We Study Billionaires - The Investor’s Podcast Network - BTC242: Bitcoin Core Vs. Knots w/ NVK (BItcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I sit down with NVK, the founder of Coin Kite and the creator of Cold Card, for a high signal discussion on the evolving state of Bitcoin. We explore the long-term dynamics of the Mempool incentives, the growing divide between Bitcoin Core and Bitcoin Nots, and what's really at stake with MemPol filtering. We also dig into CTV and what it unlocks for Bitcoin's scalability,

Starting point is 00:00:30 and the promise and limitations of Nostr and why institutional custody is more about legal architecture than technical constraints. All right. So with all of that said, let's jump right into this interview with the one and only Mr. NVK. Celebrating 10 years.

Starting point is 00:00:50 You are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone. Welcome to the show. I'm here with the one only NVK, repeat guests, super technical and smart individual with anything to do with Bitcoin. Welcome to the show, NVK.

Starting point is 00:01:18 Hey, Preston. Thanks for having me back. So here's where I want to start. And I think it's in an area that many probably aren't expecting. And it's just really kind of talking about the mempool. It's talking about fees. And it's talking about the long-term viability of fees taking over and really kind of providing the revenue for miners long term in the face of so much happening on, call it layer twos or

Starting point is 00:01:46 ETFs and basically everybody choosing these surrogate holding entities for how they get exposure to Bitcoin. What are your thoughts on this? Is it something we should be concerned with? What are your thoughts here? I mean, you know, like most things in life, number go up, fixes almost everything. That's true. Okay, keep going. Because think about it this way. If you look at the block reward, not the fees, just the block reward today, it's going to half again in, what, three and a half or three years from now? Yeah. Kind of lost track.

Starting point is 00:02:17 So if the price is double in three years, miners essentially making the same thing, right? Just block reward. I think it's safe to say that it probably be double in three, four years from now. So they'd be making about the same. So there is that on the block reward. I mean, like, there is enough there, at least for a while, where we're going to have enough in block reward. Now, the fee space is super tricky, right? Because I think it's always going to be completely sort of like random in terms of fee spikes,

Starting point is 00:02:53 because you're always going to have new sort of technology out there that leverages Bitcoin in ways that we may not want or whatever. However, you go on the monetary, non-monetary use of Bitcoin, right? It's still a database out there in the network that is like its great majority use is for monetary purposes, which should be really. But anyways, so let's say that we do have some fee spikes here and there. I mean, that does help feed miners as well, but I don't think they can plan for that. I do believe, though, that the trend is very clear. We're not going to see Bayes layer being packed.

Starting point is 00:03:31 get, you know, it's still going to be probably more than what we have right now. Right now it can practically do one set V-by-8 again. Yeah. And I still think we're going to have moments like this throughout like ever in Bex-Wi. But the reality is, you know, like a U-TX-O is just going to continually be more. And it's going to be less necessary to move the ownership of that U-TX-O on chain. As people realize that Bitcoin is a great store of value and they can use other layers to saddle or quasi saddle, right, and save on fees. So, for example, lightning, right?

Starting point is 00:04:08 Like, you can do a lot of back and forth from lightning before you decide to settle. The same is true for ARC what's coming and the same is true for coin backed equities. Right. I mean, like you can almost sing that's another layer in Bitcoin. I want to get to the ARC comment, but before we do that, I'm just, I'm trying to think 20 years from now, are we still going to see memples that are one sat per VB. And if so, is that an issue? I guess is really the question. I don't think it's an issue because if the price goes up, the reward that is a lot less in terms of Bitcoin units is still going to be a lot more in dollar yield. So you're saying the block reward alone because you're getting this doubling, you know, and let's just say you take Sailor's

Starting point is 00:04:54 model as far as like the price action and the appreciation over the next 10 to 20 years, you're saying that even though that block reward is still minuscule, it is enough because of the really quick math that you explained is all it has to do is go up by double every four years as far as the price. I mean, yes. And there is more to this, right? Because, you know, the fees, Bitcoin fees are also Bitcoin unit base. They are not dollar base, right?

Starting point is 00:05:21 So even if people are transacting a lot last on chain. because they don't want to spend those very expensive UTXOs in fees, those fees might still economically suffice because mining is USD denominated, right? Because mining users have to pay electricity in dollars. It has to pay rent in dollars. It has to pay for hardware gear in dollars. Employee salaries are still denominated in dollars. So I think there is a case for that.

Starting point is 00:05:53 I mean, I can't predict the future. You know, I know for a fact that like, I mean, not for a fact, but I have a very strong belief that we're not going to be changing the Bitcoin cap to inflate so that we can pay minors. Yeah. Very likely to happen. And if that did happen, I dumped in the Bitcoin, which I have not. But I would dump it if I had any. You got a smile out of me on that one. Yeah.

Starting point is 00:06:18 Yeah, I know, I think people worry too much about this issues that are resolvable by number go up. Yeah. You know, and it's the, like, seriously, if Bitcoin is not double in 20 years, today's price, I mean, the experiment likely failed. Mm-hmm. I mean, Saylor talks about this from time to time where he's like, the bigger concern that I have is people really campaigning for this idea of adjusting anything and not just letting the fundamental. He describes it almost like physics, you know, if we changed how much gravity there was that we were experiencing here on Earth, like you're going to wreck havoc in. Yeah, I mean, it's a very, how do you call it? It's a very sensitive formula, right?

Starting point is 00:06:57 Like we have a literal formula for how Bitcoin work. And if you change one variable, everything, the system changes, right? Yeah. It's a problem. Teng Witt changed a little bit of that formula with the discount for the data that's prunable. And that did change Bitcoin economics a bit, when or not it did. Yeah. If we had not increased the block size, you know, miners would be making more now in fees.

Starting point is 00:07:20 Maybe. Yeah. Maybe not. It's hard to know. You can't apply central planning. This is the cars that we were dealt. Now, let's just use the cards that we were dealt on the best way we can. I do like his analogy where it is not moral or ethical to change the rules when the game already started. I think that's a very good way of framing some of these issues. That's not to say that we can't upgrade Bitcoin with other technical necessities. For example, simple covenants, right? Aside from making maybe people lose more Bitcoin in case they do it wrong because then they'll have proof of birth, which is great for everybody, really. There is no economical change to the Bitcoin model, right?

Starting point is 00:08:06 It just means that now Bitcoin is, if we do it right, we can out create vaults that are protected by the Bitcoin the same way that the Bitcoin units are protected by Bitcoin. I want to come back to this one as well, but we need to frame it up a little bit more for the listener before we do 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. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering

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Starting point is 00:12:33 Okay. So on this idea, of not changing the fundamental units or incentives inside of Bitcoin, there's a massive debate for people that are really dialed into this stuff. I think for people on the fringe, they have no idea that this debate's even happening. But for people that are really dialed in, this debate between Bitcoin Core and Bitcoin Nots is just somewhat crazy right now as far as the conversations online. And I think for casual observers or people that own Bitcoin as an ETF or whatever, they don't even realize that this discussion is taking

Starting point is 00:13:10 place. Can you throw it in good thing, which is probably a good thing? Well, help explain this, like in a really, really basic level. First of all, explain what Bitcoin core is and what they do. And then let's talk about just kind of like what has materialized as far as the debate. And then third, I really want to try to talk about, is there risks here from a consensus standpoint? Is there a risk that we have two competing software versions cropping up? Let's first just frame it for the audience. You're very good at framing things and making it simple for the casual listener. So frame this up for them.

Starting point is 00:13:48 Okay. So what is Bitcoin, right? Like in terms of technically rules that Bitcoin was never defined in a spec document. Like most standard, they have a spec document. You're saying in the white paper. Yeah, the white paper doesn't define Bitcoin minutia, right? When you build technology, especially protocol technology, you go out there and you write a huge spec book.

Starting point is 00:14:12 Like it's like Lutheran book that if you go from spec to software, you can rebuild the protocol, right? Like you don't need software to begin with. You just need the spec book, right? Okay. In Bitcoin, we didn't have that. What we had was the Satoshi client, which is the original Bitcoin client. It got renamed to Bitcoin Core, but it really is the Satoshi client, the original Bitcoin client.

Starting point is 00:14:35 Okay. There was the software that Satoshi put up. And it was a bit macaroni code. It's like a single guy just getting at it. There was no real spec for it. And I've heard Jeff Garzick say this many years ago. People have their opinion on Jeff. But he said many years ago that when he first saw the code, he was like, wow, this is

Starting point is 00:14:56 a disaster. It seems like you kind of have a similar. And I see that we saw the cold the first time. We're like, no, man, like, this is brutal. Really? So that was your same opinion. Yeah. You know, the beauty of Bitcoin is that the concept of it, right? Like the economical formula and the game The game adjustment. The game theory. And all this little sort of the game theory, everything that defines the Bitcoin is just conceptually, right? It is absolutely beautiful and brilliant, right? That Dal is Satoshi's through brilliancy, right?

Starting point is 00:15:33 Yeah. His actual code implementation, I mean, it's pretty brutal. I've heard this. The original Satoshi client has poker in it, like the beginning stub for a poker, a client, for example. Is this why we have 21? Who knows, right? But maybe, right?

Starting point is 00:15:50 So, like, we have this brilliant concept. Yeah. You know, I'm sure if you got Einstein, right, like, after he figured out the concept of BMC Square, right, like, if he tried to write a program that then goes and make, like, atomic model simulations, it'll be cold. Yeah. Like, it's okay. We already done enough. It's amazing. Thank you.

Starting point is 00:16:12 NVK, do you think that this points more to this being an individual? as opposed to a group because of the code looking like this. No, I mean, like, you can also make the case that the group decided to call this extremely poorly with windows just to make a point by design. I mean, like, it's one of those rabbit holes. If you ask me, I believe Satoshi was probably a person who lived outside of the law, maybe had its bumps with the deep state. So like, it was somebody who deeply understood what they were doing, how the world really works.

Starting point is 00:16:46 Yeah, yeah, right. It's a great way to put it. Yeah. And remember, right, like when you get into like the very lower levels and layers of society and state actors and things, like lawlessness is a lot more prevalent, but I mean, how things are done than people think that they are, right? Like it's from a global point of view, you're saying. Yeah, no, but even government.

Starting point is 00:17:11 I mean, I remember like the Navy worked on Thor and they funded Thor. But that's where the dark markets are. When you get to peak engineering, there's a lot of people who do illegal because they understand the world. There's a lot of people who are just geniuses. It's like a big mess. That's just a tangent there. But then the point is the software was not ideal.

Starting point is 00:17:31 And it was like extremely redone through the years. It refactored from a lot of different engineers that were provided. Oh, yeah. Like thousands. Thousands of people have worked on Bitcoin Core. There were different sort of like quote-unquote leaders. There were a lot of leaders. There were played heroes.

Starting point is 00:17:49 Like the drama is plentful and it's an amazing story of 16 years of turnover, right? But at one point, I can't remember it was just before Gavin maybe, which was the guy that Satoshi essentially like he had a bit of like a role of leadership to. And this is Gavin that you're referring to for people listening. Yeah. He might have been Mike Hearn, which was a spook. Allegedly. Well, Mike was out of Google, right? Yes. I think that the story goes that he was the guy who allegedly put the back door to

Starting point is 00:18:21 Google, but that's a different story. I don't want to let people go dive into that one. But anyways, the point is around that time, it was suggested that we split Bitcoin core, Bitcoin into two parts, the wallet part, right? And the consensus code part. And the consensus code part was going to be called Bitcoin Core, because it's very, common to have the core part of software being the partners transportable between different clients. And it didn't transpire much that way just because it's the monumental task. We're still working on it.

Starting point is 00:18:54 There's a few different initiatives on working on that. And it became one of those things is like the software is the spec and the spec is the software, right? It's very hard to move away from that. The Bitcoin, although simple is extremely complicated. And there is a lot of new ones, two tiny little things and things affect each other. So anyways, so we got to this name. called Bitcoin Core instead of just Bitcoin.

Starting point is 00:19:16 And Bitcoin Core just meant to be the main sort of implementation of Bitcoin, which is really the direct, the standard derivative of the Supposition Point. And I mean, not even a derivative, really direct. It's just it was the same cold base just being worked on. Now, at what point did Luke come into the time? Oh, because this is important. It was around early, extremely early. I can't remember.

Starting point is 00:19:40 Like 2010 early? I was the name of his mining pool. Mm-hmm. Which was the first, was it the first mining pool? Was that right? For people listening, we're talking about Luke Dasher. And the reason that I bring up Luke and why it's important is because he's the one that's really spearheading the whole Bitcoin knots, which is the competition. Yeah.

Starting point is 00:20:02 So I remember this funny. He has a history of wanting to do filters. Look, when from Suk, let's actually forked Bitcoin's core, but remain, he kept it in consensus with. with Bitcoin, right? So if you ran not, you don't fall off consensus, at least for now. You never know. And I remember he had. And that's, you never know. Blacklisting for Satoshi dies. Those are a bunch of stuff. But NVK, I really want to footstomp that comment right there, because that's where we're really kind of going with the third part of the question, which is, is there a risk in there being two competing? Oh, there is

Starting point is 00:20:39 always a risk? Because remember, the SPAC of Bitcoin is the software. As long as if you don't change anything that is consensus, you don't fork. Even if you decided to make your software pink blue, it doesn't matter. Right. As long as the transactions are valid and you're validating transactions that get mined, you should be good. So I doubt that they would choose to make changes that could make them fork out because

Starting point is 00:21:06 like reality is the majority of the economic actors in Bitcoin, economic note. economic nodes, really. So large nodes that are validating transactions and have lots of coins and, you know, they are all running a version of core. A lot of miners do run patched core versions because they have different needs, especially around MNPool policy. So that's not something I was aware of. Okay, explain that a little bit more.

Starting point is 00:21:33 Well, you can go even from basics, right? Like, I mean, Bitcoin Core has a limit on the size of the men pool that show, right? And if you're minor, you might want to expand them and pull even more stuff in. You just have more competition of power. So they're running like basically their own version of core, but just allows them to kind of see the mempool. Yes. Larger level.

Starting point is 00:21:54 Okay. And you know, from time to time, people will create a transaction that it's not really valid on the core men pool, but it is valid in a block. Things happen. I don't have the examples in front of me, but the point is like there is, Some, as long as the transactions are valid on a block, you're pretty much good, even if you deviate on how you do little thing. Yeah. And that's sort of like where it goes.

Starting point is 00:22:22 I mean, and then you have all the soft policies, right? Like all the standardiness, as they call it. And that's where there is a lot of disagreement. And you know, it's funny that like the disagreement can happen because these are not consensus, hard consensus rules. Which goes back to your original comment that there was never a spec sheet that went out with the protocol. Yes. Okay. But like there's been a lot of people who are very smart who made the software a lot better,

Starting point is 00:22:51 where from your MMPL we have a better view of the, that's by the way, the argument the the core has for some of the removal of the operator limit, things like that, is that like their argument is that you get a better view of all the transactions in the MMPL. can calculate fees better, for example, and you need disincentivize centralization, right? But then the other side of the argument is that you would incentivize people to make non-monetary transactions of Bitcoin and incentivize them to bloat the network with large op returns, but up returns are prunable. The other side, like, it's a bit of a waste of time to fight too much over the minutia on

Starting point is 00:23:37 this. I think the biggest problem right now is, this is more like a metal comment, is that like, see, like the people who work on Bitcoin core are volunteers, right? And,

Starting point is 00:23:50 you know, they're humans. People, humans love to create groups. And people group themselves based on their preferences. And then they tend to go in a certain orthodoxy together. Right. Like,

Starting point is 00:24:05 I mean, that's the most human behavior. And Bitcoin Core is mostly managed from a software management perspective on GitHub. And GitHub, bought by Microsoft, it is a terrible place for you to manage software that is contentious. Right. And mind you, like, the more valuable Bitcoin becomes, the more contention there's going to be even the smallest changes, right? Because it affects everybody's bank, so everybody might have a real picture. But the thing is, like core, the Quint Core, Satoshi client, does not have automatic update on purpose.

Starting point is 00:24:46 And if there ever is, that is when you stop updating is before you have auto updates. That's when you break out the pitch for it. The auto updates is a form of like user management in a way, right? Like now if we had software updates, Core could make changes that the network would take up without being fully agent around the right. Agency in the software you choose in Bitcoin or the update you choose in Bitcoin is very important, because then people cannot take you without your sort of explicit approval or knowledge into forks that may not be good, like say, for example, inflation or something, right?

Starting point is 00:25:27 The point there, I guess, is that core, this group, the current version of the groups, because the group changes all the time too, and it's a lot of people. And, you know, there's like the main maintainer, sub-maintainers, that relationship also changes all the time. It does have a monopoly on the distribution of the Bitcoin code, right? Like the majority of the Bitcoin code is core, especially when you come to economic actors. And, you know, when they choose to deploy a change,

Starting point is 00:25:55 even if it's standard in its so non-hard consensus rules, even if they don't push updates as automatic updates, like it still causes the network to probably adopt their version, right? So they do have power and with power comes a lot of content. So personally, I think we're starting to get to a point where maybe expediting the division of the wallet software from the consensus part of core may be extra important. And then incentivizing people to maybe have. their own versions, like more versions of core that try to not touch the consensus code important.

Starting point is 00:26:38 This is really, so basically you're getting back to the spec sheet is like, let's break this out, let's all agree on what those specs are. And then on the areas that aren't risked to consensus long term, then let people build their own versions of. Exactly. And then if you overfilter, it just means you're going to have a very poor view of the menpool. Yeah. But then, you know, maybe you're just have a lot of social pool and you can sort of of incentivize people to run some filters that may be better for the Bitcoin, you know, block, bloth or whatever. Like this thing has become very loosey-goose because again, they're not hard consensus, right? And if you overdo something, then you just fall off in a way.

Starting point is 00:27:27 You can think about it that way. Do you think that we could get agreement? on what those technical specs are to put in a nice, neat order and then allow. Because it seems like right now that wouldn't be the case. It's just too big. Like the consensus part is just too big. So yes, anything is possible, but it's completely unrealistic. So there is a project called Lib consensus. And who is working on the, I think it's a charlatan is working.

Starting point is 00:27:58 Like, like, Lib, like you would put a. on it. Let no, Lib like library. Oh, okay, Lib. Yeah. So Lib consensus. And the goal of that project is to separate the consensus code from which is the original core concept. Interesting. I want to try to frame this rule since because we talked about a lot of different things here. And I want you to correct me if I'm saying any of this wrong. But the debate, you know, if I was going to really break it down simply, you have this op return. And today, it's, it's, you know, it's, It's at 83 bytes. This is a policy rule.

Starting point is 00:28:34 Bitcoin Core has been enforcing this limit of 83. And anything larger than that is considered spam or something that is being obtuse in a block. And Core has come out and says, we're just going to lift this. And if you want to create mammoth transaction and there's probably a bunch of JPEGs or whatever in that block, but you're willing to pay the high fee, then we're just going to let the fee market figure out. what should go into the next block and what shouldn't?

Starting point is 00:29:03 And we're just going to lift this 83 limit. Did I say something wrong there? No, no, no. That's correct. It's just, I think there's just two little things that are important on that. One is that operatives are prunable. So that means you can remove them from your node. So you don't have to store them.

Starting point is 00:29:19 You do have to process them, but you don't have to store them. Okay. Which is important. And the reason why this is important is because if you don't want to store four megabytes of somebody's JPEG on your node, you can basically extract that out and you don't have to store it and it's not going to take up all the memory. And am I correct? Okay, keep going. What was the second point?

Starting point is 00:29:40 Sorry, I forgot. Oh, man, I messed you up. I'm sorry. When I start talking, I guess it'll pop in your head. Let me keep going. So the thing that Luke is really getting behind with Bitcoin knots is he saying, no, this 83 bite limit still needs to be in place. and this is here for a reason. And if people are running a node, like myself and many others that we have 20,000 plus people running their nodes, if they don't want to relay a transaction of a bunch of JPEGs, they don't have to relay it in this gossip network of these are the transactions that are trying to get into the MMPL.

Starting point is 00:30:17 So if somebody's trying to put JPEGs in there and I'm running my own hardware, my own node that I paid for and I'm spending electricity to run, if I don't want to relay these transactions that are over that, well, then now I have the ability to do that. And Core is kind of removing, my understanding is that core is removing that ability for me to filter transactions that are over this 83-bit limit, which is a somewhat arbitrary limit. But it's the end. Well, the limit came in way back then because there were issues with very unsavory things that could be put into Bitcoin blocks when Bitcoin was very small and that could have been an excuse to shut it down. And I think we know where you're going with that. Yeah. Yeah. So nowadays it doesn't really matter.

Starting point is 00:31:03 I'm sure people put stuff that shouldn't be there anyways. But you can't turn it off anymore. It's like, no, it's the blockchain and the Bitcoin. Yeah. Strategy on stuff. Yeah. You know, like, it's a different environment. I'm not a huge fan of removing that limit.

Starting point is 00:31:18 I'm not sure it's a great use of time. Well, this is my point on it, MVP, is why take that optionality away from me as a person who's running a note? If I want to limit it, I should be able to. If I want to open it up and allow whatever to be put in there, then you should have that option as a person who's choosing to run the hardware and the software that you paid for. I mean, the argument, as I understand, is that because they're the reference implementation, they're trying to optimize for maximum visibility of the manpool.

Starting point is 00:31:51 And that includes transactions you may not like. So it's just like, okay, this is the reference. So let's make sure that if you're running the reference implementation, you can see all the transactions, including the ones that you don't want to see happen. Because of like reality is for literally ever, miners have, have taken out of bound or out of memful direct transactions from people to mine. It's like trying to change the master branch to like main branch on GitHub because it's like, it's not woke to say master branch or something.

Starting point is 00:32:27 It really just riled up all sides for no reason where, you know, we should be arguing about like more interesting things. Well, I definitely agree with that point that there's other things that are more important to be discussing. I think the issue and why this turned into such a big deal is because it was the method that Core used to roll it out. Would you agree with that? It was the method at which core told to. It was very poorly managed.

Starting point is 00:32:56 That GitHub issue, you know, listen, it's like I don't, I kind of feel for them too because managing that, like managing GitHub and seeing a bunch of people like posting AI, like aid answers to fight on that thread. was very, very, I do post off to. On Cone card, we close the issues because we just don't have patience to deal with, like, a lot of strolling. But again, it's like the reason why Bitcoin Core was so sort of like respected and so above, it's because they always managed to be above it all. Orion, which was one of the main maintainers prior to now, always managed to remain fully impartial, try to just keep things open and sort of just left people. people tired out on threads and things, moderation.

Starting point is 00:33:45 Again, I was saying GitHub has very poor moderation tours, tools for open source software. But at the same time, like the way that like you almost feel like a troll opening the FPR too. The way that the PR was open, it was very poorly done. Like everything around this issue was poor management, poor behavior by all sides, just all overall garbage. So, you know, you end up at the place you're at with people screaming at each other on Twitter. Let's take a quick break and hear from today's sponsors. No, it's not your imagination.

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Starting point is 00:37:50 It's not. No, no, no. This is do or die from Bitcoin. It's just how can we move as a community? I think for me, I'm looking at it. I'm saying, how can we move forward as a community in a more constructive way, in a more thoughtful way, and make sure that we don't, destroy the consensus that already exist on this protocol.

Starting point is 00:38:08 No, see, like, this is the thing. I'm on the other side of this. People should, like, be even more against each other. I just don't want to see the discussion, but like Bitcoin game theory is amazing for the more people don't like each other, the more Bitcoin doesn't change. You're going to get like flare-ups on the non-consensus code, like the operative size filter, something like that. But realistically speaking, like, this just makes Bitcoin stronger.

Starting point is 00:38:35 Because it can't be changed is your point. Yeah, because it's going to be even harder to make any changes, right? Because now you have even more people who disagree, more people who don't trust each other. So there is more scrutiny. It was amazing. Like, you want Bitcoin to be as adversarial as possible. Which is interesting, right? That's like what other thing exists in the world that that would be the scenario of more disagreement

Starting point is 00:38:59 leads to stronger entrenchment of the product. Yeah. You know, it's unpleasant. And I hope that people can keep the discourse to a more polite and gentleman-like discussion. You don't have to go tell people to do something to a goat. But in all scrutiny, adversarialists, these are all like parts of the Bitcoin game theory. So it's okay. I think when people see people disagreeing around Bitcoin means that's a good thing.

Starting point is 00:39:29 There is like, what could kill Bitcoin is apathy? Let's put it this way. If there is full aptity, Bitcoin dies because then people just take Bitcoin in whatever direction is useful to them, like democracy kind of thing. And then it gets gained out and then it dies, right? Now if people continue just having very fervor orthodoxies around Bitcoin in their nodes, it's great. All right.

Starting point is 00:39:52 Let's move on. Let's talk about Noster. You and I are hardcore primal client users and promoters and we love it and I'm just very bullish on Noster. I'm curious to hear because I haven't had this conversation with you for a while. I'm kind of curious your thoughts on the status of Noster where it's at right now, where you kind of see it going. And maybe most importantly, your description of what is it? Because I think people looking at it today would say, oh, it's a replacement for Twitter. It's decentralized social media. But my opinion, and I suspect you,

Starting point is 00:40:32 you agree with me on this is that it's something way bigger than that. It's identity layer, a decentralized identity layer. And so what in the world does that mean? Give us your thoughts. I personally don't like Noster for identity in terms of like logging in to sites and things because it links your identity to login in sites and things. But I love it as a way to find identity. Right.

Starting point is 00:40:59 So you can find coordination like an address. book that nobody controls because email is kind of an address book, but email depends on domains. Domains are centralized, but you can lose your domain, right? But nobody can take away your private keys, your NOSTER private keys unless you lose them. So it's super cool that way, a great way to find people. There is like a lot of work being done so that you can find privacy in the interaction between your identity and maybe services. Then the login with Nostra will become great.

Starting point is 00:41:29 Just think about Noster as like a decentralized, non-authority way of having identities and address book. So we can send payments to each other, you can send messages to each other. AIs can have their own private key pair. So you can have AI agents that can top to each other. They can find each other. And that sort of opens this huge design space for everything that is on the internet.

Starting point is 00:41:54 It sounds a little sort of out there, but that's almost everything that's on the internet could leverage NOSTER in that sense. So it really is just an open protocol for communication. Are you suggesting that AIs wouldn't be able to get around that in some other way? Like they'd have to use a Noster decentralized protocol to have an identity. They could use a centralized system too, and they do now. But then again, they're depending.

Starting point is 00:42:20 First of all, they're using a design space that was not designed for them to use it in that way. Right. So like the internet, the way is designed today, the protocols that we have, like email, HTTP and those things, they're not natural for proper payments, for AI to talk to each other and all that stuff, right? It's very inefficient. And also on the other hand is like, you know, you have this essentially signed events, signed messages with public key cryptography that are extremely efficient for this kind of behavior. And they're going to be smart enough to understand the value prop of. Exactly. Yeah. Exactly. Right. And then from the user perspective, too, I mean, like, you gain the fact that nobody can fake with an AI or Photoshop your Noster tweet, right?

Starting point is 00:43:06 Which is deranged now. I mean, like, it's a really big deal. Yeah. To the point that I just said, I think that's one of the biggest hangups that we have today on Noster is people just don't understand the value prop. I mean, we're having a hard enough time getting people to understand decentralized money, let alone decentralized speech and identity. I mean, this takes time. Like, it took 16 years for Bitcoin to be 100,000 times more than $1. It took 12 years for public trade companies to publicly talk about their Bitcoin pile. It takes time.

Starting point is 00:43:37 And when you look at these things in the timescale that human altering technologies normally have, it still has been nothing. Right? I mean, like gold had 5,000 years. Yeah, yeah. And the printing press had, what, like 200 now, 300 now? more. When is Gutenberg?

Starting point is 00:43:56 Does it be $1,200? Anyways, long time. The point is, things take time, right? And we're all like, the people who understand this thing deeply are anxious to have everybody else understand. And the people who don't understand it's like, what I care in like my life works, right? So it takes time for these two things to covert and converge. But we are moving, right?

Starting point is 00:44:16 Like Nostercons in waves, the same way the Bitcoin price, for example, does because it's the adoption wave, right? And it's the same true for Bitcoin. It's an adoption wave, not the value wave. It's moving. I mean, we have then, like, layer three Bitcoin payment systems that leverage Noster natively, like Kashi tokens and, you know, it's an infetti, all these other technologies for payments that do, they wouldn't work as well on Twitter, right, unless Twitter integrates

Starting point is 00:44:44 them. But like on Noster, you donate permission for that, right? You can leverage Noster. Now you have payments that you can tip people, right? You can do all this thing. And so as the build out happen for very user-friendly, obvious value propositions, right, people will start migrating over, right? Like, for example, Noster long-term forms, start long-term content. You know, it's like it's already better than substack, you know, and you can get a tip.

Starting point is 00:45:11 And you're not blocked by Twitter. Yeah. Which is kind of a big deal. I just, it's just hard getting people to understand the value prop. It really is. I was in South Korea recently and there was a friend that we introduced to Noster via Primal and they got onboarded. They actually got a lot of followers. And like most things, they just kind of didn't pay attention to it for a little bit because they had some people helped them get all set up. And of course, they lost their private key to their Nostr. And they were

Starting point is 00:45:47 asking me, they're like, okay, so like, who's the admin that I need to talk to, get my my access back. And I looked at the person, I was like, well, it doesn't work like that. It's gone forever. And then they were like, well, I have 5,000 followers or whatever on the ostrac. And I was like, yeah, well, you'll never make another post again because it's like gone. It's very common for early adopters to get burned, right? Like the amount of people who lost Bitcoin in the very early days, people who bought like

Starting point is 00:46:14 100,000 bitcoins for like nothing. Yeah. For 100 bucks. They lost coins because the tool. in the early days of Bitcoin were very poor. They gave poor experiences. And a lot of people don't come back. Mm-hmm.

Starting point is 00:46:28 So there is this turnover that happens in early stages of technology. People just get burned by the technology. They don't want to come back. So we don't depend on that. I mean, like Bitcoin has moved on. Even if people don't like Bitcoin because they lost Bitcoin, right? Like that drive isn't a pile of garbage or something. But so.

Starting point is 00:46:45 MVP, to this point, I'm looking at it and like, you're an engineer. You're a person who understands things technically at a, level that, you know, you're the 0.1 percentile in the world. I come with an engineering background. Some of this stuff is somewhat innate to us. We just kind of wrap our head around it quicker because of how we're wired. Most of the public isn't. You know, maybe they're in marketing. Maybe they're in whatever. And they just don't have that technical foundation. And so when they come across something like this and the app says, oh, remember these keys, they're like, okay, yeah, yeah, yeah, got it. Because they're used to just how they've interacted with everything else on the planet, which is I can always be bailed out by some administrator to save me.

Starting point is 00:47:26 And I think that this, I don't know, I think that this is a way bigger deal and a bigger hurdle for us when it comes to Noster specifically over Bitcoin. I think with Bitcoin people know it's money and that they probably need to pay a higher level of attention to it. But like when it comes to Noster, I'm just more concerned as to that variable and that. that roadblock is just the competent, the technical competence of the everyday person. And I'm saying this on the back of just coming from the DMV, right? I literally was at the DMV for two hours this morning. Okay. But you're a little jaded then.

Starting point is 00:48:03 I think, listen, it's not a matter of like being smart, not being smart. Just having like, if you want to be an early adopter, you just have to have higher pain tolerance. We don't have to onboard the normies yet, the same way we didn't have to in the Bitcoin the early day. People will come as the value proposition is high enough for the level of pain that they will have to endure. It's just a nature of new technology. But the thing is, like, the change is massive. Like, I lost my first Noster private key that I used for the whole first key here.

Starting point is 00:48:35 That's gone. And then, you know, and then I semi-lost my current key, but then it was reversible. But the point is that the tools were very rudimentary then. They're much better now. And if you do go out to, like, I mean, Primo is the only tool that I would recommend to an army. It's like if you go to Primal and you create an account there, the chances of you losing your keys are pretty low. They're not zero, but they're pretty low. And it's going to get better, right?

Starting point is 00:49:01 Like once we have better signing schemas or social recovery, whatever is the solution, right? He gets better. To that point. We may never be as good as Twitter in terms of recovery because you own your keys, the same with Bitcoin. Yeah. Like there's social. recovery, some of the ideas that you've seen kind of born in Bitcoin that I think you would strongly argue are terrible ways to secure your keys might act, and I'm being very serious,

Starting point is 00:49:29 might actually be really good methods for securing keys on something like Noster, where the level of, would you agree with that? The value prop is a little different because the problem is a little different. Yeah. You're trying to maintain access to your identity. Right? Like if you leak your Bitcoin is gone. You can't just create the new one. Yeah.

Starting point is 00:49:52 So it is different in that sense. Yeah. Right. So the solution will vary a little bit more. And I think maybe social recovery might be a great solution for it. But there is more to this. Like, I mean, there's a lot more tech that can be built out because the primitives that it's sure for anoster, you can create more clever signing schemas that will give you

Starting point is 00:50:15 much better recoverability and resilience. But it takes time. Yeah. For people that are hearing this conversation, I think it is time for you to try it out because it is really different than what it was. Call it a year ago or definitely two years ago on Noster. And obviously, we're very biased. We are advisors with Primal,

Starting point is 00:50:38 but I think if you would download the app and try it out, I think you're going to be really impressed with how simple, how you basically have a Bitcoin wallet. it right there embedded into the social network and your ability to just start up conversations and zap people with Bitcoin is like no other. I think the point of the ability wise. We're like, I cannot tell if I'm on Twitter or Primeway anymore on my phone. Yeah, right.

Starting point is 00:51:00 Yeah. Same. And then we're still in this phase of development. We're sort of trying to emulate the things we had before where like I think things are going forward when it become more interesting where you're doing things that were just not done before. I'm often looking for the zap button on Twitter. Yeah.

Starting point is 00:51:18 Yeah. But it pisses me off that I cannot like send some stats to somebody on Twitter that said something funny or something useful to me. Yeah. So I think monetization is like Noster with Bitcoin is just so far ahead of like what centralized systems can do that like they just can't compete. Yeah. I mean, I know when people share an interview that I did, I almost always zap them a dollar or whatever just because. I appreciate them sharing the content, right? Like, it's a value ad for me to have people out there sharing the content and spreading

Starting point is 00:51:51 the things that I'm talking about. And I don't know. Long term, I'm very bullish on this. I just don't understand the timeline of adoption. And I just think that it's, I don't know, it's hard to really kind of wrap my head around, but I really enjoyed hearing your comments on that. So people who don't know who you are, you are one of the best hardware developers when it comes to Bitcoin hardware while it's on the planet. Tell people a little bit about cold card.

Starting point is 00:52:20 Tell them if you have anything like roadmap wise, like what you see moving forward and kind of how you see the space developing or anything else that you really want to talk about with respect to the card. Thanks for that. I think like a big difference between us and all the other. There's a lot of very good stuff out there. Like the space has developed quite a lot. is that we are an independent Bitcoin-only hardware company that's been doing this for literally ever. And we use Bitcoin. You know, I know it sounds crazy, but like so many companies out there, they just have Fiat people running the company and do those things.

Starting point is 00:52:56 I think the reason why the products that we make are the way they are is because it's well-used for so long by some people who actually use Bitcoin. And we have this sort of like very clear, least to us, path on how this thing plays out, right? We really think that the sort of the proversial grammar that's going to use Bitcoin on chain is like idiotic to say the least because there's not enough stats for everybody, right? Like there's only 2.1 quadrillion stats and there is 8 billion people in the world. And wealth distribution is a basis point now and maybe 100 times better. and that's still 1%.

Starting point is 00:53:36 And then when you break that down, there's just not enough size. So what happens then is that the majority of the people holding on-chain Bitcoin are going to be people who chose personal responsibility, who chose to vary with a lot of agency to do this, right? To have their metal plate, stamp that seat down, and want to pass that on to their kids, and function in that sort of extreme self-custody environment. I think they're a lot easier now.

Starting point is 00:54:06 You know, you tap here and you scan death and transaction goes away. But the thinking is from this extreme perspective. It's not different than like even people who have a lot of money and don't believe in gold as a medium exchange. It still has like a decent amount of gold in a vault stuff way, in like physical, right? And that is the perspective that like humans have had with all their money and stores of value throughout like millennia, right? There's the stuff that is trendy today.

Starting point is 00:54:35 There is the stuff that is like I needed in case of emergency. And then there is sort of like the balance and in between of that, right? So we built the products for the people who need to transact in a few different ways, right? But mostly focused on this sort of extremely self-sovereign, self-custody of that Bitcoin. They own that Bitcoin. They don't leak privacy if they do it right. And it's a much better place to be in. And if they can just sit this out, they will see a lot of return.

Starting point is 00:55:02 on that Bitcoin, hopefully, right? That's the plan. Now, what happens is, like, can my grandma use this? Yes. Like, I passed it. It's totally usable, but it's not designed for grandma. And I think there's a lot of distraction in the market because when you choose to make something very secure, there will be trade-off, right?

Starting point is 00:55:21 And I think those trade-offs are necessary because, again, if you have just a thousand bucks worth of Bitcoin, like, just keep it on an app. There is a million apps. They're amazing. Many of them are fully self-sovereign, whatever, but like, you don't need to buy stuff to store that. And you can progress. And like the point that don't have this sort of like paralysis where you don't go and buy the Bitcoin. And then slowly get it out of the exchange, learn how to do it and move it that way.

Starting point is 00:55:52 But realistically, like we were talking about the base layer not having transactions, right? Is that, you know, the majority of the people are going to be on lightning are going to be on layer three, layer four, layer five, whatever, right? They're not going to be storing Bitcoin in their heart of walls. That's going to be a niche market that we hope to address it very well, but that is the main sort of difference there. Do you try to cater to the institutions and how they're going about the self-custody as far as the signing devices or is it much more retail based?

Starting point is 00:56:21 I'm just kind of curious on that. So there are exchanges they use our devices as part of their. What a compliment, by the way. Multi-Sig. Yeah. Our devices are well used by institutions using collaborative multi-sig. There are institutions who make it with just code card forums. There is a lot of large holders out there to use passphrase with single-sig.

Starting point is 00:56:43 There's a place for everything. We don't focus on people who need normally qualified custodians because their needs are of a legal nature, not of a technical nature. Yeah. That's a great way to frame it. Yeah. So even though there are some qualified custodians, that do use some of our technology.

Starting point is 00:57:03 The point is when, say, micro strategy, like, has the requirements, the legal requirements on how that Bitcoin is held, they end up going to disqualified custodiums or big name brands because they don't want to get sued if there is a problem. But, you know, those are 100 actors, you know, maybe 1,000 in a few years from now. But, like, it's a very small, unique market. The vast majority of the money is, say, family offices. So, you know, they're stuffing vaults in places with Swiss francs. They're stuffing vaults with gold.

Starting point is 00:57:34 There's stuffing vaults of corn card. There is a lot of stuff out there that is just not as visible, but that's where a lot of the money is. And what's cool is that, you know, like you as an average person with some tens of thousands of dollars in savings in Bitcoin can store on that same cold card that people who store hundreds of millions of dollars do. That's the beauty of the Bitcoin tack in general. We use technologies that are cross-vender independent. So like vendors can, any vendor, like if you take the seat out of a cold card, you can stick it in any other, how to wallet and it's going to work. There's a beauty to that.

Starting point is 00:58:08 You're not vendor dependent. You don't, if we disappear tomorrow, you're still safe. And there's a lot of those principles that are applied on how we develop more stuff. NVK, I can talk to you all day long because you're such a wealth of knowledge when it comes to this stuff. What I appreciate the most is you're able to frame it in a way that doesn't have this bias one way or the other, you're very middle of the road as far as just being able to lay out the strengths and the weaknesses of any side of these arguments. And I greatly appreciate that. And I know the listener does as well. So thank you so much for making time to come on the show. Give people a

Starting point is 00:58:41 handoff or anything else that you want to highlight or promote. I'll let the audience know. Thanks for that, Preston. I know I'm just another big my idiot, but I appreciate it. You're our idiot, MVP. That's right. No, I mean, seriously, if people are interested in, in self-custodying and having a solution that hopefully he's handed over to their children, their grandchildren and grandchildren, take a look at our stuff and stuff at point kite.com. We make the cold card. We make the tap signer. We make a bunch of stuff.

Starting point is 00:59:11 I have a million-dollar projects, like the Bitcoin treasuries and things like that. We have way too much fun in the space. We do. We do. Thank you, sir. Such a pleasure and honor to have you. And I look forward to the next chat. Thank you for listening to TIP.

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