1 00:00:00,000 --> 00:00:10,960 jimmy thanks for doing this topic of the day is mining centralization but before we get there 2 00:00:10,960 --> 00:00:17,660 i want to quiz you just went down the street to cooper's got brisket i want you to guess 3 00:00:17,660 --> 00:00:24,240 what the current price of brisket per pound is at cooper's it's downtown prime location 4 00:00:24,240 --> 00:00:31,760 austin which obviously oh yeah obviously um 5 00:00:31,760 --> 00:00:32,080 um 6 00:00:32,080 --> 00:00:39,960 very popular around here i'm gonna guess 32.99 7 00:00:39,960 --> 00:00:49,460 39.50 what yeah do you have any recollection we've been going to cooper's for a long time 8 00:00:49,460 --> 00:00:52,900 around bit devs do you have any recollection of the earliest price you would have remembered 9 00:00:52,900 --> 00:00:57,120 at Cooper's. Well, Cooper's didn't open until like five years ago. 10 00:00:57,400 --> 00:01:03,140 No, it's been at least 2018. Okay. So seven years ago, something like that. Yeah. But, um, 11 00:01:05,000 --> 00:01:11,740 I want to say like 2299 was maybe like the earliest I can remember. 12 00:01:11,860 --> 00:01:16,020 The lowest I saw when I started going there more frequently when I started Unchained, 13 00:01:16,020 --> 00:01:18,900 which would have been 2018, 1799. 14 00:01:20,680 --> 00:01:21,240 Yeah. 15 00:01:22,280 --> 00:01:27,580 I remember when I first moved to Austin, I went to Rudy's. 16 00:01:27,680 --> 00:01:32,080 I think it was like 629 or something. 17 00:01:32,320 --> 00:01:32,560 Yeah. 18 00:01:32,680 --> 00:01:33,480 This was 2012. 19 00:01:33,880 --> 00:01:34,560 It's just amazing. 20 00:01:35,220 --> 00:01:41,520 I've triggered a number of people carrying the torch on safe's ribeye as an inflation index. 21 00:01:41,520 --> 00:01:45,980 and I'm conditioned to the increase in prices. 22 00:01:45,980 --> 00:01:50,060 And even at Cooper's, I think I went and I saw it at $33 or $34, 23 00:01:50,600 --> 00:01:53,100 but there was something about that $39.50. 24 00:01:54,920 --> 00:01:57,180 And I know that I've seen it, you know, 25 00:01:57,180 --> 00:02:02,380 back in time at the same location, $17.99, more than a hundred percent. 26 00:02:03,480 --> 00:02:06,720 Well, you know, in Bitcoin terms, that's actually quite cheap now, 27 00:02:06,760 --> 00:02:07,700 like compared to that. 28 00:02:07,700 --> 00:02:20,620 I saw a tweet that you put out about something that you were looking to purchase, seeing that it was some amount more expensive and then realized that it was cheaper in Bitcoin terms. 29 00:02:20,620 --> 00:02:25,560 And it is true that that brisket is still cheaper in Bitcoin terms. 30 00:02:25,560 --> 00:02:26,220 Way cheaper. 31 00:02:26,500 --> 00:02:29,980 The dollar inflation still hits. 32 00:02:30,300 --> 00:02:30,820 It does. 33 00:02:30,820 --> 00:02:31,140 Still hits. 34 00:02:31,480 --> 00:02:31,900 It does. 35 00:02:33,580 --> 00:02:35,080 Start paying attention, freaks. 36 00:02:35,080 --> 00:02:41,160 But all right, on to the real topic of the day, mining centralization. 37 00:02:41,820 --> 00:02:46,320 And specifically, we're going to get into pool, mining pool centralization. 38 00:02:48,000 --> 00:02:54,340 Explain in your words the relationship between Bitcoin miners and mining pools, just to set some context. 39 00:02:55,140 --> 00:03:01,260 Right. So the reason why pools exist in the first place is because you want variance reduction. 40 00:03:01,260 --> 00:03:14,520 If you have a tiny amount of hash rate, you have whatever hash rate you have divided by the global hash rate percentage chance of finding the next block. 41 00:03:14,720 --> 00:03:16,740 It's obviously not going to be very much. 42 00:03:17,660 --> 00:03:29,040 And instead of waiting for the one jackpot hit, if you will, you can pull all of your resources and split it equally. 43 00:03:29,040 --> 00:03:31,060 That's what a mining pool is supposed to be. 44 00:03:31,260 --> 00:03:39,100 Unfortunately, the first design of mining pool stuff uses something called Stratum V1. 45 00:03:39,420 --> 00:03:50,360 And this is where the mining pool tells everybody, hey, here's the block you have to mine, including this output address that goes to the pool and will do the splitting up afterwards. 46 00:03:51,520 --> 00:03:56,900 And that means that the pool essentially acts as the block template constructor. 47 00:03:56,900 --> 00:04:03,420 and in fact for any member of the pool they don't have to run a node at all they just have to 48 00:04:03,420 --> 00:04:09,960 take the template modify it in whatever way to roll the nonce or whatever and just 49 00:04:09,960 --> 00:04:16,140 hash until they find the block right or find really what they do is they find shares and 50 00:04:16,140 --> 00:04:24,140 submit those shares and if the pool if they find a block then it gets spread equally that's the 51 00:04:24,140 --> 00:04:31,980 idea behind pools. And that's how it's more or less executed. But, you know, one of the things 52 00:04:31,980 --> 00:04:39,040 that makes it kind of bad is that the pool operator gets to decide what goes into each block. 53 00:04:39,400 --> 00:04:47,180 And that means that there's a centralized block production industrial complex, if you will. 54 00:04:47,180 --> 00:04:57,700 There's only maybe 15 pools that have something like 95% of the hash rate that are running 55 00:04:57,700 --> 00:04:58,500 stratum v1. 56 00:04:58,960 --> 00:05:02,800 I think Brain's pool, they run stratum v2. 57 00:05:04,340 --> 00:05:06,700 Ocean obviously runs datum. 58 00:05:07,300 --> 00:05:14,900 And then there's like CK solo pool, and they make it so that you can mine solo and decide 59 00:05:14,900 --> 00:05:17,100 on your template yourself. 60 00:05:17,180 --> 00:05:20,840 But they take up, I believe, less than 5%. 61 00:05:20,840 --> 00:05:28,860 So 95% of hash rate essentially is controlled by like 16 pool operators. 62 00:05:29,060 --> 00:05:34,460 And we know that some of them have like economic, you know, interest in the other. 63 00:05:34,600 --> 00:05:37,880 So it's probably more like 10 at the most, right? 64 00:05:37,900 --> 00:05:38,580 Like entities. 65 00:05:38,580 --> 00:05:39,140 Yeah. 66 00:05:39,300 --> 00:05:46,520 And so you mentioned that like most Bitcoin miners, if they're working with a centralized 67 00:05:46,520 --> 00:05:53,440 pool are not running their own node they don't have to no um and that when they 68 00:05:53,440 --> 00:06:03,800 are performing work say on site where they're consuming power and running the bitcoin hashing 69 00:06:03,800 --> 00:06:08,660 algorithm they're basically their their primary communication channel is back through the pool 70 00:06:08,660 --> 00:06:14,340 they they send the pool all of their work and then not only does their work go back through the pool 71 00:06:14,340 --> 00:06:21,280 and the pool does the accounting of how much work all the miners participating in their pool do, 72 00:06:21,580 --> 00:06:26,980 but then the money goes directly to the pool and then- 73 00:06:26,980 --> 00:06:27,900 They have to get paid out. 74 00:06:28,020 --> 00:06:29,360 And the pools pay out the miners. 75 00:06:29,620 --> 00:06:36,420 Right. It's a big trust relationship, honestly, because every hasher, right? 76 00:06:36,420 --> 00:06:40,180 We shouldn't call these people that are participating in a pool, 77 00:06:40,260 --> 00:06:43,140 not really running their own nodes or constructing blocks. 78 00:06:43,140 --> 00:06:48,860 like any, uh, an actual miner, they're not really mining as much as they are hashing. 79 00:06:48,960 --> 00:06:54,880 The mining pools are mining because they're constructing their own blocks. Um, but that's, 80 00:06:54,880 --> 00:07:00,060 they, they have to have, um, this big trust relationship because the pool does the payout. 81 00:07:00,240 --> 00:07:08,140 Right. Um, and you know, they, I, I believe I used to mine a long time ago and I, I was like, 82 00:07:08,160 --> 00:07:13,120 okay, how do I even verify that this is the amount that I'm owed? Or like, how do you, 83 00:07:13,140 --> 00:07:19,540 know because they need to figure out how many shares you submitted and so on and basically share 84 00:07:19,540 --> 00:07:25,860 is like something that doesn't quite meet the proof of work but is very still very difficult 85 00:07:25,860 --> 00:07:35,420 that you can prove hey I did this much work and so the pool pays based on that that is uh it's kind 86 00:07:35,420 --> 00:07:42,440 of like it's a big trust relationship it's a bit of a mess because of that yeah and then also just 87 00:07:42,440 --> 00:07:50,860 for context before we discuss the consequences of centralization provide your view of the context 88 00:07:50,860 --> 00:07:56,280 of the function that the miners are providing to the aggregate network yeah they're making it so 89 00:07:56,280 --> 00:08:05,400 that it's very hard to go backwards right the blockchain is adding blocks and not going backwards 90 00:08:05,400 --> 00:08:26,980 In order to subvert any transaction that's included in a block, then you not only have to do at least the equivalent amount of work, proof of work wise, but if there are blocks on top of it, you have to do the proof of work of all those blocks as well. 91 00:08:26,980 --> 00:08:39,520 So it ends up being a security measure to not quite finalize a transaction, but make it very difficult to reverse it. 92 00:08:39,520 --> 00:08:46,900 Right. Like nothing is ever final in theory. You could, if you had like, uh, you know, if you were 93 00:08:46,900 --> 00:08:51,620 God, for example, you can, you can make like transit, uh, like blocks all the way going back 94 00:08:51,620 --> 00:08:57,020 to the Genesis blockchain, uh, Genesis block and just, you know, like, uh, wipe out everything, 95 00:08:57,020 --> 00:09:04,020 uh, at least according to the rules of the software. Um, but you know, that's, uh, but you 96 00:09:04,020 --> 00:09:10,820 get very good like assurance of finality based on proof of work rather than you know somebody's 97 00:09:10,820 --> 00:09:16,160 trust me bro assurances or something like that yeah and two i think it was two episodes ago 98 00:09:16,160 --> 00:09:24,380 pierre and i did a deep dive on the difficulty adjustment and difficulty target and we asked 99 00:09:24,380 --> 00:09:27,960 or not we estimated but the the number that we were working on was that there was approximately 100 00:09:27,960 --> 00:09:33,960 20 gigawatts of power securing the bitcoin network somewhere probably between 20 and 25 gigawatts but 101 00:09:33,960 --> 00:09:40,120 that on average it would require 20 to 25 gigawatts of power running probabilistically to 102 00:09:40,120 --> 00:09:47,520 solve the next block in 10 minutes and that in order to effectively undo history or undo 103 00:09:47,520 --> 00:09:54,140 potential transactions that were already settled it would require that much power just you know 104 00:09:54,140 --> 00:10:00,680 it would be possible probabilistically for someone to do less work just based on luck but on average 105 00:10:00,680 --> 00:10:05,000 it would be that much work 10 minutes just to rewrite the past block and then if you were 106 00:10:05,000 --> 00:10:11,360 talking about undoing two blocks to your point of nothing's technically final but practically 107 00:10:11,360 --> 00:10:18,480 speaking the more work that's being done the more work is required to undo a previously valid 108 00:10:18,480 --> 00:10:23,600 transaction and that it's a principal function to ensuring transaction finality in the bitcoin 109 00:10:23,600 --> 00:10:51,260 Yeah. And it makes it a lot harder. Everything else in sort of like the fiat world is based on, okay, well, we're going to say this is final by convention or something like that. This actually requires energy. And that sort of component is very unique and gives it sort of like a solidness that almost nothing else financial really has. 110 00:10:51,260 --> 00:10:57,020 yeah and that is something that i want to talk about as well this this dynamic of 111 00:10:57,020 --> 00:11:04,240 and you drew the distinction between hashing versus mining but that the participants that 112 00:11:04,240 --> 00:11:12,420 are actually doing the work are the hashers or the miners the mining pools themselves are not 113 00:11:12,420 --> 00:11:17,360 the ones that are actually consuming energy but they're this principal point of centralization 114 00:11:17,360 --> 00:11:21,000 that hash rate is fairly well distributed, 115 00:11:21,000 --> 00:11:23,840 but then everything centralizes 116 00:11:23,840 --> 00:11:27,620 at the point of creating blocks 117 00:11:27,620 --> 00:11:29,340 or putting the set of transactions together 118 00:11:29,340 --> 00:11:30,880 that are going to be proposed, 119 00:11:31,000 --> 00:11:33,440 say in the next block to the network, 120 00:11:33,440 --> 00:11:36,740 as well as managing all the payouts. 121 00:11:39,380 --> 00:11:42,560 And you talked a little bit about the number of pools 122 00:11:42,560 --> 00:11:43,860 that represent different percentages 123 00:11:43,860 --> 00:11:45,580 based on when I look at it, 124 00:11:45,580 --> 00:11:51,240 boundary represents about 30 percent antpool is 14 but there's a number of other pools 125 00:11:51,240 --> 00:11:58,600 that are working off of the same templates as antpool when you add up what people believe those 126 00:11:58,600 --> 00:12:07,280 proxies to be boundary and amp pool are 55 the top five are 70 and then the top six 127 00:12:07,280 --> 00:12:09,780 or seven are 90% of the network. 128 00:12:10,840 --> 00:12:14,640 What do you see as the principal risks 129 00:12:14,640 --> 00:12:19,880 of specifically mining pool centralization 130 00:12:19,880 --> 00:12:21,040 to the Bitcoin network? 131 00:12:22,760 --> 00:12:27,940 Well, if you have block construction 132 00:12:27,940 --> 00:12:31,180 outsourced to only a few entities, 133 00:12:31,180 --> 00:12:36,700 then they can do cartel-like behavior. 134 00:12:36,700 --> 00:12:38,500 They can do all sorts of things, right? 135 00:12:38,560 --> 00:12:45,380 Like they can just say, for example, if they had, I don't know, 95% or something like that, 136 00:12:45,880 --> 00:12:48,800 they could literally extort the network if they wanted to. 137 00:12:49,160 --> 00:12:55,000 They could just say, hey, if you want a transaction, you have to pay us $500 per transaction. 138 00:12:55,400 --> 00:12:56,680 We're not going to include anything else. 139 00:12:56,920 --> 00:12:59,160 And that could be cartel-like behavior, right? 140 00:12:59,200 --> 00:13:02,880 And they could enforce it if they sort of agree with it. 141 00:13:03,240 --> 00:13:06,400 Are there problems with cartels and like defections and so on? 142 00:13:06,400 --> 00:13:08,740 But that's something that they could do. 143 00:13:10,160 --> 00:13:25,420 And, you know, not only that, but, you know, they can let in whatever transaction that they want and not what, you know, like what the rest of the network is trying to get in and so on. 144 00:13:25,420 --> 00:13:40,720 They couldn't, I mean, if in any point of centralization, you can sort of restrict things in ways that aren't optimal for the network to grow and so on. 145 00:13:40,720 --> 00:13:48,460 So say those like five or six entities decide at some point we don't like lightning. 146 00:13:48,640 --> 00:13:50,200 It's taking away a lot of our fees. 147 00:13:50,920 --> 00:13:54,340 So any lightning transaction, we're just going to filter. 148 00:13:54,940 --> 00:13:55,040 Right. 149 00:13:55,420 --> 00:14:14,400 And that's a scenario that could happen, in which case, like, they're hoping that if people can't use Lightning or open channels with Lightning and so on, then people have to come on chain, which would increase the fees and increase their revenue, something like that. 150 00:14:14,900 --> 00:14:17,260 There's a couple different scenarios there. 151 00:14:17,700 --> 00:14:19,480 And let's talk about it on either side. 152 00:14:19,480 --> 00:14:30,580 Let's say there's a scenario where a cartel of miners got together and said, there's going to be 22 million Bitcoin. 153 00:14:31,400 --> 00:14:33,480 What happens and why is that unrealistic? 154 00:14:34,000 --> 00:14:37,260 Yeah, that's unrealistic because that would require hard work. 155 00:14:37,940 --> 00:14:38,420 So that... 156 00:14:38,420 --> 00:14:39,900 But just walk through those dynamics. 157 00:14:40,160 --> 00:14:40,520 Right, right. 158 00:14:40,580 --> 00:14:44,920 So say they want to do that, then they would have to change their software. 159 00:14:44,920 --> 00:14:50,480 in which case, you know, they, I don't know what the emission schedule would be. 160 00:14:50,480 --> 00:15:08,765 If it the same as Bitcoin up until a certain point then it stay more or less unchanged right Like until the point at which the emission schedule changes So currently the emission schedule is 3 every 10 minutes If they start saying okay instead of 3 161 00:15:09,205 --> 00:15:14,665 we're going to make it five, right? For, for right now, then it would be an immediate hard fork, 162 00:15:14,725 --> 00:15:19,465 at which point they're not hashing Bitcoin anymore. They're hashing Bitcoin miner or whatever 163 00:15:19,465 --> 00:15:25,705 it is. And there would be two versions of the blockchain and they would, they would never come 164 00:15:25,705 --> 00:15:32,525 back together because they're it's a hard fork it they're very very different and uh and it would 165 00:15:32,525 --> 00:15:38,245 probably uh slow down the bitcoin network quite a bit because a lot of hashing power effectively 166 00:15:38,245 --> 00:15:44,465 has left but that means that um you know the difficulty adjustment after a month or two would 167 00:15:44,465 --> 00:15:50,545 probably you know make it so that you know the transactions go through in a reasonable time again 168 00:15:50,545 --> 00:15:58,145 or more mining comes online like uh you know equipment that has been like mothballed somewhere 169 00:15:58,145 --> 00:16:04,925 maybe comes online and you get hash rate that way um but ultimately you just have two separate 170 00:16:04,925 --> 00:16:13,285 tokens right it would and it would be effectively the same as the 2017 yeah yeah you would it would 171 00:16:13,285 --> 00:16:22,625 feel like an airdrop yeah everyone has the same amount of bitcoin a and minor forked bitcoin b 172 00:16:22,625 --> 00:16:30,785 and people that and then the market would determine which one they'd rather want to hold 173 00:16:30,785 --> 00:16:37,565 and then the hash rate would logically follow because of economic pressure eventually yeah 174 00:16:37,565 --> 00:16:37,885 Yeah. 175 00:16:38,725 --> 00:16:42,625 But then you also brought up the scenario of censorship. 176 00:16:43,445 --> 00:16:58,125 And there might be one version of censorship in terms of not validating, say, Bitcoin from, let's just say, an OFAC-sanctioned address. 177 00:16:58,245 --> 00:17:00,365 Yeah, that's a more salient one, yeah. 178 00:17:00,505 --> 00:17:02,705 And there's two different scenarios. 179 00:17:02,885 --> 00:17:04,685 There's ones where they just won't mine it. 180 00:17:04,685 --> 00:17:14,085 and if enough of the cartel is together and agreed the transaction just doesn't get mined 181 00:17:14,085 --> 00:17:19,925 but then if there's a scenario where they hard-coded something into their software to say 182 00:17:19,925 --> 00:17:26,625 any bitcoin from this address is actually invalid talk about the differences between those two 183 00:17:26,625 --> 00:17:32,545 different scenarios because like one would create a fork versus one would just basically try to 184 00:17:32,545 --> 00:17:39,085 carding you off from the network yeah uh so if they if they just never mind the transactions that 185 00:17:39,085 --> 00:17:45,605 are from olfax sanctions list then that wouldn't really affect the network that much other than for 186 00:17:45,605 --> 00:17:52,345 the person that has that address obviously um like blocks would still be valid to every node and so on 187 00:17:52,345 --> 00:18:00,425 um if you suddenly said you know transactions from this are uh this address are now invalid 188 00:18:00,425 --> 00:18:08,465 then someone as long as that such a transaction shows up on the network you would have an instant 189 00:18:08,465 --> 00:18:16,785 hard fork because the software that says this is invalid would would deny that block and the 190 00:18:16,785 --> 00:18:25,005 software that says it is valid would continue to you know build on it now that that would be 191 00:18:25,005 --> 00:18:30,265 weird because in a in a sense i think that would be a soft work because it's a tightening of the 192 00:18:30,265 --> 00:18:37,845 rules. So in that case, like the mining cartel would actually have the advantage in the sense that 193 00:18:37,845 --> 00:18:45,625 if they did that, said, okay, transactions from these 17 addresses are invalid, 194 00:18:45,625 --> 00:18:50,385 it would be a tightening of the rules. And if they ever overtake, 195 00:18:50,585 --> 00:19:00,125 you know, the chain that had the transaction from that address in it, then all of the other 196 00:19:00,125 --> 00:19:03,505 nodes that have built on it, 197 00:19:03,565 --> 00:19:05,485 you have wipeout risk basically, 198 00:19:05,485 --> 00:19:07,845 because if the chain is longer with the miners, 199 00:19:07,845 --> 00:19:10,425 then everybody else would have to take it, 200 00:19:10,505 --> 00:19:11,985 but it's not the reverse. 201 00:19:12,105 --> 00:19:13,025 It would be a soft work. 202 00:19:13,725 --> 00:19:14,865 I'm envisioning this here, 203 00:19:14,945 --> 00:19:18,565 although even that I expect to be unlikely 204 00:19:18,565 --> 00:19:21,145 would be someone like the US government saying, 205 00:19:21,285 --> 00:19:22,845 hey, here's this set of lists 206 00:19:23,445 --> 00:19:27,045 that we deem to be enemies of the state. 207 00:19:27,045 --> 00:19:33,785 more than just filtering the transactions 208 00:19:33,785 --> 00:19:35,905 if you were to mine 209 00:19:35,905 --> 00:19:37,305 these transactions then 210 00:19:37,305 --> 00:19:39,285 you are going to be 211 00:19:39,285 --> 00:19:42,085 or if it's in your blockchain then we're going to 212 00:19:42,085 --> 00:19:42,805 be liable 213 00:19:42,805 --> 00:19:46,085 even if somebody else mined it then you couldn't mine on top 214 00:19:46,085 --> 00:19:47,785 of it if your software 215 00:19:47,785 --> 00:19:50,145 said anything from this 216 00:19:50,145 --> 00:19:51,365 address is invalid 217 00:19:51,365 --> 00:19:54,645 that 218 00:19:54,645 --> 00:19:59,705 Do you think that that's a realistic scenario? 219 00:20:00,885 --> 00:20:02,545 I suppose it's possible. 220 00:20:02,945 --> 00:20:05,505 And who knows what bureaucrats think of. 221 00:20:05,745 --> 00:20:11,165 But I mean, it's a way to pressure a centralized entity. 222 00:20:11,165 --> 00:20:24,185 And the thing is, when a centralized entity exists, then you can sort of choke it and bend it to your will, which is sort of the scenario you're more broadly describing. 223 00:20:24,645 --> 00:20:32,605 And then maybe talk about it or in a scenario where it exists today, 224 00:20:32,605 --> 00:20:38,325 where say six or seven miners control 90% of the hash rate versus a more 225 00:20:38,325 --> 00:20:43,065 distributed set of circumstances, 226 00:20:43,525 --> 00:20:49,545 why it would or why it would or would not be more likely to be successful if it 227 00:20:49,545 --> 00:20:50,005 were attempted. 228 00:20:50,545 --> 00:20:50,645 Yeah. 229 00:20:50,725 --> 00:20:51,385 So if you, 230 00:20:51,385 --> 00:20:53,265 if you do it with like six or seven miners, 231 00:20:53,785 --> 00:20:54,365 pretty easy, 232 00:20:54,405 --> 00:20:54,585 right? 233 00:20:54,585 --> 00:20:59,925 you go to them and like give them, you know, whatever legal notice or whatever, 234 00:20:59,925 --> 00:21:03,705 and their lawyers get involved and they stop mining or whatever. 235 00:21:05,025 --> 00:21:08,805 It's a lot more like, that's a lot more likely to be successful 236 00:21:08,805 --> 00:21:12,505 than if you had like a thousand miners distributed all over the world. 237 00:21:12,605 --> 00:21:16,005 You have no idea where they are, who they are, why, you know, 238 00:21:16,545 --> 00:21:20,725 what equipment they use or where, like, how are you even going to serve them? 239 00:21:20,725 --> 00:21:24,685 Like, okay, you're not allowed to do this or whatever. 240 00:21:26,145 --> 00:21:31,485 And even if you've deemed that they're enemies of the state or whatever, 241 00:21:31,625 --> 00:21:35,205 how are you even going to find out where they are and all that? 242 00:21:35,405 --> 00:21:42,185 So it becomes sort of like that nightmare scenario that we talk about in Bitcoin. 243 00:21:42,345 --> 00:21:44,345 What happens if the government bans Bitcoin? 244 00:21:46,365 --> 00:21:48,925 Like, yeah, what would happen? 245 00:21:48,925 --> 00:21:57,045 I'm not entirely sure, but I think a lot of the mining would be outside of the jurisdiction that banned it. 246 00:21:58,025 --> 00:22:04,565 And, yeah, like it's a lot harder, obviously, when it's decentralized than when it's centralized. 247 00:22:04,565 --> 00:22:15,785 what are so then what about a scenario where it wasn't something as clearly obvious like 248 00:22:15,785 --> 00:22:21,625 increasing the fixed supply of from 21 million to something greater in that 249 00:22:21,625 --> 00:22:27,445 creating a hard fork but some other change to the network that 250 00:22:27,445 --> 00:22:36,645 maybe discuss like a scenario where it's a soft fork, 251 00:22:36,765 --> 00:22:38,645 but not something that's like as overt. 252 00:22:38,765 --> 00:22:39,345 Cause like in the, 253 00:22:39,345 --> 00:22:42,305 in the scenario where they change the fixed supply, 254 00:22:42,405 --> 00:22:48,525 that's obviously so core to the economic incentives of the network that the 255 00:22:48,525 --> 00:22:54,045 network splits in two and everyone that holds Bitcoin on either chain ultimately 256 00:22:54,045 --> 00:23:01,025 would decide very quickly what's valuable and what's not, but what are other potential scenarios 257 00:23:01,025 --> 00:23:08,345 that are maybe not as overt that you think about in terms of just the risks of changes to the rules? 258 00:23:09,365 --> 00:23:15,725 Yeah. Good question. Um, I think the one you laid out about like the old fact list, 259 00:23:15,725 --> 00:23:21,845 maybe that one's too obvious, but, um, I, I'm going to reverse sort of like the child porn thing 260 00:23:21,845 --> 00:23:25,605 that's being discussed online about what happens with that. 261 00:23:26,225 --> 00:23:31,925 What if the government says, okay, well, if it's in the blockchain, 262 00:23:32,105 --> 00:23:34,025 then it's illegal or something like that. 263 00:23:34,025 --> 00:23:38,085 And anyone who mines it is going to be deemed in possession or something. 264 00:23:38,865 --> 00:23:44,565 Then you kind of have the reverse scenario where every miner 265 00:23:44,565 --> 00:23:48,005 is going to avoid that, like the plague. 266 00:23:48,005 --> 00:23:58,305 And they might actually adopt like knots or something just so they can avoid that legal liability or something like that. 267 00:23:58,725 --> 00:24:09,485 Well, I mean, it seemingly gets into that scenario of do you filter or if it was something like that, it would seem like it would potentially need to be hard coded. 268 00:24:09,485 --> 00:24:16,605 And the only defense of that is hash rate distribution where it's not credible. 269 00:24:16,605 --> 00:24:24,585 and if it's not credible then it's less likely to be attempted um but maybe you also draw the 270 00:24:24,585 --> 00:24:31,185 distinction between because it is current to the debate and i don't want to go super deep into 271 00:24:31,185 --> 00:24:39,625 opportun and have this just become a conversation about the opportun filter but discuss the the 272 00:24:39,625 --> 00:24:47,265 difference between non-consensus or like maybe three vectors non-consensus rule like a relay 273 00:24:47,265 --> 00:24:55,085 policy a consensus rule that creates a hard fork versus a consensus rule that creates a software 274 00:24:55,085 --> 00:25:00,165 we talked about one scenario that would create a software being more restrictive but just talk like 275 00:25:00,165 --> 00:25:05,725 maybe talk about each one of those and how they're different in relation to each other and then where 276 00:25:05,725 --> 00:25:13,185 you know what might or might not be an area of greater or less risk yeah so consensus rules 277 00:25:13,185 --> 00:25:19,485 there there's a bunch of them but the main ones that you know are like the fact that 278 00:25:19,485 --> 00:25:26,465 you have a 21 million limit that's the result of the emission schedule which is having every four 279 00:25:26,465 --> 00:25:33,305 years right that and that's specific to the coinbase transaction there are specific rules about 280 00:25:33,305 --> 00:25:40,525 how the coinbase transaction needs to look and so on that have been encoded into Bitcoin since the 281 00:25:40,525 --> 00:25:48,745 beginning. And there's a lot of consensus rules, including the block size limit and number of 282 00:25:48,745 --> 00:25:55,965 signature operations and things like that. There's, you know, like different opcodes and what they do. 283 00:25:56,565 --> 00:26:02,605 A lot of them did nothing, but they were changed so that it would be backwards compatible and so on. 284 00:26:02,605 --> 00:26:09,145 So there's a whole bunch of things that every node checks for consensus validity. 285 00:26:10,325 --> 00:26:15,965 And it has to pass all of those for a block to be considered valid. 286 00:26:16,225 --> 00:26:20,745 And for a block to be considered valid, every transaction within the block has to be considered valid as well. 287 00:26:21,885 --> 00:26:28,445 And within each transaction, every opcode and everything has to resolve a particular way. 288 00:26:29,065 --> 00:26:30,765 Otherwise, it's considered valid. 289 00:26:30,765 --> 00:26:40,165 And if you have an invalid transaction or, you know, invalid input signature or invalid anything, basically the entire block is invalid. 290 00:26:41,665 --> 00:26:44,105 So that's the consensus rule. 291 00:26:44,625 --> 00:26:50,705 And if you tighten the consensus rules just a little bit, that's called a soft work. 292 00:26:50,705 --> 00:27:03,605 And if you loosen the consensus rules, like with the block size increase in 2017, that would have been loosening because there was a consensus rule that said blocks have to be one megabyte. 293 00:27:05,085 --> 00:27:14,625 And, you know, people, particularly businesses that didn't really want to write all this segue code, you know, let's just make it into two. 294 00:27:14,625 --> 00:27:24,105 But then that would have been a hard fork because every node that thinks that one megabyte is the limit is going to reject anything bigger than that. 295 00:27:24,825 --> 00:27:26,665 So that's what a hard fork is. 296 00:27:26,705 --> 00:27:29,045 A soft fork would be like shrinking it, right? 297 00:27:29,125 --> 00:27:34,625 Because if it's 500,000 bytes, then that's still under a megabyte. 298 00:27:35,705 --> 00:27:42,305 And actually that was like a proposal for a long time because we weren't developing a feed market or whatever. 299 00:27:42,305 --> 00:27:48,885 so those those are two examples and originally if i'm just to use that as an example originally 300 00:27:48,885 --> 00:27:54,945 there was not a cap or was there there there wasn't and then uh i believe satoshi put it in 301 00:27:54,945 --> 00:28:02,605 there as a way to um like uh prevent trolling because at the time like bitcoin was just so cheap 302 00:28:02,605 --> 00:28:11,445 so you could like potentially create these really really large blocks and like just kind of ruin 303 00:28:11,445 --> 00:28:18,985 Bitcoin, like a four gigabyte block or something like that. Right. And yeah, decided to put it in 304 00:28:18,985 --> 00:28:25,645 there as sort of like an anti denial of service measure. And so, and I think, you know, in my view 305 00:28:25,645 --> 00:28:34,545 that having on that point, like having some fixed space, not just on a denial of service, but 306 00:28:34,545 --> 00:28:43,085 it ensures that in concert with the fixed supply that there's scarcity of block space which 307 00:28:43,085 --> 00:28:46,385 should ensure the integrity of the system to have a 308 00:28:47,045 --> 00:28:54,605 e-market to actually pay bitcoin miners after the 21 million supply cap is exhausted or issue 309 00:28:54,605 --> 00:29:02,205 and schedule but to hone in on the example of okay there's a one megabyte block in 2017 310 00:29:02,205 --> 00:29:09,045 certain participants in the network including miners proposed a two megabyte block in that 311 00:29:09,045 --> 00:29:14,945 scenario everyone that was looking at the rules saying a block cannot be larger than one megabytes 312 00:29:14,945 --> 00:29:22,905 would have instantly invalidated any block that was greater and that is what we call what's 313 00:29:22,905 --> 00:29:28,645 referred to as a hard fork a split in the network but in a scenario where someone using the other 314 00:29:28,645 --> 00:29:33,585 example you provided said hey we're going to propose a set of rules that say everything 315 00:29:33,585 --> 00:29:39,405 it's only valid if it's over if it's under half a megabyte 316 00:29:39,405 --> 00:29:50,125 if everybody else continues to mine one megabyte blocks is that would be invalid to the software 317 00:29:50,125 --> 00:30:07,530 but it more restrictive so it doesn immediately create a fork it could create a It could if you if you had somebody mind a 750 byte block then it would be valid on one and invalid on the other 318 00:30:07,650 --> 00:30:08,770 That's where a fork happens. 319 00:30:09,010 --> 00:30:12,830 So just talk about some of those incentives in terms of likelihood 320 00:30:12,830 --> 00:30:20,310 because of, you know, it would seem that it's difficult to affect a hard fork 321 00:30:20,310 --> 00:30:22,530 because you'd immediately fork off the network. 322 00:30:22,530 --> 00:30:36,290 But with a soft fork, even there would generally need to be wide consensus because of the possibility that someone continues to mine on the old set of rules and what those consequences would be. 323 00:30:36,290 --> 00:30:56,050 Yeah. So in a hard fork, you know, you just sort of go your separate ways, right? You never merge back or anything like that. With a soft fork, you have this weird possibility where one side has the advantage. If they're ever longer than the other, then the other side kind of has to take it. 324 00:30:56,050 --> 00:31:08,750 So the way that works is that people running the old software might have a transaction that's valid to them, but is invalid to the new set of rules. 325 00:31:09,430 --> 00:31:11,510 That would cause a fork. 326 00:31:11,510 --> 00:31:22,450 but if uh if at any time the new set of rules the length the total amount of work proof of work done 327 00:31:22,450 --> 00:31:28,030 on it is greater than the total amount of proof of work done on the other chain on the old chain 328 00:31:28,030 --> 00:31:34,670 then the old chain just takes the all the blocks of the new chain right it's what you call a wipe 329 00:31:34,670 --> 00:31:40,830 out where all the blocks that you constructed just go away. 330 00:31:40,830 --> 00:31:41,270 Right. 331 00:31:41,410 --> 00:31:50,690 And this is why whenever you have a software, you want a big majority on the new side so 332 00:31:50,690 --> 00:31:56,190 that you don't get wipeouts like that, which would be like from a user experience standpoint, 333 00:31:56,350 --> 00:31:57,030 like a nightmare. 334 00:31:57,030 --> 00:32:00,950 because you think you've, you know, 335 00:32:01,490 --> 00:32:05,390 deposited some amount of Bitcoin to Kraken or something, 336 00:32:05,510 --> 00:32:09,450 and then, you know, it gets wiped out. 337 00:32:09,690 --> 00:32:11,210 It basically reverts back to the address 338 00:32:11,210 --> 00:32:12,550 that it was previously in. 339 00:32:12,670 --> 00:32:12,970 Yeah. 340 00:32:13,090 --> 00:32:14,570 You don't necessarily lose Bitcoin, 341 00:32:14,690 --> 00:32:17,070 but it could have significant consequences 342 00:32:17,070 --> 00:32:18,570 for anyone that's doing real commerce. 343 00:32:18,850 --> 00:32:19,250 Yeah, yeah. 344 00:32:19,250 --> 00:32:22,470 It would just, it would be a long, 345 00:32:22,470 --> 00:32:29,450 you you would basically going be going backwards in the blockchain and then going up like another 346 00:32:29,450 --> 00:32:36,850 path and it would be and those scenarios like um i know the developers spend a lot of time like just 347 00:32:36,850 --> 00:32:43,250 trying to figure out what to do in those situations because they're uh rare but they're very very 348 00:32:43,250 --> 00:32:51,370 disruptive so try to avoid them as much as we can and then you know i want to come back to the 349 00:32:51,370 --> 00:32:59,070 soft work idea in terms of a change of consensus rules, but then talk about it in relation to 350 00:32:59,070 --> 00:33:04,650 something like a relay policy that's outside of the consensus rules. 351 00:33:04,830 --> 00:33:11,970 Yeah. So relay policy is, uh, is really about the peer to peer network. And the way Satoshi 352 00:33:11,970 --> 00:33:17,870 designed it is that transactions go from node to node and whoever happens to be the miner, 353 00:33:17,870 --> 00:33:24,530 You know, they, they construct a block based on these transactions that are sort of gossiped onto the network. 354 00:33:24,690 --> 00:33:28,850 And what I mean by gossip is everyone tells everybody about everything that they know. 355 00:33:29,670 --> 00:33:35,810 That if you do that for absolutely everything, then you kind of get some bad scenarios. 356 00:33:35,810 --> 00:33:38,070 You get denial of service factor. 357 00:33:38,070 --> 00:33:55,130 So if you have enormous transactions, right, that are constantly coming in and they're, say, like, you know, very low fees or something like that, they can kind of take down your node because you're, you know, it's filling up your memory and so on and your mempool. 358 00:33:55,130 --> 00:34:02,710 so you know relay policy tends to be different than the consensus rules and a little more 359 00:34:02,710 --> 00:34:09,130 restrictive because there are valid transactions but a lot of them like you don't know what they 360 00:34:09,130 --> 00:34:15,190 mean right like that will explain that valid based on consent the consensus rules but but you don't 361 00:34:15,190 --> 00:34:21,510 so right now for example there's a version field in transaction uh there are i believe three 362 00:34:21,510 --> 00:34:28,290 versions that are allowed right now. I think one is version one is what it began with. Version two 363 00:34:28,290 --> 00:34:34,010 is if you're using check sequence verify, which I think was introduced like, I don't know, 364 00:34:34,050 --> 00:34:39,390 seven or eight years ago. So I forget exactly. And then version three is more recent. I think it's 365 00:34:39,390 --> 00:34:46,290 something to do with mempool policy, but it's like some, some, some, there are three versions 366 00:34:46,290 --> 00:34:53,370 that are valid or that are, uh, that are known right by everybody. Um, version four could be 367 00:34:53,370 --> 00:34:58,890 valid at some point. I like could mean something at some point, but it's still perfectly valid as 368 00:34:58,890 --> 00:35:03,890 a transaction. But if you don't know what it means, it's like, okay, this is probably a mistake. 369 00:35:03,890 --> 00:35:10,910 You just sort of like, don't relay it. Um, even if it's a valid transaction, um, there are lots 370 00:35:10,910 --> 00:35:15,590 of things like that. Like, uh, there, there's something called the taproot annex and it's a 371 00:35:15,590 --> 00:35:21,470 field that's there so that, you know, upgrades can happen on the taproot script, for example. 372 00:35:23,050 --> 00:35:29,570 But it's not supposed to be used. So the relay policy says, okay, if there is a taproot annex, 373 00:35:30,050 --> 00:35:36,590 we don't know what it means yet, right? So don't, don't relay it, right? In which case it doesn't 374 00:35:36,590 --> 00:35:44,250 get relayed, but it's valid to put stuff into there. And there have been transactions bind with 375 00:35:44,250 --> 00:35:50,610 a taproot annex in it. And lots of, lots of little things like that, where as a node, you, 376 00:35:50,910 --> 00:35:55,650 when you're relaying stuff, you kind of want to know what the transaction means before you relay it. 377 00:35:55,970 --> 00:36:03,030 And yeah, if, if it doesn't make sense to you, then like why waste the bandwidth and uploading, 378 00:36:03,290 --> 00:36:09,170 you know, uploading it to other nodes and so on. So that, that's kind of the idea of the relay 379 00:36:09,170 --> 00:36:17,070 policy is that you want to know about stuff but there are things that are legal in the blockchain 380 00:36:17,070 --> 00:36:25,170 but that you don't valid yeah that that are technically legal but isn't necessarily like 381 00:36:25,170 --> 00:36:30,110 something that you want it's like um it's a lot like the distinction between legality and morality 382 00:36:30,110 --> 00:36:36,070 sometimes right like where you know something is technically legal but it's like morally dubious 383 00:36:36,070 --> 00:36:44,490 right like um like as a node sometimes you want to just like filter for those things because you 384 00:36:44,490 --> 00:36:53,210 you can have transactions with all kinds of stuff in it that uh that are technically legal but like 385 00:36:53,210 --> 00:36:57,710 that would are you when you say legal you're talking about valid based on consensus rules 386 00:36:57,710 --> 00:37:02,670 right right so like having a uh transaction version that's four or greater right like 387 00:37:02,670 --> 00:37:12,530 the versions are there so that you can hint to um you know the software hey this is what's in it 388 00:37:12,530 --> 00:37:19,630 but a lot of that hasn't been like invented yet right like uh like version two didn't exist 389 00:37:19,630 --> 00:37:25,930 until check sequence verify and it was there so that you know there would be a clear distinction 390 00:37:25,930 --> 00:37:30,310 between version one and version two it's like version two there's a code path that says okay 391 00:37:30,310 --> 00:37:36,770 And now you got to go check the sequence field and figure out the relative time lock for this for this transaction. 392 00:37:37,550 --> 00:37:41,790 And version one is like you don't have to worry about the sequence field. 393 00:37:41,790 --> 00:37:44,690 Right. So you don't have to go through all of this logic. 394 00:37:45,490 --> 00:37:49,330 That's that was like a flag or something like that. 395 00:37:49,330 --> 00:37:52,710 And that that's very useful for the software. 396 00:37:52,710 --> 00:38:09,910 And if it's sort of creating, uh, you know, it's adding meaning to something that doesn't exist yet, then, you know, it's just kind of polluting the, um, the blockchain with like bad meaning, if that makes sense. 397 00:38:09,910 --> 00:38:19,290 Right. It's, uh, um, how can I put this? It's kind of like a, like a spelling error or something 398 00:38:19,290 --> 00:38:23,210 like that. That's, that, that's how I would consider it almost. And it's like, okay, yeah, 399 00:38:23,250 --> 00:38:27,950 don't like, it's either a mistake or somebody doing something malicious. So it's not really 400 00:38:27,950 --> 00:38:32,650 worth relaying something like that. And so, and I think that's one of the areas where, 401 00:38:32,650 --> 00:38:35,850 when it comes to specifically the relay policy, 402 00:38:35,850 --> 00:38:41,550 which is every node in the network 403 00:38:41,550 --> 00:38:45,170 is deciding what they want to relay and not. 404 00:38:45,410 --> 00:38:46,350 And that there's a distinction 405 00:38:46,350 --> 00:38:49,890 between consensus valid transactions 406 00:38:49,890 --> 00:38:54,010 and a node deciding, 407 00:38:54,870 --> 00:38:57,190 and that could be an individual or a business, 408 00:38:57,610 --> 00:38:58,890 deciding what they do 409 00:38:58,890 --> 00:39:03,410 and don't want to broadcast to every one of their peers 410 00:39:03,410 --> 00:39:04,490 that they're connected to 411 00:39:04,490 --> 00:39:07,370 based on all the transactions that they're seeing 412 00:39:07,370 --> 00:39:08,650 on some rules-based. 413 00:39:10,150 --> 00:39:13,030 When it comes to mining centralization 414 00:39:13,030 --> 00:39:16,530 and pool centralization specifically, 415 00:39:21,030 --> 00:39:23,250 if in the scenario where, 416 00:39:23,450 --> 00:39:25,650 say, the sixth or seventh largest pool, 417 00:39:25,770 --> 00:39:27,310 because what's currently being proposed 418 00:39:27,310 --> 00:39:29,850 without, again, getting too into the substance of the debate, 419 00:39:30,730 --> 00:39:34,330 increasing the op return limit, using the example of the day, 420 00:39:34,330 --> 00:39:40,630 if the largest six or seven pools decide that this is something that they want, 421 00:39:41,230 --> 00:39:44,530 can they effectively force that onto the network? 422 00:39:45,450 --> 00:39:47,190 And then what are the consequences of it? 423 00:39:47,510 --> 00:39:50,130 Yeah, I think they kind of can, right? 424 00:39:50,270 --> 00:39:56,650 And that's kind of the point that Libre Relay was making, 425 00:39:56,650 --> 00:39:59,490 is that as long as they get the transactions themselves, 426 00:39:59,590 --> 00:40:00,890 they can mine them. 427 00:40:03,530 --> 00:40:06,450 And LibreRelay is like a node 428 00:40:06,450 --> 00:40:08,890 that specifically connects to these miners 429 00:40:08,890 --> 00:40:13,350 and sends them the large op return transactions. 430 00:40:14,750 --> 00:40:18,150 And if they put it into a block 431 00:40:18,150 --> 00:40:20,850 and it's legal or valid, 432 00:40:21,010 --> 00:40:22,570 then everyone else takes them. 433 00:40:22,990 --> 00:40:24,010 And then that's it. 434 00:40:24,010 --> 00:40:33,030 the problem here is that because of minor centralization you have these known nodes 435 00:40:33,030 --> 00:40:38,870 that are constructing the block so there aren't that many probably like 16 like i said 436 00:40:38,870 --> 00:40:46,690 nodes that if you reach probably any one of them or a good number of them then you're going to get 437 00:40:46,690 --> 00:40:54,270 that transaction mind, like, you know, if it has enough fees and so on, then, uh, then 438 00:40:54,270 --> 00:40:58,470 they put it into a block and everyone sort of has to follow it. 439 00:40:58,470 --> 00:40:58,690 Right. 440 00:40:58,930 --> 00:41:03,890 That's, that's the main, um, main thing that they could do. 441 00:41:03,890 --> 00:41:10,450 Uh, but if you had a distributed, um, mining system, then you don't know where all the 442 00:41:10,450 --> 00:41:14,570 miners are and you're forced to rely on the P2P network to do the distribution. 443 00:41:14,570 --> 00:41:21,670 that still doesn't take very much for these transactions to go out to everybody right if 444 00:41:21,670 --> 00:41:28,370 there's something called the percolation threshold and that's based on like how many connections each 445 00:41:28,370 --> 00:41:36,930 node makes to other other nodes but i think the average number of nodes are the number of 446 00:41:36,930 --> 00:41:42,490 connections that a node has is something like 10 in which case the percolation threshold i think 447 00:41:42,490 --> 00:41:49,270 it's 10%. So if more than 10% of the network relays a particular type of transaction, then it's going 448 00:41:49,270 --> 00:41:55,490 to be known by everybody pretty much. And that, that graph is pretty steep right around 10%. So 449 00:41:55,490 --> 00:42:02,670 it's like almost zero at like 9% and then like almost certain by like 12%, something like that. 450 00:42:02,670 --> 00:42:12,030 So that, that's just how the math works out with network stuff and gossip protocols and stuff like 451 00:42:12,030 --> 00:42:19,770 that. So, you know, and, you know, Peter Todd, I think has figured out ways to connect Libre relay 452 00:42:19,770 --> 00:42:25,210 nodes to other Libre relay nodes to make sure that the percolation happens a lot more reliably. 453 00:42:26,210 --> 00:42:32,930 In which case I think you need even less. So it'll get to a lot of stuff, even with a small number, 454 00:42:32,930 --> 00:42:41,410 But the bigger thing is that each miner decides what to actually put in. 455 00:42:42,170 --> 00:42:45,930 And some of them may be economically motivated, right? 456 00:42:46,010 --> 00:42:52,610 Like this is sort of the argument that a lot of core people have been saying is that, oh, you know, if they can make five more cents, they'll totally do it. 457 00:42:53,150 --> 00:42:55,890 Well, I mean, that's not exactly taking in all the costs. 458 00:42:55,890 --> 00:43:06,630 We were talking before the show about the cost to a NOTS miner, right? 459 00:43:06,690 --> 00:43:14,710 Like if you're running NOTS and mining, the risk that you have is that it takes longer 460 00:43:14,710 --> 00:43:19,210 for a previous block to get to you because you don't have those transactions in there 461 00:43:19,210 --> 00:43:19,830 yet, right? 462 00:43:19,890 --> 00:43:24,570 And this is what a lot of core devs are saying is like compact relay is broken. 463 00:43:24,570 --> 00:43:31,230 Yeah, well, compact relay depends on you having some of those transactions for the next block already in your mempool. 464 00:43:31,690 --> 00:43:34,810 And if you don't have them, then you have to now take time to go and get them. 465 00:43:35,170 --> 00:43:44,390 So if a block has a bunch of transactions that you don't have in your mempool, then it takes you longer, which means that, say, you have like a three-second delay. 466 00:43:45,170 --> 00:43:51,370 That's like half a percent of the entire time that you could be mining, right? 467 00:43:51,370 --> 00:43:57,570 Like, uh, like given like a 10 minute block, that's like half a percent of 10 minutes. 468 00:43:57,950 --> 00:44:03,470 So, uh, you know, you, you, you'd be sort of like losing money, but like, it's kind of 469 00:44:03,470 --> 00:44:05,290 a double-edged sword. 470 00:44:05,290 --> 00:44:13,050 It also hurts the miner that mine that block, because if the compact block relay is kind 471 00:44:13,050 --> 00:44:18,710 of broken for them, then whenever they mine that block, then there's orphan risk for them 472 00:44:18,710 --> 00:44:31,790 Because in those, you know, in the extra time that it takes for the block to propagate, then other miners might find the block, in which case now you're in a race and you might, you might lose. 473 00:44:31,790 --> 00:44:40,710 So there's, the way I would describe that particular dynamic is it's what's called a costly punishment. 474 00:44:41,230 --> 00:44:45,170 I'm punishing myself as a way to punish you, right? 475 00:44:45,170 --> 00:44:50,470 Like, and if you're not taking in some of this stuff, then I'm giving you a little bit 476 00:44:50,470 --> 00:44:54,350 of orphan risk, but I'm also giving myself a little bit of orphan risk. 477 00:44:54,350 --> 00:45:10,835 And it like kind of a game of chicken almost Right So that one thing as it relates to the relay policy And part of what I trying to frame is the distinction between the relay policy and consensus And I want to come back to consensus to talk about some of the implications 478 00:45:10,835 --> 00:45:34,915 One of my primary issues with the way that this specific change is being proposed is the recognition that functionally six or seven nodes in the network, the large mining pools, can determine what's best for the network. 479 00:45:34,915 --> 00:45:37,235 which if 480 00:45:37,235 --> 00:45:39,855 say you took that six or seven 481 00:45:39,855 --> 00:45:41,395 mining pools that represent 482 00:45:41,395 --> 00:45:43,355 90% of the hash rate 483 00:45:43,355 --> 00:45:44,995 and you said there's a hundred 484 00:45:44,995 --> 00:45:47,515 mining pools and they all have 1% 485 00:45:47,515 --> 00:45:49,355 of the hash rate and 486 00:45:49,355 --> 00:45:52,195 if 90% 487 00:45:52,195 --> 00:45:53,355 of 488 00:45:53,355 --> 00:45:55,635 90 out of 100 rather than 489 00:45:55,635 --> 00:45:57,615 7 out of 7 all decided that 490 00:45:57,615 --> 00:45:59,535 something was best there'd be a greater 491 00:45:59,535 --> 00:46:01,595 assurance that 492 00:46:01,595 --> 00:46:03,295 there really was consensus 493 00:46:03,295 --> 00:46:04,695 over 494 00:46:04,695 --> 00:46:07,135 well it wouldn't be consensus but 495 00:46:07,135 --> 00:46:10,195 not consensus rules but a rough consensus of the relay policy 496 00:46:10,195 --> 00:46:12,175 and that 497 00:46:12,175 --> 00:46:15,935 part of the way that I see Bitcoin's value 498 00:46:15,935 --> 00:46:19,055 is that it's purpose built 499 00:46:19,055 --> 00:46:20,515 to be difficult to change 500 00:46:20,515 --> 00:46:24,415 it should be difficult to change the relay policy 501 00:46:24,415 --> 00:46:27,635 or at least what the 502 00:46:27,635 --> 00:46:31,375 rough consensus of the network is it should be even harder 503 00:46:31,375 --> 00:46:33,175 to change consensus rules which it is 504 00:46:33,175 --> 00:46:45,835 but that basically the centralization creates a scenario where um and changing the the relay 505 00:46:45,835 --> 00:46:52,415 policy could create a scenario where either just the six or seven largest blocks or sorry miners 506 00:46:52,415 --> 00:46:59,715 mining pools get to decide but then what precedent it sets for the future of how changes get made 507 00:46:59,715 --> 00:47:07,355 and so i think like there's a scenario where hey if it's if it's six or seven mining pools that 508 00:47:07,355 --> 00:47:12,335 control 90 do they just have to functionally bring everyone along because if it was more 509 00:47:12,335 --> 00:47:17,135 distributed someone might propose a change and if it wasn't adopted it would create risk for all 510 00:47:17,135 --> 00:47:22,495 miners and then they would regravitate around there being a rough consensus and relay policy 511 00:47:22,495 --> 00:47:28,315 which to me seems to be lost a lot in in this specific conversation is they're actually valued 512 00:47:28,315 --> 00:47:33,095 to the network of there being rough consensus and relay policy to reduce risk. 513 00:47:33,895 --> 00:47:34,095 Yeah. 514 00:47:34,215 --> 00:47:40,375 I mean, it would of course be nice if, you know, every node behaved the same way or something 515 00:47:40,375 --> 00:47:46,115 like that, because then it would, it would make stuff like compact block relay much easier. 516 00:47:46,555 --> 00:47:53,215 But I think more than sort of like miners doing that, I think the bigger risk is actually 517 00:47:53,215 --> 00:47:58,135 coders doing that, developers doing that. 518 00:47:58,315 --> 00:48:02,755 where they get to decide things for the network. 519 00:48:02,975 --> 00:48:06,195 Miners, for the most part, I think we saw in 2017, 520 00:48:06,535 --> 00:48:11,975 they just want to know what the rest of the network wants, 521 00:48:11,975 --> 00:48:17,395 and then they kind of do it and make the most money they can within those limits. 522 00:48:18,255 --> 00:48:21,755 And, you know, I put out a tweet a while back. 523 00:48:22,195 --> 00:48:27,855 I think they would fold like cheap chairs if there was any sort of like orphan risk or anything, right? 524 00:48:27,855 --> 00:48:28,815 like for their business. 525 00:48:29,035 --> 00:48:30,755 They're all kind of fragile anyway. 526 00:48:31,355 --> 00:48:33,775 They're almost all fiat businesses 527 00:48:33,775 --> 00:48:36,235 taking out way too many loans 528 00:48:36,235 --> 00:48:38,175 or issuing bonds or something like that 529 00:48:38,175 --> 00:48:40,155 and needing to pay stuff off. 530 00:48:41,415 --> 00:48:43,335 The bigger risk, I think, 531 00:48:43,555 --> 00:48:45,275 comes from the developers 532 00:48:45,275 --> 00:48:49,795 where if they get to set this relay policy 533 00:48:49,795 --> 00:48:55,615 against the wishes of a lot of plebs, right? 534 00:48:55,655 --> 00:48:56,535 A lot of users. 535 00:48:57,855 --> 00:49:01,115 then can they do that with a soft work, right? 536 00:49:01,135 --> 00:49:02,175 A contentious one. 537 00:49:03,255 --> 00:49:06,055 Yeah, and I think that that's actually where I want to go. 538 00:49:06,435 --> 00:49:08,135 Before we get there, 539 00:49:08,235 --> 00:49:10,375 because I want to discuss that scenario specifically, 540 00:49:11,475 --> 00:49:14,135 is I just want to talk about a scenario 541 00:49:14,135 --> 00:49:16,335 where say 90% of miners, 542 00:49:16,395 --> 00:49:17,135 because in this scenario, 543 00:49:17,655 --> 00:49:22,475 the developers, they're just proposing a new relay policy. 544 00:49:22,995 --> 00:49:24,315 Miners still have to run it. 545 00:49:24,455 --> 00:49:25,755 And in this context, 546 00:49:25,755 --> 00:49:34,095 node runners they might not want to relay transactions but they're going to accept 547 00:49:34,095 --> 00:49:42,675 the transactions as valid and that the stakeholders most of consequence in this debate are miners 548 00:49:42,675 --> 00:49:48,335 because are they going to propagate the transactions and are they going to mine the 549 00:49:48,335 --> 00:49:53,375 transactions and so the developers are just proposing a rule but again in that scenario 550 00:49:53,375 --> 00:49:55,075 where if there were 100 different miners, 551 00:49:55,435 --> 00:49:56,935 each with 1%, 552 00:49:56,935 --> 00:50:00,015 part of what I think about is, 553 00:50:00,255 --> 00:50:01,635 would they even propose it? 554 00:50:01,695 --> 00:50:04,155 Because it would be harder to game theory 555 00:50:04,155 --> 00:50:07,975 what 100 interests might decide 556 00:50:07,975 --> 00:50:11,975 and they're more likely being 40% going one way, 557 00:50:12,095 --> 00:50:13,135 60% going another, 558 00:50:13,415 --> 00:50:17,535 and it's creating propagation issues in a real way. 559 00:50:17,775 --> 00:50:19,175 Because my understanding of that is, 560 00:50:19,355 --> 00:50:23,135 if you've seen a transaction and you store it, 561 00:50:23,135 --> 00:50:24,555 but you don't pass it on, 562 00:50:24,795 --> 00:50:25,935 it's actually very quick 563 00:50:25,935 --> 00:50:28,515 if you see a valid block to validate it. 564 00:50:28,655 --> 00:50:30,055 That the real issue is 565 00:50:30,055 --> 00:50:32,155 if you've never seen the transaction 566 00:50:32,155 --> 00:50:34,715 and you don't have it stored somewhere 567 00:50:34,715 --> 00:50:36,435 on your node, even if you haven't. 568 00:50:36,515 --> 00:50:37,715 Then you have to go ask somebody. 569 00:50:37,775 --> 00:50:38,835 Yeah, then you have to go ask somebody 570 00:50:38,835 --> 00:50:40,595 and that's the scenario where there can be 571 00:50:40,595 --> 00:50:41,515 some delay. 572 00:50:41,515 --> 00:50:42,335 Some delay. 573 00:50:42,555 --> 00:50:44,575 And it's also what then will cause 574 00:50:44,575 --> 00:50:45,675 there to be gravitation 575 00:50:45,675 --> 00:50:49,055 around a rough consensus and relay policy 576 00:50:49,055 --> 00:50:50,315 because it's not in the interest really 577 00:50:50,315 --> 00:50:51,475 of any miners 578 00:50:51,475 --> 00:50:54,535 to have their blocks potentially be orphaned. 579 00:50:54,535 --> 00:50:54,875 Right. 580 00:50:55,075 --> 00:51:00,315 And that's the, you know, costly punishment aspect of it 581 00:51:00,315 --> 00:51:04,775 is that like a lot of people are like, 582 00:51:04,855 --> 00:51:07,615 oh, you know, it's completely useless to run knots or whatever. 583 00:51:07,795 --> 00:51:10,375 But if you're a miner that's running knots, 584 00:51:10,655 --> 00:51:12,775 even if it's a small amount, 585 00:51:13,895 --> 00:51:18,535 you're adding just a little bit of orphan risk 586 00:51:18,535 --> 00:51:20,775 to the miners that are mining spam. 587 00:51:21,475 --> 00:51:22,895 Right. So that that's. 588 00:51:23,715 --> 00:51:28,075 But is that true if they're in the minority versus if they're in the majority? 589 00:51:28,315 --> 00:51:34,035 Yeah. I mean, you're still hurting them. Right. Because even if you have one percent of the hash rate, you might still find something. 590 00:51:34,255 --> 00:51:39,515 Like that's that's always a risk. Even if it's a very tiny risk, it's still a risk. 591 00:51:39,655 --> 00:51:42,855 And it's a risk to yourself, too, because it takes longer for your blocks to propagate. 592 00:51:42,855 --> 00:51:48,015 Right. That's why I call it a costly punishment. You're punishing yourself, but you're also punishing everybody else. 593 00:51:48,015 --> 00:51:55,255 that, uh, the miner that created that block, which is why, like, you know, the, the sort of 594 00:51:55,255 --> 00:51:59,935 line that I've heard over and over again is, oh yeah, it's completely useless to run knots. What 595 00:51:59,935 --> 00:52:04,335 are you doing? Right. Like you're, you're not really changing anything. Well, actually, if you're 596 00:52:04,335 --> 00:52:11,215 even running like a little bid X at home, right, you're mining. And if you're, you know, doing it 597 00:52:11,215 --> 00:52:19,195 in a decentralized way or whatever, you're kind of at least making it a little bit more risky for 598 00:52:19,195 --> 00:52:27,115 a big miner to include transactions that you haven't seen because they might get orphaned. 599 00:52:27,255 --> 00:52:32,795 And I mean, I don't think any of them really act until they actually are orphaned and the 600 00:52:32,795 --> 00:52:37,835 probabilities are small enough where, you know, it might not happen for quite a while. 601 00:52:37,835 --> 00:52:42,375 but once it does then they're gonna be like okay we just lost like four million dollars right like 602 00:52:42,375 --> 00:52:47,775 what are we gonna do because four hundred thousand or yeah whatever the you know current block thing 603 00:52:47,775 --> 00:52:55,615 is uh yeah four hundred thousand like why why uh why take that risk let's just uh do that um so 604 00:52:55,615 --> 00:53:06,035 in a way it's uh i think game theoretically like useful um to sort of even punish yourself even a 605 00:53:06,035 --> 00:53:13,855 even if it's, uh, if there's like very little probability of succeeding, uh, like collectively 606 00:53:13,855 --> 00:53:19,315 it ends up actually starting to matter. Yeah. And I think, you know, coming back to 607 00:53:19,315 --> 00:53:28,515 what's, I think of greatest consequence here is that, or at least in my framing and thinking is 608 00:53:28,515 --> 00:53:35,735 that I wouldn't expect even in this scenario, say the seven largest mining pools that represent 609 00:53:35,735 --> 00:53:42,895 90% to adopt a new version of Bitcoin core that they think would hurt the 610 00:53:42,895 --> 00:53:43,235 network. 611 00:53:43,455 --> 00:53:44,915 Their interests is aligned. 612 00:53:46,175 --> 00:53:50,415 And I even wouldn't think that the Bitcoin core developers are proposing a 613 00:53:50,415 --> 00:53:51,635 rule that they think would harm the network. 614 00:53:51,795 --> 00:53:52,115 I generally, 615 00:53:52,235 --> 00:53:52,435 you know, 616 00:53:52,455 --> 00:53:53,155 my own opinions, 617 00:53:53,295 --> 00:53:56,735 I generally view that they think that it's the best interest network. 618 00:53:58,155 --> 00:53:59,855 Where I still see a concern though, 619 00:53:59,855 --> 00:54:02,935 is when there's a shockingly few number of people, 620 00:54:04,055 --> 00:54:04,355 there's always, 621 00:54:04,395 --> 00:54:04,975 like in my view, 622 00:54:04,975 --> 00:54:09,735 There's always risk to change because there's an unknown. 623 00:54:09,875 --> 00:54:12,935 There's an unknown of what incentives are opened up. 624 00:54:13,235 --> 00:54:17,415 And the fiat world is 200 times larger than the Bitcoin world. 625 00:54:17,515 --> 00:54:21,035 There's a lot of fiat incentives that are unpredictable. 626 00:54:21,655 --> 00:54:29,195 And that so long as there's great distribution and decentralization in decision making, 627 00:54:29,195 --> 00:54:33,535 if there's overwhelming adoption of something that's proposed, 628 00:54:33,635 --> 00:54:37,315 even as something which I think is discounted in terms of the relay policy 629 00:54:37,315 --> 00:54:38,455 because it's not a consensus rule, 630 00:54:40,595 --> 00:54:43,995 those smaller number of actors might be making a decision 631 00:54:43,995 --> 00:54:47,175 that they think is in their own interest and the best interest of the network 632 00:54:47,175 --> 00:54:49,275 that actually could have unintended consequences. 633 00:54:49,915 --> 00:54:56,735 And if there were more participants participating in that rough consensus, 634 00:54:57,335 --> 00:54:58,715 even if something like a relay policy, 635 00:54:58,715 --> 00:55:03,815 there would be a greater insurance if it was overwhelming that it actually 636 00:55:03,815 --> 00:55:04,515 made sense. 637 00:55:06,035 --> 00:55:09,955 Now let's take it to another one of my concerns, 638 00:55:10,075 --> 00:55:17,335 which you raised is if this sets a precedent on the relay, 639 00:55:17,955 --> 00:55:22,735 but then something similar happens with a contentious software. 640 00:55:23,555 --> 00:55:26,735 Like if you could lay out, you brought that scenario up. 641 00:55:26,735 --> 00:55:31,115 So lay out something tangible and how that might play out. 642 00:55:31,415 --> 00:55:31,555 Yeah. 643 00:55:31,635 --> 00:55:38,515 So the thing that really bothers me about this particular op return thing, I don't think 644 00:55:38,515 --> 00:55:40,095 that change is all that big of a deal. 645 00:55:40,215 --> 00:55:44,335 We still have like the block size limit and stuff like that to limit spam. 646 00:55:44,495 --> 00:55:49,815 So ultimately it's going to get priced out by economic transactions in the end anyway. 647 00:55:50,175 --> 00:55:54,635 I mean, maybe in between we suffer a little because blocks are a little bloated or something, 648 00:55:54,635 --> 00:55:59,775 But ultimately, I think it's a problem that solves itself. 649 00:56:00,155 --> 00:56:02,995 So I'm not too concerned about the actual change itself. 650 00:56:03,295 --> 00:56:11,095 What I am concerned about is the process, which currently is, hey, we're the developers. 651 00:56:12,435 --> 00:56:22,495 And we're going to, even though there's a whole bunch of people in the community that don't like this change, we're going to go ahead with it anyway. 652 00:56:22,495 --> 00:56:28,995 and there have been several sort of like justifications for that one is hey if you don't 653 00:56:28,995 --> 00:56:33,475 like it just go run some other client and then as soon as you start running another client hey 654 00:56:33,475 --> 00:56:37,815 that client is so stupid you shouldn't you shouldn't run it right like that's yeah it's 655 00:56:37,815 --> 00:56:42,735 like kind of talking out of both sides of their mouth and that's that's to me like a very fiat 656 00:56:42,735 --> 00:56:49,295 political tactic of hey uh if you don't like it then don't do it but not like that right like it's 657 00:56:49,295 --> 00:56:55,655 it's just kind of closing off all doors because we're the technical experts. It's, um, which is, 658 00:56:55,655 --> 00:57:02,415 you know, basically how they push the VAX among other things. Uh, so I, uh, I don't like the 659 00:57:02,415 --> 00:57:09,735 tactics that are being used to do that. And I don't like that. They basically push this change 660 00:57:09,735 --> 00:57:16,815 through, um, more or less forcefully without, without really listening to community feedback, 661 00:57:16,815 --> 00:57:19,555 which suggests to me that this may happen again. 662 00:57:20,175 --> 00:57:20,355 Right. 663 00:57:20,455 --> 00:57:21,635 And just on that point, 664 00:57:21,715 --> 00:57:23,055 which is if you say, 665 00:57:23,395 --> 00:57:24,195 hey, if you don't like it, 666 00:57:24,195 --> 00:57:24,855 because that's the idea. 667 00:57:24,955 --> 00:57:27,655 It's like, hey, developers are just posing code. 668 00:57:28,235 --> 00:57:31,415 There's no auto updates in Bitcoin, 669 00:57:31,795 --> 00:57:33,095 certainly not in Bitcoin core. 670 00:57:33,595 --> 00:57:35,195 So anybody who runs it 671 00:57:35,195 --> 00:57:38,095 would have to voluntarily be opting into it. 672 00:57:38,995 --> 00:57:41,135 If you said something along the lines of, 673 00:57:41,935 --> 00:57:42,815 hey, if you don't like it, 674 00:57:44,275 --> 00:57:46,035 run a different version of the software. 675 00:57:46,035 --> 00:57:51,395 but at the same time you're thinking there's not a credible another version of the software 676 00:57:51,395 --> 00:57:59,655 then you're not it's not a genuine yeah i mean you're you're making a power play right like that's 677 00:57:59,655 --> 00:58:04,735 and that's what i think the whole thing has felt like for pretty much everyone like it's like one 678 00:58:04,735 --> 00:58:09,115 of the things about a lot of coders is that they're not entirely socially aware and they think 679 00:58:09,115 --> 00:58:13,895 they're hiding their motivations when it's like crystal clear to everybody like they're they're 680 00:58:13,895 --> 00:58:18,635 forcing this change right like they they they think they're in the right and they think they 681 00:58:18,635 --> 00:58:25,335 know better than everybody else and they are basically making it so that it's going in whether 682 00:58:25,335 --> 00:58:33,515 you like it or not um and like that that kind of attitude is just like completely against the 683 00:58:33,515 --> 00:58:39,755 you know ethos of bitcoin right like it's it's supposed to be a community project it's it's a 684 00:58:39,755 --> 00:58:44,895 it's a consensus system. You're supposed to, you know, listen to other people and stuff. And 685 00:58:44,895 --> 00:58:50,055 instead what we're getting is, Oh, everyone that disagrees is like just an influencer or whatever, 686 00:58:50,055 --> 00:58:57,195 or, uh, you know, you guys are so stupid. It's, it can still go in to blocks and so on. And, 687 00:58:57,275 --> 00:59:05,875 you know, it, it, the, the attitude is, is one that inevitably leads to some form of 688 00:59:05,875 --> 00:59:08,815 authoritarianism. And I think it might show up in a soft, 689 00:59:08,915 --> 00:59:09,915 a contentious software. 690 00:59:11,135 --> 00:59:13,455 Let's go there. But that made me think of one last question. 691 00:59:15,115 --> 00:59:18,435 Do you think that 692 00:59:18,435 --> 00:59:22,795 if mining was more distributed, 693 00:59:23,155 --> 00:59:29,755 whether their calculus on changing the relay policy would be different? 694 00:59:29,755 --> 00:59:36,555 so if we had a lot of different um 695 00:59:36,555 --> 00:59:44,435 minors i think their arguments would be very different i don't know if their um attitude 696 00:59:44,435 --> 00:59:49,755 necessarily would be or their um calculation around that would be because the the main 697 00:59:49,755 --> 00:59:54,415 arguments that they've been giving is well you know filters don't work it just gets into blocks 698 00:59:54,415 --> 00:59:56,995 anyway, and, and things of that nature. 699 00:59:57,655 --> 01:00:03,035 Um, that wouldn't be the case if you had lots of miners, cause the P2P network is 700 01:00:03,072 --> 01:00:09,552 where the blocks would be coming from and not these five or six players and a lot of the assumptions 701 01:00:09,552 --> 01:00:17,952 or a lot of their arguments depend on these six you know largely centralized mining pool players 702 01:00:18,592 --> 01:00:23,712 you know staying that way forever right like because yeah filters don't work when you have 703 01:00:23,712 --> 01:00:31,152 like six players that are creating all of the blocks in in the in the like sort of peer-to-peer 704 01:00:33,072 --> 01:00:38,992 transmission sense. There are other ways in which filters work, which I won't get into, but like 705 01:00:38,992 --> 01:00:45,852 those are the types of arguments that they're making is based on the current situation. I think 706 01:00:45,852 --> 01:00:52,432 it would be different kinds of arguments, but they would still be sort of digging in their heels on 707 01:00:52,432 --> 01:00:58,172 this. Where I was specifically going is just like their calculus as to whether or not 708 01:00:58,172 --> 01:01:04,432 or handicapping of whether the changes would be adopted by miners, 709 01:01:04,432 --> 01:01:06,892 that if there were more of them and they were more distributed, 710 01:01:06,892 --> 01:01:13,212 then they couldn't look at party A, B, C, D, E, F, the six and say, you know, 711 01:01:13,332 --> 01:01:16,812 I'm not, and I'm not suggesting that they, you know, 712 01:01:16,812 --> 01:01:20,612 went to discuss it with the mining pools, but just, even if you didn't, 713 01:01:20,872 --> 01:01:25,352 if you could handicap what six or seven large mining pools might do verse, 714 01:01:25,632 --> 01:01:27,912 there's a hundred and you don't know who they are. 715 01:01:28,172 --> 01:01:36,572 And what if only 40% adopt versus if 60% didn't, is this proposed change still a good proposed change? 716 01:01:36,752 --> 01:01:36,912 Yeah. 717 01:01:36,992 --> 01:01:38,932 Whether that would change their calculus. 718 01:01:38,932 --> 01:01:54,232 I mean, I think they would, if only 40%, say, of the miners, like, adopted it, then your argument that it makes for a more accurate mempool for fees would no longer apply, right? 719 01:01:54,232 --> 01:02:01,012 because that depends on the you running the same software as the miners and if only 40 percent of 720 01:02:01,012 --> 01:02:04,892 them are doing it then you're only going to be accurate 40 percent of the time and there'd be 721 01:02:04,892 --> 01:02:12,232 propagation issues yeah and that's that so those kinds of arguments like the arguments again would 722 01:02:12,232 --> 01:02:18,912 be pretty different i think but they seem pretty determined on this and i i've never seen the core 723 01:02:18,912 --> 01:02:23,572 devs quite like this before and i've been i've been in this space space for a very long time 724 01:02:23,572 --> 01:02:34,552 like the the way in which they they're so violently suppressing dissent right is just 725 01:02:34,552 --> 01:02:41,512 it's been absolutely shocking to me just like you know i i saw a core developer say you know 726 01:02:41,512 --> 01:02:48,232 the reason why we're so like all in on this is because we think we like you know we've already 727 01:02:48,232 --> 01:02:52,572 taken a lot of the hits let's just go all the way or something like that which is like really you're 728 01:02:52,572 --> 01:02:57,952 just going to keep going because you you you're sort of in a in for a penny in for a pound fallacy 729 01:02:57,952 --> 01:03:03,952 like we've already fought for this long why why not just go all the way now right like i don't know 730 01:03:03,952 --> 01:03:12,272 it just seems like a very um it the character of this particular fight is very different than 731 01:03:12,272 --> 01:03:14,252 anything else I've seen in Bitcoin before. 732 01:03:16,692 --> 01:03:17,212 Yeah. 733 01:03:17,472 --> 01:03:17,732 Well, 734 01:03:17,872 --> 01:03:21,992 and you've been a lot around for a lot longer than I have. 735 01:03:23,172 --> 01:03:27,912 I was around for the 2017 hard fork, 736 01:03:28,212 --> 01:03:30,552 but a lot of that was not being driven. 737 01:03:31,692 --> 01:03:34,852 Or at least the side that was hard forking was not being driven by 738 01:03:34,852 --> 01:03:35,312 quarter developers. 739 01:03:35,492 --> 01:03:37,632 They were on the conservative side. 740 01:03:37,632 --> 01:03:47,572 and then taproot was a very long process there was there was you know i think criticisms around 741 01:03:47,572 --> 01:03:54,372 activation activation yeah um but i at least from my seat 742 01:03:54,372 --> 01:04:02,512 there there was widespread like i i don't i don't remember any individual voices of people 743 01:04:02,512 --> 01:04:07,372 that i knew that were like adamantly against something and it might have been but just saying 744 01:04:07,372 --> 01:04:11,692 that like this does seem like a shift 745 01:04:11,692 --> 01:04:13,412 in one of the precedents that set, 746 01:04:13,512 --> 01:04:16,932 which they've actively put out there 747 01:04:16,932 --> 01:04:22,692 is that if there's consensus amongst core developers, 748 01:04:22,992 --> 01:04:25,632 which in this sense, 749 01:04:26,112 --> 01:04:29,512 there's Luke on one side 750 01:04:29,512 --> 01:04:31,012 and maybe one or two others, 751 01:04:31,012 --> 01:04:32,512 but by and large, 752 01:04:32,592 --> 01:04:35,132 there is consensus amongst core developers 753 01:04:35,132 --> 01:04:37,652 that they've basically said 754 01:04:37,652 --> 01:04:39,592 the precedent is 755 01:04:39,592 --> 01:04:41,372 if there's consensus amongst us, 756 01:04:41,412 --> 01:04:42,532 then we have an obligation 757 01:04:42,532 --> 01:04:44,512 to do what we think is best 758 01:04:44,512 --> 01:04:46,312 regardless of the users of the network. 759 01:04:47,552 --> 01:04:48,692 There's contention. 760 01:04:50,372 --> 01:04:51,512 Play that out 761 01:04:51,512 --> 01:04:54,852 if it's a change to the consensus rules. 762 01:04:55,472 --> 01:04:56,752 Because I would expect 763 01:04:56,752 --> 01:04:57,972 they would say that would be different. 764 01:04:58,252 --> 01:05:00,832 But if there was consensus 765 01:05:00,832 --> 01:05:02,832 amongst core developers 766 01:05:02,832 --> 01:05:04,092 or contributors 767 01:05:04,092 --> 01:05:08,112 that some software made sense, 768 01:05:10,052 --> 01:05:13,012 then talk about it in relation specifically 769 01:05:13,012 --> 01:05:14,132 to mining centralization. 770 01:05:14,452 --> 01:05:16,552 If there's six or seven mining pools 771 01:05:16,552 --> 01:05:18,072 that control 90% of the hash rate, 772 01:05:18,072 --> 01:05:19,252 and they agree, 773 01:05:20,412 --> 01:05:25,092 can functionally record developers by writing code, 774 01:05:25,152 --> 01:05:28,332 which again, users of the network have to adopt. 775 01:05:28,492 --> 01:05:30,092 No one's putting a gun to their head. 776 01:05:30,092 --> 01:05:37,712 is it a lot easier than it would seem to potentially in a more restrictive way, 777 01:05:37,712 --> 01:05:43,412 but also restrictive is a loose term of it opens up surface areas. 778 01:05:43,932 --> 01:05:46,912 From a transaction perspective, it's restricted. 779 01:05:47,272 --> 01:05:55,872 Is it more easily possible to change the rules than it otherwise should be? 780 01:05:55,872 --> 01:06:03,612 i i mean you're asking me to speculate on like what might happen should apply the same 781 01:06:03,612 --> 01:06:09,732 circumstance to a consortia software yeah i i i'm i'm trying to think about it and i think it's kind 782 01:06:09,732 --> 01:06:14,112 of an open question right now can the developers and miners team up together and screw over the 783 01:06:14,112 --> 01:06:21,492 users i don't know it's possible um let's just play through a scenario okay there's a 784 01:06:21,492 --> 01:06:23,632 software proposal 785 01:06:23,632 --> 01:06:25,712 the 786 01:06:25,712 --> 01:06:28,572 six mining pools that represent 90% 787 01:06:28,572 --> 01:06:29,132 of the hash rate 788 01:06:29,132 --> 01:06:30,892 support it 789 01:06:30,892 --> 01:06:34,592 but a lot of users 790 01:06:34,592 --> 01:06:35,912 in the network and potentially 791 01:06:35,912 --> 01:06:38,132 some 792 01:06:38,132 --> 01:06:40,432 cohort of the 10% of the miners 793 01:06:40,432 --> 01:06:41,512 that don't support it 794 01:06:41,512 --> 01:06:44,532 or assume that 10% don't what plays 795 01:06:44,532 --> 01:06:45,352 out in that world 796 01:06:45,352 --> 01:06:48,472 so in that case I think it gets 797 01:06:48,472 --> 01:06:49,332 say 798 01:06:49,332 --> 01:06:57,992 so assuming that the core devs are sort of aligned on this change and they go to the miners 90% of 799 01:06:57,992 --> 01:07:02,152 the miners agree with them and i don't want to say they go to the miners they put software out 800 01:07:02,152 --> 01:07:11,032 and the six largest mining pools take it okay um i think it comes down to the users right like uh 801 01:07:11,032 --> 01:07:18,892 and it's whether they they adopt it or not and this is where it gets kind of tricky because a lot of 802 01:07:18,892 --> 01:07:34,382 users trust the devs right now Although I think some of that is breaking down not too many of them trust the miners i don think that i think that 2017 more or less killed that but there is a 803 01:07:34,382 --> 01:07:44,462 scenario in which something like that happens and then um i don't know like maybe there's an 804 01:07:44,462 --> 01:07:51,882 alternate implementation maybe it's not something like that and they uh they don't agree with it 805 01:07:51,882 --> 01:07:59,422 and at that point like maybe there's like two incompatible soft forks or something like that 806 01:07:59,422 --> 01:08:08,122 which ends up being a hard fork but yeah but there but so like in that scenario i mean there's two 807 01:08:08,122 --> 01:08:21,802 scenarios a new version of bitcoin is before that has a soft fork and if there's 90 of miners that 808 01:08:21,802 --> 01:08:30,122 support and say 10 that do not and they mine an invalid transaction it would create a hard fork 809 01:08:30,122 --> 01:08:37,582 which one well which one if they mine an invalid transaction then it's still sort of uh 810 01:08:37,582 --> 01:08:45,202 they'd be they would invalidate you but then like it can get overtaken so this is where like the 811 01:08:45,202 --> 01:08:51,982 game theory gets a little bit complex uh because if you can get overtaken and wiped out at any time 812 01:08:51,982 --> 01:08:56,282 you're going to want some protection against that now traditionally what forks have done 813 01:08:56,282 --> 01:09:00,922 is they purposefully make it so that it's going to no longer be a software, 814 01:09:01,062 --> 01:09:04,262 but a hard fork so that they can't get wiped out. Right. Cause you don't, 815 01:09:04,362 --> 01:09:08,522 you don't want the chain to roll back a hundred blocks or something. So, 816 01:09:08,522 --> 01:09:11,382 um, right. And when I said, when I meant mine and invalid block, 817 01:09:11,382 --> 01:09:15,282 I meant like mine a block that would be invalid. Yeah. Yeah. 818 01:09:15,282 --> 01:09:18,542 But then you can get overtaken if it's longer. Right. So that, that's the, 819 01:09:18,722 --> 01:09:19,842 that's my point. So there's, there's a, 820 01:09:19,942 --> 01:09:23,022 there's a real risk to the minority so that it would, 821 01:09:23,022 --> 01:09:25,002 But there are things that the minority can do. 822 01:09:25,642 --> 01:09:31,842 So you can do sort of like an incompatible soft work or something like that. 823 01:09:31,882 --> 01:09:33,302 I haven't thought through this yet, but. 824 01:09:33,822 --> 01:09:39,162 I mean, like users of the software could write code that says, hey, anything that looks like that is not valid. 825 01:09:39,162 --> 01:09:41,562 Or something like that. 826 01:09:41,722 --> 01:09:48,382 So that what ends up with is like two soft works that are sort of mutually incompatible. 827 01:09:48,382 --> 01:09:56,362 And like everything before just takes like the longer chain, but like nothing wipes out the other, something like that, which would be a very weird scenario. 828 01:09:56,362 --> 01:10:03,742 I haven't really analyzed that particular one, but that's something that that's a potential way in which the minority might deal with it. 829 01:10:03,782 --> 01:10:04,982 They might even just hard fork. 830 01:10:04,982 --> 01:10:05,542 I don't know. 831 01:10:06,262 --> 01:10:10,182 I think in my mind, the most realistic scenario is, 832 01:10:11,062 --> 01:10:13,342 and what concerns me about this precedent, 833 01:10:13,942 --> 01:10:18,442 is that a contentious software meets all the same criteria. 834 01:10:18,642 --> 01:10:22,602 And even if someone says that it would be different 835 01:10:22,602 --> 01:10:24,442 if it was a consensus rule, 836 01:10:24,882 --> 01:10:28,342 is that if you could handicap 837 01:10:28,342 --> 01:10:32,222 what the six or seven largest mining pools would do, 838 01:10:32,222 --> 01:10:37,242 if you set the precedent that if there's consensus amongst core developers, 839 01:10:37,542 --> 01:10:44,942 then you have an obligation as a steward to push that change, 840 01:10:45,342 --> 01:10:46,962 and the change would go through. 841 01:10:47,562 --> 01:10:49,922 Because the six or seven largest mining pools would, 842 01:10:50,342 --> 01:10:52,842 if they fall, I'm saying in the scenario that they do, 843 01:10:52,842 --> 01:10:57,882 and then the minority, there's major risk to hard forking. 844 01:10:58,402 --> 01:11:02,042 And as users of the network, you might not know, right? 845 01:11:02,222 --> 01:11:04,622 But there's a lot of risks associated with that. 846 01:11:04,682 --> 01:11:10,282 And the most likely scenario is it's not going to create immediate catastrophic risk to Bitcoin. 847 01:11:10,462 --> 01:11:15,182 It's more of one of those things that's death by a thousand cuts and more realistically, 848 01:11:15,382 --> 01:11:22,682 potentially by, you know, 10 cuts that cause some change that might not singularly distort incentives. 849 01:11:22,682 --> 01:11:26,102 But if you add up a number of changes together. 850 01:11:26,362 --> 01:11:27,702 There are too many moving parts, though. 851 01:11:27,702 --> 01:11:37,122 So like the miners would not agree to do that if they saw the possibility that like there could be a minority with like an economic majority or something. 852 01:11:37,682 --> 01:11:44,262 So what would probably happen in a scenario like that before it gets to that would be some sort of futures market. 853 01:11:44,582 --> 01:11:48,502 OK, there's this this part that wants to do that. 854 01:11:48,622 --> 01:11:50,202 If they ever hard fork, then you get. 855 01:11:50,582 --> 01:11:52,022 But you know that there would be a hard fork. 856 01:11:52,302 --> 01:11:56,422 Right. But but like you can make a futures market that that's on that. 857 01:11:56,422 --> 01:12:01,442 Right. And you can you can trade those and maybe deposit some Bitcoin and bet on it. 858 01:12:01,482 --> 01:12:04,782 That's what happened with with like 2017 and so on. 859 01:12:05,242 --> 01:12:15,142 And miners would look at that and say, OK, well, here's here's this side and how much it's like, you know, say it's like 9010. 860 01:12:15,822 --> 01:12:20,402 But when they look at the price of the futures market, it's like the other way. 861 01:12:20,402 --> 01:12:22,242 It's like 2080 or something like that. 862 01:12:22,242 --> 01:12:27,322 then they're going to be like well it makes no economic sense to go mine on this chain that 863 01:12:27,322 --> 01:12:34,042 the core devs are proposing we're going to have to go with this so yeah it's one thing if there's 864 01:12:34,042 --> 01:12:38,102 two different proposals like it's one thing in in 2017 where you knew like whatever was being 865 01:12:38,102 --> 01:12:42,222 proposed would result in a hard fork versus if you don't know whether someone would do something 866 01:12:42,222 --> 01:12:49,242 well so that this is where like the game theory continues right like because that possibility is 867 01:12:49,242 --> 01:12:55,582 there then somebody might propose something to consolidate the opposition in which case you have 868 01:12:55,582 --> 01:13:02,302 like two incompatible softworks or something and the softwork that has more hash rate in it kind of 869 01:13:02,302 --> 01:13:10,622 wins and or is not hash rate in it more economic um majority in it yeah agree in the scenario where 870 01:13:10,622 --> 01:13:18,242 there is a hard fork then no but like the minority at that at the point where they know that they're 871 01:13:18,242 --> 01:13:25,582 minority is motivated then to create that scenario so that they can win right because you you if you 872 01:13:25,582 --> 01:13:32,662 have 90 hash rate and 10 hash rate you're going to lose but if you can influence the 90 by creating 873 01:13:32,662 --> 01:13:37,562 this scenario then that's what you're going to do because that's the only way you can win as a 10 874 01:13:37,562 --> 01:13:43,982 right and in my view it's like the reality is that you're not like 10 because you don't know 875 01:13:43,982 --> 01:13:46,762 what any other economic actors are going to do. 876 01:13:46,802 --> 01:13:48,082 Well, this is why futures markets 877 01:13:48,082 --> 01:13:49,862 will probably pop up for that reason. 878 01:13:49,862 --> 01:13:51,922 And then like, you just need a proposal. 879 01:13:51,922 --> 01:13:53,782 And then once you have a rallying point, 880 01:13:53,782 --> 01:13:55,442 then people will be like, okay, well, 881 01:13:55,442 --> 01:13:58,662 let's start betting on this and so on. 882 01:13:58,922 --> 01:14:00,782 But then let me put it another way. 883 01:14:01,222 --> 01:14:02,682 There's never been a soft fork. 884 01:14:03,442 --> 01:14:04,982 I guess there's never been a contention of soft fork, 885 01:14:05,522 --> 01:14:06,982 but there's also never been, 886 01:14:07,442 --> 01:14:08,922 when there has been a soft fork, 887 01:14:09,002 --> 01:14:11,402 there's never been a hard fork. 888 01:14:12,122 --> 01:14:12,822 Out of it, yeah. 889 01:14:12,822 --> 01:14:15,342 You know, and so it's like, it would be an unknown territory. 890 01:14:15,562 --> 01:14:18,962 Well, I mean, you know, Bitcoin Cash was a hard fork off of it, but yeah. 891 01:14:18,962 --> 01:14:21,282 Right, but that was, like the proposal was always, 892 01:14:21,542 --> 01:14:25,482 increase the block size, everyone knew that it was a hard fork. 893 01:14:25,562 --> 01:14:28,882 Now, I want to depart there in this kind of last segment 894 01:14:28,882 --> 01:14:30,062 that I want to talk about is, 895 01:14:30,962 --> 01:14:37,262 one of the other consequences in this circumstance is that it's very much, 896 01:14:38,222 --> 01:14:40,362 you know, one, I don't, one of my other problems is, 897 01:14:40,362 --> 01:14:53,912 I don think that there was ever an open debate or interest in a debate There was a decision made and didn really matter what another side perspective was There was a decision made 898 01:14:54,512 --> 01:15:01,092 One of the most important constituencies in the discussion around the relay 899 01:15:01,092 --> 01:15:02,192 policy specifically, 900 01:15:02,692 --> 01:15:07,892 the changes to it is the mining constituency and they're largely absent from 901 01:15:08,492 --> 01:15:09,432 the debate. 902 01:15:09,432 --> 01:15:14,852 um save and accept you can assume what marathon does because they have their 903 01:15:14,852 --> 01:15:21,172 um slipstream and you can know what you know a pool like luxor does because they're luxor but um 904 01:15:21,172 --> 01:15:27,172 the those are all the pools 905 01:15:27,172 --> 01:15:35,692 all of this seems to be in the disinterest of the miners themselves they're coming back to the very 906 01:15:35,692 --> 01:15:42,132 beginning which is the miners that are not participating directly in consensus are largely 907 01:15:42,132 --> 01:15:50,152 devoid of a of not just a voice they they don't have control of their hash rate you know someone 908 01:15:50,152 --> 01:15:56,172 else is making their decision and there's always the idea that oh you can switch pools but 909 01:15:56,172 --> 01:16:03,172 functionally speaking what do you think the the consequences are of so few miners 910 01:16:03,172 --> 01:16:08,072 actually participating directly in consensus 911 01:16:08,072 --> 01:16:11,912 as well as in what versions of Bitcoin they run 912 01:16:11,912 --> 01:16:14,732 that includes things like the relay policy 913 01:16:14,732 --> 01:16:15,952 that sit outside of consensus. 914 01:16:16,652 --> 01:16:18,792 Yeah, the consequences are that 915 01:16:18,792 --> 01:16:20,532 they're sort of mercenaries, right? 916 01:16:20,592 --> 01:16:21,792 They're like hash rate for sale. 917 01:16:23,292 --> 01:16:25,952 And yeah, it's unfortunate 918 01:16:25,952 --> 01:16:27,692 because it would be better 919 01:16:27,692 --> 01:16:31,232 if they were all sort of individually making decisions 920 01:16:31,232 --> 01:16:32,432 and cared about the network. 921 01:16:33,172 --> 01:16:36,132 It's a little bit of a fiat artifact. 922 01:16:36,132 --> 01:16:42,192 A lot of these miners got into it because they, um, they happen to have, uh, some cheap 923 01:16:42,192 --> 01:16:48,312 energy and, um, you know, contacts with the mining equipment at manufacturers or something 924 01:16:48,312 --> 01:16:49,312 like that. 925 01:16:49,312 --> 01:16:57,212 Uh, I, I, I think what will happen is that there will be more user level mining, um, 926 01:16:57,212 --> 01:17:00,032 to decentralize it a little more. 927 01:17:00,032 --> 01:17:02,032 It's already happening with stuff like bid X. 928 01:17:02,032 --> 01:17:05,212 obviously at a tiny, tiny, minuscule scale. 929 01:17:06,032 --> 01:17:11,332 But more of that, I think, is in the interest of a lot of users. 930 01:17:11,972 --> 01:17:18,752 And once you get that, then you don't have mining centralization anymore. 931 01:17:18,752 --> 01:17:22,532 And we don't have to talk about all of the problems that they cause 932 01:17:22,532 --> 01:17:26,972 because there are so few people that make the decisions. 933 01:17:27,192 --> 01:17:29,912 It's not necessarily that they're bad people. 934 01:17:29,912 --> 01:17:41,052 It's just that you don't, you want like the entire ethos of a decentralized system is that, you know, you don't have central controllers, authoritarians. 935 01:17:41,332 --> 01:17:44,112 And unfortunately we have that in this. 936 01:17:44,272 --> 01:17:54,212 And something that I think everybody wants is decentralized mining, including all the devs and everybody on both sides, I think. 937 01:17:54,212 --> 01:18:01,732 which is why a lot of the mining, um, voices like not really in this because both sides are claiming 938 01:18:01,732 --> 01:18:08,172 that, um, ultimately what they want will decentralize mining. Right. It's kind of like 939 01:18:08,172 --> 01:18:13,072 two sides talking to each other and the miners are just like, Hey guys, I mean, they're not because 940 01:18:13,072 --> 01:18:17,992 they're generally not part of the conversation. No, no, they're not. Uh, and, uh, yeah, I mean, 941 01:18:17,992 --> 01:18:22,652 they've been cut off since 2017 from a lot of this stuff. It's, it's kind of a very strange thing, 942 01:18:22,652 --> 01:18:28,012 but i mean it is one thing that i also think about which because most of them you know 943 01:18:29,452 --> 01:18:37,712 small to mid-sized miners which i would say like small but they are a dedicated mining business 944 01:18:37,712 --> 01:18:42,972 not somebody you know running a bid axe or you know just home mining with a single asa like 945 01:18:42,972 --> 01:18:47,852 mining's their business but they're a small miner to someone that might be a mid-sized miner running 946 01:18:47,852 --> 01:18:53,472 10 megawatts of power which is a lot of power there's nothing small amount of but relative to 947 01:18:53,472 --> 01:19:02,272 the rise of the world small that they they might be aware that there's a debate about something 948 01:19:02,272 --> 01:19:07,392 changing as it relates to relay policy and that might have a certain consequence but they have no 949 01:19:07,392 --> 01:19:15,212 idea the substance yeah you know and because they're removed from it via the pool it's almost 950 01:19:15,212 --> 01:19:21,432 as if i don't say it's not their problem but it's it's something that they don't realize that they 951 01:19:21,432 --> 01:19:27,652 need to have a more active participant or to be in a more active participant in because it's their 952 01:19:27,652 --> 01:19:34,732 hash rate you know and then that leads to the question of i would wonder i doubt that riot 953 01:19:34,732 --> 01:19:43,792 that has nearly probably a gigawatt of power online securing the bitcoin network is is opinionated 954 01:19:43,792 --> 01:20:05,412 And then, uh, and then my question to you would be like, there might be disinterest between a miner and a pool, but if the miners aren't really engaged, you know, the pool isn't seemingly, you know, incentivized to do something in the disinterest with their miners, but if they're not actively participating in consensus, how do they? 955 01:20:05,412 --> 01:20:13,012 Yeah, the problem actually comes back to fiat money because a lot of these hashers are fiat funded. 956 01:20:13,512 --> 01:20:19,792 And the way fiat money works is that it makes big things grow bigger. 957 01:20:20,632 --> 01:20:23,012 So mining is a margin business. 958 01:20:23,552 --> 01:20:34,052 It's you get the marginal energy that like the power plant can't sell to at higher rates and you get you get sort of like the leftovers. 959 01:20:34,052 --> 01:20:39,652 So there's a ceiling to the amount of energy that's available in any one location. 960 01:20:39,912 --> 01:20:48,372 So there's a natural limit to the scale that you can have in any one place because you're just getting the leftover energy from everywhere. 961 01:20:50,792 --> 01:20:55,692 But the way fiat money works is that they want to fund the bigger things. 962 01:20:55,692 --> 01:21:04,992 And so you can almost always get money printed out of nothing as loans to grow bigger, which is what a lot of these mining conglomerates have done. 963 01:21:05,132 --> 01:21:05,732 They've grown bigger. 964 01:21:05,872 --> 01:21:10,992 So I suspect most of them, like a lot of the big ones, probably don't even make money on a lot of that stuff. 965 01:21:11,072 --> 01:21:12,692 They build it out just because they can get the... 966 01:21:13,312 --> 01:21:18,812 Well, I knew Marathon mines Bitcoin at a loss just based on their financial statements, which doesn't make any sense. 967 01:21:19,092 --> 01:21:22,072 But that's a fiat consequence, right? 968 01:21:22,072 --> 01:21:33,512 Like because they can get these loans, they can sell their shares into the market or something and basically just keep making it look like they're getting bigger. 969 01:21:33,692 --> 01:21:36,272 It's kind of a big Ponzi scheme in a sense. 970 01:21:36,612 --> 01:21:38,552 But that's something that they can do. 971 01:21:39,052 --> 01:21:48,512 And that means that they don't have to care that much about all of the stuff that's going on in Bitcoin because it's not really a profit motive. 972 01:21:48,512 --> 01:21:49,852 If they were profit motivated, 973 01:21:49,852 --> 01:21:52,772 a lot of them should be on like ocean, right? 974 01:21:52,772 --> 01:21:56,852 Like you don't have off-band payments and stuff like that. 975 01:21:56,852 --> 01:21:58,752 Where if you're a hasher, 976 01:21:58,752 --> 01:22:00,952 you don't see any off-band payments, right? 977 01:22:00,952 --> 01:22:05,952 Like if I pay and pool to get a transaction in, 978 01:22:07,212 --> 01:22:17,802 like off right With a credit card or something I think via BTC used to have one of those i don know if they still do then like none of the hashers see that money right i mean i think 979 01:22:17,802 --> 01:22:25,462 that in theory some might some pools might say we we we set this into the uh fixed pay per share 980 01:22:25,462 --> 01:22:31,302 however they do their calculations point is it's a black box and and you don't know and that so many 981 01:22:31,302 --> 01:22:38,862 of them are addicted to the fixed payout that that that's what they're there for i just you know 982 01:22:38,862 --> 01:22:46,062 my my i guess my last question is what do you think causes it to change that gets more miners 983 01:22:46,062 --> 01:22:54,502 engaged and actively being direct participants in the network and i'm not even saying you know 984 01:22:54,502 --> 01:22:57,182 every miner has to run their own node, 985 01:22:57,622 --> 01:23:01,542 but, and I'm not also saying actively participating 986 01:23:01,542 --> 01:23:03,922 in whatever the debate is in the day on Twitter, 987 01:23:03,922 --> 01:23:11,942 but not just being reserved to the corner of the world 988 01:23:11,942 --> 01:23:15,042 that they're hashing and actually being 989 01:23:15,042 --> 01:23:16,282 a more active participant in consensus. 990 01:23:16,422 --> 01:23:17,942 Do you think it, like, I don't even know 991 01:23:17,942 --> 01:23:20,482 what the parallel to a Mt. Gox scenario would be, 992 01:23:20,582 --> 01:23:23,482 or it might just be maybe on your line of thinking, 993 01:23:23,482 --> 01:23:26,602 as there become fewer miners that are fiat minded 994 01:23:26,602 --> 01:23:30,542 that actually understand Bitcoin 995 01:23:30,542 --> 01:23:32,322 and the conversion of energy to Bitcoin 996 01:23:32,322 --> 01:23:34,382 versus energy to Bitcoin to fiat, 997 01:23:35,062 --> 01:23:37,782 that that naturally brings along with it 998 01:23:37,782 --> 01:23:40,642 the incentives to engage in consensus 999 01:23:40,642 --> 01:23:41,562 and to participate. 1000 01:23:42,342 --> 01:23:45,922 Yeah, it's easier for a big company to go get loans 1001 01:23:45,922 --> 01:23:49,182 than it is to like make more profit. 1002 01:23:49,742 --> 01:23:53,142 If these hashers were more focused on profit 1003 01:23:53,142 --> 01:23:55,642 then I think all the problems solve themselves. 1004 01:23:56,562 --> 01:24:00,762 I really believe that market forces would force them 1005 01:24:00,762 --> 01:24:04,642 into a more decentralized and active participation 1006 01:24:04,642 --> 01:24:05,662 in this whole thing. 1007 01:24:06,382 --> 01:24:08,102 The way they're doing things now 1008 01:24:08,102 --> 01:24:11,382 is that they get a lot of their income 1009 01:24:11,382 --> 01:24:13,902 from fiat money printing in some ways 1010 01:24:13,902 --> 01:24:15,202 through loans and so on. 1011 01:24:15,262 --> 01:24:16,882 So they don't have to care. 1012 01:24:17,542 --> 01:24:19,682 And that's, in a sense, 1013 01:24:19,842 --> 01:24:21,562 like once the fiat system collapses, 1014 01:24:21,562 --> 01:24:26,822 This mining will be fixing itself, but of course that's going to take a while. 1015 01:24:26,842 --> 01:24:33,462 For now, it's functionally out of sight, out of mind, and it's almost like, well, I don't have to worry about this because the pool's going to make the decision. 1016 01:24:33,462 --> 01:24:51,222 But at a certain point, people with large interests realize that, you know, large financial interests realize that they have an actual stake in interest in informing what changes get made and why, both as it might relate to a future software. 1017 01:24:51,562 --> 01:24:55,602 or something like a relay policy because the end of the economic incentive 1018 01:24:55,602 --> 01:25:00,202 doesn't really exist just to defer because it can either be your, 1019 01:25:00,362 --> 01:25:02,482 in your purview and, 1020 01:25:02,482 --> 01:25:04,482 and, 1021 01:25:04,582 --> 01:25:08,082 and do something actively or not. 1022 01:25:08,182 --> 01:25:12,642 And in the scenario where you're actually procuring all this energy and 1023 01:25:12,642 --> 01:25:13,122 hashing, 1024 01:25:13,242 --> 01:25:14,942 what's the benefit to not, 1025 01:25:15,282 --> 01:25:15,642 you know? 1026 01:25:16,462 --> 01:25:19,682 So it might be a long, 1027 01:25:19,842 --> 01:25:20,302 you know, 1028 01:25:20,302 --> 01:25:24,502 death of fiat or it might be a quick death of fiat but people i do agree with you that the 1029 01:25:24,502 --> 01:25:29,802 figuring out the bitcoin side of it and the cutting off of the fiat spigot is likely a natural 1030 01:25:29,802 --> 01:25:36,502 decentralizing force and um that and bitcoin are stepping up i think i like i mean 1031 01:25:36,502 --> 01:25:42,582 i run a bit x at home right so in a sense i'm i'm mining at least a little bit 1032 01:25:42,582 --> 01:25:49,822 even though it's like maybe five shares a day yeah you're on like 13 cents power yeah and it's like 1033 01:25:49,822 --> 01:25:56,402 But, you know, we haven't really optimized mining very much, right? 1034 01:25:56,482 --> 01:26:07,682 Like, you can heat lots of things and produce other goods where even paying 13 cents per kilowatt hour, like, might make sense if you can use the waste. 1035 01:26:07,882 --> 01:26:16,042 Like, you do some other process where you can convert that to profit and then the little bit extra you can use for mining or something like that. 1036 01:26:16,042 --> 01:26:25,082 And like that, those scenarios are where entrepreneurs can come in and really like make a difference. 1037 01:26:25,082 --> 01:26:29,702 But yeah, we kind of live in a fiat world where- 1038 01:26:29,702 --> 01:26:32,762 Bob Burnett told me that he's mining off of cow waste. 1039 01:26:33,182 --> 01:26:35,682 So, you know, like that's, there is innovation happening out there. 1040 01:26:35,682 --> 01:26:46,322 I'm also going to have Tyler Stevens on, who's working on a lot of not only home mining, but specifically the capturing of heat. 1041 01:26:46,862 --> 01:26:47,022 Yeah, yeah. 1042 01:26:47,042 --> 01:26:50,322 I think there's a lot of potential along those lines. 1043 01:26:50,442 --> 01:26:55,942 And maybe it becomes really more centralized as more innovations come in and those things. 1044 01:26:56,102 --> 01:27:04,982 Like if you can, I don't know, heat your water heater or something with mining equipment, maybe that makes the economics work. 1045 01:27:04,982 --> 01:27:06,242 I don't really know. 1046 01:27:06,602 --> 01:27:12,302 Or there's maybe some other technology that comes in that makes it so that you can generate energy at home. 1047 01:27:12,302 --> 01:27:21,762 Maybe we can have modular nuclear power plants at home and you don't need electricity lines and use all the excess energy for that. 1048 01:27:22,482 --> 01:27:26,662 The future is very difficult to figure out. 1049 01:27:26,662 --> 01:27:32,922 Well, yeah, I did see, I have bigger questions about large amounts of solar on the grid, 1050 01:27:32,922 --> 01:27:36,862 but scenarios where people are putting solar panels on their house and 1051 01:27:36,862 --> 01:27:39,782 there's restrictions on what they can put back into the grid. 1052 01:27:39,882 --> 01:27:43,942 And they have three times the amount of power that their home actually needs. 1053 01:27:44,002 --> 01:27:44,882 It's essentially excess. 1054 01:27:45,622 --> 01:27:48,142 So I definitely see that there's a, 1055 01:27:48,202 --> 01:27:54,142 there's a large surface area for innovation and that should help decentralize 1056 01:27:54,142 --> 01:27:54,342 it. 1057 01:27:56,722 --> 01:27:59,182 The reality of the scenario is today, 1058 01:27:59,182 --> 01:28:01,762 the level of centralization 1059 01:28:01,762 --> 01:28:04,502 in my mind, and I just want to see if you agree with this, 1060 01:28:04,742 --> 01:28:07,262 it makes it easier to change Bitcoin when it otherwise should be harder 1061 01:28:07,262 --> 01:28:08,742 on a relative perspective. 1062 01:28:09,342 --> 01:28:11,902 And that more miners 1063 01:28:11,902 --> 01:28:15,162 will inevitably figure out 1064 01:28:15,162 --> 01:28:17,582 that it's not in their own incentive 1065 01:28:17,582 --> 01:28:20,582 to essentially outsource decisions about 1066 01:28:20,582 --> 01:28:23,002 what rules are followed versus not. 1067 01:28:23,162 --> 01:28:25,362 And that should hopefully drive decentralization as well, 1068 01:28:25,362 --> 01:28:29,462 which will help make the network harder to change, 1069 01:28:29,562 --> 01:28:30,682 but not just for its own sake, 1070 01:28:30,722 --> 01:28:33,182 but to ensure that if changes are made, 1071 01:28:33,262 --> 01:28:34,782 that there's overwhelming support. 1072 01:28:35,182 --> 01:28:37,622 Yeah, I certainly hope so. 1073 01:28:37,742 --> 01:28:38,642 It's weird though. 1074 01:28:38,902 --> 01:28:41,082 I didn't think about it the way you just said it, 1075 01:28:41,122 --> 01:28:45,202 that a lot of the Bitcoin mining centralization 1076 01:28:45,202 --> 01:28:47,722 is actually like energy centralization, 1077 01:28:47,902 --> 01:28:49,542 energy production centralization 1078 01:28:49,542 --> 01:28:52,522 and all of these fiat things 1079 01:28:52,522 --> 01:28:55,362 that sort of infect our industry. 1080 01:28:56,282 --> 01:28:56,362 Yeah. 1081 01:28:57,422 --> 01:29:01,402 Well, no one miner is going to solve it, 1082 01:29:01,522 --> 01:29:05,402 but in the end, everything's good for Bitcoin. 1083 01:29:05,822 --> 01:29:06,002 Yeah. 1084 01:29:08,742 --> 01:29:09,582 Hope so. 1085 01:29:10,702 --> 01:29:13,222 Only because people are not complacent. 1086 01:29:13,702 --> 01:29:14,922 You know, you got to be high agency. 1087 01:29:15,442 --> 01:29:17,502 Well, thanks for the discussion. 1088 01:29:17,882 --> 01:29:19,362 Appreciate you coming down to the commons 1089 01:29:19,362 --> 01:29:20,422 slash Bitcoin Park. 1090 01:29:20,422 --> 01:29:22,942 and we'll do another one sometime soon. 1091 01:29:23,222 --> 01:29:23,742 Sounds good. 1092 01:29:23,942 --> 01:29:24,102 All right. 1093 01:29:24,122 --> 01:29:24,602 Appreciate it, Jimmy. 1094 01:29:24,822 --> 01:29:25,022 Yeah.