What Bitcoin Did - Bitcoin Core, OP_RETURN, & the Fight to Save Our Wallets w/ Matt Corallo

Episode Date: June 9, 2025

Matt Corallo is an Open Source Engineer at Spiral, a long time Bitcoin Core contributor and Lightning dev. In this episode, we discuss the current state of Lightning: what's finally working, what UX breakthroughs are coming, and why 2024 might be the year lightning delivers. We also get into the risks of U.S. policy treating non-custodial services like custodians, the threat of regulatory capture through KYC mandates, why developers are walking away from the U.S. market, and why the “Save Our Wallets” campaign may be Bitcoin’s last chance to protect non-custodial tools. Plus: how OP_RETURN wars are distracting from real issues, whether Bitcoin Core needs a comms team, and if Bitcoin has already ossified. Follow: Danny Knowles: https://x.com/_DannyKnowles or https://primal.net/danny Matt Corallo: https://x.com/TheBlueMatt Save Our Wallets: https://saveourwallets.org/ THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd ANCHORWATCH: https://www.anchorwatch.com/ COINKITE: https://store.coinkite.com/promo/WBD BLOCKWARE: https://mining.blockwaresolutions.com/wbd

This is the only way we know how to make any cryptocurrency scale, not even Bitcoin, just any cryptocurrency. We cannot scale it without these second layer systems that tend to rely on these insulary services. If you're an LSP and you can't stop the user from transacting, how are you going to do AML, which requires that you freeze their money if you've decided that they're a terrorist? Whatever it is you're interested in, almost all of the stuff needs to not be regulated like a custodian, like a money transmitter. People are just going to stick to using custodians, which is even worse. Frankly, we need to get the law changed. Like, we always have these things.

And if those get regulated, we're like really, really, really, really, really fucked. It's over. Yeah. So it's basically a little more long form of that. Like, here's the history of how we talked about scaling Bitcoin. Here's what we have to look forward to going forward. And also, by the way, call your Congress. You're always such a duma, Matt. You're always telling us how Bitcoin's terrible.

Yeah, yeah. I mean, for once, I am actually genuinely excited, but we also have to get this bill passed. What are you excited about? About this bill passing? No, I'm actually, I'm really excited for what Lightning is going to look like this year. Well, that's cool for it. For once. For once. Yeah. Like, you know, we, Lightning has been this long slog where we just haven't been making the kind of progress we want. is the UX has just sucked. Like the UX of Lightning has sucked for so long and so many people have written it off. Rightfully so, I don't blame anyone for doing that.

And finally this year is the culmination of like three or four different projects plus some other stuff we're working on the spiral and I'm just like really excited for what that user experience of non-custodial Bitcoin's going to look like. That's great here that you're excited about Lightning Forons. Yeah, yeah. I'm like excited about things we're going to have

in the short term for once. What's changed your mind on that? What's coming that you think was going to make a significant impact on life? Yeah, it's a bunch of technical stuff. It's stuff like, you know, that we've been working on, that we've known we needed to build for years, that we've been building towards but just haven't gotten there yet. And so, you know, a big one that's easy to see is this zero fee commitment transaction.

So Lightning has these transactions that constantly get updated before they hit the chain. And we can now actually put zero fees on that transaction. So we can get it in the blockchain, despite it having zero fees, we have to attach another transaction to it to pay for the fees. But this required three different features to ship in Bitcoin Core that finally shipped in the last version, 29, I guess it is. Now we have to actually build it in Lightning. But it was a massive, it was a large research project in Bitcoin Core, and now it's an actual set of features that they've shipped in Bitcoin Core. And there's more work that they're doing to make it better for us, which is great.

And I'm excited about it. you know, it was a ton of work from a lot of different people on different projects and now finally it shipped. And on the lightning side, we can start implementing it. And it's not too wildly complicated in the lightning side. And within the next few months, we're going to start having zero fee commitment transactions, which is while it doesn't sound like much, but it solves really weird, terrible user experience in lightning.

What are the user experience it solves? Yeah. So in lightning, in lightning, the question of what is my balance is complicated. And no user is like, oh, you know, what's my balance? And they see the number at the top of their wallet and it's like star asterisk. It's complicated. Like, everybody would be like, what the hell is this? Go their phone away and like, you know, use a custodial service.

You have all this weird, like, okay, well, you have this transaction that you haven't broadcasted yet that has a fee and we haven't paid it yet, but we're going to eventually pay it so we have to deduct that from your balance. And then, oh, by the way, we're like constantly updating that fee. So your balance is kind of changing, but not really. then, oh yeah, by the way, if you, if you disagree with your channel counterparty with what that fee should be, your channel's going to like randomly close and now you're going to have pay even more fee and then your user experience is going to suck even more.

This is like chaos. It's just terrible. It's just terrible. And it's all these things where the protocol is bleeding up into the user experience and it shouldn't be that. It needs to be seamless. No one is ever going to use non-custodial lightning unless it is actually seamless. Yeah.

And that's something we've seen. Like everyone, like, if you watch people here pay at the conference, they're probably going to be using, like, strike or a service like that rather than, but for me, I've got to rep Cash App. I mean, they pay my bills. Yeah, there you go, cash up. But, like, as someone who, I just use Phoenix Wallet, I don't see these, like, these things behind the scenes. Yeah. So how is it going to change the experience for someone like me?

So Phoenix Wallet has done a good job. They've made some trust tradeoffs, trusting their LSP, a little bit, which we can now start to relax a little more. So, you know, they're, they're, not. custodial, but they trust their LSP a little bit, and then we can start to relax that a little more, which is great. And then on top of that, more competition, right? So more, you know, Phoenix has had to invest whatever, three, four engineers, full time for how many years to build Phoenix and make it as good as it is. Now we're getting to a point where it's like, okay, well, you can just use LDK,

you can just use whatever LSP, there's multiple different LSPs, and you can just hook those up, throw them in your wallet, and suddenly you have a really competitive wallet. And, you know, Phoenix has to recoup the cost of those engineers. And so their fees are a little high. I mean, like, people do complain about Phoenix's fees. And rightly so. And it's like, you know, it sucks. It's because they're having really high costs. And so, you know, you can't really be like, ah, it's terrible. They're ripping me off. It's like, no, actually, they have, they have high costs. But we have to have more competition there. And we have to get the competition so that those fees come down so that there's more LSP's. And I think we're really getting there.

That's cool. Because, like, you're right. The fees on Phoenix are high. Like, while the mempool's been basically empty for however long, it's often cheaper just a non-chain transactions to actually use Phoenix. So that's cool. But when you say that you can do zero fee transactions, how does that work? Who pays? Yeah, yeah. So you're kind of cheating, right? So it's the commitment transaction itself has zero fee, but of course, you've got to pay the minor somehow. So you have to hang another transaction off of it, right? So there's an output in it, and you build another transaction that immediately spends it that has high fee. So it pays for the whole package, There's two transactions together that the whole thing together pays enough fee, but the first transaction in the package does not.

And so this was part of why it was so much work in Bitcoin Core is like Bitcoin Core historically has, okay, it receives a transaction, it adds it to the Mempool. But now it has to receive two transactions and a reason about can these two transactions go into the mempool together. I need to relay them together to my peers. I need to receive them as a package from my peers. It was actually a really non-trivial overhaul of the way Bitcoin Core reasons about. transactions coming into the Mempool. So it was a ton of work for them. And I'm happy they finally finished it because it was really important for us, but it was a ton of work for them. So when, will that be coming in the upgrade to core in like September or whenever the next?

No, it already shipped. So it was already in the previous one, 29, I think, is the number. Okay, nice. And you said that spiral you're working on stuff. Can you talk about what you're working out on that? Yeah, a little bit. So we're looking at kind of whole, the whole picture of a wallet a little bit. And you know, you always have this problem these days with wallets where people want to open a wallet. They want to receive, they want to link it to their nostar, they want to get a zap for 21 sats, and they want their balance to show 21 sats. And it's like, okay, but no lightning anything, nothing on chain, no arc, no roll up, nothing is going to work for your 21 sat balance. Okay. It's just not, especially when you have churn. Like a lot of those users are never

going to receive more than 21 sats. Can you explain why that will never work? There's just nothing non-custodial we can do because fundamentally, in order for something to be non-custodial, you have to be able to take your money and go home. You have to be able to take your sats, put them on chain and go home. Whether it's a lightning channel where you have to be able to close the channel, whether it's ARC where you have to do the unilateral exit thing, where it's like many transactions that have to hit the chain, whether it's a roll-up where like, okay, the roll-up operator

is censoring you and you have to take your money and exit the roll-up and go to chain one way or another, if you want to call it non-custodial, and you want to call it trustless, really, you have to be able to take your money and go home, take it to the chain and go home. And if you only have 21 sats, you can't do that, not even close. You know, you need at least whatever, 300, 400, 500, to hit the dust limit, depending on the output. And, okay, even if you hit the dust limit, well, you have to be able to pay the fees to get there. And so, you know, you have to have some real non-zero amount of money before you could remotely call it trustless.

And so, you know, okay, you're looking at this kind of whole picture. You're like, okay, well, we have all these users who want these like 21 sat balances and we want to build a great non-custodial user user experience. You know, that's our mission at Spiralist to make Bitcoin usable as money without compromising on the trust list goal. And so we're trying to look at more, okay, can we marry the two a little bit? can we take some custodial service or some at least trustful service and lightning and build a cohesive wallet that uses both,

moves you back and forth as makes sense based on your balance. That makes sense. So small amounts will go to the custodial side and then as that reaches a certain limit, it can move across into the most of the studio side. Yeah, and there's a bunch of wallets that have tried to do this. Mutiny back in the day tried to do this. We actually recently hired Ben Carman who worked at Mutiny,

who's working on this stuff with us. Yeah, Ben. Love Ben. And then there's a few other wallets. I know Zeus just added eCash as well. It's still pretty manual in their implementation. And so there's a bunch of wallets trying to do this. And I think it's kind of a recognition that this makes sense, that we have to have something in this direction,

that we have to recognize the limits of non-custodial while also still trying to execute on that for users where it makes sense to. And so we're really trying to make that easier for wallets, make it super seamless. and it really only makes sense now because we've fixed so many other pieces of lightning. It didn't make sense when lightning was super jank. It's like, okay, well, you know,

this is something mutiny ran into. It was like, you know, you'd have all your money. You'd put it in your mint, your fennie mint. And then, okay, you would move it over to a lightning wallet. And now the lightning wallet would, like, get a random force closure. You'd have this high fee. Now you have on-chain money.

It's like trying to move back into a channel. And suddenly the U.X just sucks. And people would be like, no, turn off the lightning part. I want to just have it be custodial in this fetiment. Yeah. And that's not, you know, that's not really what they wanted. That's not what they were going for.

But that's what they had to ship because lightning just wasn't ready. Mm-hmm. And I think finally, lightning, finally, finally, finally, after all these years, lightning is going to be ready this year.

You know, we're shipping stuff. I say this year to be conservative. I'm hoping it's like next quarter. Wow. That's very cool to hear. But it's going to happen this year at least. and bringing these two things together, I think also the custodial services

have gotten a lot better. The no KYC custodial options, whether it's liquid, Spark, eCash, whatever. Those have gotten a lot better. And so these things have been progressing and they're finally getting to a point where we can really make a super clean, super slick, super awesome non-custodial UX.

Very cool. I mean, I've spoken to Tony a few times from Mutiny and he got super jaded with lightning. And obviously they ended up completely pivoting. When you say that one side of that wallet it's going to be either custodial or trust minimized. Is that going to be eCash on that side? I don't know.

I mean, depends on what wallet developers want. It depends on what makes sense. You know, eCash has suffered with the problem of just not having mints. You know, the software is really great, and there are some mints, but they'll often shut down after not very long. And they just don't stick around

because there's some legality questions to running a mint. In a sense that maybe their money transmitters. Yeah. Yeah, or their custodial service, right? Like, if you're a custodial service, at least in the U.S., or if you're servicing U.S. customers, that generally means, I think it's fairly well accepted

in the policy space in D.C. That means you have to K.Y.C. Yeah. And so there's obviously legality questions here, certainly servicing Americans. Maybe you can do it outside of the U.S., but, you know, it kind of is what it is. So, you know, there's Spark, which is non-constitutional.

custodial but trusted, which is an interesting kind of delineation there where their view is that they don't have to KYC, they're not a money transmitter because they're not a custodian. They don't have a key that can come in and take your money. You know, they just, there's no, there's no hot key there, right? But it's still fully trusted, right? If they change their software and they start implementing the protocol incorrectly, they start misbehaving under the protocol, then suddenly they do have keys that could take your money. This episode is also brought to you by Iron, the largest NASDAQ listed Bitcoin miner using 100% renewable energy. Iron are not just pairing the Bitcoin network, they also provide cutting-edge computing resources for AI, all backed by renewable energy.

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head over to river.com forward slash WBD and earn up to $100 in Bitcoin when you buy. That's river.com forward slash WBD. This episode is brought to you by Anchor Watch. Now, one of the things that keeps us Bitcoiners up at night is an idea of a critical error in your Bitcoin cold storage. And this is where Anchor Watch comes in. With Anchor Watch, you're protected by two things.

You have their time locked, multi-sig vault, and you have your own A-plus rated Lloyds of London-backed insurance policy. So you get to hold your keys and Ankerwatch holds the risk. So whether you're worried about inheritance planning, wrench attacks, natural disasters, or just your own silly mistakes, you're fully protected by Anchor Watch. Rates for fully insured custody start as low as 0.55% and are available for individuals and commercial customers located in the US. Speak to Anchorage for a quote and for more details about your security options and coverage over at anchorwatch.com. That's anchorwatch.com. I've never, I've not fully understood Spark. I've actually been trying to get Kevin on the show from LightSpark for a while.

And we've just not managed to make it happen yet, but I will. But can you give me like a rough overview of what Spark actually does? So Spark is an extension of the state chains idea, which is fairly old. State chains were cool, state coins, but they had this problem of you just had one coin. So like I take a tenth of a Bitcoin. I used to use a Bitcoin example, but it doesn't make sense anymore. I take a tenth of a Bitcoin. I lock it up as a state coin, and then there's this operator, so whoever this semi-trusted operator is,

they sign every transition of the coin. So I can take the coin and hand you the private key to the coin, and then you go to the operator and you say, hey, operator, I've got the private key, let's update the coin. And the operator updates the coin, you do a dance where you get a new private key, and the operator deletes the old key. And they promise you they delete the old key. They swear they've deleted the old key. and as long as they have actually deleted the old key,

the old transaction that I, the old coin, I can no longer access it. If they don't delete the old key, then you trust me to not spend the money. Yeah. And so this was cool, but you know, you're trusting, you know, the trust model is always explained

as like you're trusting either the operator or all of the past owners of the coins. In practice, all of the past owners of the coins probably includes the operator, so you're trusting the operator. They have to actually delete the key every time, rotate it through. So this is the same thing Nicholas Gregory is working on. Yes.

Nicholas Gregory had a version of this at Commerce Block. Yeah. And so he came on the show years ago at this point. I can't remember one. And the thing that I always struggled with that is like, how do you provably delete something? Yeah, you can't. You just can't. That's not a thing you can do in computer science today.

There's probably ways where you could do like a secure hardware token. some kind of secure element, whatever, that would be like, okay, well, I'm trusting that the hardware that you bought from them, that they signed is actually, you know, the hardware is working the way they said it is, but even that doesn't exist today to my knowledge.

So you really can't. You're just trusting them. Okay, but it's obviously slightly better form of trust, is that right? Yeah, but it is still better, right? Because as long as they're, so, I think they're all. are really important differences, right?

So with a classic custodian, if they get hacked, then your money's gone. Right? Like that's one of your big concerns, is not just the custodian took my money and the custodian turned out to be malicious. That happens, but with a well-regulated company, probably not.

But they might get hacked, right? And it might be an insider, it might be someone accessing the data center, whatever it is. If they get hacked, they can take the money. With Spark, that's not true. They can get hacked, and the software can get changed out from under them, and then slowly over-

time as the coins move they could take the money, but that's still a very different model, right? It's a massively different model because if you look at like a strike or a river or like a coin base crack and whatever, the risk of them stealing the funds would be very low down. Like to me, that would be like a less than 2% chance or something. Sure, it's not like that. But the hack is the issue. Right. Yeah. And we've seen that time and time again with exchanges getting hacked. And so, okay, the hacker could break in, change the software that's running and then try to like

keep a persistent hack so that they can break in again next week and then take some of the money. But like, you know, these are two very different things because potentially they could be detected and then they only get part of the money. And so, yeah, I mean, it is a much

better model. And it doesn't make them a custodian in their view. They're not, this is like this weird difference between a custodian and a trusted entity. And they're like, well, we don't have keys. We're not custodying the money.

We're just running the signer, this blind signer, pretend. With Spark, it's not. With Commerce Block, it was. It was a blind signer. It didn't even know what was going on. So Spark is an extension of this state coin's idea.

They extended it with the ability to have multiple values. So with state coins, when it was like, okay, I lock up 0.1 Bitcoin, now we can only transact in 0.1 Bitcoin increments. We can't transact in less. So that's limited utility, right? It makes it kind of hard to use. With Spark, they have this fairly complicated structure. like, okay, underneath the state coin, you build this tree of transactions that can split the state coin into multiple parts. And then, you know, when the tree gets too deep, you can go to the

state coin operator and you can trade your like tree part to a shallower tree. And like, it gets fairly complicated. But it doesn't really change the trust model. It relies on a little bit more trust in the operator because now they're almost always the past owner of the coin. I see. But it's still kind of the same fundamental principle. of like they're promising they delete keys and as long as they delete keys, you're okay and they don't have keys to take your money. And you said that

that in their view and probably following like the FinCEN guidelines, that doesn't make them a money transmitter. That's their view. We've seen this before though. We saw what happened with Samurai. Yeah. And what's recently come out with Samurai is that FinCen had said, no, they are not money transmitters but it didn't stop the state going

after them. Right. And won't stop the next administration. You know, the pendulum always swings, and the pendulum keeps swinging higher in both directions. The pendulum will only swing higher in both directions because what goes right must come left and equal and opposite height, right? Yeah.

And so that really concerns me. And I think there's no question that the next administration will try to take advantage of some of this stuff. And that's why you're here wearing your Save Our Wallets hat. So we've got a new initiative here and you should go to our website, save our wallets.org,

and call your comments. I know it's kind of wild for Bitcoiners, but I think, you know, to take a step back, you know, I talked about how excited I am for non-custodial wallets and all of the cool stuff we're going to build. And there's, on the lightning side, you know, we have LSP's. You have to lean on an LSP. They're not trusted, but they have to allocate some liquidity. And in fact, with the earlier wallet model we were talking about, they don't have to allocate

as much liquidity as they used to. It's great, but they still have to have some liquidity. they're still involved. But even when you look further down the road, you look at timeout trees and arc and roll-ups and all these operators, there's some entity involved. There's some, this ancillary service,

is what I like to call them, that has to help operate the system. It's not a custodian. It's usually not even trusted. In some cases it is, but usually not even trusted. And it, but it's needed to, like, keep the thing going. Sometimes it's decentralized.

Sometimes it's a centralization. entity, whatever, it depends, but there's some extra thing. You're not just putting transactions on the blockchain anymore. And we need that. This is the only way we know how to make any cryptocurrency scale, not even Bitcoin, just any cryptocurrency. We cannot scale it without these second layer systems that tend to rely on these ancillary services.

And if these ancillary services are regulated like money transmitters, which by the way is absurd. Like they can't comply. Like you can't say, oh, I'm not involved in your transaction. not a custodian, but I have to K-Y-C-A-M-L-U as if I were, it's fundamentally impossible. If you're an LSP and you can't stop the user from transacting, how are you going to do AML,

which requires that you freeze their money if you've decided that they're a terrorist? Like you can't, you just can't do it. You can't do it. It's not possible. So these regulations don't make any sense, but I guarantee you the next administration is going to try it again.

They're going to try to apply them. And if they do, it means all of these things, things we're talking about are not possible. It means we cannot build a scalable Bitcoin. We cannot build a scalable cryptocurrency. We cannot have roll-ups. We can't have, you know, if you're a defy person, we can't have front-ends for your defy. We can't, Coinbase can't operate base. We can't have lightning. We can't have arc. We can't have any kind of roll-ups. No Bitcoin Season 2. Whatever it is you're interested in, almost all of the stuff needs to not be regulated like a custodian, like a money transmitter. It does not make sense.

They can't, but if they try, we can't build any of these things. Or at least we can't build it in America and we can't offer it to Americans. It will still get built. It will get built outside the U.S. I hope, you know, in the worst case, it might not get built as much because Americans are afraid of not building it. And then people are just going to stick to using custodians, which is even worse. But frankly, we need to get the law changed.

And we know that that's true. Like after the Samurai case, Phoenix left the U.S. Wasabi left for the US. That would make sense. But can Phoenix operate a sustainable business without the U.S. market? Like maybe, but it's going to make it a lot harder for these people. So we're just not going to have these tools. And they're, you know, for better or for worse, there's also a minority of developers outside the U.S. Like most of the developers, maybe not most, but certainly a plurality of developers are in the U.S.,

working in the U.S. And if the law in the U.S. says you can't ship these things, then people are not going to do it. Like, people don't want to go to jail. It's just not worth it for them. You know, the calculus does not make sense for me to go to jail just so I can ship some non-custodial wallet for you. Like, I'm not going to do it. I'm sorry.

And so we need to get the law change, right? So it's great. The Blanche memo in the DOJ where they said, look, we as policy are not going to charge this. It's not a formal ruling. If they charge you anyway, you cannot hold it up in court and say, hey, I mean, you can, but it's not. This is specifically right to the Samurai case.

Yeah, the Samurai case, the Blanche, so the DOJ released this memo that said, at the deputy attorney general, released this memo that said, look, we're not going to charge this kind of thing anymore. This doesn't make sense. But if some person within the DOJ does charge you with that, you can't hold it up in court and say, like, look, the DOJ said they weren't going to do it, and now they did. The judge is going to say, no. I mean, they might look at it. They might be like, oh, why are you doing this? But it's not. It's not. It's not a defense. And more importantly, it can be changed by the current administration. If they've changed their minds, it certainly will be changed by the next administration. And so, yeah, okay, it's great that Phoenix is back in the U.S. for now, but the next administration is going to change that real quick. And so we have to get the law change so that they can't try this again. Okay. So what is Save Our Wallets? What is like step by step, what do you want to do? So real simple. It's super straightforward. There's a bill in Congress right now called the Block. blockchain regulatory certainty act. It is a three-page bill, two and a half pages, double-spaced. You can go read it. You can go understand it. There's nothing complicated in it. It just says, if you are not a custodian, if you don't have the ability to take someone's money, you are not a money transmitter. Full stop. That's all. That's all it does. We need to get it passed. And in order to get it passed, we need Congress to actually feel the pressure. You know, some of the

cryptocurrency lobbying groups are super on board. Coin Center has this listed as their top priority this year. They want to get this thing passed. Some of the other ones are still more interested in other stuff that matters way less. It's cool if we get a

Bitcoin strategic reserve. But if that means we only have custodial wallets in three years, what the fuck was that for? The next administration is going to sell it anyway. Even if they time lock it, I don't care if we have no non-custodial wallets, what the hell was the point?

I've been doing, I've done two shows this morning, and in both of them, we've talked about regulatory capture, and this is the way. Yeah. This is how it happened. This is, this is it. And so we need people to call their congressperson. Like literally pick up the phone, call your two senators, call your house member. It's not complicated. It doesn't take much time. I know Bitcoiners, I'm going to get so much shit on Twitter. they're going to be like, ah, statist and yada, yada and whatever. I don't think you will. I think people are coming around to understanding how important this kind of thing is.

Like I agree with you that this is very different to the strategic Bitcoin Reserve. Like while it would be great for number go up and it would pump our bags, I don't give a fuck about that like I do about this. This is far more important. Yeah. So this is in Congress at the moment. Yeah. So it's in the house right now. It's been proposed by it's bipartisan Tom Emmer, who is that.

House majority whip. He's great. He's great. He's the majority whip, which is the second number two position on the Republican side of the House for the non-Americans or the people who don't know their politics. And he's the job of what was the TV show with the child rapist, Kevin Spacey, House of Cards. That was his position. He was the whip. Okay. Anyway, so just for context. And in terms of like the rest of Congress, what's the kind of Like, how have they received this? Yeah, so it's him and the Democrat from the Bronx, who I'm forgetting now, who also co-introduced it in this Congress.

And so on the House side, you know, I'm not a policy person. You could ask BPI or Coin Center or something. You know, on the House side, it looks like we've got a shot. Senate's going to be a more uphill battle. But, like, frankly, we just need them to feel pressure. Like, this isn't on people's radar even. It's some other bill, you know, they were busy. with the stable coin regulation, and then they have this whole market structure thing,

which is about how tokens are regulated. And it's like, okay, it doesn't affect Bitcoin at all. And like, okay, these things are important, but neither of them affect Bitcoin at all. This impacts Bitcoin. It also impacts all of crypto in a much, much, much bigger way. And it's barely on their radar. And so we need people calling them and saying, look, this is really important. This regulation doesn't make sense.

These companies cannot possibly comply with this. This is not the right regulation. Look, they'll still have, it's not like we want them to be totally unregulated. If you're an LSP, you're still going to have sanctions requirements. You're not going to be able to open a channel with someone in Iran. That's not changing. You know, that's still going to be there. It'd be great if that changed, but like that's not realistic.

That's not going to happen. This is really just about money transmission and broken legislation and broken regulation, not overall making these things totally unregulated, total wild west. And so we need people to call. We need people to explain to their House members, to their senators. Here's why, like just real simple, five minutes, pick up the phone. You can go to save our wellness.org. You type in your zip code.

It'll list the phone numbers for you. We don't log your queries. We don't keep that information. We proxy it for you before it goes to our data provider. So you don't have to worry about it. You can give me your email if you want to. There's a form to give me your email. email. I might send you an email later. I might not. But it's just me. It's my server. Don't worry.

It's not going anywhere else. You know, it might go to MailChimp or whatever later. But just sign up. Please call your congressperson. This really, really matters. This means, this is really make or break as to whether I can continue writing non-custodial Bitcoin software over the next few years. And that's it. Help me as an English person who lives in Australia, understand. Does call your local politician work? In the US, it very much does. It really does. They don't get a lot of calls.

They get a decent number, and certainly when there's volume, they care. You know, these guys, this is their job. This is their career for many of them. Whether it should be allowed as a career or not as a separate question, but for many of them it is. And they want to get reelected. And so they don't have, they generally don't have great information

about what is going to impact people's votes. You know, they'll, they have polls. where someone will go around and call a thousand people and say, what do you think about this? But, you know, that's only so much. And then they have a ton of lobbyists coming at them. And they don't really have a feel for like what people are mad at. So literally, they care about retweets.

They maybe cared about it a little more, you know, when Twitter was, had a broader appeal when it was Twitter and there were a lot broader political views on Twitter. But they do care about those things. They care about social media numbers. numbers and they really care when you call because calling shows that you care. You can send them an email and it kind of matters, but if you pick up the phone and call, they know you actually care. You spent five minutes of your time to do something to get involved politically to pick up the

phone and like not many people do. And so they, they know, yeah, it's proof of work. It's proof of work. It's proof that you care enough to do that, that you're paying attention because probably if you called, you're going to pay attention to whether they vote and you're going to vote based on it next November in, you know, however many years, whenever they're up for re-election, they know that you care enough. Probably you, you know, signed up some email, something. You're going to get emails saying, you know, your house member is terrible. Your senator's terrible. They voted against this thing.

So it's just, it comes down to proof of work. And they don't have a lot of information to go on, usually, especially in some of these kind of more niche interests, where like, okay, if you call an American and you say, hey, what are your thoughts on the Blockchain Regulatory Certainty Act? Yeah. There's just going to be like, you can't do polling on this, right? And so when you get these kind of niche interests, people just have to call it. That's the only thing that works.

Sending an email kind of works. At least do that. If you really can't call, send an email. But please just pick up the phone. It's not hard. Productively log your poll. Right. So where did this bill come from?

Who wrote it? Tom Emmer's staff mostly, is my understanding. But it's really, yeah. I mean, it really came from the samurai stuff. I mean, it really came from, like, just how absurd those prosecutions are. Whereas, like, okay, look, Samurai was on Twitter telling Russian oligarchs to launder money through their service. Yeah. Yes.

They were silly. They were, this was dumb. They were going to get charged. They got charged with conspiracy to commit money laundering and various other things. I'm not going to defend that, right? This is America. This is like you shouldn't be able to be put in jail for tweets. Sure, sure.

But there's, I mean, there's something to say, something to be said about intent. Yeah. And, you know, doing things with malicious intent has implications in law. I'm not a lawyer, but in many cases it does. But at the end of the day, the DOJ can charge them with things related to those issues and not charge them with something that is completely on its face absurd. And, you know, we know FinCEN looked at this and said, this is not a money transmitter. This doesn't make sense.

The rules that you're trying to apply here do not make sense. you know, had they, so fundamentally, what they were charged with is that they were a money transmitter and that this meant, okay, they had AMLKYC obligations, but also they had to register with FinC, and they had to say, hey, FinC and they had to say, hey, FinCN or state money transmitter, I'm a money transmitter, I want to be regulated. Please come regulate me. And FinCid said, no, this does not make sense. We would not expect them to register with us. And then they got charged for not registering. So like the entity that they were supposed to register with said no. Like, I mean, okay, they didn't try to register, but the entity said like, no, we wouldn't have wanted them registered because this doesn't make sense. And then they were charged for not registering. This makes no sense, right?

But again, you know, who works at FinCEN is going to change in the next administration? If this, you know, if they want to change, they're going to charge this again. They're going to change whoever works at FinCEN. And so, like, we really have to. change the law. We really do. And presumably, like, time is on the essence of the essence there, because if this is going to pass, it's probably going to pass under this Trump administration. Yes. And that means in the next year and a half. And even worse, I mean, we're already past

100 days. Usually in the U.S. when you get, like, a clean sweep of the president, the House, and the Senate, usually they want to get most of their big stuff done in the first 100 days. We're already past that. You know, Trump already is starting to show some political weakness, People mad at Trump for various things, totally unrelated to Bitcoin, but obviously Bitcoin too. And that makes it harder for him to pass law and makes it harder to get stuff through Congress that we want through. So time is really of the essence. It's not just that we want to get it done in the next year and a half. We have to get it done in the next year and a half.

But we also probably want to get it done faster than that. So times of the essence, we really need to get calls in. We need to get Congress people educated about this. You know, Coin Center and others, BPI are doing great work. trying to get that to happen, but a lot of Congress people don't take the time to meet with them. And so we need constituents to call in and say, look, here's why, here's what matters, this matters to me, and I'm going to vote this way based on what you do right now in two, four, or six years. And you say a year and a half because presumably you're guessing that Trump loses either the House or the Senate or both.

Oh, yeah, without question. Okay. So everyone, get on the phone. Yeah. Call your congressman. Save our wallets. It's super easy. You can pause the video.

you can look at it. It's right here. I'll make sure I link it below as well. Okay. Can we get on to the most controversial topic in Bitcoin? Yeah, sure. I know you don't really want to talk about this, but the operative walls, drama, debate, whatever you want to call it, has really fired people up. Yeah.

Maybe don't let me influence what you're going to say. Just give me your kind of like overview of the whole thing. Yeah. I mean, you know, I think people rightfully have a very strong reaction to the concept of people putting garbage in the chain. People putting images, people putting arbitrary data, just not financial data in the chain. And there's some nuance to how you define that and people disagree, but whatever. Like people have very strong opinions about that data being in the chain.

And that's totally fair. You know, the chain is a public resource. Hopefully none of us can stop anyone from putting stuff there. That's kind of the whole point of Bitcoin. but the issue is really that, you know, people have strong answers. It's totally understandable. And I understand why people are frustrated, you know, Bitcoin Core proposing to remove some limits on some types of data, not relevant to the types of data. People generally use, not relevant to the ways people generally try to embed data in the chain, but some types of data felt to, I think,

a lot of people like kind of giving up on the fight. You know, it's like Bitcoin Core is like giving up trying to fight this stuff. And like that's bad and like screw them. And like, that's totally fair. Like, yeah, I mean, I get that. I think, you know, Bitcoin Core obviously was worried about much worse implications if they didn't make this change. I think people quite rightly or at least certainly quite logically have a very solid argument

that this isn't going to impact data in the change. chain because people, again, people want to use the witness discount, right? It's 4x cheaper to embed data via inscriptions than via op returns. And so people are probably going to keep doing that. So, you know, I get why people were mad, but I think, like, you have to recognize that it's not going to impact the data, and there are much larger risks here if people start transacting very heavily via these out-of-band relay services. Yes.

I mean, just really massive risks there. In terms of just minor centralization. Yeah. Because if Marathon's the only one offering like Slipstream, they just grow at a different rate to the regular miners using the Mempool. Yeah, totally. And not just that. I mean, I think people underestimate how big an impact that kind of thing can have.

Because, you know, obviously the Bitcoin price varies wildly. And so the margin of most miners varies wildly with it. it. But in the aggregate and the long term, and certainly over the long term, as we expect the Bitcoin price to be a little less volatile, we expect miners to have very, very, very, very thin margins. And so, okay, if you have a really thin margin and you're making 2% more revenue than everyone else, like, it's not much, right? Two percent, only 2% more revenue. But if your margins only a few percent, that's multiple, you know, multiple X or like, you know, double-digit percentage more profit than your competition,

which makes a huge difference into whether or not you can buy the latest gen chips, invest in that new mining farm, whatever. You're going to grow at a very, very different rate. And so that stuff worries me. I think Bitcoin Core folks a lot, a lot more than, you know, again, I just don't really see people. I'm sure people are going to start embedding some kind of data in op returns. It's not like people aren't going to.

And that people don't. you know, people certainly already do. But in terms of the risks or the damage to Bitcoin from data being embedded in the chain, this doesn't get to change it. They're going to use inscriptions anyway. This episode is brought to you by Blockware. Would you rather have one Bitcoin today or two in a few years from now? Silly question.

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So I think probably at least one of the key sort of issues in this argument is around filters. And on the kind of mechanic ocean side of the argument, it's fix the filters, put more of them in. Just because occasional spam emails get into your inbox doesn't mean that spam filters don't work. But do spam filters actually work? Yeah. I mean, I think people rightfully point out that they increase the cost somewhat, right? There is some non-zero cost to, okay, if all of the network is running Bitcoin Core and Bitcoin Core has some relay policy that rejects certain types of transactions,

getting those types of transactions mine requires some additional work. You can't just push them into your Bitcoin node. You have to go to SlipStream. You have to go know about fine, download Peter, Todd's Libra Relay patch set, run a node there, get some connections directly to F2Pool or whatever other miners are running it, and then send transactions via that. So there is non-zero additional work, right? And that you can say that adds a cost.

It's not necessarily a financial cost. I know Slipstream charges more for transactions via slipstream than the normal transactions, not a lot more, but some more. But, you know, Libre Relay, getting it mined via F2 pool is not an additional cost. But some, even if it's a non-financial cost, it's a cost. So I think people are rightfully annoyed. They're like, look, there was this cost being added. You're removing this cost to this thing that I think is bad that shouldn't exist in Bitcoin.

Fuck you. And that's, you know, that's fair. But I think we have to really carefully analyze and consider what that actual cost is. Like, is that cost high enough that we need to worry about it or think heavily about it? And, you know, I think in the, if you just kind of naively look at it and you're like, okay, well, the only cost is they have to integrate with this API with Slipstream or they have to run labor relay or whatever. That cost is obviously basically zero, right?

Like, you have to know that it exists. And so you have to, you know, be a little bit well-versed in Bitcoin, but the cost is basically zero. You can get around it quite easily. I think people make the argument that history tells a different story, right? They, I think mechanic, if you were sitting here or someone arguing fixed the filters, they would argue that, well, the history of Bitcoin is that we've always had filters and that the filters apparently work.

Like, these types of transactions that are non-standard don't get mined very often. And so we need to carefully analyze, like, why is that? What are the types of transactions? Why do they not get mine very often? And the reality is it's because people just don't want to bake those kinds of transactions. Like, oh, did you want to use OPSuccess 4 in your transaction? Do you want to use the op code, op success for in your transaction? No, you have no reason to do that.

Nobody has any reason to do that. Nor does, most people don't know what it means. They don't need to know what it means. There's no value, there's nothing interesting you can do with that. So they've asked the majority of standard notice rules, no one wants to do. No one has any desire to create these transactions.

And so, of course, none of these transactions into the chain because just no one has any desire to do them. On the specifically Op return side, I think similarly, you know, before Op Return was standardized, people were talking about loading the UTXO set because people do want to do

colored coin style protocols where there's Tapperid assets, RGB, there's like five or six of them in history, whatever, it doesn't matter, but people have wanted to do these things and so, you know, people wanted to embed the data

via multi-sigs, via some, you know, they pretend that it's a public key and they make it look like a public key so that nodes can't really tell the difference, but, you know, their software can parse it tell what's going on. And Op return is much, much, much, much better

for the Bitcoin system than that, right? Because you avoid having a UTXO entry, you make clear what's going on, you, it's just, it's better for everyone. If they use that, it's better for them too. It's simpler. They don't have to do this complicated encoding as a public key or whatever.

And so people have used Op return in response, albeit non-standard ones, not large op returns. But again, it's because people don't want to use them. They don't have a real use for them. The thing that really did shift via, because of standardness rules, is inscriptions, right? So, like, you know, these things are cases where it's like, yes, okay, after the standardness rules changed,

people started doing these things, but it's not that, like, people didn't want, like, wanted to do these things before and would have done them, had the standardness rules not change. It's like, no, the standardness rules have always shifted to accommodate the types of things people want to do, sometimes to nudge them in the right direction to say, like, look, you know,

there's not a financial cost, not substantial cost for you to get non-standard transactions mind, but there's some cost, and so we can use them to nudge people in the right direction. If there's something they want to do and they could do it in a way that's good for Bitcoin or bad for Bitcoin,

and we make the way that's good for Bitcoin standard, they'll probably do it in that way. And so that's good. We can use standardness rules to kind of nudge people, people, and we have before. And that's kind of what this whole debate was, right? We want to make operands bigger to nudge Citria to do things that are a little better for Bitcoin

and not worse for Bitcoin. But, you know, there's not, the people have the cause and effect reversed, right? It's not that, like, oh, first the standardist rules got changed, and now all these people, all the floodgates opened and people started doing all these crazy things. Like, no, actually, people expressed interest in doing these things. and in response to standardness rules got changed, which prevented them from doing something in a worse way. They were going to do it anyway,

but it prevented them from doing it a worse way. I think this is where I don't know what's gone on here in terms of like Citria's conversations, interactions with court. But I think this is where some people are getting either confused or getting it right. I don't know which side it is. In that it's, I think people think that Citri went to court and asked for a change and then Core made a change.

Is the reality that Call saw what Citri were doing and made a change to make that. I haven't spoken with Citria either, but from what I understand, it was the second, right? So Citria had this design for this transaction where they were going to embed all this data

in outputs. They did, for technical reasons, it couldn't be in the input, so it couldn't be like an inscription-style thing. It had to be in the outputs of the transaction. And they were going to do it with, you know, a bad way to do it.

They're going to blow the UTXO set, have all these potentially zero value outputs. I think that might be a different one of their transactions, but have all these outputs in the transaction that had all this garbage in it that was going to blow up the UTXO sentence like this is not good for Bitcoin.

We would rather you do it as an operturn. So here you need to do it will increase the op return limit to allow you to do this. And it's not, you know, I don't want to harp on this citria example too much because, you know, these changes are made to allow for classes of things, right?

It's not just like, oh, this change is just made for Citriot. It's like, no, someone has a legitimate use case for this or legitimate or not, whatever. Someone has a use case they're going to do for this. And so we have to make it not as bad because probably lots of other people are going to have similar use case. There's going to be tons of ZK roll-ups doing the same thing. Yeah. There's going to be other people who have similar needs. They're going to have to have some data in the outputs and they're going to put it in a bare multi-sig or something that's really nasty or we can give them more operative space. That makes sense. And I think the other kind of crux of this issue is

around Core's handling the situation. I've had both Shinobi and Mechanic on the show talking about this. And Mechanic, I think, again, don't want to talk to him for him, but I think he thinks they fucked up. And Shinobi said, no, they did not fuck up. I know you may be a little bit biased in this one, but do you think Core handled this properly? Yeah, I mean, so for those who aren't familiar,

I haven't contributed to Core in many years. I have lunch with some of the folks who do contribute to Corps, so I know their side of it fairly well, but I don't work on it. I'm not in a lot of those conversations. Yeah. You know, obviously they're human. They got a little eager

with the ban hammer in a few cases. You know, at the same time, I don't envy them. Like, you know, you have this, their workspace is GitHub. That is where they work. That is their office space. That's where they have technical conversations

with everybody else working on the project every day. And when it gets flamed, when it's just like posted on Twitter and everyone, and their mom is creating a GitHub account so they can comment and just scream like you guys are evil and you're destroying Bitcoin

and whatever, yeah, you got to start banning people because it's the place for that debate. It's not the place for that. Twitter is great for it or X or whatever. There's the mailing list. I know on the issue, you know, Bitcoin Core has always had a policy of for

Bitcoin Core, the repo on GitHub is for technical discussions and the mailing list is for the more philosophical questions of like what should we do. And you see this all the time with like softworks. It's like, no, if somebody opens a pull request for the softwork, the discussion on the pull request for the software is, is the code correct?

It is not, should we activate this soft work? It's not, is this software a good idea? It is, is the code correct. It's not about what Bitcoin is. Right. The mailing list is where that is. You can go to the mailing list. You can go to Delving.

You can go to many other forums to have conversations about these kinds of things. It's not the GitHub. I know people want it to be the GitHub, but that's just not the way. the project is set up. That's not how it needs to be set up for them. And so, yeah, in some cases, maybe they were a little eager with the button, but they also had to be in some cases. And, you know, fundamentally, they screwed up communication. Like, they didn't communicate. You know, it's hard because Bitcoin Core is not an organization. There's no comms people who work for Bitcoin Core. There's no organization to work for, for that matter. There's just a bunch

of developers. And so, you know, this debate started happening and they engage on Twitter and they start responding to people and quote tweeting. And some of them are pretty aggressive and some of them are super passive and whatever. And like, you know, and so some of them go on podcasts, whatever, but there's no formal statements. You know, there's no Bitcoincore.org blog. Here's what everyone thinks. Like they can. And BitcoinCore.org blog has posted formal statements before, I think only in one case. Do you think core should have a commisperson? I mean, yes, I think it should have better comms. In part, just like, people want to know what they're up to.

Like, people don't see, you know, we were talking about this, like, Bitcoin Core package relay thing. And it's like, okay, well, you know, if you go read the release notes, you'll see, like, Bitcoin Core shipped package relay. It's like, cool, the fuck does that do? What does that mean for me? Why do I care? And it's like, you know, having someone sit down and write posts that explain, like, no, no, no. this fundamentally improves the lightning user experience to unlock really good non-custodial wallets that just weren't possible before would be helpful. I think that'd be good for the community

to see like the why of a lot of the work that Bitcoin Core does. I think there'd be plenty of people out there that would be willing to offer grants for something like that. I don't know if I'm being very naive there, but I think that would be a really useful role. Oh, no, I totally agree. It's obviously hard because, you know, speaking on behalf of the project requires, you know, because it is, it's not a company. It's, you know, you really can only speak on behalf of the project when kind of everyone in the project agrees. But even if it was just explaining what these things people were on are.

And so for stuff like that, it's like unlikely to ruffle any feathers, but you do still need someone who's senior enough to kind of have the vibe for like, what are people going to find unoffensive and agree with? And what are people going to be like, ah, you're like being a little too rosy with your explanation. you have to have to have to have the right person who can kind of make sure everyone's on the right page. But I think it would be really helpful. Yeah, I do too.

One of the, I don't know if again, this is like a bit of recency bias and I'm blowing this out proportion. But one of the things that kind of worries me about this is the like Bitcoin community, for lack of a better term, I've got up in arms about something that's relatively inconsequential. Do you think the chance that Bitcoin has already ossified has increased following this? Maybe. I think, you know, there's, it's hard, right? Because there's obviously a part of this debate is just a, what is it called? Like, it's a protest vote, right?

That there's, you know, there's always, you know, fundamentally, no one who's, quote, in power is viewed popularly for long. For sure. It's just, it's not, you look at approval. ratings for politicians, like they get elected, their approval rating is up here and it goes down. And that's just, that's how it always happens, right? Because they make decisions, some people disagree with the decisions, and those people, at least in Bitcoin's case, are often unemployed and can spend their time voicing how much they disagree with those decisions on Twitter rather than actually doing something useful.

And then they make more decisions and other people disagree with them for other reasons. And the people who disagree might not actually agree with each other, but they disagree with the people who are in power. And like, you know, for better or worse, people see Bitcoin Core is that. I think that's entirely accurate, but, you know, there's something to it. I agree. And so, you know, that's always been the case. It's not new.

We saw it even more in the block size wars. And it will continue. I think that doesn't necessarily mean, that people will show up and say no to a change, right? Like if there's a proposed soft fork that adds value to Bitcoin, whatever, you know, there would certainly be people who disagree. Hopefully, if there's a proposed software,

they only disagree for minutia reasons that don't really matter, and we can all kind of agree to ignore them rather than substantial disagreements. So I think what you're seeing is really just this protest vote effect. of seeing people who already disagreed with Bitcoin Core for one reason or another and now are screaming louder.

And we might see that with respect to some proposed software, great consensus cleanup or something, but we also might not. We might see enough people excited about it that they say, no, this is worth doing, and then it happens and we're all happy with that. The reason I'd be nervous, though, is, like, if you use Covenants as an example,

if we look like we're going to go ahead with CTV, I think there's massive PTSD now from the tap upgrade and the sort of knock-on effects from that. That I just, I struggle to see how we'll ever get rough consensus again on a change like that. Yeah, maybe. I think, so I think one thing that has broken down is like if you look at soft forks prior to kind of the block size wars and even into the block size wars, the way they always worked

is kind of first you had the technology. community find consensus around an idea, right? So first, you know, because we got to hash out what color to paint the shed. Like, should it be this bit or that bit? It doesn't matter to anyone, but, you know, there's some technical differences and, like, we got to hash it out, right? And so you always saw this progression of, like, first, the idea, get socialized in the technical community, and then a concrete implementation, and then people kind of argue back and

forth and kind of come up with something concrete that we can all sort of agree on, you know, people might disagree on this or that, but we recognize that like, okay, it's fine. It's not exactly the way I wanted it, but it's fine. It will make Bitcoin better. And other people disagree with me, and so the things we disagree on, whatever. And then from there, it starts getting shopped out to the broader community. It's like, okay, we have this thing. The technical community kind of agrees, and now it's time for the broader community to decide. Here's an idea. We think we should do it.

Tell us what you think. If everyone seems to agree, we go forward with it as a community, right? That has broken down, right? So now we see people who, for better or for worse, either aren't finding the success they want in the technical community, aren't connected enough to the technical community, or for whatever reason decide, like, this should happen. it's not happening, I'm gonna go directly

to the broader community and we're gonna like force it. And, you know, part of that is like the technical community is bigger, part of it is like, you know, some people want stuff to happen and they don't know what the process is and it's hard to figure out the process and it's like you wanna get people to review your BIP but they're busy and they don't get around to reviewing your BIP and so it's like, what am I supposed to do here?

I think we should do this, but like no one's answering me. you know, it's no fault of their own, like very competent people have this problem, right? I mean, drive chains are a perfect example of this. Yeah, maybe. You know, but, you know, there's, there are examples of this and these people, I think, get frustrated, and that's totally fair.

And so the process is broken down in part because of that, in part because, like, you know, people are busy. It's like, okay, the people who you'd want to review this might be busy working on package relay and really laying transactions differently in the MEP pool and Bitcoin Core or not working on consensus necessarily right now. And so that makes it harder.

But I don't think that makes it impossible, right? So like with Covenants, you know, you brought up the Covenants example. We've seen this kind of repeatedly. We've seen like ideas come and go and like a small subset. But even the people actively working on Covenants research hadn't found any agreement

on what they wanted to do. And there was starting to be some agreement on what they wanted to do. do from the people who are actively working on Covenants research. And that CTV. Plus checkstick from Stack. Yeah. And so, okay, they have that.

They have, like, more concrete things that are using it or intending to use it. Arc actually being built and, like, being deployed. And so it's like, okay, well, CTV would be a nice improvement to Arc. It can be deployed without it. Okay. It can be built without it. And we can see whether people are interested in using it without it. And then if people are interested in it, if it's sort of.

kind of working, then like, okay, maybe CTV improves it. Maybe people aren't interested in using it because of the problems that it has that would be fixed by CTV or whatever. Um, so we get these like actual interesting points in the real world. Uh, and this starts to make a much more compelling argument, especially within the technical community, it's like, okay, the people who are working on, focused on this area are starting to agree with each other. Maybe now more people should pay attention. More people should join this discussion. You know, I happen to disagree with that direction, but you know, it's directionally maybe okay. And so I think that looks a lot more like the beginnings of a successful softwork, right?

Where there's like a technical portion of the community that's starting to agree. And then once that becomes a little more firm, once there's a little more there, then it starts to be much more compelling to like, okay, now there's a whole heap of technical people who've looked at this, who've analyzed it, who agree or disagree, but are okay with this. And now we can have the broader community make a more informed decision. And so I think that, so I don't buy that we're ossified, in part because of that, in part because, like, you know, I see the change in how the people working on Covenant's research have kind of melded together a little bit more. Well, it's nice to talk to bullish,

Matt, bullish on lightning, bullish on Bitcoin upgrades. What else are you looking at them? I know, it's weird. I'm not, I'm very rarely the bullish one. Yeah, I think we've done like three shows on how much lightning sucks. So this is a nice change. Yeah, no, it's, it's weird. Feels weird to me too, but hey. So what else is going on at the moment that you're excited about? Yeah, that's a lot of it. I guess, you know, there's the lightning side of things. Just to save our wallets, of course. Also, B.3.3. I don't think we've ever discussed it. 353.

So 353 is a, so in the lightning world, this lightning address concept really hit PMF, right? So a lot of people really love this username at domain. Like, it's super slick. It's easy to remember. It's easy to share. It's easy to tell people. Familiar, like people know these format.

It has a lot of issues, but it's also lightning only, which means it doesn't scale to other stuff. and it has privacy issues, it has sanctions questions, it has, yeah, it could be improved. 353 takes it to five new, takes it five steps further. So it has the same kind of familiar user experience, username, a domain, whatever. But instead of using HTTP and then L and URL, it just uses DNS. And so it just embeds the data in the DNS, just like you would. It's just a text record if you know DNS, if you've ever put a website up.

You might have had to copy a text record from like a little site verification or whatever. It's just a text record. And it just has, you know, all of your Bitcoin payment instructions. What's really nice about DNS. DNS is actually hierarchical and authenticated. So in a hardware wallet, you can embed two public keys, one old one and one current one. And the code to verify signatures, the parse DNS records. And you can actually give it a full proof that,

it can verify totally offline that this payment instruction is for this name. Oh, that's cool. So this means that I can go on my wallet and type in, I want to pay, you know, donate at what Bitcoin did.com, and I can hit enter, and I can go to my hardware wallet, and my hardware wallet won't display a fucking address

that I can't verify and has no meaning to me whatsoever. It will say, donate at what Bitcoin did.com. And I can know that that's actually authenticated. It's not bullshit, that's real, I can trust that, and I'm not trusting my computer to not give it a fake proof or whatever. It verified it. That's a really cool U.S. That's very cool.

It's a much better U.S. Because in all these hardware wallets, it's great, but people go and like, okay, I want to deposit to my exchange, and they go on their computer, and they go to their exchange, and they get the address, and then they hit pay, and they, you know, go to a hardware wall, and they hold their hardware wallet up against the screen, and they check that the hardware wallet on the screen show the same thing. and the malware changed the address on your screen. It doesn't like this meant nothing. This added no value to you.

It doesn't even need to have malware on there. Like we saw what happened with buy bit. Sure, sure. The website got changed. You know, so in some exchanges, you can phone, you can pick up the phone, call the exchange, have them verify the address. And you should do this if you're depositing a bunch of money.

Come on, that's a crazy U.X. Can you imagine? Like your exchange is just like Matt at Coinbase or whatever and I can check on my hardware wallet. No, I'm depositing to my account at Coinbase, or some better exchange, hopefully. River. River, my account at River, right?

That's so much better UX. So, you know, we can get that for on-chain. It also works for lightning. It would also work for cashew or whatever other payment mechanism you're using. Just one name, one text record that works for everything. Because it's a text record, it's super easy.

If you have your own domain, it's super easy. You just copy and paste it into the website. You're done. You don't have to think about it. It's not like, you know, LNURL. You have to run your own LNURL server or whatever. Like, you don't have to think about it. You just go to whoever you registered your domain with.

You turn on the DNSSEC button, usually just a button you turn it on. And then you paste in your text record. So this is still pretty early. You know, there's some lightning wallets that support it now. Phoenix supports it. Misty Breeze, the Breeze wallet as well as their SDK now supports it. LDK obviously supports it for all of our wallets. and the Lightning End is built in Full 12.

So Lightning Wallace are starting to adopt it. It's got a little bit of a chicken and egg problem on the hardware wallet side because people don't have them to receive. You've got to get hardware wallet support and you've got to get the wallet on the computer to support it. It's just time. So it's a chicken and egg problem.

It just needs time. I've had a number of conversations with hardware wallets people. They're interested in it, but prioritization is hard, getting resources hard. It's one of those things that Once a few wallets start to do it, I think people are going to see the user experience and demand that their wallet does it and the hardware wallet does it because it's just going to be so slick. So that's coming eventually.

If you're interested in it, tweet it your hardware wallet vendor. Tweet it your hardware wallet and call your congressman. And call your congressman. Or if you're an engineer, or if you're not an engineer, you know, load up your favorite AI coding tool and hack it into your hardware wallet. And vibe code it. vibe code it and it'll probably be buggy and it probably won't work. But maybe it will convince your hardware wallet vendor to do it anyway because they're going to be annoyed. There you go. Well, thank you Matt. I'm very glad to hear you bullish. Bitcoin's doing good. Yeah. We're in a good spot.

Yeah. It's wild. It's wild. Well, I appreciate it. You're looking forward to Vegas. It's going to be a wild few days. Yeah. Yeah. Well, I mean, it's a lot. For me, it's a lot of promoting this. Talking to politicians, a bunch of podcasts, really just trying to get the word out there because not enough people know that this is going on, know that we have a short window and know just how important it is. So I'm in back-to-back podcasts, back-to-back talks, all kinds of stuff. It's going to be nuts. Love it. Well, anything I can do to support it, I will. I'll make sure I link everything in the show notes below the show. But thank you, man. I appreciate this. And obviously, open invites come on whenever you want. I know you want to talk about this, but that extends forever.

Awesome. Thank you very much. Appreciate it. Yeah. Thanks for having me.