{ "episodeId": "SLP403", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "alex_b": { "name": "Alex B", "role": "guest", "tag": "ALEX" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.47, "text": "Hi and welcome to Stephan Livera podcast show about Bitcoin and Austrian economics. Today my guest is Alex B and we're chatting about Bitcoin long term security arguments as well as an update on his thesis about Ethereum centralization with Lido. This show is brought to you by Swan Bitcoin, the easy way to buy Bitcoin and learn about Bitcoin. Swan is organizing a conference called Pacific Bitcoin and I'm gonna be one of the hosts. It's on this year, November 10th and 11th in LA, California. There'll be thousands of Bitcoiners from around the globe catch up with all the Bitcoiners there. There are so many awesome speakers who are coming, also people like Lynn Alden, Alex Epstein, Corey Klipstein, Jan Pritzker, and so many more. 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There and the associated gear, such as the metal seed backup, and just get started with self-custody using hardware security. That's coinkite dot com. Alex, welcome back to the show." }, { "speaker": "alex_b", "time": "02:41", "start": 160.93, "text": "Hey, Stefan, it's good to be back here. How are you doing?" }, { "speaker": "stephan", "time": "02:44", "start": 163.99, "text": "Doing well. I think there's lots to chat about from, Bitcoin arguments as well as potentially a bit of an update on some of the earlier stuff we were chatting about last time you were on the show. I think it seems topical in, let's say, the last month or two, there's been Long-term security arguments for Bitcoin. So I think part of what I'm hearing is this argument of, \"Oh, we, you know, the-- there's kind of this fee apocalypse argument.\" So maybe if you wanted to, I guess, just recapitulate in your own words, how do you view this long-term security argument in relation to Bitcoin?" }, { "speaker": "alex_b", "time": "03:22", "start": 202.05, "text": "absolutely. I think I actually made a bit of a case on it, a-as well last time we spoke. And I, I-- honestly, it seems natural Of a bear market for, for these kinds of topics to, to come on, it's a little unnerving, that a lot of the debate i-is coming on, i-is coming from our side unfortunately, especially from perhaps respected developers, not to name, anyone, but, generally speaking, the argument that I made, in the earlier show that I still stick with is that There's a very, very important distinction between the monetary policy aspects of things and the distribution schedule, of Bitcoin. And I like to think of it in a way where, Satoshi never really designed Bitcoin to have a quote-unquote monetary policy. Obviously, he was trying to replicate, something that's more akin to, to gold, a-and decided to go with a, a, a fixed, supply. And I think the notion of a strict supply Is, this hugely important shelling point in the entire history and, and, and narrative of Bitcoin. It is effectively the very first and most prominent and perhaps most important meme in sort of this cultural movement, really. The idea of the hard cap, you know, twenty-one million. There's not a whole lot of things that, that you could put, before that in terms of, like, you know, what people associate with Bitcoin when they think of Bitcoin. And, when you open up the, the discussion when you, when I think when you move the, the Overton window, of argument, i-into a different direction where people try to approximate, try to model a future economy, at least ten years from now, you know, I, I, I have to say I always, sort of very much strongly disagree with people that say, \"Hey, we'll, we'll only have till...\" What, what is it, twenty forty to, to think about this from? we're, in, in a more practical matter, you know, we're certainly a couple of decades at most, away from, tr-actively relying on transaction fee for, security of the network. But, sorry, just to let's, let's just recapitulate" }, { "speaker": "stephan", "time": "05:43", "start": 342.7, "text": "part of the argument just so people understand, like if somebody's new and they're listening, I guess part of the argument here is, oh, look, this idea that today, right now And there's the block, as in the transaction fees. And so what we're talking about here is over time, the block subsidy is coming down, and the, I guess the argument here is will the transaction fees rise to replace that? And of course, there's different arguments back and forth about whether the transactions are coming up enough to make up for that. But that's kind of the high level argument. Now, as you're rightly saying, people say, \"Oh, that won't matter until twenty-one forty,\" but the other point to be said is that ninety-nine percent of bitcoins will be issued by Twenty thirty-five. So as we stand today in, August twenty twenty-two, something like ninety-one percent of the total number of bitcoins that will ever be mined has been mined. So I guess that's a little bit of background just for people who are trying to follow along. And so then if you could just spell out some of your thinking on those various arguments." }, { "speaker": "alex_b", "time": "06:42", "start": 402.48, "text": "Sure. I think a lot of the commotion around it is created by some of the activity, you know, that, we're seeing on other chains, that are certainly actively generating, a whole lot of- a, a fees for, the, the miners or slash validators on, on their alternative network. But I think it's just fundamentally, a misunderstanding, and it's, it's one that we've struggled with throughout Bitcoin's history of being realistic about the, the evolution of mo- of Bitcoin, as a monetary phenomenon. the idea, you know, that, that we struggled with during the twenty sixteen, twenty seven block size debate, where there was a lot of focus And payments, because p-people were seeing payments as, as this utility, that Bitcoin provided. I-it comes from this, this idea first and foremost that, strictly holding Bitcoin, i-is not an utility in and of itself. Because users are incentivized on other networks to, leverage their capital in ways that they're not able to, on Bitcoin, there's a lot of confusion that prevails and, gives the sense that Bitcoin might not be serving the purpose that, it should, and that, the monetary incentive for miners to secure the network, when the subsidy starts going down, or, you know, looking at the data that's available today in terms of what, What transaction fees are on network, it's, it's in, it certainly seems like a moonshot, for that to be, sustainable. Unfortunately, it really isn't sustainable in that the data that we're looking at is, from my perspective, mostly noise. I would discard most of the data that, in terms of transaction, that activity on the blockchain up until at least late twenty seventeen, if, if not late twenty eighteen, because the reasons why, we had- Fee activity during that time was mostly two phenomena, a, a very poorly, well, poorly well scaled infrastructure, both from the user's, point of view, so when we're talking about wallets, a-and UX a-and the fee bumping mechanism, or, or just the fee estimation algorithms, those were very poor, generally speaking, as far as, s-s-surely, especially within the ecosystems of wallets that were available and how skewed, the distribution of transactions per wallet was back then. a single entity that wouldn't manage fees, i-in a proper way, would end up congesting the network, you know, in a quite disproportional way, than they should really. and the other aspect obviously was the, the network in and of itself, that SegWit was, being the big bomb for, for some of that, and we, we found ways to Better utilize, the block space in several matter. And so that led to, historical data that, gives the perception, today that network is less utilized than it was i-in the past, and, and people interpret some sort of trend from that, and there's no clear, you know, there's no clear indication of course that this trend seems to be reverting, quite the opposite, fees have been historically low for, most, most of the last couple of years, except for a small little period last year. But looking at it, from a bigger picture, you, you really realize that it, it's just all a matter of Bitcoin, monetizing a-and we're still at a very early speculative cycle where Bitcoin, Bitcoin, the idea of Bitcoin payments, remains extremely marginal, a-as much as we'd like to, you know, get ourselves excited about various initiatives, whether it's El Salvador or, you know, the growth of Lightning, i-in the grand scheme of things, I think that capital allocator is only- At Bitcoin, certainly as a, as a payment system yet. And so there's no expectation, there shouldn't be no expectation that activity on, of Bitcoin, at least from a transaction perspective, gains any sing- any more significant traction two years from now, even, even perhaps four years from now, from now. And I think that's a view that a lot of people tend to share, but they also, at the same time, get, get nervous seeing, some of the activity on, you know, it's, it's, it's all very much Gaslighting, to a certain, to a certain extent, where people are made to believe that these are competitive networks, so people are made to believe that the gain of another, i-is the loss of, of, of Bitcoin, where I think we should strongly reject that narrative a-and look at what these systems are for what they are, which is that most of them, admittedly, nowadays, ninety-nine percent of them, are not trying to be money. and, aside from Ethereum and where some, some of its proponents- proponent are certainly still advocating for this. You're looking at an ecosystem of distributed consensus software, basically, is, is what I like to think of it as, as sort of validators as a service, that, that provide opportunities for, you know, permissionless development of, of, of markets and, and software infra- infrastructure that in- incentivize certain use cases that are obviously for very good reasons not covered in, in Bitcoin, but these are the, these are the kind of the Activities that are already very prevalent in the fiat world. So there's a very good product market fit for these kinds of software offerings, applications, DeFi, whatever that is, i-i-in this current historical, historical period, because it's not, you know, it doesn't, y-y-you don't need to buy into a certain, like, you don't really need to buy into a fundamental narrative, like, like you, you need to, to really adopt Bitcoin. You just gotta look at it as just another- Playground, within the ho- the whole financial system where capital allocators can gain an edge and can gain alpha and outperform, especially in this time of inflation and, you know, where everyone is trying to one up each other." }, { "speaker": "stephan", "time": "12:51", "start": 770.96, "text": "Sure. And so there's a lot of different ideas in relation to how the fee market has happened or let's call it the block space market, if we're being precise, but there were things like in the twenty sixteen, seventeen year there were people talking about spam on the chain to try to, as part of the argument to- to, for people to preference Bcash. And also, like you said, there were problems around fee estimation and the way people thought about using Bitcoin transactions. A lot of exchanges didn't have batching, they, a lot of them didn't have SegWit, and we saw a very noticeable pressure being taken off the block space load, let's say, when Blockchain Dot Info, one of the large on-chain transacting wallets, upgraded to SegWit. Additionally, we saw, I think it's fair to say, previous to a lot of the stablecoin volume that we see nowadays, there was a lot People in earlier years who were using just Bitcoin natively to move between exchanges, and they were very high time preference, they were willing to pay a lot, and so that sort of had this effect of pushing up the average fee that people would pay. But I guess it's, it's kind of funny in a sense because it's-- there's almost cycles moving to this thing because I recall, I think it was around twenty sixteen or seventeen, Vitalik and, and co were making this argument that, \"Oh, look, see, Ethereum has low fees, look how good we are. You, look at And now it's sort of like the shoe is on the other foot. And now, yeah, you know, because back in those days, Bitcoin people were making the argument, \"Oh, look, see, it's just like a restaurant, and it's a popular restaurant. Like, you know, nobody says, 'Oh, look, it's too crowded, nobody goes there.' Hang, hang on, there's something wrong. Like, obviously, if people are using it, they're paying for that for a reason. And now it's like the shoe is on the other foot. Now we're seeing" }, { "speaker": "stephan", "time": "14:38", "start": 878.04, "text": "In terms of transaction fees, at least that's where it is today. But I think to, to your broader point, it's that we're looking at, I think for many people, they are looking at it like a savings, they're looking at it like a store of value, they're not necessarily looking to transact day to day, although of course you can do that, and now we have the Lightning Network and, and, and it has improved in reliability now, so I think it's fair to say that, you know, that use case is being served if you want it," }, { "speaker": "stephan", "time": "15:08", "start": 907.7, "text": "but So long range security is this argument that, oh, see, Bitcoin won't have enough people transacting or paying enough fees to give the network some security against a potential attacker. But at least, here's the way I'm thinking about it, I'm curious what you think. But the way I'm seeing it is there'll just be so many more people, even in ten or twenty years time, who are transacting on Bitcoin, and they may be doing a lot of channel open and channel close transactions or refilling transactions to fill their lightning node, or they may be doing coin joins. If anything, it Hard to get your transaction into a block because there's so much competition. So at least that's how I'm seeing it going, and I, I, it's almost like I'm seeing it like the problem might be the other way around, but I'm curious what you think." }, { "speaker": "alex_b", "time": "15:50", "start": 949.92, "text": "No, I agree. I, I mean, I, I've repeatedly made the case, I've, I was actually a little vocal for a while where, I was suggesting that we will, that we would be revisiting, block rewards, you know, upwards of ten bitcoins, you Higher than, the current subsidy. For the reason, for the very simple fact that, when you consider a block subs-- sorry, a block reward that's purely based off of fees, there's really no ceiling. So I expect there to be some sort of equilibrium where users, will opt for different payment mechanism depending on their needs and depending on, you know, their, their, the need for confirmation, finality, and, and things like that. But the fact of the matter is that once Bitcoin mon- It'll open up opportunities for, I would guess, most things we can't actually imagine today, right? That's sort of the failure, of, I think that's a repeated failure that, that we make, with technology is that, when we're talking about those fundamentally sort of, new paradigms, you know, it's people always make the argument that you couldn't have possibly imagined Netflix, in the early, days of, of the internet, because you didn't even- Have the, the, the infrastructure to, to support, so, something like Netflix. A-and so I'm fully in agreement with you that by the time that Bitcoin's monetized, we will see blocks that will persistently, I imagine, be full, and those transactions will very rarely be, retail users, will even rarely be strictly single individuals. it'll be a composition of, yes, lightning hubs, settlements, perhaps, federated, I expect it to be federated, side chains or other, other software or consensus sort of dis-distributed consensus models, shovin mints that all, ultimately settle the transactions of, of their users on, on the network. And so it used to be very, I don't know, it used to be very popular. I think it was not, I think people very, very much used to say it'd be very expensive to transact on, on the Bitcoin network in the future, and I- I'm still convinced of that, a-and I think it'll be because it'll provide large, it, it's, you know, it's really not only, about the, the number of users that are transacting, but about the, the amount of capital that, Bitcoin is, is serving. And when you look at the amount of, Of money transacting through the largest, global settlement layers today in, within the fiat system, you know, you're talking about amounts of money where if, if Bitcoin manages to sell that, and only takes, a very, I think, A very conventional or not egregious, percentage, or let's put it in percentage fee, the, the revenue, the revenue will be there for miners, to, to continue to add security to the network. A-and really, the, the question is, is there, i-is that really, there's this question of security budget, right? So the idea that, there is a budget is actually very, I think, hotly con-should be hotly contested, because the budget assumes that, there is, we are able to make model and the approximate the, the actual security that's required for Bitcoin to operate, when in fact it's really just a, a consequence of the market. A-and so users will pay for, using the network And whatever demand is derived from that will, will translate into fees, and that'll be the amount of security that, that the network requires. Users might underpay, but at which point, the, the prospect of Bitcoin not generating significant fees in the future is fundamental, is, is for me fundamentally, an, an idea that lacks creativity, and that ultimately, sort of betrays a little bit of, overall bearishness really on, on, on the, on the, on the Bitcoin case, because if- If you accept, if you accept it's going to be a global standard bearer of value, it seems very logical, and self-explanatory to me that, the demand for that, will, will be massive and, probably larger than any possible use case, right? That, that's the important discussion is the use case of money, dwarfs all of them, a-and The, the numbers that we're seeing today i-in terms of financial activity on alternative networks, while these are large numbers that are, you know, ballooned by fake market cap, perhaps not fake, but, you know, very extravagant ways to, to estimate the market cap of these, other crypto tokens And at the end of the day, in the grand scheme of things, it's a drop of water in the ocean, and so it'll naturally take time, take more time for Bitcoin to establish itself because it, you know, it attempts to claim the, the very biggest use case, in, in, in the financial world." }, { "speaker": "stephan", "time": "20:53", "start": 1252.52, "text": "Yeah. And as you said with security budget, that can be a misleading term, and arguably that was also created by some, essentially some shitcoiner who was trying to argue about, you know, the security level. And I think it's also important to point out Halvings. So long as Bitcoin doubles every four years, and of course, it's not gonna do that forever, but I'm saying at least in this initial period, then at least even on the subsidy point of view, in fiat terms, the so-called security budget in quote, in quotation marks, remains the same. But as you said, I think it's important to actually disaggregate that down into its components, because really what are we talking about here? What we're talking about here is, are you as a miner profitable? And two, are you as a transactor able to get your transaction block, or in this case, if you're doing a Lightning channel, et cetera, to open or close, you need to get that Bitcoin on-chain transaction confirmed into a block to have your channel open or closed, et cetera. So that's really what we're talking about. And so if we're talking about security budgets, it's really more appropriate to think of it more from that perspective. And I think once you see it from that point of view, then you can understand that, let's say, if you are a user and you are unable to get your transaction confirmed into a block" }, { "speaker": "alex_b", "time": "22:06", "start": 1326.21, "text": "Effective, the fallacy of the argument also, and one of the reason why I, I think it's a massive waste of time, is that there really isn't no alternative. The reason why this, this debate is being brought up, of course, one of the main reason why, i-it makes a lot of noise, i-is that certain parties and, certain interests are, are trying to prop up, you know, POS proof-of-stake, as, as an alternative, for a, a future security model, and we can go Into details later on into why that's very, very unlikely to be the case, but the other alternative, you know, that, that we brought up, or we actually perhaps didn't mention explicitly, but one of the reason why we're talking about that today is this idea that's been propped up of, of, of tail emission. The general idea being that as long as the supply is fixed, the argument goes that the nature of Bitcoin remains the same, so it, it wouldn't matter so much whether we have, a, a, sorry. A fixed supply or, a fixed, sorry, a fixed inflation rate, or, as long as the model, you know, the argument is, as long as the, as the economic model persists a-and doesn't change, then that's good enough. there's so many reasons why, that doesn't hold from my point of view, but if we're just going to perhaps address the, the tail emission argument, it's so fundamentally naive that it kind of befalls me, befalls me that, People are actually inter- interpreting it, because the, the fundamental premise of the argument is that, well, it's such small inflation for users ten, twenty years from now that users aren't gonna care, you know, if you're paying, point five percent inflation, you're not going to mine as, as long as that's the social contract, and that's, that's not gonna change. But when you're looking at the-- you can look at it from the user perspective, but what really the- The problem that they're trying to address is miner security, right? Incentive for miner to secure the network. And so if the share of value that's being taken away, taken away literally by, by users is small enough that they're not going to, air quotes, not going to notice, then why would you assume that this amount of value gives any more incentive for miners to secure the network? 'Cause you just made the argument that it, it was, it, it was too small, of, of, of a fraction of the- Your supply to, to make an impact on, on, on, on the holding of users. So there's, it's a very contradictory, approach to me. and, and again, it also needs, like, the ass- it needs to assume that you get it right off, you know, you, you, whatever telomission you, you, you choose, you, you get it right one time and, and, you know, then there's no changing it. It's an obvious slippery slope. I think most people understand why it's extremely unlikely that this become even mildly In, in the future, though, I don't think we're gonna stop hearing about it. It's, it just doesn't fundamentally address the problem. It, it re- it really doesn't. So, yeah, there's, there's really no alternative. we've, we've bought into a system with, with a premise that, there will be an econo- an economy around Bitcoin that will provide enough demand for it to be sustained on a transaction fee model basis. And, as far as I'm concerned, if that doesn't work, then we've gotta go I've seen out there just doesn't fit, the current model and incentive models that, that are required for a, you know, global neutral layer of money." }, { "speaker": "stephan", "time": "25:45", "start": 1545.25, "text": "Well said, and I particularly like your argument there around the contradiction, because some of the proponents of this whole tail emission idea are saying, have been arguing both things. They've been saying on one side, \"Oh, look, the users won't really notice,\" but on the other hand, they're also saying, \"Oh, look, the current system as it is, oh no, the fee apocalypse is going to happen, and the On Twitter, and, you know, you just made that same argument, and I think that's a very strong one. So I think we can pretty much consider most of those arguments dispatched. I think I'll just kind of summarize really. It's unethical as well, like the, the users bought in on this premise. Like most of the users, the vast majority of them, were told this is the limit and it's never gonna change. To now try to, like, retrospectively, you know, pull the rug out from underneath them and change the rules of the game when there's no need. There" }, { "speaker": "stephan", "time": "26:36", "start": 1596.47, "text": "That it's either gonna go boom or bust, right? It's, you know, we-- obviously most of us are bullish on Bitcoin, we think it's gonna go, you know, very high and a lot, a lot of people are going to be transacting on Bitcoin and therefore there will be a lot of transaction fees. So anyway, I think that's probably the, the key point on some of that aspect of it. I guess I was also curious as well to get some of your thoughts on this idea, and I know we've spoken about this a bit offline, is this idea around economic nodes" }, { "speaker": "stephan", "time": "27:06", "start": 1626.39, "text": "Concept came up particularly in the twenty seventeen block size war debate because there was a discussion around, okay, well, okay, yes, when you run your Bitcoin node, you are in some sense defending your chosen rule set. So as an example for listeners who aren't familiar, when you run your Bitcoin node, you're, in a sense, you're asserting what you think Bitcoin really is, and if somebody tries to send you invalid Bitcoin, your node is going to essentially reject that or it won't see that transaction as valid. So I guess from your perspective, I know you have, perhaps- That's a, an interesting point of view on this. So how, what would you, how would you frame that idea of which economic nodes matter?" }, { "speaker": "alex_b", "time": "27:42", "start": 1662.09, "text": "Right. I think it's, it's, it's funny, it's a timely, and it's very timely that conversation because, there was the anniversary, as, as you probably know, of course, of, of BOA itself, yesterday. And, I was, I happened to be listening to a couple of, I try to listen every now and then to a couple of Twitter Spaces to A couple of articles or saw a, a bit of comments about it and it, it seems like a, it, it's, it's an issue that's still very much misunderstood. I actually haven't, unfortunately, I haven't read, Jonathan Bier's book on, on the block size debate and, and maybe I should. And unfortunately, because I, I spent a lot of time in the trenches with, with Jonathan, back in two thousand sixteen, and whatnot, and actually met him in, in Milan back at the scaling, scaling point conference. But anyways, I, I think there's still a bit of a, you know, David versus Goliath narrative that persists, and that strikes me as the wrong, conclusion. I, I think it very much felt like that, to a lot of people that were involved. But at the end of the day, what made us prevail in USF was that we did, in fact, have lion's shares of Bitcoin's economy behind us. in an explicit or implicit way, regardless of, and you know, it's, it's, there's the, like the way the story is told is the plebs running their nodes versus the big corporations. But to your point of economic nodes, economic nodes, the work plebs behind those nodes control, a significant portion of, of, of the Bitcoin monetary supply. And at the end of the day, and or, or all, but also of the, of the, the purchasing power, the actual, not The purchasing power, but the demand, the current demand for Bitcoin in terms of capital that's, yet to be allocated, these are the people that made the difference. And certainly it doesn't take a lot of, you know, this, this game theory of USF, it doesn't take the majority of these sleeping giants to raise up, and say their piece for there to be enough, disincentive for miners, to work against, you know, what appears to be the Consensus on the, on, on the net, on the network. But I think on any sort of quote-unquote blockchain or distributed monetary system like that, there's still very much an argument that gold, the gold, you know, those who own the gold make the rules, because regardless of, the, the node that you run, ultimately, what decides who enforces, the rules on the Bitcoin network are those who are act-- who are actively, actively validating transactions and transactions that they're per- Personally involved in, and your influence on the network scales up, according to the amount of capital that you validate through your node, in a way that's personally involved and in a way that's sovereign. A-and so running a node, as, as an act, of defense against the network, without being financially, motivated, and your, you know, the financial motivation scales really around the amount of capital that you've got tied to the, to this network. It's, it's, it's a, it's a cool story, it That's the time story to tell to people, but it gives people the wrong, idea about what enforces consensus rules. And it's important because really at the end of the day, there are risk, there are failure models, there are risk models where, if enough capital is captured within, a single network, it could cause a fork that, betrays, you know, the original thesis to be, to be victorious, to, to essentially, to essentially- squash, the fundamentals, the fundamentalists, that are trying to protect, you know, the, the original chain. And I think we will see that, down the line with, with other blockchain, I think that's something that's likely to happen, where even if not a fork, the amount of influence that, certain interests might have on the capital, infrastructure of the network gives them disproportional influence over some of the decision making, with regards to protocol Design and, you know, where things like wh-whatever, like, security models, might, might be involved. So I think it's a distinction that's, worth keeping in mind, when considering the game theory and, and sort of the incentive model that, that makes Bitcoin tick." }, { "speaker": "stephan", "time": "32:18", "start": 1937.68, "text": "Right. And so I guess just to summarize and paraphrase a little bit just for beginner listeners, I think part of the point is when people are new, sometimes they get a perception that, \"Oh, if I just run this Bitcoin node, that's kind of defending the Well, not really. It's more like if you are using that node in a meaningful way, and the best way usually is if-- in this case, if you are receiving Bitcoin into your, you know, onto your wallet that's validated by this Bitcoin node, and you are ideally rejecting invalid coin. So, you know, I-- you know, my node is rejecting Bcash, or it's not, it's, it doesn't see those Bcash transactions as valid. And so in that sense, and if you are an economic actor in the network who is receiving a lot of coins and validating through your" }, { "speaker": "stephan", "time": "33:01", "start": 1980.56, "text": "Helping enforce the consensus and enforce the validation in the network. So I would you say that's kind of like a, a fair summary of what you're saying or how would you modify that?" }, { "speaker": "alex_b", "time": "33:10", "start": 1990.47, "text": "no, I think that's a fair summary, and I, I, I think one of the, actually one of the tangent to that, that point that I like to make, this distinction is very important also because, there, there's a strong, tendency to underestimate the power over consensus that a user who holds a lot of Bitcoin but doesn't actually validate their own transaction. I, there are scenarios where you want, y-you actually, for exa-uh, create, for example, the, the block size debate where certainly Bitcoin, Blockchain dot info, you know, were process-processing like, a third of the, the actual transactions, o-on the network at the time. But the important thing to, to understand is they were doing it by proxy. And, and at the end of the day, an actor that's not necessarily always validating his own transaction, with The node still has the opportunity to do so if there's a call for it, if there's a need for it, and obviously that involves education and people understanding the importance of sovereignty, and things like that. But it's important to point out that, I, I guess ultimately, there is, there is a strong, argument to be made that those people who own large quantities of Bitcoin can still influence consensus in different ways that aren't direct, even without running, their own node, because they have a financial stake Taking the network, they can make financial decisions on the market, and that has a, a huge influence on, you know, we saw, we, we saw people make the argument that, some of the trading activity with, Bitcoin Cash futures, and, and associated forks, during, during twenty seventeen, twenty eighteen, a lot of people made the argument that, this is what scared off the miners, you know, people saw that there wasn't no actual demand, let's change It's a bit of a dangerous argument to make, a-any, it, it's, it's one of the reason why people weren't, especially all that keen with those kinds of games, if you will, because it's very easily mani-manipulated. I think Bitcoin was actually very, very fortunate that it found itself in a time where, it was still small enough and, you know, the liquidity and the, you know, the whole financial, the general infrastructure around Bitcoin wasn't as large as it was, because if it would have happened during, you know, this last Incentive, for, for people to try and manipulate opinions via those future, those future markets. And unfortunately, they're able to, they're, they're able to do it, whether or not, whether, whether they own Bitcoin or not, perhaps via paper Bitcoin or, you know, or things like that. But I'm, I'm not making a point that, running a node is, is, I think it's optional certainly, but I, I'm not also making the point that people shouldn't be running their own nodes. I, I think if they want" }, { "speaker": "alex_b", "time": "36:01", "start": 2160.56, "text": "The Bitcoin user should get the experience to run their node within, you know, the, the gro-the, the evolution through Bitcoin, but, but certainly it's not a prerequisite. It doesn't make you more of a Bitcoiner if you're running a node than so-necessarily somebody else. I personally don't actively run a node, and I haven't for the last couple of years. One, and one of the main reasons really is that I have, I, I really have no source of revenue or, or, or income that doesn't come from a party that, that I trust, and I do You know, people that I do business with to a certain extent, and I have plenty recourse, if, like there's no opportunity for these party to, to double spend, you know, for example. And, and I have recourse if, if, if I don't receive the funds. So it's not, it's not absolutely necessary. There's no, no, there's no, you know, no true Scotsman, when it comes to Bitcoin. Running a node is, an, an individual choice, and it, I think overall my point is sometimes in terms of what effect it has, on the consensus of the" }, { "speaker": "stephan", "time": "37:06", "start": 2226.01, "text": "network. Back to the show in a moment. Are you involved in Bitcoin mining? Make sure you check out brains dot com. Brains OS Plus is their firmware that allows you to use the auto-tuning feature. This can increase the hash rate on your Bitcoin ASIC machines. You can improve your efficiency by as much as twenty-five percent, and you can mine on any pool or get zero percent pool fees on SlashPool. Now, they've got a range of supported models. Go to the website and you can check the latest they have S nineteen, S nineteen Pro, S nineteen J, S nineteen J Pro, and some of the other S ni-- S seventeen models. They've also got Wattminer M twenty S and other Antminer X nineteen models in the pipeline. So go to the website at b r a i i n s dot com and you can check out BrainzOS Plus firmware for your Bitcoin mining ASIC. Mempool dot space is the Bitcoin explorer built by Bitcoiners for Bitcoiners. It features real-time transaction tracking and mempool visualization so you can quickly get the information you need. You need about your Bitcoin transactions. It is available over Tor and also completely open source, so you can run it on your own. You can run your own mempool explorer at home on a Raspberry Pi or otherwise with just one click. Over one million people use mempool dot space every month, and the project is operated freely for the benefit of the Bitcoin community without ads or third party trackers of any kind. Mempool dot space shows you multiple layers of the Bitcoin economy. You can go try it out today over at mempool dot space. With all All the hacks that we see going on, both in the Bitcoin world and in the so-called crypto world, you need to take your self-custody seriously, and Unchained Capital can help you with this. They take removing single points of failure seriously, and so you can create a two-of-three multi-signature setup with the Unchained Vault, meaning you create a setup where there are three keys, and you hold two of them in different locations. They can help you with the setup and make this easy for you. They've got a concierge onboarding program, so they will ship you the hardware to withdraw from the exchange into keys that you control. So that website is unchained dot com slash concierge. Use the code livera to get a discount on your concierge onboarding program. And now back to the show with Alex. I see, yeah. So, I mean, the way I see it, I think it is a vital step for many Bitcoiners who are, let's say, if you're listening to the podcast and you're thinking, \"I've never done this before,\" I would say definitely you need to learn how to use it. I personally do use a Bitcoin node in terms of receiving payments and things like that. I find it really handy, but, you know, I think it's a graduation step for a lot of people, and, depending on your situation, you'll, you'll find different scenarios" }, { "speaker": "stephan", "time": "39:44", "start": 2383.74, "text": "Voltage dot cloud and spin up their Bitcoin node there. I know that's a cloud node, but you might be a merchant or whatever, it might be different scenarios there. but to your broader point, I think it was true to say that the futures markets on the fork coins, so I know Bitfinex, for example, had, they called it B one X and B two X around the SegWit two X debacle, which came later in the year in twenty seventeen, and I, as I, off the top of my head, I think that it was something like point one five Well, just Bitcoin, Segwit one x coin or B one x coin. And so that arguably helped the market figure out, but like you said, it's possible also that there's paper Bitcoin, but that said, you would have to see that across all the different exchanges too. So, you know, it's, it's kind of interesting to see if something were to happen like that today, how would it shake out? Well, who knows. but anyway, I also wanted to get your thoughts in terms of updates on some of the Ethereum centralization, Lido, staking derivatives" }, { "speaker": "stephan", "time": "40:44", "start": 2443.76, "text": "Earlier show there, but just, I guess the, the very high level summary is, as I understand your argument, let me just quickly recapitulate that for listeners as well. It's that there are centralization pressures within Ethereum. One of those is this concept of staking derivatives, we're seeing liquid staking derivatives, where there is centralization, arguably, being driven into one of the parties called Lido, and they have, I believe, it's over ninety percent of the liquid staked ETH in and This represents some future potential governance risk around what happens with Ethereum. So I'm curious to get your thoughts on that. Firstly, do you agree with that summary? And then, what are some of your updated thoughts on this since we last spoke?" }, { "speaker": "alex_b", "time": "41:28", "start": 2488.17, "text": "Right. I think since we last spoke, I, I've just been validated in my thesis times and times again. It's now being, it's now being recognized as a, a very public, issue where even Ethereum- Foundation, the engineers and, and developers are acknowledging it, as an existential threat, to, to Ethereum. so we've come a long way, you know, you, you mentioned ninety percent of, the liquid staking share, that hasn't really moved, it's always been dominant and it should be expected to remain dominant, but I think one of the big conversation items, last time we spoke, Lightning was fifteen percent of the overall stake Ethereum, among All validators, and that was just a little less than, perhaps a little less than a year ago really. Today it sits at thirty, thirty-two, so it's a hundred percent increase, i-in the last year. And, and generally, if you look at things, you, you look at, the other numbers, I think more than sixty percent of the new, ETH that is being staked, you know, on a daily basis, is actually still being added to Lido. so the centralization and, the dynamics that, would encourage people to, further centralize i-into, what I believe will now be a, a monopoly are, are clearer than ever, and with the merge possibly, coming by the end of the year, it's going to be extremely, extremely interesting, to see this play out because while people might, you know, people in Etherium camp might be very, very excited about the prospects of the merge, I think this is really when the- The, the dynamics that spur the centralization of Lido really kicks into gear, and this is where you see, opportunity for Lido, as a validator to start capturing things like, MEV in a much, much significant way. And I wouldn't be surprised if within a, a year from, from this interview, we, from this podcast, we're looking at Lido has, owning over fifty percent of the stake on the Ethereum network, at which point- It's, it's painfully transparent and blatant that, the claims of neutrality of Ethereum are significantly diminished. And I, I, I think the big question mark though is, that remains is, is how does that ultimately play out, you know? People, people have always fantasized about Ethereum crashing down in a big ball of fire. I'm personally of the opinion that it's, it's very, very unlikely, to happen. It seems very much to me like Ethereum is Justin, to, to be captured, by, I think the interest that remain, it's, it's a little unclear to me who will be, driving, who will be behind the wheels, o- Ethereum five years from now if, if really it survives. And I think it's possible, that it survives that long. a-and I've put a bit of a thesis this, this morning on, on Twitter. I've been thinking about, some of this stuff, and, and I was reviewing a couple of tweets in preparation This chat and I just sort of had this eureka, eureka moment to me where that really crystallized, the difference between, a system like Ethereum and, a system proof of stake like Ethereum and, and something like proof of work. And the, I think, I guess the exercise that I'm driving, that I'm driving people at is considering what happens in a highly centralized, highly sort of almost monopolized context or scenario for both of them, where, you know, you have perhaps fifty-one percent of the- Hash rate that has consolidated under a, a single, mining pool in, in Bitcoin. What happens then? Well, what we think happens then is that really in the best case scenario, nothing, nothing happens because, you know, the underlying incentive thesis that's, was there from day one from Satoshi is that even if people manage to obtain that amount of, hash rate at such a, such a significant amount of hash rate, the incentives are people to continue to work within the insa-- within the rules of the system because it is profitable for them to Do so, correct. And in proof of stake, there are two incentives at play that challenge each other, and the, the main fundamental difference is that proof of stake validators, proof of stake block producers, which is really what they are, are not only concerned about selling you inclusion into a block, they are also selling you priority in terms of your transaction. And obviously, given all that we know about the state of MEV and Maximally extractable value, on Ethereum and, and this notion that because of the applications that are popular on Ethereum require sort of instant fin-finality to a certain extent, where you've got, many AMM, many, many exchanges, centralized, quote-unquote, decentralized exchange, where arbitrage opportunities are available, and if a certain actor recognizes that opportunity before another and manages- Just to get their transaction that captures this, inefficiency in the market before another, then they can extract, the associated value of that. And that turned-- that has turned into a game where miners are now obviously, as the, as the ones effectively responsible for transaction ordering, on, on the Ethereum network, miners play a central part into this, extraction, extraction game. But this extraction game, if really the prospects of Ethereum are to be fruitful For, you're talking about billions of dollars, like a, a billion dollar business, one of the main, one of the largest, fastest growing industry, in Ethereum is, is MEB, and the problem with that is that under a system like Lighto, where you have the staking derivative that creates, that incentivized, that has network effect, that incentivized centralization because of liquidity first and foremost, and we had a great example of that during the Terra Luna. crisis, and Three Arrows Capital crisis where, you saw the, STE, which is, the light ostaking derivative, and, the, the STE and ETH, pool in, what, what they call the curve pool, which is this liquidity pool which very basically allows people to sell their STE for ETH, for Ethereum, or sell, their Ethereum for the, this is the staking derivative, and this exists because It isn't possible until, until a certain time after the merge for people to unstake their, Ethereum. People can stake today to, to, to Lido, but can't, withdraw that stake. And that's the same for every staking setup, whether it's as a personal at-home user or other validating pool. And so what happened is that there was a lot of volatility in the market and, the peg, which is, you know, one stake equals Is supposed to represent, a claim on, one ETH, and this liquidity in this pool tried to maintain that one for one peg. Because of the liquidity, the peg dropped significantly, not in a, not in a perhaps, very dangerous way, but this just goes to illustrate that staking derivatives are a winner take all sort of formula because of that need for liquidity. If the liquidity around staking derivatives had been fractioned, during this event Of the last couple of months ago, then this would have significantly, perhaps, damaged each and every single one of them being significantly smaller. So there's, there's this, this network effect of staking derivatives at play, and then there's the network effect of, of, of MEV, wherein whoever controls a large portion of the stake on the network has the opportunity to capture more MEV purely because of, effectively, the concept of variance, right? It's The, the concept of variance that we know exist also, within Bitcoin is one of the reason why people get into a group, together in pool, i-is because otherwise, as a single miner, perhaps almost regardless of your hashing power, there's, there's, there's an effect at, at play where unless you get significant amount of hashing power, you're more likely to be less lucky. a-and so there's this, there's this concept of luck in, in the ability to, to produce blocks. That obviously the larger you scale up and the bigger you are, the more likely you are to get lucky and the more likely you are to get the opportunity to create more blocks, in, in a perhaps disproportional way, to your stake slash hashing power. The disproportional- aspect is even more important in MVD where MVD fluctuates, and isn't necessarily a smooth distribution. Yeah. So the opportunity for to capture a, a block of, of MVD that has much larger value than the next block or the one ten blocks be- behind, then it leads to large takers, and entities like Lido in the future to be able to consolidate, the capital that's pulled into their infrastructure Structure, because they're able through this MEV to offer larger staking rewards to, to their users and also use that capital to bolster their own investment, in, into, i-in to capture of MEV. Capture of MEV is effectively the digital equivalent of, mining specialization. It is, a little bit, the idea that, perhaps in an an-analog ways that if you take a Bitmain, for example, that- Would have such an outsized share of the market that they would be able to get so much capital that they'd be reinvesting into their chips and, and be able to gain such an outsized advantage because they, they are able to use that proprietary chip that's more efficient. But fortunately, because Bitcoin is a proof of work is sort of bound by the laws of physics, you know, there's really only like there's diminishing returns in terms of, specialization of, of course, like, you know, you can To get, more efficient chips, your operational pro- your operational process can be more efficient, and more cost effective, but the margins are extremely tight. In, in MEV, the margin are as big as the market is. and, and, and so, once you're able to capture more, of, of that activity than any other player, you consolidate in a very, very, very, very dangerous way for, for, for the network. So ultimately, you are likely to create a monopoly. It's, it's, it's very likely that the natural state, of proof of stake is a natural monopoly that is driven by the staking derivatives and that is driven by the market of, of MEV. And by creating a natural monopoly, you enable rent seeking, and you, enable block producer, sorry, d-block producer to create a market Market for transaction priority that is completely separate from their responsibility to include you into blocks, right? And the reason why that's important is that within the silo of transaction priority, the single monopolistic block producer is allowed to do effectively whatever they want, and that activity is mostly confined to near-term sell- Man transaction, right? Because the idea is that you don't necessarily want to censor indefinitely a transaction or double, even if you attain fifty-one percent or if, if you're monopoly, you're effectively the only person on network producing block. And you wouldn't want to, you know, start mining in, invalid block or double spending, because this flies in the face of the social consensus, right? This is when whoever runs an Ethereum node might step up to the plate and say, \"Hey, you guys are obviously acting, in, malicious ways. They might slash you, if that's within the scope of what you're doing, slash your stake, meanings you lose money, or they might choose to fork the network and...\" You know, blacklist, certain validators and, and stuff like that. So it's a risky game for validators to play, when really all they need to do is sit on at the top of this economy and just start raking in money by, being this rent-seeking entity that enables you, if you want, Stephan, to get your block included as a priority in the next one. Well, why don't you pay me a, a little more money, than, the other people that are in line trying to catch it? Sure, for example, that opportunity, that MVD opportunity. You can create, you can create private mempools where certain privileged people, would broadcast their transactions strictly to you, so that you may include them, in, into the next blocks, i-in a pro- in a, in a prioritized way. And that's very, very important because if you manage to build this private mempool of transaction where people are manually submitting their transaction to you and only you To you, then that further, that further consolidates your advantage as, an an entity that ma- that attempts to, capture MEV, right? Because if people start submitting their transactions, their high value transactions to you, these are transactions that aren't submitted to the other potential competitors, other validators, and these are, these, these, this is value that they can never capture. So you consolidate in that way. But, but really more importantly, and where it gets- It's all twisted and you can see very, very different outcomes is, well, what if I decide that I don't want you, Stephan, to be the one to capture that opportunity? What I'm going to do is I'm actually going to pay, I, I'm actually going to pay the monopoly, the monopoly block producer to censor your transaction. I wanna make sure that, you know, we've been playing the same MVD games. I know that you know what you're doing, but I'm seeing this one transaction here which I really wanna get my hands on, I'm afraid that perhaps you Make sure that you're not able to capture it. I'm gonna pay a premium on top of that. And you can see very quickly how, this, turns into a bidding war, between who wants to get their block included, who wants to censor the other party for, for whatever reason. And when I say censorship, I only mean, you know, small, near term censorship, because by the time the opportunity is gone, when I've captured it, the idea that you've been censored You know, it's, it's, it's, it's a transaction that, provided no value to you, other than if you were able to capture it in that moment. You know, it's not like censori- it's not like censoring a user that's trying to send money to a third party, a-and, you know, whose transaction won't ever go through. It's a temporary c-censorship, but it's enough to have i-it's effect. And so the mon-monopoly block producer is able to, to get away with a lot of Spitting wars between various users in this massive NFT ecosystem and by doing that further consolidate their power, but most importantly, further consolidate the capital within the network, right? You really have a system where you have these overloads, lords, where you, have no choice but to pay taxes. You have to pay taxes because you have to be staking your Ethereum, i-in this, i-i-in this world where potentially- Because of staking derivatives and how easy it is, if you're not staking your Ethereum, you're getting your share of the supply diluted. It's, it's effective inflation, as far as you're concerned, or at least your purchasing power, diminishes compared to people who are staking with Lido. But Lido, as, and, and, and entity itself also derives a fraction of that, the staking rewards. So they charge you effectively a tax, and because you have a natural monopoly, then there's- Opportunity for them to leverage, very large taxation amounts. So, you know, it, it's, it's all a bit of a, as far as I'm concerned, it's a bit of a mess, and like I said, it's been publicly acknowledged by very significant, Ethereum people. there's been, demands that Lido caps their, stakable supply at, at, at twenty-five percent, and there's been a vote, on, on, on, on, on the Lido DAO Recently, where people suggested that perhaps they should, limit, the actual, percentage, actual percentage supply, and well, what do you know, it was almost unanimous in terms of users voting against that proposal, because it's not within their incentives to do so. It was practically, it was a landslide, it was ninety-nine percent of users voting against that proposal. And so they, they have this, they, they, they, there really is the incentive problem at play within Ethereum where I think they're driving into a wall, but unfortunately it's a wall that, you know, is, i- like I said, it's not something that's going to explode to, today and, and, sorry, tomorrow and we'll say, \"Hey, that was it.\" I think it's actually leads to a very perverse system, a very pernicious system. you know, when, when people make the argument that like Ethereum is fiat and is likely to be captured by bankers, I think there's a very plausible argument, That's the case, because why, you know, people have this fantasy that, governments are trying to kill Ethereum, the Gary Gensers is, is trying to kill Ethereum, where if we truly believe those government entities and the, those fiat officials to be what we think they are, then m- it makes a lot more sense for them, you know, to capture these networks and profit from, and, and, you know, prop up these networks as much as they can for as long as they can, because There is an opportunity for them to sit on the money spigot and, it's, it's, it's a new form, it, it's, it's just a different model, for them to, to extract value, out, out of people, and it just makes too much sense for them to leverage that rather than try to, to extinguish it. To ban it," }, { "speaker": "stephan", "time": "01:00:40", "start": 3640.1, "text": "let's say. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah Now, of course, there are different departments of government, so let's say one department of government might be try-- might well not like some certain project, and another might be thinking, \"Oh, I'm, you know, this is an opportunity for us. This is-- this might eventually be more power, more money, et cetera, right? So, more, fame, prestige, whatever, whatever the incentive is for that person.\" Now, it also reminds me, because back in, I believe it was late 2013 or early 2014, You know, at the time, Bitcoin mining and so this one miner was getting, I think close to fifty percent of the network in terms of mining, but I think, it was, it's, it's kind of an interesting little parallel that Bitcoin had a moment like this in history, but of course, they, I think they voluntarily restricted their supply or their mining percentage down, and, in this case, the users of this protocol, you know, almost ninety-nine percent or higher than ninety-nine percent voted against that. Now, I have heard of one idea for- From the Ethereum camp, they've got this idea of, as a response to this concept of the, the centralization, Lido, et cetera, this proposer builder separation. So I'm curious if you have any thoughts on that idea. So as I understand, they, they would bid in real time to win the right to capture MEV in any validator's block, whether it's part of Lido or some homestaker, as an example. So I'm curious if you've looked into any of that or have any response to that particular argument?" }, { "speaker": "alex_b", "time": "01:02:16", "start": 3736.42, "text": "Yeah, I have. I To sort of compartmentalize, the division of labor within this, this MEV, market or more generally speaking, block production, block production, but, certainly one of the driving motive, behind that is the existence of, of MEV, and it seems to me like although there might be good intent behind it from, a lot of some of the people working on that, it all seems to me like a masquerade because there is no Because of the mon- I mean, because of the monopolistic, i-incentive for, for staking a-and staking derivatives, it makes a lot more sense for a dominant staking entity or dominant set of validators like Lido to verti-vertically integrate, across proposer builders, relayers, searchers, and, and those all terms, you know, those are all different entities, or ideally from their perspective, those are different entities, Where they are hoping to create a, a market that will create competition, amongst, the people involved, the actors involved in, into the MEV business, which hopefully, you know, will distribute it enough to avoid centralization. But the problem is that the incentives are, are, are just not, are, are just not there. There, there is, very likely to be, like I said, a single monopoly Monopolistic relayer, a single monopolistic proposer, and what's gonna happen there is that certainly Lido might, so Lido might be contributing themselves in terms of searchers, and searchers are literally the one that dig through transactions on the network, observe, ob-observe all of the, distributed, decentralized exchange activity, and you know, really spot those opportunities, a-and, and the rest of the, and the rest of the, the, the rest of the actors are responsible For putting those blocks into bun, what they call bundles, and it's actually effectively constructing a block, you know, effectively trying to construct a block that extracts as much value as possible so that, the validators can then use that block to add, to add it to the chain. So without getting furthermore i-into technical details, I think this alleviates one of the reason why they're doing this is this alleviates one of the major issue with Ethereum at the moment is that block production Rock production, as it curr-currently stands, effectively has a single centralized point of failure in, the Flashbots infrastructure. And the Flashbots infrastructure is what currently allows miners receive or create an auction market for these MEV bundles, for these MEV transactions, and offer the opportunity for anyone that's trying to partake into this to submit their bundles. Directly to miners, so that they can put them into block, and obviously, depending on the value of them, prioritize one over the other, and then there's a bidding, there's a bidding game going on. And the, and the problem is that sitting sort of right in between these searchers and these people that are putting together the bundles and the miners is, Flashbots relays, which are the ones effectively responsible for coordinating this- This, this entire dance and Flashbots relays, as far as I understand it, you know, are nothing more than software running in the cloud, certain probably AWS infrastructure or whatever that is most likely in a redundant way, most likely in a way that's, you know, fairly secure and airtight, but certainly when we're talking about billions and billions of dollars of value and, and systems that are supposed to be, built in, in trust-minimized ways, To have such an obvious, central point of failure is, is quite re-replexing, and even more so that they've made the decision now, with Proverstate to, I, I've made that tread, that tread just yesterday, I believe, but to, you know, effectively bake in that part of the software into, the various Ethereum clients, and it was already, I mean, it was already kind of used by most, if not all, miners Miners, I would, I would assume that the, the, the original iteration of the Flashbot software is used by all miners, but now they've, they've went, they went so far as to putting that into the, not the reference, well, effectively yes, the, as an API in the reference client, so i-i-in a way that enforces not enforces, but makes it even more likely that every single validators, down the line will use it, and this centralized relay will still be a main-main-mainstay of the MEV infrastructure until they plan to introduce this prop-proposed, proposer builder separation, where you might have then entities that can volunteer as relayers and create a market for, for relayers. But, it's, it's, it's unclear to me how How that's going to play out, I think there'll be, I think generally speaking, I see it playing out two ways. People are going to get very more vocal about it, or, I think there's this sort of, no, it's, I, I've been rereading like, Adam Leshyrg and Ernst's, book and, you know, it, it feels to me like in the Ethereum world, development world, ecosystem, there's a bit of a \"Who is John Galt?\"" }, { "speaker": "alex_b", "time": "01:08:07", "start": 4087.57, "text": "you know, sort of Bother, like, you know, like, we'll just figure it out, you know, like why, like, people aren't actually, not dejected, but, there's a bit of an apathy in terms of the conditions of, of the network and, and the trends that we're seeing. I was, I was listening to a podcast a couple of months ago where it was a couple of guys from the Ethereum Foundation and, and the very notable and popular Hasso, where they were openly, entertaining, centralization Station, on Ethereum and almost, you know, sort of like war is slave, slavery and slavery is peace and sort of like trying to make those, trying to make arguments for why this, wouldn't be such a bad state of things. So I think it's going to be, perhaps an upcoming battle where more fundamentalists are going, you know, who are perhaps more aligned with decentralization start to raise their voice and and then it's g- then it'll be a, it'll be an interesting argument, but there's so much, there, there really is so much dead weight, there's so much, people have invested so much, i-into that, into that venture that, you know, there, there, there comes to a point where it's just s-sunk, sunk cost fallacy where they'll just play along with whatever, whatever happens because, the admission of failure has become very, very, Very, very, very costly. And so you'll have this internal dynamic, and then obviously you'll have, the competitors, that I think, you know, we've seen come up in, in this, in this last cycle and are, are, are probably likely to, try to snatch network effect away from Ethereum. So I'm interested to see it play out, but unfortunately for the very vocal, Maxis and anti, blockchain crypto scams on, on, on Twitter I have to say you'll have to be, you'll have to be con- to continue to be very vil- vigilant because these things are, are unlikely to go away." }, { "speaker": "stephan", "time": "01:10:19", "start": 4219.04, "text": "And, Yeah, and I think to your point as well about the competition that Ethereum will be facing, there may be other more openly centralized solutions that just are cheaper and maybe people will just use those. I mean, of course, it depends whether, whether gambling with the leverage is, not that I have an issue with gambling per se, I just think there's this perception that, oh, look how much Transaction, I think they're, they're not really comparing the same thing, as I think we've, we've spoken about, right? Like Bitcoin is seen differently, rightly, so, and rightly so. so I think that's probably how, I think the key part to understand is that we're looking at this fundamental new money, this new thing with certain assurances that really nothing else gives us. you know, and we're living in this world where there's a war on cash, where literally a couple day-- like maybe just a couple days ago, I saw this news article about how Now, Emirates, the airline, is looking to decrease their flight frequency to Nigeria because they can't repatriate the money back, because Ni- maybe the Nigerian government is trying to keep the US dollar there because they don't wanna give that back. So it's kind of like, and it's such an obvious use case here where Bitcoin, you know, obviously people could-- Of course, maybe, you know, you could argue ab- about how big Bitcoin is today, but I think there's just that fundamental use case there where people just need to be able to transact, and they may need to do To do it even under conditions where, let's say, the normal banking system isn't working for them, or where the government-controlled banking system isn't working for them, and that speaks to some of the issues around centralization that we've spoken of. So, I think probably a, a good spot to finish up here. I enjoyed the chat. any, any last points you wanted to mention for listeners? Anything else to keep an eye on?" }, { "speaker": "alex_b", "time": "01:12:01", "start": 4321.01, "text": "I, I mean, I will say just to wrap up what I was just talking about is like, and, that it's actually very, from my perspective, as much as most people, hate the, the prospect of it, I think we're likely to live, with a multi-chain, world for, still quite some time. And, with that in mind, I, I would encourage people to, to keep an open mind, in, in terms of, I don't, I'm, I'm not trying to, turn into, a, a Udio or Eric here, but there are use cases that By building distributed consensus technology, whether that's via blockchain or via a, like we said, shavian, bank, of, a federation, there are opportunities for, Bitcoin to be perhaps leveraged down the line in ways that might make you uncomfortable, but that are just the consequence of market and, and this permissionless aspect of it. A-and so I, I think it's very unlikely that the current act actors of this blockchain, the current main proponent of this multi-chain world exists ten, five to ten years from now, most of them will likely be extinct because they are fundamentally based on flawed economic premises, flawed technical, technological premises, but I have personally the feeling that we will be exploring that in certain respect in, in Bitcoin, In the Bitcoin ecosystem more and more, and I know some people are, that are building very interesting, products that, that, that leverage concepts like that, products that are fully incentive, fully sort of aligned with Bitcoin, with, with the Bitcoin ethos, and there's no, shitcoin involved, and I'm not, you know, I'm not setting myself up to announce my next shitcoin, but, I, although it might sound like that, now that I'm thinking. Sing to myself, chat. But yeah, I, I just encourage people to keep an open mind. There, there's going to be, again, stay, stay vigilant of course, because we haven't seen our last cycle of, of, of scams and, and, and shit tokens and, and, and new narratives. But the Bitcoin technological ecosystem should be encouraged to learn from whatever actual applicable technology is being developed in, in, in other spheres and see how they can leverage that for, to the, to their benefit. Things like Fedimen, it's not a one size fits all, approach. A lot of people aren't going to give up on on chain transaction, self-validation and things like that, but I think it's a little bit of a-- there's a little bit of a hubris, to the idea that our conception of Bitcoin today is what should be the conception and the approach and the use case of Bitcoin tomorrow for the billions of people, that are going to follow." }, { "speaker": "stephan", "time": "01:15:05", "start": 4505.99, "text": "Right, and a lot of that plays into what kind of- Scaling techniques are available, some of that will be custodial, obviously, I prefer as much as possible is not custodial, but we'll see what happens. So, Alex, thanks for joining me. Listeners, make sure you follow Alex on Twitter, his handle is burgealex4. I'll put the links in the show notes. Alex, thanks for joining me." }, { "speaker": "alex_b", "time": "01:15:24", "start": 4524.62, "text": "Appreciate it, Stefan. Have a good day." }, { "speaker": "stephan", "time": "01:15:27", "start": 4527.3, "text": "Get the show notes at stephanlivera dot com slash four o three. Thanks for listening, and I'll see you in the citadels." } ] }