We Study Billionaires - The Investor’s Podcast Network - BTC018: Bitcoin Smart Contract w/ Discrete Log Contracts featuring Pierre Rochard & Ben Carman (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, everyone, welcome to this Wednesday's release of the show where we're talking about Bitcoin. For many years, it's been assumed that smart contracts can't occur on the base layer of Bitcoin. But on today's show, I talk with Pierre Rochard and Ben Carmen about a new innovation called discrete log contracts, which makes many people's original understanding of smart contracts not happening on the base layer invalid. Within the past year, some groundbreaking work with ECDSA adapter signatures went from theory to application. This is a cryptographic signature scheme that enables scriptless scripts to execute smart contracts

Starting point is 00:00:39 without relying on Bitcoin's scripting language. Just when you think things can't get more interesting, new innovators and brilliantly smart people keep coming up with even more fascinating things in this red-hot sector. So without further delay, here's my chat with Pierre and Ben on smart contracts. tracks within the Bitcoin base layer. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Everyone, welcome to the show.

Starting point is 00:01:21 I'm your host, Preston Pish, and here I am, company with Ben Carmen and also Pierre Rochard. So let's just kick this off right out of the gate and let's dive into this thing that looks very complex to me. And I'm sure everybody else who's listening to this is thinking, what in the world is this? that they're talking about. Discrete log contracts. Explain this to me. Pierre, go first. Explain this to me like I'm 10. What is this? I'll start with an example that hopefully your audience is already familiar with is a futures contract or any other kind of derivative.

Starting point is 00:01:57 And conceptually, the key part of this is that the contract depends on the price of the underlying. So the underlying can be really anything, but the price is just a piece of information. And conceptually, what discrete law contracts are automating or putting into code is the mechanics around who is going to get paid what based on the underlying event that's happening. And it's information-centric in the sense that it's the same with a futures contract that is cash settled, for example, you don't actually move the underlying commodity. You're just making a side bet on what's going to happen

Starting point is 00:02:41 to the value of this commodity. That's kind of my, as simple as I can get it. Maybe Ben can get it simpler. I just like to think of it as a Bitcoin contract whose outcome is dependent on what an independent unknowing third party says. This third party could be saying who won the Super Bowl, they could be saying what the Bitcoin prices,

Starting point is 00:03:00 they could be saying what some trade coin prices, they can say anything, just as long. And then your total contract is based on whatever they sign. So when I think about this, why haven't we been doing discrete log contracts, DLCs, since the beginning? Because you guys are doing this on the base layer of Bitcoin right now, correct? Yeah, yeah. It's all doable today.

Starting point is 00:03:21 Basically because, I mean, the paper for it came out in 2017 by Tadstrija. So I guess it was like, you know, undiscovered before then. And afterwards, it was really happy to do. beforehand and there's no real interest on doing it. And the last year or two, there's been a lot of elements in like the cryptography side to allow this to be able to do today. Previously, we thought we would need short signatures to do the clean model of it. But there's a way to figure out where we could do it on today's base chain without

Starting point is 00:03:51 any new Salforks that makes it a lot cleaner to do. So who discovered this? It sounds like it was a discovery within just the last couple years then. Lord Fournier, he's a square Crypto Grant Receiver. He's like one of the big guys that wrote the paper called One Time Verifiable Encryption, which basically lets you do adapter signatures or like encrypted signatures basically on ECDSA signatures,

Starting point is 00:04:15 which is what Bitcoin uses today. Previously, it was like thought that it's only really doable with NOR. Now that they figure out how to do it, no, we're able to do this stuff. And I'd also add that Tadj, who wrote the discrete log contracts paper, also was one of the co-authors on the Lightning paper. So I feel like two of the most advanced new ways of using Bitcoin have been at least partially foreign by the same mind. That's unbelievable. He's a smart guy. If I'm an Ethereum person or somebody else who's doing smart contracts on another protocol,

Starting point is 00:04:51 what would they say to you in this conversation right now? Because I'm sure they're very skeptical of this being able to scale. They've got tons of arguments. So like, what would their argument against this being able to scale be? Well, so first of all, they don't know about this stuff for the most part. So you'd first get a blank stare. They're just not familiar with it. And that's why we're doing this podcast, right, to help move education along. The second is that to them, this is uncontroversial, I think, is that they would see what a discrete law contract can do and what price oracles can do as being only two of the possible, of the many other things that you could do on Ethereum, right? And so because they have lots of other things going on,

Starting point is 00:05:36 they might argue that what we're talking about is insufficient to build a advanced, decentralized financial system or to put artwork on the blockchain or other use cases. And so we get into the argument of scalability. If we look at the gas fees on Ethereum, which is the equivalent of transaction fees on Bitcoin, they have skyrocketed because their platform is so amenable to usage for applications and combined with architected in such an unscalable manner that now their fees are skyrocketing and show no sign of abating. Whereas the approach that the.

Starting point is 00:06:19 Bitcoin core developers and most of the Bitcoin protocol developers have taken with scaling is let's focus on making it as efficient as possible so that when applications do become popular on it, then it doesn't create as big of an issue. Now, we don't know yet because discrete log contracts on Bitcoin have not taken off yet. I think they will relatively soon. But I'll let Ben speak to that. I think you're making a lot of good points. Like, the way these other systems are designed is to make it like spinning up new contracts is like really simple to do where, you know, you just write like a, you spend a day writing a solidity contract. That's basically like JavaScript and you can deploy it and now you're done and everyone can use it. Versus with DLCs, it's a lot

Starting point is 00:07:04 more private and scalable where like if we're doing a bet, it's just me and peer, like contracting this bet off chain and all over execution logic is off chain. So we can't, someone can't just write this for us. We need like software and like, and then we have to, you have to, you know, to have it communicated with each other and do all this verification of stuff individually ourselves. So it makes it on the user side, they're doing all their verification themselves versus just trusting the blockchain to do it for them. So it makes it a lot harder to build initially, because why we've been working on this stuff for like a year or two and don't have like these very nice feature projects versus like,

Starting point is 00:07:36 you know, today they can spend up like uni swap and sushi swap in a couple months and get like a ton of money going through it because they seem to initially make that, you know, their JavaScript program and just put it on the blockchain and everything else is done for them. So it's really a user interface issue today as far as getting this to kind of grow because it's not an easy task to really kind of implement this onto the blockchain. But give it, let's say, three years, five years from now. I'm assuming both of you see this as an up and rising kind of use case where people are using the blockchain, the Bitcoin first layer blockchain in order to have a bunch

Starting point is 00:08:14 of smart contracts. I think it's like a Kintill Lightning where like beginning of 2018, like the Lightning Network first launch, there's like 10 nodes of like, you know, and you had to use like CLI, compile it yourself, maybe. It was really hard to do. Now like you can download like four different apps on your iPhone and run a Lightning Node on your phone. It's, you know, just to get a QR code and go.

Starting point is 00:08:33 It's really simple. I think like DLCs will be like that in the future where, you know, today we have really ugly goos and it's slow to do sometimes. But, you know, in the future, on this stuff, so optimize, we're actually done. and we have more money in this thing, more people working on it, actually hire some designers to make good deweys for us, then my mom could use it or something. Now, I'm curious, will this scale into the Lightning Network?

Starting point is 00:08:56 So could you run DLCs on Lightning? Yeah, it's actually almost usable on any system that Bitcoin uses. All it requires is a multi-sig and signatures, which basically any cryptograph system will natively support automatically. We use it on Lightning, uses it on liquid. You can use it on like Ruben Sonson's crazy state chains, things. You can use it on almost anything that will be usable on. So, yeah, we, like, I guess your Wits, we have like a million blogs about like everything, DLCs.

Starting point is 00:09:26 We have like five different blog posts on how to do it different ways on Lightning. Wow. Okay. The reason why I think that this is such a big deal on Lightning is because your fees are pretty much non-existent. You have immediate settlement as far as the transaction, whenever the Oracle would say that the event whatever has occurred, then you'll receive the payment immediately. So I'm sure people that are listening to this are probably saying, well, what in the world's an Oracle? And how do they work when you're talking about DLC? So Pierre, take the first part there as far

Starting point is 00:09:58 as talking about what an Oracle is, why it's important. And then you can cover the other part there too, is well, Ben. The Oracle is, or the or the oracles are what connect the blockchain and the settlement of that contract with the outside world. Because inside of Bitcoin, you only have access to a certain amount of verifiable data. So, you know, when you're doing the Bitcoin mining and the nonces and verifying transactions like that, there's only so much external data coming in. And the only way to have external data that's, you know, completely unrelated to Bitcoin come in is to have someone make a cryptographic signature,

Starting point is 00:10:41 attesting to that data. And so mechanically what happens is that somebody who wants to enter into a contract goes to an Oracle and asks the Oracle, hey, will you in the future resolve this contract by attesting to a certain event? And then the Oracle says, yeah, sure, okay, I'll be around. So here is a cryptographic token that then you can bake into your contract. And then you enter into the contract, you put it onto the Bitcoin blockchain. Six months later, you come back to the Oracle and you say, hey, I need this piece of data here to resolve the contract, whatever the conditions are.

Starting point is 00:11:20 It could be any number of different payout conditions attached to it. And then the Oracle would take, you know, maybe it's Bitcoin's price, $60,000 using their private key. Then the contract participants would be able to use that signature in order to spend the Bitcoin. So, Ben, I'm looking at a site that you sent me before we had this conversation. That's called SureBits. And in here, I see a bunch of descriptions of contracts.

Starting point is 00:11:50 And I'm assuming that these are real contracts that are DLCs on the base layer of Bitcoin. Is that correct? Yeah. So that's what I sent you. It's our what we call an Oracle Explorer. So basically, anyone can be an Oracle. And you just, like I say, you want to test events. Like something I was doing was saying, like, does Taft Route?

Starting point is 00:12:09 activate in 2020. So I put that into my software. I gave it two options, yes or no. And it gave me an announcement. In this announcement, any user can enter into their DLC software to negotiate a contract based on what I'm going to say if Capri activated in 2021. And then eventually, at the end of the year, if Tapu's activated, I'll sign yes. If it hasn't, I'll sign no.

Starting point is 00:12:32 And I'll enter my signatures onto the site. And then users can pull it from the site and finish and close their contract. And the really nice thing about this is I don't know who's actually using me as an Oracle. Like, I'm just putting signatures up there. So I have no liability to them and they have no liability to me. So I'm a lot more private in that way. So in the future, what you're suspecting is that instead of it being you that's authenticating yes or no or whatever the outcome is, you're going to, let's say, Coinbase

Starting point is 00:12:58 and Coinbase is constantly streaming what the price of Bitcoin is or whatever. And so then that database of, let's just call it Coinbase, and what they are streaming as events is something that the two contract owners would basically assign an address so that that information could be captured. Walk us through how that sequence of events would occur. If we want to do a futures contract on the Bitcoin price and Coinbase as an Oracle, most likely say if like Coinbase is being Oracle, probably send a price like every day or something. We'd say like, okay, what's their, they're going to test a day like for a week from now on Friday. they'll grab their announcement for their planned Friday signature, put that into our contract. We'll say, you know, how much more betting and then, like, create like a curve of, like, you know,

Starting point is 00:13:42 whatever, what our payouts are based on whatever they sign, you know, if it's $50,000, maybe I get all the money, if it's $100,000, you get all the money, a curve between that, they based on, you know, 75-fits splitter, whatever. And then we'll create a contract, broadcast a transaction. Now we're locked into it once that's confirmed. And then at the end of the week, price stays $100K. I think you're winning the money. So now we take this point base.

Starting point is 00:14:04 We'll sign the price 100K. We'll put that into our DLC software again. Sign the transaction. Now we'll have a valid closing transaction that sends all the money to you. And then we're done. We never even needed to actually interact with Coinbase. We just need to get the announcement and the signatures just from anywhere. And they don't need to know that we actually use them, which is really nice.

Starting point is 00:14:23 So, Pierre, when I'm thinking about this, there's a token called Link that is an Oracle token that is, I think, people who would. own link would make the argument that it has value because you're consuming resources in order to go and fetch this information. And when I'm thinking about what was just described, I'm trying to understand why something like Link would not be required and why a Coinbase would be propagating data that could be used for this. Like, what is their incentive in order to propagate this data that then would be used in these smart contracts? It seems to me like there's something missing there, like an incentive that's missing there?

Starting point is 00:15:05 The difference with a system like Link is that this is happening off-chain. And so it's not like the data provider is broadcasting it out to the world on a, on a blockchain. They can be broadcasting out to the world via any medium. It could be, they could be tweeting it out while also putting it up on their website and putting it up on the ShurdBits website. Just like Trading View. Yeah, exactly.

Starting point is 00:15:30 So because they are using their private key, you would be able to make sure that you are always getting the verified valid data for that data provider. Their incentive could be a range of different parts. So for one, if you are a data provider who has a, that data is coming from your, let's say, your spot trading platform, and you want market participants who might, for example, be doing. some arbitrage between spot and futures, it would make sense for them to do that arbitrage on your platform if you're the one providing the data because then that avoids any issues of having a difference between the Oracle price and the market that you're operating in price. But really, I think that the incentives, and this is something that Shirtbitts's work done as well, is thinking about how can we have people pay for oracles through Lightning and

Starting point is 00:16:30 micropayments. And so that way you would be buying the data in a very granular way. And in as well, it's a kind of a permissionless way as well because you're just paying up cash. You don't have to get into some kind of weird, extenuated, you know, relationship with the data provider. And so that would be when the contract is written, both parties would agree to whatever that streamed cost would be for the data that's coming from the Oracle. Is that correct? Yeah, I mean, we expect the cost of running an Oracle is almost zero. Like you're just putting out like maybe a kilobite of data a day, even that. So it's like really nothing.

Starting point is 00:17:10 Like say like Coinbase again as being an Oracle, they could charge one cent worth of stats for Satoshi's. It's basically nothing to pay for it. And you're probably betting more than that. So it's always going to be worth it. And your opinion is because the data is so readily available, it's going to be a commoditized thing from their vantage point of what they're charging, correct? Yeah, yeah.

Starting point is 00:17:30 And like, since also it is so cheap to be an Oracle, like it could just be like me or some random Twitter club that's being an Oracle. And, you know, I could undercut Coinbase's cost pretty easily because I know I spent five minutes a day doing it. As long as someone just any random person could put off a reputation of being testing to the correct things, they can be an Oracle. Oh, I was just going to mention that in the specific case of these exchanges, they have public price feeds. And so anyone with a reputation could come in and, as Ben said, start plug into their price feed, do their job for them if they won't do it. Let's say that the price feed goes bad. You could have in the contract, as it gets written, you could say, hey, if this one is not producing any data, the fallback would be this one. I'm assuming that something that could be stipulated.

Starting point is 00:18:18 This is something, we'll actually have a blog post going out relatively soon, where you can use multiple oracles in your contract. So you could say, like, you know, I need like Coinbase Crack and BitFenect, BitTMex, and, like, BitStamped to be my oracles. If three of them are similar prices, we'll execute, you know, if you have like zero through a million, then we'll, like, be screwed. But as long as you have, like, whatever parameters you want, so you could do like three or five, two of three, 66 of 100, whatever you want. So, Pierre, you see, and I'm putting words in your mouth here, so correct me if I'm wrong. But I get the impression that you find Link to be a worthless token based on everything you're saying here today. Well, the premise of it is good, but the problem is in the execution of it, because ultimately, what they're doing is unscalable relative to the off-chain way of doing it. There's an infinite amount of data and of different things that one could attest to in the world.

Starting point is 00:19:15 And so I don't think that it makes sense to put it all on chain and to have kind of a fire hose like that. And I also think that in terms of liquidity, it makes more sense to have both the outcome of the contract. So the, you know, how the Bitcoin get divied up. It's basically, it's a, you know, it's a Bitcoin settled contract. And it makes sense to me that the Oracle would get paid in Bitcoin via Lightning and that it would all be Bitcoin denominated for monetary reasons, right? Because we don't like barter and having to deal with. with random exchange rates when really they're contrived and they add friction to the overall process.

Starting point is 00:19:59 It seems to me like this would be something that's really going to take root on the Lightning Network, opposed to on-chain like Ben's demonstrating right now. Yeah, I agree. I mean, in the last, like, I don't think we've had the Mempool clear in like three months and these are getting pretty expensive. So, yeah, I think like eventually the average usual will be priced out of the main chain, which was expected. And yeah, these things will be with the lightning.

Starting point is 00:20:23 And luckily, people are working on things like that. So it'll take a few years. But, yeah, it will be really nice to have on change. But then you can also do like really fast stuff where, you know, you're closing a contract every two seconds and you're still never paying for that. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer.

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Starting point is 00:24:39 That's Shopify.com slash WSB. All right, back to the show. So I remember, I think it was back in 2017, that Rootstock came out with their big announcement that they're going to try to do smart contracts on Bitcoin. I kind of lost track of this project. I'm just kind of curious whether this kind of makes that whole thing obsolete. So they were, they are, I think, still. And this is also the case with a project called,

Starting point is 00:25:10 RGB and Liquid also to an extent of building a secondary layer where you can have non-Bitcoin tokens and then with various levels of programmability around those tokens. To me, I'm not super excited about projects like that and I haven't really gravitated towards them like I have towards DLCs, because the way I see it is that DLCs are, first of all, not creating their own token, and also they are economically useful in the sense of risk transfer. And that's something I've always been interested in. When I was an intern at Deloitte, I was auditing oil and gas derivatives contracts. And so this is a world that I'm very interested in, and seeing it intersect with Bitcoin was really interesting. But these other projects are looking at ways of, I mentioned

Starting point is 00:26:09 DLCs or Bitcoin settled. These other projects would have other tokens involved in the issuance or transfer. And that part, I'm not as excited about it. We can get into why I'm not excited about it, but that's a whole other counterfeit. Well, you know, so when I talked with Samson Mao, he was creating a new game. They were going to issue tokens. The tokens were going to be part of the game itself. He went through all the proper filings for basically an IPO with these tokens. I think in that regard, to me it makes a whole lot of sense that that's kind of how the future of equity issuance will go on something like liquid. But it seems like the DLCs that we're talking about are much more derivative in that their contracts that like you said are

Starting point is 00:26:58 denominated in Satoshis and using that as the base layer. So that's kind of the, when I think about what's happening on Ethereum, what's happening on any other protocol that's trying to do smart contracts, there's an aspect of tokens, the issuance in creating of new tokens, and then there's really just kind of smart contract vehicles. Is there another third or fourth thing that's really kind of taking place there? Because the NFTs, non-fungible tokens, are just similar to token issuance. What also am I missing other than smart contracts and token issuance? ELC doesn't exactly compete with this. Like, like I said earlier, it's just like all you need is multi-sig and signatures that you can encrypt. And so this is doable like with RGB. This is doable on

Starting point is 00:27:43 liquid. This is doable with, you know, you can do it on like coin if you want to. Like, you do it on any really system. So it's very easy to pour it over. Like we've very expected out, or we know we could do this with RGB. We could this do with RGB tokens on Lightning. We could do this You know, on some third layer thing, most likely, like, it's really going to be, like, the DLCs would probably just be aided on top of all these other systems. Pierre, I want to hear why you don't like the token issuance. That was a really interesting point, Ben just made, that I was saying that DLCs are Bitcoin settled, but that's not necessarily the case.

Starting point is 00:28:15 They could be settled in any token. So the reason I am not super excited about tokens is because they create a conflict of interest between the different class holders, let's say, of an enterprise. And it's not like that's new, right? There's always been conflicts of interest between class A shares and class B shares, and maybe there's somebody with some convertible debt and somebody with some senior or secured debt or some junior debt. And there's always like weird conflicts of interest that have to get adjudicated or worked out.

Starting point is 00:28:51 You're talking about the INX token is what you're talking about. Yeah, I think that they all have this central issue of the issuance of the token is revenue that accrues to the shareholders. And that's just kind of the economic, the accounting fundamentals of it. And that creates a conflict of interest. Whereas if we were to say, let's have pure tokenized equity or a tokenized bond offering, that's fine. We need to find a different word than tokenized because now, a security token, I've only heard it refer to in the specific circumstance where the issuer selling the security tokens, recognizing revenue from that sale. And that's not a financing cash inflow.

Starting point is 00:29:38 It's an operating cash inflow. That's a really good point. And then the stipulations they put around it of like revenue shares, this is always diverting value from shareholders to the token holders. And that to is, you know, you can, and they've made a point of having lots of safeguards around it, lots of, you know, governance, et cetera. And I'm just left scratching my head of like, why you're going into pretzels over this because you really want to have the token on a blockchain part and you're not actually improving the merits of the product. And you're not, in my view, improving the outcome for their shareholders. The only advantage is that you get you get the certificates to immediately clear.

Starting point is 00:30:27 Like, let's just say you would go through a token issuance for like real equity, like common stock like the way you're describing it. For me, I guess how I'm looking at this is we need stock certificates to clear immediately. Like when I look at the whole GameStop thing, like total disaster on the speed at which the certificates are clearing because they're lending them out, the whole Robin Hood thing, that whole thing is really kind of coming down to the speed of clearance, really. kind of causing some major issues in the way that the traditional system works. So with that regard, I'm excited about the tokens, but I see your point that it's become so smushy as to what it is

Starting point is 00:31:06 that the buyers of these things are actually getting and how easy it is for companies to basically upset that stack of where you lie in the equity, that it's causing some issues. Let's say, okay, we do have straight normal equity that is being issued as a token. There's two problems. One is that the issuer is always centralized. But that will never change, though, Pierre. That'll never change. There's some nexus with the real world.

Starting point is 00:31:39 And the second, though, is that as a corporate entity, you do actually want to exercise some control over who holds your equity. So, for example, you don't want someone doing a hostile takeover in 30 seconds by buying all of your tokens on the market and transferring them. You want to be able to have stipulations for how concentrated ownership of your stock can be, who can own it, who can't, write a first refusal, you know, lots of different corporate governance actions that I haven't heard anyone credibly, you know, explain that their system will be able to handle all of this. And so this is your case for why the SEC and all the other regulatory bodies are going to

Starting point is 00:32:25 crack down on? Oh, well, I think they're going to crack down on it as a shakedown to extract money from them. And that's what they've done historically, is that they've, you know, asked for the ICO issuer to pay a fine and to move along. And so it's not really justice or anything like that, even from their point of view. I think that one of the problems with enforcement against ICOs is the coordination problem of what happens if you have a million people who invested $1,000 each?

Starting point is 00:32:59 Okay, so they have to do some kind of class action, right? And so we've seen some securities class actions. They're a real headache. And you've got to have someone who's really motivated and who lost a lot of money. And unfortunately, it's usually smaller retail participants who lose money and they don't have enough money or they don't have the time and motivation to hire a securities lawyer to make things right, even kind of without involving the SEC, right, just using common law, you know, fraud. So recently on Binance, they came out with this Binance smart chain, which is a competitor to Ethereum. And what I found fascinating about this launch was they made the software so similar to Ethereum that people that had smart contracts over on Ethereum could effectively port all of their

Starting point is 00:33:52 prior work into the Binance smart chain. And they had an enormous reduction in fees or the gas price. Is this just a pivot to Binance for the time being? Is this something that's actually going to provide a, threat to Ethereum, and then how does it all relate back to Bitcoin as far as long-term implications of smart contracts and token issuance? I think the fee problem will, you know, if they got the same volume that Ethereum did, they'd have the exact same fees unless, you know, they're like more centralized and maybe

Starting point is 00:34:29 they could deal with that a little bit better. But from my understanding, they're not really solving the problem. They're just, you know, they took 10% of Ethereum's like volume or something. So they have reduced fees. So, Ben, here's my question for you. So you're basically saying that this is an inherent problem that will keep coming up for a protocol that tries to do too much on the base layer. Is that what you're really saying? I think, like, your base protocols should just be for final settlement and, like,

Starting point is 00:34:56 very minimal verification. It shouldn't be doing, like, your actual computation, your actual contracts computation, we should on just, like, off-chain between the parties that actually care. If you and Pierre are doing a bet, you know, I like you guys, but I don't really care about your contract and you should just validate yourself. I don't want to store that and have to validate it myself. And so by doing a DLC between Pierre and I, let's say we had a bet, you know, whatever that bet might be, it's a year from now, the date that the termination date of determining whether it was yes or no. We enter into that contract through a DLC. Let's say we do it on Lightning. So our fees are nothing for. the most part? If we had a channel open directly between ourselves, then yeah. So let's talk about that a little bit. That's fascinating to think that you're going from something that has tremendous fees associated with doing all this on a base layer that's then stored

Starting point is 00:35:52 and just keep the storage just keeps growing. No one can run a full node in 10 years because the storage capacity required for all these pre-existing contracts that we've done are all there, right? So like none of that is necessarily a concern with Bitcoin in the way that you're writing the DLCs. The issue of doing computation on the base layer, there's also an issue of all of these tokens that are being issued on the base layer. So ERC 20 tokens, for example, there's no equivalent in Bitcoin. The advantage of that is that the Bitcoin blockchain is really about moving Bitcoin around. There's no, it's not moving other, other currencies around. except you had like Omni that was doing or colored coins that were doing their thing.

Starting point is 00:36:39 And they got priced out eventually. And so I think that keeping it focused that way is a huge advantage as well. Yeah, definitely. I think like since Bitcoin will be the most valuable asset, then like naturally Bitcoin will be the only thing worth paying fees for. If you're moving the equity of a company, go back to our example of tokens, Like, that can be a SQL database that gets audited by their Big Four accountant. And then you might have NASDAQ or some other exchange that is trading the physical,

Starting point is 00:37:14 quote, of the actual shares. And then they might actually trade very little relative to the size of the derivatives market, where you might have everyone around the world using DLCs in order to construct their portfolios and to track asset prices rather than actually using the quote unquote physical. Personally, I imagine a world where the people who, the actual share of a company, it's kind of like the same way in the commodities world. Who actually takes delivery of oil? Well, it's the people that are actually going to be using it.

Starting point is 00:37:50 It's not the speculators who, for the most part. So I think that in terms of who actually owns companies, it's going to be either folks who, you know, like Warren Buffett are taking a sizable stake in a company or the arbitrages who are arbitraging between the futures on DLCs versus the physical on the exchanges on the spot market. So if I'm entering into a contract with somebody with a DLC, let's say it's on the Lightning Network. Can other participants are outside a third party view in and see the terms and conditions of that contract or is it encrypted and they're not seeing any of it? Yeah, not at all. They'd have to get physical access basically to your computer to see what exactly you did. So basically all we're doing is setting up the contract and it's saying like these are every

Starting point is 00:38:41 possible outcomes. We give an invalid signature for it. And then this Oracle gives us a signature. We can make one of those signatures valid and then use that to execute. all the people see like a third party observer, they just see like multi-sig closing transaction. It looks like any like standard. It looks exactly like the Lightning Channel actually. And it's very hard to tell exactly what's going on.

Starting point is 00:39:03 So we would still have platforms to find parties, right, to have a counterparty. So I'm going to log into some website in the future when a, you know, let's say it's an oil future or it's a whatever kind of future. I'm going to, I'm a buyer. I'm getting matched up with some type of. seller, we can kind of see where the market price still is. But then when we go to execute that peer-to-peer contract, I'm just kind of working through this in my head. So everything's going to turn into a peer-to-peer contract, but the platform that would be hosting the two participants would just be a matchmaker kind of site. There's like kind of some precedent for

Starting point is 00:39:41 this in Bitcoin already where things like joint market or bis, where these are peer-to-peer, like one's a coin join and one's a buying Bitcoin and honestly platform. Both of the these, there's a kind of, like, so for joint market, it uses an IRC chat server that just, you know, you find peers on there, and it sends messages for you through IRC, and so that's how to negotiate stuff. This is it just has like a peer-to-peer network, and you send around messages saying, these are all the order orders I know, and then people always tell you their orders, and you kind of fill up like a mempool, basically, of people's buy and sell orders, and then

Starting point is 00:40:13 you then would, you know, find one that you'd like and take it. So we could do the same thing for DLCs. We also could do a more centralized thing where we just have like, you know, maybe like, you know, you go to website.com and pick what a whichever thing you want and you can find it. I'll give you like an invoice or something that you can paste into our software and it'll negotiate the actual contract. There's lots of different solutions. This is like the one thing we haven't fully figured out how it will.

Starting point is 00:40:38 It'll probably something more like the market figures out rather than like a technology solution. Here, I want to talk a little bit about running your own node and opening up channels. So I run my own full node. I opened a channel with some party. I have no idea who it was. So I did this and I was just kind of clueless as to what to do next. And I had Jack Mahler's app on my phone and I told it what my node was. And does that now enable me to really kind of use that money that I basically opened the channel with with that one other party? Or can I only conduct transactions with that one other party? Or can I only conduct transactions with that one? party that I open the channel with. Got it. So for kind of the first question of what you can do, it's when you open a channel, you're buying an option. You're buying the right, but not the obligation to send Bitcoin or to receive Bitcoin if this channel happens to have some inbound capacity.

Starting point is 00:41:35 But presumably, if you're the one opening the channel, it's just outbound capacity because it's your own Bitcoin that you're putting up into the channel. At that point, if your channel is connected to another node that itself has, let's say, eight other channels with other nodes, then your payment doesn't necessarily have to be to the one peer that you open a channel with. It could be with any of the nine peers that you're now connected with and so on and so forth for a dozen hops. And so it's a routed system that, so it is peer to peer, but because you have multiple hops that you can do with your payments, you don't necessarily have to be directly connected with every single peer on the network.

Starting point is 00:42:20 And that's what really allows it to be very scalable. On top of that, the Lightning developers recently made an improvement where when you send a payment, it could go through several different channels in parallel. And this is much how the internet works. Your packets across the internet might not necessarily follow the same route every time. It's just going to depend on the relative capacity of the different routes. And the lightning developers made it so that you can split up a payment into multiple different channels. That made lightning a lot more capital efficient as a system. Because one of the drawbacks of

Starting point is 00:42:58 lightning is that it's a prepaid system. So you've got to put up Bitcoin in order to send Bitcoin. And somebody else has to put up Bitcoin in order for you to receive Bitcoin. Now, I actually don't think that's too big of an issue because of this really cool feature called NGU, a number go-up technology. And so people actually don't have as much of an issue of holding cash. With USDA, it's a problem when you have to put up capital because that means that you're tying up cash that's getting diluted and the inflation is eating away at it. With Lightning, you have the opposite problem of you put up, let's say you put up $10,000 worth of Bitcoin into your lightning node, and then Bitcoin's price goes up 10x. Now your lightning node has

Starting point is 00:43:46 $100,000 worth of Bitcoin on it, and you didn't do anything to do that. And so it's okay to have it be a prepaid system in that regard, but it is routed and it is peer-to-peer. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA

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Starting point is 00:47:12 This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. One of the issues that I found, or I don't know if it's an issue or not, that I found interesting is as I was trying to open a channel with another node, it didn't seem like, I could really put all that much value into it. I think like $10 or $20 was all the more that I could

Starting point is 00:47:37 open a channel with for the most part, at least the couple that I clicked through that I tried to open a channel with. Does that cause any type of issues moving forward? So that sounds like there was a UI issue where they might not have been communicating as clearly as they should have been what was going on there. Because today, you can open very large channels. And with a feature called Wembo, you can actually, in a custom manner, open up arbitrarily large channels, up to 21 million Bitcoin, right? And the nice thing about Lightning is that it is not a global consensus system like Bitcoin is. And so two peers can kind of come up with their own rules of how big their channels are going to be or how big their payments are going to

Starting point is 00:48:25 be without having an impact on the overall protocol for lightning. Now, ideally, the channel management is something that's automated and happens in the background. So you would just put Bitcoin into your lightning wallet, and your lightning wallet handles all the liquidity management behind the scenes for you, so you don't have to think about your channel sizes or who your peers are. The technology is still relatively early, so that's not 100% reliable. yet, I'm pretty confident that it's a solvable problem and that a lot of this will get automated away for mainstream users. Let's just fast forward four years into the future.

Starting point is 00:49:06 How do you see the typical person using Bitcoin? Are they outsourcing to some, you know, like let's just say your mom or dad or grandma or somebody who's not going to be like running their full node? Like most people are not going to be running their own full node, right? Well, I've got to go on historical data on this because it's kind of a behavioral question. And so far, we have seen a lot more people using centralized services like Coinbase or like Cash App instead of using their own self-hosted, their own, holding their own keys. Now, that's got some nuances to it.

Starting point is 00:49:48 But I think that by and large, it is going to continue to be the case that the median person is going to be using a custodial service. Now, the median Bitcoin, probably not. I think that the median Bitcoin is actually on somebody's own keys. Even if we looked at the median transaction would be between folks who are self-custying. But with lightning, it actually kind of makes the problem worse because lightning in some ways is more complex than on chain. And so it actually increases the value of using a custodian to send lightning payments or receive lightning payments. That's going to be controversial.

Starting point is 00:50:36 But that's kind of the truth of the matter right now. But I think the technology will overcome that and it'll level the playing field. Let me ask you it this way then. Let's say we go through hyper-bitcoinization. Okay, Fiat's dead. I would suspect that most participants in the economy, they're going out, they're buying their day-to-day stuff, are getting paid over the Lightning Network. Would you agree with that? So maybe, maybe not. They might be using Bitcoin with their Visa card. And it's not because I want that to happen or I own a lot of shares of Visa or anything like that.

Starting point is 00:51:14 It's that building out the last mile in payments is very time consuming and expensive. And that's why Visa has 50% profit margins. They've been building a payments network for decades now. And Bitcoin has only been doing it for, let's call it a decade. And Lightning has only been doing it for, let's call it, two or three years. And so if hyper-bitconization were to happen tomorrow, I think it's much more realistic that Visa would add Bitcoin to their network and that that would be kind of the network that people use and that Lightning would, it would take a couple of decades for Lightning to eclipse Visa in terms of usage.

Starting point is 00:51:56 Visa would be using Lightning Bitcoin. Not necessarily because they have their own closed network. And so they have their own proprietary system, which is a layer three, what you call it, as does, you know, Coinbase, for example. But Visa has been using different currencies for decades as well. You know, you can use Euros on Visa, you can use dollars on Visa, and it's not far-fetched that you'd be able to use Bitcoin on Visa's network. It just wouldn't have any of the assurances that we have using on-chain Bitcoin

Starting point is 00:52:33 or of using Lightning of being trust minimized. You're 100% trusting Visa. You have no privacy with regards to visa. It's got those drawback. And then you're also paying fees to Visa. Now, I think that because Lightning is a better system, that it will out-compete Visa. But we have to keep in mind that it took decades for Visa to out-compete checks. Even though Visa is better than checks, it's still not like an overnight revelation

Starting point is 00:53:02 where everybody switches over to using FASA. And Visa could be using Lightning as well. They could, if they're doing a payment to MasterCard or something, to Venmo or something like that, they could easily use a lightning payment to, like, the other party system instead of having to go on chain for a $10 payment. I was listening to an interview that Will Reeves was doing, and he's the CEO at Fold. And he was talking about how expensive it is in order to send Bitcoin from people's wallets on fold just to whatever self-custody wallet they've got and how they basically release those funds on a weekly basis, at least during the interview, I think I remember I'm saying that they do it on a weekly basis. And how expensive that was for the fees to send out all those different Bitcoin once a week

Starting point is 00:53:47 and how he was effectively saying that in time, it's going to make a lot more sense for them to start working on Lightning as well. So I find it really interesting. I don't know that I fully grasp what that's going to look like in four years and eight years from now. But like you're saying, Pierre, it seems like it's not going to be something that happens immediately. There's going to be this overlapping period as it becomes more widely adopted. I think there's already like good precedent for that, just on like on chain Bitcoin

Starting point is 00:54:16 where like when Montgazca hacked, they were talking about how they had pieces of paper of private keys written on them as their backup system. Or today, now exchanges have much more complicated things, and then average users are able to just write down 24 words on a paper. Lightning's only two or three years old, and it has a lot of time to mature and people to figure out the best practices of things to do. It's all coming. It's just like lots of work to be done. And these things take time, especially when you're building a really robust system correctly. I actually think that DLCs could get adoption more quickly than, let's call it, coffee payments on lightning.

Starting point is 00:54:51 And the reason I think that is two big criticisms of Bitcoin. One is it's just speculative, it's just speculation, it's just casino, and the second is that it's too volatile. And DLCs cater to those two, quote unquote, problems. It enables people to speculate on prices in a permissionless manner, and it enables people to hedge volatility or to go long volatility, to short volatility. and both of those combined, I think, make it so that the audience is much more likely to be interested in DLCs than in being able to spend Bitcoin at Starbucks.

Starting point is 00:55:31 You would think all these hedge funds that are long volatility type or volatility trading type hedge funds would be all up in Bitcoin, but it appears that many of them are the biggest critics of Bitcoin these days. There's a lot of irony there. There's a lot of closet indexers out there. Pierre, I want to get your thoughts on the contango trade. So when I'm looking at this, I'm trying to wrap my head around why it exists. What are some of your thoughts on why the future price of Bitcoin, which has effectively no storage cost for the most part, has this bid in the future tail versus what you could

Starting point is 00:56:11 get in the spot today? It's a really interesting question because if we look at Bitcoin's monetary economics. There's really, there's two things that a monetary network or authority could do. One is target the money supply and the other is target interest rates. And so when you're targeting the money supply, the interest rate is free floating. When you're targeting the interest rate, the money supply is free floating. Bitcoin obviously does the former and is, you know, with the halvings and difficulty adjustments, targeting a very restricted money supply. And that allows interest rates to be freely floating. And so when we have contango like this, I think I saw it was

Starting point is 00:56:52 annualized 30%. It's basically saying that the Bitcoin Central Bank currently has a 30% interest rate. In today's world of zero percent interest rate central banks for Fiat, it's astounding that this is happening. And it opens up, you know, the history's largest carry trade imaginable. what is causing that interest rate to be not only positive, but very, very, very positive. I don't know. Honestly, I think that there's so many just so explanations, right? One would be that there are folks who can only get exposure to Bitcoin through CME futures, and so they are driving up the curve because they can't, for whatever operational reasons

Starting point is 00:57:37 or anything like that, go buy a spot and drive up the spot price. but there might also just be a lack of sellers. So if nobody wants to sell futures, then they have to be strongly incentivized by having this contango. And really, the way to reduce it would be to see more fiat getting created to buy Bitcoin. And basically this 30% is saying, hey, look, if you have access to the Cantion effect and you can get some cheap credit, then you can borrow for 3% and lend for 30% and have a 27% net interest margin.

Starting point is 00:58:17 So it's a huge price signal to the market that folks should be doing that. And yet, the only person really doing it at scale is Michael Saylor with his convertible bonds, at least in the public markets. But look, if there were more people doing it, then it wouldn't be such a big contango. So I wouldn't be surprised if he's, you know, one of the very few. But I have a huge amount of confidence in the market. system and that rational actors will respond to this price signal get into the game. And write contracts and put up 100% escrow.

Starting point is 00:58:51 Well, and the amount of capital is really the biggest issue, I think, is that you do have to have the ability to move billions of dollars and to have access to cheap rates to be able to do this. But, yeah, it's a very fascinating friend going on. So when we think about this derivatives business and them being 100% collateralized when these contracts are written, and then we look at the discrete log contracts, the DLCs that we've been talking about, this sounds to me like a recipe for locking up more Bitcoin and clawing it off the market not to be sold for another year or whatever the duration of each one of these

Starting point is 00:59:35 contracts are, which sounds like it goes to this number go up technology you or. talking about. So here's the question. Michael Saylor is quoted as saying that having cycles, they're pretty much going to become irrelevant. What are your thoughts on that? I think havings will matter until these take over the block subsidy, which I mean could be the next having anyways, so maybe they don't matter anymore now. But I think, you know, I think he is mostly right. We're getting so many buyers in like huge institutional money that, you know, the miners selling and the inflation rate's already really, really low. So like, by and large, like, it's just kind of a buyer's market at this point. Everyone's just buying as much Bitcoin as they can.

Starting point is 01:00:19 Sounds like you agree with them. Yeah, pretty much. Pierre? I shared part of Ben's view, which is that, well, really, if we look at it this way, of the first halving of going from 50 Bitcoin to 25 Bitcoin, logically to me would have a much greater impact than going from 25 Bitcoin to 12.5 Because, or from 12.5 to 6.25, which was last year, because the mass, again, the stock was so great that the change in the flow becomes more and more marginal and thus would have an increasingly marginal effect on the price. The nuance I would add to that, though, is that this kind of gets into

Starting point is 01:01:02 the efficient markets argument of, well, look, if everyone knows that the supply is going to get cut in half in the future, then that gets priced in today. And thus, there won't be an effect from the halving. We actually do see the quantity of Bitcoin get cut in half. Because before that happens, all we have is this subsidy function that we think is going to work and that, you know, we think our note is going to function properly. But I do think that for the market for monies, for monetary economics, what actually happened matters versus what people's expectations of what was going to happen. There's a real tangible difference between those two things of people's expectations versus what actually happened. And we see this in Fiat monetary economics

Starting point is 01:01:51 all the time where the Fed will move markets by making an announcement of what's going to happen. and then it actually happening also has an effect on the market. And so clearly just announcing that something's going to happen, no matter how credible you are, doesn't mean that everything gets priced in immediately. So all this to say that, I don't know, I look at Plan B's model and the Stock to Flow price model as something that is modulating my views and moderating them.

Starting point is 01:02:22 I'm like a perma hyper bull. And so I always think Bitcoin's going to a million dollars tomorrow. And this model tells me to be more patient and to lower my time preference. Other people react to it the opposite, where they think Bitcoin is going to go sideways forever and that this model is moon juice. That's nonsense. And so I think that it's valuable for people who are trying to put a price some kind of range, right?

Starting point is 01:02:52 So I can say like, all right, at the end of the year, it's going to be between 10, grand and 100 grand. But I'm not going to trade on that. How could you ever trade on such a wide band? But psychologically, you know, that might help you help motivate you to save more, for example, you know, if you feel like, okay, well, after this, having the value is going to go up. So I really need to cut my own hair and sell my chairs. But that's kind of a motivational aspect. Hopefully it's not a trading signal. What's the single most interesting aspect of Bitcoin to you right now? I think there's so many cool things. It's crazy. I see how like bifurcated the Bitcoin community is like, I mean, personally, I work, I'm working on DLC stuff stuff. And I like miss like all this stuff happening on base protocol on developments, like new P2P messages going on and privacy networks being implemented and stuff like that. And then, you know, in Lightning and I miss like half the stuff that's going on where I didn't realize that we added like multi-part payments, you know, a month after it happened and stuff like that. So there's like tons of stuff going on. It's really hard to follow it all. But I don't know, I think DLCs is honestly, it's probably the most underrated thing going on right now where like,

Starting point is 01:03:55 Not many people are talking about it and don't know about it yet. But I think once we have like, you know, initial like products of things using this, it's going to explode really quickly because they are so useful. And it's going to fill a niche that needs to be filled in Bitcoin. I echo that sentiment. And I actually think it's going to be more than a niche because when I look at the size of the derivatives market today, it's massive. And if you lower the cost of derivatives and both in the sense of, just the fees you have to pay, but also in the amount of trust involved, right?

Starting point is 01:04:30 If you make derivatives non-custodial, automated, and with multiple oracles so that you have really strong assurances that if you're right about this contract, and it's fully collateralized, you know, which it is with DLCs, if you're right, that you're going to get paid. And we saw with like the GameStop shenanigans where there's this sentiment that. that, okay, even if I'm right about a future price, I might get rug pulled by someone who's more powerful than I am who can make some phone calls and make things happen so that I lose on this contract, even though I followed the rules. And so I think that if you give market participants confidence, and frankly, you know, what in the Fiat world we call rule of law and certainty

Starting point is 01:05:20 about contracts that then they are going to be much more willing to enter into them and to really to much more interesting trading strategies and apply these contracts to a much wider number of use cases than they are currently applied to. When I started learning about discrete law contracts, I was like, wow, this is like when I started learning about lightning. It's like, okay, we don't have to accept the narratives about Bitcoin, right, where we say, okay, well, because we want Bitcoin to be decentralized and we want to have this network of nodes and we don't want to increase the block size limit, now we have to make this narrative that

Starting point is 01:05:58 Bitcoin is just a store of value and it's just digital gold, which is kind of just a irrationalization after the fact. And that I think critics of Bitcoin have pointed out that, hey, look, you guys kind of changed the narrative here. But then when Lightning came along and said, hey, look, we can have cheap payments. We can have a net settlement system so that, We can have a decentralized base chain while also having a high-velocity payment system on top of it. Then suddenly the critics were dissatisfied with lightning for whatever little reasons or the U.S. challenges of a two-year-old technology entail. And so that excitement of having something where we can break a narrative of saying,

Starting point is 01:06:40 okay, well, actually, Bitcoin, not only is it not just digital gold, it's also not just a dumb rock. We actually do have smart contracts that we can build on top of this. We can build decentralized finance on top of it, and it will be sturdy, right? So it's kind of building on quicksand versus building on a rock. And I really think that with DLCs, Ben and Shurdbits, and there are other teams as well that are building on this. I want to call out Crypto Garage and their P2P derivatives platform, because I've been playing around with it, and others that I think that they're still sort of stealth.

Starting point is 01:07:20 Atomic did the presidential election pretty publicly. That was really cool to see. I'm hoping that more teams come on board because there's a huge amount that needs to be built for a very wide array of use cases. There's still a lot of greenfield. Even though SharedBits has done tremendously good work here, I think that they would welcome additional help in terms of building out more. DLCs.

Starting point is 01:07:45 And to put like the context of like DLC's development, we're kind of out like where lightning was at like the beginning of 2018. We're like just finishing up this very initial base protocol for DLCs. And we're probably going to get that like within the year. And then we'll start, you know, flushing out really good U.S., flushing out the protocol more to fix all the initial things we find, you know, problematic in the beginning. We have, you know, a huge influx of users. So this is all like a gradual thing, right?

Starting point is 01:08:11 really just getting started now. So we still have like tons of room to grow. Okay, so today I saw Ray Dalio published the following comment. If history and logic are a guide, policy makers who are short of money will raise taxes and won't like these capital movements out of debt assets and into other storeholds of wealth assets and other tax domains so they could very well impose prohibition against capital movements to other assets, i.e. gold, Bitcoin, and other locations. These tax changes could be more shocking than most expect. Pierre, what are your thoughts on that? Is this something that he's pulling from historical reference of how individual countries reacted relative to capital trying to move into other currencies that were stable? Is it a one-size-fits-all comparison that he's

Starting point is 01:09:04 making to what we're seeing right now, considering this is a global event? It is drawn from history. There's two ways that the government or the monetary authorities can react to what one might call a speculative attack. And one is to raise interest rates. And so that's kind of the market-based approach or to sell Forex reserves if they have any. Very few of them have any Bitcoin reserves. So they're having fun staying poor.

Starting point is 01:09:32 But the other way to react is to have capital controls and to try to clamp down on the private sector, trying to get money out of the fiat system. And capital controls are, from what I've read in the economic literature and what I've observed throughout history, fairly ineffective. It's kind of like with coronavirus, you know, where they were like, we've got to shut down flights and we've got to socially distance and wear masks and all this stuff. That's kind of the equivalent of what financial capital controls are, and people debate the effectiveness of those things. So just the fact that it's even debatable to me is indicative that it doesn't have a strong enough effect to be unquestionable. And on top of that, it's a very short-term thing. So people find ways around capital controls. They route around them. There's always a way to rat around. And this happens with taxes as well. This is kind of tax policy 101. If you tax

Starting point is 01:10:34 one thing heavily, well, you'll have less of that, then you'll have more of everything else. And so people will find other things to do with their money. And there isn't really a free lunch. You've got to tax everything more. If they tax everything more, that's going to hurt the economy, just as they're trying to not have that happen because obviously their revenue shortfall, it's weird where they're not making enough revenue from taxes to pay for all of the deficit spending that they have going on. I don't know why Ray thinks that it's going to be a tax response. Maybe because you look at Ray, he's worth what, $20 billion. Maybe that's why he's thinking they're going to come after him specifically.

Starting point is 01:11:16 Anybody with a high net worth is who they're coming after. Possibly. And now what we've seen that is effective is where the government just comes in and sees this financial assets. In Argentina, and very recently in Cuba, they just said, hey, look, all of the money you had in this account, that's ours new. And we're giving you in return some funny money. And so I can absolutely see a government sees financial assets from an account like that. Now, I just don't think that would even happen in the United States. I think that the U.S. has the same problem financially, allegedly, allegedly with COVID, where you

Starting point is 01:11:55 have too many civil liberties to actually be able to do the totalitarian crackdown and, you know, like China did of, you know, squash and everything. I don't think it would fly in the U.S. to have the government go so heavy-handed. I think that historically in the U.S., you know, there have been capital controls, but I also, with regards to Bitcoin, the way that they were able to get the gold was that most of the gold was already deposited in banks. So, With the mechanics of getting your gold out of a bank, the logistics of that are much harder than getting your Bitcoin out of an exchange, for example. And so I do think that they would immediately trigger a flight, a run on the exchanges,

Starting point is 01:12:40 although I wouldn't call it a run because these exchanges are not fractional reserve. They are 100% reserve. I'll emphasize that. And so they would be able to withdraw their Bitcoin from exchanges, and then the government can't get anything really. So I'm very skeptical that Ray is lumping in Bitcoin with gold here. I think Bitcoin's a lot more seizure resistant than gold ever was. It's unfair that he's doing that,

Starting point is 01:13:06 although I feel like he's gone back and forth on Bitcoin a few times, and maybe he's accumulating his bag. All right, guys, we've been going for quite a while here. I just want to thank you for coming on and talking about this stuff. This is fascinating stuff. You talk about being at the very front of this, it's YouTube. So guys, give a handoff to the audience where they can learn more about you.

Starting point is 01:13:30 And also, Ben, if you want to put something out for any software engineers there, if you guys are looking to point them to a resource, be sure to highlight that as well. If you guys want to know more about DLCs, the Sherpitz.com slash blog has tons of posts all about DLCs from like the low level, like deep technicals to a high level new understanding. And we have also things like lightning, taproot, anything I want to know about Bitcoin tech. So feel free to check that out. And then just like follow us on Twitter. And just DM me if you ever want to get interested.

Starting point is 01:14:01 I'll point you to all the great resources we have. I'll emphasize that in this case, I'm just a cheerleader. I'm just excited about what they're building. I haven't been a participant in it. So very happy to help communicate about DLCs and to follow their progress. maybe I'll build something with it eventually. So we'll see. I'll see.

Starting point is 01:14:26 Stay tuned. There's also the DLC specs GitHub repo, which I'll send a link to you, Preston, so that for folks who are interested in kind of seeing what the latest is on DLCs, they'll be able to follow along there. Here, we're eternally grateful for you because we're just a bunch of nerdy tech guys and don't know how to say the financial stuff for us. I don't understand any of the underlying cryptography.

Starting point is 01:14:49 and I have to ask you guys to make things safe for me because I've already cut my fingers several times on some of these things. So it's a lot of fun to be exploring. And from my seat, it's just pure magic. All right, guys. Well, appreciate that. We'll have all of that in the show notes, the links. Be sure to check that out if you guys really enjoyed the conversation.

Starting point is 01:15:13 And Pierre, Ben, thank you so much for coming on. Anytime. Thanks for having us on, Preston. Hey, so thanks for everybody listening to the show. If you enjoyed the conversation, be sure to subscribe to the show on whatever podcast app you're using. We really appreciate that. And if you have time, leave us a review. So thanks for joining us this week. And we'll catch you next Wednesday. Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional.

Starting point is 01:15:46 This show is copyrighted by the Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - BTC018: Bitcoin Smart Contract w/ Discrete Log Contracts featuring Pierre Rochard & Ben Carman (Bitcoin Podcast)

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