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You know people, people um, blast me and probably you too for like outrageous tweets and just trying to get people all crazy, you know using incendiary language.
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Sure.
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It's Twitter man.
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That's how you get people to, to, to pay attention.
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If I didn't, if I wasn't such a dick with a lot of this stuff, nobody would care.
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There's a lot of people saying the stuff I'm saying and the stuff you're saying.
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There's a lot of people saying it.
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I'm with you.
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But they're just like little, they're little mice, right?
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They're like, you know, nobody listens.
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You know, so it's like you message you want people to actually hear it.
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Right?
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Right.
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Right.
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Whether it's positive or negative, whatever it is.
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I enjoy the challenge of like writing something viral.
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There's a, there's a, there's a nuance in the language that I enjoy, you know.
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the hardware wallet.
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This team has proven over and over that they're committed to freedom of their users.
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trust-minimized hardware wallet.
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And what do I mean by trust-minimized?
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I mean you never have to plug this into your computer.
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When you use other Bitcoin hardware wallets, you have to connect them to your computer
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in order to use them.
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You scan QR codes.
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You use an SD card.
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There's a number of ways that bypass the need to connect directly to your computer.
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Foundationsdevices.com.
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The only way you can use Bitcoin properly, the way it was meant to be used and stayed
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truly private, is to run your own full node.
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Have your own copy of the blockchain on your own full node.
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that nobody else can associate your IP, your UTXOs, or anything back to you.
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When you use a full node like the Tonto, you are using Bitcoin as privately as you can.
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Go to Ronindojo.io.
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Ronindojo.io.
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Justin Bonds.
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Yes, we have a lot to talk about.
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We were just saying like, let's stop with the chit chat before we stop recording and
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save the good stuff for when we're actually recording.
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Thank you for agreeing to come on.
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I know we've had interactions on Twitter, and we spoke once on a Twitter space, I think.
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This is good.
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This gives us time to get more in depth on some of this stuff.
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Oh, yeah.
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And I was very happy when you reached out to come talk to me because I feel like we
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have so many things in common.
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We also disagree on some major things as well.
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So it's a really interesting combination of ideas I think we have between the two of us.
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So I'll see how much of that we could have.
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Yeah I have like a short list of things, but we probably won't get through it.
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Yeah, no, certainly.
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So you run a hedge fund?
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Is it a hedge fund?
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Yeah.
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Okay.
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So you manage other people's money.
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Yeah, that's correct.
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As a centralized institution, the type of thing that I think the creator of Bitcoin
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wanted to mitigate that sort of risk.
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And I think I'm aware of the paradox almost, right?
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That I'm an advocate of decentralization, yet I manage a centralized fund essentially.
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But I do invest in decentralized assets.
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And I try to serve as a bridge between different worlds and I think traditional structures
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also still have a place in our ideal world as well.
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Not that I think you'd be too much of a fan of a type of a smart contract fund anyway,
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would you?
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Well okay, so first of all, we all do centralized things.
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So we all work in centralized ways in some form.
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Nobody leads a fully decentralized life, right?
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So I always say, I don't go out there.
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A lot of people think that I'm just against everything centralized.
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That's not true.
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There's plenty of centralized stuff that's fine.
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And even banks and exchanges, at least they're honest about their centralization.
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They're honest about the fact that you can't see all the stuff that's going on.
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My issues are really with transparency.
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So I figure as long as you're, like if you were out there saying you were running a decentralized
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hedge fund, then I might have a problem.
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It's kind of like saying you're running a decentralized layer two where you got a multi-sig,
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right?
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So, well, otherwise like, no, you got to make a living and you got, you're really good at
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doing something.
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Is your hedge fund all like 100% crypto?
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Yeah, 100% crypto.
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We only invest in things that are decentralized and passable, all of our fundamental checks,
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so to speak.
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We're not based in the Bahamas or something either.
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We're based in the Netherlands.
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So we try to tick all the boxes from a kind of regulatory perspective.
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And I talk to a lot of institutional parties actually as a evangelist, if you will, which
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I think within the cryptocurrency community, I'm a bit more of a critic, I think.
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I think some investors-
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What's the largest holding?
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We actually do not disclose what our holdings are.
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Yeah.
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We're the secret source for the type of fund that we're arguing.
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I bet you I know what the largest holding is.
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I bet you would actually.
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Bitcoin Cash.
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No, I'm just kidding.
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No, no.
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I mean, I'm glad you bring it up.
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I'm glad to talk about all of these things, you know, because I used to be a Bitcoin Cash
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supporter, but not since 2018, if I'm remembering my years correctly.
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Back when it was the end thing.
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Right.
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Well, I feel like-
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No, I do want to talk about that with you.
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No, I would love to, because I feel from my perspective, I was being consistent with my
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principle.
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Yeah, we respect that.
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I appreciate that from you actually.
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Well, the most recent thing that we connected on and agreed on was the issue with Ethereum
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layer 2s.
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And by the way, your largest holding is 100%, Heath.
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I know that.
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I won't confirm or deny.
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But layer 2s have a serious problem, right?
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And we sort of saw eye to eye on the fact that specific to Polygon, which is not a layer
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2 actually, I'm kind of mixing things up here.
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Polygon, the side chain, has a very centralized governance structure, you know, when you consider
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the fact that it has a multi-sig, can almost do anything.
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But then that extends out to layer 2s as well.
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So how does that, because if it were your largest holding in the hedge fund, does this
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kind of stuff factor in the fact that the push seems to be to be pushing business, so
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to speak, or transactions out to these centralized layer 2s, and that could be the future of
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the protocol?
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Absolutely.
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Yeah, no, I think that this is big influence on us in terms of not seeing as bright of
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a future anymore for Ethereum, because it's pushing this layer 2 narrative, which I just
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don't think is as competitive, at least in terms of like a long term kind of utility
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based perspective on, you know, fundamental perspective on value investing based perspective
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on investing, right?
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Because that changes the calculation a bit.
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And in that sense, I just don't think it's a competitive solution.
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And if you don't have the advantages of decentralization, and you know, I mean, look, the layer 2s
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can be technically decentralized, but you're building out an ecosystem that's extremely
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fragmented and will definitely still include like a lot of centralized and custodian solutions.
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Like that's not going away.
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That's why I've been, you know, so against this kind of L2 narrative, quote unquote,
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you know, the L2 scaling solution, right?
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Which I don't really consider a scaling solution at all.
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But do you think that this is the future, whether we like it or not?
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Or do you, are you advocating for a different path?
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Oh, yeah, absolutely.
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No, I think I think on chain scaling is the way forward.
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You know, I really think that we can scale on the base layer and, you know, while preserving
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decentralization, right, that there's a balancing act to be had there in terms of tradeoffs.
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But scalability is still important.
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And there's certain technologies, I think, that are very interesting from my perspective,
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such as sharding and things like enshrined roll ups, I think, which, which to me are
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distinct from layer 2s.
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Yeah, like this stuff that Vitalik just wrote about a day or two ago, right?
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Did you read that post from Vitalik?
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I'm not sure about this.
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He did a long post about enshrining ZK roll ups.
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Yeah, I haven't read that particular post.
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I do.
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But I have been staying up to date with the whole ZKVM space.
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And my main problem with it is, you know, when we have computer scientists and engineers
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telling us, oh, yeah, it's going to be five plus years away when we figure out how to
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do this.
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That's just a giant red flag.
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So for me, my criticism, like I'm not against this idea of ZKVM.
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I think it's a fine idea.
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But I think if it's an idea that's projected to be five plus years out, I mean, what that
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tells me in my experience is they don't have a clue.
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Basically that's some sky and like pie in the sky type of thinking.
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And that's not really what I appreciate in this space.
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I'm not going to apply any double standards here when it comes to such claims.
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If I'm looking at some small cryptocurrency and I'm deep diving that and they're like,
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oh, yeah, we'll figure out this key technology in five plus years from now.
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No way.
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Are you kidding me?
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You don't have a clue.
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Right.
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What's your philosophy on how you approach the space and how you decide to criticize
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and stuff like that?
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First, I'll tell you mine just to compare.
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So it's really for me about it's about most of the time it's about strengthening an ecosystem.
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So with Bitcoin for me, it's about if I see weak spots, I see opportunities to influence
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opinions on a certain thing.
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I'll go there and I'll sort of reveal the soft spot in order to get people talking about
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it knowing that it might take a year or two or five for people to eventually get to a
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place where they want to make a fix.
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I'd say that's 50% of my time.
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And the other 50% is almost like a warning people about what I see.
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For instance, with Ethereum, I don't think Ethereum is something that can be fixed to
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the point where I would align with it philosophically anymore since it's switched to proof of stake
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and I want to get into that with you too.
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But it's almost like I feel like people need to understand all of the red flags and the
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warning signs with regard to centralization potential for the future, with regard to how
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it could be a compliant blockchain in the future with all these enshrined features.
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How do you approach the space when it comes to critiquing and offering up public opinions
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like that?
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It's a very good question.
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And what I mentioned earlier is in terms of us having similarity and differences, I think
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we were both very outspoken critics of Polygon, as you mentioned before.
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So we've overlapped, I think, as critics in the space on a bunch of different topics.
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I think in this case, it's really good to go to first principles for me.
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And I'm guessing we have most of our first principles in common because for me, that's
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really the empowering vision that Bitcoin originally brought forward, like that self-ownership,
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self-sovereignty, having this sound decentralized money, a separation from the monetary power
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from the state.
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It's about freedom, I think, on so many levels.
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And a lot of that also, for me at least, goes back to a lot of my political ideology as
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well, which does have some libertarian roots and things like Austrian economics.
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And I think we...
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Do I have that right?
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Is that we all have that in common?
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I suspect we do, don't we?
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Well, the two of us at least, not everybody.
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Yes, of course.
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So far, yeah.
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Yeah, okay.
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So I think for me, there's this grand vision of what we can achieve with cryptocurrency
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and how we can do good in the world from our perspective.
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And that's the vision I'm trying to maximize.
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And I feel within the space, my role, because I also am a cryptocurrency researcher and
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have been for many years, my role as a critic, I think, is a way of giving back and putting
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my weight on the scales a bit of history as we can at such an early stage.
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And that's, to a large part, what motivates me in terms of my public critiques that I
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do, is I try to identify, okay...
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And I have to weigh up the difficulty of doing a critique.
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Some things are much harder to critique than others, takes a lot more time.
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And then I look up, like, okay, how many people are going to get hurt by this?
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How badly is the crime?
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How badly is the potential for pain here?
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And in terms of like...
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The pain you're going to inflict?
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Well, no, no, of course, the pain of the victims here, right?
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Because I'm not the victim.
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Yeah, who are the victims?
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In a lot of cases, the...
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Sorry?
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The developers?
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No, no, definitely not the developers.
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No, maybe in some cases, but in most cases, it should be things like investors that I'm
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thinking about primarily, you know, when people put a lot of money into a token, and their
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hopes and dreams is all the psychological stuff that goes along.
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And some people are just feeding into that, I think, in an irresponsible way.
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And especially when, you know, their claims don't match up with reality.
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And especially when someone claims to be desensualized and they're not, right?
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This is, I think, one of the big crimes as well that I think we're both motivated to
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call out.
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Yeah.
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So, wait, do you mean that before you critique something, you're thinking about how you could
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affect its market value?
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Or you're talking about saving people from losing money by critiquing something?
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More the latter.
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But I suppose the two go hand in hand.
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I mean, anything goes hand in hand in this market.
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You know, it's the nature of cryptocurrencies.
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It's all attached to this token of value, which is what introduces a bunch of skewed
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incentives.
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It's like it adds all this friction that no other technology ecosystem has.
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When the technology is the money, it creates such a mess of incentives that you don't see
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in any other industry, right?
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So well, let me ask you this.
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You said you're kind of not so bullish as an investor.
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I'm saying the path forward for Ethereum is not super clear, especially with the current
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sentiment, right?
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Pushing people to layer twos.
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You're obviously, and we'll get into it, you're obviously not into Bitcoin as it currently
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exists.
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We should talk about that as well.
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I'll be very curious.
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Which I do want to talk about.
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But I do want to know if those two are basically not the ultimate freedom path, right?
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If those two are not the best path for freedom, what's the best path for free for freedom?
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Are you at the point where it's just like crypto is not going to get us there?
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Oh no, I'm still a believer.
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I'm definitely still a believer in cryptocurrency.
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And no, it was unfortunate.
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If you say Solana, I'm going to shoot you.
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We'll get to that.
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But I'll add some nuance to it.
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That's a good one.
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So look, I think for me, I've been a supporter of Ethereum since it was launched in 2015.
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I think it was.
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Even mining it in the first week, I had a small mining farm at the time and I even had
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all my GPUX ready to mine it.
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Giant pain in the ass because it was all like command line.
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I had to compile code.
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Because when I first started teaching myself how to use Linux, it wasn't very usable on
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launch, let's just say that.
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But I've been a big supporter of it because they promised to scale through sharding and
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there's a bunch of other specific aspects I like about it.
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I actually do like the economic design.
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I do like proof of stake, which we should talk about later a bit more as well.
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So for me to see Ethereum pivot away from layer one scaling and from my perspective,
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really Bitcoin history is kind of repeating itself in Ethereum now.
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If you think about it, that to me was a big disappointment.
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And then that made me look less optimistically towards Ethereum's future.
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I do think it will continue to be a dominant blockchain for a very long time because the
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network effects are very sticky in cryptocurrency.
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And I think Bitcoin is a testament to that as well.
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But I think long run, if Ethereum stays on its current course and really fails to meet
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demand on its layer one, then I think competitors really have a really good shot at overtaking
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it in the future or actually will overtake it in the future.
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So I'm still hoping Ethereum can change.
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I'm putting out a message saying, hey, this is what Ethereum needs to do to get out of
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this hole, but people are not necessarily going to listen to me.
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And I'm a big critic of how Ethereum governance works.
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I think we disagree on the solution to that since I'm a fan of on-chain governance as
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a solution to a lot of these problems.
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But I actually think the governance in Ethereum is actually very similar to the governance
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in Bitcoin.
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I think that's problematic.
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I think when you have highly centralized decision making and it's a bit of a wild card in terms
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of predicting where that will go.
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Yeah, that makes me more doubtful about Ethereum more long term.
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That's why I become more interested in competing layer ones.
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And now to go back to your question, it was difficult to be a critic of BTC, the largest
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cryptocurrency in the entire ecosystem since 2017.
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And it was a lot more controversial to take that position back then.
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And now having to also be a critic of the second largest cryptocurrency, that's not
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necessarily something I wanted to do.
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That just does make my life more difficult.
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I really felt an allegiance and I had a community there and they still host me at conferences
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and things like that.
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It's not something I wanted to do, but it's something I felt I had to do.
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I'm looking at more alternative L1s now because if I don't see Ethereum going where I think
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it should be, then I'll find my perfect cryptocurrency somewhere else.
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Even if it means trading away some decentralization?
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No.
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Because any other L1 you're talking about, unless you're talking about certain privacy
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coins or something like that, but or Litecoin or Doge, is that where you're going?
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No, not Litecoin or Doge.
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Okay.
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All right.
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You want smart contracts, right?
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I want smart contracts.
374
00:22:09,160 --> 00:22:10,160
Yeah, exactly.
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So, are smart contracts is sort of a must have for freedom or are you thinking more from
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a business point of view?
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Both.
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Both.
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So, from my perspective, I think that well, first of all, I think the goal of cryptocurrency
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is to create good money and I believe that good decentralized money and I believe good
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decentralized money also needs good decentralized finance to support it.
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Because otherwise, everyone just ends up putting it in centralized financial institutions and
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then what's the point?
384
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Well, I mean, there's still major advantages to it.
385
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Don't get me wrong, but I feel like there's more to add there.
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And I think that in the developed world, at least, using cryptocurrency as a form of money,
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I think it's very difficult to convince people to do that.
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So I've started to see DeFi being more like this stepping stone towards adoption as money
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as well.
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And I just think that through DeFi and a lot of the related applications, I think there
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is potential for greater adoption there and usage, which then drives fees and drives demand
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and etc.
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etc.
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And we have a virtuous cycle there.
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So that's why I think DeFi is a necessary component.
396
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Just to be competitive in the market and that's the business component.
397
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You can collect more fees and you have higher security than you can pay for more shards.
398
00:23:34,400 --> 00:23:43,720
Yeah, what are some of the decentralized parts of DeFi that you like and that you think are
399
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sufficiently decentralized?
400
00:23:47,640 --> 00:23:48,640
Let's pick them apart.
401
00:23:48,640 --> 00:23:52,520
Honestly, I don't think anything is really sufficiently decentralized at this point or
402
00:23:52,520 --> 00:23:54,800
maybe, but I'm not sure.
403
00:23:54,800 --> 00:23:56,880
Even Bitcoin and Ethereum.
404
00:23:56,880 --> 00:24:01,600
I think more practical decentralization comes at greater scale.
405
00:24:01,600 --> 00:24:07,960
But in terms of, let's say, technical decentralization, there are projects out there that burn their
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admin keys.
407
00:24:09,200 --> 00:24:11,720
So Uniswap has no admin key.
408
00:24:11,720 --> 00:24:13,200
Let me think.
409
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What are some other examples?
410
00:24:15,720 --> 00:24:18,280
Maker has no admin key.
411
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Has that burned?
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Augur is a little bit defunct right now, but had no admin key.
413
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Whenever you have these contracts where everyone has to migrate to the next contract, that's
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not ideal in my view because then you have to launch an entire new smart contract and
415
00:24:34,120 --> 00:24:39,280
ask people, please move over to the next one because you literally can't change the rules.
416
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I think that does qualify.
417
00:24:41,400 --> 00:24:45,360
That's maybe in the minority, but I think that does exist.
418
00:24:45,360 --> 00:24:47,760
It's not the case that all smart contracts are bad.
419
00:24:47,760 --> 00:24:53,120
I remember in the Bitcoin community, in the early days, things like decentralized exchanges
420
00:24:53,120 --> 00:24:56,560
were one of the big ambitions of Bitcoin.
421
00:24:56,560 --> 00:24:59,320
It's like, yeah, we can build a decentralized exchange over Bitcoin.
422
00:24:59,320 --> 00:25:00,320
That was one of the dreams.
423
00:25:00,320 --> 00:25:01,320
Where's that gone?
424
00:25:01,320 --> 00:25:02,320
Yeah, yeah.
425
00:25:02,320 --> 00:25:10,720
I mean, I guess one of my biggest issues with DeFi though, as we currently know it, is that
426
00:25:10,720 --> 00:25:13,760
it wouldn't be possible without Chainlink.
427
00:25:13,760 --> 00:25:22,040
And Chainlink has the same problem as Polygon with regard to having that multi-sig that
428
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can nuke the whole thing.
429
00:25:25,880 --> 00:25:30,800
I initially got interested in DeFi because I thought it was going to fulfill that promise
430
00:25:30,800 --> 00:25:32,900
that you were just talking about that.
431
00:25:32,900 --> 00:25:35,440
We have decentralized money.
432
00:25:35,440 --> 00:25:40,360
Now we need decentralized financial services for that decentralized money.
433
00:25:40,360 --> 00:25:44,520
We shouldn't have to use that decentralized money on centralized exchanges only.
434
00:25:44,520 --> 00:25:46,000
I get that.
435
00:25:46,000 --> 00:25:49,000
And that's why I was initially attracted to DeFi.
436
00:25:49,000 --> 00:25:53,400
But initially with DeFi, that's how it was advertised.
437
00:25:53,400 --> 00:25:57,160
It was advertised as trying to solve that problem.
438
00:25:57,160 --> 00:26:02,320
But then just like every other project in the space, over time, and in this case it
439
00:26:02,320 --> 00:26:07,080
was really over a year or less, incentives changed.
440
00:26:07,080 --> 00:26:11,600
And the incentive became how do we provide a return to these VCs who came in and decided
441
00:26:11,600 --> 00:26:17,360
that they needed a return through a token or through all these other ways that they
442
00:26:17,360 --> 00:26:19,800
have to make money in DeFi.
443
00:26:19,800 --> 00:26:26,360
And it became about just building things that were just decentralized enough to pass.
444
00:26:26,360 --> 00:26:33,160
And using centralized price feeds from Chainlink and basically taking shortcuts wherever necessary
445
00:26:33,160 --> 00:26:37,320
to get a product to market now because we don't have years to wait.
446
00:26:37,320 --> 00:26:40,000
We have to get a product out the door now.
447
00:26:40,000 --> 00:26:44,500
And by the way, we need to do all this before regulators realize what the hell we're doing
448
00:26:44,500 --> 00:26:47,040
because by that point it'll be far too late.
449
00:26:47,040 --> 00:26:49,020
They're going to nuke the whole industry.
450
00:26:49,020 --> 00:26:55,760
So we have to buy 2023, have a token out, airdrop, come up with this cool way to create
451
00:26:55,760 --> 00:27:05,040
this new investment opportunity by airdropping and then dumping on people's heads.
452
00:27:05,040 --> 00:27:08,600
All this stuff which is regulated in traditional markets.
453
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But really it just became this mess.
454
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To me, it almost killed the whole idea.
455
00:27:19,040 --> 00:27:24,160
I think that if we're going to see real DeFi anytime soon, it's going to start from scratch.
456
00:27:24,160 --> 00:27:31,600
What we've already done has been a complete disaster with regards to freedom.
457
00:27:31,600 --> 00:27:34,000
So it's more to separate.
458
00:27:34,000 --> 00:27:36,640
I'm not talking about building a great investment.
459
00:27:36,640 --> 00:27:40,880
I'm not talking about building a great portfolio or I'm not talking about is this going to
460
00:27:40,880 --> 00:27:43,800
help increase in value over the next five years.
461
00:27:43,800 --> 00:27:45,280
I don't care about that.
462
00:27:45,280 --> 00:27:49,160
What I care about is, is it going to help me be a freer person?
463
00:27:49,160 --> 00:27:53,120
Is it going to help me not have to trust people with my money?
464
00:27:53,120 --> 00:27:56,120
Is it going to help me have a plan B if I need it?
465
00:27:56,120 --> 00:27:57,520
That's the kind of stuff I'm talking about.
466
00:27:57,520 --> 00:28:00,640
I think that's the kind of stuff you're talking about too.
467
00:28:00,640 --> 00:28:03,040
And you're not wrong with everything you said there.
468
00:28:03,040 --> 00:28:09,360
The Chainlink admin key can mess with the price freeze and totally tank what is this?
469
00:28:09,360 --> 00:28:10,880
Several billion dollar market.
470
00:28:10,880 --> 00:28:11,880
It's crazy.
471
00:28:11,880 --> 00:28:12,880
Oh yeah.
472
00:28:12,880 --> 00:28:13,880
At least 10.
473
00:28:13,880 --> 00:28:14,880
Yeah.
474
00:28:14,880 --> 00:28:18,680
But I think it's important to also distinguish a few things.
475
00:28:18,680 --> 00:28:22,600
So I mean, we can see the good amongst the bad as well a little bit more.
476
00:28:22,600 --> 00:28:32,560
So if I take the Uniswap, for example, the price on that AMM, that's not affected by
477
00:28:32,560 --> 00:28:34,680
the Chainlink Oracle.
478
00:28:34,680 --> 00:28:37,320
And the Chainlink Oracle can't steal funds.
479
00:28:37,320 --> 00:28:38,320
Not directly.
480
00:28:38,320 --> 00:28:39,320
Right.
481
00:28:39,320 --> 00:28:40,320
Exactly.
482
00:28:40,320 --> 00:28:44,480
Indirectly, arguably, maybe through arbitrage and manipulating other price feeds.
483
00:28:44,480 --> 00:28:45,480
Who knows?
484
00:28:45,480 --> 00:28:47,240
It's an edge case.
485
00:28:47,240 --> 00:28:53,960
But I would say if we zoom in, then we can say, okay, this is a real application where
486
00:28:53,960 --> 00:28:59,940
someone can exchange their cryptocurrency on an exchange with high liquidity without
487
00:28:59,940 --> 00:29:02,720
a third trusted party.
488
00:29:02,720 --> 00:29:07,840
And sure, there's a bunch of landmines on the way there and it's not exactly the most
489
00:29:07,840 --> 00:29:09,360
user-friendly thing in the world.
490
00:29:09,360 --> 00:29:11,160
But those cases do exist.
491
00:29:11,160 --> 00:29:15,120
And that to me is that kind of glimmer of hope, you know, of like, wow, we can actually
492
00:29:15,120 --> 00:29:16,120
do this.
493
00:29:16,120 --> 00:29:18,560
And I think that's proof of that.
494
00:29:18,560 --> 00:29:21,480
Whether it's going to be on Ethereum or the next thing.
495
00:29:21,480 --> 00:29:23,680
That's wonderful.
496
00:29:23,680 --> 00:29:32,040
I think Uniswap is an interesting case though, because we've seen three versions and a fourth
497
00:29:32,040 --> 00:29:34,160
version proposed.
498
00:29:34,160 --> 00:29:35,160
Or the fourth one is up.
499
00:29:35,160 --> 00:29:36,160
I don't even know anymore.
500
00:29:36,160 --> 00:29:37,360
I've lost track.
501
00:29:37,360 --> 00:29:45,760
But each one has been decentralized and you've had to migrate from one to the other if you
502
00:29:45,760 --> 00:29:48,680
wanted to use the newest one.
503
00:29:48,680 --> 00:29:50,600
And we've seen people doing it.
504
00:29:50,600 --> 00:29:51,880
You referenced this before.
505
00:29:51,880 --> 00:29:57,920
We've seen people doing it almost like you upgrade your iPhone sometimes.
506
00:29:57,920 --> 00:30:01,160
It's like, okay, we're going to move to the new one.
507
00:30:01,160 --> 00:30:05,160
Version three created some drama just because it was so difficult to use.
508
00:30:05,160 --> 00:30:10,720
But I think that where it gets kind of tricky with this stuff, and I've been thinking about
509
00:30:10,720 --> 00:30:16,200
this more lately, and this applies to the Bitcoin debates too, and Ethereum debate,
510
00:30:16,200 --> 00:30:23,640
all the debates, is thinking about the external stuff, the stuff that you can't see on chain.
511
00:30:23,640 --> 00:30:28,800
And so from the on chain point of view, Uniswap is decentralized, unstoppable.
512
00:30:28,800 --> 00:30:33,200
You can't turn it off.
513
00:30:33,200 --> 00:30:37,240
There's no regulator that could come in and say, we have to turn off Uniswap version one.
514
00:30:37,240 --> 00:30:38,240
It's still there.
515
00:30:38,240 --> 00:30:39,240
It's always going to be there.
516
00:30:39,240 --> 00:30:40,240
Nobody's using it.
517
00:30:40,240 --> 00:30:42,520
Or very few are using it at this point.
518
00:30:42,520 --> 00:30:44,560
It still exists.
519
00:30:44,560 --> 00:30:50,400
But what Uniswap has gotten good at, and Uniswap, by the way, the company, has grown quite a
520
00:30:50,400 --> 00:30:59,200
bit and has hired people that are former Federal Reserve people, former people that have been
521
00:30:59,200 --> 00:31:09,680
on presidential staffs and worked in the White House, regulators and former SEC or CFTC officers.
522
00:31:09,680 --> 00:31:13,000
It's become this spook operational.
523
00:31:13,000 --> 00:31:16,160
They also created this white listed pool.
524
00:31:16,160 --> 00:31:17,160
Did you see that as well?
525
00:31:17,160 --> 00:31:21,800
Where they created only, you have to do KYC and AML to get in the pool and then all the
526
00:31:21,800 --> 00:31:23,680
institutionals can kind of trade with each other there.
527
00:31:23,680 --> 00:31:24,680
Oh, okay.
528
00:31:24,680 --> 00:31:25,680
Yeah.
529
00:31:25,680 --> 00:31:26,680
I mean, that's what version four is for.
530
00:31:26,680 --> 00:31:33,920
Version four was specifically created to allow total flexibility with how you allow access
531
00:31:33,920 --> 00:31:38,040
to these pools with what they call hooks.
532
00:31:38,040 --> 00:31:44,920
It's building my case here for the fact that, yeah, we can, there's a million decentralized
533
00:31:44,920 --> 00:31:49,720
ideas that have been built and that nobody's used.
534
00:31:49,720 --> 00:31:52,320
And then there's others that have kind of caught on.
535
00:31:52,320 --> 00:31:56,360
But at the end of the day, isn't it just money that talks?
536
00:31:56,360 --> 00:32:01,880
We've seen principles just destroyed by large amounts of money over and over and over.
537
00:32:01,880 --> 00:32:02,880
Right?
538
00:32:02,880 --> 00:32:04,360
So, okay, we figured out Uniswap works.
539
00:32:04,360 --> 00:32:05,360
Cool.
540
00:32:05,360 --> 00:32:06,640
The math is awesome, et cetera.
541
00:32:06,640 --> 00:32:08,120
Hayden is brilliant.
542
00:32:08,120 --> 00:32:12,360
But then it's like, okay, all these VCs come in, all this billions of dollars comes in.
543
00:32:12,360 --> 00:32:16,480
Next thing you know, we're sort of slowly going down this slippery slope towards this
544
00:32:16,480 --> 00:32:19,460
regulated, captured KYC Uniswap.
545
00:32:19,460 --> 00:32:24,800
So why should I have hoped that any of this could ever catch on in a decentralized way?
546
00:32:24,800 --> 00:32:34,440
So I think for me, I actually really believe in the utility of this technology.
547
00:32:34,440 --> 00:32:40,840
And what that also means is that it works because of greed in many ways.
548
00:32:40,840 --> 00:32:47,360
So I'm coupling and sure, I find a lot of what's, I'm not a VC, I'm a value investor
549
00:32:47,360 --> 00:32:48,360
myself.
550
00:32:48,360 --> 00:32:52,600
I invest in tokens for long term and that's why I do fundamental research.
551
00:32:52,600 --> 00:32:56,400
And sure, I find a lot of the things that happen in the VC world, not all of it, but
552
00:32:56,400 --> 00:32:59,840
some of it, especially in the crypto world, it's very distasteful.
553
00:32:59,840 --> 00:33:03,240
What's happening there and the kind of games that are being played.
554
00:33:03,240 --> 00:33:05,440
Certainly.
555
00:33:05,440 --> 00:33:12,120
But at the same time, one of the reasons I think that I really came to believe in cryptocurrency
556
00:33:12,120 --> 00:33:18,800
is I think before I saw cryptocurrency, I really looked at democracy as kind of this
557
00:33:18,800 --> 00:33:21,480
dysfunctional system.
558
00:33:21,480 --> 00:33:24,160
And sure, it's the best system we have.
559
00:33:24,160 --> 00:33:28,240
And as I think Winston Churchill said this in particular, he said that democracy is the
560
00:33:28,240 --> 00:33:29,560
best of the worst system.
561
00:33:29,560 --> 00:33:31,420
It's kind of the best that we have.
562
00:33:31,420 --> 00:33:32,760
So that's what we go with.
563
00:33:32,760 --> 00:33:33,760
But I saw a lot of-
564
00:33:33,760 --> 00:33:37,280
Not sure I completely agree with that, but okay.
565
00:33:37,280 --> 00:33:38,280
Maybe we'll come back to that.
566
00:33:38,280 --> 00:33:39,280
That'd be fun.
567
00:33:39,280 --> 00:33:44,760
I'm using a broad definition of democracy here though.
568
00:33:44,760 --> 00:33:51,040
And the idea though is that one of the reasons that democracy is dysfunctional is that, and
569
00:33:51,040 --> 00:33:54,840
one of the reasons it's dysfunctional is that because it requires a very highly enlightened
570
00:33:54,840 --> 00:33:57,840
population for it to really function.
571
00:33:57,840 --> 00:34:01,900
People have to really mean well and they have to be virtuous and they have to be informed.
572
00:34:01,900 --> 00:34:07,000
And then only then, and usually it tends to break down at larger scales because then you
573
00:34:07,000 --> 00:34:09,840
can't really reflect the will of the people too well either.
574
00:34:09,840 --> 00:34:14,400
I have a background in political philosophy if I didn't come across yet with this little
575
00:34:14,400 --> 00:34:15,400
rant.
576
00:34:15,400 --> 00:34:16,400
I like it.
577
00:34:16,400 --> 00:34:17,400
Yeah.
578
00:34:17,400 --> 00:34:18,400
I like this kind of conversation.
579
00:34:18,400 --> 00:34:20,660
No, no, that's great.
580
00:34:20,660 --> 00:34:23,000
But then cryptocurrency came along for me.
581
00:34:23,000 --> 00:34:26,920
And something that I saw in cryptocurrency is that actually, no, people don't need to
582
00:34:26,920 --> 00:34:29,760
be very enlightened.
583
00:34:29,760 --> 00:34:31,840
People don't need to mean well.
584
00:34:31,840 --> 00:34:34,280
You're not dependent upon that.
585
00:34:34,280 --> 00:34:37,480
It works because people follow their own incentives.
586
00:34:37,480 --> 00:34:44,360
In that sense, it's kind of this idea of the black hand of the market and bringing about
587
00:34:44,360 --> 00:34:47,760
positive outcomes basically in the longer run.
588
00:34:47,760 --> 00:34:51,560
Of course, there's going to be negative externalities along the way and so forth.
589
00:34:51,560 --> 00:34:56,640
But for me, what it therefore fixes is that, okay, you actually have a system that works
590
00:34:56,640 --> 00:35:02,060
despite of people's greed or actually it works because of people's greed or selfishness
591
00:35:02,060 --> 00:35:05,360
or self-interest, I should say.
592
00:35:05,360 --> 00:35:09,640
And what it does is that it align those incentives and then it creates this public good.
593
00:35:09,640 --> 00:35:14,360
And I think for me, that also that's why cryptocurrency works.
594
00:35:14,360 --> 00:35:18,880
So that's why I'm not too disparaged when I see people following their own self-interest
595
00:35:18,880 --> 00:35:19,880
unethically even.
596
00:35:19,880 --> 00:35:25,400
So I'm like, okay, well, at least cryptocurrency still works under those circumstances.
597
00:35:25,400 --> 00:35:31,840
As in the American founders said, it still works even when there's monsters in charge.
598
00:35:31,840 --> 00:35:34,200
So it's like that's kind of the idea.
599
00:35:34,200 --> 00:35:40,160
Well, no one's in charge obviously, but it's a bit of a misquote.
600
00:35:40,160 --> 00:35:45,520
Now this is a super interesting area to think about because this is exactly where my head's
601
00:35:45,520 --> 00:35:48,680
been at for a while now.
602
00:35:48,680 --> 00:35:52,080
First of all, with regard to the US, are you in the US?
603
00:35:52,080 --> 00:35:53,080
I'm not actually.
604
00:35:53,080 --> 00:35:57,720
I'm based in the Netherlands and Europe.
605
00:35:57,720 --> 00:36:06,280
So one of the reasons I got attracted to Bitcoin was because since I learned about the constitution
606
00:36:06,280 --> 00:36:10,960
of the US and how it works and why it was set up the way it was set up, I saw Bitcoin
607
00:36:10,960 --> 00:36:18,400
as sort of almost a parallel, a very similar idea where it's like, let's create these
608
00:36:18,400 --> 00:36:21,920
rails for a system to run on.
609
00:36:21,920 --> 00:36:26,280
And it doesn't rely on the honesty of people, like you just said.
610
00:36:26,280 --> 00:36:32,320
It doesn't rely on good people running the show because we take into consideration that
611
00:36:32,320 --> 00:36:37,240
there's no such thing as like a good tyrant.
612
00:36:37,240 --> 00:36:41,960
Once people gain power, we have to assume they're going to get corrupted, not because
613
00:36:41,960 --> 00:36:45,440
they're bad people, but because that's just the way humans are.
614
00:36:45,440 --> 00:36:51,320
We have to acknowledge that humans are fallible, messed up, and there's no human that can be
615
00:36:51,320 --> 00:36:56,200
trusted 100% with the fate of the world or country.
616
00:36:56,200 --> 00:36:58,200
Power crops, absolutely.
617
00:36:58,200 --> 00:36:59,880
Right, exactly.
618
00:36:59,880 --> 00:37:04,960
So that's a big reason I got attracted to Bitcoin.
619
00:37:04,960 --> 00:37:11,520
And now look at where the US is now.
620
00:37:11,520 --> 00:37:18,960
We have stopped enforcing the Bill of Rights on a lot of different issues, especially the
621
00:37:18,960 --> 00:37:28,120
Fourth Amendment, which is supposed to protect our right to privacy, our right to not search,
622
00:37:28,120 --> 00:37:31,480
to not have to reveal all of the details of our life.
623
00:37:31,480 --> 00:37:34,280
That's violated every minute of every day.
624
00:37:34,280 --> 00:37:39,520
Then you talk about freedom of speech, religion, et cetera, and all this other stuff that people
625
00:37:39,520 --> 00:37:43,000
want to attack and are attacking with the government.
626
00:37:43,000 --> 00:37:49,440
And we see the Tenth Amendment, which says that anything that is not, any power that's
627
00:37:49,440 --> 00:37:56,400
not specifically in the Constitution says to be given to the federal government belongs
628
00:37:56,400 --> 00:37:57,560
to the states.
629
00:37:57,560 --> 00:37:58,560
That's completely forgotten.
630
00:37:58,560 --> 00:38:02,160
Like if you say that now, bring it up, it's laughed at.
631
00:38:02,160 --> 00:38:07,200
So we've gotten to a point where the Constitution is almost becoming like people want it to
632
00:38:07,200 --> 00:38:12,720
be a relic, people want it to be ignored in a lot of cases, change the meanings of things.
633
00:38:12,720 --> 00:38:17,900
Now it was created with the best technology available at the time.
634
00:38:17,900 --> 00:38:22,880
If there was the technology we have today back in the late 1700s, it might have been
635
00:38:22,880 --> 00:38:25,280
a different story.
636
00:38:25,280 --> 00:38:27,320
But that was the best that we had back then.
637
00:38:27,320 --> 00:38:33,320
Now with Bitcoin, we have a lot of the same issues I feel like that are coming up.
638
00:38:33,320 --> 00:38:37,760
And not with Bitcoin, with every cryptocurrency, Ethereum too, especially Ethereum.
639
00:38:37,760 --> 00:38:44,980
In that people like to think of these things like they're a universe.
640
00:38:44,980 --> 00:38:50,040
People like to think of Bitcoin like it's a universe that is unto itself.
641
00:38:50,040 --> 00:38:53,800
As long as the technology works and does what it does, then we're fine.
642
00:38:53,800 --> 00:38:57,920
But the reality of it is that it's almost like I've been thinking of it like a planet
643
00:38:57,920 --> 00:39:02,040
and there's all these comets and asteroids that are going to be coming at it, hitting
644
00:39:02,040 --> 00:39:03,040
it.
645
00:39:03,040 --> 00:39:06,200
And one of those comets could be the government.
646
00:39:06,200 --> 00:39:07,720
One of those comets could be BlackRock.
647
00:39:07,720 --> 00:39:10,640
One of those comets could be this or that or the other thing.
648
00:39:10,640 --> 00:39:13,240
And it just takes one to strike and to blow the thing up.
649
00:39:13,240 --> 00:39:18,400
There's all these externalities that are attacking these things all the time that have nothing
650
00:39:18,400 --> 00:39:19,400
to do.
651
00:39:19,400 --> 00:39:25,320
You can't see any of it on chain and you can't see any of it maybe in the governance system.
652
00:39:25,320 --> 00:39:31,800
But coming from the outside, with Ethereum, it's 100% regulators, governments having an
653
00:39:31,800 --> 00:39:36,600
influence on the VCs who are having an influence on the developers and on the development of
654
00:39:36,600 --> 00:39:38,080
the applications on Ethereum.
655
00:39:38,080 --> 00:39:42,520
And on the layer 2s, there's a reason the layer 2s all have multi-sig and it's not just
656
00:39:42,520 --> 00:39:43,780
the fixed bugs.
657
00:39:43,780 --> 00:39:46,160
It's because they want to stay compliant.
658
00:39:46,160 --> 00:39:49,840
And so there's all this stuff going on that's external.
659
00:39:49,840 --> 00:39:56,200
So that's been top of mind for me and I'm not sure how I can ever come to terms with
660
00:39:56,200 --> 00:39:58,240
that not being an issue.
661
00:39:58,240 --> 00:40:04,120
How do you create a form of a Bitcoin or something like that that's not susceptible to people
662
00:40:04,120 --> 00:40:11,200
with lots of guns and people who can weaponize the media against you and people who could
663
00:40:11,200 --> 00:40:15,600
turn the majority of the population on you?
664
00:40:15,600 --> 00:40:17,720
How does Bitcoin exist in a world like that?
665
00:40:17,720 --> 00:40:21,860
I think the answer has always been, grow it so large that no single party can take it
666
00:40:21,860 --> 00:40:22,860
down.
667
00:40:22,860 --> 00:40:25,000
That's all you can do.
668
00:40:25,000 --> 00:40:26,000
Yeah.
669
00:40:26,000 --> 00:40:27,000
So it's like a race.
670
00:40:27,000 --> 00:40:31,440
We have to make this thing succeed before the powers that be have an opportunity to
671
00:40:31,440 --> 00:40:32,640
squash it.
672
00:40:32,640 --> 00:40:35,240
But I think I'm a little bit more optimistic than you.
673
00:40:35,240 --> 00:40:40,640
I think we're already past the point of no return at this stage.
674
00:40:40,640 --> 00:40:47,660
And actually, I'm a student of American history as well and I do also love a lot of the ideas
675
00:40:47,660 --> 00:40:49,840
presented in the US Constitution.
676
00:40:49,840 --> 00:40:53,440
This might be a bit of a controversial take, but I think out of all the places you could
677
00:40:53,440 --> 00:40:57,880
live in the world, certain US states are probably still some of the freest places you could
678
00:40:57,880 --> 00:40:58,880
be.
679
00:40:58,880 --> 00:41:01,800
And also because of the US Constitution, it still holds some weight.
680
00:41:01,800 --> 00:41:04,320
And I know nothing is perfect.
681
00:41:04,320 --> 00:41:08,560
No, we're clinging by a thread, man.
682
00:41:08,560 --> 00:41:11,960
I'm in Florida, so I know all about it.
683
00:41:11,960 --> 00:41:12,960
Yeah.
684
00:41:12,960 --> 00:41:15,040
Anyway, we're still doing okay down here.
685
00:41:15,040 --> 00:41:19,440
And I'm really curious to understand your perspective on Bitcoin because that's one
686
00:41:19,440 --> 00:41:21,500
of the big areas where we differ.
687
00:41:21,500 --> 00:41:26,360
And you're thinking about how can we avoid this type of capture from occurring?
688
00:41:26,360 --> 00:41:32,900
And I find it curious how you see all of these problems in Ethereum, right?
689
00:41:32,900 --> 00:41:35,240
And you're not entirely wrong.
690
00:41:35,240 --> 00:41:39,560
But don't you see the same problems in Bitcoin as well?
691
00:41:39,560 --> 00:41:45,760
Well lately, the past few months, I've been turning into a little bit with regard to,
692
00:41:45,760 --> 00:41:46,760
you know what?
693
00:41:46,760 --> 00:41:47,760
It's since I podcast.
694
00:41:47,760 --> 00:41:51,860
Well, I was already thinking about stuff and I did a podcast with Jameson Lopp and we started
695
00:41:51,860 --> 00:41:57,920
talking about mining and we started talking about some of the threats.
696
00:41:57,920 --> 00:42:04,080
And I'd already been thinking about, I keep using BlackRock as an example, but it's not
697
00:42:04,080 --> 00:42:07,920
the only example, but it's just such a good example that resonates with people.
698
00:42:07,920 --> 00:42:13,280
And you know better than anybody that you need a good catchy example to get your tweet
699
00:42:13,280 --> 00:42:16,120
out there with a get it a lot of likes, right?
700
00:42:16,120 --> 00:42:19,080
So you get that sweet Elon money, right?
701
00:42:19,080 --> 00:42:21,360
But just kidding.
702
00:42:21,360 --> 00:42:22,360
You know what?
703
00:42:22,360 --> 00:42:30,320
And by the way, sidetrack, people blast me and probably you too for outrageous tweets
704
00:42:30,320 --> 00:42:34,600
and just trying to get people all crazy, you know, using incendiary language.
705
00:42:34,600 --> 00:42:35,960
We're both guilty.
706
00:42:35,960 --> 00:42:37,320
It's Twitter, man.
707
00:42:37,320 --> 00:42:41,400
That's how you get people to pay attention.
708
00:42:41,400 --> 00:42:46,160
If I wasn't such a dick with a lot of this stuff, nobody would care.
709
00:42:46,160 --> 00:42:48,920
There's a lot of people saying the stuff I'm saying and the stuff you're saying.
710
00:42:48,920 --> 00:42:52,360
There's a lot of people saying it, but they're just like little mice, right?
711
00:42:52,360 --> 00:42:53,360
They're like, nobody listens.
712
00:42:53,360 --> 00:42:57,480
If you have a positive message, you want people to actually hear it, right?
713
00:42:57,480 --> 00:42:58,480
Right.
714
00:42:58,480 --> 00:43:00,720
Whether it's positive or negative, whatever it is.
715
00:43:00,720 --> 00:43:04,000
I enjoy the challenge of like writing something viral.
716
00:43:04,000 --> 00:43:07,880
There's a nuance in the language that I enjoy, you know?
717
00:43:07,880 --> 00:43:08,880
Yeah.
718
00:43:08,880 --> 00:43:09,880
Yeah, it's fun.
719
00:43:09,880 --> 00:43:10,880
Yeah.
720
00:43:10,880 --> 00:43:14,320
Hey, my history too has been in marketing.
721
00:43:14,320 --> 00:43:15,920
I did marketing for sports.
722
00:43:15,920 --> 00:43:22,360
I spent a number of years with the UFC ultimate fighting, doing marketing, writing copy, promoting
723
00:43:22,360 --> 00:43:23,420
fights.
724
00:43:23,420 --> 00:43:29,480
So it's in my background to draw on people's emotions, to get them to think about something
725
00:43:29,480 --> 00:43:31,120
or to get them to do something.
726
00:43:31,120 --> 00:43:33,400
I like your content as well.
727
00:43:33,400 --> 00:43:35,720
Anyway, we have that in common.
728
00:43:35,720 --> 00:43:36,720
Yeah.
729
00:43:36,720 --> 00:43:37,720
Right.
730
00:43:37,720 --> 00:43:38,720
Yeah.
731
00:43:38,720 --> 00:43:43,680
But for Bitcoin, I'm all about criticizing areas that I see as weak because I think that
732
00:43:43,680 --> 00:43:47,320
that's the only way we can get them stronger.
733
00:43:47,320 --> 00:43:49,120
So I have a number of concerns.
734
00:43:49,120 --> 00:43:56,280
So I'll show you what for me is my biggest concern besides maybe the long term.
735
00:43:56,280 --> 00:43:57,280
Okay.
736
00:43:57,280 --> 00:44:00,360
Maybe not including the stuff of the security model.
737
00:44:00,360 --> 00:44:01,360
Maybe we'll get into that later.
738
00:44:01,360 --> 00:44:02,360
Okay.
739
00:44:02,360 --> 00:44:03,360
That's a big concern.
740
00:44:03,360 --> 00:44:05,320
But actually my biggest concern is actually governance.
741
00:44:05,320 --> 00:44:10,240
And that's what makes me so concerned that it won't fix things in time basically because
742
00:44:10,240 --> 00:44:12,240
the governance is dysfunctional.
743
00:44:12,240 --> 00:44:19,560
So I've thought a lot about when changes to Bitcoin happen, right?
744
00:44:19,560 --> 00:44:21,280
What is the governance process?
745
00:44:21,280 --> 00:44:26,680
What is actually the decision making process in practice?
746
00:44:26,680 --> 00:44:29,240
Not some idealized version.
747
00:44:29,240 --> 00:44:33,760
What is actually the real politic of it?
748
00:44:33,760 --> 00:44:38,740
How many people does it take to get together in a room and all agree on something?
749
00:44:38,740 --> 00:44:41,800
And if they then come out with a publicly, does it actually happen?
750
00:44:41,800 --> 00:44:47,120
Even if it might be controversial or can they block things, right?
751
00:44:47,120 --> 00:44:54,240
So for me, like doing that type of an analysis on Bitcoin, I'm extremely concerned about
752
00:44:54,240 --> 00:44:55,240
the state of governance.
753
00:44:55,240 --> 00:45:00,120
And that's, I think for me, what a lot of the block size debates were about as well.
754
00:45:00,120 --> 00:45:06,000
And I was on the quote unquote losing side of that, let's say.
755
00:45:06,000 --> 00:45:12,400
But I think this idea that there's only one implementation, one client implementation,
756
00:45:12,400 --> 00:45:15,440
one dominant one at least that's calling all of the shots.
757
00:45:15,440 --> 00:45:20,080
And you have a literal lead maintainer who has the final say over code changes.
758
00:45:20,080 --> 00:45:27,380
And you have this whole culture kind of propping up the supremacy of these developers.
759
00:45:27,380 --> 00:45:31,440
I think that's a major problem because that concentrates power in the hands of a very
760
00:45:31,440 --> 00:45:38,040
few people, which is then very easy to then capture and corrupt and pervert.
761
00:45:38,040 --> 00:45:41,760
And it's subject to all of these external powers now.
762
00:45:41,760 --> 00:45:48,520
And that's where I also, I'll just go straight for the major points here.
763
00:45:48,520 --> 00:45:50,320
I see a major conflict of interest.
764
00:45:50,320 --> 00:45:56,960
The same I see in Ethereum, by the way, where say a lot of the Bitcoin developers are being
765
00:45:56,960 --> 00:46:04,560
paid or have shares in companies such as Blockstream and what's the other one?
766
00:46:04,560 --> 00:46:06,360
Oh man, I forgot the name.
767
00:46:06,360 --> 00:46:11,440
But there's a few companies like that that are funding developers.
768
00:46:11,440 --> 00:46:15,680
And these companies can have a conflict of interest, for instance, favoring layer two
769
00:46:15,680 --> 00:46:20,040
scaling over layer one scaling, for instance.
770
00:46:20,040 --> 00:46:24,520
And also there was this great, did you read the CIA report that happened a year ago?
771
00:46:24,520 --> 00:46:28,640
The CIA put this thing that was sponsored by the CIA.
772
00:46:28,640 --> 00:46:35,280
And basically they said the way to say take over a cryptocurrency or disrupt it is to
773
00:46:35,280 --> 00:46:38,400
target the core developers.
774
00:46:38,400 --> 00:46:39,400
And I think they're right.
775
00:46:39,400 --> 00:46:41,900
I think that's such a key pain point.
776
00:46:41,900 --> 00:46:48,680
And even if the developers are honest, they could also just be making wrong decisions
777
00:46:48,680 --> 00:46:54,160
because the governance process is not conducive to actually creating the best decisions.
778
00:46:54,160 --> 00:46:56,880
So that's like a more optimistic scenario as opposed to being captured.
779
00:46:56,880 --> 00:47:01,560
But that to me is one of my biggest concerns around Bitcoin.
780
00:47:01,560 --> 00:47:05,800
And part of the reason I'm an advocate for systems of on-chain governance to kind of
781
00:47:05,800 --> 00:47:11,320
mitigate those problems and add the checks and balances and add the restrictions to governance,
782
00:47:11,320 --> 00:47:16,560
which I think mirroring the US Constitution in so many ways and that idea of a republic
783
00:47:16,560 --> 00:47:19,640
is you're limiting power, you're dividing power.
784
00:47:19,640 --> 00:47:26,200
And if you formalize it, then instead of the rulers being in the shadows, you kind of bring
785
00:47:26,200 --> 00:47:28,120
it out into the open.
786
00:47:28,120 --> 00:47:31,360
And I think that's a better way to do things.
787
00:47:31,360 --> 00:47:40,040
Yeah, it's an interesting dichotomy in how to think about these projects.
788
00:47:40,040 --> 00:47:51,960
I think that one of the things I like about Bitcoin is that it is more of an organic...
789
00:47:51,960 --> 00:47:58,280
People think of it as immutable and as it is what it is, it's never going to change.
790
00:47:58,280 --> 00:48:01,680
But the reality of it is that it is a...
791
00:48:01,680 --> 00:48:04,200
First and foremost, it's a brand.
792
00:48:04,200 --> 00:48:05,760
Bitcoin is a brand.
793
00:48:05,760 --> 00:48:12,880
And the brand is... whatever the Bitcoin brand points at is what most people are going to
794
00:48:12,880 --> 00:48:14,800
think is Bitcoin.
795
00:48:14,800 --> 00:48:20,320
So when Bitcoin Cash happened, it lost the battle for the brand, as much as Roger Ver
796
00:48:20,320 --> 00:48:21,320
tried.
797
00:48:21,320 --> 00:48:23,360
He lost the battle for the brand.
798
00:48:23,360 --> 00:48:27,680
And it was decided by a lot of the big powers that you were talking about.
799
00:48:27,680 --> 00:48:31,240
But more importantly, it was decided by public opinion.
800
00:48:31,240 --> 00:48:35,480
And public opinion was swayed in a certain way, but what we have today became Bitcoin.
801
00:48:35,480 --> 00:48:38,160
I'm not sure if that's entirely true.
802
00:48:38,160 --> 00:48:40,720
The public opinion piece.
803
00:48:40,720 --> 00:48:46,840
That the split, that the result of the split was purely the result of an egalitarian public
804
00:48:46,840 --> 00:48:47,880
opinion.
805
00:48:47,880 --> 00:48:51,000
I think there was a lot more politics going on than that.
806
00:48:51,000 --> 00:48:54,640
I think that censorship had a lot to do with the outcome.
807
00:48:54,640 --> 00:49:01,040
I think that the exchanges actually named one side of the ticker BTC also had a lot
808
00:49:01,040 --> 00:49:02,520
to do with it.
809
00:49:02,520 --> 00:49:10,080
And I think for a lot of the polls that were taken and for a lot of the ecosystem and industry,
810
00:49:10,080 --> 00:49:14,640
most major parties were supporting an increase in the block size and the developers got to
811
00:49:14,640 --> 00:49:17,400
do the thing that they wanted to do instead.
812
00:49:17,400 --> 00:49:22,240
So that to me was an example of, oh, these developers actually have too much power.
813
00:49:22,240 --> 00:49:24,440
And from my view, also doing the wrong thing.
814
00:49:24,440 --> 00:49:26,240
I'm not sure.
815
00:49:26,240 --> 00:49:30,840
We might disagree on that one in particular.
816
00:49:30,840 --> 00:49:37,160
Well regardless of which side you agree with, I think my point is that Bitcoin is sort of
817
00:49:37,160 --> 00:49:42,000
this flowing thing that goes through these forks in the river and ultimately goes down
818
00:49:42,000 --> 00:49:43,840
one of these paths.
819
00:49:43,840 --> 00:49:48,800
And then it's up to the individuals involved if they want to participate with that, endorse
820
00:49:48,800 --> 00:49:54,800
it, go off in a different way, try to get adoption with a different technology.
821
00:49:54,800 --> 00:50:00,440
As opposed to formalize on-chain governance, which sort of treats the project as more of
822
00:50:00,440 --> 00:50:04,000
like this is the project and a hundred years is still going to be the project.
823
00:50:04,000 --> 00:50:07,640
We're going to go through iterations that governance is going to choose.
824
00:50:07,640 --> 00:50:11,480
And so I'm not saying one's right or wrong, but I'm saying like they're almost two different
825
00:50:11,480 --> 00:50:16,080
concepts for a path forward for a cryptocurrency like this.
826
00:50:16,080 --> 00:50:23,640
So you seem to be leaning more towards this system of we need to figure out on-chain governance,
827
00:50:23,640 --> 00:50:26,320
how it's going to work, participants, et cetera.
828
00:50:26,320 --> 00:50:31,400
And then we need to sort of steer that ship, navigate these waters and try to keep out
829
00:50:31,400 --> 00:50:34,600
the big money, keep out the big governance and stuff like that.
830
00:50:34,600 --> 00:50:35,600
No, no, no.
831
00:50:35,600 --> 00:50:39,400
We need governance so that it can resist the corruption of big money.
832
00:50:39,400 --> 00:50:40,400
Okay.
833
00:50:40,400 --> 00:50:43,360
I mean, how does...
834
00:50:43,360 --> 00:50:48,140
See, that's something that that's where I start to get concerned because big money seems
835
00:50:48,140 --> 00:50:49,800
to corrupt everything.
836
00:50:49,800 --> 00:50:52,920
So if you can't keep big money out of a system like Bitcoin, how do you keep it out of another?
837
00:50:52,920 --> 00:50:57,200
I should rephrase that, to harness the greed and corruption of big money.
838
00:50:57,200 --> 00:50:58,200
To harness.
839
00:50:58,200 --> 00:50:59,200
So you like proof of stake.
840
00:50:59,200 --> 00:51:00,200
Yeah.
841
00:51:00,200 --> 00:51:01,200
Yeah, sure.
842
00:51:01,200 --> 00:51:02,200
Because that clearly aligns those incentives.
843
00:51:02,200 --> 00:51:07,880
I mean, proof of work basically works on the same principles, just pros and cons to each.
844
00:51:07,880 --> 00:51:11,120
I think more of the pros land on the stake.
845
00:51:11,120 --> 00:51:12,120
But we're actually...
846
00:51:12,120 --> 00:51:15,480
Let's not move on from the previous subject just yet.
847
00:51:15,480 --> 00:51:19,320
This is becoming quite interesting.
848
00:51:19,320 --> 00:51:30,120
Because in my view, that's why we need the governance is to kind of keep the system away
849
00:51:30,120 --> 00:51:31,840
from corruption.
850
00:51:31,840 --> 00:51:36,680
It's because if you don't have that, what you end up with in practice is a very few
851
00:51:36,680 --> 00:51:39,000
people making all of the decision.
852
00:51:39,000 --> 00:51:44,240
And I think that is very much goes against the ethos of cryptocurrency.
853
00:51:44,240 --> 00:51:50,400
Because I think that's practically what ends up happening behind the scenes.
854
00:51:50,400 --> 00:51:52,520
How do you think they're making those decisions?
855
00:51:52,520 --> 00:51:57,120
I completely understand and I actually share a lot of the concerns about what are the incentives
856
00:51:57,120 --> 00:51:59,640
for these developers, who's paying them.
857
00:51:59,640 --> 00:52:06,040
I look at like Luke Dash Jr. getting paid to do work on BIP 300, getting paid by Layer
858
00:52:06,040 --> 00:52:10,760
2 Labs, who's out there the biggest proponent for BIP 300.
859
00:52:10,760 --> 00:52:14,920
And he's publicly said he doesn't even philosophically align with it.
860
00:52:14,920 --> 00:52:16,480
He's just doing the work he's paid to do.
861
00:52:16,480 --> 00:52:18,160
And he has this influence and access.
862
00:52:18,160 --> 00:52:20,160
Luke Dash Jr. doesn't philosophically align with a lot of things.
863
00:52:20,160 --> 00:52:21,160
He's just one example of...
864
00:52:21,160 --> 00:52:25,600
I don't want to pick on him, but he's a good example of somebody with influence and access
865
00:52:25,600 --> 00:52:29,840
getting paid to use that influence and access.
866
00:52:29,840 --> 00:52:31,680
And almost just via hired gun.
867
00:52:31,680 --> 00:52:34,520
So where was I going with that?
868
00:52:34,520 --> 00:52:35,520
I forgot.
869
00:52:35,520 --> 00:52:39,960
Yeah, the conflict of interests of developers.
870
00:52:39,960 --> 00:52:42,040
So I get concerned about that too.
871
00:52:42,040 --> 00:52:43,040
Yeah.
872
00:52:43,040 --> 00:52:48,560
But I forgot where I was actually heading with that whole line of thought.
873
00:52:48,560 --> 00:52:49,560
That's okay.
874
00:52:49,560 --> 00:52:53,560
No, because the way it looks like, right, is you have this GitHub.
875
00:52:53,560 --> 00:52:58,160
And you have, I think in the case of Bitcoin now, it's five people who have like a veto
876
00:52:58,160 --> 00:52:59,800
power, I believe it is.
877
00:52:59,800 --> 00:53:01,440
Those are the maintainers.
878
00:53:01,440 --> 00:53:05,800
And then you have the lead maintainer who basically has a final say of the system.
879
00:53:05,800 --> 00:53:11,080
And what they claim is they say this is a perfect meritocracy.
880
00:53:11,080 --> 00:53:15,400
And this is this beautiful, organic, emergent behavior that comes from where the best ideas
881
00:53:15,400 --> 00:53:17,120
always win.
882
00:53:17,120 --> 00:53:18,120
That is the claim.
883
00:53:18,120 --> 00:53:24,700
But I think in reality, like we said, power crops and absolute power crops, absolutely.
884
00:53:24,700 --> 00:53:29,480
They kick out developers that don't agree with them and then claim consensus.
885
00:53:29,480 --> 00:53:32,780
I don't think that that is truly a meritocracy.
886
00:53:32,780 --> 00:53:37,040
And I think there's a lot of conflicts of interest, and I think that's just far too
887
00:53:37,040 --> 00:53:39,240
centralized as a system.
888
00:53:39,240 --> 00:53:45,880
And I think that's resulted in bad decision making in my view, such as not scaling the
889
00:53:45,880 --> 00:53:53,160
blockchain up to reasonable levels, as was always intended by the founder.
890
00:53:53,160 --> 00:53:57,320
I'm really curious on your view on that actually, since we're touching on it now.
891
00:53:57,320 --> 00:54:00,840
Wouldn't you support say a moderate increase, say eight megabyte blocks?
892
00:54:00,840 --> 00:54:03,120
It would bring so much more utility.
893
00:54:03,120 --> 00:54:06,400
I mean, like 32 megabyte blocks, right?
894
00:54:06,400 --> 00:54:12,800
You can still verify that on a Raspberry Pi, right?
895
00:54:12,800 --> 00:54:16,840
If you just add some code optimizations for that, you can still verify that on a Raspberry
896
00:54:16,840 --> 00:54:17,840
Pi.
897
00:54:17,840 --> 00:54:24,200
32 megabytes, and then you have the scale of a freaking PayPal.
898
00:54:24,200 --> 00:54:27,000
And now you can truly use Bitcoin as money.
899
00:54:27,000 --> 00:54:31,080
And now it's like this empowering thing that people actually have direct access to with
900
00:54:31,080 --> 00:54:32,240
low fees.
901
00:54:32,240 --> 00:54:35,080
And you solve the security dilemma.
902
00:54:35,080 --> 00:54:36,640
I will say, I think that-
903
00:54:36,640 --> 00:54:39,080
Isn't that just a no brainer?
904
00:54:39,080 --> 00:54:44,440
Knowing what I know now after having watched Ethereum try to scale with layer twos and
905
00:54:44,440 --> 00:54:48,600
watching the Lightning Network struggle.
906
00:54:48,600 --> 00:54:55,640
Knowing what I know now, and I wasn't like a vocal advocate for either side really at
907
00:54:55,640 --> 00:54:58,720
the time, but it does make sense.
908
00:54:58,720 --> 00:55:03,000
At the same time, I am in the process right now of syncing a node and it's taken me a
909
00:55:03,000 --> 00:55:06,320
solid week.
910
00:55:06,320 --> 00:55:15,480
I can see both sides, but I do agree that the decision there went in a certain way because
911
00:55:15,480 --> 00:55:16,480
of money.
912
00:55:16,480 --> 00:55:19,360
There were closed door meetings.
913
00:55:19,360 --> 00:55:22,320
We weren't at privy to all that information, all those conversations.
914
00:55:22,320 --> 00:55:25,760
We know there was the New York stuff going on and whatever else.
915
00:55:25,760 --> 00:55:30,240
It's like 200 million plus funding for Blockstream.
916
00:55:30,240 --> 00:55:31,240
Yeah.
917
00:55:31,240 --> 00:55:37,560
But what do you think was the motivation for that outcome?
918
00:55:37,560 --> 00:55:39,240
Why did they want that to go that way?
919
00:55:39,240 --> 00:55:43,360
I'm hesitant to know what's in other people's minds.
920
00:55:43,360 --> 00:55:44,720
I can say, look, there was a-
921
00:55:44,720 --> 00:55:46,600
It must have been a business decision.
922
00:55:46,600 --> 00:55:47,600
Right.
923
00:55:47,600 --> 00:55:50,120
Clearly there's a conflicts of interest.
924
00:55:50,120 --> 00:55:58,640
I think Adam Back, Greg Maxwell, a lot of these folks have shares in Blockstream and
925
00:55:58,640 --> 00:56:04,120
they raise a lot of money for VC funding and Blockstream's promises to build L2 solutions
926
00:56:04,120 --> 00:56:10,880
for profit and that clearly benefits from not scaling the layout basically.
927
00:56:10,880 --> 00:56:16,640
I can't say with 100% certainty that they had this type of perverse intent, right?
928
00:56:16,640 --> 00:56:19,960
But I think it's highly problematic that it's there in the first place.
929
00:56:19,960 --> 00:56:26,240
They could truly believe in the ethos that they promote or maybe they were biased a bit
930
00:56:26,240 --> 00:56:29,240
in that true belief, but I can't say.
931
00:56:29,240 --> 00:56:36,120
But either way, I think it's wrong because it completely destroys what Bitcoin was actually
932
00:56:36,120 --> 00:56:37,320
meant to do.
933
00:56:37,320 --> 00:56:42,280
I think Satoshi, I think we can agree, was very clear on this about what the intent was
934
00:56:42,280 --> 00:56:47,360
of Bitcoin in the white paper, in his writing extensively.
935
00:56:47,360 --> 00:56:53,280
I think for me, that was really a pivot away from the social contract, which to me really
936
00:56:53,280 --> 00:56:55,480
flies in the face of what Bitcoin was supposed to be.
937
00:56:55,480 --> 00:56:58,120
It's not supposed to pivot away from the social contract.
938
00:56:58,120 --> 00:57:02,840
Now I'm like, wow, so blockchain, that can happen?
939
00:57:02,840 --> 00:57:07,720
That's why now I'm like, okay, this is just a major systemic failure in governance.
940
00:57:07,720 --> 00:57:11,300
This is why I'm trying to find solutions to that.
941
00:57:11,300 --> 00:57:15,800
How can we design a blockchain in such a way to avoid these problems from reoccurring?
942
00:57:15,800 --> 00:57:19,440
Because the same thing is happening to Ethereum now.
943
00:57:19,440 --> 00:57:21,920
How do we avoid that from repeating?
944
00:57:21,920 --> 00:57:22,920
Yeah.
945
00:57:22,920 --> 00:57:23,920
Yeah.
946
00:57:23,920 --> 00:57:29,880
If there's one thing I've learned over the last three, four years, it's that the money
947
00:57:29,880 --> 00:57:37,320
is always going to come down on the side of scaling because there's more opportunity for
948
00:57:37,320 --> 00:57:38,320
profit.
949
00:57:38,320 --> 00:57:42,800
There's more opportunity to build a business around scaling solution than there is around
950
00:57:42,800 --> 00:57:46,200
having native solutions on the layer one.
951
00:57:46,200 --> 00:57:49,200
No, no, but the layer one can scale in my view.
952
00:57:49,200 --> 00:57:54,560
So I'm saying like, yeah, but there's less profit potential for third parties, for venture
953
00:57:54,560 --> 00:57:57,920
capitalists, et cetera.
954
00:57:57,920 --> 00:58:01,720
If you have that kind of a solution and that creates this perverse incentives because they
955
00:58:01,720 --> 00:58:06,840
can't rein seek on the layer one, they can on the layer twos that they might build out.
956
00:58:06,840 --> 00:58:12,200
And this is why just so I'm also offering some solutions while critiquing.
957
00:58:12,200 --> 00:58:15,640
This is actually where I think like treasury systems, blockchain treasury systems come
958
00:58:15,640 --> 00:58:16,640
in.
959
00:58:16,640 --> 00:58:21,080
Because if you say take 10% of the block reward, you put that in a treasury, you then have
960
00:58:21,080 --> 00:58:23,720
a proposal system with like decentralized voting, right?
961
00:58:23,720 --> 00:58:29,520
There's going to be a lot of inefficiency, I know, but at least that creates a L1 bias
962
00:58:29,520 --> 00:58:35,000
source of funding, which can counteract the influence of this kind of perverse incentive
963
00:58:35,000 --> 00:58:36,940
that we're identifying.
964
00:58:36,940 --> 00:58:42,520
This is why I've been a supporter of that type of design, things like Dash, Decree,
965
00:58:42,520 --> 00:58:46,120
Tezos have implemented this and more.
966
00:58:46,120 --> 00:58:48,120
Not Ethereum, unfortunately.
967
00:58:48,120 --> 00:58:49,120
Yeah.
968
00:58:49,120 --> 00:58:54,720
Ethereum, you know, in my opinion is far worse off in this regard than Bitcoin.
969
00:58:54,720 --> 00:58:57,120
Oh, well, here I disagree with you, right?
970
00:58:57,120 --> 00:58:58,720
Because if we're talking about...
971
00:58:58,720 --> 00:58:59,720
I'll tell you why.
972
00:58:59,720 --> 00:59:00,880
I'll also tell you why.
973
00:59:00,880 --> 00:59:05,240
You can stop.
974
00:59:05,240 --> 00:59:10,320
Because well, okay, DeFi had a lot to do with this.
975
00:59:10,320 --> 00:59:17,800
DeFi had a chance to be built on top of decentralized stables like Dai, you know, and others that
976
00:59:17,800 --> 00:59:21,800
could have existed but didn't because they didn't see the reason to.
977
00:59:21,800 --> 00:59:29,040
Instead it was built on the back of Tether, of USDC, of Paxos and whatever else.
978
00:59:29,040 --> 00:59:34,000
And at this point, you know, we're still talking about Ethereum is interesting because of DeFi,
979
00:59:34,000 --> 00:59:35,000
right?
980
00:59:35,000 --> 00:59:36,000
Ethereum is interesting.
981
00:59:36,000 --> 00:59:37,000
Sure.
982
00:59:37,000 --> 00:59:40,280
That's why Ethereum is at 1800, whatever, or no, where's Ethereum?
983
00:59:40,280 --> 00:59:41,280
I don't even know.
984
00:59:41,280 --> 00:59:42,520
I don't look at prices that much.
985
00:59:42,520 --> 00:59:48,040
But the reason Ethereum is interesting is because of DeFi and because of that innovation
986
00:59:48,040 --> 00:59:50,820
and because of all the VC investment.
987
00:59:50,820 --> 00:59:58,080
The problem though is that they've developed this ecosystem that has to all move together,
988
00:59:58,080 --> 00:59:59,080
right?
989
00:59:59,080 --> 01:00:06,800
There can not be disagreement within that $10 to $20 billion ecosystem, including USDC,
990
01:00:06,800 --> 01:00:12,800
Circle, including Tether, including Chainlink, including anybody else who's involved and
991
01:00:12,800 --> 01:00:15,140
reliant on those organizations.
992
01:00:15,140 --> 01:00:19,200
They all have to move along together or else the thing starts to fall apart because they're
993
01:00:19,200 --> 01:00:21,280
all intertwined, right?
994
01:00:21,280 --> 01:00:22,860
Because of the way the tech works.
995
01:00:22,860 --> 01:00:29,760
So if a hard fork is proposed and Circle likes it, but Aave doesn't like it, Aave is going
996
01:00:29,760 --> 01:00:34,280
to go with Circle because their whole shit's going to fall apart if they don't all stick
997
01:00:34,280 --> 01:00:35,280
together.
998
01:00:35,280 --> 01:00:39,380
We saw this already, which nobody really paid attention to, but it was a really interesting
999
01:00:39,380 --> 01:00:45,520
case study with the proof of stake fork because the proof of work chain is still there.
1000
01:00:45,520 --> 01:00:49,160
It's still being mined actually, which is funny.
1001
01:00:49,160 --> 01:00:55,120
And all the DeFi stuff that was on the, you know, everything that was on the chain pre-fork
1002
01:00:55,120 --> 01:00:59,960
went along on the proof of work chain too, except USDC wasn't honoring tokens, Tether
1003
01:00:59,960 --> 01:01:03,340
wasn't honoring, nobody's honoring any of those tokens, but Aave was still there with
1004
01:01:03,340 --> 01:01:04,620
all the balances.
1005
01:01:04,620 --> 01:01:07,920
They had Compound still there, Uniswap still there, everything's still there, and everything
1006
01:01:07,920 --> 01:01:09,720
just imploded like instantly, right?
1007
01:01:09,720 --> 01:01:13,960
Everything's getting liquidated, everything's getting, it's like a complete shit show because
1008
01:01:13,960 --> 01:01:16,040
the tokens aren't being honored anymore.
1009
01:01:16,040 --> 01:01:18,920
You know, none of it is redeemable.
1010
01:01:18,920 --> 01:01:26,240
So those organizations overtly control the future of Ethereum.
1011
01:01:26,240 --> 01:01:30,080
If Circle doesn't like a fork and doesn't go, nobody's going.
1012
01:01:30,080 --> 01:01:33,200
If Tether doesn't like a fork and doesn't go, nobody's going.
1013
01:01:33,200 --> 01:01:39,080
So that as a put, those are direct vested interests that are controlling the future
1014
01:01:39,080 --> 01:01:41,840
of Ethereum, whether or not they're paying off the devs.
1015
01:01:41,840 --> 01:01:43,640
They don't have to have any involvement with that.
1016
01:01:43,640 --> 01:01:47,800
If the devs do something that they don't like, the devs are going to stop doing it, right?
1017
01:01:47,800 --> 01:01:52,360
And it's very clear as opposed to Bitcoin, which I hear and I understand what you're
1018
01:01:52,360 --> 01:01:54,760
saying about Bitcoin, but it's a little bit hazier.
1019
01:01:54,760 --> 01:01:59,560
It's not quite as obvious, which may be worse, maybe more dangerous, but it's less of a direct
1020
01:01:59,560 --> 01:02:01,480
threat, I think, in the near future.
1021
01:02:01,480 --> 01:02:04,920
No, and I think you have a point.
1022
01:02:04,920 --> 01:02:08,360
Actually, I think there are potentially perverse incentives there.
1023
01:02:08,360 --> 01:02:12,120
Though I did think making Ethereum harder to fork, I thought you would actually like
1024
01:02:12,120 --> 01:02:14,240
that as opposed to not like that.
1025
01:02:14,240 --> 01:02:15,240
That's okay.
1026
01:02:15,240 --> 01:02:16,640
How did they make it?
1027
01:02:16,640 --> 01:02:17,960
Oh, you mean because of that?
1028
01:02:17,960 --> 01:02:22,800
Yeah, well, you have to sit down in a room with Circle, Tether, and all these guys.
1029
01:02:22,800 --> 01:02:27,600
But I suppose one of the reasons I'm less concerned over this than you are, and I definitely
1030
01:02:27,600 --> 01:02:31,120
acknowledge that there can definitely be some perverse effects there.
1031
01:02:31,120 --> 01:02:36,020
And yes, it does make it more difficult to have this kind of forked governance.
1032
01:02:36,020 --> 01:02:43,880
But I think from my perspective, I think that splitting a chain, that type of governance,
1033
01:02:43,880 --> 01:02:46,420
that's like the nuclear option, in my view.
1034
01:02:46,420 --> 01:02:50,520
That's what you do when everything else has fell apart and you're just so far ideological
1035
01:02:50,520 --> 01:02:55,240
apart and everything else has failed that then you press the big red button.
1036
01:02:55,240 --> 01:03:02,920
I think that should be the very, very last thing in a long line of processes to fix things.
1037
01:03:02,920 --> 01:03:08,520
This is why, in my view, it's like, okay, well, yes, it does make it more difficult
1038
01:03:08,520 --> 01:03:20,480
to fork, but I would rather see an internal decision-making process where more diverse
1039
01:03:20,480 --> 01:03:25,640
voices can be heard and that is more inclusive.
1040
01:03:25,640 --> 01:03:31,320
And ultimately, of course, as an on-chain governance, it's tied to actual incentives
1041
01:03:31,320 --> 01:03:33,720
through stakeholder-based voting.
1042
01:03:33,720 --> 01:03:38,680
For some reason, as in proof of work, you can actually do something similar with the
1043
01:03:38,680 --> 01:03:40,960
miners.
1044
01:03:40,960 --> 01:03:44,920
I think that to me means also...
1045
01:03:44,920 --> 01:03:50,320
And that goes on to my next point because one of my major concerns really is this kind
1046
01:03:50,320 --> 01:03:53,320
of centralization in the development.
1047
01:03:53,320 --> 01:03:56,600
In the case of Ethereum, there's a very big difference between Ethereum and Bitcoin in
1048
01:03:56,600 --> 01:03:57,960
that regard.
1049
01:03:57,960 --> 01:04:04,600
And there is actually multiple dominant client implementations in Ethereum.
1050
01:04:04,600 --> 01:04:07,120
So it's not just a single dictatorship.
1051
01:04:07,120 --> 01:04:12,640
It's like several dictatorships that kind of have to negotiate with each other, which
1052
01:04:12,640 --> 01:04:16,600
I think is better because it's just another step removed from having that sort of extreme
1053
01:04:16,600 --> 01:04:19,040
centralization.
1054
01:04:19,040 --> 01:04:20,120
And I think that's...
1055
01:04:20,120 --> 01:04:23,440
And I think because I'm more interested in preventing...
1056
01:04:23,440 --> 01:04:28,840
I think if a governance mechanism keeps forking, keeps splitting, I think that's extremely
1057
01:04:28,840 --> 01:04:29,960
destructive.
1058
01:04:29,960 --> 01:04:35,760
That's one of the reasons I stopped believing in Bitcoin Cash, let's say, because I'm like,
1059
01:04:35,760 --> 01:04:38,080
wow, okay, this is actually systemic.
1060
01:04:38,080 --> 01:04:39,080
It's still happening.
1061
01:04:39,080 --> 01:04:45,280
You had the BSV fork and then you had the E-cash fork and it was just a disaster in
1062
01:04:45,280 --> 01:04:47,240
that regard.
1063
01:04:47,240 --> 01:04:49,700
And I don't think Bitcoin is really that different.
1064
01:04:49,700 --> 01:04:53,160
It's essentially the same design as Bitcoin Cash.
1065
01:04:53,160 --> 01:04:57,680
The only difference was the bigger block size limit and it's more optimized because core
1066
01:04:57,680 --> 01:05:00,440
developers are not optimizing for that.
1067
01:05:00,440 --> 01:05:03,200
There's a consequence of that too.
1068
01:05:03,200 --> 01:05:12,480
So I think for me, if I identify as a lack of client diversity, extreme centralization
1069
01:05:12,480 --> 01:05:17,680
of power in clients, if I identify that as a problem, then obviously I'm going to see
1070
01:05:17,680 --> 01:05:23,480
Ethereum actually being better in that regard because it has multiple client implementations.
1071
01:05:23,480 --> 01:05:27,360
The culture supports that and it went through a lot of effort from the early days to actually
1072
01:05:27,360 --> 01:05:29,320
make sure it was done that way.
1073
01:05:29,320 --> 01:05:34,360
Just like the core developers made a lot of effort to push out any alternative clients
1074
01:05:34,360 --> 01:05:36,080
during the block size debates.
1075
01:05:36,080 --> 01:05:39,800
Because it wasn't always that way in the case of Bitcoin.
1076
01:05:39,800 --> 01:05:40,800
Yeah.
1077
01:05:40,800 --> 01:05:42,800
So that's a lot to unpack.
1078
01:05:42,800 --> 01:05:46,160
I should have given you a bit more breaks in between there.
1079
01:05:46,160 --> 01:05:52,800
Well, I want to like on a grander scale, proof of stake versus proof of work.
1080
01:05:52,800 --> 01:05:58,160
And I'm specific to Ethereum and Bitcoin is fine.
1081
01:05:58,160 --> 01:06:07,280
In my view, the switch over to proof of stake for Ethereum, you mentioned that you like
1082
01:06:07,280 --> 01:06:10,480
it as a form of governance and it makes more sense to you than proof of work.
1083
01:06:10,480 --> 01:06:14,240
It's an efficient consensus algorithm as well.
1084
01:06:14,240 --> 01:06:15,240
What do you dislike about it?
1085
01:06:15,240 --> 01:06:16,240
I'm really, really curious.
1086
01:06:16,240 --> 01:06:24,840
Well, my concern is that one of the things about proof of work that I appreciate is the
1087
01:06:24,840 --> 01:06:31,840
friction that's created between the incentives of miners versus the incentives of other ecosystem
1088
01:06:31,840 --> 01:06:32,840
participants.
1089
01:06:32,840 --> 01:06:38,040
Which, you know, it sort of goes back to that constitution comparison where you've got competing
1090
01:06:38,040 --> 01:06:41,000
incentives which adds friction.
1091
01:06:41,000 --> 01:06:43,000
It's like a division of power.
1092
01:06:43,000 --> 01:06:46,960
Right, it makes it harder to affect change.
1093
01:06:46,960 --> 01:06:49,920
And a lot of people point to that and say that's bad.
1094
01:06:49,920 --> 01:06:50,920
That's a bug, right?
1095
01:06:50,920 --> 01:06:53,360
I point to that and say that's good.
1096
01:06:53,360 --> 01:06:58,820
Because I think that making it more difficult to implement changes is a positive feature
1097
01:06:58,820 --> 01:06:59,820
of a system.
1098
01:06:59,820 --> 01:07:03,280
No, actually, I actually agree.
1099
01:07:03,280 --> 01:07:10,360
With regard to Ethereum and proof of stake, my big concern now is that validators' incentives
1100
01:07:10,360 --> 01:07:13,560
are directly aligned with pretty much everybody else.
1101
01:07:13,560 --> 01:07:19,080
Everybody's incentives are aligned to grow the value of Ethereum, to grow to, you know,
1102
01:07:19,080 --> 01:07:26,800
and not just the token value, but to keep it in compliance.
1103
01:07:26,800 --> 01:07:33,440
Because you can't have a strong ETH token if it's not in compliance with the law.
1104
01:07:33,440 --> 01:07:40,680
And I think that longer term, it's going to be easier.
1105
01:07:40,680 --> 01:07:45,920
No, because Bitcoin is almost defining the law.
1106
01:07:45,920 --> 01:07:50,560
I think that Bitcoin pre-existed a lot of the scrutiny.
1107
01:07:50,560 --> 01:07:53,080
Because it's the reason, I mean, look, if Bitcoin could be stopped.
1108
01:07:53,080 --> 01:07:55,360
That sounds like a double standard to me.
1109
01:07:55,360 --> 01:07:58,440
No, let me explain.
1110
01:07:58,440 --> 01:08:02,080
Bitcoin developed in silence.
1111
01:08:02,080 --> 01:08:08,160
Bitcoin sort of, if Bitcoin wasn't released in 2009 and had like that five, six, seven
1112
01:08:08,160 --> 01:08:11,040
years to bubble up before anybody in government cared.
1113
01:08:11,040 --> 01:08:14,200
I mean, it was only like two years ago, three years ago, when we're sitting here saying,
1114
01:08:14,200 --> 01:08:17,640
like, imagine the day when they say Bitcoin in Congress.
1115
01:08:17,640 --> 01:08:19,200
Imagine the day when the president says Bitcoin.
1116
01:08:19,200 --> 01:08:23,140
You know, it's like it had a long time to mature.
1117
01:08:23,140 --> 01:08:25,640
And by the time they figured it out, it was too late.
1118
01:08:25,640 --> 01:08:29,120
Okay, so isn't that true for the whole industry?
1119
01:08:29,120 --> 01:08:35,120
No, all of the things that make Bitcoin valuable were created in the first five years, I would
1120
01:08:35,120 --> 01:08:40,040
say, like the decentralization level, the immutability, etc.
1121
01:08:40,040 --> 01:08:45,800
With Ethereum, like I said before, everything valuable about Ethereum is being created now.
1122
01:08:45,800 --> 01:08:53,540
With Web3, with smart contracts, with DeFi, that ecosystem is seeking compliance.
1123
01:08:53,540 --> 01:08:56,720
Because without compliance, it has zero value.
1124
01:08:56,720 --> 01:08:59,720
So proof of stake makes it easier.
1125
01:08:59,720 --> 01:09:03,320
And all the stuff Italic's now pitching with enshrining, you know, all this stuff in the
1126
01:09:03,320 --> 01:09:06,800
protocols opposed to building on top of it.
1127
01:09:06,800 --> 01:09:12,480
It's all pointing towards a road toward compliance, you know, which limits freedom, which points
1128
01:09:12,480 --> 01:09:16,360
to a blockchain that's ultimately going to be government friendly.
1129
01:09:16,360 --> 01:09:19,840
Incentives being aligned between validators and the rest of the ecosystem makes it, is
1130
01:09:19,840 --> 01:09:25,560
going to long term make it easier for Ethereum to go in a direction that's anti-freedom.
1131
01:09:25,560 --> 01:09:28,640
I'll push back on that for a few reasons.
1132
01:09:28,640 --> 01:09:32,200
And I also want to just kind of loop it back to what we're saying earlier as well.
1133
01:09:32,200 --> 01:09:37,600
So there's two reasons, primarily, if I really simplify things, two reasons why I think that
1134
01:09:37,600 --> 01:09:39,200
proof of stake is superior.
1135
01:09:39,200 --> 01:09:42,960
So one is governance and the other one is just from an efficiency consensus algorithm
1136
01:09:42,960 --> 01:09:43,960
point of view.
1137
01:09:43,960 --> 01:09:48,040
Okay, so on the governance side, you know, during the block size debates, I think there
1138
01:09:48,040 --> 01:09:52,800
was a lot of theories and I myself included, you know, wrote some thesis about this as
1139
01:09:52,800 --> 01:09:59,520
well that, you know, that what role do the miners play in governance?
1140
01:09:59,520 --> 01:10:02,720
And I think that was a very important question.
1141
01:10:02,720 --> 01:10:06,600
And I think in the end, when it came to this kind of decision making, I don't feel like
1142
01:10:06,600 --> 01:10:10,360
the miners had much of a say in governance because the majority of miners actually wanted
1143
01:10:10,360 --> 01:10:12,080
a block size increase, right?
1144
01:10:12,080 --> 01:10:16,560
And the developers, you know, went along and did what they wanted to do anyway.
1145
01:10:16,560 --> 01:10:20,520
So I think for me, the miners were too weak.
1146
01:10:20,520 --> 01:10:24,480
And you know, they're the one party that has like a proof of positive incentive because
1147
01:10:24,480 --> 01:10:25,480
of proof of work.
1148
01:10:25,480 --> 01:10:30,600
Like they're the one party that really should be a very strong factor, let's say.
1149
01:10:30,600 --> 01:10:35,760
If you say, I wrote something called the theory on governance, the free stage model, where
1150
01:10:35,760 --> 01:10:41,680
I argue that there's free primary groups and that is like a checks and balance system.
1151
01:10:41,680 --> 01:10:45,240
But I think in the end, what ended up happening is the miners ended up being very weak on
1152
01:10:45,240 --> 01:10:46,240
that front.
1153
01:10:46,240 --> 01:10:50,480
And I think one of the reasons for that and one of the ways that proof of stake is potentially
1154
01:10:50,480 --> 01:10:54,560
different, experiment still needs to play out its course.
1155
01:10:54,560 --> 01:11:03,200
But is that I think that miners tend to have a too short term of a incentive.
1156
01:11:03,200 --> 01:11:08,720
So for instance, they're going to prioritize short term decision making over long term
1157
01:11:08,720 --> 01:11:12,240
decision making because they don't want to rock the boat because they tend to be very
1158
01:11:12,240 --> 01:11:13,380
mercenary.
1159
01:11:13,380 --> 01:11:17,360
They tend to think about things in terms of three to five year timeframes in terms of
1160
01:11:17,360 --> 01:11:20,280
electricity contracts and hardware.
1161
01:11:20,280 --> 01:11:27,360
So I feel like as I think if they're preferencing such a short term decision making over long
1162
01:11:27,360 --> 01:11:32,840
term decision making, then that to me explains, I think, why they didn't play a stronger
1163
01:11:32,840 --> 01:11:36,200
role in this.
1164
01:11:36,200 --> 01:11:39,920
And I think that miners ultimately, I think they're because they're so mercenary, they
1165
01:11:39,920 --> 01:11:42,080
just follow the market.
1166
01:11:42,080 --> 01:11:45,480
They're not really making decisions.
1167
01:11:45,480 --> 01:11:50,080
And I think one of the differences in proof of stake and Ethereum doesn't have this
1168
01:11:50,080 --> 01:11:51,080
by the way.
1169
01:11:51,080 --> 01:11:56,320
But I think something I do advocate for is you have very long lock in periods.
1170
01:11:56,320 --> 01:12:00,440
The longer you lock it in for the more the reward and that way you can actually skew
1171
01:12:00,440 --> 01:12:04,000
a system more towards long term decision making.
1172
01:12:04,000 --> 01:12:07,520
And I think that's something that's possible with proof of stake that's not possible for
1173
01:12:07,520 --> 01:12:08,520
proof work.
1174
01:12:08,520 --> 01:12:11,360
Okay, so that's the governance angle.
1175
01:12:11,360 --> 01:12:17,400
From a consensus algorithm design angle, I see a system that's simply more efficient.
1176
01:12:17,400 --> 01:12:21,500
And if you look at how difficult is it to attack a system, I look at something like
1177
01:12:21,500 --> 01:12:23,960
what is the cost to attack the system.
1178
01:12:23,960 --> 01:12:29,000
For the same amount of money, you have a system that's actually more secure.
1179
01:12:29,000 --> 01:12:33,020
And what that means is that you can balance that differently, but you can have more security
1180
01:12:33,020 --> 01:12:39,240
or you can actually have a system that's more economically sound because you can be burning
1181
01:12:39,240 --> 01:12:44,200
more and you don't need to generate as much inflation for things like maintaining the
1182
01:12:44,200 --> 01:12:45,980
security budget.
1183
01:12:45,980 --> 01:12:51,640
So there's a bunch of advantages there that I think by civil orders of magnitude, I actually
1184
01:12:51,640 --> 01:12:54,640
think proof of stake is actually more secure.
1185
01:12:54,640 --> 01:12:59,420
If you think about potential attack scenarios in terms of how much money would an attacker
1186
01:12:59,420 --> 01:13:01,480
have to put in to actually attack the system.
1187
01:13:01,480 --> 01:13:05,560
And there's a lot of devil in the details here in terms of working out that scenario,
1188
01:13:05,560 --> 01:13:07,080
but that's basically what I'm arguing.
1189
01:13:07,080 --> 01:13:11,160
So I'm saying, okay, it's more secure, has the potential for more sound economics and
1190
01:13:11,160 --> 01:13:12,920
it's a better governance mechanism.
1191
01:13:12,920 --> 01:13:19,400
And just to me, it just seems to achieve those purposes better than proof of work does.
1192
01:13:19,400 --> 01:13:25,320
That's kind of what I was alluding to before with it being potentially a feature, not a
1193
01:13:25,320 --> 01:13:26,320
bug.
1194
01:13:26,320 --> 01:13:30,480
And again, go back, think about the constitution.
1195
01:13:30,480 --> 01:13:33,880
It could be said that there's competing time horizons within that as well.
1196
01:13:33,880 --> 01:13:38,440
You think about Supreme Court's there for life, president's there for four years, senators
1197
01:13:38,440 --> 01:13:39,440
there for six years.
1198
01:13:39,440 --> 01:13:42,000
The Supreme Court is a perfect example of that, right?
1199
01:13:42,000 --> 01:13:46,400
That's where you quote unquote enforce a long lock-in period to ensure long-term decision
1200
01:13:46,400 --> 01:13:51,200
making and eliminating external pressures potentially as well.
1201
01:13:51,200 --> 01:13:52,600
So Supreme Court's the validators?
1202
01:13:52,600 --> 01:13:54,320
Is that what you're saying?
1203
01:13:54,320 --> 01:13:57,040
If they lock in their stake for long enough, yeah, that's how.
1204
01:13:57,040 --> 01:14:01,140
Hail the new Supreme Court.
1205
01:14:01,140 --> 01:14:07,620
But I guess what I was getting to is, is it really a bug to have a branch of government
1206
01:14:07,620 --> 01:14:17,040
or whatever you want to call it, that is acting as a competing incentive system, a competing
1207
01:14:17,040 --> 01:14:23,280
time horizon, doesn't match up exactly with other participants of the ecosystem?
1208
01:14:23,280 --> 01:14:30,240
Or is it better, not thinking, security is almost critical, obviously, but it's a separate
1209
01:14:30,240 --> 01:14:32,560
issue from the governance aspect.
1210
01:14:32,560 --> 01:14:36,160
And I agree, minors are typically not vocal governance participants.
1211
01:14:36,160 --> 01:14:37,280
Exactly.
1212
01:14:37,280 --> 01:14:40,760
Which was evidenced with Ethereum's fork, right?
1213
01:14:40,760 --> 01:14:44,360
Minors had no power over that fork.
1214
01:14:44,360 --> 01:14:47,840
So as much as they might have wanted to.
1215
01:14:47,840 --> 01:14:51,120
So they lost their living and they knew they were going to lose it.
1216
01:14:51,120 --> 01:14:57,360
They knew they were going to lose all the benefits of being an Ethereum miner.
1217
01:14:57,360 --> 01:15:01,280
But most of them probably weren't too vocal about it because they saw other opportunities
1218
01:15:01,280 --> 01:15:02,920
to be mercenaries on other chains.
1219
01:15:02,920 --> 01:15:05,000
I see where you're heading with this.
1220
01:15:05,000 --> 01:15:09,380
And like you're right, it could be a feature if the system was balanced out with another
1221
01:15:09,380 --> 01:15:11,920
party that had long-term incentives.
1222
01:15:11,920 --> 01:15:13,880
And I don't think that's actually the case.
1223
01:15:13,880 --> 01:15:18,040
That's where I see a problem with Bitcoin's design.
1224
01:15:18,040 --> 01:15:22,440
So what you're saying is nobody in the Bitcoin ecosystem is thinking long-term?
1225
01:15:22,440 --> 01:15:24,640
No, no, of course I'm not saying that.
1226
01:15:24,640 --> 01:15:26,960
There's plenty of people that are thinking long-term.
1227
01:15:26,960 --> 01:15:30,840
I think you, I'm not sure how much you've talked about the security budget and things
1228
01:15:30,840 --> 01:15:36,320
like that, but I know Eric Wall and Paul Stork.
1229
01:15:36,320 --> 01:15:40,600
There's a lot of Bitcoiners that I respect that have actually been very vocal about the
1230
01:15:40,600 --> 01:15:41,760
shortcomings of it.
1231
01:15:41,760 --> 01:15:47,480
No, I think the problem is that the people in charge are not, well, I think there being
1232
01:15:47,480 --> 01:15:50,380
people in charge is a problem in of itself.
1233
01:15:50,380 --> 01:15:56,100
And then an extension of that is that they're not doing what needs to be done to prevent
1234
01:15:56,100 --> 01:15:59,540
potential disaster in Bitcoin's design.
1235
01:15:59,540 --> 01:16:03,840
Maybe that's a good segue to talk about long-term security and why I think that more inflation
1236
01:16:03,840 --> 01:16:10,120
will be introduced when the security budget runs out in 7 to 11 years from now.
1237
01:16:10,120 --> 01:16:13,760
Yes, 7 to 11 years from now.
1238
01:16:13,760 --> 01:16:16,240
The security budget runs out in 7 to 11 years?
1239
01:16:16,240 --> 01:16:17,560
Five to nine years from now.
1240
01:16:17,560 --> 01:16:19,040
Sorry, I'll revise that.
1241
01:16:19,040 --> 01:16:20,040
Yeah.
1242
01:16:20,040 --> 01:16:23,560
Yeah, because I mean, so originally, right?
1243
01:16:23,560 --> 01:16:25,800
You mean it just goes, yeah, go ahead.
1244
01:16:25,800 --> 01:16:32,200
So originally, the original design of Bitcoin was you have a very large number of transactions,
1245
01:16:32,200 --> 01:16:33,760
each paying a small fee.
1246
01:16:33,760 --> 01:16:38,280
This has utility, this has purpose, therefore, this is a sustainable security model.
1247
01:16:38,280 --> 01:16:42,920
And it's like sustained fees as well if you have a high underlying usage and a decent
1248
01:16:42,920 --> 01:16:44,160
amount of capacity.
1249
01:16:44,160 --> 01:16:46,860
That was how Bitcoin was originally designed.
1250
01:16:46,860 --> 01:16:51,400
And the inflation in Bitcoin really should be seen as like this bootstrapping mechanism
1251
01:16:51,400 --> 01:16:55,120
to fund security until fees can actually take over.
1252
01:16:55,120 --> 01:16:58,720
Because the halvening are exponential, right?
1253
01:16:58,720 --> 01:17:03,840
So if you think about how exponential functions work, it can't just keep doubling every
1254
01:17:03,840 --> 01:17:04,840
four years.
1255
01:17:04,840 --> 01:17:08,480
Very quickly, you start running into territory that's just like...
1256
01:17:08,480 --> 01:17:12,400
And the reason why I say that is because in order for the security budget to remain the
1257
01:17:12,400 --> 01:17:14,840
same, the price has to...
1258
01:17:14,840 --> 01:17:18,520
And if there aren't additional fees, then the price has to double in order to maintain
1259
01:17:18,520 --> 01:17:22,720
that same security budget, what is being paid out to the miners, right?
1260
01:17:22,720 --> 01:17:26,600
So every four years that halves, that means the security budget is halving.
1261
01:17:26,600 --> 01:17:32,440
And I don't see a way that Bitcoin is going to be able to have sustainable high fees,
1262
01:17:32,440 --> 01:17:37,280
which would be in the tune if you want to just have today's security, which potentially
1263
01:17:37,280 --> 01:17:38,560
could be lower than today.
1264
01:17:38,560 --> 01:17:43,640
But for today's security needs to be around $60 to $80 per transaction.
1265
01:17:43,640 --> 01:17:48,000
And I just don't think that that's really something that's going to happen in a competitive
1266
01:17:48,000 --> 01:17:52,160
market, at least not sustained because of the way the fee market works.
1267
01:17:52,160 --> 01:17:54,280
You kind of have these fee spikes.
1268
01:17:54,280 --> 01:17:55,280
But the way...
1269
01:17:55,280 --> 01:17:57,480
I mean, the fee spikes alone are not going to be enough.
1270
01:17:57,480 --> 01:18:03,080
So basically, if you pay less to the miners, the security, the cost to attack the system,
1271
01:18:03,080 --> 01:18:07,960
as I mentioned before, drops lower and lower until it actually becomes profitable to attack
1272
01:18:07,960 --> 01:18:15,000
through things like double spends, through 51% attacks on things like exchanges.
1273
01:18:15,000 --> 01:18:19,080
And that's when censorship can also occur, it becomes very vulnerable to censorship.
1274
01:18:19,080 --> 01:18:21,040
And this is how it ties back into all these things, right?
1275
01:18:21,040 --> 01:18:26,720
And I'm saying if Ethereum's economic model is more secure, it's paying out more for security,
1276
01:18:26,720 --> 01:18:29,220
that means it's more censorship resistant, right?
1277
01:18:29,220 --> 01:18:33,260
That means it's harder for any single one party to come along and take it over.
1278
01:18:33,260 --> 01:18:37,040
If the security budget for Bitcoin is 10 million, right?
1279
01:18:37,040 --> 01:18:42,040
A state actor can literally take over the system for like 8 million or something, probably
1280
01:18:42,040 --> 01:18:44,080
a bit more like 16 million or something.
1281
01:18:44,080 --> 01:18:47,000
But still, that's too low of a number, right?
1282
01:18:47,000 --> 01:18:49,160
That's a huge problem.
1283
01:18:49,160 --> 01:18:52,360
That's a huge existential threat to Bitcoin's existence.
1284
01:18:52,360 --> 01:18:57,600
And I think that for me, the solution was always attract real use cases, utility that
1285
01:18:57,600 --> 01:19:02,960
creates fees, then it becomes sustainable, then you can have your supply cap, right?
1286
01:19:02,960 --> 01:19:07,200
But I think instead, the core developers were really like, no, we will not increase the
1287
01:19:07,200 --> 01:19:11,520
block size limits and they'd rather increase the inflation over that.
1288
01:19:11,520 --> 01:19:16,080
And people like Peter Todd have been publicly talking about this, that in order to remain
1289
01:19:16,080 --> 01:19:20,600
secure, inflation has to be increased.
1290
01:19:20,600 --> 01:19:27,560
And that to me, it just goes against one of the few advantages that I think people cite
1291
01:19:27,560 --> 01:19:29,080
for Bitcoin.
1292
01:19:29,080 --> 01:19:33,720
And I think that's terrible.
1293
01:19:33,720 --> 01:19:35,480
To add inflation would be terrible?
1294
01:19:35,480 --> 01:19:36,480
Yeah.
1295
01:19:36,480 --> 01:19:39,800
I mean, it might be the best solution, but that's terrible, right?
1296
01:19:39,800 --> 01:19:42,080
I mean, if it pivoted now...
1297
01:19:42,080 --> 01:19:44,400
It's terrible today, right?
1298
01:19:44,400 --> 01:19:45,800
But if it's your only option...
1299
01:19:45,800 --> 01:19:46,800
Sure.
1300
01:19:46,800 --> 01:19:50,680
But I mean, that's a terrible outcome, in my view, if there were better outcomes.
1301
01:19:50,680 --> 01:19:57,520
I mean, if it started attracting usage now, if it pivoted its narrative now, if it increased
1302
01:19:57,520 --> 01:20:00,640
the block size now, there's a chance it won't have to do that.
1303
01:20:00,640 --> 01:20:02,220
But I don't see that happening.
1304
01:20:02,220 --> 01:20:06,880
If I look at who's in charge, who's making the decisions, what kind of resistance would
1305
01:20:06,880 --> 01:20:08,080
there be to that sort of change?
1306
01:20:08,080 --> 01:20:14,720
And if I try to calculate what is the probability of change before the security budget runs
1307
01:20:14,720 --> 01:20:18,040
out, yeah, that's a huge problem.
1308
01:20:18,040 --> 01:20:22,600
And that's something that I've been shouting off the rooftops.
1309
01:20:22,600 --> 01:20:30,240
One of the things that I just want to call out is you mentioned that you said it's harder
1310
01:20:30,240 --> 01:20:36,800
to change Ethereum and make it into add censorship to it because of its proof of state structure.
1311
01:20:36,800 --> 01:20:40,280
Well, that's depending on how much is securing the system.
1312
01:20:40,280 --> 01:20:42,280
Right, right.
1313
01:20:42,280 --> 01:20:47,920
The one caveat I want to add there, just because it is somewhere that I get hung up philosophically,
1314
01:20:47,920 --> 01:20:53,120
is what I said before of thinking of the externalities, not just what's happening on chain, but the
1315
01:20:53,120 --> 01:21:00,680
externalities and the side effects, the unintended consequences of having a fully aligned ecosystem
1316
01:21:00,680 --> 01:21:07,240
that's fully aligned as far as the incentive of driving up the value of the token.
1317
01:21:07,240 --> 01:21:08,720
And when you have that kind of...
1318
01:21:08,720 --> 01:21:13,480
My view is still a good motivation generally, but there are definitely negative externalities.
1319
01:21:13,480 --> 01:21:14,480
I agree.
1320
01:21:14,480 --> 01:21:15,480
So continue.
1321
01:21:15,480 --> 01:21:16,480
Right.
1322
01:21:16,480 --> 01:21:19,800
And one of them is the fact, and I think we're seeing it already, the fact that there's a
1323
01:21:19,800 --> 01:21:27,400
high incentive to become and to stay compliant, to not be working...
1324
01:21:27,400 --> 01:21:30,200
Well, let me back up.
1325
01:21:30,200 --> 01:21:33,600
Specifically for Ethereum, because of what it's building with DeFi, because of what its
1326
01:21:33,600 --> 01:21:40,840
aspirations are, which are to be sort of the base layer of programmable money in the future.
1327
01:21:40,840 --> 01:21:48,960
So the aspirations of the validators who are heavily backed by VC, who are centralized
1328
01:21:48,960 --> 01:21:51,640
entities themselves, right?
1329
01:21:51,640 --> 01:21:54,440
They don't want to have this pirate kind of system.
1330
01:21:54,440 --> 01:21:56,880
They don't want to be Monero where they're getting banned everywhere.
1331
01:21:56,880 --> 01:21:58,880
And miners and developers also backed by VCs.
1332
01:21:58,880 --> 01:21:59,880
Yeah.
1333
01:21:59,880 --> 01:22:00,880
And so developers are.
1334
01:22:00,880 --> 01:22:01,880
Yes, they are.
1335
01:22:01,880 --> 01:22:05,840
So like, is that different?
1336
01:22:05,840 --> 01:22:08,920
It's different in that they don't...
1337
01:22:08,920 --> 01:22:14,240
Are you honestly pointing to Bitcoin as having the same level of alignment philosophically
1338
01:22:14,240 --> 01:22:15,760
between those parties?
1339
01:22:15,760 --> 01:22:16,760
Because they don't, right?
1340
01:22:16,760 --> 01:22:17,760
Alignment.
1341
01:22:17,760 --> 01:22:18,760
Oh, that's another question entirely.
1342
01:22:18,760 --> 01:22:19,760
I was talking about the...
1343
01:22:19,760 --> 01:22:21,280
I mean, they're both backed by VCs.
1344
01:22:21,280 --> 01:22:25,240
Ethereum clearly has more VC investment, but I think that's because there's more utility
1345
01:22:25,240 --> 01:22:26,240
there.
1346
01:22:26,240 --> 01:22:31,080
But I do think it's somewhat of a mischaracterization, even with all of my critique of Ethereum.
1347
01:22:31,080 --> 01:22:35,480
I think it's a bit of a mischaracterization to say that they want compliance.
1348
01:22:35,480 --> 01:22:38,200
I mean, the narrative is clearly one of decentralization.
1349
01:22:38,200 --> 01:22:41,400
I mean, that's what motivates the community.
1350
01:22:41,400 --> 01:22:46,320
And I disagree that the incentives necessarily line up to just embrace compliance on like
1351
01:22:46,320 --> 01:22:51,560
a native L1 level, which would ruin a blockchain and would make me more concerned for Bitcoin
1352
01:22:51,560 --> 01:22:56,400
actually because they have the same fundamental design in terms of its core aspects, right?
1353
01:22:56,400 --> 01:22:58,480
That would even be possible.
1354
01:22:58,480 --> 01:23:03,360
No, I think that decentralization is actually what makes it valuable.
1355
01:23:03,360 --> 01:23:07,280
So it's like once you add compliance and you just ruin it, then you're just back to Web
1356
01:23:07,280 --> 01:23:08,280
2 again.
1357
01:23:08,280 --> 01:23:09,280
And then like, what's the point?
1358
01:23:09,280 --> 01:23:13,280
It's an exercise in futility, just like a bait and switch.
1359
01:23:13,280 --> 01:23:18,320
So I think even if that were to happen in Ethereum, which I doubt, but even if I just
1360
01:23:18,320 --> 01:23:23,200
entertain that thought, like just for the matter of argument, I think in the long run,
1361
01:23:23,200 --> 01:23:29,000
a decentralized blockchain that can offer a lot of utility, I think that will still be
1362
01:23:29,000 --> 01:23:33,800
far more competitive in the market and it'll be far more attractive in the long run.
1363
01:23:33,800 --> 01:23:34,800
So yeah, that's right.
1364
01:23:34,800 --> 01:23:38,840
But we know there's certain things that the government, that US government, that the European
1365
01:23:38,840 --> 01:23:42,120
government and other powerful governments won't accept.
1366
01:23:42,120 --> 01:23:53,120
And they won't accept a blockchain that has the capability of changing in a way that will
1367
01:23:53,120 --> 01:23:59,560
eliminate privacy from the government that'll be able to comply with KYC AML.
1368
01:23:59,560 --> 01:24:00,560
The governments...
1369
01:24:00,560 --> 01:24:01,560
Go ahead, sorry.
1370
01:24:01,560 --> 01:24:02,560
Sorry, just...
1371
01:24:02,560 --> 01:24:09,680
Well, if the governments see a way to achieve those end games, which they do with Ethereum
1372
01:24:09,680 --> 01:24:14,920
already, because of the alignment of incentives, particularly of validators and the big money
1373
01:24:14,920 --> 01:24:19,960
behind it, the external money, if they see a way to get in, they'll get in.
1374
01:24:19,960 --> 01:24:24,360
And they may see that with Bitcoin too, but it's a less direct route.
1375
01:24:24,360 --> 01:24:29,600
I think with Bitcoin, ultimately the attack will come in the form of a fork and attempt
1376
01:24:29,600 --> 01:24:31,640
to hijack the brand.
1377
01:24:31,640 --> 01:24:35,360
I think they could easily fork Bitcoin to proof of stake and convince the dummies of
1378
01:24:35,360 --> 01:24:36,800
the world that they're in a fork with Bitcoin now.
1379
01:24:36,800 --> 01:24:39,400
In about five to nine years from now.
1380
01:24:39,400 --> 01:24:43,280
If the security budget runs out, that creates the perfect storm for that sort of thing to
1381
01:24:43,280 --> 01:24:44,280
happen.
1382
01:24:44,280 --> 01:24:45,280
Right.
1383
01:24:45,280 --> 01:24:46,280
Yeah.
1384
01:24:46,280 --> 01:24:49,100
So I mean, it's like, at that point, that's what I was saying before.
1385
01:24:49,100 --> 01:24:51,600
So much of Bitcoin is psychological and we know it.
1386
01:24:51,600 --> 01:24:53,760
The brand is what it is.
1387
01:24:53,760 --> 01:24:58,040
Now, the people like us who actually understand the tech, we're a very small percentage of
1388
01:24:58,040 --> 01:24:59,040
the world.
1389
01:24:59,040 --> 01:25:04,120
We're a single digit percent of the world, tiny percent, but everybody's heard of Bitcoin
1390
01:25:04,120 --> 01:25:05,120
by now.
1391
01:25:05,120 --> 01:25:09,760
So when the other 98% of the world is told, okay, now this is Bitcoin, and anybody who
1392
01:25:09,760 --> 01:25:14,480
tells you differently is a criminal, you don't think that 98% is just going to just go along
1393
01:25:14,480 --> 01:25:15,480
with it.
1394
01:25:15,480 --> 01:25:16,880
They don't know what proof of stake is or proof of fork is.
1395
01:25:16,880 --> 01:25:22,000
You have a point if you think about Bitcoin as like this purely speculative store of value.
1396
01:25:22,000 --> 01:25:25,720
If you think that's going to be the most valuable thing on earth, then sure, then you're correct.
1397
01:25:25,720 --> 01:25:27,580
But that's not what I believe.
1398
01:25:27,580 --> 01:25:31,300
I think that the utility of blockchain is far more valuable.
1399
01:25:31,300 --> 01:25:34,260
And part of the utility is the removal of middlemen.
1400
01:25:34,260 --> 01:25:36,500
That's what makes it so efficient.
1401
01:25:36,500 --> 01:25:42,440
That's how we can actually create better products, better money, because no one is in control.
1402
01:25:42,440 --> 01:25:45,560
So I think in the long run, I think that's going to win.
1403
01:25:45,560 --> 01:25:48,720
That's why I believe in cryptocurrency.
1404
01:25:48,720 --> 01:25:53,360
I think at my heart, I'm still a bit of an optimist.
1405
01:25:53,360 --> 01:25:58,960
I mean, sure, there are futures where what you're saying plays out.
1406
01:25:58,960 --> 01:26:02,180
Our governments become more totalitarian.
1407
01:26:02,180 --> 01:26:04,800
And then I think what you're saying is true for China.
1408
01:26:04,800 --> 01:26:08,740
I think authoritarian governments, generally speaking, are just going to be completely
1409
01:26:08,740 --> 01:26:12,120
incompatible with the ethos of decentralized blockchains.
1410
01:26:12,120 --> 01:26:16,400
It's just not going to work out at all.
1411
01:26:16,400 --> 01:26:24,160
So I think places where you still have freedom of speech, or at least a part of it, places
1412
01:26:24,160 --> 01:26:32,600
where you still have property rights, I think these places can still be accepting of cryptocurrency.
1413
01:26:32,600 --> 01:26:41,900
And I'm maybe not as pessimistic as you are about regulators coming down and banning everything
1414
01:26:41,900 --> 01:26:48,160
I suppose I'm a bit more optimistic in terms of that future.
1415
01:26:48,160 --> 01:26:54,340
We just need to explain to them that, no, no, you don't apply the same regulations because
1416
01:26:54,340 --> 01:27:01,960
there is no intermediary that you need to protect the user from.
1417
01:27:01,960 --> 01:27:03,760
I think that's it's fundamentally true.
1418
01:27:03,760 --> 01:27:04,760
Well, that's not true, though.
1419
01:27:04,760 --> 01:27:05,760
Sorry?
1420
01:27:05,760 --> 01:27:10,640
But it's not true as long as we've got DAOs and multisig and chain links.
1421
01:27:10,640 --> 01:27:15,400
So hey, if the regulator goes after these things with admin keys, you know what the
1422
01:27:15,400 --> 01:27:16,400
regulator is doing?
1423
01:27:16,400 --> 01:27:21,880
The regulator is actually supporting decentralization, which I find wonderfully ironic.
1424
01:27:21,880 --> 01:27:26,080
So those things, the things with admin keys, sure.
1425
01:27:26,080 --> 01:27:32,460
Actually, I'm conflicted because the libertarian in me doesn't want more government interference.
1426
01:27:32,460 --> 01:27:36,820
But on the other hand, I'm like, if they do that, then they are technically protecting
1427
01:27:36,820 --> 01:27:39,880
people and they're supporting the cause of decentralization.
1428
01:27:39,880 --> 01:27:43,200
So I think I'm allowed to be conflicted about this particular case.
1429
01:27:43,200 --> 01:27:47,080
But you know, they won't be able to go after is the truly decentralized projects.
1430
01:27:47,080 --> 01:27:49,080
And they do still exist.
1431
01:27:49,080 --> 01:27:50,560
And then people do still have the option.
1432
01:27:50,560 --> 01:27:51,560
But that's not how it's playing out.
1433
01:27:51,560 --> 01:27:52,560
Here's how it's playing out.
1434
01:27:52,560 --> 01:27:53,560
No, but it is though.
1435
01:27:53,560 --> 01:27:57,160
Because you do still, I know most people are going to use the wrong thing, right?
1436
01:27:57,160 --> 01:27:58,760
Especially in the early days.
1437
01:27:58,760 --> 01:28:00,480
So I'm with you on that.
1438
01:28:00,480 --> 01:28:01,760
But those options still exist.
1439
01:28:01,760 --> 01:28:09,720
I can purchase cryptocurrency anonymously and obscure my IP and I can run it through
1440
01:28:09,720 --> 01:28:12,240
a little cash if you want to violate sanctions.
1441
01:28:12,240 --> 01:28:17,920
Yeah, I mean, but I won't be able to send that money back to my bank account, right?
1442
01:28:17,920 --> 01:28:20,440
Without identifying the source, I'll be able to do a lot of things with it.
1443
01:28:20,440 --> 01:28:21,440
But I can.
1444
01:28:21,440 --> 01:28:23,120
But here's what's actually happening.
1445
01:28:23,120 --> 01:28:28,040
What's actually happening is that the polygons of the world and the layer twos of the world
1446
01:28:28,040 --> 01:28:32,800
and the DeFi apps that have multi SIGs of the world, they are they're not just going
1447
01:28:32,800 --> 01:28:35,440
to get shut down by the government.
1448
01:28:35,440 --> 01:28:40,120
They're keeping access to be able to change stuff so that they can comply.
1449
01:28:40,120 --> 01:28:41,640
And there's negotiations going on.
1450
01:28:41,640 --> 01:28:45,560
They're negotiating with the government on what these laws and regulations are going
1451
01:28:45,560 --> 01:28:46,560
to look like.
1452
01:28:46,560 --> 01:28:51,720
And the government is not, you know, SEC is a different story, but there's other regulators
1453
01:28:51,720 --> 01:28:56,320
that and Congress people, you know, if you look at these hearings that are going on,
1454
01:28:56,320 --> 01:29:02,880
that are being lobbied to change laws, you know, and so the compliance is going to happen,
1455
01:29:02,880 --> 01:29:05,400
but it's going to be with a new set of laws.
1456
01:29:05,400 --> 01:29:09,520
And it's going to be a trade off between what the government wants and what they can get
1457
01:29:09,520 --> 01:29:11,360
out of these protocols.
1458
01:29:11,360 --> 01:29:14,040
So we're not talking about just shut down, right?
1459
01:29:14,040 --> 01:29:20,440
We're talking about the worst case scenario, I think, which is these mutated forms of it's
1460
01:29:20,440 --> 01:29:25,640
more decentralized than what we have now, but it's still giving up so much of what we
1461
01:29:25,640 --> 01:29:27,920
thought we were going to get out of crypto.
1462
01:29:27,920 --> 01:29:31,600
You know, and so that's really the worst case to me.
1463
01:29:31,600 --> 01:29:35,240
And that's why I think Ethereum is heading down that path.
1464
01:29:35,240 --> 01:29:36,240
Yeah.
1465
01:29:36,240 --> 01:29:44,320
I mean, I mean, and this is why also I've become such a critic of the layer two.
1466
01:29:44,320 --> 01:29:51,120
Because it worsens the user experience, it actually increases the need for custodians
1467
01:29:51,120 --> 01:29:55,720
actually pushing people into the centralized service and custodians.
1468
01:29:55,720 --> 01:30:00,760
But what I don't under entirely where I've maybe we we differ a bit is that I mean, they
1469
01:30:00,760 --> 01:30:03,360
go after these protocols of admin keys.
1470
01:30:03,360 --> 01:30:07,080
And so so what?
1471
01:30:07,080 --> 01:30:09,240
You know, we still have our decentralized options.
1472
01:30:09,240 --> 01:30:14,480
And sure, we're going to be out there promoting that everyone should use them.
1473
01:30:14,480 --> 01:30:15,480
What decentralized options?
1474
01:30:15,480 --> 01:30:17,480
What are you talking about on Ethereum?
1475
01:30:17,480 --> 01:30:18,480
Yeah.
1476
01:30:18,480 --> 01:30:19,480
Yeah.
1477
01:30:19,480 --> 01:30:20,480
No, for instance, you're talking about Uniswap.
1478
01:30:20,480 --> 01:30:26,960
Okay, say I anonymize my coins through Railgun, which is an anonymity protocol.
1479
01:30:26,960 --> 01:30:27,960
Right.
1480
01:30:27,960 --> 01:30:31,000
And I run that through Uniswap to swap my coins.
1481
01:30:31,000 --> 01:30:32,000
Right.
1482
01:30:32,000 --> 01:30:33,000
Then I run it.
1483
01:30:33,000 --> 01:30:35,600
And then I run it into Aave.
1484
01:30:35,600 --> 01:30:36,600
Right.
1485
01:30:36,600 --> 01:30:37,600
For all.
1486
01:30:37,600 --> 01:30:38,600
And if I.
1487
01:30:38,600 --> 01:30:42,600
Well, you'll be banned from Uniswap because Uniswap's now got hooks, which allows everybody
1488
01:30:42,600 --> 01:30:43,600
to create these.
1489
01:30:43,600 --> 01:30:44,600
But I'll use Uniswap version free.
1490
01:30:44,600 --> 01:30:45,600
Right.
1491
01:30:45,600 --> 01:30:46,600
That doesn't have the hooks.
1492
01:30:46,600 --> 01:30:49,280
Well, there's not going to be any liquidity there.
1493
01:30:49,280 --> 01:30:50,640
You're not going to be easy to target.
1494
01:30:50,640 --> 01:30:51,640
Okay.
1495
01:30:51,640 --> 01:30:52,640
Well, then I'm going to get good rates.
1496
01:30:52,640 --> 01:30:53,640
But then I'll use a different.
1497
01:30:53,640 --> 01:30:54,640
You know, it's like.
1498
01:30:54,640 --> 01:30:55,640
No, no.
1499
01:30:55,640 --> 01:30:56,640
Sure.
1500
01:30:56,640 --> 01:30:57,640
I'll be hampered.
1501
01:30:57,640 --> 01:30:58,640
You're going to be a pirate.
1502
01:30:58,640 --> 01:30:59,640
Sure.
1503
01:30:59,640 --> 01:31:00,640
You'll be a pirate.
1504
01:31:00,640 --> 01:31:01,640
I get it.
1505
01:31:01,640 --> 01:31:02,640
You know, because that's that's the world we live in.
1506
01:31:02,640 --> 01:31:03,640
Right.
1507
01:31:03,640 --> 01:31:06,280
And I and I and I agree with you.
1508
01:31:06,280 --> 01:31:07,280
And I agree with you.
1509
01:31:07,280 --> 01:31:08,280
We should have more freedom.
1510
01:31:08,280 --> 01:31:09,280
Right.
1511
01:31:09,280 --> 01:31:10,280
I actually agree with you.
1512
01:31:10,280 --> 01:31:11,280
And I want that.
1513
01:31:11,280 --> 01:31:12,280
Right.
1514
01:31:12,280 --> 01:31:15,680
But let's not throw out the baby with the bathwater here.
1515
01:31:15,680 --> 01:31:16,680
Right.
1516
01:31:16,680 --> 01:31:22,000
If someone really needs this, if some revolutionary somewhere really needs this, it's still there.
1517
01:31:22,000 --> 01:31:26,520
And I think that's that's technically correct, even though it's not as good as the mainstream
1518
01:31:26,520 --> 01:31:27,520
thing.
1519
01:31:27,520 --> 01:31:28,520
It's there.
1520
01:31:28,520 --> 01:31:36,320
But the the problem is that the admin key driven projects, the VCs that are behind them are
1521
01:31:36,320 --> 01:31:41,680
actively trying to make the stuff that you like illegal.
1522
01:31:41,680 --> 01:31:47,560
They're actively trying to say like like if someone is they're out there paying to pay
1523
01:31:47,560 --> 01:31:49,040
enough Congress people.
1524
01:31:49,040 --> 01:31:53,760
But how do you stop someone from for like an anon from someone that has proper upset?
1525
01:31:53,760 --> 01:31:58,520
How do you stop them from like interacting with these smart contracts, the ones that
1526
01:31:58,520 --> 01:31:59,800
don't have admin keys, right?
1527
01:31:59,800 --> 01:32:01,560
The ones that don't have these things?
1528
01:32:01,560 --> 01:32:03,480
How do you stop you can't stop exactly.
1529
01:32:03,480 --> 01:32:05,880
But it's not about some some pirate anon.
1530
01:32:05,880 --> 01:32:06,920
That's exactly my point.
1531
01:32:06,920 --> 01:32:08,480
You can't stop loving guy.
1532
01:32:08,480 --> 01:32:09,480
Right.
1533
01:32:09,480 --> 01:32:10,480
That's my point.
1534
01:32:10,480 --> 01:32:11,480
Right.
1535
01:32:11,480 --> 01:32:14,480
You can't you can stop them from effectively using it if there's no equity.
1536
01:32:14,480 --> 01:32:16,400
That's that's that's a good thing.
1537
01:32:16,400 --> 01:32:17,400
Right.
1538
01:32:17,400 --> 01:32:21,100
That someone can just have the freedom to do that and nobody can stop them.
1539
01:32:21,100 --> 01:32:22,100
You have to agree.
1540
01:32:22,100 --> 01:32:24,480
That's a good thing.
1541
01:32:24,480 --> 01:32:26,120
It's a good thing until it's illegal.
1542
01:32:26,120 --> 01:32:28,320
And if they catch you doing it, it's still a good thing.
1543
01:32:28,320 --> 01:32:32,720
Even if it's illegal, they're making it illegal is what's bad about that scenario.
1544
01:32:32,720 --> 01:32:33,720
Right.
1545
01:32:33,720 --> 01:32:34,720
Yeah.
1546
01:32:34,720 --> 01:32:36,220
But that's what DeFi is doing.
1547
01:32:36,220 --> 01:32:37,220
That's what the that's my point.
1548
01:32:37,220 --> 01:32:40,760
What's the regulator reason that they're doing this illegal not DeFi itself?
1549
01:32:40,760 --> 01:32:41,760
No, no.
1550
01:32:41,760 --> 01:32:44,400
See, that's where there's confusion.
1551
01:32:44,400 --> 01:32:49,520
And it's the hardest thing to communicate about this space is that there are huge organizations,
1552
01:32:49,520 --> 01:32:58,560
huge VCs, you know, even DeFi developers themselves are out there lobbying for laws, regulations
1553
01:32:58,560 --> 01:33:03,960
that would hamper competition that would keep them in their prime spots, that would make
1554
01:33:03,960 --> 01:33:08,200
competition that doesn't comply with the rules that they're agreeing to be beholden to.
1555
01:33:08,200 --> 01:33:11,520
I have to point out Bitcoiners are guilty of this too, right.
1556
01:33:11,520 --> 01:33:18,280
In regards to some Bitcoiners at least calling for regulations to their competitors.
1557
01:33:18,280 --> 01:33:19,280
Right.
1558
01:33:19,280 --> 01:33:20,280
Yeah.
1559
01:33:20,280 --> 01:33:21,280
Yeah.
1560
01:33:21,280 --> 01:33:25,320
I mean, sure, there's organizations behind Bitcoin industry organizations too.
1561
01:33:25,320 --> 01:33:28,960
But specifically with regard to Ethereum, we're talking about banking.
1562
01:33:28,960 --> 01:33:33,720
You know, we're talking about stuff that's going to affect how CBDCs are rolled out.
1563
01:33:33,720 --> 01:33:38,520
We're talking about a whole different level of possible damage, you know, and we're talking
1564
01:33:38,520 --> 01:33:43,120
about a whole different level of damage to privacy, I think, you know, with regard to
1565
01:33:43,120 --> 01:33:45,560
especially with what's on Ethereum, but beyond that.
1566
01:33:45,560 --> 01:33:50,040
Because it sounds like we're disagreeing, right, but we're not actually disagreeing
1567
01:33:50,040 --> 01:33:51,040
with each other.
1568
01:33:51,040 --> 01:33:53,120
I would like like, what are we actually disagreeing on here?
1569
01:33:53,120 --> 01:33:55,520
Like it sounds like we are, but I think we're in agreement.
1570
01:33:55,520 --> 01:33:56,920
I'm just more optimistic.
1571
01:33:56,920 --> 01:34:04,760
I think that you where I think the point of disagreement is, is on the approach to an
1572
01:34:04,760 --> 01:34:07,920
optimism around DeFi on Ethereum.
1573
01:34:07,920 --> 01:34:16,240
I don't see a path forward for DeFi on Ethereum that doesn't involve compliance and compliance
1574
01:34:16,240 --> 01:34:21,720
that ultimately creates precedents that hurts the rest of the crypto industry with regard
1575
01:34:21,720 --> 01:34:24,160
to promises of freedom and privacy.
1576
01:34:24,160 --> 01:34:28,080
Would it be any different if the DeFi was over Bitcoin?
1577
01:34:28,080 --> 01:34:33,400
Like if we just had that functionality, wouldn't things just play out exactly the same?
1578
01:34:33,400 --> 01:34:35,800
It's a good question.
1579
01:34:35,800 --> 01:34:39,360
I think it depends how it was built, what kind of layer it was built on.
1580
01:34:39,360 --> 01:34:43,720
You know, I think with like we have RSK, which has smart contract functionality.
1581
01:34:43,720 --> 01:34:45,560
That's a perfect example of things.
1582
01:34:45,560 --> 01:34:49,680
I mean, that's a federated system, right, RSK.
1583
01:34:49,680 --> 01:34:55,160
I think I think all the pretty much almost all of the L2 solutions and or DeFi Bitcoin
1584
01:34:55,160 --> 01:34:56,600
are L2 solutions.
1585
01:34:56,600 --> 01:35:01,080
But like hypothetically, if it had native DeFi, like programmability built in, just
1586
01:35:01,080 --> 01:35:03,920
pure hypothetical, like I think it would play out the same.
1587
01:35:03,920 --> 01:35:07,040
Well, this is my concern with BIP 300.
1588
01:35:07,040 --> 01:35:14,480
You know, is that could we end up seeing the and I haven't been able to I want to do a
1589
01:35:14,480 --> 01:35:20,960
whole separate podcast about this, you know, because part of my concern goes beyond anything
1590
01:35:20,960 --> 01:35:24,680
technical and beyond anything that that is written in a white paper or anything like
1591
01:35:24,680 --> 01:35:25,680
that.
1592
01:35:25,680 --> 01:35:27,460
It's about longer term.
1593
01:35:27,460 --> 01:35:31,400
How is this going to bring in big money that's going to try to corrupt the integrity of the
1594
01:35:31,400 --> 01:35:32,400
base layer?
1595
01:35:32,400 --> 01:35:35,600
Yeah, and I, I get that.
1596
01:35:35,600 --> 01:35:39,400
Basically the way that it works is it doesn't change the base layer, right?
1597
01:35:39,400 --> 01:35:42,040
It just everything can work as it always has.
1598
01:35:42,040 --> 01:35:43,720
It just adds new functionality.
1599
01:35:43,720 --> 01:35:44,720
Miners won't know any difference.
1600
01:35:44,720 --> 01:35:45,720
It just gonna look like regular.
1601
01:35:45,720 --> 01:35:47,120
I believe it's merged mind.
1602
01:35:47,120 --> 01:35:50,880
So miners do need to watch the the drive chain.
1603
01:35:50,880 --> 01:35:52,440
But but yes, it is.
1604
01:35:52,440 --> 01:35:53,440
It is a layer two.
1605
01:35:53,440 --> 01:35:54,960
So layer one continues as is.
1606
01:35:54,960 --> 01:35:56,440
Sorry, continue.
1607
01:35:56,440 --> 01:35:57,440
Right.
1608
01:35:57,440 --> 01:36:01,720
And there could be hundreds of these drive chains, you know, and all doing different
1609
01:36:01,720 --> 01:36:03,320
things.
1610
01:36:03,320 --> 01:36:08,640
What I don't fully understand yet is what kind of unintended consequences could that
1611
01:36:08,640 --> 01:36:14,240
have politically, you know, with this amorphous governance system that you nicely described,
1612
01:36:14,240 --> 01:36:20,160
you know, like like what, you know, corruption with developers, like all that other stuff.
1613
01:36:20,160 --> 01:36:24,120
Like I haven't heard that fully vetted out, you know, and that's the part that I get concerned
1614
01:36:24,120 --> 01:36:25,120
about.
1615
01:36:25,120 --> 01:36:26,120
So I don't know the answer.
1616
01:36:26,120 --> 01:36:29,960
Yeah, no, I don't know the answer to that either.
1617
01:36:29,960 --> 01:36:33,080
But I think we have to give it our best shot.
1618
01:36:33,080 --> 01:36:37,600
You know, like I tend to be optimistic, but it doesn't necessarily change my course of
1619
01:36:37,600 --> 01:36:40,560
action because I'm still going to advocate for decentralization.
1620
01:36:40,560 --> 01:36:44,160
I'm still going to call out centralization where I see it.
1621
01:36:44,160 --> 01:36:45,160
Right.
1622
01:36:45,160 --> 01:36:46,160
It's it's still.
1623
01:36:46,160 --> 01:36:50,600
Yeah, that's that's where I think, you know, that's what really matters.
1624
01:36:50,600 --> 01:36:51,600
Right.
1625
01:36:51,600 --> 01:36:53,440
And, you know, the world can go either way.
1626
01:36:53,440 --> 01:36:54,440
Right.
1627
01:36:54,440 --> 01:36:59,320
Like this, this factors outside of our control that could sway the world one way or another.
1628
01:36:59,320 --> 01:37:05,840
You know, I think as long as I'm doing my best.
1629
01:37:05,840 --> 01:37:09,800
In terms of pushing things in a better direction, I think that's that's what matters.
1630
01:37:09,800 --> 01:37:11,800
And I mean, I mean, ultimately, I'm curious.
1631
01:37:11,800 --> 01:37:15,320
It just it comes across.
1632
01:37:15,320 --> 01:37:16,320
Almost pessimistic.
1633
01:37:16,320 --> 01:37:18,200
You still think we're going to win, right?
1634
01:37:18,200 --> 01:37:19,640
At the end of this long road.
1635
01:37:19,640 --> 01:37:25,400
Well, I was just thinking that when you were saying what you were just saying, I think
1636
01:37:25,400 --> 01:37:29,760
that is our biggest difference in approach is that you come at it from an optimistic
1637
01:37:29,760 --> 01:37:30,760
point of view.
1638
01:37:30,760 --> 01:37:37,880
And I come at it from the point of view that that I believe people, humans are inherently
1639
01:37:37,880 --> 01:37:41,600
greedy and inherently fallible.
1640
01:37:41,600 --> 01:37:46,840
And that money in our in our today's mutated, we don't live in a capitalist society.
1641
01:37:46,840 --> 01:37:52,560
We live in like this mutated form of capitalism that's, you know, crossed over with socialism
1642
01:37:52,560 --> 01:37:56,360
and all this other stuff, you know, crony capitalism.
1643
01:37:56,360 --> 01:38:02,120
I think that in this mutated economic world we live in, there's there's dangers everywhere.
1644
01:38:02,120 --> 01:38:07,880
And it makes it very, very unlikely that we're going to be able to achieve what we want to
1645
01:38:07,880 --> 01:38:08,880
achieve.
1646
01:38:08,880 --> 01:38:13,040
And I think that the only way we can do it is by coming at it from a completely adversarial
1647
01:38:13,040 --> 01:38:18,680
approach and assume that every human involved is going to mess up at some point.
1648
01:38:18,680 --> 01:38:23,360
You know, and I think that the only hope that we have is to assume the worst in people and
1649
01:38:23,360 --> 01:38:30,040
to try to use technology to avert it, to avert those those, you know, bad intentions that
1650
01:38:30,040 --> 01:38:32,240
people just have it in their in their core.
1651
01:38:32,240 --> 01:38:33,240
Yes.
1652
01:38:33,240 --> 01:38:34,400
I think that's the difference in how we approach.
1653
01:38:34,400 --> 01:38:38,880
Yeah, no, I think I think I think you're right about that.
1654
01:38:38,880 --> 01:38:42,640
It's but I'm sorry.
1655
01:38:42,640 --> 01:38:43,640
I've corrupted you.
1656
01:38:43,640 --> 01:38:44,640
No, yeah.
1657
01:38:44,640 --> 01:38:50,400
I think I think on another hand, I think it's it's we have to we have to do the best we
1658
01:38:50,400 --> 01:38:57,040
can, you know, and and I think ultimately, ultimately, I do think cryptocurrency will
1659
01:38:57,040 --> 01:38:58,040
succeed.
1660
01:38:58,040 --> 01:39:02,840
And and I think also I think one thing that that differentiates our our different viewpoints
1661
01:39:02,840 --> 01:39:06,120
here is that it's about how we're prioritizing threats.
1662
01:39:06,120 --> 01:39:11,600
It seems to me like for you, some of the biggest threats to cryptocurrency are external.
1663
01:39:11,600 --> 01:39:15,980
And actually, in my view, and this is related to a lot of the work I've done around governance.
1664
01:39:15,980 --> 01:39:19,400
In my view, I think the biggest threat to cryptocurrency is actually internal.
1665
01:39:19,400 --> 01:39:24,360
I think we're like our own worst enemy in so many ways.
1666
01:39:24,360 --> 01:39:30,440
Like it's it's like it's it's the corruption that happens from within or the susceptibility,
1667
01:39:30,440 --> 01:39:35,280
I think, you know, for corruption, I think is is one of is like the biggest threat to
1668
01:39:35,280 --> 01:39:36,280
me.
1669
01:39:36,280 --> 01:39:41,560
Like, actually, I'm fairly optimistic, you know, when it comes to the regulatory side
1670
01:39:41,560 --> 01:39:42,560
of things.
1671
01:39:42,560 --> 01:39:46,000
I mean, there's going to be ups and downs and tug of war is going to go back and forth
1672
01:39:46,000 --> 01:39:47,560
and the pendulum is going to swing.
1673
01:39:47,560 --> 01:39:50,320
But I think I'm more optimistic on that front than you are.
1674
01:39:50,320 --> 01:39:56,160
But I'm I'm far more concerned about being our own worst enemy in that and that it's
1675
01:39:56,160 --> 01:40:00,040
it's it's it's our own internal systems of governments that are actually the biggest
1676
01:40:00,040 --> 01:40:01,040
threat.
1677
01:40:01,040 --> 01:40:05,200
And we'll I think, in my view, continue to delay mass adoption, unfortunately, because
1678
01:40:05,200 --> 01:40:08,480
of just wrong choices being made.
1679
01:40:08,480 --> 01:40:10,520
It's a consequence.
1680
01:40:10,520 --> 01:40:12,160
Yeah, I agree with you.
1681
01:40:12,160 --> 01:40:13,600
I agree on a lot of that.
1682
01:40:13,600 --> 01:40:19,440
I think actually the biggest threats come probably right at the edge, the edge between
1683
01:40:19,440 --> 01:40:20,940
internal and external.
1684
01:40:20,940 --> 01:40:25,440
You know, and it's when the external forces find their way through weak defenses.
1685
01:40:25,440 --> 01:40:27,400
You know, that's where it starts to get.
1686
01:40:27,400 --> 01:40:28,560
That's where the two viewpoints combined.
1687
01:40:28,560 --> 01:40:30,200
I've seen a lot of that already.
1688
01:40:30,200 --> 01:40:31,400
Yeah, exactly.
1689
01:40:31,400 --> 01:40:35,320
But well, listen, man, this has been a great chat.
1690
01:40:35,320 --> 01:40:36,320
We've gone way over time.
1691
01:40:36,320 --> 01:40:37,320
I enjoyed this.
1692
01:40:37,320 --> 01:40:42,560
This was and we're probably pushing the limits of anybody who's still listening.
1693
01:40:42,560 --> 01:40:45,800
So we'll but we should do it again sometime.
1694
01:40:45,800 --> 01:40:46,800
I think it's great.
1695
01:40:46,800 --> 01:40:47,800
I love chatting.
1696
01:40:47,800 --> 01:40:48,800
We only got through half of my list.
1697
01:40:48,800 --> 01:40:51,120
I want to talk to you about privacy.
1698
01:40:51,120 --> 01:40:54,360
I want to talk to you about a bunch of privacy.
1699
01:40:54,360 --> 01:40:58,920
We barely let me just shove that.
1700
01:40:58,920 --> 01:41:03,600
But yeah, yeah, we'll definitely we'll definitely do it again.
1701
01:41:03,600 --> 01:41:04,600
But thanks for spending all this time.
1702
01:41:04,600 --> 01:41:05,600
It was a pleasure.
1703
01:41:05,600 --> 01:41:06,600
And yeah.
1704
01:41:06,600 --> 01:41:10,320
And again, I really admire the work you've been doing as well.
1705
01:41:10,320 --> 01:41:16,840
So just just keep up and we're going to keep crusading for decentralization and freedom.
1706
01:41:16,840 --> 01:41:19,640
And you know, that's that's what matters.
1707
01:41:19,640 --> 01:41:20,640
Thank you so much for it.
1708
01:41:20,640 --> 01:41:40,700
It sure does.
00:00:00,000 --> 00:00:11,800
You know people, people um, blast me and probably you too for like outrageous tweets and just trying to get people all crazy, you know using incendiary language.
2
00:00:11,800 --> 00:00:12,300
Sure.
3
00:00:12,300 --> 00:00:13,800
It's Twitter man.
4
00:00:13,800 --> 00:00:18,000
That's how you get people to, to, to pay attention.
5
00:00:18,000 --> 00:00:22,800
If I didn't, if I wasn't such a dick with a lot of this stuff, nobody would care.
6
00:00:22,800 --> 00:00:25,600
There's a lot of people saying the stuff I'm saying and the stuff you're saying.
7
00:00:25,600 --> 00:00:26,800
There's a lot of people saying it.
8
00:00:26,800 --> 00:00:27,300
I'm with you.
9
00:00:27,300 --> 00:00:29,200
But they're just like little, they're little mice, right?
10
00:00:29,200 --> 00:00:30,400
They're like, you know, nobody listens.
11
00:00:30,400 --> 00:00:33,600
You know, so it's like you message you want people to actually hear it.
12
00:00:33,600 --> 00:00:34,400
Right?
13
00:00:34,400 --> 00:00:35,000
Right.
14
00:00:35,000 --> 00:00:35,700
Right.
15
00:00:35,700 --> 00:00:37,500
Whether it's positive or negative, whatever it is.
16
00:00:37,500 --> 00:00:41,500
I enjoy the challenge of like writing something viral.
17
00:00:41,500 --> 00:00:44,900
There's a, there's a, there's a nuance in the language that I enjoy, you know.
18
00:00:44,900 --> 00:00:49,600
Not enough people understand everything that you can do with Bit Refill.
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00:00:49,600 --> 00:00:51,200
Come to bit refill.com.
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Take a look at their gift cards, phone refills, eSims.
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The list goes on and on and on.
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You can buy any of these with crypto.
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You don't have to provide your name.
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As long as you have crypto, you can buy here.
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Let's say I want to buy an Instacart gift card, $50.
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You can check out with any of these cryptocurrencies.
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You can buy eSims for your phone in all different countries.
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00:01:46,300 --> 00:01:49,100
Use promo code Chris Black.
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Bitrefill.com.
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00:01:50,400 --> 00:01:54,900
The Bitcoin hardware wallet space can be a little confusing, but I'm here to tell you
46
00:01:54,900 --> 00:02:03,100
that the most important part of your decision needs to be the ethos of the team that's developing
47
00:02:03,100 --> 00:02:04,100
the hardware wallet.
48
00:02:04,100 --> 00:02:06,500
That's why I look to Foundation Devices.
49
00:02:06,500 --> 00:02:12,100
This team has proven over and over that they're committed to freedom of their users.
50
00:02:12,100 --> 00:02:15,300
They're committed to the sovereignty of their users.
51
00:02:15,300 --> 00:02:22,100
The Passport Bitcoin Wallet from Foundation Devices is a beautiful, air-gapped, open source,
52
00:02:22,100 --> 00:02:24,700
trust-minimized hardware wallet.
53
00:02:24,700 --> 00:02:26,500
And what do I mean by trust-minimized?
54
00:02:26,500 --> 00:02:29,500
I mean you never have to plug this into your computer.
55
00:02:29,500 --> 00:02:34,000
When you use other Bitcoin hardware wallets, you have to connect them to your computer
56
00:02:34,000 --> 00:02:35,000
in order to use them.
57
00:02:35,000 --> 00:02:36,300
You scan QR codes.
58
00:02:36,300 --> 00:02:38,100
You use an SD card.
59
00:02:38,100 --> 00:02:42,800
There's a number of ways that bypass the need to connect directly to your computer.
60
00:02:42,800 --> 00:02:46,300
And the whole point is to minimize trust.
61
00:02:46,300 --> 00:02:50,900
And for a limited time, use promo code BLEK to get three months of privacy-friendly IVPN
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Foundationsdevices.com.
64
00:02:54,800 --> 00:02:58,300
You may have seen me upload this photo to Twitter the other day and wondered what I was
65
00:02:58,300 --> 00:03:00,100
so excited about.
66
00:03:00,100 --> 00:03:05,200
It's my brand new Ronin Dojo Tonto Bitcoin Full Node.
67
00:03:05,200 --> 00:03:10,500
The only way you can use Bitcoin properly, the way it was meant to be used and stayed
68
00:03:10,500 --> 00:03:14,200
truly private, is to run your own full node.
69
00:03:14,200 --> 00:03:18,800
Have your own copy of the blockchain on your own full node.
70
00:03:18,800 --> 00:03:23,600
And when you send a transaction, you're using your full node and not somebody else's so
71
00:03:23,600 --> 00:03:29,160
that nobody else can associate your IP, your UTXOs, or anything back to you.
72
00:03:29,160 --> 00:03:35,400
When you use a full node like the Tonto, you are using Bitcoin as privately as you can.
73
00:03:35,400 --> 00:03:37,700
Go to Ronindojo.io.
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00:03:37,700 --> 00:03:44,800
Use promo code BLEK to get $10 off your purchase of a Tonto full node.
75
00:03:44,800 --> 00:03:45,800
Ronindojo.io.
76
00:03:45,800 --> 00:03:47,800
Justin Bonds.
77
00:03:47,800 --> 00:04:03,000
Yes, we have a lot to talk about.
78
00:04:03,000 --> 00:04:07,280
We were just saying like, let's stop with the chit chat before we stop recording and
79
00:04:07,280 --> 00:04:11,000
save the good stuff for when we're actually recording.
80
00:04:11,000 --> 00:04:14,920
Thank you for agreeing to come on.
81
00:04:14,920 --> 00:04:21,680
I know we've had interactions on Twitter, and we spoke once on a Twitter space, I think.
82
00:04:21,680 --> 00:04:22,680
This is good.
83
00:04:22,680 --> 00:04:24,680
This gives us time to get more in depth on some of this stuff.
84
00:04:24,680 --> 00:04:25,680
Oh, yeah.
85
00:04:25,680 --> 00:04:30,080
And I was very happy when you reached out to come talk to me because I feel like we
86
00:04:30,080 --> 00:04:32,640
have so many things in common.
87
00:04:32,640 --> 00:04:34,880
We also disagree on some major things as well.
88
00:04:34,880 --> 00:04:40,240
So it's a really interesting combination of ideas I think we have between the two of us.
89
00:04:40,240 --> 00:04:44,520
So I'll see how much of that we could have.
90
00:04:44,520 --> 00:04:48,240
Yeah I have like a short list of things, but we probably won't get through it.
91
00:04:48,240 --> 00:04:50,320
Yeah, no, certainly.
92
00:04:50,320 --> 00:04:53,000
So you run a hedge fund?
93
00:04:53,000 --> 00:04:54,000
Is it a hedge fund?
94
00:04:54,000 --> 00:04:55,000
Yeah.
95
00:04:55,000 --> 00:04:56,000
Okay.
96
00:04:56,000 --> 00:04:57,600
So you manage other people's money.
97
00:04:57,600 --> 00:04:59,520
Yeah, that's correct.
98
00:04:59,520 --> 00:05:07,440
As a centralized institution, the type of thing that I think the creator of Bitcoin
99
00:05:07,440 --> 00:05:10,320
wanted to mitigate that sort of risk.
100
00:05:10,320 --> 00:05:16,600
And I think I'm aware of the paradox almost, right?
101
00:05:16,600 --> 00:05:22,240
That I'm an advocate of decentralization, yet I manage a centralized fund essentially.
102
00:05:22,240 --> 00:05:25,360
But I do invest in decentralized assets.
103
00:05:25,360 --> 00:05:31,120
And I try to serve as a bridge between different worlds and I think traditional structures
104
00:05:31,120 --> 00:05:36,160
also still have a place in our ideal world as well.
105
00:05:36,160 --> 00:05:40,720
Not that I think you'd be too much of a fan of a type of a smart contract fund anyway,
106
00:05:40,720 --> 00:05:42,720
would you?
107
00:05:42,720 --> 00:05:47,160
Well okay, so first of all, we all do centralized things.
108
00:05:47,160 --> 00:05:51,360
So we all work in centralized ways in some form.
109
00:05:51,360 --> 00:05:53,760
Nobody leads a fully decentralized life, right?
110
00:05:53,760 --> 00:05:58,640
So I always say, I don't go out there.
111
00:05:58,640 --> 00:06:01,600
A lot of people think that I'm just against everything centralized.
112
00:06:01,600 --> 00:06:02,600
That's not true.
113
00:06:02,600 --> 00:06:05,640
There's plenty of centralized stuff that's fine.
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00:06:05,640 --> 00:06:14,200
And even banks and exchanges, at least they're honest about their centralization.
115
00:06:14,200 --> 00:06:18,000
They're honest about the fact that you can't see all the stuff that's going on.
116
00:06:18,000 --> 00:06:20,160
My issues are really with transparency.
117
00:06:20,160 --> 00:06:25,180
So I figure as long as you're, like if you were out there saying you were running a decentralized
118
00:06:25,180 --> 00:06:27,720
hedge fund, then I might have a problem.
119
00:06:27,720 --> 00:06:32,520
It's kind of like saying you're running a decentralized layer two where you got a multi-sig,
120
00:06:32,520 --> 00:06:33,520
right?
121
00:06:33,520 --> 00:06:37,240
So, well, otherwise like, no, you got to make a living and you got, you're really good at
122
00:06:37,240 --> 00:06:38,240
doing something.
123
00:06:38,240 --> 00:06:40,200
Is your hedge fund all like 100% crypto?
124
00:06:40,200 --> 00:06:42,320
Yeah, 100% crypto.
125
00:06:42,320 --> 00:06:47,200
We only invest in things that are decentralized and passable, all of our fundamental checks,
126
00:06:47,200 --> 00:06:48,200
so to speak.
127
00:06:48,200 --> 00:06:50,920
We're not based in the Bahamas or something either.
128
00:06:50,920 --> 00:06:52,160
We're based in the Netherlands.
129
00:06:52,160 --> 00:06:58,000
So we try to tick all the boxes from a kind of regulatory perspective.
130
00:06:58,000 --> 00:07:03,840
And I talk to a lot of institutional parties actually as a evangelist, if you will, which
131
00:07:03,840 --> 00:07:08,960
I think within the cryptocurrency community, I'm a bit more of a critic, I think.
132
00:07:08,960 --> 00:07:09,960
I think some investors-
133
00:07:09,960 --> 00:07:12,100
What's the largest holding?
134
00:07:12,100 --> 00:07:15,320
We actually do not disclose what our holdings are.
135
00:07:15,320 --> 00:07:16,320
Yeah.
136
00:07:16,320 --> 00:07:20,240
We're the secret source for the type of fund that we're arguing.
137
00:07:20,240 --> 00:07:22,880
I bet you I know what the largest holding is.
138
00:07:22,880 --> 00:07:23,880
I bet you would actually.
139
00:07:23,880 --> 00:07:24,880
Bitcoin Cash.
140
00:07:24,880 --> 00:07:25,880
No, I'm just kidding.
141
00:07:25,880 --> 00:07:26,880
No, no.
142
00:07:26,880 --> 00:07:28,880
I mean, I'm glad you bring it up.
143
00:07:28,880 --> 00:07:32,600
I'm glad to talk about all of these things, you know, because I used to be a Bitcoin Cash
144
00:07:32,600 --> 00:07:40,040
supporter, but not since 2018, if I'm remembering my years correctly.
145
00:07:40,040 --> 00:07:41,520
Back when it was the end thing.
146
00:07:41,520 --> 00:07:42,520
Right.
147
00:07:42,520 --> 00:07:43,520
Well, I feel like-
148
00:07:43,520 --> 00:07:44,920
No, I do want to talk about that with you.
149
00:07:44,920 --> 00:07:49,880
No, I would love to, because I feel from my perspective, I was being consistent with my
150
00:07:49,880 --> 00:07:50,880
principle.
151
00:07:50,880 --> 00:07:52,880
Yeah, we respect that.
152
00:07:52,880 --> 00:07:56,640
I appreciate that from you actually.
153
00:07:56,640 --> 00:08:05,880
Well, the most recent thing that we connected on and agreed on was the issue with Ethereum
154
00:08:05,880 --> 00:08:06,880
layer 2s.
155
00:08:06,880 --> 00:08:10,080
And by the way, your largest holding is 100%, Heath.
156
00:08:10,080 --> 00:08:11,680
I know that.
157
00:08:11,680 --> 00:08:14,680
I won't confirm or deny.
158
00:08:14,680 --> 00:08:18,000
But layer 2s have a serious problem, right?
159
00:08:18,000 --> 00:08:24,240
And we sort of saw eye to eye on the fact that specific to Polygon, which is not a layer
160
00:08:24,240 --> 00:08:26,640
2 actually, I'm kind of mixing things up here.
161
00:08:26,640 --> 00:08:33,960
Polygon, the side chain, has a very centralized governance structure, you know, when you consider
162
00:08:33,960 --> 00:08:37,660
the fact that it has a multi-sig, can almost do anything.
163
00:08:37,660 --> 00:08:41,040
But then that extends out to layer 2s as well.
164
00:08:41,040 --> 00:08:49,160
So how does that, because if it were your largest holding in the hedge fund, does this
165
00:08:49,160 --> 00:08:55,040
kind of stuff factor in the fact that the push seems to be to be pushing business, so
166
00:08:55,040 --> 00:08:58,920
to speak, or transactions out to these centralized layer 2s, and that could be the future of
167
00:08:58,920 --> 00:08:59,920
the protocol?
168
00:08:59,920 --> 00:09:00,920
Absolutely.
169
00:09:00,920 --> 00:09:09,120
Yeah, no, I think that this is big influence on us in terms of not seeing as bright of
170
00:09:09,120 --> 00:09:14,280
a future anymore for Ethereum, because it's pushing this layer 2 narrative, which I just
171
00:09:14,280 --> 00:09:20,420
don't think is as competitive, at least in terms of like a long term kind of utility
172
00:09:20,420 --> 00:09:25,520
based perspective on, you know, fundamental perspective on value investing based perspective
173
00:09:25,520 --> 00:09:28,000
on investing, right?
174
00:09:28,000 --> 00:09:29,800
Because that changes the calculation a bit.
175
00:09:29,800 --> 00:09:32,400
And in that sense, I just don't think it's a competitive solution.
176
00:09:32,400 --> 00:09:42,480
And if you don't have the advantages of decentralization, and you know, I mean, look, the layer 2s
177
00:09:42,480 --> 00:09:47,040
can be technically decentralized, but you're building out an ecosystem that's extremely
178
00:09:47,040 --> 00:09:52,880
fragmented and will definitely still include like a lot of centralized and custodian solutions.
179
00:09:52,880 --> 00:09:55,400
Like that's not going away.
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That's why I've been, you know, so against this kind of L2 narrative, quote unquote,
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you know, the L2 scaling solution, right?
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Which I don't really consider a scaling solution at all.
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But do you think that this is the future, whether we like it or not?
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Or do you, are you advocating for a different path?
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Oh, yeah, absolutely.
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No, I think I think on chain scaling is the way forward.
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You know, I really think that we can scale on the base layer and, you know, while preserving
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decentralization, right, that there's a balancing act to be had there in terms of tradeoffs.
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But scalability is still important.
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And there's certain technologies, I think, that are very interesting from my perspective,
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such as sharding and things like enshrined roll ups, I think, which, which to me are
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distinct from layer 2s.
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Yeah, like this stuff that Vitalik just wrote about a day or two ago, right?
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Did you read that post from Vitalik?
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I'm not sure about this.
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He did a long post about enshrining ZK roll ups.
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Yeah, I haven't read that particular post.
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I do.
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But I have been staying up to date with the whole ZKVM space.
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And my main problem with it is, you know, when we have computer scientists and engineers
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telling us, oh, yeah, it's going to be five plus years away when we figure out how to
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do this.
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That's just a giant red flag.
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So for me, my criticism, like I'm not against this idea of ZKVM.
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I think it's a fine idea.
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But I think if it's an idea that's projected to be five plus years out, I mean, what that
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tells me in my experience is they don't have a clue.
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Basically that's some sky and like pie in the sky type of thinking.
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And that's not really what I appreciate in this space.
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I'm not going to apply any double standards here when it comes to such claims.
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If I'm looking at some small cryptocurrency and I'm deep diving that and they're like,
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oh, yeah, we'll figure out this key technology in five plus years from now.
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No way.
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Are you kidding me?
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You don't have a clue.
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Right.
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What's your philosophy on how you approach the space and how you decide to criticize
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and stuff like that?
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First, I'll tell you mine just to compare.
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So it's really for me about it's about most of the time it's about strengthening an ecosystem.
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So with Bitcoin for me, it's about if I see weak spots, I see opportunities to influence
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opinions on a certain thing.
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I'll go there and I'll sort of reveal the soft spot in order to get people talking about
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it knowing that it might take a year or two or five for people to eventually get to a
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place where they want to make a fix.
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I'd say that's 50% of my time.
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And the other 50% is almost like a warning people about what I see.
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For instance, with Ethereum, I don't think Ethereum is something that can be fixed to
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the point where I would align with it philosophically anymore since it's switched to proof of stake
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and I want to get into that with you too.
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But it's almost like I feel like people need to understand all of the red flags and the
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warning signs with regard to centralization potential for the future, with regard to how
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it could be a compliant blockchain in the future with all these enshrined features.
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How do you approach the space when it comes to critiquing and offering up public opinions
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like that?
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It's a very good question.
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And what I mentioned earlier is in terms of us having similarity and differences, I think
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we were both very outspoken critics of Polygon, as you mentioned before.
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So we've overlapped, I think, as critics in the space on a bunch of different topics.
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I think in this case, it's really good to go to first principles for me.
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And I'm guessing we have most of our first principles in common because for me, that's
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really the empowering vision that Bitcoin originally brought forward, like that self-ownership,
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self-sovereignty, having this sound decentralized money, a separation from the monetary power
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from the state.
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It's about freedom, I think, on so many levels.
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And a lot of that also, for me at least, goes back to a lot of my political ideology as
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well, which does have some libertarian roots and things like Austrian economics.
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And I think we...
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Do I have that right?
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Is that we all have that in common?
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I suspect we do, don't we?
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Well, the two of us at least, not everybody.
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Yes, of course.
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So far, yeah.
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Yeah, okay.
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So I think for me, there's this grand vision of what we can achieve with cryptocurrency
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and how we can do good in the world from our perspective.
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And that's the vision I'm trying to maximize.
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And I feel within the space, my role, because I also am a cryptocurrency researcher and
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have been for many years, my role as a critic, I think, is a way of giving back and putting
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my weight on the scales a bit of history as we can at such an early stage.
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And that's, to a large part, what motivates me in terms of my public critiques that I
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do, is I try to identify, okay...
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And I have to weigh up the difficulty of doing a critique.
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Some things are much harder to critique than others, takes a lot more time.
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And then I look up, like, okay, how many people are going to get hurt by this?
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How badly is the crime?
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How badly is the potential for pain here?
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And in terms of like...
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The pain you're going to inflict?
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Well, no, no, of course, the pain of the victims here, right?
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Because I'm not the victim.
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Yeah, who are the victims?
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In a lot of cases, the...
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Sorry?
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The developers?
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No, no, definitely not the developers.
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No, maybe in some cases, but in most cases, it should be things like investors that I'm
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thinking about primarily, you know, when people put a lot of money into a token, and their
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hopes and dreams is all the psychological stuff that goes along.
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And some people are just feeding into that, I think, in an irresponsible way.
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And especially when, you know, their claims don't match up with reality.
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And especially when someone claims to be desensualized and they're not, right?
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This is, I think, one of the big crimes as well that I think we're both motivated to
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call out.
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Yeah.
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So, wait, do you mean that before you critique something, you're thinking about how you could
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affect its market value?
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Or you're talking about saving people from losing money by critiquing something?
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More the latter.
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But I suppose the two go hand in hand.
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I mean, anything goes hand in hand in this market.
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You know, it's the nature of cryptocurrencies.
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It's all attached to this token of value, which is what introduces a bunch of skewed
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incentives.
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It's like it adds all this friction that no other technology ecosystem has.
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When the technology is the money, it creates such a mess of incentives that you don't see
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in any other industry, right?
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So well, let me ask you this.
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You said you're kind of not so bullish as an investor.
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I'm saying the path forward for Ethereum is not super clear, especially with the current
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sentiment, right?
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Pushing people to layer twos.
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You're obviously, and we'll get into it, you're obviously not into Bitcoin as it currently
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exists.
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We should talk about that as well.
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I'll be very curious.
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Which I do want to talk about.
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But I do want to know if those two are basically not the ultimate freedom path, right?
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If those two are not the best path for freedom, what's the best path for free for freedom?
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Are you at the point where it's just like crypto is not going to get us there?
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Oh no, I'm still a believer.
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I'm definitely still a believer in cryptocurrency.
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And no, it was unfortunate.
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If you say Solana, I'm going to shoot you.
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We'll get to that.
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But I'll add some nuance to it.
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That's a good one.
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So look, I think for me, I've been a supporter of Ethereum since it was launched in 2015.
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I think it was.
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Even mining it in the first week, I had a small mining farm at the time and I even had
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all my GPUX ready to mine it.
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Giant pain in the ass because it was all like command line.
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I had to compile code.
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Because when I first started teaching myself how to use Linux, it wasn't very usable on
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launch, let's just say that.
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But I've been a big supporter of it because they promised to scale through sharding and
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there's a bunch of other specific aspects I like about it.
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I actually do like the economic design.
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I do like proof of stake, which we should talk about later a bit more as well.
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So for me to see Ethereum pivot away from layer one scaling and from my perspective,
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really Bitcoin history is kind of repeating itself in Ethereum now.
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If you think about it, that to me was a big disappointment.
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And then that made me look less optimistically towards Ethereum's future.
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I do think it will continue to be a dominant blockchain for a very long time because the
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network effects are very sticky in cryptocurrency.
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And I think Bitcoin is a testament to that as well.
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But I think long run, if Ethereum stays on its current course and really fails to meet
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demand on its layer one, then I think competitors really have a really good shot at overtaking
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it in the future or actually will overtake it in the future.
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So I'm still hoping Ethereum can change.
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I'm putting out a message saying, hey, this is what Ethereum needs to do to get out of
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this hole, but people are not necessarily going to listen to me.
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And I'm a big critic of how Ethereum governance works.
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I think we disagree on the solution to that since I'm a fan of on-chain governance as
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a solution to a lot of these problems.
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But I actually think the governance in Ethereum is actually very similar to the governance
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in Bitcoin.
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I think that's problematic.
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I think when you have highly centralized decision making and it's a bit of a wild card in terms
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of predicting where that will go.
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Yeah, that makes me more doubtful about Ethereum more long term.
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That's why I become more interested in competing layer ones.
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And now to go back to your question, it was difficult to be a critic of BTC, the largest
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cryptocurrency in the entire ecosystem since 2017.
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And it was a lot more controversial to take that position back then.
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And now having to also be a critic of the second largest cryptocurrency, that's not
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necessarily something I wanted to do.
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That just does make my life more difficult.
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I really felt an allegiance and I had a community there and they still host me at conferences
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and things like that.
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It's not something I wanted to do, but it's something I felt I had to do.
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I'm looking at more alternative L1s now because if I don't see Ethereum going where I think
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it should be, then I'll find my perfect cryptocurrency somewhere else.
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Even if it means trading away some decentralization?
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No.
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Because any other L1 you're talking about, unless you're talking about certain privacy
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coins or something like that, but or Litecoin or Doge, is that where you're going?
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No, not Litecoin or Doge.
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Okay.
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All right.
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You want smart contracts, right?
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I want smart contracts.
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Yeah, exactly.
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So, are smart contracts is sort of a must have for freedom or are you thinking more from
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a business point of view?
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Both.
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Both.
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So, from my perspective, I think that well, first of all, I think the goal of cryptocurrency
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is to create good money and I believe that good decentralized money and I believe good
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decentralized money also needs good decentralized finance to support it.
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Because otherwise, everyone just ends up putting it in centralized financial institutions and
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then what's the point?
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Well, I mean, there's still major advantages to it.
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Don't get me wrong, but I feel like there's more to add there.
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And I think that in the developed world, at least, using cryptocurrency as a form of money,
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I think it's very difficult to convince people to do that.
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So I've started to see DeFi being more like this stepping stone towards adoption as money
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as well.
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And I just think that through DeFi and a lot of the related applications, I think there
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is potential for greater adoption there and usage, which then drives fees and drives demand
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and etc.
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etc.
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And we have a virtuous cycle there.
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So that's why I think DeFi is a necessary component.
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Just to be competitive in the market and that's the business component.
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You can collect more fees and you have higher security than you can pay for more shards.
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Yeah, what are some of the decentralized parts of DeFi that you like and that you think are
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sufficiently decentralized?
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Let's pick them apart.
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Honestly, I don't think anything is really sufficiently decentralized at this point or
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maybe, but I'm not sure.
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Even Bitcoin and Ethereum.
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I think more practical decentralization comes at greater scale.
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But in terms of, let's say, technical decentralization, there are projects out there that burn their
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admin keys.
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So Uniswap has no admin key.
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Let me think.
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What are some other examples?
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Maker has no admin key.
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Has that burned?
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Augur is a little bit defunct right now, but had no admin key.
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Whenever you have these contracts where everyone has to migrate to the next contract, that's
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not ideal in my view because then you have to launch an entire new smart contract and
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ask people, please move over to the next one because you literally can't change the rules.
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I think that does qualify.
417
00:24:41,400 --> 00:24:45,360
That's maybe in the minority, but I think that does exist.
418
00:24:45,360 --> 00:24:47,760
It's not the case that all smart contracts are bad.
419
00:24:47,760 --> 00:24:53,120
I remember in the Bitcoin community, in the early days, things like decentralized exchanges
420
00:24:53,120 --> 00:24:56,560
were one of the big ambitions of Bitcoin.
421
00:24:56,560 --> 00:24:59,320
It's like, yeah, we can build a decentralized exchange over Bitcoin.
422
00:24:59,320 --> 00:25:00,320
That was one of the dreams.
423
00:25:00,320 --> 00:25:01,320
Where's that gone?
424
00:25:01,320 --> 00:25:02,320
Yeah, yeah.
425
00:25:02,320 --> 00:25:10,720
I mean, I guess one of my biggest issues with DeFi though, as we currently know it, is that
426
00:25:10,720 --> 00:25:13,760
it wouldn't be possible without Chainlink.
427
00:25:13,760 --> 00:25:22,040
And Chainlink has the same problem as Polygon with regard to having that multi-sig that
428
00:25:22,040 --> 00:25:25,880
can nuke the whole thing.
429
00:25:25,880 --> 00:25:30,800
I initially got interested in DeFi because I thought it was going to fulfill that promise
430
00:25:30,800 --> 00:25:32,900
that you were just talking about that.
431
00:25:32,900 --> 00:25:35,440
We have decentralized money.
432
00:25:35,440 --> 00:25:40,360
Now we need decentralized financial services for that decentralized money.
433
00:25:40,360 --> 00:25:44,520
We shouldn't have to use that decentralized money on centralized exchanges only.
434
00:25:44,520 --> 00:25:46,000
I get that.
435
00:25:46,000 --> 00:25:49,000
And that's why I was initially attracted to DeFi.
436
00:25:49,000 --> 00:25:53,400
But initially with DeFi, that's how it was advertised.
437
00:25:53,400 --> 00:25:57,160
It was advertised as trying to solve that problem.
438
00:25:57,160 --> 00:26:02,320
But then just like every other project in the space, over time, and in this case it
439
00:26:02,320 --> 00:26:07,080
was really over a year or less, incentives changed.
440
00:26:07,080 --> 00:26:11,600
And the incentive became how do we provide a return to these VCs who came in and decided
441
00:26:11,600 --> 00:26:17,360
that they needed a return through a token or through all these other ways that they
442
00:26:17,360 --> 00:26:19,800
have to make money in DeFi.
443
00:26:19,800 --> 00:26:26,360
And it became about just building things that were just decentralized enough to pass.
444
00:26:26,360 --> 00:26:33,160
And using centralized price feeds from Chainlink and basically taking shortcuts wherever necessary
445
00:26:33,160 --> 00:26:37,320
to get a product to market now because we don't have years to wait.
446
00:26:37,320 --> 00:26:40,000
We have to get a product out the door now.
447
00:26:40,000 --> 00:26:44,500
And by the way, we need to do all this before regulators realize what the hell we're doing
448
00:26:44,500 --> 00:26:47,040
because by that point it'll be far too late.
449
00:26:47,040 --> 00:26:49,020
They're going to nuke the whole industry.
450
00:26:49,020 --> 00:26:55,760
So we have to buy 2023, have a token out, airdrop, come up with this cool way to create
451
00:26:55,760 --> 00:27:05,040
this new investment opportunity by airdropping and then dumping on people's heads.
452
00:27:05,040 --> 00:27:08,600
All this stuff which is regulated in traditional markets.
453
00:27:08,600 --> 00:27:14,800
But really it just became this mess.
454
00:27:14,800 --> 00:27:19,040
To me, it almost killed the whole idea.
455
00:27:19,040 --> 00:27:24,160
I think that if we're going to see real DeFi anytime soon, it's going to start from scratch.
456
00:27:24,160 --> 00:27:31,600
What we've already done has been a complete disaster with regards to freedom.
457
00:27:31,600 --> 00:27:34,000
So it's more to separate.
458
00:27:34,000 --> 00:27:36,640
I'm not talking about building a great investment.
459
00:27:36,640 --> 00:27:40,880
I'm not talking about building a great portfolio or I'm not talking about is this going to
460
00:27:40,880 --> 00:27:43,800
help increase in value over the next five years.
461
00:27:43,800 --> 00:27:45,280
I don't care about that.
462
00:27:45,280 --> 00:27:49,160
What I care about is, is it going to help me be a freer person?
463
00:27:49,160 --> 00:27:53,120
Is it going to help me not have to trust people with my money?
464
00:27:53,120 --> 00:27:56,120
Is it going to help me have a plan B if I need it?
465
00:27:56,120 --> 00:27:57,520
That's the kind of stuff I'm talking about.
466
00:27:57,520 --> 00:28:00,640
I think that's the kind of stuff you're talking about too.
467
00:28:00,640 --> 00:28:03,040
And you're not wrong with everything you said there.
468
00:28:03,040 --> 00:28:09,360
The Chainlink admin key can mess with the price freeze and totally tank what is this?
469
00:28:09,360 --> 00:28:10,880
Several billion dollar market.
470
00:28:10,880 --> 00:28:11,880
It's crazy.
471
00:28:11,880 --> 00:28:12,880
Oh yeah.
472
00:28:12,880 --> 00:28:13,880
At least 10.
473
00:28:13,880 --> 00:28:14,880
Yeah.
474
00:28:14,880 --> 00:28:18,680
But I think it's important to also distinguish a few things.
475
00:28:18,680 --> 00:28:22,600
So I mean, we can see the good amongst the bad as well a little bit more.
476
00:28:22,600 --> 00:28:32,560
So if I take the Uniswap, for example, the price on that AMM, that's not affected by
477
00:28:32,560 --> 00:28:34,680
the Chainlink Oracle.
478
00:28:34,680 --> 00:28:37,320
And the Chainlink Oracle can't steal funds.
479
00:28:37,320 --> 00:28:38,320
Not directly.
480
00:28:38,320 --> 00:28:39,320
Right.
481
00:28:39,320 --> 00:28:40,320
Exactly.
482
00:28:40,320 --> 00:28:44,480
Indirectly, arguably, maybe through arbitrage and manipulating other price feeds.
483
00:28:44,480 --> 00:28:45,480
Who knows?
484
00:28:45,480 --> 00:28:47,240
It's an edge case.
485
00:28:47,240 --> 00:28:53,960
But I would say if we zoom in, then we can say, okay, this is a real application where
486
00:28:53,960 --> 00:28:59,940
someone can exchange their cryptocurrency on an exchange with high liquidity without
487
00:28:59,940 --> 00:29:02,720
a third trusted party.
488
00:29:02,720 --> 00:29:07,840
And sure, there's a bunch of landmines on the way there and it's not exactly the most
489
00:29:07,840 --> 00:29:09,360
user-friendly thing in the world.
490
00:29:09,360 --> 00:29:11,160
But those cases do exist.
491
00:29:11,160 --> 00:29:15,120
And that to me is that kind of glimmer of hope, you know, of like, wow, we can actually
492
00:29:15,120 --> 00:29:16,120
do this.
493
00:29:16,120 --> 00:29:18,560
And I think that's proof of that.
494
00:29:18,560 --> 00:29:21,480
Whether it's going to be on Ethereum or the next thing.
495
00:29:21,480 --> 00:29:23,680
That's wonderful.
496
00:29:23,680 --> 00:29:32,040
I think Uniswap is an interesting case though, because we've seen three versions and a fourth
497
00:29:32,040 --> 00:29:34,160
version proposed.
498
00:29:34,160 --> 00:29:35,160
Or the fourth one is up.
499
00:29:35,160 --> 00:29:36,160
I don't even know anymore.
500
00:29:36,160 --> 00:29:37,360
I've lost track.
501
00:29:37,360 --> 00:29:45,760
But each one has been decentralized and you've had to migrate from one to the other if you
502
00:29:45,760 --> 00:29:48,680
wanted to use the newest one.
503
00:29:48,680 --> 00:29:50,600
And we've seen people doing it.
504
00:29:50,600 --> 00:29:51,880
You referenced this before.
505
00:29:51,880 --> 00:29:57,920
We've seen people doing it almost like you upgrade your iPhone sometimes.
506
00:29:57,920 --> 00:30:01,160
It's like, okay, we're going to move to the new one.
507
00:30:01,160 --> 00:30:05,160
Version three created some drama just because it was so difficult to use.
508
00:30:05,160 --> 00:30:10,720
But I think that where it gets kind of tricky with this stuff, and I've been thinking about
509
00:30:10,720 --> 00:30:16,200
this more lately, and this applies to the Bitcoin debates too, and Ethereum debate,
510
00:30:16,200 --> 00:30:23,640
all the debates, is thinking about the external stuff, the stuff that you can't see on chain.
511
00:30:23,640 --> 00:30:28,800
And so from the on chain point of view, Uniswap is decentralized, unstoppable.
512
00:30:28,800 --> 00:30:33,200
You can't turn it off.
513
00:30:33,200 --> 00:30:37,240
There's no regulator that could come in and say, we have to turn off Uniswap version one.
514
00:30:37,240 --> 00:30:38,240
It's still there.
515
00:30:38,240 --> 00:30:39,240
It's always going to be there.
516
00:30:39,240 --> 00:30:40,240
Nobody's using it.
517
00:30:40,240 --> 00:30:42,520
Or very few are using it at this point.
518
00:30:42,520 --> 00:30:44,560
It still exists.
519
00:30:44,560 --> 00:30:50,400
But what Uniswap has gotten good at, and Uniswap, by the way, the company, has grown quite a
520
00:30:50,400 --> 00:30:59,200
bit and has hired people that are former Federal Reserve people, former people that have been
521
00:30:59,200 --> 00:31:09,680
on presidential staffs and worked in the White House, regulators and former SEC or CFTC officers.
522
00:31:09,680 --> 00:31:13,000
It's become this spook operational.
523
00:31:13,000 --> 00:31:16,160
They also created this white listed pool.
524
00:31:16,160 --> 00:31:17,160
Did you see that as well?
525
00:31:17,160 --> 00:31:21,800
Where they created only, you have to do KYC and AML to get in the pool and then all the
526
00:31:21,800 --> 00:31:23,680
institutionals can kind of trade with each other there.
527
00:31:23,680 --> 00:31:24,680
Oh, okay.
528
00:31:24,680 --> 00:31:25,680
Yeah.
529
00:31:25,680 --> 00:31:26,680
I mean, that's what version four is for.
530
00:31:26,680 --> 00:31:33,920
Version four was specifically created to allow total flexibility with how you allow access
531
00:31:33,920 --> 00:31:38,040
to these pools with what they call hooks.
532
00:31:38,040 --> 00:31:44,920
It's building my case here for the fact that, yeah, we can, there's a million decentralized
533
00:31:44,920 --> 00:31:49,720
ideas that have been built and that nobody's used.
534
00:31:49,720 --> 00:31:52,320
And then there's others that have kind of caught on.
535
00:31:52,320 --> 00:31:56,360
But at the end of the day, isn't it just money that talks?
536
00:31:56,360 --> 00:32:01,880
We've seen principles just destroyed by large amounts of money over and over and over.
537
00:32:01,880 --> 00:32:02,880
Right?
538
00:32:02,880 --> 00:32:04,360
So, okay, we figured out Uniswap works.
539
00:32:04,360 --> 00:32:05,360
Cool.
540
00:32:05,360 --> 00:32:06,640
The math is awesome, et cetera.
541
00:32:06,640 --> 00:32:08,120
Hayden is brilliant.
542
00:32:08,120 --> 00:32:12,360
But then it's like, okay, all these VCs come in, all this billions of dollars comes in.
543
00:32:12,360 --> 00:32:16,480
Next thing you know, we're sort of slowly going down this slippery slope towards this
544
00:32:16,480 --> 00:32:19,460
regulated, captured KYC Uniswap.
545
00:32:19,460 --> 00:32:24,800
So why should I have hoped that any of this could ever catch on in a decentralized way?
546
00:32:24,800 --> 00:32:34,440
So I think for me, I actually really believe in the utility of this technology.
547
00:32:34,440 --> 00:32:40,840
And what that also means is that it works because of greed in many ways.
548
00:32:40,840 --> 00:32:47,360
So I'm coupling and sure, I find a lot of what's, I'm not a VC, I'm a value investor
549
00:32:47,360 --> 00:32:48,360
myself.
550
00:32:48,360 --> 00:32:52,600
I invest in tokens for long term and that's why I do fundamental research.
551
00:32:52,600 --> 00:32:56,400
And sure, I find a lot of the things that happen in the VC world, not all of it, but
552
00:32:56,400 --> 00:32:59,840
some of it, especially in the crypto world, it's very distasteful.
553
00:32:59,840 --> 00:33:03,240
What's happening there and the kind of games that are being played.
554
00:33:03,240 --> 00:33:05,440
Certainly.
555
00:33:05,440 --> 00:33:12,120
But at the same time, one of the reasons I think that I really came to believe in cryptocurrency
556
00:33:12,120 --> 00:33:18,800
is I think before I saw cryptocurrency, I really looked at democracy as kind of this
557
00:33:18,800 --> 00:33:21,480
dysfunctional system.
558
00:33:21,480 --> 00:33:24,160
And sure, it's the best system we have.
559
00:33:24,160 --> 00:33:28,240
And as I think Winston Churchill said this in particular, he said that democracy is the
560
00:33:28,240 --> 00:33:29,560
best of the worst system.
561
00:33:29,560 --> 00:33:31,420
It's kind of the best that we have.
562
00:33:31,420 --> 00:33:32,760
So that's what we go with.
563
00:33:32,760 --> 00:33:33,760
But I saw a lot of-
564
00:33:33,760 --> 00:33:37,280
Not sure I completely agree with that, but okay.
565
00:33:37,280 --> 00:33:38,280
Maybe we'll come back to that.
566
00:33:38,280 --> 00:33:39,280
That'd be fun.
567
00:33:39,280 --> 00:33:44,760
I'm using a broad definition of democracy here though.
568
00:33:44,760 --> 00:33:51,040
And the idea though is that one of the reasons that democracy is dysfunctional is that, and
569
00:33:51,040 --> 00:33:54,840
one of the reasons it's dysfunctional is that because it requires a very highly enlightened
570
00:33:54,840 --> 00:33:57,840
population for it to really function.
571
00:33:57,840 --> 00:34:01,900
People have to really mean well and they have to be virtuous and they have to be informed.
572
00:34:01,900 --> 00:34:07,000
And then only then, and usually it tends to break down at larger scales because then you
573
00:34:07,000 --> 00:34:09,840
can't really reflect the will of the people too well either.
574
00:34:09,840 --> 00:34:14,400
I have a background in political philosophy if I didn't come across yet with this little
575
00:34:14,400 --> 00:34:15,400
rant.
576
00:34:15,400 --> 00:34:16,400
I like it.
577
00:34:16,400 --> 00:34:17,400
Yeah.
578
00:34:17,400 --> 00:34:18,400
I like this kind of conversation.
579
00:34:18,400 --> 00:34:20,660
No, no, that's great.
580
00:34:20,660 --> 00:34:23,000
But then cryptocurrency came along for me.
581
00:34:23,000 --> 00:34:26,920
And something that I saw in cryptocurrency is that actually, no, people don't need to
582
00:34:26,920 --> 00:34:29,760
be very enlightened.
583
00:34:29,760 --> 00:34:31,840
People don't need to mean well.
584
00:34:31,840 --> 00:34:34,280
You're not dependent upon that.
585
00:34:34,280 --> 00:34:37,480
It works because people follow their own incentives.
586
00:34:37,480 --> 00:34:44,360
In that sense, it's kind of this idea of the black hand of the market and bringing about
587
00:34:44,360 --> 00:34:47,760
positive outcomes basically in the longer run.
588
00:34:47,760 --> 00:34:51,560
Of course, there's going to be negative externalities along the way and so forth.
589
00:34:51,560 --> 00:34:56,640
But for me, what it therefore fixes is that, okay, you actually have a system that works
590
00:34:56,640 --> 00:35:02,060
despite of people's greed or actually it works because of people's greed or selfishness
591
00:35:02,060 --> 00:35:05,360
or self-interest, I should say.
592
00:35:05,360 --> 00:35:09,640
And what it does is that it align those incentives and then it creates this public good.
593
00:35:09,640 --> 00:35:14,360
And I think for me, that also that's why cryptocurrency works.
594
00:35:14,360 --> 00:35:18,880
So that's why I'm not too disparaged when I see people following their own self-interest
595
00:35:18,880 --> 00:35:19,880
unethically even.
596
00:35:19,880 --> 00:35:25,400
So I'm like, okay, well, at least cryptocurrency still works under those circumstances.
597
00:35:25,400 --> 00:35:31,840
As in the American founders said, it still works even when there's monsters in charge.
598
00:35:31,840 --> 00:35:34,200
So it's like that's kind of the idea.
599
00:35:34,200 --> 00:35:40,160
Well, no one's in charge obviously, but it's a bit of a misquote.
600
00:35:40,160 --> 00:35:45,520
Now this is a super interesting area to think about because this is exactly where my head's
601
00:35:45,520 --> 00:35:48,680
been at for a while now.
602
00:35:48,680 --> 00:35:52,080
First of all, with regard to the US, are you in the US?
603
00:35:52,080 --> 00:35:53,080
I'm not actually.
604
00:35:53,080 --> 00:35:57,720
I'm based in the Netherlands and Europe.
605
00:35:57,720 --> 00:36:06,280
So one of the reasons I got attracted to Bitcoin was because since I learned about the constitution
606
00:36:06,280 --> 00:36:10,960
of the US and how it works and why it was set up the way it was set up, I saw Bitcoin
607
00:36:10,960 --> 00:36:18,400
as sort of almost a parallel, a very similar idea where it's like, let's create these
608
00:36:18,400 --> 00:36:21,920
rails for a system to run on.
609
00:36:21,920 --> 00:36:26,280
And it doesn't rely on the honesty of people, like you just said.
610
00:36:26,280 --> 00:36:32,320
It doesn't rely on good people running the show because we take into consideration that
611
00:36:32,320 --> 00:36:37,240
there's no such thing as like a good tyrant.
612
00:36:37,240 --> 00:36:41,960
Once people gain power, we have to assume they're going to get corrupted, not because
613
00:36:41,960 --> 00:36:45,440
they're bad people, but because that's just the way humans are.
614
00:36:45,440 --> 00:36:51,320
We have to acknowledge that humans are fallible, messed up, and there's no human that can be
615
00:36:51,320 --> 00:36:56,200
trusted 100% with the fate of the world or country.
616
00:36:56,200 --> 00:36:58,200
Power crops, absolutely.
617
00:36:58,200 --> 00:36:59,880
Right, exactly.
618
00:36:59,880 --> 00:37:04,960
So that's a big reason I got attracted to Bitcoin.
619
00:37:04,960 --> 00:37:11,520
And now look at where the US is now.
620
00:37:11,520 --> 00:37:18,960
We have stopped enforcing the Bill of Rights on a lot of different issues, especially the
621
00:37:18,960 --> 00:37:28,120
Fourth Amendment, which is supposed to protect our right to privacy, our right to not search,
622
00:37:28,120 --> 00:37:31,480
to not have to reveal all of the details of our life.
623
00:37:31,480 --> 00:37:34,280
That's violated every minute of every day.
624
00:37:34,280 --> 00:37:39,520
Then you talk about freedom of speech, religion, et cetera, and all this other stuff that people
625
00:37:39,520 --> 00:37:43,000
want to attack and are attacking with the government.
626
00:37:43,000 --> 00:37:49,440
And we see the Tenth Amendment, which says that anything that is not, any power that's
627
00:37:49,440 --> 00:37:56,400
not specifically in the Constitution says to be given to the federal government belongs
628
00:37:56,400 --> 00:37:57,560
to the states.
629
00:37:57,560 --> 00:37:58,560
That's completely forgotten.
630
00:37:58,560 --> 00:38:02,160
Like if you say that now, bring it up, it's laughed at.
631
00:38:02,160 --> 00:38:07,200
So we've gotten to a point where the Constitution is almost becoming like people want it to
632
00:38:07,200 --> 00:38:12,720
be a relic, people want it to be ignored in a lot of cases, change the meanings of things.
633
00:38:12,720 --> 00:38:17,900
Now it was created with the best technology available at the time.
634
00:38:17,900 --> 00:38:22,880
If there was the technology we have today back in the late 1700s, it might have been
635
00:38:22,880 --> 00:38:25,280
a different story.
636
00:38:25,280 --> 00:38:27,320
But that was the best that we had back then.
637
00:38:27,320 --> 00:38:33,320
Now with Bitcoin, we have a lot of the same issues I feel like that are coming up.
638
00:38:33,320 --> 00:38:37,760
And not with Bitcoin, with every cryptocurrency, Ethereum too, especially Ethereum.
639
00:38:37,760 --> 00:38:44,980
In that people like to think of these things like they're a universe.
640
00:38:44,980 --> 00:38:50,040
People like to think of Bitcoin like it's a universe that is unto itself.
641
00:38:50,040 --> 00:38:53,800
As long as the technology works and does what it does, then we're fine.
642
00:38:53,800 --> 00:38:57,920
But the reality of it is that it's almost like I've been thinking of it like a planet
643
00:38:57,920 --> 00:39:02,040
and there's all these comets and asteroids that are going to be coming at it, hitting
644
00:39:02,040 --> 00:39:03,040
it.
645
00:39:03,040 --> 00:39:06,200
And one of those comets could be the government.
646
00:39:06,200 --> 00:39:07,720
One of those comets could be BlackRock.
647
00:39:07,720 --> 00:39:10,640
One of those comets could be this or that or the other thing.
648
00:39:10,640 --> 00:39:13,240
And it just takes one to strike and to blow the thing up.
649
00:39:13,240 --> 00:39:18,400
There's all these externalities that are attacking these things all the time that have nothing
650
00:39:18,400 --> 00:39:19,400
to do.
651
00:39:19,400 --> 00:39:25,320
You can't see any of it on chain and you can't see any of it maybe in the governance system.
652
00:39:25,320 --> 00:39:31,800
But coming from the outside, with Ethereum, it's 100% regulators, governments having an
653
00:39:31,800 --> 00:39:36,600
influence on the VCs who are having an influence on the developers and on the development of
654
00:39:36,600 --> 00:39:38,080
the applications on Ethereum.
655
00:39:38,080 --> 00:39:42,520
And on the layer 2s, there's a reason the layer 2s all have multi-sig and it's not just
656
00:39:42,520 --> 00:39:43,780
the fixed bugs.
657
00:39:43,780 --> 00:39:46,160
It's because they want to stay compliant.
658
00:39:46,160 --> 00:39:49,840
And so there's all this stuff going on that's external.
659
00:39:49,840 --> 00:39:56,200
So that's been top of mind for me and I'm not sure how I can ever come to terms with
660
00:39:56,200 --> 00:39:58,240
that not being an issue.
661
00:39:58,240 --> 00:40:04,120
How do you create a form of a Bitcoin or something like that that's not susceptible to people
662
00:40:04,120 --> 00:40:11,200
with lots of guns and people who can weaponize the media against you and people who could
663
00:40:11,200 --> 00:40:15,600
turn the majority of the population on you?
664
00:40:15,600 --> 00:40:17,720
How does Bitcoin exist in a world like that?
665
00:40:17,720 --> 00:40:21,860
I think the answer has always been, grow it so large that no single party can take it
666
00:40:21,860 --> 00:40:22,860
down.
667
00:40:22,860 --> 00:40:25,000
That's all you can do.
668
00:40:25,000 --> 00:40:26,000
Yeah.
669
00:40:26,000 --> 00:40:27,000
So it's like a race.
670
00:40:27,000 --> 00:40:31,440
We have to make this thing succeed before the powers that be have an opportunity to
671
00:40:31,440 --> 00:40:32,640
squash it.
672
00:40:32,640 --> 00:40:35,240
But I think I'm a little bit more optimistic than you.
673
00:40:35,240 --> 00:40:40,640
I think we're already past the point of no return at this stage.
674
00:40:40,640 --> 00:40:47,660
And actually, I'm a student of American history as well and I do also love a lot of the ideas
675
00:40:47,660 --> 00:40:49,840
presented in the US Constitution.
676
00:40:49,840 --> 00:40:53,440
This might be a bit of a controversial take, but I think out of all the places you could
677
00:40:53,440 --> 00:40:57,880
live in the world, certain US states are probably still some of the freest places you could
678
00:40:57,880 --> 00:40:58,880
be.
679
00:40:58,880 --> 00:41:01,800
And also because of the US Constitution, it still holds some weight.
680
00:41:01,800 --> 00:41:04,320
And I know nothing is perfect.
681
00:41:04,320 --> 00:41:08,560
No, we're clinging by a thread, man.
682
00:41:08,560 --> 00:41:11,960
I'm in Florida, so I know all about it.
683
00:41:11,960 --> 00:41:12,960
Yeah.
684
00:41:12,960 --> 00:41:15,040
Anyway, we're still doing okay down here.
685
00:41:15,040 --> 00:41:19,440
And I'm really curious to understand your perspective on Bitcoin because that's one
686
00:41:19,440 --> 00:41:21,500
of the big areas where we differ.
687
00:41:21,500 --> 00:41:26,360
And you're thinking about how can we avoid this type of capture from occurring?
688
00:41:26,360 --> 00:41:32,900
And I find it curious how you see all of these problems in Ethereum, right?
689
00:41:32,900 --> 00:41:35,240
And you're not entirely wrong.
690
00:41:35,240 --> 00:41:39,560
But don't you see the same problems in Bitcoin as well?
691
00:41:39,560 --> 00:41:45,760
Well lately, the past few months, I've been turning into a little bit with regard to,
692
00:41:45,760 --> 00:41:46,760
you know what?
693
00:41:46,760 --> 00:41:47,760
It's since I podcast.
694
00:41:47,760 --> 00:41:51,860
Well, I was already thinking about stuff and I did a podcast with Jameson Lopp and we started
695
00:41:51,860 --> 00:41:57,920
talking about mining and we started talking about some of the threats.
696
00:41:57,920 --> 00:42:04,080
And I'd already been thinking about, I keep using BlackRock as an example, but it's not
697
00:42:04,080 --> 00:42:07,920
the only example, but it's just such a good example that resonates with people.
698
00:42:07,920 --> 00:42:13,280
And you know better than anybody that you need a good catchy example to get your tweet
699
00:42:13,280 --> 00:42:16,120
out there with a get it a lot of likes, right?
700
00:42:16,120 --> 00:42:19,080
So you get that sweet Elon money, right?
701
00:42:19,080 --> 00:42:21,360
But just kidding.
702
00:42:21,360 --> 00:42:22,360
You know what?
703
00:42:22,360 --> 00:42:30,320
And by the way, sidetrack, people blast me and probably you too for outrageous tweets
704
00:42:30,320 --> 00:42:34,600
and just trying to get people all crazy, you know, using incendiary language.
705
00:42:34,600 --> 00:42:35,960
We're both guilty.
706
00:42:35,960 --> 00:42:37,320
It's Twitter, man.
707
00:42:37,320 --> 00:42:41,400
That's how you get people to pay attention.
708
00:42:41,400 --> 00:42:46,160
If I wasn't such a dick with a lot of this stuff, nobody would care.
709
00:42:46,160 --> 00:42:48,920
There's a lot of people saying the stuff I'm saying and the stuff you're saying.
710
00:42:48,920 --> 00:42:52,360
There's a lot of people saying it, but they're just like little mice, right?
711
00:42:52,360 --> 00:42:53,360
They're like, nobody listens.
712
00:42:53,360 --> 00:42:57,480
If you have a positive message, you want people to actually hear it, right?
713
00:42:57,480 --> 00:42:58,480
Right.
714
00:42:58,480 --> 00:43:00,720
Whether it's positive or negative, whatever it is.
715
00:43:00,720 --> 00:43:04,000
I enjoy the challenge of like writing something viral.
716
00:43:04,000 --> 00:43:07,880
There's a nuance in the language that I enjoy, you know?
717
00:43:07,880 --> 00:43:08,880
Yeah.
718
00:43:08,880 --> 00:43:09,880
Yeah, it's fun.
719
00:43:09,880 --> 00:43:10,880
Yeah.
720
00:43:10,880 --> 00:43:14,320
Hey, my history too has been in marketing.
721
00:43:14,320 --> 00:43:15,920
I did marketing for sports.
722
00:43:15,920 --> 00:43:22,360
I spent a number of years with the UFC ultimate fighting, doing marketing, writing copy, promoting
723
00:43:22,360 --> 00:43:23,420
fights.
724
00:43:23,420 --> 00:43:29,480
So it's in my background to draw on people's emotions, to get them to think about something
725
00:43:29,480 --> 00:43:31,120
or to get them to do something.
726
00:43:31,120 --> 00:43:33,400
I like your content as well.
727
00:43:33,400 --> 00:43:35,720
Anyway, we have that in common.
728
00:43:35,720 --> 00:43:36,720
Yeah.
729
00:43:36,720 --> 00:43:37,720
Right.
730
00:43:37,720 --> 00:43:38,720
Yeah.
731
00:43:38,720 --> 00:43:43,680
But for Bitcoin, I'm all about criticizing areas that I see as weak because I think that
732
00:43:43,680 --> 00:43:47,320
that's the only way we can get them stronger.
733
00:43:47,320 --> 00:43:49,120
So I have a number of concerns.
734
00:43:49,120 --> 00:43:56,280
So I'll show you what for me is my biggest concern besides maybe the long term.
735
00:43:56,280 --> 00:43:57,280
Okay.
736
00:43:57,280 --> 00:44:00,360
Maybe not including the stuff of the security model.
737
00:44:00,360 --> 00:44:01,360
Maybe we'll get into that later.
738
00:44:01,360 --> 00:44:02,360
Okay.
739
00:44:02,360 --> 00:44:03,360
That's a big concern.
740
00:44:03,360 --> 00:44:05,320
But actually my biggest concern is actually governance.
741
00:44:05,320 --> 00:44:10,240
And that's what makes me so concerned that it won't fix things in time basically because
742
00:44:10,240 --> 00:44:12,240
the governance is dysfunctional.
743
00:44:12,240 --> 00:44:19,560
So I've thought a lot about when changes to Bitcoin happen, right?
744
00:44:19,560 --> 00:44:21,280
What is the governance process?
745
00:44:21,280 --> 00:44:26,680
What is actually the decision making process in practice?
746
00:44:26,680 --> 00:44:29,240
Not some idealized version.
747
00:44:29,240 --> 00:44:33,760
What is actually the real politic of it?
748
00:44:33,760 --> 00:44:38,740
How many people does it take to get together in a room and all agree on something?
749
00:44:38,740 --> 00:44:41,800
And if they then come out with a publicly, does it actually happen?
750
00:44:41,800 --> 00:44:47,120
Even if it might be controversial or can they block things, right?
751
00:44:47,120 --> 00:44:54,240
So for me, like doing that type of an analysis on Bitcoin, I'm extremely concerned about
752
00:44:54,240 --> 00:44:55,240
the state of governance.
753
00:44:55,240 --> 00:45:00,120
And that's, I think for me, what a lot of the block size debates were about as well.
754
00:45:00,120 --> 00:45:06,000
And I was on the quote unquote losing side of that, let's say.
755
00:45:06,000 --> 00:45:12,400
But I think this idea that there's only one implementation, one client implementation,
756
00:45:12,400 --> 00:45:15,440
one dominant one at least that's calling all of the shots.
757
00:45:15,440 --> 00:45:20,080
And you have a literal lead maintainer who has the final say over code changes.
758
00:45:20,080 --> 00:45:27,380
And you have this whole culture kind of propping up the supremacy of these developers.
759
00:45:27,380 --> 00:45:31,440
I think that's a major problem because that concentrates power in the hands of a very
760
00:45:31,440 --> 00:45:38,040
few people, which is then very easy to then capture and corrupt and pervert.
761
00:45:38,040 --> 00:45:41,760
And it's subject to all of these external powers now.
762
00:45:41,760 --> 00:45:48,520
And that's where I also, I'll just go straight for the major points here.
763
00:45:48,520 --> 00:45:50,320
I see a major conflict of interest.
764
00:45:50,320 --> 00:45:56,960
The same I see in Ethereum, by the way, where say a lot of the Bitcoin developers are being
765
00:45:56,960 --> 00:46:04,560
paid or have shares in companies such as Blockstream and what's the other one?
766
00:46:04,560 --> 00:46:06,360
Oh man, I forgot the name.
767
00:46:06,360 --> 00:46:11,440
But there's a few companies like that that are funding developers.
768
00:46:11,440 --> 00:46:15,680
And these companies can have a conflict of interest, for instance, favoring layer two
769
00:46:15,680 --> 00:46:20,040
scaling over layer one scaling, for instance.
770
00:46:20,040 --> 00:46:24,520
And also there was this great, did you read the CIA report that happened a year ago?
771
00:46:24,520 --> 00:46:28,640
The CIA put this thing that was sponsored by the CIA.
772
00:46:28,640 --> 00:46:35,280
And basically they said the way to say take over a cryptocurrency or disrupt it is to
773
00:46:35,280 --> 00:46:38,400
target the core developers.
774
00:46:38,400 --> 00:46:39,400
And I think they're right.
775
00:46:39,400 --> 00:46:41,900
I think that's such a key pain point.
776
00:46:41,900 --> 00:46:48,680
And even if the developers are honest, they could also just be making wrong decisions
777
00:46:48,680 --> 00:46:54,160
because the governance process is not conducive to actually creating the best decisions.
778
00:46:54,160 --> 00:46:56,880
So that's like a more optimistic scenario as opposed to being captured.
779
00:46:56,880 --> 00:47:01,560
But that to me is one of my biggest concerns around Bitcoin.
780
00:47:01,560 --> 00:47:05,800
And part of the reason I'm an advocate for systems of on-chain governance to kind of
781
00:47:05,800 --> 00:47:11,320
mitigate those problems and add the checks and balances and add the restrictions to governance,
782
00:47:11,320 --> 00:47:16,560
which I think mirroring the US Constitution in so many ways and that idea of a republic
783
00:47:16,560 --> 00:47:19,640
is you're limiting power, you're dividing power.
784
00:47:19,640 --> 00:47:26,200
And if you formalize it, then instead of the rulers being in the shadows, you kind of bring
785
00:47:26,200 --> 00:47:28,120
it out into the open.
786
00:47:28,120 --> 00:47:31,360
And I think that's a better way to do things.
787
00:47:31,360 --> 00:47:40,040
Yeah, it's an interesting dichotomy in how to think about these projects.
788
00:47:40,040 --> 00:47:51,960
I think that one of the things I like about Bitcoin is that it is more of an organic...
789
00:47:51,960 --> 00:47:58,280
People think of it as immutable and as it is what it is, it's never going to change.
790
00:47:58,280 --> 00:48:01,680
But the reality of it is that it is a...
791
00:48:01,680 --> 00:48:04,200
First and foremost, it's a brand.
792
00:48:04,200 --> 00:48:05,760
Bitcoin is a brand.
793
00:48:05,760 --> 00:48:12,880
And the brand is... whatever the Bitcoin brand points at is what most people are going to
794
00:48:12,880 --> 00:48:14,800
think is Bitcoin.
795
00:48:14,800 --> 00:48:20,320
So when Bitcoin Cash happened, it lost the battle for the brand, as much as Roger Ver
796
00:48:20,320 --> 00:48:21,320
tried.
797
00:48:21,320 --> 00:48:23,360
He lost the battle for the brand.
798
00:48:23,360 --> 00:48:27,680
And it was decided by a lot of the big powers that you were talking about.
799
00:48:27,680 --> 00:48:31,240
But more importantly, it was decided by public opinion.
800
00:48:31,240 --> 00:48:35,480
And public opinion was swayed in a certain way, but what we have today became Bitcoin.
801
00:48:35,480 --> 00:48:38,160
I'm not sure if that's entirely true.
802
00:48:38,160 --> 00:48:40,720
The public opinion piece.
803
00:48:40,720 --> 00:48:46,840
That the split, that the result of the split was purely the result of an egalitarian public
804
00:48:46,840 --> 00:48:47,880
opinion.
805
00:48:47,880 --> 00:48:51,000
I think there was a lot more politics going on than that.
806
00:48:51,000 --> 00:48:54,640
I think that censorship had a lot to do with the outcome.
807
00:48:54,640 --> 00:49:01,040
I think that the exchanges actually named one side of the ticker BTC also had a lot
808
00:49:01,040 --> 00:49:02,520
to do with it.
809
00:49:02,520 --> 00:49:10,080
And I think for a lot of the polls that were taken and for a lot of the ecosystem and industry,
810
00:49:10,080 --> 00:49:14,640
most major parties were supporting an increase in the block size and the developers got to
811
00:49:14,640 --> 00:49:17,400
do the thing that they wanted to do instead.
812
00:49:17,400 --> 00:49:22,240
So that to me was an example of, oh, these developers actually have too much power.
813
00:49:22,240 --> 00:49:24,440
And from my view, also doing the wrong thing.
814
00:49:24,440 --> 00:49:26,240
I'm not sure.
815
00:49:26,240 --> 00:49:30,840
We might disagree on that one in particular.
816
00:49:30,840 --> 00:49:37,160
Well regardless of which side you agree with, I think my point is that Bitcoin is sort of
817
00:49:37,160 --> 00:49:42,000
this flowing thing that goes through these forks in the river and ultimately goes down
818
00:49:42,000 --> 00:49:43,840
one of these paths.
819
00:49:43,840 --> 00:49:48,800
And then it's up to the individuals involved if they want to participate with that, endorse
820
00:49:48,800 --> 00:49:54,800
it, go off in a different way, try to get adoption with a different technology.
821
00:49:54,800 --> 00:50:00,440
As opposed to formalize on-chain governance, which sort of treats the project as more of
822
00:50:00,440 --> 00:50:04,000
like this is the project and a hundred years is still going to be the project.
823
00:50:04,000 --> 00:50:07,640
We're going to go through iterations that governance is going to choose.
824
00:50:07,640 --> 00:50:11,480
And so I'm not saying one's right or wrong, but I'm saying like they're almost two different
825
00:50:11,480 --> 00:50:16,080
concepts for a path forward for a cryptocurrency like this.
826
00:50:16,080 --> 00:50:23,640
So you seem to be leaning more towards this system of we need to figure out on-chain governance,
827
00:50:23,640 --> 00:50:26,320
how it's going to work, participants, et cetera.
828
00:50:26,320 --> 00:50:31,400
And then we need to sort of steer that ship, navigate these waters and try to keep out
829
00:50:31,400 --> 00:50:34,600
the big money, keep out the big governance and stuff like that.
830
00:50:34,600 --> 00:50:35,600
No, no, no.
831
00:50:35,600 --> 00:50:39,400
We need governance so that it can resist the corruption of big money.
832
00:50:39,400 --> 00:50:40,400
Okay.
833
00:50:40,400 --> 00:50:43,360
I mean, how does...
834
00:50:43,360 --> 00:50:48,140
See, that's something that that's where I start to get concerned because big money seems
835
00:50:48,140 --> 00:50:49,800
to corrupt everything.
836
00:50:49,800 --> 00:50:52,920
So if you can't keep big money out of a system like Bitcoin, how do you keep it out of another?
837
00:50:52,920 --> 00:50:57,200
I should rephrase that, to harness the greed and corruption of big money.
838
00:50:57,200 --> 00:50:58,200
To harness.
839
00:50:58,200 --> 00:50:59,200
So you like proof of stake.
840
00:50:59,200 --> 00:51:00,200
Yeah.
841
00:51:00,200 --> 00:51:01,200
Yeah, sure.
842
00:51:01,200 --> 00:51:02,200
Because that clearly aligns those incentives.
843
00:51:02,200 --> 00:51:07,880
I mean, proof of work basically works on the same principles, just pros and cons to each.
844
00:51:07,880 --> 00:51:11,120
I think more of the pros land on the stake.
845
00:51:11,120 --> 00:51:12,120
But we're actually...
846
00:51:12,120 --> 00:51:15,480
Let's not move on from the previous subject just yet.
847
00:51:15,480 --> 00:51:19,320
This is becoming quite interesting.
848
00:51:19,320 --> 00:51:30,120
Because in my view, that's why we need the governance is to kind of keep the system away
849
00:51:30,120 --> 00:51:31,840
from corruption.
850
00:51:31,840 --> 00:51:36,680
It's because if you don't have that, what you end up with in practice is a very few
851
00:51:36,680 --> 00:51:39,000
people making all of the decision.
852
00:51:39,000 --> 00:51:44,240
And I think that is very much goes against the ethos of cryptocurrency.
853
00:51:44,240 --> 00:51:50,400
Because I think that's practically what ends up happening behind the scenes.
854
00:51:50,400 --> 00:51:52,520
How do you think they're making those decisions?
855
00:51:52,520 --> 00:51:57,120
I completely understand and I actually share a lot of the concerns about what are the incentives
856
00:51:57,120 --> 00:51:59,640
for these developers, who's paying them.
857
00:51:59,640 --> 00:52:06,040
I look at like Luke Dash Jr. getting paid to do work on BIP 300, getting paid by Layer
858
00:52:06,040 --> 00:52:10,760
2 Labs, who's out there the biggest proponent for BIP 300.
859
00:52:10,760 --> 00:52:14,920
And he's publicly said he doesn't even philosophically align with it.
860
00:52:14,920 --> 00:52:16,480
He's just doing the work he's paid to do.
861
00:52:16,480 --> 00:52:18,160
And he has this influence and access.
862
00:52:18,160 --> 00:52:20,160
Luke Dash Jr. doesn't philosophically align with a lot of things.
863
00:52:20,160 --> 00:52:21,160
He's just one example of...
864
00:52:21,160 --> 00:52:25,600
I don't want to pick on him, but he's a good example of somebody with influence and access
865
00:52:25,600 --> 00:52:29,840
getting paid to use that influence and access.
866
00:52:29,840 --> 00:52:31,680
And almost just via hired gun.
867
00:52:31,680 --> 00:52:34,520
So where was I going with that?
868
00:52:34,520 --> 00:52:35,520
I forgot.
869
00:52:35,520 --> 00:52:39,960
Yeah, the conflict of interests of developers.
870
00:52:39,960 --> 00:52:42,040
So I get concerned about that too.
871
00:52:42,040 --> 00:52:43,040
Yeah.
872
00:52:43,040 --> 00:52:48,560
But I forgot where I was actually heading with that whole line of thought.
873
00:52:48,560 --> 00:52:49,560
That's okay.
874
00:52:49,560 --> 00:52:53,560
No, because the way it looks like, right, is you have this GitHub.
875
00:52:53,560 --> 00:52:58,160
And you have, I think in the case of Bitcoin now, it's five people who have like a veto
876
00:52:58,160 --> 00:52:59,800
power, I believe it is.
877
00:52:59,800 --> 00:53:01,440
Those are the maintainers.
878
00:53:01,440 --> 00:53:05,800
And then you have the lead maintainer who basically has a final say of the system.
879
00:53:05,800 --> 00:53:11,080
And what they claim is they say this is a perfect meritocracy.
880
00:53:11,080 --> 00:53:15,400
And this is this beautiful, organic, emergent behavior that comes from where the best ideas
881
00:53:15,400 --> 00:53:17,120
always win.
882
00:53:17,120 --> 00:53:18,120
That is the claim.
883
00:53:18,120 --> 00:53:24,700
But I think in reality, like we said, power crops and absolute power crops, absolutely.
884
00:53:24,700 --> 00:53:29,480
They kick out developers that don't agree with them and then claim consensus.
885
00:53:29,480 --> 00:53:32,780
I don't think that that is truly a meritocracy.
886
00:53:32,780 --> 00:53:37,040
And I think there's a lot of conflicts of interest, and I think that's just far too
887
00:53:37,040 --> 00:53:39,240
centralized as a system.
888
00:53:39,240 --> 00:53:45,880
And I think that's resulted in bad decision making in my view, such as not scaling the
889
00:53:45,880 --> 00:53:53,160
blockchain up to reasonable levels, as was always intended by the founder.
890
00:53:53,160 --> 00:53:57,320
I'm really curious on your view on that actually, since we're touching on it now.
891
00:53:57,320 --> 00:54:00,840
Wouldn't you support say a moderate increase, say eight megabyte blocks?
892
00:54:00,840 --> 00:54:03,120
It would bring so much more utility.
893
00:54:03,120 --> 00:54:06,400
I mean, like 32 megabyte blocks, right?
894
00:54:06,400 --> 00:54:12,800
You can still verify that on a Raspberry Pi, right?
895
00:54:12,800 --> 00:54:16,840
If you just add some code optimizations for that, you can still verify that on a Raspberry
896
00:54:16,840 --> 00:54:17,840
Pi.
897
00:54:17,840 --> 00:54:24,200
32 megabytes, and then you have the scale of a freaking PayPal.
898
00:54:24,200 --> 00:54:27,000
And now you can truly use Bitcoin as money.
899
00:54:27,000 --> 00:54:31,080
And now it's like this empowering thing that people actually have direct access to with
900
00:54:31,080 --> 00:54:32,240
low fees.
901
00:54:32,240 --> 00:54:35,080
And you solve the security dilemma.
902
00:54:35,080 --> 00:54:36,640
I will say, I think that-
903
00:54:36,640 --> 00:54:39,080
Isn't that just a no brainer?
904
00:54:39,080 --> 00:54:44,440
Knowing what I know now after having watched Ethereum try to scale with layer twos and
905
00:54:44,440 --> 00:54:48,600
watching the Lightning Network struggle.
906
00:54:48,600 --> 00:54:55,640
Knowing what I know now, and I wasn't like a vocal advocate for either side really at
907
00:54:55,640 --> 00:54:58,720
the time, but it does make sense.
908
00:54:58,720 --> 00:55:03,000
At the same time, I am in the process right now of syncing a node and it's taken me a
909
00:55:03,000 --> 00:55:06,320
solid week.
910
00:55:06,320 --> 00:55:15,480
I can see both sides, but I do agree that the decision there went in a certain way because
911
00:55:15,480 --> 00:55:16,480
of money.
912
00:55:16,480 --> 00:55:19,360
There were closed door meetings.
913
00:55:19,360 --> 00:55:22,320
We weren't at privy to all that information, all those conversations.
914
00:55:22,320 --> 00:55:25,760
We know there was the New York stuff going on and whatever else.
915
00:55:25,760 --> 00:55:30,240
It's like 200 million plus funding for Blockstream.
916
00:55:30,240 --> 00:55:31,240
Yeah.
917
00:55:31,240 --> 00:55:37,560
But what do you think was the motivation for that outcome?
918
00:55:37,560 --> 00:55:39,240
Why did they want that to go that way?
919
00:55:39,240 --> 00:55:43,360
I'm hesitant to know what's in other people's minds.
920
00:55:43,360 --> 00:55:44,720
I can say, look, there was a-
921
00:55:44,720 --> 00:55:46,600
It must have been a business decision.
922
00:55:46,600 --> 00:55:47,600
Right.
923
00:55:47,600 --> 00:55:50,120
Clearly there's a conflicts of interest.
924
00:55:50,120 --> 00:55:58,640
I think Adam Back, Greg Maxwell, a lot of these folks have shares in Blockstream and
925
00:55:58,640 --> 00:56:04,120
they raise a lot of money for VC funding and Blockstream's promises to build L2 solutions
926
00:56:04,120 --> 00:56:10,880
for profit and that clearly benefits from not scaling the layout basically.
927
00:56:10,880 --> 00:56:16,640
I can't say with 100% certainty that they had this type of perverse intent, right?
928
00:56:16,640 --> 00:56:19,960
But I think it's highly problematic that it's there in the first place.
929
00:56:19,960 --> 00:56:26,240
They could truly believe in the ethos that they promote or maybe they were biased a bit
930
00:56:26,240 --> 00:56:29,240
in that true belief, but I can't say.
931
00:56:29,240 --> 00:56:36,120
But either way, I think it's wrong because it completely destroys what Bitcoin was actually
932
00:56:36,120 --> 00:56:37,320
meant to do.
933
00:56:37,320 --> 00:56:42,280
I think Satoshi, I think we can agree, was very clear on this about what the intent was
934
00:56:42,280 --> 00:56:47,360
of Bitcoin in the white paper, in his writing extensively.
935
00:56:47,360 --> 00:56:53,280
I think for me, that was really a pivot away from the social contract, which to me really
936
00:56:53,280 --> 00:56:55,480
flies in the face of what Bitcoin was supposed to be.
937
00:56:55,480 --> 00:56:58,120
It's not supposed to pivot away from the social contract.
938
00:56:58,120 --> 00:57:02,840
Now I'm like, wow, so blockchain, that can happen?
939
00:57:02,840 --> 00:57:07,720
That's why now I'm like, okay, this is just a major systemic failure in governance.
940
00:57:07,720 --> 00:57:11,300
This is why I'm trying to find solutions to that.
941
00:57:11,300 --> 00:57:15,800
How can we design a blockchain in such a way to avoid these problems from reoccurring?
942
00:57:15,800 --> 00:57:19,440
Because the same thing is happening to Ethereum now.
943
00:57:19,440 --> 00:57:21,920
How do we avoid that from repeating?
944
00:57:21,920 --> 00:57:22,920
Yeah.
945
00:57:22,920 --> 00:57:23,920
Yeah.
946
00:57:23,920 --> 00:57:29,880
If there's one thing I've learned over the last three, four years, it's that the money
947
00:57:29,880 --> 00:57:37,320
is always going to come down on the side of scaling because there's more opportunity for
948
00:57:37,320 --> 00:57:38,320
profit.
949
00:57:38,320 --> 00:57:42,800
There's more opportunity to build a business around scaling solution than there is around
950
00:57:42,800 --> 00:57:46,200
having native solutions on the layer one.
951
00:57:46,200 --> 00:57:49,200
No, no, but the layer one can scale in my view.
952
00:57:49,200 --> 00:57:54,560
So I'm saying like, yeah, but there's less profit potential for third parties, for venture
953
00:57:54,560 --> 00:57:57,920
capitalists, et cetera.
954
00:57:57,920 --> 00:58:01,720
If you have that kind of a solution and that creates this perverse incentives because they
955
00:58:01,720 --> 00:58:06,840
can't rein seek on the layer one, they can on the layer twos that they might build out.
956
00:58:06,840 --> 00:58:12,200
And this is why just so I'm also offering some solutions while critiquing.
957
00:58:12,200 --> 00:58:15,640
This is actually where I think like treasury systems, blockchain treasury systems come
958
00:58:15,640 --> 00:58:16,640
in.
959
00:58:16,640 --> 00:58:21,080
Because if you say take 10% of the block reward, you put that in a treasury, you then have
960
00:58:21,080 --> 00:58:23,720
a proposal system with like decentralized voting, right?
961
00:58:23,720 --> 00:58:29,520
There's going to be a lot of inefficiency, I know, but at least that creates a L1 bias
962
00:58:29,520 --> 00:58:35,000
source of funding, which can counteract the influence of this kind of perverse incentive
963
00:58:35,000 --> 00:58:36,940
that we're identifying.
964
00:58:36,940 --> 00:58:42,520
This is why I've been a supporter of that type of design, things like Dash, Decree,
965
00:58:42,520 --> 00:58:46,120
Tezos have implemented this and more.
966
00:58:46,120 --> 00:58:48,120
Not Ethereum, unfortunately.
967
00:58:48,120 --> 00:58:49,120
Yeah.
968
00:58:49,120 --> 00:58:54,720
Ethereum, you know, in my opinion is far worse off in this regard than Bitcoin.
969
00:58:54,720 --> 00:58:57,120
Oh, well, here I disagree with you, right?
970
00:58:57,120 --> 00:58:58,720
Because if we're talking about...
971
00:58:58,720 --> 00:58:59,720
I'll tell you why.
972
00:58:59,720 --> 00:59:00,880
I'll also tell you why.
973
00:59:00,880 --> 00:59:05,240
You can stop.
974
00:59:05,240 --> 00:59:10,320
Because well, okay, DeFi had a lot to do with this.
975
00:59:10,320 --> 00:59:17,800
DeFi had a chance to be built on top of decentralized stables like Dai, you know, and others that
976
00:59:17,800 --> 00:59:21,800
could have existed but didn't because they didn't see the reason to.
977
00:59:21,800 --> 00:59:29,040
Instead it was built on the back of Tether, of USDC, of Paxos and whatever else.
978
00:59:29,040 --> 00:59:34,000
And at this point, you know, we're still talking about Ethereum is interesting because of DeFi,
979
00:59:34,000 --> 00:59:35,000
right?
980
00:59:35,000 --> 00:59:36,000
Ethereum is interesting.
981
00:59:36,000 --> 00:59:37,000
Sure.
982
00:59:37,000 --> 00:59:40,280
That's why Ethereum is at 1800, whatever, or no, where's Ethereum?
983
00:59:40,280 --> 00:59:41,280
I don't even know.
984
00:59:41,280 --> 00:59:42,520
I don't look at prices that much.
985
00:59:42,520 --> 00:59:48,040
But the reason Ethereum is interesting is because of DeFi and because of that innovation
986
00:59:48,040 --> 00:59:50,820
and because of all the VC investment.
987
00:59:50,820 --> 00:59:58,080
The problem though is that they've developed this ecosystem that has to all move together,
988
00:59:58,080 --> 00:59:59,080
right?
989
00:59:59,080 --> 01:00:06,800
There can not be disagreement within that $10 to $20 billion ecosystem, including USDC,
990
01:00:06,800 --> 01:00:12,800
Circle, including Tether, including Chainlink, including anybody else who's involved and
991
01:00:12,800 --> 01:00:15,140
reliant on those organizations.
992
01:00:15,140 --> 01:00:19,200
They all have to move along together or else the thing starts to fall apart because they're
993
01:00:19,200 --> 01:00:21,280
all intertwined, right?
994
01:00:21,280 --> 01:00:22,860
Because of the way the tech works.
995
01:00:22,860 --> 01:00:29,760
So if a hard fork is proposed and Circle likes it, but Aave doesn't like it, Aave is going
996
01:00:29,760 --> 01:00:34,280
to go with Circle because their whole shit's going to fall apart if they don't all stick
997
01:00:34,280 --> 01:00:35,280
together.
998
01:00:35,280 --> 01:00:39,380
We saw this already, which nobody really paid attention to, but it was a really interesting
999
01:00:39,380 --> 01:00:45,520
case study with the proof of stake fork because the proof of work chain is still there.
1000
01:00:45,520 --> 01:00:49,160
It's still being mined actually, which is funny.
1001
01:00:49,160 --> 01:00:55,120
And all the DeFi stuff that was on the, you know, everything that was on the chain pre-fork
1002
01:00:55,120 --> 01:00:59,960
went along on the proof of work chain too, except USDC wasn't honoring tokens, Tether
1003
01:00:59,960 --> 01:01:03,340
wasn't honoring, nobody's honoring any of those tokens, but Aave was still there with
1004
01:01:03,340 --> 01:01:04,620
all the balances.
1005
01:01:04,620 --> 01:01:07,920
They had Compound still there, Uniswap still there, everything's still there, and everything
1006
01:01:07,920 --> 01:01:09,720
just imploded like instantly, right?
1007
01:01:09,720 --> 01:01:13,960
Everything's getting liquidated, everything's getting, it's like a complete shit show because
1008
01:01:13,960 --> 01:01:16,040
the tokens aren't being honored anymore.
1009
01:01:16,040 --> 01:01:18,920
You know, none of it is redeemable.
1010
01:01:18,920 --> 01:01:26,240
So those organizations overtly control the future of Ethereum.
1011
01:01:26,240 --> 01:01:30,080
If Circle doesn't like a fork and doesn't go, nobody's going.
1012
01:01:30,080 --> 01:01:33,200
If Tether doesn't like a fork and doesn't go, nobody's going.
1013
01:01:33,200 --> 01:01:39,080
So that as a put, those are direct vested interests that are controlling the future
1014
01:01:39,080 --> 01:01:41,840
of Ethereum, whether or not they're paying off the devs.
1015
01:01:41,840 --> 01:01:43,640
They don't have to have any involvement with that.
1016
01:01:43,640 --> 01:01:47,800
If the devs do something that they don't like, the devs are going to stop doing it, right?
1017
01:01:47,800 --> 01:01:52,360
And it's very clear as opposed to Bitcoin, which I hear and I understand what you're
1018
01:01:52,360 --> 01:01:54,760
saying about Bitcoin, but it's a little bit hazier.
1019
01:01:54,760 --> 01:01:59,560
It's not quite as obvious, which may be worse, maybe more dangerous, but it's less of a direct
1020
01:01:59,560 --> 01:02:01,480
threat, I think, in the near future.
1021
01:02:01,480 --> 01:02:04,920
No, and I think you have a point.
1022
01:02:04,920 --> 01:02:08,360
Actually, I think there are potentially perverse incentives there.
1023
01:02:08,360 --> 01:02:12,120
Though I did think making Ethereum harder to fork, I thought you would actually like
1024
01:02:12,120 --> 01:02:14,240
that as opposed to not like that.
1025
01:02:14,240 --> 01:02:15,240
That's okay.
1026
01:02:15,240 --> 01:02:16,640
How did they make it?
1027
01:02:16,640 --> 01:02:17,960
Oh, you mean because of that?
1028
01:02:17,960 --> 01:02:22,800
Yeah, well, you have to sit down in a room with Circle, Tether, and all these guys.
1029
01:02:22,800 --> 01:02:27,600
But I suppose one of the reasons I'm less concerned over this than you are, and I definitely
1030
01:02:27,600 --> 01:02:31,120
acknowledge that there can definitely be some perverse effects there.
1031
01:02:31,120 --> 01:02:36,020
And yes, it does make it more difficult to have this kind of forked governance.
1032
01:02:36,020 --> 01:02:43,880
But I think from my perspective, I think that splitting a chain, that type of governance,
1033
01:02:43,880 --> 01:02:46,420
that's like the nuclear option, in my view.
1034
01:02:46,420 --> 01:02:50,520
That's what you do when everything else has fell apart and you're just so far ideological
1035
01:02:50,520 --> 01:02:55,240
apart and everything else has failed that then you press the big red button.
1036
01:02:55,240 --> 01:03:02,920
I think that should be the very, very last thing in a long line of processes to fix things.
1037
01:03:02,920 --> 01:03:08,520
This is why, in my view, it's like, okay, well, yes, it does make it more difficult
1038
01:03:08,520 --> 01:03:20,480
to fork, but I would rather see an internal decision-making process where more diverse
1039
01:03:20,480 --> 01:03:25,640
voices can be heard and that is more inclusive.
1040
01:03:25,640 --> 01:03:31,320
And ultimately, of course, as an on-chain governance, it's tied to actual incentives
1041
01:03:31,320 --> 01:03:33,720
through stakeholder-based voting.
1042
01:03:33,720 --> 01:03:38,680
For some reason, as in proof of work, you can actually do something similar with the
1043
01:03:38,680 --> 01:03:40,960
miners.
1044
01:03:40,960 --> 01:03:44,920
I think that to me means also...
1045
01:03:44,920 --> 01:03:50,320
And that goes on to my next point because one of my major concerns really is this kind
1046
01:03:50,320 --> 01:03:53,320
of centralization in the development.
1047
01:03:53,320 --> 01:03:56,600
In the case of Ethereum, there's a very big difference between Ethereum and Bitcoin in
1048
01:03:56,600 --> 01:03:57,960
that regard.
1049
01:03:57,960 --> 01:04:04,600
And there is actually multiple dominant client implementations in Ethereum.
1050
01:04:04,600 --> 01:04:07,120
So it's not just a single dictatorship.
1051
01:04:07,120 --> 01:04:12,640
It's like several dictatorships that kind of have to negotiate with each other, which
1052
01:04:12,640 --> 01:04:16,600
I think is better because it's just another step removed from having that sort of extreme
1053
01:04:16,600 --> 01:04:19,040
centralization.
1054
01:04:19,040 --> 01:04:20,120
And I think that's...
1055
01:04:20,120 --> 01:04:23,440
And I think because I'm more interested in preventing...
1056
01:04:23,440 --> 01:04:28,840
I think if a governance mechanism keeps forking, keeps splitting, I think that's extremely
1057
01:04:28,840 --> 01:04:29,960
destructive.
1058
01:04:29,960 --> 01:04:35,760
That's one of the reasons I stopped believing in Bitcoin Cash, let's say, because I'm like,
1059
01:04:35,760 --> 01:04:38,080
wow, okay, this is actually systemic.
1060
01:04:38,080 --> 01:04:39,080
It's still happening.
1061
01:04:39,080 --> 01:04:45,280
You had the BSV fork and then you had the E-cash fork and it was just a disaster in
1062
01:04:45,280 --> 01:04:47,240
that regard.
1063
01:04:47,240 --> 01:04:49,700
And I don't think Bitcoin is really that different.
1064
01:04:49,700 --> 01:04:53,160
It's essentially the same design as Bitcoin Cash.
1065
01:04:53,160 --> 01:04:57,680
The only difference was the bigger block size limit and it's more optimized because core
1066
01:04:57,680 --> 01:05:00,440
developers are not optimizing for that.
1067
01:05:00,440 --> 01:05:03,200
There's a consequence of that too.
1068
01:05:03,200 --> 01:05:12,480
So I think for me, if I identify as a lack of client diversity, extreme centralization
1069
01:05:12,480 --> 01:05:17,680
of power in clients, if I identify that as a problem, then obviously I'm going to see
1070
01:05:17,680 --> 01:05:23,480
Ethereum actually being better in that regard because it has multiple client implementations.
1071
01:05:23,480 --> 01:05:27,360
The culture supports that and it went through a lot of effort from the early days to actually
1072
01:05:27,360 --> 01:05:29,320
make sure it was done that way.
1073
01:05:29,320 --> 01:05:34,360
Just like the core developers made a lot of effort to push out any alternative clients
1074
01:05:34,360 --> 01:05:36,080
during the block size debates.
1075
01:05:36,080 --> 01:05:39,800
Because it wasn't always that way in the case of Bitcoin.
1076
01:05:39,800 --> 01:05:40,800
Yeah.
1077
01:05:40,800 --> 01:05:42,800
So that's a lot to unpack.
1078
01:05:42,800 --> 01:05:46,160
I should have given you a bit more breaks in between there.
1079
01:05:46,160 --> 01:05:52,800
Well, I want to like on a grander scale, proof of stake versus proof of work.
1080
01:05:52,800 --> 01:05:58,160
And I'm specific to Ethereum and Bitcoin is fine.
1081
01:05:58,160 --> 01:06:07,280
In my view, the switch over to proof of stake for Ethereum, you mentioned that you like
1082
01:06:07,280 --> 01:06:10,480
it as a form of governance and it makes more sense to you than proof of work.
1083
01:06:10,480 --> 01:06:14,240
It's an efficient consensus algorithm as well.
1084
01:06:14,240 --> 01:06:15,240
What do you dislike about it?
1085
01:06:15,240 --> 01:06:16,240
I'm really, really curious.
1086
01:06:16,240 --> 01:06:24,840
Well, my concern is that one of the things about proof of work that I appreciate is the
1087
01:06:24,840 --> 01:06:31,840
friction that's created between the incentives of miners versus the incentives of other ecosystem
1088
01:06:31,840 --> 01:06:32,840
participants.
1089
01:06:32,840 --> 01:06:38,040
Which, you know, it sort of goes back to that constitution comparison where you've got competing
1090
01:06:38,040 --> 01:06:41,000
incentives which adds friction.
1091
01:06:41,000 --> 01:06:43,000
It's like a division of power.
1092
01:06:43,000 --> 01:06:46,960
Right, it makes it harder to affect change.
1093
01:06:46,960 --> 01:06:49,920
And a lot of people point to that and say that's bad.
1094
01:06:49,920 --> 01:06:50,920
That's a bug, right?
1095
01:06:50,920 --> 01:06:53,360
I point to that and say that's good.
1096
01:06:53,360 --> 01:06:58,820
Because I think that making it more difficult to implement changes is a positive feature
1097
01:06:58,820 --> 01:06:59,820
of a system.
1098
01:06:59,820 --> 01:07:03,280
No, actually, I actually agree.
1099
01:07:03,280 --> 01:07:10,360
With regard to Ethereum and proof of stake, my big concern now is that validators' incentives
1100
01:07:10,360 --> 01:07:13,560
are directly aligned with pretty much everybody else.
1101
01:07:13,560 --> 01:07:19,080
Everybody's incentives are aligned to grow the value of Ethereum, to grow to, you know,
1102
01:07:19,080 --> 01:07:26,800
and not just the token value, but to keep it in compliance.
1103
01:07:26,800 --> 01:07:33,440
Because you can't have a strong ETH token if it's not in compliance with the law.
1104
01:07:33,440 --> 01:07:40,680
And I think that longer term, it's going to be easier.
1105
01:07:40,680 --> 01:07:45,920
No, because Bitcoin is almost defining the law.
1106
01:07:45,920 --> 01:07:50,560
I think that Bitcoin pre-existed a lot of the scrutiny.
1107
01:07:50,560 --> 01:07:53,080
Because it's the reason, I mean, look, if Bitcoin could be stopped.
1108
01:07:53,080 --> 01:07:55,360
That sounds like a double standard to me.
1109
01:07:55,360 --> 01:07:58,440
No, let me explain.
1110
01:07:58,440 --> 01:08:02,080
Bitcoin developed in silence.
1111
01:08:02,080 --> 01:08:08,160
Bitcoin sort of, if Bitcoin wasn't released in 2009 and had like that five, six, seven
1112
01:08:08,160 --> 01:08:11,040
years to bubble up before anybody in government cared.
1113
01:08:11,040 --> 01:08:14,200
I mean, it was only like two years ago, three years ago, when we're sitting here saying,
1114
01:08:14,200 --> 01:08:17,640
like, imagine the day when they say Bitcoin in Congress.
1115
01:08:17,640 --> 01:08:19,200
Imagine the day when the president says Bitcoin.
1116
01:08:19,200 --> 01:08:23,140
You know, it's like it had a long time to mature.
1117
01:08:23,140 --> 01:08:25,640
And by the time they figured it out, it was too late.
1118
01:08:25,640 --> 01:08:29,120
Okay, so isn't that true for the whole industry?
1119
01:08:29,120 --> 01:08:35,120
No, all of the things that make Bitcoin valuable were created in the first five years, I would
1120
01:08:35,120 --> 01:08:40,040
say, like the decentralization level, the immutability, etc.
1121
01:08:40,040 --> 01:08:45,800
With Ethereum, like I said before, everything valuable about Ethereum is being created now.
1122
01:08:45,800 --> 01:08:53,540
With Web3, with smart contracts, with DeFi, that ecosystem is seeking compliance.
1123
01:08:53,540 --> 01:08:56,720
Because without compliance, it has zero value.
1124
01:08:56,720 --> 01:08:59,720
So proof of stake makes it easier.
1125
01:08:59,720 --> 01:09:03,320
And all the stuff Italic's now pitching with enshrining, you know, all this stuff in the
1126
01:09:03,320 --> 01:09:06,800
protocols opposed to building on top of it.
1127
01:09:06,800 --> 01:09:12,480
It's all pointing towards a road toward compliance, you know, which limits freedom, which points
1128
01:09:12,480 --> 01:09:16,360
to a blockchain that's ultimately going to be government friendly.
1129
01:09:16,360 --> 01:09:19,840
Incentives being aligned between validators and the rest of the ecosystem makes it, is
1130
01:09:19,840 --> 01:09:25,560
going to long term make it easier for Ethereum to go in a direction that's anti-freedom.
1131
01:09:25,560 --> 01:09:28,640
I'll push back on that for a few reasons.
1132
01:09:28,640 --> 01:09:32,200
And I also want to just kind of loop it back to what we're saying earlier as well.
1133
01:09:32,200 --> 01:09:37,600
So there's two reasons, primarily, if I really simplify things, two reasons why I think that
1134
01:09:37,600 --> 01:09:39,200
proof of stake is superior.
1135
01:09:39,200 --> 01:09:42,960
So one is governance and the other one is just from an efficiency consensus algorithm
1136
01:09:42,960 --> 01:09:43,960
point of view.
1137
01:09:43,960 --> 01:09:48,040
Okay, so on the governance side, you know, during the block size debates, I think there
1138
01:09:48,040 --> 01:09:52,800
was a lot of theories and I myself included, you know, wrote some thesis about this as
1139
01:09:52,800 --> 01:09:59,520
well that, you know, that what role do the miners play in governance?
1140
01:09:59,520 --> 01:10:02,720
And I think that was a very important question.
1141
01:10:02,720 --> 01:10:06,600
And I think in the end, when it came to this kind of decision making, I don't feel like
1142
01:10:06,600 --> 01:10:10,360
the miners had much of a say in governance because the majority of miners actually wanted
1143
01:10:10,360 --> 01:10:12,080
a block size increase, right?
1144
01:10:12,080 --> 01:10:16,560
And the developers, you know, went along and did what they wanted to do anyway.
1145
01:10:16,560 --> 01:10:20,520
So I think for me, the miners were too weak.
1146
01:10:20,520 --> 01:10:24,480
And you know, they're the one party that has like a proof of positive incentive because
1147
01:10:24,480 --> 01:10:25,480
of proof of work.
1148
01:10:25,480 --> 01:10:30,600
Like they're the one party that really should be a very strong factor, let's say.
1149
01:10:30,600 --> 01:10:35,760
If you say, I wrote something called the theory on governance, the free stage model, where
1150
01:10:35,760 --> 01:10:41,680
I argue that there's free primary groups and that is like a checks and balance system.
1151
01:10:41,680 --> 01:10:45,240
But I think in the end, what ended up happening is the miners ended up being very weak on
1152
01:10:45,240 --> 01:10:46,240
that front.
1153
01:10:46,240 --> 01:10:50,480
And I think one of the reasons for that and one of the ways that proof of stake is potentially
1154
01:10:50,480 --> 01:10:54,560
different, experiment still needs to play out its course.
1155
01:10:54,560 --> 01:11:03,200
But is that I think that miners tend to have a too short term of a incentive.
1156
01:11:03,200 --> 01:11:08,720
So for instance, they're going to prioritize short term decision making over long term
1157
01:11:08,720 --> 01:11:12,240
decision making because they don't want to rock the boat because they tend to be very
1158
01:11:12,240 --> 01:11:13,380
mercenary.
1159
01:11:13,380 --> 01:11:17,360
They tend to think about things in terms of three to five year timeframes in terms of
1160
01:11:17,360 --> 01:11:20,280
electricity contracts and hardware.
1161
01:11:20,280 --> 01:11:27,360
So I feel like as I think if they're preferencing such a short term decision making over long
1162
01:11:27,360 --> 01:11:32,840
term decision making, then that to me explains, I think, why they didn't play a stronger
1163
01:11:32,840 --> 01:11:36,200
role in this.
1164
01:11:36,200 --> 01:11:39,920
And I think that miners ultimately, I think they're because they're so mercenary, they
1165
01:11:39,920 --> 01:11:42,080
just follow the market.
1166
01:11:42,080 --> 01:11:45,480
They're not really making decisions.
1167
01:11:45,480 --> 01:11:50,080
And I think one of the differences in proof of stake and Ethereum doesn't have this
1168
01:11:50,080 --> 01:11:51,080
by the way.
1169
01:11:51,080 --> 01:11:56,320
But I think something I do advocate for is you have very long lock in periods.
1170
01:11:56,320 --> 01:12:00,440
The longer you lock it in for the more the reward and that way you can actually skew
1171
01:12:00,440 --> 01:12:04,000
a system more towards long term decision making.
1172
01:12:04,000 --> 01:12:07,520
And I think that's something that's possible with proof of stake that's not possible for
1173
01:12:07,520 --> 01:12:08,520
proof work.
1174
01:12:08,520 --> 01:12:11,360
Okay, so that's the governance angle.
1175
01:12:11,360 --> 01:12:17,400
From a consensus algorithm design angle, I see a system that's simply more efficient.
1176
01:12:17,400 --> 01:12:21,500
And if you look at how difficult is it to attack a system, I look at something like
1177
01:12:21,500 --> 01:12:23,960
what is the cost to attack the system.
1178
01:12:23,960 --> 01:12:29,000
For the same amount of money, you have a system that's actually more secure.
1179
01:12:29,000 --> 01:12:33,020
And what that means is that you can balance that differently, but you can have more security
1180
01:12:33,020 --> 01:12:39,240
or you can actually have a system that's more economically sound because you can be burning
1181
01:12:39,240 --> 01:12:44,200
more and you don't need to generate as much inflation for things like maintaining the
1182
01:12:44,200 --> 01:12:45,980
security budget.
1183
01:12:45,980 --> 01:12:51,640
So there's a bunch of advantages there that I think by civil orders of magnitude, I actually
1184
01:12:51,640 --> 01:12:54,640
think proof of stake is actually more secure.
1185
01:12:54,640 --> 01:12:59,420
If you think about potential attack scenarios in terms of how much money would an attacker
1186
01:12:59,420 --> 01:13:01,480
have to put in to actually attack the system.
1187
01:13:01,480 --> 01:13:05,560
And there's a lot of devil in the details here in terms of working out that scenario,
1188
01:13:05,560 --> 01:13:07,080
but that's basically what I'm arguing.
1189
01:13:07,080 --> 01:13:11,160
So I'm saying, okay, it's more secure, has the potential for more sound economics and
1190
01:13:11,160 --> 01:13:12,920
it's a better governance mechanism.
1191
01:13:12,920 --> 01:13:19,400
And just to me, it just seems to achieve those purposes better than proof of work does.
1192
01:13:19,400 --> 01:13:25,320
That's kind of what I was alluding to before with it being potentially a feature, not a
1193
01:13:25,320 --> 01:13:26,320
bug.
1194
01:13:26,320 --> 01:13:30,480
And again, go back, think about the constitution.
1195
01:13:30,480 --> 01:13:33,880
It could be said that there's competing time horizons within that as well.
1196
01:13:33,880 --> 01:13:38,440
You think about Supreme Court's there for life, president's there for four years, senators
1197
01:13:38,440 --> 01:13:39,440
there for six years.
1198
01:13:39,440 --> 01:13:42,000
The Supreme Court is a perfect example of that, right?
1199
01:13:42,000 --> 01:13:46,400
That's where you quote unquote enforce a long lock-in period to ensure long-term decision
1200
01:13:46,400 --> 01:13:51,200
making and eliminating external pressures potentially as well.
1201
01:13:51,200 --> 01:13:52,600
So Supreme Court's the validators?
1202
01:13:52,600 --> 01:13:54,320
Is that what you're saying?
1203
01:13:54,320 --> 01:13:57,040
If they lock in their stake for long enough, yeah, that's how.
1204
01:13:57,040 --> 01:14:01,140
Hail the new Supreme Court.
1205
01:14:01,140 --> 01:14:07,620
But I guess what I was getting to is, is it really a bug to have a branch of government
1206
01:14:07,620 --> 01:14:17,040
or whatever you want to call it, that is acting as a competing incentive system, a competing
1207
01:14:17,040 --> 01:14:23,280
time horizon, doesn't match up exactly with other participants of the ecosystem?
1208
01:14:23,280 --> 01:14:30,240
Or is it better, not thinking, security is almost critical, obviously, but it's a separate
1209
01:14:30,240 --> 01:14:32,560
issue from the governance aspect.
1210
01:14:32,560 --> 01:14:36,160
And I agree, minors are typically not vocal governance participants.
1211
01:14:36,160 --> 01:14:37,280
Exactly.
1212
01:14:37,280 --> 01:14:40,760
Which was evidenced with Ethereum's fork, right?
1213
01:14:40,760 --> 01:14:44,360
Minors had no power over that fork.
1214
01:14:44,360 --> 01:14:47,840
So as much as they might have wanted to.
1215
01:14:47,840 --> 01:14:51,120
So they lost their living and they knew they were going to lose it.
1216
01:14:51,120 --> 01:14:57,360
They knew they were going to lose all the benefits of being an Ethereum miner.
1217
01:14:57,360 --> 01:15:01,280
But most of them probably weren't too vocal about it because they saw other opportunities
1218
01:15:01,280 --> 01:15:02,920
to be mercenaries on other chains.
1219
01:15:02,920 --> 01:15:05,000
I see where you're heading with this.
1220
01:15:05,000 --> 01:15:09,380
And like you're right, it could be a feature if the system was balanced out with another
1221
01:15:09,380 --> 01:15:11,920
party that had long-term incentives.
1222
01:15:11,920 --> 01:15:13,880
And I don't think that's actually the case.
1223
01:15:13,880 --> 01:15:18,040
That's where I see a problem with Bitcoin's design.
1224
01:15:18,040 --> 01:15:22,440
So what you're saying is nobody in the Bitcoin ecosystem is thinking long-term?
1225
01:15:22,440 --> 01:15:24,640
No, no, of course I'm not saying that.
1226
01:15:24,640 --> 01:15:26,960
There's plenty of people that are thinking long-term.
1227
01:15:26,960 --> 01:15:30,840
I think you, I'm not sure how much you've talked about the security budget and things
1228
01:15:30,840 --> 01:15:36,320
like that, but I know Eric Wall and Paul Stork.
1229
01:15:36,320 --> 01:15:40,600
There's a lot of Bitcoiners that I respect that have actually been very vocal about the
1230
01:15:40,600 --> 01:15:41,760
shortcomings of it.
1231
01:15:41,760 --> 01:15:47,480
No, I think the problem is that the people in charge are not, well, I think there being
1232
01:15:47,480 --> 01:15:50,380
people in charge is a problem in of itself.
1233
01:15:50,380 --> 01:15:56,100
And then an extension of that is that they're not doing what needs to be done to prevent
1234
01:15:56,100 --> 01:15:59,540
potential disaster in Bitcoin's design.
1235
01:15:59,540 --> 01:16:03,840
Maybe that's a good segue to talk about long-term security and why I think that more inflation
1236
01:16:03,840 --> 01:16:10,120
will be introduced when the security budget runs out in 7 to 11 years from now.
1237
01:16:10,120 --> 01:16:13,760
Yes, 7 to 11 years from now.
1238
01:16:13,760 --> 01:16:16,240
The security budget runs out in 7 to 11 years?
1239
01:16:16,240 --> 01:16:17,560
Five to nine years from now.
1240
01:16:17,560 --> 01:16:19,040
Sorry, I'll revise that.
1241
01:16:19,040 --> 01:16:20,040
Yeah.
1242
01:16:20,040 --> 01:16:23,560
Yeah, because I mean, so originally, right?
1243
01:16:23,560 --> 01:16:25,800
You mean it just goes, yeah, go ahead.
1244
01:16:25,800 --> 01:16:32,200
So originally, the original design of Bitcoin was you have a very large number of transactions,
1245
01:16:32,200 --> 01:16:33,760
each paying a small fee.
1246
01:16:33,760 --> 01:16:38,280
This has utility, this has purpose, therefore, this is a sustainable security model.
1247
01:16:38,280 --> 01:16:42,920
And it's like sustained fees as well if you have a high underlying usage and a decent
1248
01:16:42,920 --> 01:16:44,160
amount of capacity.
1249
01:16:44,160 --> 01:16:46,860
That was how Bitcoin was originally designed.
1250
01:16:46,860 --> 01:16:51,400
And the inflation in Bitcoin really should be seen as like this bootstrapping mechanism
1251
01:16:51,400 --> 01:16:55,120
to fund security until fees can actually take over.
1252
01:16:55,120 --> 01:16:58,720
Because the halvening are exponential, right?
1253
01:16:58,720 --> 01:17:03,840
So if you think about how exponential functions work, it can't just keep doubling every
1254
01:17:03,840 --> 01:17:04,840
four years.
1255
01:17:04,840 --> 01:17:08,480
Very quickly, you start running into territory that's just like...
1256
01:17:08,480 --> 01:17:12,400
And the reason why I say that is because in order for the security budget to remain the
1257
01:17:12,400 --> 01:17:14,840
same, the price has to...
1258
01:17:14,840 --> 01:17:18,520
And if there aren't additional fees, then the price has to double in order to maintain
1259
01:17:18,520 --> 01:17:22,720
that same security budget, what is being paid out to the miners, right?
1260
01:17:22,720 --> 01:17:26,600
So every four years that halves, that means the security budget is halving.
1261
01:17:26,600 --> 01:17:32,440
And I don't see a way that Bitcoin is going to be able to have sustainable high fees,
1262
01:17:32,440 --> 01:17:37,280
which would be in the tune if you want to just have today's security, which potentially
1263
01:17:37,280 --> 01:17:38,560
could be lower than today.
1264
01:17:38,560 --> 01:17:43,640
But for today's security needs to be around $60 to $80 per transaction.
1265
01:17:43,640 --> 01:17:48,000
And I just don't think that that's really something that's going to happen in a competitive
1266
01:17:48,000 --> 01:17:52,160
market, at least not sustained because of the way the fee market works.
1267
01:17:52,160 --> 01:17:54,280
You kind of have these fee spikes.
1268
01:17:54,280 --> 01:17:55,280
But the way...
1269
01:17:55,280 --> 01:17:57,480
I mean, the fee spikes alone are not going to be enough.
1270
01:17:57,480 --> 01:18:03,080
So basically, if you pay less to the miners, the security, the cost to attack the system,
1271
01:18:03,080 --> 01:18:07,960
as I mentioned before, drops lower and lower until it actually becomes profitable to attack
1272
01:18:07,960 --> 01:18:15,000
through things like double spends, through 51% attacks on things like exchanges.
1273
01:18:15,000 --> 01:18:19,080
And that's when censorship can also occur, it becomes very vulnerable to censorship.
1274
01:18:19,080 --> 01:18:21,040
And this is how it ties back into all these things, right?
1275
01:18:21,040 --> 01:18:26,720
And I'm saying if Ethereum's economic model is more secure, it's paying out more for security,
1276
01:18:26,720 --> 01:18:29,220
that means it's more censorship resistant, right?
1277
01:18:29,220 --> 01:18:33,260
That means it's harder for any single one party to come along and take it over.
1278
01:18:33,260 --> 01:18:37,040
If the security budget for Bitcoin is 10 million, right?
1279
01:18:37,040 --> 01:18:42,040
A state actor can literally take over the system for like 8 million or something, probably
1280
01:18:42,040 --> 01:18:44,080
a bit more like 16 million or something.
1281
01:18:44,080 --> 01:18:47,000
But still, that's too low of a number, right?
1282
01:18:47,000 --> 01:18:49,160
That's a huge problem.
1283
01:18:49,160 --> 01:18:52,360
That's a huge existential threat to Bitcoin's existence.
1284
01:18:52,360 --> 01:18:57,600
And I think that for me, the solution was always attract real use cases, utility that
1285
01:18:57,600 --> 01:19:02,960
creates fees, then it becomes sustainable, then you can have your supply cap, right?
1286
01:19:02,960 --> 01:19:07,200
But I think instead, the core developers were really like, no, we will not increase the
1287
01:19:07,200 --> 01:19:11,520
block size limits and they'd rather increase the inflation over that.
1288
01:19:11,520 --> 01:19:16,080
And people like Peter Todd have been publicly talking about this, that in order to remain
1289
01:19:16,080 --> 01:19:20,600
secure, inflation has to be increased.
1290
01:19:20,600 --> 01:19:27,560
And that to me, it just goes against one of the few advantages that I think people cite
1291
01:19:27,560 --> 01:19:29,080
for Bitcoin.
1292
01:19:29,080 --> 01:19:33,720
And I think that's terrible.
1293
01:19:33,720 --> 01:19:35,480
To add inflation would be terrible?
1294
01:19:35,480 --> 01:19:36,480
Yeah.
1295
01:19:36,480 --> 01:19:39,800
I mean, it might be the best solution, but that's terrible, right?
1296
01:19:39,800 --> 01:19:42,080
I mean, if it pivoted now...
1297
01:19:42,080 --> 01:19:44,400
It's terrible today, right?
1298
01:19:44,400 --> 01:19:45,800
But if it's your only option...
1299
01:19:45,800 --> 01:19:46,800
Sure.
1300
01:19:46,800 --> 01:19:50,680
But I mean, that's a terrible outcome, in my view, if there were better outcomes.
1301
01:19:50,680 --> 01:19:57,520
I mean, if it started attracting usage now, if it pivoted its narrative now, if it increased
1302
01:19:57,520 --> 01:20:00,640
the block size now, there's a chance it won't have to do that.
1303
01:20:00,640 --> 01:20:02,220
But I don't see that happening.
1304
01:20:02,220 --> 01:20:06,880
If I look at who's in charge, who's making the decisions, what kind of resistance would
1305
01:20:06,880 --> 01:20:08,080
there be to that sort of change?
1306
01:20:08,080 --> 01:20:14,720
And if I try to calculate what is the probability of change before the security budget runs
1307
01:20:14,720 --> 01:20:18,040
out, yeah, that's a huge problem.
1308
01:20:18,040 --> 01:20:22,600
And that's something that I've been shouting off the rooftops.
1309
01:20:22,600 --> 01:20:30,240
One of the things that I just want to call out is you mentioned that you said it's harder
1310
01:20:30,240 --> 01:20:36,800
to change Ethereum and make it into add censorship to it because of its proof of state structure.
1311
01:20:36,800 --> 01:20:40,280
Well, that's depending on how much is securing the system.
1312
01:20:40,280 --> 01:20:42,280
Right, right.
1313
01:20:42,280 --> 01:20:47,920
The one caveat I want to add there, just because it is somewhere that I get hung up philosophically,
1314
01:20:47,920 --> 01:20:53,120
is what I said before of thinking of the externalities, not just what's happening on chain, but the
1315
01:20:53,120 --> 01:21:00,680
externalities and the side effects, the unintended consequences of having a fully aligned ecosystem
1316
01:21:00,680 --> 01:21:07,240
that's fully aligned as far as the incentive of driving up the value of the token.
1317
01:21:07,240 --> 01:21:08,720
And when you have that kind of...
1318
01:21:08,720 --> 01:21:13,480
My view is still a good motivation generally, but there are definitely negative externalities.
1319
01:21:13,480 --> 01:21:14,480
I agree.
1320
01:21:14,480 --> 01:21:15,480
So continue.
1321
01:21:15,480 --> 01:21:16,480
Right.
1322
01:21:16,480 --> 01:21:19,800
And one of them is the fact, and I think we're seeing it already, the fact that there's a
1323
01:21:19,800 --> 01:21:27,400
high incentive to become and to stay compliant, to not be working...
1324
01:21:27,400 --> 01:21:30,200
Well, let me back up.
1325
01:21:30,200 --> 01:21:33,600
Specifically for Ethereum, because of what it's building with DeFi, because of what its
1326
01:21:33,600 --> 01:21:40,840
aspirations are, which are to be sort of the base layer of programmable money in the future.
1327
01:21:40,840 --> 01:21:48,960
So the aspirations of the validators who are heavily backed by VC, who are centralized
1328
01:21:48,960 --> 01:21:51,640
entities themselves, right?
1329
01:21:51,640 --> 01:21:54,440
They don't want to have this pirate kind of system.
1330
01:21:54,440 --> 01:21:56,880
They don't want to be Monero where they're getting banned everywhere.
1331
01:21:56,880 --> 01:21:58,880
And miners and developers also backed by VCs.
1332
01:21:58,880 --> 01:21:59,880
Yeah.
1333
01:21:59,880 --> 01:22:00,880
And so developers are.
1334
01:22:00,880 --> 01:22:01,880
Yes, they are.
1335
01:22:01,880 --> 01:22:05,840
So like, is that different?
1336
01:22:05,840 --> 01:22:08,920
It's different in that they don't...
1337
01:22:08,920 --> 01:22:14,240
Are you honestly pointing to Bitcoin as having the same level of alignment philosophically
1338
01:22:14,240 --> 01:22:15,760
between those parties?
1339
01:22:15,760 --> 01:22:16,760
Because they don't, right?
1340
01:22:16,760 --> 01:22:17,760
Alignment.
1341
01:22:17,760 --> 01:22:18,760
Oh, that's another question entirely.
1342
01:22:18,760 --> 01:22:19,760
I was talking about the...
1343
01:22:19,760 --> 01:22:21,280
I mean, they're both backed by VCs.
1344
01:22:21,280 --> 01:22:25,240
Ethereum clearly has more VC investment, but I think that's because there's more utility
1345
01:22:25,240 --> 01:22:26,240
there.
1346
01:22:26,240 --> 01:22:31,080
But I do think it's somewhat of a mischaracterization, even with all of my critique of Ethereum.
1347
01:22:31,080 --> 01:22:35,480
I think it's a bit of a mischaracterization to say that they want compliance.
1348
01:22:35,480 --> 01:22:38,200
I mean, the narrative is clearly one of decentralization.
1349
01:22:38,200 --> 01:22:41,400
I mean, that's what motivates the community.
1350
01:22:41,400 --> 01:22:46,320
And I disagree that the incentives necessarily line up to just embrace compliance on like
1351
01:22:46,320 --> 01:22:51,560
a native L1 level, which would ruin a blockchain and would make me more concerned for Bitcoin
1352
01:22:51,560 --> 01:22:56,400
actually because they have the same fundamental design in terms of its core aspects, right?
1353
01:22:56,400 --> 01:22:58,480
That would even be possible.
1354
01:22:58,480 --> 01:23:03,360
No, I think that decentralization is actually what makes it valuable.
1355
01:23:03,360 --> 01:23:07,280
So it's like once you add compliance and you just ruin it, then you're just back to Web
1356
01:23:07,280 --> 01:23:08,280
2 again.
1357
01:23:08,280 --> 01:23:09,280
And then like, what's the point?
1358
01:23:09,280 --> 01:23:13,280
It's an exercise in futility, just like a bait and switch.
1359
01:23:13,280 --> 01:23:18,320
So I think even if that were to happen in Ethereum, which I doubt, but even if I just
1360
01:23:18,320 --> 01:23:23,200
entertain that thought, like just for the matter of argument, I think in the long run,
1361
01:23:23,200 --> 01:23:29,000
a decentralized blockchain that can offer a lot of utility, I think that will still be
1362
01:23:29,000 --> 01:23:33,800
far more competitive in the market and it'll be far more attractive in the long run.
1363
01:23:33,800 --> 01:23:34,800
So yeah, that's right.
1364
01:23:34,800 --> 01:23:38,840
But we know there's certain things that the government, that US government, that the European
1365
01:23:38,840 --> 01:23:42,120
government and other powerful governments won't accept.
1366
01:23:42,120 --> 01:23:53,120
And they won't accept a blockchain that has the capability of changing in a way that will
1367
01:23:53,120 --> 01:23:59,560
eliminate privacy from the government that'll be able to comply with KYC AML.
1368
01:23:59,560 --> 01:24:00,560
The governments...
1369
01:24:00,560 --> 01:24:01,560
Go ahead, sorry.
1370
01:24:01,560 --> 01:24:02,560
Sorry, just...
1371
01:24:02,560 --> 01:24:09,680
Well, if the governments see a way to achieve those end games, which they do with Ethereum
1372
01:24:09,680 --> 01:24:14,920
already, because of the alignment of incentives, particularly of validators and the big money
1373
01:24:14,920 --> 01:24:19,960
behind it, the external money, if they see a way to get in, they'll get in.
1374
01:24:19,960 --> 01:24:24,360
And they may see that with Bitcoin too, but it's a less direct route.
1375
01:24:24,360 --> 01:24:29,600
I think with Bitcoin, ultimately the attack will come in the form of a fork and attempt
1376
01:24:29,600 --> 01:24:31,640
to hijack the brand.
1377
01:24:31,640 --> 01:24:35,360
I think they could easily fork Bitcoin to proof of stake and convince the dummies of
1378
01:24:35,360 --> 01:24:36,800
the world that they're in a fork with Bitcoin now.
1379
01:24:36,800 --> 01:24:39,400
In about five to nine years from now.
1380
01:24:39,400 --> 01:24:43,280
If the security budget runs out, that creates the perfect storm for that sort of thing to
1381
01:24:43,280 --> 01:24:44,280
happen.
1382
01:24:44,280 --> 01:24:45,280
Right.
1383
01:24:45,280 --> 01:24:46,280
Yeah.
1384
01:24:46,280 --> 01:24:49,100
So I mean, it's like, at that point, that's what I was saying before.
1385
01:24:49,100 --> 01:24:51,600
So much of Bitcoin is psychological and we know it.
1386
01:24:51,600 --> 01:24:53,760
The brand is what it is.
1387
01:24:53,760 --> 01:24:58,040
Now, the people like us who actually understand the tech, we're a very small percentage of
1388
01:24:58,040 --> 01:24:59,040
the world.
1389
01:24:59,040 --> 01:25:04,120
We're a single digit percent of the world, tiny percent, but everybody's heard of Bitcoin
1390
01:25:04,120 --> 01:25:05,120
by now.
1391
01:25:05,120 --> 01:25:09,760
So when the other 98% of the world is told, okay, now this is Bitcoin, and anybody who
1392
01:25:09,760 --> 01:25:14,480
tells you differently is a criminal, you don't think that 98% is just going to just go along
1393
01:25:14,480 --> 01:25:15,480
with it.
1394
01:25:15,480 --> 01:25:16,880
They don't know what proof of stake is or proof of fork is.
1395
01:25:16,880 --> 01:25:22,000
You have a point if you think about Bitcoin as like this purely speculative store of value.
1396
01:25:22,000 --> 01:25:25,720
If you think that's going to be the most valuable thing on earth, then sure, then you're correct.
1397
01:25:25,720 --> 01:25:27,580
But that's not what I believe.
1398
01:25:27,580 --> 01:25:31,300
I think that the utility of blockchain is far more valuable.
1399
01:25:31,300 --> 01:25:34,260
And part of the utility is the removal of middlemen.
1400
01:25:34,260 --> 01:25:36,500
That's what makes it so efficient.
1401
01:25:36,500 --> 01:25:42,440
That's how we can actually create better products, better money, because no one is in control.
1402
01:25:42,440 --> 01:25:45,560
So I think in the long run, I think that's going to win.
1403
01:25:45,560 --> 01:25:48,720
That's why I believe in cryptocurrency.
1404
01:25:48,720 --> 01:25:53,360
I think at my heart, I'm still a bit of an optimist.
1405
01:25:53,360 --> 01:25:58,960
I mean, sure, there are futures where what you're saying plays out.
1406
01:25:58,960 --> 01:26:02,180
Our governments become more totalitarian.
1407
01:26:02,180 --> 01:26:04,800
And then I think what you're saying is true for China.
1408
01:26:04,800 --> 01:26:08,740
I think authoritarian governments, generally speaking, are just going to be completely
1409
01:26:08,740 --> 01:26:12,120
incompatible with the ethos of decentralized blockchains.
1410
01:26:12,120 --> 01:26:16,400
It's just not going to work out at all.
1411
01:26:16,400 --> 01:26:24,160
So I think places where you still have freedom of speech, or at least a part of it, places
1412
01:26:24,160 --> 01:26:32,600
where you still have property rights, I think these places can still be accepting of cryptocurrency.
1413
01:26:32,600 --> 01:26:41,900
And I'm maybe not as pessimistic as you are about regulators coming down and banning everything
1414
01:26:41,900 --> 01:26:48,160
I suppose I'm a bit more optimistic in terms of that future.
1415
01:26:48,160 --> 01:26:54,340
We just need to explain to them that, no, no, you don't apply the same regulations because
1416
01:26:54,340 --> 01:27:01,960
there is no intermediary that you need to protect the user from.
1417
01:27:01,960 --> 01:27:03,760
I think that's it's fundamentally true.
1418
01:27:03,760 --> 01:27:04,760
Well, that's not true, though.
1419
01:27:04,760 --> 01:27:05,760
Sorry?
1420
01:27:05,760 --> 01:27:10,640
But it's not true as long as we've got DAOs and multisig and chain links.
1421
01:27:10,640 --> 01:27:15,400
So hey, if the regulator goes after these things with admin keys, you know what the
1422
01:27:15,400 --> 01:27:16,400
regulator is doing?
1423
01:27:16,400 --> 01:27:21,880
The regulator is actually supporting decentralization, which I find wonderfully ironic.
1424
01:27:21,880 --> 01:27:26,080
So those things, the things with admin keys, sure.
1425
01:27:26,080 --> 01:27:32,460
Actually, I'm conflicted because the libertarian in me doesn't want more government interference.
1426
01:27:32,460 --> 01:27:36,820
But on the other hand, I'm like, if they do that, then they are technically protecting
1427
01:27:36,820 --> 01:27:39,880
people and they're supporting the cause of decentralization.
1428
01:27:39,880 --> 01:27:43,200
So I think I'm allowed to be conflicted about this particular case.
1429
01:27:43,200 --> 01:27:47,080
But you know, they won't be able to go after is the truly decentralized projects.
1430
01:27:47,080 --> 01:27:49,080
And they do still exist.
1431
01:27:49,080 --> 01:27:50,560
And then people do still have the option.
1432
01:27:50,560 --> 01:27:51,560
But that's not how it's playing out.
1433
01:27:51,560 --> 01:27:52,560
Here's how it's playing out.
1434
01:27:52,560 --> 01:27:53,560
No, but it is though.
1435
01:27:53,560 --> 01:27:57,160
Because you do still, I know most people are going to use the wrong thing, right?
1436
01:27:57,160 --> 01:27:58,760
Especially in the early days.
1437
01:27:58,760 --> 01:28:00,480
So I'm with you on that.
1438
01:28:00,480 --> 01:28:01,760
But those options still exist.
1439
01:28:01,760 --> 01:28:09,720
I can purchase cryptocurrency anonymously and obscure my IP and I can run it through
1440
01:28:09,720 --> 01:28:12,240
a little cash if you want to violate sanctions.
1441
01:28:12,240 --> 01:28:17,920
Yeah, I mean, but I won't be able to send that money back to my bank account, right?
1442
01:28:17,920 --> 01:28:20,440
Without identifying the source, I'll be able to do a lot of things with it.
1443
01:28:20,440 --> 01:28:21,440
But I can.
1444
01:28:21,440 --> 01:28:23,120
But here's what's actually happening.
1445
01:28:23,120 --> 01:28:28,040
What's actually happening is that the polygons of the world and the layer twos of the world
1446
01:28:28,040 --> 01:28:32,800
and the DeFi apps that have multi SIGs of the world, they are they're not just going
1447
01:28:32,800 --> 01:28:35,440
to get shut down by the government.
1448
01:28:35,440 --> 01:28:40,120
They're keeping access to be able to change stuff so that they can comply.
1449
01:28:40,120 --> 01:28:41,640
And there's negotiations going on.
1450
01:28:41,640 --> 01:28:45,560
They're negotiating with the government on what these laws and regulations are going
1451
01:28:45,560 --> 01:28:46,560
to look like.
1452
01:28:46,560 --> 01:28:51,720
And the government is not, you know, SEC is a different story, but there's other regulators
1453
01:28:51,720 --> 01:28:56,320
that and Congress people, you know, if you look at these hearings that are going on,
1454
01:28:56,320 --> 01:29:02,880
that are being lobbied to change laws, you know, and so the compliance is going to happen,
1455
01:29:02,880 --> 01:29:05,400
but it's going to be with a new set of laws.
1456
01:29:05,400 --> 01:29:09,520
And it's going to be a trade off between what the government wants and what they can get
1457
01:29:09,520 --> 01:29:11,360
out of these protocols.
1458
01:29:11,360 --> 01:29:14,040
So we're not talking about just shut down, right?
1459
01:29:14,040 --> 01:29:20,440
We're talking about the worst case scenario, I think, which is these mutated forms of it's
1460
01:29:20,440 --> 01:29:25,640
more decentralized than what we have now, but it's still giving up so much of what we
1461
01:29:25,640 --> 01:29:27,920
thought we were going to get out of crypto.
1462
01:29:27,920 --> 01:29:31,600
You know, and so that's really the worst case to me.
1463
01:29:31,600 --> 01:29:35,240
And that's why I think Ethereum is heading down that path.
1464
01:29:35,240 --> 01:29:36,240
Yeah.
1465
01:29:36,240 --> 01:29:44,320
I mean, I mean, and this is why also I've become such a critic of the layer two.
1466
01:29:44,320 --> 01:29:51,120
Because it worsens the user experience, it actually increases the need for custodians
1467
01:29:51,120 --> 01:29:55,720
actually pushing people into the centralized service and custodians.
1468
01:29:55,720 --> 01:30:00,760
But what I don't under entirely where I've maybe we we differ a bit is that I mean, they
1469
01:30:00,760 --> 01:30:03,360
go after these protocols of admin keys.
1470
01:30:03,360 --> 01:30:07,080
And so so what?
1471
01:30:07,080 --> 01:30:09,240
You know, we still have our decentralized options.
1472
01:30:09,240 --> 01:30:14,480
And sure, we're going to be out there promoting that everyone should use them.
1473
01:30:14,480 --> 01:30:15,480
What decentralized options?
1474
01:30:15,480 --> 01:30:17,480
What are you talking about on Ethereum?
1475
01:30:17,480 --> 01:30:18,480
Yeah.
1476
01:30:18,480 --> 01:30:19,480
Yeah.
1477
01:30:19,480 --> 01:30:20,480
No, for instance, you're talking about Uniswap.
1478
01:30:20,480 --> 01:30:26,960
Okay, say I anonymize my coins through Railgun, which is an anonymity protocol.
1479
01:30:26,960 --> 01:30:27,960
Right.
1480
01:30:27,960 --> 01:30:31,000
And I run that through Uniswap to swap my coins.
1481
01:30:31,000 --> 01:30:32,000
Right.
1482
01:30:32,000 --> 01:30:33,000
Then I run it.
1483
01:30:33,000 --> 01:30:35,600
And then I run it into Aave.
1484
01:30:35,600 --> 01:30:36,600
Right.
1485
01:30:36,600 --> 01:30:37,600
For all.
1486
01:30:37,600 --> 01:30:38,600
And if I.
1487
01:30:38,600 --> 01:30:42,600
Well, you'll be banned from Uniswap because Uniswap's now got hooks, which allows everybody
1488
01:30:42,600 --> 01:30:43,600
to create these.
1489
01:30:43,600 --> 01:30:44,600
But I'll use Uniswap version free.
1490
01:30:44,600 --> 01:30:45,600
Right.
1491
01:30:45,600 --> 01:30:46,600
That doesn't have the hooks.
1492
01:30:46,600 --> 01:30:49,280
Well, there's not going to be any liquidity there.
1493
01:30:49,280 --> 01:30:50,640
You're not going to be easy to target.
1494
01:30:50,640 --> 01:30:51,640
Okay.
1495
01:30:51,640 --> 01:30:52,640
Well, then I'm going to get good rates.
1496
01:30:52,640 --> 01:30:53,640
But then I'll use a different.
1497
01:30:53,640 --> 01:30:54,640
You know, it's like.
1498
01:30:54,640 --> 01:30:55,640
No, no.
1499
01:30:55,640 --> 01:30:56,640
Sure.
1500
01:30:56,640 --> 01:30:57,640
I'll be hampered.
1501
01:30:57,640 --> 01:30:58,640
You're going to be a pirate.
1502
01:30:58,640 --> 01:30:59,640
Sure.
1503
01:30:59,640 --> 01:31:00,640
You'll be a pirate.
1504
01:31:00,640 --> 01:31:01,640
I get it.
1505
01:31:01,640 --> 01:31:02,640
You know, because that's that's the world we live in.
1506
01:31:02,640 --> 01:31:03,640
Right.
1507
01:31:03,640 --> 01:31:06,280
And I and I and I agree with you.
1508
01:31:06,280 --> 01:31:07,280
And I agree with you.
1509
01:31:07,280 --> 01:31:08,280
We should have more freedom.
1510
01:31:08,280 --> 01:31:09,280
Right.
1511
01:31:09,280 --> 01:31:10,280
I actually agree with you.
1512
01:31:10,280 --> 01:31:11,280
And I want that.
1513
01:31:11,280 --> 01:31:12,280
Right.
1514
01:31:12,280 --> 01:31:15,680
But let's not throw out the baby with the bathwater here.
1515
01:31:15,680 --> 01:31:16,680
Right.
1516
01:31:16,680 --> 01:31:22,000
If someone really needs this, if some revolutionary somewhere really needs this, it's still there.
1517
01:31:22,000 --> 01:31:26,520
And I think that's that's technically correct, even though it's not as good as the mainstream
1518
01:31:26,520 --> 01:31:27,520
thing.
1519
01:31:27,520 --> 01:31:28,520
It's there.
1520
01:31:28,520 --> 01:31:36,320
But the the problem is that the admin key driven projects, the VCs that are behind them are
1521
01:31:36,320 --> 01:31:41,680
actively trying to make the stuff that you like illegal.
1522
01:31:41,680 --> 01:31:47,560
They're actively trying to say like like if someone is they're out there paying to pay
1523
01:31:47,560 --> 01:31:49,040
enough Congress people.
1524
01:31:49,040 --> 01:31:53,760
But how do you stop someone from for like an anon from someone that has proper upset?
1525
01:31:53,760 --> 01:31:58,520
How do you stop them from like interacting with these smart contracts, the ones that
1526
01:31:58,520 --> 01:31:59,800
don't have admin keys, right?
1527
01:31:59,800 --> 01:32:01,560
The ones that don't have these things?
1528
01:32:01,560 --> 01:32:03,480
How do you stop you can't stop exactly.
1529
01:32:03,480 --> 01:32:05,880
But it's not about some some pirate anon.
1530
01:32:05,880 --> 01:32:06,920
That's exactly my point.
1531
01:32:06,920 --> 01:32:08,480
You can't stop loving guy.
1532
01:32:08,480 --> 01:32:09,480
Right.
1533
01:32:09,480 --> 01:32:10,480
That's my point.
1534
01:32:10,480 --> 01:32:11,480
Right.
1535
01:32:11,480 --> 01:32:14,480
You can't you can stop them from effectively using it if there's no equity.
1536
01:32:14,480 --> 01:32:16,400
That's that's that's a good thing.
1537
01:32:16,400 --> 01:32:17,400
Right.
1538
01:32:17,400 --> 01:32:21,100
That someone can just have the freedom to do that and nobody can stop them.
1539
01:32:21,100 --> 01:32:22,100
You have to agree.
1540
01:32:22,100 --> 01:32:24,480
That's a good thing.
1541
01:32:24,480 --> 01:32:26,120
It's a good thing until it's illegal.
1542
01:32:26,120 --> 01:32:28,320
And if they catch you doing it, it's still a good thing.
1543
01:32:28,320 --> 01:32:32,720
Even if it's illegal, they're making it illegal is what's bad about that scenario.
1544
01:32:32,720 --> 01:32:33,720
Right.
1545
01:32:33,720 --> 01:32:34,720
Yeah.
1546
01:32:34,720 --> 01:32:36,220
But that's what DeFi is doing.
1547
01:32:36,220 --> 01:32:37,220
That's what the that's my point.
1548
01:32:37,220 --> 01:32:40,760
What's the regulator reason that they're doing this illegal not DeFi itself?
1549
01:32:40,760 --> 01:32:41,760
No, no.
1550
01:32:41,760 --> 01:32:44,400
See, that's where there's confusion.
1551
01:32:44,400 --> 01:32:49,520
And it's the hardest thing to communicate about this space is that there are huge organizations,
1552
01:32:49,520 --> 01:32:58,560
huge VCs, you know, even DeFi developers themselves are out there lobbying for laws, regulations
1553
01:32:58,560 --> 01:33:03,960
that would hamper competition that would keep them in their prime spots, that would make
1554
01:33:03,960 --> 01:33:08,200
competition that doesn't comply with the rules that they're agreeing to be beholden to.
1555
01:33:08,200 --> 01:33:11,520
I have to point out Bitcoiners are guilty of this too, right.
1556
01:33:11,520 --> 01:33:18,280
In regards to some Bitcoiners at least calling for regulations to their competitors.
1557
01:33:18,280 --> 01:33:19,280
Right.
1558
01:33:19,280 --> 01:33:20,280
Yeah.
1559
01:33:20,280 --> 01:33:21,280
Yeah.
1560
01:33:21,280 --> 01:33:25,320
I mean, sure, there's organizations behind Bitcoin industry organizations too.
1561
01:33:25,320 --> 01:33:28,960
But specifically with regard to Ethereum, we're talking about banking.
1562
01:33:28,960 --> 01:33:33,720
You know, we're talking about stuff that's going to affect how CBDCs are rolled out.
1563
01:33:33,720 --> 01:33:38,520
We're talking about a whole different level of possible damage, you know, and we're talking
1564
01:33:38,520 --> 01:33:43,120
about a whole different level of damage to privacy, I think, you know, with regard to
1565
01:33:43,120 --> 01:33:45,560
especially with what's on Ethereum, but beyond that.
1566
01:33:45,560 --> 01:33:50,040
Because it sounds like we're disagreeing, right, but we're not actually disagreeing
1567
01:33:50,040 --> 01:33:51,040
with each other.
1568
01:33:51,040 --> 01:33:53,120
I would like like, what are we actually disagreeing on here?
1569
01:33:53,120 --> 01:33:55,520
Like it sounds like we are, but I think we're in agreement.
1570
01:33:55,520 --> 01:33:56,920
I'm just more optimistic.
1571
01:33:56,920 --> 01:34:04,760
I think that you where I think the point of disagreement is, is on the approach to an
1572
01:34:04,760 --> 01:34:07,920
optimism around DeFi on Ethereum.
1573
01:34:07,920 --> 01:34:16,240
I don't see a path forward for DeFi on Ethereum that doesn't involve compliance and compliance
1574
01:34:16,240 --> 01:34:21,720
that ultimately creates precedents that hurts the rest of the crypto industry with regard
1575
01:34:21,720 --> 01:34:24,160
to promises of freedom and privacy.
1576
01:34:24,160 --> 01:34:28,080
Would it be any different if the DeFi was over Bitcoin?
1577
01:34:28,080 --> 01:34:33,400
Like if we just had that functionality, wouldn't things just play out exactly the same?
1578
01:34:33,400 --> 01:34:35,800
It's a good question.
1579
01:34:35,800 --> 01:34:39,360
I think it depends how it was built, what kind of layer it was built on.
1580
01:34:39,360 --> 01:34:43,720
You know, I think with like we have RSK, which has smart contract functionality.
1581
01:34:43,720 --> 01:34:45,560
That's a perfect example of things.
1582
01:34:45,560 --> 01:34:49,680
I mean, that's a federated system, right, RSK.
1583
01:34:49,680 --> 01:34:55,160
I think I think all the pretty much almost all of the L2 solutions and or DeFi Bitcoin
1584
01:34:55,160 --> 01:34:56,600
are L2 solutions.
1585
01:34:56,600 --> 01:35:01,080
But like hypothetically, if it had native DeFi, like programmability built in, just
1586
01:35:01,080 --> 01:35:03,920
pure hypothetical, like I think it would play out the same.
1587
01:35:03,920 --> 01:35:07,040
Well, this is my concern with BIP 300.
1588
01:35:07,040 --> 01:35:14,480
You know, is that could we end up seeing the and I haven't been able to I want to do a
1589
01:35:14,480 --> 01:35:20,960
whole separate podcast about this, you know, because part of my concern goes beyond anything
1590
01:35:20,960 --> 01:35:24,680
technical and beyond anything that that is written in a white paper or anything like
1591
01:35:24,680 --> 01:35:25,680
that.
1592
01:35:25,680 --> 01:35:27,460
It's about longer term.
1593
01:35:27,460 --> 01:35:31,400
How is this going to bring in big money that's going to try to corrupt the integrity of the
1594
01:35:31,400 --> 01:35:32,400
base layer?
1595
01:35:32,400 --> 01:35:35,600
Yeah, and I, I get that.
1596
01:35:35,600 --> 01:35:39,400
Basically the way that it works is it doesn't change the base layer, right?
1597
01:35:39,400 --> 01:35:42,040
It just everything can work as it always has.
1598
01:35:42,040 --> 01:35:43,720
It just adds new functionality.
1599
01:35:43,720 --> 01:35:44,720
Miners won't know any difference.
1600
01:35:44,720 --> 01:35:45,720
It just gonna look like regular.
1601
01:35:45,720 --> 01:35:47,120
I believe it's merged mind.
1602
01:35:47,120 --> 01:35:50,880
So miners do need to watch the the drive chain.
1603
01:35:50,880 --> 01:35:52,440
But but yes, it is.
1604
01:35:52,440 --> 01:35:53,440
It is a layer two.
1605
01:35:53,440 --> 01:35:54,960
So layer one continues as is.
1606
01:35:54,960 --> 01:35:56,440
Sorry, continue.
1607
01:35:56,440 --> 01:35:57,440
Right.
1608
01:35:57,440 --> 01:36:01,720
And there could be hundreds of these drive chains, you know, and all doing different
1609
01:36:01,720 --> 01:36:03,320
things.
1610
01:36:03,320 --> 01:36:08,640
What I don't fully understand yet is what kind of unintended consequences could that
1611
01:36:08,640 --> 01:36:14,240
have politically, you know, with this amorphous governance system that you nicely described,
1612
01:36:14,240 --> 01:36:20,160
you know, like like what, you know, corruption with developers, like all that other stuff.
1613
01:36:20,160 --> 01:36:24,120
Like I haven't heard that fully vetted out, you know, and that's the part that I get concerned
1614
01:36:24,120 --> 01:36:25,120
about.
1615
01:36:25,120 --> 01:36:26,120
So I don't know the answer.
1616
01:36:26,120 --> 01:36:29,960
Yeah, no, I don't know the answer to that either.
1617
01:36:29,960 --> 01:36:33,080
But I think we have to give it our best shot.
1618
01:36:33,080 --> 01:36:37,600
You know, like I tend to be optimistic, but it doesn't necessarily change my course of
1619
01:36:37,600 --> 01:36:40,560
action because I'm still going to advocate for decentralization.
1620
01:36:40,560 --> 01:36:44,160
I'm still going to call out centralization where I see it.
1621
01:36:44,160 --> 01:36:45,160
Right.
1622
01:36:45,160 --> 01:36:46,160
It's it's still.
1623
01:36:46,160 --> 01:36:50,600
Yeah, that's that's where I think, you know, that's what really matters.
1624
01:36:50,600 --> 01:36:51,600
Right.
1625
01:36:51,600 --> 01:36:53,440
And, you know, the world can go either way.
1626
01:36:53,440 --> 01:36:54,440
Right.
1627
01:36:54,440 --> 01:36:59,320
Like this, this factors outside of our control that could sway the world one way or another.
1628
01:36:59,320 --> 01:37:05,840
You know, I think as long as I'm doing my best.
1629
01:37:05,840 --> 01:37:09,800
In terms of pushing things in a better direction, I think that's that's what matters.
1630
01:37:09,800 --> 01:37:11,800
And I mean, I mean, ultimately, I'm curious.
1631
01:37:11,800 --> 01:37:15,320
It just it comes across.
1632
01:37:15,320 --> 01:37:16,320
Almost pessimistic.
1633
01:37:16,320 --> 01:37:18,200
You still think we're going to win, right?
1634
01:37:18,200 --> 01:37:19,640
At the end of this long road.
1635
01:37:19,640 --> 01:37:25,400
Well, I was just thinking that when you were saying what you were just saying, I think
1636
01:37:25,400 --> 01:37:29,760
that is our biggest difference in approach is that you come at it from an optimistic
1637
01:37:29,760 --> 01:37:30,760
point of view.
1638
01:37:30,760 --> 01:37:37,880
And I come at it from the point of view that that I believe people, humans are inherently
1639
01:37:37,880 --> 01:37:41,600
greedy and inherently fallible.
1640
01:37:41,600 --> 01:37:46,840
And that money in our in our today's mutated, we don't live in a capitalist society.
1641
01:37:46,840 --> 01:37:52,560
We live in like this mutated form of capitalism that's, you know, crossed over with socialism
1642
01:37:52,560 --> 01:37:56,360
and all this other stuff, you know, crony capitalism.
1643
01:37:56,360 --> 01:38:02,120
I think that in this mutated economic world we live in, there's there's dangers everywhere.
1644
01:38:02,120 --> 01:38:07,880
And it makes it very, very unlikely that we're going to be able to achieve what we want to
1645
01:38:07,880 --> 01:38:08,880
achieve.
1646
01:38:08,880 --> 01:38:13,040
And I think that the only way we can do it is by coming at it from a completely adversarial
1647
01:38:13,040 --> 01:38:18,680
approach and assume that every human involved is going to mess up at some point.
1648
01:38:18,680 --> 01:38:23,360
You know, and I think that the only hope that we have is to assume the worst in people and
1649
01:38:23,360 --> 01:38:30,040
to try to use technology to avert it, to avert those those, you know, bad intentions that
1650
01:38:30,040 --> 01:38:32,240
people just have it in their in their core.
1651
01:38:32,240 --> 01:38:33,240
Yes.
1652
01:38:33,240 --> 01:38:34,400
I think that's the difference in how we approach.
1653
01:38:34,400 --> 01:38:38,880
Yeah, no, I think I think I think you're right about that.
1654
01:38:38,880 --> 01:38:42,640
It's but I'm sorry.
1655
01:38:42,640 --> 01:38:43,640
I've corrupted you.
1656
01:38:43,640 --> 01:38:44,640
No, yeah.
1657
01:38:44,640 --> 01:38:50,400
I think I think on another hand, I think it's it's we have to we have to do the best we
1658
01:38:50,400 --> 01:38:57,040
can, you know, and and I think ultimately, ultimately, I do think cryptocurrency will
1659
01:38:57,040 --> 01:38:58,040
succeed.
1660
01:38:58,040 --> 01:39:02,840
And and I think also I think one thing that that differentiates our our different viewpoints
1661
01:39:02,840 --> 01:39:06,120
here is that it's about how we're prioritizing threats.
1662
01:39:06,120 --> 01:39:11,600
It seems to me like for you, some of the biggest threats to cryptocurrency are external.
1663
01:39:11,600 --> 01:39:15,980
And actually, in my view, and this is related to a lot of the work I've done around governance.
1664
01:39:15,980 --> 01:39:19,400
In my view, I think the biggest threat to cryptocurrency is actually internal.
1665
01:39:19,400 --> 01:39:24,360
I think we're like our own worst enemy in so many ways.
1666
01:39:24,360 --> 01:39:30,440
Like it's it's like it's it's the corruption that happens from within or the susceptibility,
1667
01:39:30,440 --> 01:39:35,280
I think, you know, for corruption, I think is is one of is like the biggest threat to
1668
01:39:35,280 --> 01:39:36,280
me.
1669
01:39:36,280 --> 01:39:41,560
Like, actually, I'm fairly optimistic, you know, when it comes to the regulatory side
1670
01:39:41,560 --> 01:39:42,560
of things.
1671
01:39:42,560 --> 01:39:46,000
I mean, there's going to be ups and downs and tug of war is going to go back and forth
1672
01:39:46,000 --> 01:39:47,560
and the pendulum is going to swing.
1673
01:39:47,560 --> 01:39:50,320
But I think I'm more optimistic on that front than you are.
1674
01:39:50,320 --> 01:39:56,160
But I'm I'm far more concerned about being our own worst enemy in that and that it's
1675
01:39:56,160 --> 01:40:00,040
it's it's it's our own internal systems of governments that are actually the biggest
1676
01:40:00,040 --> 01:40:01,040
threat.
1677
01:40:01,040 --> 01:40:05,200
And we'll I think, in my view, continue to delay mass adoption, unfortunately, because
1678
01:40:05,200 --> 01:40:08,480
of just wrong choices being made.
1679
01:40:08,480 --> 01:40:10,520
It's a consequence.
1680
01:40:10,520 --> 01:40:12,160
Yeah, I agree with you.
1681
01:40:12,160 --> 01:40:13,600
I agree on a lot of that.
1682
01:40:13,600 --> 01:40:19,440
I think actually the biggest threats come probably right at the edge, the edge between
1683
01:40:19,440 --> 01:40:20,940
internal and external.
1684
01:40:20,940 --> 01:40:25,440
You know, and it's when the external forces find their way through weak defenses.
1685
01:40:25,440 --> 01:40:27,400
You know, that's where it starts to get.
1686
01:40:27,400 --> 01:40:28,560
That's where the two viewpoints combined.
1687
01:40:28,560 --> 01:40:30,200
I've seen a lot of that already.
1688
01:40:30,200 --> 01:40:31,400
Yeah, exactly.
1689
01:40:31,400 --> 01:40:35,320
But well, listen, man, this has been a great chat.
1690
01:40:35,320 --> 01:40:36,320
We've gone way over time.
1691
01:40:36,320 --> 01:40:37,320
I enjoyed this.
1692
01:40:37,320 --> 01:40:42,560
This was and we're probably pushing the limits of anybody who's still listening.
1693
01:40:42,560 --> 01:40:45,800
So we'll but we should do it again sometime.
1694
01:40:45,800 --> 01:40:46,800
I think it's great.
1695
01:40:46,800 --> 01:40:47,800
I love chatting.
1696
01:40:47,800 --> 01:40:48,800
We only got through half of my list.
1697
01:40:48,800 --> 01:40:51,120
I want to talk to you about privacy.
1698
01:40:51,120 --> 01:40:54,360
I want to talk to you about a bunch of privacy.
1699
01:40:54,360 --> 01:40:58,920
We barely let me just shove that.
1700
01:40:58,920 --> 01:41:03,600
But yeah, yeah, we'll definitely we'll definitely do it again.
1701
01:41:03,600 --> 01:41:04,600
But thanks for spending all this time.
1702
01:41:04,600 --> 01:41:05,600
It was a pleasure.
1703
01:41:05,600 --> 01:41:06,600
And yeah.
1704
01:41:06,600 --> 01:41:10,320
And again, I really admire the work you've been doing as well.
1705
01:41:10,320 --> 01:41:16,840
So just just keep up and we're going to keep crusading for decentralization and freedom.
1706
01:41:16,840 --> 01:41:19,640
And you know, that's that's what matters.
1707
01:41:19,640 --> 01:41:20,640
Thank you so much for it.
1708
01:41:20,640 --> 01:41:40,700
It sure does.
