came out really. I mean, ordinals only really started to be developed in like January of this year. So it's honestly pretty astounding how much has been built, given the very, very short duration that they've existed. But yeah, ordinal support for wallets, of course, I think it is a base function that you need. Exchange is adding ordinal support, which we're seeing a lot of that occur quite rapidly,

whether that be BRC20s or Bitcoin and NFTs. So I think we're seeing everything to be on pace, to be integrated into most consumer-facing, you know, goos or interfaces that consumers are, use to interact with blockchain tech. So I think we're seeing that happen at probably one of the craziest paces I've ever seen just because of all these existing wallets and exchanges have had to do this for Ethereum and other chains.

And so they're quickly realizing, hey, we need to do this for Bitcoin. It's good for them financially and their users are asking for it. So, yeah, I think we've seen that at a blazing fast speed. But yeah, I would say we'll probably see widespread ordinal support across. all major wallets and exchanges. I couldn't imagine any later than the winter of this year. I think it'll be widely integrated into most of them. Yeah, I would agree with that.

I think that we've seen an incredible pace of adoption from the start of ordnals, seeing, you know, Ugo Labs and Board Ape come in and do a collection, seeing many of the top NFC projects and artists coming over to do ordnals. And then now seeing exchanges come in, seeing that the, you know, typically like a lot of the Bitcoin maxis or the toxic maxis would have tried to kill this and they and it it kind of failed right like all the criticism against it as we talked about earlier developers saying that like this is a DDoS attack or this is a bug most of people have come around and when you look at like kind of the political situation of these ecosystems it's been much more agreeable to those people that's why we're seeing you know, like Saylor come in, Saylor who typically has been saying, you know, or a lot of the Bitcoin Maxi's rather been saying what's happening

in Ethereum mold is not good or it's, you know, not impressive. Saylor said that Ordinals took NFTs from something that was bearish and now something that's bullish. And so we're starting to see like the normal cast on Bitcoin come around to this, but it's happening slowly. And so I think it's happening slowly and organically that these dominoes are kind of

falling over. And I think that we have like the fundamental building blocks. We have the fund the non-fungible token standard. We have the fungible token standard. People are going to use, uh, creativity and the entrepreneurial, um, inclination to try lots of experiments. And the more experiments that we have, the more learning that we have and the more likely that something is going to stick. And I think we're going to be very surprised. Um, and I've been, you know, someone who was very excited about this from the very beginning, I've been constantly surprised over the past. few months. All right. Well, this has been such a fascinating discussion about one of the hottest topics in crypto today. Where can people learn more about each of you and your work? You can go to my

website, Danheld.com. There you can see my newsletter, Twitter account, et cetera, depending on what social media channel you're on, you pick which one you'd like to follow me on. On there, I talk about basics around Bitcoin, NFTs, and the rise of ordnals. You can follow me on Twitter. at TO and also the Bitcoin Frontier Fund is BTC frontier.fondure. Fund. And we host a twice a week Twitter spaces on Ordinals at the Ordinals show. It's kind of talking about the technical topics. So you can check out that as well. Perfect. It's been a pleasure having you both on Unchained. Thanks, Laura. Thanks, Laura.

Thanks so much for joining us today. To learn more about Dan, Trevor, and BRC20s. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with help from Kevin Fuchs, Matt Pilchard, Zach Seward, Juanoranavich, Sam Shrelihram, Ginny Hogan, Jeff Benson, Leandro Camino, Pima Jimdar, Shashonk, and Margaret Korea. Thanks for listening.