We Study Billionaires - The Investor’s Podcast Network - BTC077: Bitcoin Solves the Time Stamping Problem w/ Gigi (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this week's episode of the Bitcoin Fundamentals podcast. On today's show, I have a guest that needs no introduction because he's one of the most prolific writers in the Bitcoin space. He goes by the name Gigi, and as you'll see in our conversation, he is just a deep and profound thinker. During our show, we talk about his general thoughts on the health and fundamentals of the Bitcoin network, developments he's most excited for, why Bitcoin is time and what that even

Starting point is 00:00:27 means. Some of his thoughts around proof of work versus proof of stake, what is this new value for value that's happening on layer two, among many other topics and ideas? So without further delay, here's my chat with Gigi. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey everyone, welcome to the show. Like I said in the introduction, I'm here with Gigi. And this, I don't know why this is. taking us so long to get to this point where we're having a conversation because, man, I've been a fan of yours for a very long time and learned just unbelievable amounts of information from you. So welcome to this show, very excited to have you here.

Starting point is 00:01:23 Hey, Preston. Thanks a lot for having me. And thanks so much for the kind of words. Well, I'm not going to take this lightly. So you're writing, I would say, for somebody who's maybe just joining us and tapping into Bitcoin and trying to learn for the first time, you have some of the most profound pieces that you've written about in the entire space. I can honestly, and I think most people that are in the space would probably agree with that characterization and say the same. So we're going to have links to a lot of the different articles that you've written through the years in the show notes for people as they're hearing this to kind of pick through and

Starting point is 00:02:00 read because my goodness, man, some of the stuff you've written is just unbelievable. Anyway, I don't know. Yeah, there's no question that. That was just me pontificating. Thanks. Yeah, I guess, you know, like, again, thanks a lot for the kind of words. My work mostly builds up on other people's stuff. And basically, Bitcoin just blew my mind a couple of years ago.

Starting point is 00:02:20 And I'm just doing my best to pick up the pieces and kind of try to bring it in a form that is, you know, understandable to more people because it's kind of, it's kind of hard. Like everyone knows that if you meet another Bitcoin or, you know, at a conference or whatever. and you're shooting this for a couple of hours. There is a level of understanding that when you're talking to someone who hasn't been digesting Bitcoin content for like thousands of hours, it's just very difficult to really break it down to normal language and kind of two concepts that are relatable. And so, yeah, I try to do this as best as I can because I feel like, yeah, as I've said

Starting point is 00:02:57 before, like the world would be a way, way better place if more people understood Bitcoin. So that's why I'm doing what I'm doing. and I'm happy that it resonates with a lot of people and a lot of people find it useful. Couldn't agree with you more. What are you most excited about in 2022? Because so many in this space just look at the price action and they say, oh, Bitcoin's, it's not good this year. It's down, right?

Starting point is 00:03:22 But it is way more involved than just that, especially from a fundamental standpoint. So what is it that you're looking at right now that you're most excited about? That's a good question. And I have multiple answers. I think what I'm most excited about is the continuation of the grassroots movement that is Bitcoin, that it is spreading not top down, but it's spreading bottom up. And more and more people are kind of, you know, like proud about the values that Bitcoin stands for.

Starting point is 00:03:48 You know, they are speaking out about the insanity that's going on in the current system. And they are like, we need Bitcoin. And I'm a Bitcoiner. And I'm not shy about it. And we need sound money and so on. And they are building those strong communities and connecting with people and trying to truly opt out of the system that is kind of falling apart. So I'm really excited about that because, because like what Bitcoin is and what it will be in the future, it's like a moving target, you know,

Starting point is 00:04:12 and we definitely, we definitely made some transitions. Like not too long ago, Bitcoin was equivalent to buying drugs on the Silk Road, you know? And now we are in a completely different territory. And to me, Bitcoin is 40 people by the people, it's people's money. And the people are finally kind of learning about Bitcoin and are motivated. enough to use it and to make something of it. And again, as I said, like opting out of the failing system using Bitcoin as they see fit. And I'm really excited about it, that this is happening all over the world. Why do you think that it is a grassroots? Why is it starting from the grassroots and not from the top down? And then a follow-up to that would be there are a few people that

Starting point is 00:04:57 are figuring it out that you would think would not be early adopters to the scene because they have so much wealth and they just they have no real reason to really kind of be paying attention to this. So how about them? What's what's the thing that's causing them to see it where so many of their counterparts are not? Yeah, one of these guys, he has the domain, hope.com. And I think, you know, that explains a lot. I think Bitcoin is hope to a lot of people. because Bitcoin, the reason why it moves bottom up instead of top down is that Bitcoin puts the individual at the center and no one forces you to use Bitcoin. It's a voluntary choice. And you are in full control if you want to be. You know, like you can hold your own keys.

Starting point is 00:05:42 You can run your own node. You can even mine yourself. You know, like you can produce your own blocks and have your own head trade. That's very, very different than other systems or that the current banking and field system how it operates. You don't have the option to do it yourself. You know, you're always in this client server, master slave relationship. You don't have the possibility to run your own node and for example, also like try to find out how many euros are in existence or how many US dollars are in existence. In Bitcoin, it's one commander away and you can verify yourself with your own note. And I think all these, all these kind of technical base realities, they're kind of responsible for this bottom up movement because you can

Starting point is 00:06:24 actually do it yourself. You don't need anyone's permission to use Bitcoin. And that's insanely important because depending on your situation, you might be kind of forced to use Bitcoin. You know, like there are countries as you know that where, you know, like Bitcoin is the only savings vehicle that works for you and where people have access to. And you have access to it because you can't do everything yourself and no one can stop you from using Bitcoin. You know, like what Bitcoin is and what using Bitcoin means is very different, like it's different for different people that are in different situations. If you just need to generate a private key, for example, which allows you to receive funds, you can lock yourself in the bathroom and

Starting point is 00:06:59 flip a coin, you know, 256 times. Like, that's all you need to do. That's literally all you need to do. And the rest is just pen and paper. And then you can derive a Bitcoin address from that and you post it on your social media profile or whatever, like whatever channel you want to use and people can send you funds. How long would that take? If somebody wanted to generate their own key and do the math, how long do you think that that process would take? It doesn't take too long. It doesn't take too long. I mean, if you have access to some computing device and some tool that even works offline,

Starting point is 00:07:29 like a calculator, it doesn't take you too long. There are tools where you can enter the series and ones of the coin flips, and it will spit out a valid address. Like, it will take you, if you use something like that, it would only take you a couple of minutes. If you actually do the math by hand, it depends on how good you are at math, you know? It's a bit involved, but you can actually. do it, you know, and that's why it's so powerful. Like, literally no one can stop you. That's how

Starting point is 00:07:52 Bitcoin works and that's how it operates. And that's very, very different than, you know, like creating a PayPal account or opening a bank account with some random bank and so on. And that's why it's so powerful and bottom up, in my opinion. That's unbelievable when you just take a step back and think about the ramifications of what you just described. Yeah. And it's also like all this, again, I always come back to kind of the base reality of Bitcoin and how it operates. Because This is what makes it so powerful. This is also like the fact that all you need is a private key to receive and spend funds is like the consequence of that is that you can't have your money in your head. And people are not like the full consequences of this reality are not clear to most

Starting point is 00:08:36 yet because you can like just generate a private key. It doesn't matter if you do it alone on the toilet or you use a hardware or whatever it doesn't really matter. As long as it's random, you know, as long as the entropy is good, you're fine. And then you can convert it to like 12 or 24 words. And you can actually remember 12 words. Like that's doable, you know, especially if you're in a situation where you have to flee your country or what have you, then putting 12 words in your head, you can actually do it.

Starting point is 00:09:02 And this works because of the base reality of Bitcoin, of how it operates. Bitcoin is just pure information. And then you have 12 words in your head and you can be as wealthy as the Bitcoin network allows, you know, like it can be like a sailor can do it. And that's a lot of wealth. And he could run around naked and still be very, very wealthy. And that's why we say Bitcoin is unconfiscatable and all that things. You know, like take everything with a grain of salt.

Starting point is 00:09:26 It's not advisable to do, you know, like if you have a stroke, you're suddenly not as wealthy anymore. So I wouldn't advise you to do this. But there are situations where people did this and where people are doing this. And this is so powerful, it boggles the mind. And it all comes back to the fact of Bitcoin's operation and that Bitcoin is pure information. and the private key is pure information. That's why you can transform it to 12-thirds. And then you have it in your head.

Starting point is 00:09:52 It's literally this is the money, you know? Like it's not like your login to a bank account or whatever. It's like the value itself is in these bits of information. And this is just amazing. Again, like I said in the beginning, Bitcoin, like once I figured this out, Bitcoin blew my mind and I'm just trying to put the pieces back together and, you know, sometimes an article pops out. You even describe it in one of your articles as just, being magical. And what you know, what you're just describing to me almost doesn't even seem like,

Starting point is 00:10:23 I mean, Michael Saylor's a great example. He's got, what, $7 billion in Bitcoin? And to think that you could memorize 12 words in your head and go anywhere on the planet and have access to that spending power and that buying power is just, it defies on how our brains can even process that, right? Yeah, it's like in a fairy tale, you know, like you have this magic spell. And if you know it, you can do very powerful things, you know. And if you would know Michael Saylor's 12 words, like, you know, like that would be something. And now, you know, like if you're not well versed in entropy and the kind of,

Starting point is 00:11:09 the numbers that I involved in making all this work, then people will start to, you know, try to guess the different combinations of 12 or 24 words because it sounds like, it sounds so ridiculous, you know, like it's only 12 words. How hard will it be to guess? Yeah, it turns out that all the computers in the world will guess for a couple million years and you won't even be close, you know? Like it's, yeah, yeah, Bitcoin works because there's, you know, a certain power in large numbers. And that's also why I think it's bottom up as opposed to top down. because Bitcoin favors the defender. Cryptography favors the defender, you know?

Starting point is 00:11:41 And we never had this. Like, you have a military background. You know this very well. Usually it's like the guy with the biggest stick has the upper hand. You know, like if you have, again, like the largest stick, the bigger battleship, the large army and so on, this is usually the party who makes the rules. You know, like if there is a conflict, the conflict resolution happens with power and with show of force and so on and so forth. And in Bitcoin, this is different in cryptography in general is different. You know, like no army in the world can ever break strong cryptography.

Starting point is 00:12:12 Like that's not how this works. Like it doesn't help you to solve a math problem. And it's not even a math problem really, you know, like it's oftentimes in the mainstream media, you see that Bitcoin miners, they solve complicated math problems. No, no, no. That's not what they're doing. They're trying to find a very specific number. Like a set of numbers is valid.

Starting point is 00:12:29 And the search space is so large that you have to roll the dice. so many times, like the chance is so minuscule that you find this number, that all they're doing is guessing. It's not complicated. It's not complicated at all. They're just trying to find the right number. And that's also why cryptography favors the defender and favors the individual. If you use strong cryptography to defend yourself, it doesn't matter if all the armies in the world conspire against you. If China and the US and Russia conspire against you, they won't be able to break strong cryptography. They won't be able to get to your secret. They won't be able to get the 12 words out of your head, for example. And that's why it empowers the individual. And that's why I think

Starting point is 00:13:07 it's so beautiful because it will always be like this. This is how Bitcoin operates. And there is no way of changing that. Like, this will never change. This is now the truth that exists in the universe. You know, this is now a given fact. And if you know about this, you can make use of it. And that's why I think it's so insanely beautiful and so empowering for so many people. You know, it's interesting that you brought up the idea of power and military projection and things like that. And Michael Saylor recently did an interview where I was listening to him, and he made this really interesting comment. He said that the most powerful apex predator is the one that can organize the energy the best. And so when we think about Bitcoin and what you're describing

Starting point is 00:13:53 here through encryption, we're taking energy that's in a, in a, you know, tons of entropy and it's just in disarray, and we're organizing it into these neat blocks approximately every 10 minutes that organizes what, you know, one party possesses and what they're able to spend in the future based on, you know, what that energy organized onto the blockchain is. Is that how you would describe the, how would you describe this? Because you're so much more eloquent than I am in the way that I'm thinking about this. The problem with Bitcoin is that it does like five or six impossible things before breakfast, you know, like it does it all at once. So it's, I think this analogy is correct. And what it does, it uses dreaded energy to protect the information of everyone.

Starting point is 00:14:39 You know, like if a new block his mind, it's an accumulative layer of protection on the whole UTXL side of the world, on everyone's wallet, you know, on everyone's, on everyone's public information. the way it works is we have this public ledger and it records basically who owes what to whom. And if you have a private key, you can move some of the funds in this public lecture. And you know, like take everything I say with your great of self. Like technically it's a bit different, but that's how you can visualize it. I say technically it's a bit different because nothing ever really moves, you know, like messages are signed and so on and so forth. Like you cannot move information really. You can only copy information. This is a very important point

Starting point is 00:15:17 because this is at the core of the double spend problem. You know, like you cannot, I cannot have information in my head and move it to your head. I will always remember the information, you know, the speaker retains the information. That's the core of the double spent problem. But yeah, that's what Bitcoin does. It uses this energy because you need a protective layer around the publicly available information, which is Bitcoin's proof of work. Proof of work does many other things as well, but it also protects the integrity of the public

Starting point is 00:15:44 information. And that's the only way how you can protect public information without private information, you know. The other way would be to encrypt something or to sign something and then you need a private key for it, you know, and then someone holds the private key and then you have a quorum of signers and all this, everything we have in the field world, and you have some key holders, you know, that are all mighty and can do all that. And you see this very clearly also with some of the privacy technology, you know? Why do you think Seekash had like a signing ceremony, you know, like you need the private key material in the first place. And so the only way to trustlessly secure the integrity of public information is by more public information that

Starting point is 00:16:21 everyone can verify. And you cannot do it with private information because that would imply a private keyholder, you know, and we don't want to have that. Like, then you would have central banks again that can decide what is true and what is not true. And so Bitcoin uses this energy, as they say and it organizes it, it organizes it about around the very valuable information that we all value. It is a record of what happened in the system, a record of who owes what to whom. And it protects like accumulatively the past of all these transactions. And that's why what I also wrote in Bitcoin is time, you know, like the way you can think

Starting point is 00:17:00 about Bitcoin from this perspective is that Bitcoin creates its own arrow of time. Because in the digital realm, you don't have a trustless arrow of time. You know, like you will always have to refer to an external input that will tell you the time. Explain that. Why is that in the digital realm that you have such a difficulty placing time stamping? Look at a piece of paper and let the piece of paper tell you how late it is. It's an impossible problem. You need an external source and you need to feed it into the system.

Starting point is 00:17:32 And this external source can always lie. And that's the problem. There is a disconnect between what is written on the piece of paper and what is happening in the real world, so to speak. So that's why I say the map is not the territory. The map of something is not the thing in itself. That's also why bananas on the blockchain will never work. The bananas rot in the warhouse and what happens to the data? Like what happens to your sheet of paper?

Starting point is 00:17:55 Don't think about it as a blockchain. You know, like you have a sheet of paper and you draw a banana for every banana that's in the warhouse. And then, you know, you wait half a year and then does that. the sheet magically update itself? No, it doesn't. It's like, it's ridiculous, you know. And so you always have, like, there is no link between the informational realm and the physical realm. And Bitcoin is, like, proof of work is the only thing that works that creates this link in a probabilistic fashion, because it creates information that speaks for itself. It's very much like in a game of cards or whatever, like rolling dice is the perfect example.

Starting point is 00:18:31 It's like if you watch someone roll dice, let's say they roll 10 dice at once, and they all land on one, you know, like that's a perfect Bitcoin example because that's what Bitcoin does as well. Then you can, if you know that no shenanigans are going on and you watched him roll like 20 times already, then you know he probably did this for a long, long, long while until every single, every single dice was landing at one. And that's like information that speaks for itself. You can look at this. You can look at this. You can look at. just say information and you can infer what happened in the real world, what had to happen. This is such an unlikely event. Like this had to happen multiple times probably. If it didn't happen multiple times, then someone was just very, very, very, very, very lucky. But usually people are not that lucky. So he was probably sitting there and doing this for like five hours or whatnot, depending on how many dice he rose. And this is how Bitcoin mining works, you know? Like

Starting point is 00:19:25 Bitcoin miners, they find, they find this random number that in the process, in a game that you You can't cheat. And then they announce, Yatsi, I found this number and it fits the difficulty target and so on. And everyone is like, okay, like, yeah, this guy won. And we all have to work on the next round now because, you know, there's something to win. Like the Bitcoin network will reward you in good sets, in good hard Bitcoin for the work that you're doing, for participating in building up this era of time and also for participating in providing energy for this productive layer around Bitcoin.

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Starting point is 00:24:16 happening in the space that you think is underappreciated right now? Lightning. Yeah? Yeah. I think lightning is still very underappreciated. I think everything that's happening around podcasting 2.0 and the work Adam Curry is doing and just direct peer-to-peer micropayments and streaming money and authentication layers and those kind of things.

Starting point is 00:24:38 I think all of it is very underutilized and underappreciated. I think it's insanely magical, you know, like we call it, we call it magic internet money for reason. And it's, if you're playing around with this stuff and, you know, if it works, caveat after early days, you know, like payments still fail. Lightning is not perfect. Bitcoin is not perfect and so on. But it's, it's improving at such a rapid pace. And if you, like, if you're listening to this in a podcasting 2.0 app, you know, like you can stream sets right now, you know, if it's not hard to set this up on either side. And this is insanely magical. And I think it's still, a lot of people are sleeping on on this.

Starting point is 00:25:16 Like, the fact that this exists is amazing. And I think it has the power to disrupt advertisement models. I think it has the power to create whole new spaces in cyberspace that can kind of work and monetize themselves. And I think all of it is very kind of underappreciated still. What kind of timeline do you have based on like an S-curve? You know, when we just look at Bitcoin adoption, you were talking about how it's just taking off at this point. We have so many different entities involved in Bitcoin now that it just seems so inevitable. How about on the Lightning side?

Starting point is 00:25:54 And if you can maybe talk to the incentives that are going to drive the adoption in Lightning. Yeah, that's a really good question. I think what's like there are multiple things here at play. It's first and foremost, we kind of have to, the technology has to mature and we have to build out certain layers around, you know, like just providing liquidity for users and also making it easier to use, making it easier to understand. All the concepts are very foray and novel. And people don't know what Bitcoin is and what sets are and how this works and why do I need to write down words or what have you. But all of that is improving. So I'm incredibly optimistic in that regard.

Starting point is 00:26:36 But I think what's even kind of harder to put a year on or harder to put on a timeline is the psychological change that is necessary of how to use this technology and also how to use the internet and how the internet could you look like and how does it like, you know, how is audio content and video content produced and what is expected and should it be free or not? And is there an expectation of kind of supporting creators directly? I think this will come as well, because as we see, you know, I think censorship is at an all-time high, self-censorship is at an all-time high, the platforming is at an all-time high.

Starting point is 00:27:17 So it's a very necessary technology as well. But this societal shift, I think, you know, as they say, like the old guard kind of has to die and make room for the younglings that will figure this out on their own and intuitively, it was very similar. You know, like when email came around for the first time, most people were just still using fax machines for the longest time. You know, even though something way, way, way superior was here, they just didn't see the need and they didn't figure it out.

Starting point is 00:27:43 And so I think this transition will take longer than the technological maturity will take. Any other things that you think there may be, you know, happening in the space that is underappreciated? Well, I think the whole, the whole energy question, The whole emerging of the Bitcoin mining sector with the energy sector is still also underappreciated. I think it's getting more traction now and more people are waking up to it. I think, you know, in part because of the work of people like Marty Bend and Steve Barber and so on, that are very open about this and sharing their thoughts very widely.

Starting point is 00:28:20 And I really like the way that Marty is thinking about it, that it's going to be a question of what will happen first. Will Bitcoin miners become energy providers or will energy providers become Bitcoin miners? And it's like the race is on, you know? Like as you said before, it's Bitcoin. Bitcoin, like it eats up this unorganized entropy. It eats up all this rendered energy and it does something useful with it. And it's like, this is so massive because the energy sector is such a, like, it's not a straightforward thing supplying civilization with energy and supplying, like, you know, like depending on on the,

Starting point is 00:28:56 geography deploying different industry sectors and supplying, like, supplying just the population in general with energy. It's a very complex issue. And Bitcoin is the perfect fit because it is the buy of last resort when it comes to energy. You know, like Bitcoin mining is very unique in its energy load profile. You know, like you can switch it on and off at a whim. Bitcoin mining is progressless. So you don't need to power it up or power it down.

Starting point is 00:29:25 Not really, you know, it's not like aluminum smelting or what have you, or other things that were eating up stranded energy before Bitcoin came along. And so I think it will disrupt, yeah, basically all of the energy sector in the next like 10 or 20 years. Don't you? It will, yeah, it will take, it will take some time for the energy people to realize this as well. I think they're coming around to it, though. for, if we compared where we were at a year ago to right now, it almost seems like there are tons of energy producers that are looking at Texas and they're looking at some of these other parts in the world and they're saying, oh my, oh my Lord, what do you mean? I can monetize all this excess

Starting point is 00:30:07 energy. I mean, I think there's something massive brewing on this front. And I think it's happening very quickly. Yeah, yeah, I would agree. I would definitely agree. And I think, you know, there are some there are some kind of situations where it's just like it's a no brain it's a it's a it's a match made in heaven and well you know like with with the the flared gas mining for example you know like it's you have to flare the gas usually you don't utilize it at all and now you can as you say you can monetize it and it's you know it's it's good for oil production it's it's good for bitcoin it's good for the environment everyone is making money of it like it's a win win win situation and i think this will it will spread from these kind of no-brainer opportunities to the wider energy sector.

Starting point is 00:30:55 And yeah, I think a lot of people are also working on kind of, yeah, using Bitcoin to accelerate the energy transition and build out energy sites that would otherwise be not feasible. You know, like if you have to, I don't know, like build out a hybrid project and it's, it would be economically not feasible to do so, Bitcoin miners can't stop. step in and go like, okay, for the like first five years or whatever, like we, you know, like we're going to, we're going to take the energy. We're going to, we're going to put some containers there and mine. And suddenly it makes sense economically to build out this project. And yeah, as you say, all of it is, is kind of happening. But it's, it's also a slow process,

Starting point is 00:31:36 I think, because, you know, like, you don't change your mind of Bitcoin overnight. No, it takes time. Yeah, it definitely takes time. And I think. But I think the bottom line, for some of these companies, it's going to become so obvious when their competitors are, you know, just adding so much to their bottom line by incorporating this strategy into it that it's almost going to be impossible to ignore. Yeah. And you know, like again, I have to fall back to one of the Bitcoin memes. It's going to happen gradually and then suddenly, you know, it doesn't, it doesn't, and I think, you know, with the news, like Exxon is now being outspoken about Bitcoin mining and those kind of things. Like, in a lot of boardrooms, I think a lot of discussions are going on. It's like,

Starting point is 00:32:21 okay, what are these people doing? What do they know that we do not know? Yes. Yeah. So let's talk about proof of stake versus proof of work. This is, in my opinion, one of the most important things. The difference between these two is probably one of the most important things for somebody that's new coming into this space to fully understand. So if you are going to characterize the two of them, please do so. And then talk to us about the concerns that you have for proof of steak, because I know you have quite a few. Okay. I'll have to collect myself. I did not anticipate this question. I have to be honest. So, okay, proof of stake is basically a scam, period. Like, it doesn't work. It cannot work. Just in terms of timing, proof of stake systems

Starting point is 00:33:13 always need to do some proof of work in secret to fight off these race conditions and so on. Like, okay, where should I even start? Well, not explain that because I've never heard that. I've never heard that point of view before. Explain that. Either they're doing some proof of work secretly, just a little bit, you know, so as an anti-cheat mechanism, or they have a centralized timing server. There is no other way.

Starting point is 00:33:36 There is no global time on Earth. There is no global time in the universe. You know, there just isn't because of relativity. So a light signal takes like 50 milliseconds to travel from one place of the earth to the other. And that's not like an arbitrage, like that's not, that's, so there is no global state, you know, like you cannot snap with your finger and decide this is the global state of the world, because you will always have like a 50 millisecond fuzzy period where it's indeterminate. You cannot, like, signals need to travel back and forth.

Starting point is 00:34:09 There is no global state in the universe and there is no global state on earth. And so if you reduce the block time to lower than 50 milliseconds, for example, it would be absolutely impossible to find consensus. And that's also why chains that have slower, shorter block times, they have more orphan blocks because it's, you know, like the risk of running into consensus problems is higher. And Bitcoin's 10 minutes is just like, okay, that's good enough. Even if you have latency issues and so on, 10 minutes is long enough for the earth to agree on a state. And this is like a physical problem. And proof of stake cannot solve this problem, period. You need to have timestamps service that are centralized, two or three of them,

Starting point is 00:34:52 that tell you the time. Because for transactions and an order of transactions, you need to know the time. Because otherwise, you would be able to spend money that you do not have. You would be able to spend money that did not arrive yet. For consensus to rise, you need an absolute order of events. And in the universe, there is no absolute order. order of events. It's all relative. And that's why you kind of need to build up your own era of time and so on the proof of work is the only thing that works. All right, that's one thing. That's just

Starting point is 00:35:20 the time aspect. With the proof of stake, one of the biggest problems that Bitcoin solved was who gets the tokens? Who gets the initial supply? How do you distribute the money? First of all, who is allowed to print the money and how do you distribute it? How does proof of stake solve it? Who decides who can print? Who decides? Who decides? about the money supply and who gets it, you know? And if you don't have, like, are you aware of the term stake grinding and validator selection and all those kind of things? I've heard some of it through the Ethereum.

Starting point is 00:35:56 Yeah, that's a big problem. You know what solves this? Proof of work, you know? Like, if you're a validator or if you control most validators, you are the one who selects the next validator. So who gets the money next? And if you control all of it, then you just give yourself the next slot and so on and so forth and so on and so forth.

Starting point is 00:36:13 And the systems that run into that, do you know how they solve it most of the time with something that's truly random, which is proof of work? You know, like, it's all stupid. Like, it's, why are we playing these games? Bitcoin exists. Bitcoin works. Bitcoin is fair. Why are you trying to print your own money?

Starting point is 00:36:28 Why are you trying to print your own money into your own bucket? It's all unethical. It's all very, very unethical. I'm starting, you know, I'm starting to lose my patience because Bitcoin has been around for a very long time. And your proof of work, your proof of stake, shitcoin token, that you mind yourself or pre-mine yourself, most people don't know. Ethereum had a 70% pre-mine. 70% pre-mine.

Starting point is 00:36:54 Very few people, like five or six people have had 70% of the Ethereum supply before it launched, you know. And all the other projects are very similar, you know. Like there's always a few select people that print the money because it's a hard problem. How do you generate money fairly and distributed across the earth, just like gold was distributed, you know, distributed fairly all around the earth without anyone deciding who gets the money? It's a really, really hard problem. And Satoshi solved it, and he didn't take anything for himself, and he disappeared. And that's why Bitcoin can't be repeated, you know, like it's the immaculate conception of sound money.

Starting point is 00:37:31 So why do people continue to, like, improve upon that? and they don't even know the problems the proof of work solves. That's the thing. The proof of stake people have no idea what kind of problems, proof of work solves. And so they're not even understanding the problem correctly. And they are trying to come up with a solution. And all the solutions are flawed. And you always, as I said in the beginning, you always have a certain quorum of people

Starting point is 00:37:58 that decide what the truth is. And in summary, in like one sentence, proof of work relies on physical, to tell you what is true. And proof of stake relies on human judgment, and I will tell you what is true. And that's the big difference. And we want to move away from human judgment, and we want to remove humans from the equation

Starting point is 00:38:19 when it comes to the very moral and ethical question of money production and who can control the monetary flows. We have to remove humans from the equation. And proof of stake does not remove the humans from the equation. It reintroduces that. And that's why I'm so worked up about it. And I'm apologies to all the listeners that I'm ranting so hard on that.

Starting point is 00:38:45 But it's a moral and ethical question. Who should be able to print the money? And who should be able to de-platform you? Who can stop the money flows? Who can freeze their accounts? Who says what is true and what is not? And Bitcoin and proof of work, it uses physics and mathematics and something you cannot cheat. And all the other systems like proof of stake and all.

Starting point is 00:39:05 also the current Fiat system, it's all the same thing. It's a quorum of people that decides what's true. It's the central bank. It's like the 12 people in the room that decide on monetary policy. And we see this all the time. Just look at the proof of stake systems that exist. It's human judgment all the way down. And that's why these systems, they pause and they restart,

Starting point is 00:39:26 that they change the monetary supply and they blacklist people and the platform people and blah, blah, blah, blah. We're back to the old system. Proof of stake is the system, the central bank system, that we currently have. And it's immoral, it's unethical. And proof of work is a safe and secure and fair system that is based in reality, that is based in mathematics, that is based in physics itself.

Starting point is 00:39:50 And it actually solves these problems all the other people try to solve. I want to read something here from one of your article. So I'm reading this article and I'm just blown away at the intellect coming out of the this article. So the title of this is proof of life. What is life? The question of whether something is alive or not obviously hinges on one's defined definition of life. Life is endlessly complex, so it is no surprise that the answer of the question, what is life, leads to a multitude of answers. New age speculation aside, it seems that life is a process, not a substance.

Starting point is 00:40:34 We can try to describe this process by looking at things which are alive and looking at what they do. They tend to grow, reproduce, and respond. They inherent traits are made up of smaller units, cells, and use energy to maintain their internal structure in the face of entropy. I love this sentence. They use energy to maintain their internal structure in the face of entropy. I'm going to keep reading here.

Starting point is 00:41:00 I'm sorry if I'm embarrassing you, Gigi. From a physics perspective, living things are thermodynamic systems. They utilize the energy differences in their surroundings to maintain a specific molecular organization and create copies of themselves. Thermodynamically speaking, living systems are able to decrease their internal entropy at the expense of free energy taken in from the environment. In short, living things create order out of chaos. and then you write Bitcoin is doing exactly that.

Starting point is 00:41:34 It takes energy from the environment and puts things in order, i.e., it decreases its internal entropy. So you have an incredible gift for writing and explaining things so clearly. The rest of this article is mind-blowing. Here's my question. It's not about Bitcoin. It's where does this ability to write so clearly of an insanely complex topic. I mean, we're talking about life itself here. And what you just kind of described here in a way with energy and entropy and order is

Starting point is 00:42:10 just I just took a step back when I'm reading this. I'm saying, my God, like, how does a person take something that's so complex and distill it down into something so understandable? How do you do that? Yeah, I think one of the one of the, one of my favorite educators was Richard Feynman. And he had this saying, you know, like, it's not complex. It's just a lot of it. And what he meant by that is that when you break it down to first principles,

Starting point is 00:42:39 it's actually not that hard to understand. It's just the world is there's so much of it going on at once that it becomes complex. And it has the appearance of insane complexity. But the passage you just wrote, it's very, very simple. It's like you have a thing. Like if you're not living, you're decaying because, you know, the world is chaotic. And, you know, you have radiation and all kinds of things that will. just rip molecules apart and just do all kinds of things, you know?

Starting point is 00:43:03 And given a long time, everything will kind of, you know, fall apart. And that's just the way the universe works. We have these forces that they're constantly going on. And, you know, like there's also the, I can't remember who's at it, but, you know, a couple thousand years ago, the only constant is change. And that's the universe for you, you know, like it's all, it's all just the dance of the molecules. And so, again, like, it's very simple.

Starting point is 00:43:26 If you want to have something that has a certain internal structure, you need to fight against it. You need to use energy to keep the structure alive. And this is true for buildings. This is true for companies. This is true for everything that's living. And this is true for Bitcoin. And I like the motivation to write this article, Bitcoin is life or proof of life. I mixed this up now because I'm working on a chapter that's related to these thoughts,

Starting point is 00:43:51 which is named differently. And it was kind of almost obvious to me that Bitcoin is this living, breathing thing. And again, you know, like these are not my ideas. The first one who came to this conclusion was Ralph Merkel, which were, you know, who is the namesake of the Merkel tree that most Bitcoiners should know. You know, like if you put hashers into hashes and so on, you have one hash at the top and it's a Merck tree. And so it's a very nice way to produce a fingerprint of a data, basically, that Bitcoin uses. So Bitcoin is made up.

Starting point is 00:44:22 of Merkel 3, so to speak. And he came to the conclusion that, you know, Bitcoin is the first cybernetic form of life, the first cybernetic organism because it keeps itself alive and it pays us to keep it alive, you know, Bitcoin pays miners to keep it alive. And it's all about the internal structure. And of course, the internal structure of Bitcoin is data. But you still need someone to keep the data intact and alive and find it useful enough to pass it around. And again, with data, you have to reproduce it to different mediums, you know? Like, every hard rifle die and deteriorate. Every, like, it doesn't matter what you use if you use CD-ROMs to pick a very stupid example. CD-ROMs are not a good, like, shout out to one of the Twitter fights that is always going on.

Starting point is 00:45:10 But CD-ROMs are terrible in terms of storage. Like, they will try to read a CD-ROM that's 20 years old. like you will have no fun with that. So I bring all of this up because we have informational constructs that behave very similarly. Like there are some things, some informational things that outlasted empires, you know, like religious texts would be one of those examples. And they are also a kind of, you know, like if you kind of allow to allow me to stretch the metaphor by a lot, like it's also a living thing because, you know, it started in one language and then it got translated to another language and it keeps itself alive because

Starting point is 00:45:51 people find it useful and they repeat it and they replicate it and so on. And Bitcoin falls in that category as well. But with Bitcoin, it's, it actually is a very high frequency living and breathing system. And it's, we saw it like one of the best examples was the mining exodus in China, you know, like 50% of the hash rate gone from the network. I don't even know how much it was like 50 or 60% or something like that. And it recovered like without, without missing a beat. You know, the heart of like the hard rate of the Bitcoin network, as we said before, it's like

Starting point is 00:46:22 10 minutes approximately. And approximately every 10 minutes, a new block came in. It doesn't matter that just, you know, a whole, a whole really, really large country went offline and made Bitcoin mining illegal. And very organically, you know, like all the cells of these, of this organism, of this worldwide organism, they found like, they found another jurisdiction. They moved there. They reassembled themselves and the hash rate came back online, you know, like the most A6s

Starting point is 00:46:47 were not destroyed. Like, they just moved somewhere else. And, you know, like this wound was healed and Bitcoin marches on. And so I think the life metaphor, the metaphor of an organism is a very apt one. And again, coming back to Ralph Merkel, he said the same thing. You know, he was like, if nuclear war destroyed half of the planet, Bitcoin would march on unhindered. You know, it's like he understood very deeply how this system operates.

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Starting point is 00:50:36 This is a paid advertisement. All right. Back to the show. So I want to jump over to this question that you have proposed to people, because I find this question so interesting. What's the single best question you can ask someone to gain an understanding of how much they know about Bitcoin? Yeah, I think I know your answer.

Starting point is 00:51:00 I always used to, I always use the same one, which is like, Let's say, let's say, you know, the last Bitcoin block arrived eight minutes ago. How long will, Preston, how long will it take for the next Bitcoin block to come? When will the next Bitcoin block come? I don't even want to answer this because I don't have to be judged. So the last one, the last one was eight minutes ago. When will the next Bitcoin block come approximately? So I saw, I saw this thread and I saw some really intelligent answers that people would put there.

Starting point is 00:51:28 and answers that I hadn't really, you know, because when a person hears this, they're like, oh, well, two minutes, right? Like, because every block is 10 minutes. But that just shows you how little you kind of really understand about the math and all the other inner workings that are at play. And so one of the points that somebody brought up is, well, how, you know, let's just say China banned Bitcoin and we are dealing with a giant difficulty issue because all this processing power has gone offline, maybe the average blocks are 16 minutes at that point. So

Starting point is 00:52:03 maybe the answer would be, you'd maybe expect another eight minutes from now or whatnot, but so much of its probability base. So I don't even know that you can answer that question with any type of confidence without somebody who's a mathematical genius kind of like rolling their eyes at you. Well, the short, correct answer is like 10 minutes. It's always 10 minutes. Yeah. And the reason for that is like, it's very similar to the gambler's fallacy. It's like you're standing at the roulette table and, you know, like let's just pick red and black, you know, and let's say red came up 10 times in a row.

Starting point is 00:52:39 What's the chance that black will come up next, you know? And people are like, oh, yeah, black has to come now, you know, like it's almost guaranteed that black has come. But no, that's wrong, you know. Like it's, it's again, we're back to a coin flip. So it's 50-50. The chance hasn't changed. And the same is true for Bitcoin mining. It's like every individual hash that you do has the same chance of finding a valid

Starting point is 00:52:59 block given that your nonce is picked randomly. And so it's like rolling a dice, which has many, many, many, many, many sites, like trillions of sites, you know. And it averages out that if you roll this dice all the time, that it takes about 10 minutes It's until you actually manage to roll the right number. But, you know, like, again, it's memoryless. So, like, every single, every single role has, like, a minuscule chance of success. And that's why the correct answer is, like, 10 minutes from now, always, you know? And it's also always wrong.

Starting point is 00:53:35 You know, it's always wrong. You know, like, it's probability is all the way down. But it's a very good question to kind of see where someone is at in their understanding of how Bitcoin works on a technical level. it. Now, have you received any questions that you thought were good questions beyond that one that you just asked? Because I think that that question is brilliant, by the way. I think there were a couple of good ones, but it was a while ago when I asked it, so I don't have it at the top of mind. Here's a strange one for you. Why are you so obsessed with knowledge?

Starting point is 00:54:10 Because, I mean, I'm looking at you there and you got your, you know, your library behind you. you obviously, you know, you were talking about Feynman and how you got all this stuff and you just got to find the, you got to dents it down to the stuff that's actually first principles. But in order to do something like that, you have to have this foundation and this breadth of knowledge to start with in order to be able to piece that together and to kind of know where to look for the first principles. So for you personally, what has, what has incentivized you to become so knowledge, and to be so well read and to be a knowledge pig. No one ever asked me this question.

Starting point is 00:54:51 So I'll have to give you that something. I don't know. I think I always just thought that stuff was super, super interesting. Like it's amazing. Like the universe is amazing and the world is amazing. And I always wanted to kind of find out how the world works and how this stuff actually works, like how it actually works. And it's, it's, you know, like almost like a child.

Starting point is 00:55:14 It's like, ask why five times. I know you like this as well, right? Yes, yes. But it's just keep asking why. And you will see that absolutely everything, everything is interesting. And so, yeah, I always like computers. So computer science kind of came naturally to me. Like how do computers actually work?

Starting point is 00:55:35 Like what makes all this magic work? And like, make no mistake. It is absolutely magical, you know? Like what we have now, like the fact that we are speaking and I can be an invisible man and you don't know who I am and where I am. And we are speaking through like, you know, these these tubes that are the internet and no one really knows how it works, but it works. And people are listening while they are on the run and they have their magical like beans

Starting point is 00:55:58 in their ears that speak to them and everything is connected. Why, Leslie, you don't even see what's going on, but it just kind of works and so on. All of it is, it's pure magic. Like not only Bitcoin is magic, but all of this stuff is, it's insane that it works. And of course, like, once you figure this out, it's, it's a, it's a, it's a, it's a, it's a, once you, once you, once you, once you, once you realize this, then you realize, okay, what, what's biology? Like, it's doing the same thing just way more complex. Like, we can't build those machines that is a cell or that is, you know, like a worm or a day fly or what have you. Like it's, those are incredibly complex things, you know, and I don't even want to call the machines because I think, you know, it's more, it's more, more complicated. that you can't reduce absolutely everything down to a pure machine thinking, I think, you know. And it's, yeah, it just went from there, you know, and then you're going to, for example,

Starting point is 00:56:56 with the cryptography stuff, you know, the root of physics, the rudophilist mathematics. Why does the universe work in that way? Why is it allowed? Why? There was the thing. I think it was Julian Assange who said it. For some reason, the universe smiles on encryption, you know. Why do we have this asymmetric defense?

Starting point is 00:57:14 Why is it that I can do a little bit of math and no government in the world can extract the secret from me? Why is that? You know? And you go down that route and it will blow your mind like with days on end. I think, you know, like it's one of the reasons why some of the mathematicians go insane. It's like study infinity long enough and your brain will implode. And I think it's just, I found some things interesting and it just spread from there.

Starting point is 00:57:38 And I figured out that everything is interesting. if you dig down into it for long enough. And yeah, with Bitcoin, it just, as I said before, like, it completely blew my brains out. Like, how can this thing create information that is valuable? Because I dismissed Bitcoin for the longest time, because I thought I knew my computer science, and I knew that every computer system can be hacked. And, like, you know, there's copy paste. You can't have bits that are actually valuable without a central authority.

Starting point is 00:58:04 Like, you can't have it. And then I realized, okay, Bitcoin is actually created that. How does it do it? And who was genius enough to figure this out? Like it's a lot of, there's a reason why a lot of people say like it's alien technology, you know, like it's, it bubbles their mind. And it's also, you know, coming back to magic internet. It's like, and more and more people are kind of waking up to this realization as well.

Starting point is 00:58:26 It's almost too good to be true. It's like a fairy tale, you know? There comes this, there comes this shadowy figure and he remains, he manages to not docks himself and not mess up his anonymity and he creates this thing and he stays around. for a while to just make sure that it gets out the door and then he disappears. Like, it's, it's straight, it's, it's straight from, from, from, from, from, from, from a fairy tale. And, and, and yeah, I, that's, that's why I still, I still keep reading about Bitcoin and digging into all, all the aspects it touches, which will eventually be everything.

Starting point is 00:58:57 But, you know, I had to study up on economics and monetary theory and monetary history. I knew nothing about this stuff. I was, I was coming from, from the computer science crowd. I, I knew what a, you know, I knew what a, you know, I knew what, what, what a hashing algorithm is and what a public-private key pair was. And that was my start with Bitcoin. I knew nothing about money. And I didn't care about money. And I, paradoxically, I still don't, you know, I care about fixing them and, but that's about it. You have a really great quote in your article about time and Bitcoin. And the quote is, the timestamping was the root problem to be solved, is always apparent by examining the

Starting point is 00:59:38 references at the end of the Bitcoin white paper, out of the eight references in total, three are about timestamping itself. And you list the three things there. And you've really helped me personally understand why that is so important and why that's the revolutionary breakthrough into what Bitcoin is fundamentally doing is this ability to timestamp a ledger and for it to become immutable. Just brilliant writing. Just brilliant writing. A lot of people like they, you know, it's interesting because, you know, coming back to the proofs sake discussion and all of those things, I truly think that a lot of people that are working on these projects have not read those papers. Because then they would realize how

Starting point is 01:00:25 difficult the problem is. And a lot of people, you know, they know, they know the Byzantine's general problem, you know, they know at least the phrase Byzantine general's problem and so on. And Bitcoin solves the business in general's problem, but it solves it in this roundabout, weird, probabilistic way where you create this piece of information and you can all agree on the truthfulness of this piece of information. And the reason why you can do is it is because you have these absolute things that behave like timestamps. And you can map them to our time in Bitcoin because again, like a block comes in every 10 minutes approximately, you know. And so the way I explained in Bitcoin is time is like every clock, even like it doesn't matter if

Starting point is 01:01:06 you take a grandfather's clock or like a seize, one that uses a cesium or one that use like the atomic clock sets on, you always have something that swings and something that produces a tick, you know, like a tick of a clock. And Bitcoin does the same thing. It's just that every tick is one block. And so you have like, you can use this to build up a sequence of events that everyone can agree upon, you know? And that's, that's again why a lot of people misunderstand the piece, you know, they just, they just see the title and pick, yeah, Bitcoin is time in the sense of like money, store time and so on. That's not what this is about. It's about building up a purely informational construct, something that is just information that creates an arrow of time, where everyone can

Starting point is 01:01:50 agree, this is what happened first, and this is what happened next, and this is what happened next, and no one was able to modify this information. No one was able to, to, to, to, to mess with this information. And this is why in Bitcoin, every single block is linked. And every, like, every, like, that's why we call it the blockchain. It's chained together. It's linked. And every block header contains the hash of the pre of the previous block. And what this means is that every single block speaks for the entirety of the Bitcoin network. And that's why it works. That's why you can be so sure that this is what happened. It's all linked together. And removing those links and doing it it takes a lot of time and energy.

Starting point is 01:02:32 That's why you can look at it and you say, okay, this is, I can say basically with certainty, like with virtual certainty, this is what happened. And I know this because of the underlying game theory, the underlying mathematics, the underlying physics. A lot of computers had to crunch a lot of numbers for a long time and use a lot of energy for this number to appear in the universe. There is no other way. And that's how Bitcoin solves the coordination problem, the Byzantine general problem,

Starting point is 01:02:59 and all that jazz. And it has to do it via time stamping. You need to have an absolute measure of time in the sense that A came before B, came before C, and so on. And this is what Bitcoin does. And this is what only Bitcoin can do in a trustless manner. If you don't use proof of work and if you don't use to use Adam Gibson's term, the reification of information, that information speaks for itself. Information itself behaves like a physical, tangible thing. Or like Hugo Nguyen put it, With proof of work, we give blocks weight. We give them real physical weight, and they behave like physical things. Without that, you will always fall back to just trust us. Trust us, this is what happened.

Starting point is 01:03:42 Because we, the quorum, we signed up. Just look, we signed it with our keys. And we tell you this is what happened. We are the central bank. And we tell you, like, A, happened before B and before C, and it's signed by this key. And we just tell you this was the order of events. And no, we want to move away from this. You need something else.

Starting point is 01:03:59 You need something physical. You need something real. You need something that's independently verifiable. You just look at it and you know it's there and this is what happened. That's why also people, when writing about proof of work some years ago, they used the pyramids as an example. You know, like the Egyptian pyramids, the great pyramid of Giza, it's not proof of state. You can verify yourself that this is there and it took a lot of work for it to be there.

Starting point is 01:04:24 And this is also how Bitcoin works. You just look at it and you know, all right, something had to happen in the real world for this to exist. Like, this was not made up. And that's also why Bitcoin is not fiat money. It just is not. It is a very real money. It is very much like gold, but it's way, way better than gold. You can teleport it.

Starting point is 01:04:41 You can store it in your head and so on. I mean, everyone knows that by now. But it is not fiat money. And Bitcoin was created by Satoshi in the mathematical space and miners are just digging it out. But we know from the very beginning, from the Chinese system, block, 21 million, never more. And Bitcoin is already defined. We are just kind of, we're discovering it just like gold, you know, like gold doesn't grow underground. It's there. And miners are digging it out. And the same is true for Bitcoin. Bitcoin is defined in the mathematical space. And that's

Starting point is 01:05:11 also like, that's one of the main misconceptions people have about mining. You do not create Bitcoin by transmuting energy into Bitcoin. That's not how it works. Because otherwise, if we, if we would link money to energy, then if we would get, well, way, way, way better at producing energy, we would automatically create more money. If you have a fusion reaction, you have a money printer. That's not a good idea. Satoshi fixed the supply schedule in time. We know exactly how much Bitcoin will exist.

Starting point is 01:05:42 It's already predefined. It's predefined in time. And miners are digging it out of the mathematical space. That's why we can say with certainty, like with certainty approximately in the year, 2140, all the bitcoins will be mine. And that's it, 21 million, never more. And once people understand this, then it's also clear, you know, like, Bitcoin mining does not waste energy or so like you're not, you're not using the energy to mine Bitcoin. The energy is there for something else. The energy is there to solve the coordination problem. The energy is there to build this protective layer around

Starting point is 01:06:13 the records of everyone. The energy is there so you produce something that is real and something that you cannot cheat. The energy is there because Bitcoin has to be physical money and not political money. We want to move away from political money where people make decisions. It has to be physical and proof of work makes it physical. Absolutely mind-blowing stuff. Last question for you, and this one's pretty technical, BIP-119. There was a lot of questions from Twitter, people wanting to kind of hear your opinion on this. And I think that it's, there's two main pieces here. It's the process for getting the BIP push through, then also the BIP itself. If you can explain it. it in layman's terms for the non-technical folks as to what we're talking about here and just

Starting point is 01:06:59 kind of describe your thoughts on it. Yeah, I think I have to disappoint most of the Twitter people because I don't have a strong opinion on it. And I honestly, I didn't read too much into it yet. I think the controversy is only like two weeks old now or something like that. And I usually try to kind of ignore the drama of the week as best as I can. And if it goes on for a long time, I will dig deeper into it. But I think, as you said, there are two issues. The first issue is like, how can we do this on a technical level and is the proposal actually technically sound?

Starting point is 01:07:34 And there are certain opinions on that. And the second one is like about the activation method. And if we like the way it's in the way that the people that worked on this for a very long time are trying to to push this into Bitcoin, so to speak, and get it activated and so on. And I think, you know, like in hindsight, it's always, everybody's always smarter in hindsight, of course. And in hindsight, we should have had this discussion with Taproot, you know, and a lot of people were allowed about this that, you know, like, should we really like push Taproot

Starting point is 01:08:03 through in that way and do the speedy trial thing and so on and so forth? And now it comes back and kind of bites us in the ass. That, you know, like there is some precedent for pushing something through quicker than usual, so to speak. Maybe I can add this as a comment. I think what's interesting in Bitcoin is that no one can tell you what Bitcoin is. Again, as I said in the very beginning, Bitcoin puts the individual at the center. That's why you have to decide for yourself kind of what Bitcoin is and what it should be.

Starting point is 01:08:35 And so we will always have these contentions in Bitcoin. And a lot of people I think already know this. There will be a discussion around privacy and so on. There will be future upgrades to Bitcoin where most people probably won't agree. And the reason why it is that way is precisely because there is no central authority in Bitcoin. You yourself, with your note, by running the code, by holding your own keys, you decide what Bitcoin is. And you have to kind of grapple with this reality. And you have to make a decision what kind of software to run.

Starting point is 01:09:11 What are the consensus rules and so on. And this is true, like this will always be true, you know, like it's, of course, you know, Bitcoin will ossify and making upgrades will be harder as time goes on and so on, as other internet protocols, for example, ossified in the past or as, you know, like languages and so on or also an example. And it's, you will always kind of have to make the decision. Like I also compared Bitcoin to a game in the past, you know, like what, what kind of rules you want to play by.

Starting point is 01:09:44 And this is a very individual decision because there is no central authority. There is no one who will dictate what Bitcoin is, what are the right rules and what are not. And maybe one last point. I think a lot of people are not really aware about the implications of pushing soft forks through because a soft fork, you know, like there's a soft fork and there's a soft fork and there's a hard fork and the hard fork is bad and dangerous and then it won't be Bitcoin anymore. we would you know like i mean we had contentious hard forks in the past and then you have two coins

Starting point is 01:10:16 and so blah blah blah and so soft fork is good and soft fork is always good and and not risky at all and so and so on and so forth and that's not actually true you know like a soft fork can be very risky as well and also just keep in mind that reversing a soft fork is not really possible because reversing a soft fork will always be a hard fork and so we should have the debate and be careful about pushing things into bitcoin i think the most important bit the about Bitcoin is to not break it. Again, as I said before, like, I think we have one shot at this. I think there was only one immaculate conception of sound money and fair distribution and

Starting point is 01:10:56 all the chess. And so I think we should be, we should be very cautious. We should be very, very sure that we are not doing something stupid and breaking something. But again, like, I don't have a very informed opinion on it. I did not read into the technicalities of the proposal. And I'm also not up to date to woof the drama. So apologies to all my Twitter friends for not having a hot tape on this one. Do you kind of find Bitcoin being a little bit like a cell in that as that cell develops,

Starting point is 01:11:30 the epigenetics get set and then they can't really be reversed. And so like a heart cell is a heart cell and an eye cell is an eye cell. and a Bitcoin protocol basically materializes and matures into Bitcoin. And this infighting and the soft forks and everything just kind of you get to a certain point in the life of the DNA of Bitcoin developing that the epigenetics are set. Yeah, maybe, maybe. We'll see. I think, again, I think you see this with other protocols as well.

Starting point is 01:12:04 Like, just take Bitcoin is often compared to TCP IP, for example. Like that's why why people are talking also about LNP BP. So lightning network protocol slash Bitcoin protocol. It's the equivalent of TCP IP, you know, IP is the very base, like the internet protocol just pushes around zeros at once, basically. And TCP is what creates the more nuanced connections, so to speak, you know. And it's very, like it's a very nice analogy. And if you look at this tech stack, we knew very early on that the IP space of IP numbers,

Starting point is 01:12:44 IP addresses, is just too small. We will have way more devices that we have IP addresses. And that's why in your home network, you will always have like 192.168 or like 10001 or what have you. That's why we have network address translation. Not every device is uniquely identified. We have this additional layer of like we have a new, have these internet backbone routers and they have their sets of numbers. And every single home

Starting point is 01:13:09 has basically the same sets of numbers. And we just, you know, one home gets one public number and then you have a couple of private numbers that the home network figures itself out and so on. It's all not very beautiful and very complicated and it grew organically. That's what we have. We try to upgrade from IP version 4 to IP version 6 where every, it would be better engineering wise. Every device would have like a unique identifier and so on and unique number. And we tried to upgrade this for, I don't know, probably like 20 years now. I have no idea, but for a long time. And so that's also some sort of ossification. It just takes a long time. But it's not really ossified. Like people, devices support the new protocol and just as which will take a very

Starting point is 01:13:49 long time. And I think in Bitcoin, it will be similar. I think in Bitcoin, the base layer, it will ossify in a sense. And it's also, you know, if you are a pension fund that is holding, you know, like trillions upon trillions of dollars in Bitcoin, do you want to change? Do you want to change Bitcoin? Do you want to upgrade it, so to speak? Yeah, exactly. You probably don't want to do this. And so you have multiple interests that will fight against those kind of upgrades. That's why I think it will also fight. But we have second layer technology, you know, very much like we have with other internet technologies. And so I think a lot of the things, I mean, you know, like take everything I say with a grain of salt because without Segwit, we wouldn't have lightning, you know. So this was

Starting point is 01:14:33 definitely a very important soft fork to get in. In my opinion, there are some soft forks that would be great to have. But again, I think it's more important to not break Bitcoin. Just to name one, I think a cross-input signature aggregation, for example, would be good because you can define constructs that you can't think of future layers that would do settlement of Bitcoin and you would have like privacy as a byproduct, so to speak. And I think that would be good. That's like the upgrade from HTTP to HDBS and just getting SSL into the internet stack and have secure connections by default. And so I think some of those things, some of the upgrades are bound to happen because

Starting point is 01:15:16 everyone basically agrees that this is a good thing. And this will, again, take a long time. But I think in general, let's say like 30 years from now, I would surprise if Bitcoin upgrades a lot. I think it will be ossified by that point in time. Yeah, yeah. Gigi, I can't thank you enough for making time to come on the show. I'm a huge fan of yours.

Starting point is 01:15:36 Your writing is phenomenal. Please, we're going to have all this in the show notes, but tell people where they can find you and connect with you if they're interested. Yeah, the best place is probably on Twitter. I'm Deroggi on Twitter, and my Twitter handle.com, deroggi.com is my site where I publish all my writing, and you'll find other links to other projects I'm involved with. And, yeah, you can read all my articles there.

Starting point is 01:16:00 also read my first book, 21Lessons.com. You can read it for free online. Guys won, did the audiobook. I'm running the whole project, basically, and the whole site on a value for value basis. So it's all published under an open source free license. You're free to use it, remix it, translated, do what you want, print it out, sell it. I don't care. That's awesome. Yeah, it's great because, you know, like the book was translated in, I don't know, like 12 or 15 languages or something like that, the community came together and was like, hey, that's helpful. We're going to translate it. And I think my articles, it's now more than 150 translations or something. It's completely insane.

Starting point is 01:16:40 And I can highly recommend this model. Just set the content free, you know, information wants to be free and information is non-scars, you know, just give it out there. And again, as I said, in the very beginning, I think the world would be a way, way better place if more people understood Bitcoin. And so that's what I'm trying to do. I try to help people understand Bitcoin. And I'm actually somewhat actively working on a second book. I just have too many things going on, so writing is slow. But I'll get it done and I'll get it out there and I'll publish it under a free license as well. And the first couple of chapters, one of them is Bitcoin's Time, is online as well. And it's 21 Waysbook.com and you can read the

Starting point is 01:17:23 introduction at the first three or four chapters or something. And it is phenomenal, by the way. Absolutely phenomenal. Gigi, thank you so much for coming on. Really enjoyed this. Thanks so much for having me impressed. It was fun. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires.

Starting point is 01:17:44 The Bitcoin-specific shows come out every Wednesday, and I'd love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. and it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I'll catch you again next week. 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. 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 - BTC077: Bitcoin Solves the Time Stamping Problem w/ Gigi (Bitcoin Podcast)

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