Episode 96: Mining Decentralization Update

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Life from interest.
This is Bitcoin.
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Explain.
Hey, sure.
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Happy New Year.
What an amazing day, a new
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Bitcoin explained episode.
It is truly amazing we are
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exponentially slowing down as we
approach episode number 100.
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The singularity.
Exactly.
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But this is episode 96.
Yes, and Episode 96 like many
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other episodes is sponsored by
our friends from Coinkite who
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produce the cold cart and who
are kind enough to pay for
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sources mortgage of this
beautiful penthouse where we're
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recording.
Or just a Frappuccino.
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Probably somewhere in between.
Sources.
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We have a problem.
We do.
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Bitcoin mining is becoming too
centralized.
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Becoming too centralized.
I think it already is too
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centralized.
Yes, it's it's it's been
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trending in the wrong direction
since mining was invented.
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Well, that's not strictly
speaking true, of course,
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because Satoshi at first was the
only miner exactly so for a
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little while.
We had a centralization phase,
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then we had a decentralization
phase, and now we are heading
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towards the centralization
phase.
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We're trending in the wrong
direction again.
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Yep.
And, and I think we should
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nuance that because I think
pools are heavily decentralized,
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heavily centralized.
I think the mining, physical
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mining equipment is actually
quite well distributed over the
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planet and in weird remote
places.
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But it's these pools that seem
like potential choking points.
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Yeah, there there's different
layers of mining central, this
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mining centralization, right.
So there's indeed where is the
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hardware located, but a lot of
this is getting centralized in
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big data centres as well.
So there's centralization
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pressure there.
And then there is where are the
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mining pools operated from or
rather maybe how many mining
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pools are there at both, I guess
where are they operate from and
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how many are there?
So mining pool on the pool level
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of centralization and there's
the chip production
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centralization before we get.
So in this episode, we're going
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to tackle a couple of solutions
that are in development of have
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recently launched or like some
ideas to help counter this
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trend.
I'll also real quickly mention
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that the upcoming Bitcoin
Magazine print edition that I'm
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the Azure and chief of is going
to be focused on this topic as
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well.
We're going to have a whole
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special around mining
centralization and different
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solutions.
Sounds good.
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So, and a couple of them we're
going to explore in this episode
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specifically just to spoil that
for everyone, spoil that for all
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all our dear listeners, all 17
that are still left.
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There's the stratum V2.
We're going to, well, we're not
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really going to discuss like I
guess because we, we did a whole
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episode on that, but Stratum V2
Datum, the bit Axe and P2 pool,
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P2 pool.
P2 pool and and its friends.
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Right, Yeah, P2 pool and its
friends.
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So we'll all we'll we'll cover
all of these to some extent.
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So different, different ways
that mining is hopefully
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becoming more decentralized
again.
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Yeah.
And so some of these focus on
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making pools more decentralized
than others on the physical
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equipment, although the making
of does not.
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None of them fix the making of
the chips.
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No, but there are some
interesting developments there
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as well, as you can read in the
upcoming Bitcoin Magazine print
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edition.
All right, this sounds like an
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ad.
Speaking of ads, did you know
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that the Genesis book is now
also available in Dutch?
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Sure.
I saw that.
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You can finally read the Genesis
book.
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I think I read the English
version.
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Yeah, it's interesting because I
had it translated to Dutch.
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It was translated to Dutch, but
not by me.
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But did you give any feedback on
the translations to?
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To the.
Original intent of the author.
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No, because I was I I did want
to do that, but it it was weird
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to read my own text in my own
language but not written by me
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and I.
This is how Alexi Pertzer feels
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in court, because he's right.
He's, you know, he wrote
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statements in Russian and then
they got translated to Dutch.
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And then the the judge would
read them out in Dutch and then
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the translator would turn it
back into English and he would
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not have any idea what it's
about, even though it's his own
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words.
Yeah, it, it, it was weird that
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I, I'm not sure how to explain
it.
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It's, it's, it's like my text
but not my text or something.
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It's like if I had written it in
Dutch originally, I would have
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said, you know, I've written
things differently, but I would
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have written many things
differently actually.
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Like there's just a difference,
I guess in how I think in
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English and Dutch or you know,
just, it just comes out
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differently.
Yeah, that's what I would expect
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as well.
Yeah, so it was like, what if
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I'm going to start giving
feedback here on like how I
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would write it, Then I'm I'm
just going to rewrite the whole
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thing pretty much so.
Yeah.
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And if you do that, then the
question is would you improve
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things?
So would you write entire new
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chapters into it or?
So I decided in the end, I'm
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just going to treat this like
any other translated version of
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a book that I would that, you
know, that I can't read it.
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Just, you know, the translator
just does it and whoever wants
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to read it in that language can
do it.
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So no, I did not actually do
that.
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I just sort of trusted the
translator with it.
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I haven't even read the whole
thing even.
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Are you going to do a Dutch
audio book?
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Well, so then, then I would have
to what would I do it myself?
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I I did so did consider that.
And in that case I was probably
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just take the Dutch translation.
But now I have to read it out
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loud in my own voice, my own
text, which is not my own.
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I don't know, it gets too weird.
So I think not.
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So you'd have an AI voice that
sounds like you trained on this
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podcast when you're speaking
English, right?
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Anyway.
Anyways, what were we talking
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about against yours?
What?
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What are we doing here?
Well, the problem is mining
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centralization.
And we're making a podcast.
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Bitcoin explains all mining
centralization and potential
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solutions.
That's right.
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So the first solution.
Oh, do we?
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Again, I think the 17 listeners
that are left listening to this
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podcast probably all know why
mining centralization is a
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problem.
But should we explain this real
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quick?
We should, yeah.
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It may be useful to spell out a
few things.
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So in principle, centralization
doesn't have to be a problem
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because the way it works is you,
you as a user create a Bitcoin
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transaction and some miner
doesn't like you or they are
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asked by some men with a gun do
not like you and they block your
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transaction.
They don't put it in a block.
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But then as long as somebody
puts it in a block, you'll
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eventually get in there.
And you know, we, we were not
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that worried about super fast
confirmations anymore because we
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have the Lightning Network.
So really, you know, as long as
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a few percent of miners let your
blocks in, you're fine.
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But it's still not great.
That's, that's one objection.
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So we'd like, you know, we, we,
we wouldn't want a situation
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where 90% of miners suddenly
decide to not like you.
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And then you, you kind of have
to hope that 10%.
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Yeah.
I mean, I guess the, the, the,
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the short version of it is we
want Bitcoin to be censorship
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resistance.
That's kind of one of the design
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goals, I think that's fair to
say.
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And for it to be censorship
resistant, it needs to be
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impossible to regulate mining
basically, because what the
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regulators tend to do is they
tend to blacklist to certain
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people or institutions or
companies or well, or countries
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or, you know, so if we want to
stop that from happening, then
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basically regulators need to not
be able to regulate Bitcoin.
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And specifically in this case on
the mining level, if mining
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centralises too much.
So there's, you know, if if
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mining happens by too few people
or in, you know, all in the same
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location or something like that,
then regulators have a place to
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go and they can start to impose
the censorship on Bitcoin
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through these miners.
Yeah, and I guess.
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This is much harder to do.
Yeah, and another thing to to
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consider is defence in depth.
So usually you don't want to
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have only one line of defence.
Like you could say, well, even
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if 90% of the miners censor me,
doesn't matter because this 10%
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is still left.
But it's, you know, it's better
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to to be safer and make sure
that that 90% is not even going
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to censor you.
So you want to you want to
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defend yourself in multiple
places, not just just have one
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last thing that that you think
will protect you.
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And then some surprise happens
and turns out you're not
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protected.
Yeah.
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One such surprise could be the
government ordering the
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compliant miners to re orc out
the evil miners because then
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that 10% is won't you won't get
through it.
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Right.
So one of the ways you know the
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what I explained, one of the
levels of centralization is pool
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centralization, right?
So a mining pool is, you know,
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some entity that allows other
people to bundle their hash
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power through you.
But at that point, you are also
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the entity that's doing the
transaction selection typically.
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So.
So you are then, you know, even
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if there's like 10,000 people
with ASIC machines mining all
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across the world, if there's
only one person doing actual
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transaction selection, the
operator of the mining pool,
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then again, the regulator just
needs to find this one person in
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order to impose censorship.
Today we live in a world where
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two or three mining pools have
more than 50% of the total hash
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power on Bitcoin.
So, you know, now I'm sort of
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leaving out the part where hash
power can move to different
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pools if this starts to happen.
But at least sort of
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superficially at face value,
that means right now you only
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have to contact, you know, a
regulator only have to contact
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two or three mining pools and.
Yeah, I guess this goes into the
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fact that mining pools are doing
multiple things.
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And so even if you can't make
the pool smaller, at least you
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can maybe make mining pools do
fewer of those things.
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So, so mining pools combine
funds.
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That's a way to reduce your risk
as an individual miner so you
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always get the same payout
instead of maybe once a year or
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or less.
But another thing it mining pool
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does is it decides what goes in
the block.
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And so there are several
proposals that remove that role
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from the mining pool.
Even though the pool might still
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be big, they don't get to decide
what's in a block or to some
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extent.
Yes, so that's first the the
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first project that's realized
this was trend fee 2, right?
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That's what you're talking
about.
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So, so indeed you have a mining
pool, a mining pool operator
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that usually selects which
transactions go in a block.
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The idea was let's decentralize
that.
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So in the same way that the hash
power is decentralized, there's
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all these ASIC machines, you
know, these thousand people
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having ASIC machines all across
the world.
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As I just mentioned, the idea
was let's design A mining pool
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so that these thousand people,
they are actually deciding
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themselves which transactions
they're including in a
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blockchain mining and then
they're still sharing the
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reward.
So that's Strand MP two.
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We did an episode on Strand MP 2
episode 80.
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Yeah, it's not the only thing
Strand MP2 does.
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It also adds encryption.
It tries a lot of things.
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Indeed.
We did an episode about it.
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I guess one thing we can say
about it that's relevant for the
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next topic, I think, is that
it's somewhat complicated.
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So Stratum V2 really tries to be
the first actual spec because
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the first version of Stratum did
not have a spec.
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It's just code.
So there's an actual
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specification.
There are different components,
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different roles as they're
called, that communicate with
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each other and that also need to
be implemented.
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And so one of the downsides is
that it's not, you know, it's
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not that easy to get started
with Stratum V2.
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And so you know other people
have tried other methods that
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00:12:33,200 --> 00:12:34,800
are easier.
Right.
230
00:12:34,800 --> 00:12:35,720
OK.
Yeah.
231
00:12:35,720 --> 00:12:40,040
And currently there are two
Strategy 2 projects basically,
232
00:12:40,040 --> 00:12:40,960
right?
Yeah.
233
00:12:40,960 --> 00:12:44,680
So there is a firmware
implementation by Brains on
234
00:12:44,680 --> 00:12:47,280
their Brains OS, which is a
custom piece of firmware that
235
00:12:47,280 --> 00:12:49,600
you put on your ASIC.
Yeah, Brains is a mining pool.
236
00:12:49,640 --> 00:12:51,360
Yeah.
The only downside with that is
237
00:12:51,360 --> 00:12:53,760
that it's actually behind on on
the current spec.
238
00:12:53,920 --> 00:12:55,800
So they're working on it, but it
could take a while.
239
00:12:56,880 --> 00:13:00,880
You don't need to have Stratum
V2 support on the firmware
240
00:13:00,880 --> 00:13:02,600
itself.
You can run a translator that
241
00:13:02,800 --> 00:13:06,040
converts the modern Stratum V2
to the old fashioned Stratum,
242
00:13:07,200 --> 00:13:10,120
but now you're dealing with a
separate piece of software, and
243
00:13:10,120 --> 00:13:12,440
this is where the complexity
comes right back at you.
244
00:13:14,120 --> 00:13:17,440
And there is the Stratum
Reference implementation Sri,
245
00:13:17,440 --> 00:13:21,120
which is a Rust project that
implements basically all of the
246
00:13:21,120 --> 00:13:24,560
components in Stratum V2.
So you can run your own pool or
247
00:13:24,720 --> 00:13:26,360
you can run some software as a
user.
248
00:13:26,600 --> 00:13:30,000
Yeah.
And Sri is actually implemented
249
00:13:30,120 --> 00:13:33,000
by Demands Ball right now, so
that is in use.
250
00:13:33,360 --> 00:13:37,520
They're using it, yes.
You don't have to use it right.
251
00:13:37,520 --> 00:13:39,720
You can implement stratum V2
yourself.
252
00:13:40,160 --> 00:13:42,960
It's a reference, so you can use
that code to see how you would
253
00:13:42,960 --> 00:13:44,440
want to do it.
But in this case they use the
254
00:13:44,440 --> 00:13:47,040
actual code, probably with some
changes for themselves.
255
00:13:48,360 --> 00:13:51,000
Yeah.
OK.
256
00:13:51,000 --> 00:13:52,440
So that's Stratum V2, I think,
right.
257
00:13:52,440 --> 00:13:56,400
We so we're not really going
into detail beyond this.
258
00:13:56,440 --> 00:14:00,080
I put there, there's, I'm sure
it's been a while, it's been
259
00:14:00,080 --> 00:14:04,120
like 2 years, but I'm sure there
was plenty for more detail in
260
00:14:04,120 --> 00:14:06,600
the actual episode, episode 80.
Yeah, and also some history.
261
00:14:06,840 --> 00:14:10,320
Right.
So, OK, I, I mean, I don't
262
00:14:10,320 --> 00:14:15,120
remember that at all, but maybe
I'll, maybe I'll really listen
263
00:14:15,120 --> 00:14:16,840
to it myself someday.
Sure.
264
00:14:16,920 --> 00:14:21,200
Could be a good idea.
There is a new similar ish
265
00:14:21,200 --> 00:14:24,840
project as well.
Yes, Datum, yeah.
266
00:14:24,840 --> 00:14:29,160
So datum is implemented by
ocean, Ocean pool, are they just
267
00:14:29,160 --> 00:14:31,640
called ocean or ocean pool?
I'm not actually not sure.
268
00:14:31,640 --> 00:14:34,160
Anyways, I think it's just
ocean, so there.
269
00:14:34,200 --> 00:14:37,280
So, so we have an episode
explaining how Ocean's tight
270
00:14:37,280 --> 00:14:39,080
system work.
Is there a way of share
271
00:14:39,080 --> 00:14:41,400
accounting?
This would be completely
272
00:14:41,400 --> 00:14:46,920
separate from that anyway.
They released a basically a
273
00:14:46,920 --> 00:14:51,240
piece of software that you run
and it communicates to that pool
274
00:14:51,240 --> 00:14:53,440
and it makes sure that you can
make your own templates.
275
00:14:54,120 --> 00:14:58,920
How does that magic?
Because the specification is not
276
00:14:58,920 --> 00:15:00,840
out there.
There's no specification yet but
277
00:15:00,920 --> 00:15:03,920
but my impression is it's
somewhat similar to stratum P2
278
00:15:05,280 --> 00:15:07,360
but it does does have some
different trade-offs.
279
00:15:08,520 --> 00:15:10,760
But this, you know, we can, we
can do an episode when there is
280
00:15:10,760 --> 00:15:12,080
a spec.
Do do you know what the
281
00:15:12,080 --> 00:15:16,920
trade-offs are?
No, I, I think we can go back to
282
00:15:16,920 --> 00:15:21,120
stratum P2A little bit.
So there are there's three ways
283
00:15:21,120 --> 00:15:24,280
in which you can do templates in
Strata V2.
284
00:15:24,280 --> 00:15:26,800
One is you can just use the
template that the pool tells you
285
00:15:26,800 --> 00:15:29,520
to use.
That's the old Strata V1 model
286
00:15:29,520 --> 00:15:33,280
essentially.
The other is where you, and this
287
00:15:33,280 --> 00:15:36,680
is the model we talked about in
the last episode 2 years ago
288
00:15:36,920 --> 00:15:40,560
where you announce to the pool,
I want to make this template.
289
00:15:40,560 --> 00:15:43,080
So you've made your template,
you have to tell the pool about
290
00:15:43,080 --> 00:15:48,520
it and then the pool could
reject it and they can also see
291
00:15:48,520 --> 00:15:51,600
it.
But there's a third way, which I
292
00:15:51,600 --> 00:15:55,960
think Datum uses and Stratum V2
is sort of changing the spec to
293
00:15:55,960 --> 00:15:57,840
also do this.
And I don't know which, which
294
00:15:57,840 --> 00:16:00,840
one came first or whatever.
But the idea is that you don't
295
00:16:00,840 --> 00:16:02,520
actually tell the pool what
you're going to mine.
296
00:16:02,880 --> 00:16:05,440
You just give it a bunch of the
Merkel hashes.
297
00:16:05,720 --> 00:16:07,280
I think we've covered Merkel
trees before.
298
00:16:08,080 --> 00:16:12,520
And then they know that the
block, you know, they, they know
299
00:16:12,520 --> 00:16:15,080
how much, how much fees they're
being paid, but they have no
300
00:16:15,080 --> 00:16:17,680
idea what's in the block until
you publish it to the
301
00:16:17,680 --> 00:16:20,640
blockchain.
So you as the minor, if you find
302
00:16:20,640 --> 00:16:22,480
the winning block, you put it on
the blockchain.
303
00:16:22,480 --> 00:16:24,920
And that's only when the pool
learns what was actually in it.
304
00:16:25,440 --> 00:16:28,280
That makes censorship
impossible, right?
305
00:16:28,480 --> 00:16:30,880
Or at least other than self
censorship.
306
00:16:32,960 --> 00:16:38,320
While also the other thing I
wanted to bring up is I do think
307
00:16:38,320 --> 00:16:42,000
there is a legitimate, you know,
sort of critique on this
308
00:16:42,280 --> 00:16:45,240
approach.
The the third one you mean?
309
00:16:47,440 --> 00:16:50,800
Either of them really like I
just did this, this concept in
310
00:16:50,800 --> 00:16:59,200
itself, like I like
fundamentally, if regulators
311
00:16:59,240 --> 00:17:04,640
would go out and take the step
of censoring, you know, imposing
312
00:17:04,640 --> 00:17:09,720
censorship through pools, they
can't do it with these kinds of
313
00:17:09,720 --> 00:17:12,359
pools indeed, because these
pools aren't doing the
314
00:17:12,359 --> 00:17:17,119
transaction selection.
However, if a regulator wants to
315
00:17:17,119 --> 00:17:21,560
get serious about it, they can
of course still say, well, you
316
00:17:21,560 --> 00:17:24,200
have to.
So you just can't do this type
317
00:17:24,200 --> 00:17:26,720
of mining then if if you can't
do it with this type of mining.
318
00:17:26,880 --> 00:17:29,000
Yeah.
So in in Stratum V2 in that
319
00:17:29,000 --> 00:17:31,360
sense the design is more
flexible, which you could see is
320
00:17:31,360 --> 00:17:34,840
a good thing or is a bad thing.
One thing a pool could do if
321
00:17:34,840 --> 00:17:38,480
they wanted to is they can get
the templates from a compliant
322
00:17:38,480 --> 00:17:40,800
company.
So they wouldn't let the users
323
00:17:40,800 --> 00:17:44,040
make their own templates, but
they would basically as a pool
324
00:17:44,280 --> 00:17:46,560
have another company that they
get the template from.
325
00:17:46,560 --> 00:17:48,640
So they're still not.
It's not their responsibility to
326
00:17:48,640 --> 00:17:50,800
make a template.
Somebody else is doing it that.
327
00:17:50,840 --> 00:17:53,040
I don't think that would help
decentralization much though.
328
00:17:53,480 --> 00:17:55,600
Well, it wouldn't help
censorship persistent much.
329
00:17:56,320 --> 00:18:00,760
Yeah, exactly.
Yeah, I've, I, I think a more
330
00:18:00,760 --> 00:18:04,200
practical by the way, and I want
to discourage this type of
331
00:18:04,200 --> 00:18:05,800
development.
I do think it's at least
332
00:18:05,840 --> 00:18:09,760
thinking in the right direction
and there's probably potential
333
00:18:09,760 --> 00:18:13,520
in that direction.
I I just do think there's, it's
334
00:18:13,520 --> 00:18:17,280
not as if this is now a magic
bullet and it's now actually
335
00:18:17,600 --> 00:18:20,120
completely solved.
For no and, and I guess you
336
00:18:20,160 --> 00:18:23,720
know, a similar analogous
discussion is happening more in
337
00:18:23,720 --> 00:18:25,640
practice around lightning right
now.
338
00:18:25,640 --> 00:18:30,520
So in in Europe, we have these
new, you know, even stricter KYC
339
00:18:30,520 --> 00:18:34,680
rules that were tagged along
with Mikar and, and other laws.
340
00:18:35,360 --> 00:18:39,720
And they basically require
exchanges to do all these on
341
00:18:39,720 --> 00:18:43,120
chain surveillance things.
So this this basically spying on
342
00:18:43,120 --> 00:18:46,520
the users on the blockchain.
And as soon as people use
343
00:18:46,520 --> 00:18:48,920
lightning that such spying
becomes more difficult.
344
00:18:49,320 --> 00:18:52,840
So I would expect on a much
shorter term for regulators to
345
00:18:53,080 --> 00:18:56,440
be annoyed by that in some way.
We haven't seen any evidence of
346
00:18:56,440 --> 00:18:57,440
it yet, but.
Right.
347
00:18:57,440 --> 00:19:00,000
And there might be the potential
that they will just say, well
348
00:19:00,000 --> 00:19:02,480
you can't use lightning then.
Yeah, so, so, but then the
349
00:19:02,480 --> 00:19:05,680
regulators have to say like, no,
your customers must use a
350
00:19:05,680 --> 00:19:08,160
privacy unfriendly way.
They must jeopardize their own
351
00:19:08,160 --> 00:19:10,200
privacy in order for us to be
able to spy on them.
352
00:19:10,480 --> 00:19:13,160
So if you know that there could
be a whole legal battle around
353
00:19:13,160 --> 00:19:14,680
that if people want to actually
pick the battle.
354
00:19:14,680 --> 00:19:16,960
But it's a similar discussion as
what you brought up.
355
00:19:16,960 --> 00:19:20,360
Like you can force a pool, you
can tell pools like you cannot
356
00:19:20,360 --> 00:19:22,880
allow decentralization because
we cannot control it.
357
00:19:23,760 --> 00:19:25,280
That's that's definitely
possible.
358
00:19:25,400 --> 00:19:29,800
And so then the idea would be so
the, so the pool still has
359
00:19:29,800 --> 00:19:33,600
power.
It still, it still has a benefit
360
00:19:33,600 --> 00:19:36,400
of being big.
I guess there's just two things.
361
00:19:36,400 --> 00:19:38,920
So, so even though it's not
doing the transaction selection,
362
00:19:38,920 --> 00:19:44,960
it's it is doing the payouts.
And so as a user, you want to be
363
00:19:44,960 --> 00:19:47,520
able to get paid and that gives
the pool some power.
364
00:19:47,520 --> 00:19:49,200
Even though they might not
control what's in the block,
365
00:19:49,200 --> 00:19:51,640
they are the one who who are
organizing the payment.
366
00:19:51,640 --> 00:19:53,360
And by being that person, they
can.
367
00:19:54,000 --> 00:19:55,480
Yeah, there's still a choke
point in it.
368
00:19:55,920 --> 00:19:59,400
So I think one question that's
interesting to answer is why are
369
00:19:59,400 --> 00:20:04,120
these pools so big?
Related to that, because being
370
00:20:04,120 --> 00:20:06,680
big is also what makes them at
an attractive target in the 1st
371
00:20:06,680 --> 00:20:09,080
place.
If there was just a million tiny
372
00:20:09,080 --> 00:20:12,960
pools, then although in theory
you could enforce it on all the
373
00:20:12,960 --> 00:20:14,280
million of them, you can't
really.
374
00:20:14,320 --> 00:20:17,760
You want to explain why mining
is centralized?
375
00:20:18,120 --> 00:20:22,000
Yeah, so one of the problems is
that a lot of miners want to be
376
00:20:22,000 --> 00:20:23,760
paid a constant amount of money.
You.
377
00:20:23,760 --> 00:20:26,920
Already explained that short.
Well, not entirely.
378
00:20:27,360 --> 00:20:30,720
What I explained is the reason
you use a pool in the 1st place
379
00:20:30,720 --> 00:20:32,600
is to get a relatively constant
payout.
380
00:20:33,520 --> 00:20:34,800
But there's still some luck
involved.
381
00:20:34,800 --> 00:20:37,200
The pool might find a block or a
pool might not find a block.
382
00:20:37,760 --> 00:20:40,280
And some people want even more
certainty than that.
383
00:20:40,280 --> 00:20:42,840
They just want to say if I
provide hash power, I want to
384
00:20:42,840 --> 00:20:45,960
get paid.
And this game theory is tricky,
385
00:20:46,720 --> 00:20:49,520
but basically it means that a
pool has to take some financial
386
00:20:49,520 --> 00:20:52,600
risk to do this.
They have to have capital in
387
00:20:52,600 --> 00:20:54,960
order to pay you, even though
they're not finding a block, and
388
00:20:54,960 --> 00:20:57,000
they might not find a block for
a very long time and they could
389
00:20:57,000 --> 00:20:58,920
go bankrupt over that.
Right, right, right.
390
00:20:58,920 --> 00:21:01,080
Yeah, there's a good point to
bring up actually.
391
00:21:01,080 --> 00:21:04,280
So a rather actually like the
explanation I gave earlier is
392
00:21:04,280 --> 00:21:10,000
actually not strictly correct.
It's not the case that, well,
393
00:21:10,000 --> 00:21:13,040
no, it it's sort of it's, but
the the the point, the point
394
00:21:13,040 --> 00:21:15,800
here is that a lot of miners are
basically just selling their
395
00:21:15,800 --> 00:21:17,840
hash power and then getting a
fixed.
396
00:21:18,480 --> 00:21:19,880
Payment.
For their hash power.
397
00:21:19,880 --> 00:21:22,360
Yeah, the idea of pools started
out with just the idea.
398
00:21:22,360 --> 00:21:25,120
Like, OK, if I just mine on my
own, it will take me 5,000,000
399
00:21:25,120 --> 00:21:27,440
years to find a block.
That's not good.
400
00:21:27,480 --> 00:21:29,960
But as soon as you can find a
block every day or so, you
401
00:21:29,960 --> 00:21:33,040
should be fine.
But that's not enough for some
402
00:21:33,040 --> 00:21:35,160
people.
And so they want to be paid
403
00:21:35,160 --> 00:21:37,600
constantly.
And now in order to do that, you
404
00:21:37,600 --> 00:21:39,800
need to take financial risk.
And it turns out that this
405
00:21:39,800 --> 00:21:42,240
financial risk taking works
better at scale.
406
00:21:42,800 --> 00:21:46,560
So this is a massive incentive
towards just there being one
407
00:21:46,560 --> 00:21:49,640
pool like, and then they're
financed by Goldman Sachs and
408
00:21:49,640 --> 00:21:56,640
that's it.
And the solution to that what
409
00:21:56,640 --> 00:21:59,640
what kind of might get back to
it tangentially, but kind of
410
00:21:59,880 --> 00:22:02,160
really none of the four things
we're mentioning really solves
411
00:22:02,160 --> 00:22:07,800
this problem.
So the ocean pool, for example,
412
00:22:07,800 --> 00:22:09,720
does not solve this this
problem.
413
00:22:10,760 --> 00:22:12,720
They just pay you whenever they
find a block.
414
00:22:13,560 --> 00:22:16,120
And so that means that the
people who can use them are
415
00:22:16,120 --> 00:22:19,880
people who are OK with that.
Now, the benefit that they offer
416
00:22:19,880 --> 00:22:22,520
is transparency, which we
explained in the Tides episode.
417
00:22:22,840 --> 00:22:27,920
So although you might get paid
unpredictably, you know exactly
418
00:22:27,920 --> 00:22:30,720
that the pay you got plus fair,
which is very difficult to do
419
00:22:30,720 --> 00:22:33,000
with these other schemes where
it's very untransparent.
420
00:22:33,240 --> 00:22:35,760
So you think you're paying a 2%
fee, but are you really paying a
421
00:22:35,760 --> 00:22:37,120
2% fee?
You have no idea.
422
00:22:37,120 --> 00:22:39,640
Yes, exactly.
Yeah, yes.
423
00:22:42,000 --> 00:22:46,280
And in order to fix this,
basically this constant flow of
424
00:22:46,280 --> 00:22:49,480
money problem that would require
really fancy derivatives
425
00:22:49,720 --> 00:22:53,240
products, you know, discrete
lock contracts.
426
00:22:53,240 --> 00:22:55,880
There's all sorts of fancy ideas
around it, but gets pretty
427
00:22:56,520 --> 00:23:00,280
pretty abstract very quickly.
OK, let's move to the next
428
00:23:00,280 --> 00:23:02,080
topic.
This one is interesting and
429
00:23:02,080 --> 00:23:05,080
probably a little shorter.
I just wanted to say one more
430
00:23:05,080 --> 00:23:07,320
thing about Datum.
So because it's so simple, like
431
00:23:07,320 --> 00:23:10,160
just install one piece of
software, there's already an
432
00:23:10,160 --> 00:23:12,560
umbrella app for it.
So it's just very easy,
433
00:23:12,560 --> 00:23:15,440
especially for hobby miners, to
just try it out and play with
434
00:23:15,440 --> 00:23:17,760
it.
I'd like for start MV 2:00 to be
435
00:23:17,760 --> 00:23:19,720
able to do that as well.
I think it's technically very
436
00:23:19,720 --> 00:23:21,080
possible.
It's just a matter of having
437
00:23:21,080 --> 00:23:25,320
enough people doing these things
anyway.
438
00:23:26,040 --> 00:23:30,520
OK, so the next topic is an
interesting one, the bit X.
439
00:23:30,840 --> 00:23:33,520
The bit X.
What is the bit X short?
440
00:23:34,120 --> 00:23:36,600
It's an X.
Is it those?
441
00:23:36,720 --> 00:23:39,440
No, it's not.
It's basically what they did.
442
00:23:39,840 --> 00:23:42,480
Well, what it looks like is a
very small device, about the
443
00:23:42,480 --> 00:23:46,360
size of a well half the size of
a teacup, or 1/4 of the size of
444
00:23:46,360 --> 00:23:50,040
the teacup.
If you have a big teacup, it
445
00:23:50,040 --> 00:23:53,800
basically and.
It it's when are we measuring
446
00:23:53,800 --> 00:23:57,880
the mining hardware in teacups?
We have Americans listening and
447
00:23:57,880 --> 00:24:00,640
they use all these weird non
metric units so we should
448
00:24:00,800 --> 00:24:01,560
endorse.
Them a bit.
449
00:24:02,240 --> 00:24:05,680
Quarter teacup.
Sorry.
450
00:24:07,120 --> 00:24:10,480
Anyway, it's a very small device
that's kind of a fun way to
451
00:24:10,480 --> 00:24:12,560
hobby mine.
So it's not a way to make a lot
452
00:24:12,560 --> 00:24:15,640
of money, but it's it doesn't
use a lot of power either.
453
00:24:15,640 --> 00:24:17,320
You might use 15 watts or
something.
454
00:24:17,320 --> 00:24:19,040
So it's like a couple of LED
lights.
455
00:24:19,240 --> 00:24:21,080
It's the kind of thing that you
can have in your living room and
456
00:24:21,080 --> 00:24:25,480
brag about it.
However, inside of it is a
457
00:24:25,480 --> 00:24:29,840
single ASIC chip.
Where does that ASIC chip come
458
00:24:29,840 --> 00:24:32,400
from?
It comes from a bigger minor.
459
00:24:32,680 --> 00:24:35,680
So what basically happens if you
take a big minor?
460
00:24:36,240 --> 00:24:37,040
Those have.
How many?
461
00:24:37,040 --> 00:24:39,800
How many tea cups?
They have They are the size of
462
00:24:39,840 --> 00:24:43,120
two shoe boxes.
It's getting very complicated.
463
00:24:43,120 --> 00:24:46,200
Originally, like the S 9 was one
shoe box and then you, the newer
464
00:24:46,200 --> 00:24:48,280
miners are two shoe boxes and.
That well, how many?
465
00:24:48,280 --> 00:24:50,240
How many teacups in a shoe box?
I don't know.
466
00:24:50,440 --> 00:24:53,760
Anyway, So what happens is you
somebody takes those those big
467
00:24:53,760 --> 00:24:59,240
miners and carefully takes out
the individual chips or they can
468
00:24:59,240 --> 00:25:03,640
order the individual chips on
Ali Ali Baba, those kind of
469
00:25:03,640 --> 00:25:05,600
sites depending on the on the
spy chain.
470
00:25:06,760 --> 00:25:09,880
And then you take one of those
chips and you put them on a mini
471
00:25:09,880 --> 00:25:12,240
computer.
They're very simple, ESP 282
472
00:25:12,880 --> 00:25:15,600
mini computers.
And then there's an open source
473
00:25:15,600 --> 00:25:18,360
operating system that is able to
control the individual mining
474
00:25:18,360 --> 00:25:21,280
chip.
And so you end up with perhaps
475
00:25:21,840 --> 00:25:26,080
with the modern ones, I think
it's about 1 Tera hash compared
476
00:25:26,080 --> 00:25:29,520
to maybe 200 Tera hash in a
proper minor machine.
477
00:25:29,520 --> 00:25:31,520
So 1.
So 200 of bit axis is the
478
00:25:31,520 --> 00:25:35,240
equivalent of 1 double shoebox
professional mine.
479
00:25:35,480 --> 00:25:38,640
And imagine there's hundreds of
thousands of of normal mining
480
00:25:38,640 --> 00:25:41,680
machines in a big data centre
and you get a sense of the scale
481
00:25:41,680 --> 00:25:43,680
of of this mining.
Right.
482
00:25:45,680 --> 00:25:52,080
I guess the advantage would be
what I mean having an actual
483
00:25:52,080 --> 00:25:58,320
ASIC miner hardware thing that's
going to be loud and produces
484
00:25:58,320 --> 00:25:59,800
heat and all that kind of stuff,
right.
485
00:25:59,800 --> 00:26:01,000
Like that's not really
something.
486
00:26:01,360 --> 00:26:04,360
Yeah, this thing is very quiet.
It does need a fan, but it's a
487
00:26:04,360 --> 00:26:06,120
very small one.
Right.
488
00:26:06,120 --> 00:26:09,360
So like you said, you can just
why would you like?
489
00:26:09,360 --> 00:26:12,240
Is it just for people that
actually want to make money or
490
00:26:12,240 --> 00:26:14,600
is it more like for fun?
No, because for one thing,
491
00:26:14,600 --> 00:26:16,840
you're probably going to run
this thing at home and at home
492
00:26:16,840 --> 00:26:20,120
your electricity prices are
going to be too high even with a
493
00:26:20,120 --> 00:26:26,800
professional mining machine.
So, but it is, I think a way for
494
00:26:26,800 --> 00:26:30,600
people to become familiar with
mining at all because mining is
495
00:26:30,600 --> 00:26:33,200
so far away now from the end
user, because it's such an
496
00:26:33,200 --> 00:26:36,640
industrial project.
It's a very nice entry level
497
00:26:36,680 --> 00:26:38,400
device.
You can actually connect it to a
498
00:26:38,400 --> 00:26:42,800
pool and basically you see all
the moving parts to some open
499
00:26:42,800 --> 00:26:44,920
source software involved that
you can get, you know, that you
500
00:26:44,920 --> 00:26:46,800
can start playing with.
So hopefully it's a way to get
501
00:26:46,800 --> 00:26:48,120
more people interested in
mining.
502
00:26:48,880 --> 00:26:51,920
You could also see it as a
lottery system because your
503
00:26:51,920 --> 00:26:54,000
chances of winning are
absolutely tiny.
504
00:26:54,320 --> 00:26:58,200
But generally people will use
this in a solo mode where if the
505
00:26:58,200 --> 00:27:00,960
device finds a block, which
might happen once every, you
506
00:27:00,960 --> 00:27:04,600
know, million years, but that's
like, you know, every million
507
00:27:04,600 --> 00:27:05,320
it's.
Like a lottery.
508
00:27:06,400 --> 00:27:09,440
Yeah, it's like one in a million
every year per person, right?
509
00:27:09,440 --> 00:27:11,320
So somebody will find it not.
Exactly.
510
00:27:11,440 --> 00:27:12,920
It's like a lottery.
Yeah, it's like a lottery.
511
00:27:12,920 --> 00:27:18,080
And then you get, you know, the
full whatever, 3.25 BTC, which
512
00:27:18,080 --> 00:27:22,600
is nice.
Yeah, and I so.
513
00:27:23,160 --> 00:27:25,920
We're, we're hoping to see a
bottoms up, bottom up
514
00:27:25,920 --> 00:27:29,880
development here because mining
the, the machine, the making of
515
00:27:29,880 --> 00:27:34,240
these machines has been very
proprietary, very like far away,
516
00:27:34,560 --> 00:27:38,440
very close source.
And maybe somebody can figure
517
00:27:38,440 --> 00:27:40,480
out how to make these bid axes
bigger.
518
00:27:40,720 --> 00:27:44,160
So you start with a small
device, which is uneconomical,
519
00:27:44,680 --> 00:27:47,680
but there's already designs
where you put six of these ASICS
520
00:27:47,680 --> 00:27:50,600
chips in a single one that's
already a little bit better in
521
00:27:50,600 --> 00:27:54,200
terms of overhead.
And you could imagine going, you
522
00:27:54,200 --> 00:27:56,680
know, building it eventually
building a professional machine
523
00:27:56,680 --> 00:28:01,120
that's built on all these open
source standards, and then maybe
524
00:28:01,120 --> 00:28:02,960
those would be used by industry
eventually.
525
00:28:03,280 --> 00:28:05,560
The other reason why I
personally find them interesting
526
00:28:05,560 --> 00:28:09,360
is because it's plausible that
we can have stratum V2 on one of
527
00:28:09,360 --> 00:28:12,800
those devices and then start
testing start MV2 with it.
528
00:28:12,920 --> 00:28:16,160
Because start MV 2 has a bit of
a chicken egg problem where you
529
00:28:16,160 --> 00:28:18,680
know, there's, it's complicated,
so it's hard to test, but you
530
00:28:18,680 --> 00:28:20,920
want people to test it.
Otherwise the big, the big boys
531
00:28:20,920 --> 00:28:23,480
are not going to use it.
And so getting a group of
532
00:28:23,480 --> 00:28:26,240
hobbyists to use start MV 2
would be a very nice way to
533
00:28:26,240 --> 00:28:29,760
bootstrap this stuff.
OK.
534
00:28:32,680 --> 00:28:35,840
So, yeah, the the, the, the
reason why you mentioned it
535
00:28:36,000 --> 00:28:40,600
here, I guess it, you know, it
hopefully in a sort of ideal
536
00:28:40,600 --> 00:28:43,480
world, this is something that
catches on.
537
00:28:43,480 --> 00:28:46,280
And actually because there's
like, you know, at some point
538
00:28:46,280 --> 00:28:48,520
it's like millions of people
having one of these things in
539
00:28:48,520 --> 00:28:52,000
their home and then mining
hardware, you know, mining
540
00:28:52,000 --> 00:28:53,640
becomes very decentralized in
that way.
541
00:28:53,640 --> 00:28:55,280
It's sort of.
A well that that's another
542
00:28:55,280 --> 00:28:58,680
angle.
So, so we have the DIY hobby.
543
00:28:58,680 --> 00:29:01,880
Interesting that that could pay
off in the long run, more of of
544
00:29:01,880 --> 00:29:07,680
an R&D strategy, I guess.
Then there is the study said the
545
00:29:07,680 --> 00:29:10,200
lottery is solo mining.
And then there's also, if
546
00:29:10,200 --> 00:29:12,800
there's enough, it might
actually make a difference.
547
00:29:13,040 --> 00:29:15,360
Let's say all the big miners are
being censored.
548
00:29:15,760 --> 00:29:19,160
Now there's millions of these
tiny miners and as long as they
549
00:29:19,160 --> 00:29:22,640
can find one block, you know,
every couple weeks at least, you
550
00:29:22,640 --> 00:29:25,040
can still get your transactions
through sort of as a last
551
00:29:25,040 --> 00:29:27,560
bastion and, and very hard to
shut down because these things
552
00:29:27,560 --> 00:29:30,680
would be literally everywhere.
So, you know, you'd have to
553
00:29:30,680 --> 00:29:33,080
search people's houses for them
and they would be tiny and in
554
00:29:33,080 --> 00:29:35,520
quarters and that sort of stuff.
Yeah, yeah, they're.
555
00:29:35,520 --> 00:29:37,680
Probably too small for that, but
it's.
556
00:29:38,360 --> 00:29:41,880
That's assuming that these
blocks then wouldn't be reorged
557
00:29:41,880 --> 00:29:45,840
about exactly going deep into
the, you know, adversarial game
558
00:29:45,880 --> 00:29:47,640
theory here.
But at least it's another it's a
559
00:29:47,640 --> 00:29:50,680
nice extra line of defence.
Yeah, and because they're 100
560
00:29:50,680 --> 00:29:52,720
times smaller than a normal
minor, and they're typically
561
00:29:52,720 --> 00:29:55,600
only one in one place, you know,
they can be spread out very
562
00:29:55,600 --> 00:29:58,640
well.
Yeah, cool.
563
00:29:58,640 --> 00:30:00,760
Do you have one?
I do, yes.
564
00:30:01,680 --> 00:30:03,440
I'll I'll show it to you if.
You remind me.
565
00:30:03,640 --> 00:30:06,360
I think everyone, all our 17
listeners knew you had one
566
00:30:06,360 --> 00:30:07,720
because I think you mentioned
it.
567
00:30:07,720 --> 00:30:10,080
I probably.
Did I know in the Netherlands
568
00:30:10,080 --> 00:30:13,560
there's quite a few because
Satoshi Radio, the podcast sold
569
00:30:13,920 --> 00:30:18,280
200 of them and then had to
assemble them because that's the
570
00:30:18,280 --> 00:30:19,320
part we didn't mention they
also.
571
00:30:19,320 --> 00:30:22,960
Have their mining pool now
basically right or or they were
572
00:30:22,960 --> 00:30:25,160
on one of.
The one of the lowest latency
573
00:30:25,160 --> 00:30:27,360
mining pools in Europe or solar
pools.
574
00:30:28,160 --> 00:30:28,640
Right.
Yeah.
575
00:30:30,960 --> 00:30:32,280
Yeah, you can.
You can buy them.
576
00:30:32,920 --> 00:30:34,600
There's different shops that
sell them.
577
00:30:34,600 --> 00:30:37,040
You can also completely make it
from scratch from components.
578
00:30:38,800 --> 00:30:44,200
FIFA, La Revolution, whatever,
bottom up mining, let's go.
579
00:30:45,040 --> 00:30:51,960
OK.
OK then finally, sure there have
580
00:30:51,960 --> 00:30:57,000
been some developments in the P2
pool domain.
581
00:30:57,480 --> 00:31:02,600
Entrance.
Yeah, this is something I have
582
00:31:02,600 --> 00:31:05,920
not, you know, the Obi Wan
Konobi meme.
583
00:31:06,160 --> 00:31:08,960
That's a name I've not heard for
a long time.
584
00:31:09,680 --> 00:31:13,560
This was like a thing, I think
even when I got into Bitcoin,
585
00:31:13,560 --> 00:31:17,320
which was early 2013, I think
even then that was sort of
586
00:31:17,320 --> 00:31:19,440
already becoming kind of
outdated.
587
00:31:19,440 --> 00:31:24,080
Yeah, so P2 pool, but it has
existed for a long time and it
588
00:31:24,080 --> 00:31:27,640
might be coming back.
But more generally if you Google
589
00:31:28,120 --> 00:31:32,640
Braid pool or rat pool, you will
find similar concepts that have
590
00:31:32,640 --> 00:31:36,360
all been in the last two years
or so been resurfacing.
591
00:31:36,360 --> 00:31:38,320
So people are revisiting this
this concept so.
592
00:31:38,320 --> 00:31:40,120
What is?
What is the concept?
593
00:31:40,760 --> 00:31:45,200
Roughly the the concept is that
there is no pool in a very
594
00:31:45,200 --> 00:31:49,720
matrix style way.
Instead, you have you
595
00:31:49,720 --> 00:31:55,240
collaborate with people to yeah,
basically remove the pool from
596
00:31:55,240 --> 00:31:57,320
exist.
So so basically not need a pool
597
00:31:57,320 --> 00:31:58,440
at all.
So we we.
598
00:31:58,440 --> 00:32:01,440
Have to decentralize the pool.
Yes.
599
00:32:01,560 --> 00:32:04,440
Yeah, No, there what there's no
pool operator, let's put it that
600
00:32:04,440 --> 00:32:05,600
way.
That's that's the right way to
601
00:32:05,600 --> 00:32:07,520
put it, right?
There's no central operator.
602
00:32:07,520 --> 00:32:09,080
So the it's a decentralized
pool.
603
00:32:09,080 --> 00:32:13,480
Yeah, and the way you do that is
by creating a mini blockchain in
604
00:32:13,480 --> 00:32:16,320
a way.
The terms that are used are
605
00:32:16,320 --> 00:32:20,520
shares or weak blocks.
That, yeah, that's how pit pool
606
00:32:20,680 --> 00:32:22,920
always works.
That's that's that was the
607
00:32:22,920 --> 00:32:25,360
original design, right?
Yeah, there's variations on that
608
00:32:25,360 --> 00:32:27,480
design.
P2 pool indeed already worked
609
00:32:27,480 --> 00:32:30,200
that way.
So everybody, I think because I
610
00:32:30,280 --> 00:32:35,280
I never actually studied the P2
pool original that well, my
611
00:32:35,280 --> 00:32:39,600
understanding is that you would
have between real blocks, you
612
00:32:39,600 --> 00:32:44,480
would have a chain of basically
weak blocks and a weak block is
613
00:32:44,480 --> 00:32:46,120
just a block with a lower proof
of work.
614
00:32:48,560 --> 00:32:51,560
So I mean, that's how mining
pool always works basically.
615
00:32:51,560 --> 00:32:52,680
Well, that's how.
Shares work.
616
00:32:52,680 --> 00:32:54,480
Yeah, exactly.
In a mining pool, you submit a
617
00:32:54,480 --> 00:32:56,320
share to the pool to prove that
you're working.
618
00:32:56,320 --> 00:33:01,040
Yes, Now, but these shares are
independent, so one share does
619
00:33:01,040 --> 00:33:02,880
not point to another share.
Yeah.
620
00:33:02,880 --> 00:33:08,840
So, so to, to put that simply,
sort of normally, you know, when
621
00:33:08,840 --> 00:33:12,920
you're mining Bitcoin, it has to
be, you have to hit a certain
622
00:33:12,920 --> 00:33:15,320
difficulty target, right?
Which means that's the hash of
623
00:33:15,320 --> 00:33:19,040
the block has to be, or the hash
of the block header has to be,
624
00:33:19,040 --> 00:33:21,440
has to start with some number of
zeros.
625
00:33:21,440 --> 00:33:23,440
And then higher difficulty means
more zeros.
626
00:33:23,840 --> 00:33:29,320
And then these weak blocks have
require fewer zeros, so it's
627
00:33:29,320 --> 00:33:32,080
easier to find them.
And then they're not a valid
628
00:33:32,240 --> 00:33:35,480
block for the Bitcoin
blockchain, but they were still
629
00:33:35,480 --> 00:33:38,640
kind of hard to find.
So it still proves to the mining
630
00:33:38,640 --> 00:33:40,520
pool that you are at least
trying.
631
00:33:40,560 --> 00:33:42,760
Yeah, exactly.
So you're using proof of work,
632
00:33:43,320 --> 00:33:44,640
that's already how pools work,
right?
633
00:33:44,640 --> 00:33:46,960
That's what shares are you.
You make one of these weaker
634
00:33:46,960 --> 00:33:49,800
blocks and that proves to the
pool that you've done an amount
635
00:33:49,800 --> 00:33:51,760
of work and they will take that
into account.
636
00:33:51,760 --> 00:33:54,960
Now in P2 pool, it's not the
pool that takes it into account,
637
00:33:54,960 --> 00:33:57,240
just the other miners in your
pool that take it into into
638
00:33:57,240 --> 00:33:59,760
account.
Well, specifically, but correct
639
00:33:59,760 --> 00:34:02,200
me if I'm wrong.
So the idea is basically that
640
00:34:02,840 --> 00:34:08,320
you are these, these pool pools,
No, sorry, these miners, you
641
00:34:08,320 --> 00:34:11,360
know, they are trying to find a
Bitcoin block, a valid Bitcoin
642
00:34:11,360 --> 00:34:15,920
block, but they're also doing
that by hashing on top of the
643
00:34:15,920 --> 00:34:18,960
previous weak block from another
line there in the pool.
644
00:34:19,000 --> 00:34:21,239
And so that's the difference.
Whereas in a pool, in a normal
645
00:34:21,239 --> 00:34:23,440
pool shares are independent
things.
646
00:34:23,760 --> 00:34:26,560
You just submit it and it's it's
validated based on itself.
647
00:34:27,000 --> 00:34:30,400
What you're doing this B2 pool
type design is you have a chain
648
00:34:30,400 --> 00:34:32,679
of weak blocks.
So every weak block points to a
649
00:34:32,679 --> 00:34:35,760
previous weak block and and you
would have a much higher block
650
00:34:35,760 --> 00:34:37,560
frequency.
So the weak block frequency
651
00:34:37,560 --> 00:34:42,920
might be ones every 10 seconds.
So you'd have about 60 weak
652
00:34:42,920 --> 00:34:45,120
blocks in the time that you have
a normal block.
653
00:34:45,639 --> 00:34:49,760
Now this the way you do this is
by actually adding kind of
654
00:34:50,000 --> 00:34:51,880
adding a blockchain on top of a
blockchain.
655
00:34:52,199 --> 00:34:54,679
Yeah, the mining pool itself has
an internal blockchain.
656
00:34:54,679 --> 00:34:57,480
Yeah, the internal blockchain.
Between each actual Bitcoin
657
00:34:57,480 --> 00:34:59,160
block.
So the internal blockchain is
658
00:34:59,160 --> 00:35:04,720
basically a weak block plus a
reference to the previous thing
659
00:35:04,720 --> 00:35:05,520
in that chain.
Yeah.
660
00:35:06,320 --> 00:35:09,760
And then you as a miner are
supposed to always build on top
661
00:35:09,760 --> 00:35:13,360
of the last the last week block.
You're not supposed to ignore
662
00:35:13,360 --> 00:35:15,960
the last week block.
So I think the problem with this
663
00:35:15,960 --> 00:35:20,000
at the time, at least as I
remember it, and which also just
664
00:35:20,000 --> 00:35:30,000
sounds right, is that you now
get extra costs by mining on a
665
00:35:30,000 --> 00:35:32,440
PITA pool.
Namely, you have real work
666
00:35:32,440 --> 00:35:35,760
risks, so sometimes you will
mind a block that's that won't
667
00:35:35,760 --> 00:35:37,440
make it into the internal
blockchain.
668
00:35:37,840 --> 00:35:41,240
Plus there's extra latency.
Well, no, that's still real.
669
00:35:41,520 --> 00:35:44,480
You have still still risk.
So yeah, or or or.
670
00:35:44,480 --> 00:35:46,800
Still risk or for risk, Yeah,
that's that's what I mean
671
00:35:46,800 --> 00:35:49,880
actually.
So I guess that was sort of the
672
00:35:49,880 --> 00:35:52,320
main problem there's.
I think yeah, I think there were
673
00:35:52,320 --> 00:35:55,280
at least several problems. 1 is
what you just described.
674
00:35:55,280 --> 00:35:58,560
Because this frequency of blocks
is higher, you're more likely to
675
00:35:58,560 --> 00:36:01,160
produce a block that just
doesn't make it to your peers on
676
00:36:01,160 --> 00:36:04,160
time well.
And in in a normal mining pool
677
00:36:04,240 --> 00:36:06,800
it doesn't have to make it to
your peers on time.
678
00:36:06,800 --> 00:36:08,800
No, because it only goes to the
centralized pool sector.
679
00:36:08,800 --> 00:36:11,160
So there are no orphans in that
sense.
680
00:36:11,200 --> 00:36:12,880
Exactly.
So that's that's an extra
681
00:36:13,760 --> 00:36:16,720
problem introduced by P2 pool
and which makes it maybe, you
682
00:36:16,720 --> 00:36:19,720
know, economically, yeah.
Another thing is that has to do
683
00:36:19,720 --> 00:36:22,360
with the Coinbase payout.
I think we'll we'll cover that
684
00:36:22,360 --> 00:36:24,320
later.
Or go for it now.
685
00:36:24,440 --> 00:36:26,400
Yeah, the Coinbase.
We're here now.
686
00:36:26,400 --> 00:36:29,360
We're normally according now.
Might as well explain it now.
687
00:36:29,440 --> 00:36:31,160
Yeah.
So normally a pool would simply
688
00:36:31,160 --> 00:36:33,120
you would have an account with
the pool and they would
689
00:36:33,120 --> 00:36:36,840
occasionally pay you out on
chain, but not every time.
690
00:36:37,160 --> 00:36:40,480
And the problem with this design
is that everybody, because it's
691
00:36:40,480 --> 00:36:42,840
decentralized, everybody wants
to make sure they're getting
692
00:36:42,840 --> 00:36:44,640
paid.
And so your Coinbase transaction
693
00:36:44,640 --> 00:36:49,800
might have a lot of outputs,
which uses space that cannot be
694
00:36:49,800 --> 00:36:53,440
used to, you know, for to mine
actually profitable
695
00:36:53,440 --> 00:36:54,920
transactions.
So especially in a world with
696
00:36:54,920 --> 00:36:57,320
high fees, there's an
opportunity cost there.
697
00:36:57,600 --> 00:36:59,960
Now, it's not necessarily too
bad, especially with Taproot,
698
00:36:59,960 --> 00:37:01,640
because Taproot outputs are
pretty small.
699
00:37:02,400 --> 00:37:05,120
So you can fit a couple hundreds
in there without, you know, too
700
00:37:05,120 --> 00:37:09,520
much sacrifice.
But there was a bit of a snatch
701
00:37:09,800 --> 00:37:14,440
that the Ant miner firmware at
the time that ran on the ASICS
702
00:37:14,760 --> 00:37:17,000
could not handle more than 19
outputs.
703
00:37:18,080 --> 00:37:20,480
And ocean pool has run into the
same problem.
704
00:37:20,480 --> 00:37:24,120
I think we've mentioned that in
in the earlier broadcast that,
705
00:37:24,120 --> 00:37:27,040
but that can be solved by
running sane firmware on the
706
00:37:27,040 --> 00:37:30,120
device like brains OS or some
other custom firmware.
707
00:37:30,120 --> 00:37:31,920
So that problem has kind of been
solved.
708
00:37:32,160 --> 00:37:34,720
But, you know, by the time the
problem was solved, P2 pool was
709
00:37:34,720 --> 00:37:38,560
already dead.
The problem about stale blocks,
710
00:37:39,520 --> 00:37:42,440
you know, in the meantime, we
have seen networks like Ethereum
711
00:37:42,840 --> 00:37:46,720
introduce uncle blocks and ways
of accounting for these stale
712
00:37:46,720 --> 00:37:49,200
blocks.
So you would basically, if
713
00:37:49,200 --> 00:37:51,920
you're nice enough to point to
one of these blocks that was
714
00:37:51,920 --> 00:37:56,400
abandoned, you get 20% of it and
the original guy gets 80% of it.
715
00:37:56,840 --> 00:38:00,000
So it's a way to incentivize you
in pointing to other blocks.
716
00:38:00,160 --> 00:38:03,160
And there's been a lot of
academic research around it that
717
00:38:03,520 --> 00:38:05,680
suggests that at least for the
purpose of running a mining
718
00:38:05,680 --> 00:38:07,560
pool, it might be quite useful,
right?
719
00:38:07,560 --> 00:38:10,160
You you won't want to do it on
Bitcoin itself, but for a pool
720
00:38:10,160 --> 00:38:12,840
it might be fine.
Another another thing that
721
00:38:12,840 --> 00:38:14,440
hasn't.
Something good coming out of
722
00:38:14,440 --> 00:38:18,080
Ethereum that Bitcoin could use.
Yeah, and another place what's
723
00:38:18,080 --> 00:38:20,960
interesting to look at is Monero
still has P2 pool.
724
00:38:20,960 --> 00:38:23,880
Basically they copied the idea
and they're still running it and
725
00:38:23,880 --> 00:38:26,680
it's being actively used.
I believe they also have 10
726
00:38:26,680 --> 00:38:29,040
second block times.
As far as I know, Monero always
727
00:38:29,040 --> 00:38:32,520
runs behind Tor and they don't
barely have any of these
728
00:38:32,680 --> 00:38:36,320
orphans, uncles, what you want
to call it, which suggests that
729
00:38:36,320 --> 00:38:40,760
the latency problem, you know,
is, is very solvable, maybe just
730
00:38:40,760 --> 00:38:44,920
by a slightly better technology
that we have now in Bitcoin.
731
00:38:44,920 --> 00:38:48,320
We also have compact blocks now,
which are a way we've, I think
732
00:38:48,320 --> 00:38:50,400
we've covered that in an earlier
episode, like a way to very
733
00:38:50,400 --> 00:38:52,560
efficiently broadcast a block
without sending the whole 4
734
00:38:52,560 --> 00:38:55,760
megabytes using the fact that
everybody has the same and pool.
735
00:38:56,720 --> 00:38:58,720
Perhaps that can be used as
well.
736
00:38:58,920 --> 00:39:01,960
So in other words, it, it, it
is, I think it's worth looking
737
00:39:01,960 --> 00:39:05,280
at these concepts again using
some of the more modern tooling
738
00:39:05,280 --> 00:39:06,840
that we have and see if we can
revive them.
739
00:39:07,720 --> 00:39:10,160
Because it does take the, you
know, it, it removes the
740
00:39:10,160 --> 00:39:12,120
centralized pool.
So it's a very good feature.
741
00:39:13,480 --> 00:39:22,720
Another problem, see well about
this number of outputs that go
742
00:39:22,720 --> 00:39:24,920
into a coin base because every
participant wants his own
743
00:39:24,920 --> 00:39:27,280
output.
There are ideas floating around
744
00:39:27,280 --> 00:39:30,360
that to fix that through
lightning or through atomic
745
00:39:30,360 --> 00:39:33,320
swaps.
But basically we've already got
746
00:39:33,320 --> 00:39:37,080
this blockchain on top of a lock
chain and in P2 pool.
747
00:39:37,080 --> 00:39:39,480
This blockchain was just
pointing to the previous one,
748
00:39:39,480 --> 00:39:42,040
wasn't anything else.
But you could make this
749
00:39:42,040 --> 00:39:44,560
blockchain a bit more fancy by
having actual transactions in
750
00:39:44,560 --> 00:39:48,240
it, a very small number, and
those transactions would be 1
751
00:39:48,240 --> 00:39:51,600
minor saying to the other minor.
OK, here's an atomic swap.
752
00:39:51,600 --> 00:39:52,840
Would you like to take my
reward?
753
00:39:53,360 --> 00:39:56,720
So as a small miner you would
get paid on lightning by a big
754
00:39:56,720 --> 00:40:00,520
miner and in exchange for that
inside this fake blockchain you
755
00:40:00,520 --> 00:40:03,600
give up your coin and and the
minor can increase the bigger
756
00:40:03,600 --> 00:40:09,880
miner can increase their coin.
Here, you've really lost me.
757
00:40:09,880 --> 00:40:12,480
Wait, you're making transactions
on the internal?
758
00:40:13,280 --> 00:40:16,080
On the fake blockchain.
On the fake what?
759
00:40:16,560 --> 00:40:20,120
How does anyone get If it's a
fake blockchain, how does anyone
760
00:40:20,120 --> 00:40:21,920
get there?
I I just lost.
761
00:40:22,080 --> 00:40:23,640
I just lost you.
Yeah.
762
00:40:23,640 --> 00:40:26,720
So ultimately the actual money
happens in the Coinbase
763
00:40:26,720 --> 00:40:28,760
transaction, right?
And and you're making weak
764
00:40:28,760 --> 00:40:31,360
blocks with this Coinbase
transaction that has hundreds of
765
00:40:31,360 --> 00:40:33,800
outputs.
And every time a weak block is
766
00:40:33,800 --> 00:40:35,480
found, nothing happens in the
real blockchain.
767
00:40:36,080 --> 00:40:39,520
But you can shuffle around how
that weak block is organized
768
00:40:40,200 --> 00:40:43,360
and, and so you can while week
blocks are being found, you can
769
00:40:43,360 --> 00:40:46,960
do a lightning atomic swap with
somebody to say, OK, I will
770
00:40:46,960 --> 00:40:48,960
remove my output from the next
week block.
771
00:40:48,960 --> 00:40:52,080
And in exchange for that, you
get to have your output in the
772
00:40:52,080 --> 00:40:54,480
in the next week block.
So in other words, you, you, the
773
00:40:54,480 --> 00:40:59,000
big mining miner has one Bitcoin
in the output and now they have
774
00:40:59,000 --> 00:41:02,800
1.1 Bitcoin and you give up your
0.1 Bitcoin and they pay you on
775
00:41:02,800 --> 00:41:04,840
Lightning with real Bitcoin.
Now there has to be some
776
00:41:04,840 --> 00:41:07,880
discount because they're taking
a risk, but you can imagine
777
00:41:08,040 --> 00:41:10,000
figuring out the correct price
for these kind of things.
778
00:41:11,440 --> 00:41:15,000
So, so you're basically trading
being on chain right now versus
779
00:41:15,080 --> 00:41:18,360
having lightning liquidity right
now or being on chain maybe one
780
00:41:18,360 --> 00:41:22,360
day in the future versus having
lightning money right now?
781
00:41:24,160 --> 00:41:26,160
OK.
Those those kind of techniques
782
00:41:26,160 --> 00:41:26,640
could be.
Used.
783
00:41:26,640 --> 00:41:28,720
I'm not going to ask you to
explain that again.
784
00:41:29,040 --> 00:41:33,320
I am going to listen back to
this episode again later and see
785
00:41:33,320 --> 00:41:35,320
if I understand it because this
sounds I.
786
00:41:35,320 --> 00:41:37,600
I don't know, I just don't get
it yet, but that's fine.
787
00:41:37,600 --> 00:41:40,480
But you can already, we know how
to swap between altcoins and
788
00:41:40,480 --> 00:41:43,320
Bitcoin, Yes, right.
And this is essentially this,
789
00:41:43,320 --> 00:41:45,160
this chain inside the pool is an
altcoin.
790
00:41:45,160 --> 00:41:48,960
It's just the altcoin will
eventually materialize into
791
00:41:48,960 --> 00:41:51,040
Bitcoin as real blocks are
found.
792
00:41:51,800 --> 00:41:54,520
OK, right.
Oh, yeah, OK.
793
00:41:54,520 --> 00:41:56,960
I think I get it now.
Oh yeah, I I sort of.
794
00:41:57,920 --> 00:41:59,920
But the question then is how
complicated do you want to make?
795
00:41:59,920 --> 00:42:01,880
This blockchain, Yes, yes, yes.
OK.
796
00:42:01,920 --> 00:42:08,120
I think, well, they say you all,
they say you only really
797
00:42:08,120 --> 00:42:10,320
understand it.
And I tend to believe that once
798
00:42:10,320 --> 00:42:13,560
you can explain it yourself.
And I don't think I can do that
799
00:42:13,880 --> 00:42:16,680
right now, but I think I at
least sort of intuitively now
800
00:42:16,680 --> 00:42:18,400
get this idea.
Yeah.
801
00:42:18,560 --> 00:42:20,520
You're you're editing the
Coinbase.
802
00:42:21,320 --> 00:42:24,480
You're editing, you're editing
the future Coinbase and and sort
803
00:42:24,480 --> 00:42:27,080
of in that same vein, there is a
proposal to use E cash.
804
00:42:27,080 --> 00:42:31,880
So the shoe style E cash to when
when you're submitting mining
805
00:42:31,880 --> 00:42:35,200
shares or these weak blocks.
I think this one is, is not
806
00:42:35,360 --> 00:42:37,440
related to P2 pool.
It's actually for a normal pool
807
00:42:37,440 --> 00:42:41,320
again, but there instead of
instead of just shares that are
808
00:42:41,320 --> 00:42:43,440
just, you know, a thing that the
pool registers for you.
809
00:42:43,440 --> 00:42:45,840
You actually make E cash tokens
that are tradeable.
810
00:42:46,480 --> 00:42:48,960
And then you can do all sorts of
fancy things that you can
811
00:42:48,960 --> 00:42:52,600
because you you can now monetize
your fee revenue or your mining
812
00:42:52,600 --> 00:42:55,320
revenue before real block is
found and you are no longer
813
00:42:55,320 --> 00:42:57,040
depending on the pool to do that
for you.
814
00:42:57,480 --> 00:43:02,000
So these are all ways to kind of
take like if it covered in the
815
00:43:02,000 --> 00:43:04,520
episode, you can take the
transaction selection from the
816
00:43:04,520 --> 00:43:08,080
pool, but you can also take some
of the payout distribution work
817
00:43:08,080 --> 00:43:09,960
from the pool.
And so you give these pools
818
00:43:09,960 --> 00:43:12,080
might be big, but they would
have less and less actual
819
00:43:12,080 --> 00:43:15,200
functions to the point where
they're just not an interesting
820
00:43:15,200 --> 00:43:17,640
target anymore.
OK, so a.
821
00:43:17,840 --> 00:43:20,120
Lot of this is moon math and
fancy future stuff.
822
00:43:20,120 --> 00:43:23,680
Yeah, this is still very
theoretical for the most part,
823
00:43:23,680 --> 00:43:25,880
right?
Like, I mean, yeah, these are.
824
00:43:25,880 --> 00:43:27,480
Proposals floating around
mailing lists.
825
00:43:27,480 --> 00:43:30,480
Some prototypes have been
written, but I think it's a
826
00:43:30,480 --> 00:43:33,480
promising direction that needs
more attention than strategic
827
00:43:33,480 --> 00:43:38,480
Bitcoin reserves.
Aiming to that, yeah, this this,
828
00:43:39,240 --> 00:43:42,840
this would be really important
if this if if something like
829
00:43:42,840 --> 00:43:48,040
Peter Pool can be realized again
or revived or yeah, that's that
830
00:43:48,040 --> 00:43:50,720
would be one of the best
improvements to Bitcoin that I
831
00:43:50,720 --> 00:43:54,920
can think of for sure.
But so right now this is still
832
00:43:55,120 --> 00:43:56,800
in the theoretical phase for the
most part.
833
00:43:56,800 --> 00:43:59,560
I mean, I guess Peter Poole
might still be out there, sort
834
00:43:59,560 --> 00:44:01,880
of kind of.
No, I think the last release was
835
00:44:01,880 --> 00:44:04,640
in 2017, right after Segwayed,
and since then there's been no
836
00:44:04,640 --> 00:44:07,160
code development.
OK, and what about these end
837
00:44:07,160 --> 00:44:09,680
friends?
Like a ton of them are like life
838
00:44:09,680 --> 00:44:11,080
and mining.
Block Well, the things we've
839
00:44:11,080 --> 00:44:14,680
just the things we've just been
describing are sort of a mix
840
00:44:14,680 --> 00:44:18,680
between these three proposals
that I'm confusing and that also
841
00:44:18,680 --> 00:44:23,840
are copying from each other.
So P the P2 pool revival might
842
00:44:23,840 --> 00:44:26,480
actually have things from braid
pool in it, etcetera.
843
00:44:26,480 --> 00:44:28,760
So it's, it's a bit of a, you
know, we'll, we'll see what the
844
00:44:28,760 --> 00:44:30,080
eventual name of this thing will
be.
845
00:44:31,600 --> 00:44:33,520
But I'm, yeah, I'm seeing things
brewing there.
846
00:44:33,520 --> 00:44:37,480
The the combination of the, the
hard, the hardware, the new
847
00:44:37,480 --> 00:44:39,640
pools that are trying different
models and then these
848
00:44:39,640 --> 00:44:44,040
decentralized pool ideas.
Yeah, I was looking is I think
849
00:44:44,040 --> 00:44:45,680
there's a chance that we'll make
it.
850
00:44:47,560 --> 00:44:49,000
We just don't know how much time
there is, right?
851
00:44:49,000 --> 00:44:51,080
We don't know if we can keep
experimenting with this stuff
852
00:44:51,080 --> 00:44:53,880
for like the another 20 years or
whether in two months the whole
853
00:44:53,880 --> 00:44:56,640
thing comes to an end.
And if it's in two months, then
854
00:44:56,640 --> 00:45:01,440
we were too late.
Yeah, yeah.
855
00:45:01,440 --> 00:45:06,320
Well, I mean, arguably even if
censorship would start to
856
00:45:06,320 --> 00:45:11,560
happen, doesn't mean that
immediately Bitcoin is killed,
857
00:45:11,560 --> 00:45:13,720
right?
Like you can technically still
858
00:45:13,720 --> 00:45:15,400
keep working on these solutions
and.
859
00:45:15,560 --> 00:45:18,440
Yeah, I mean, one thing about
censorship is that it is an
860
00:45:18,440 --> 00:45:21,320
active attack.
So the censorship needs to keep
861
00:45:21,320 --> 00:45:23,240
happening.
As soon as it stops happening,
862
00:45:23,240 --> 00:45:24,840
it's like a floodgate that
opens.
863
00:45:25,360 --> 00:45:31,040
So in that sense, it's sort of
reversible damage, yeah, but
864
00:45:31,040 --> 00:45:33,080
it's still.
It it would be really bad.
865
00:45:33,080 --> 00:45:34,640
It would they put us in a very
different.
866
00:45:34,640 --> 00:45:37,640
World, I would say it's, you
know, well like you said, we
867
00:45:37,640 --> 00:45:39,600
don't know but I know we don't
know if this is going to happen
868
00:45:39,600 --> 00:45:43,000
in two months or 20 years, but.
On an optimistic note, there are
869
00:45:43,000 --> 00:45:45,360
lots of other cryptocurrencies
out there that are much easier
870
00:45:45,360 --> 00:45:47,600
to censor.
Like I'm not even going to name
871
00:45:47,600 --> 00:45:51,040
names much easier to censor, and
yet they are not being censored.
872
00:45:52,360 --> 00:45:54,440
So there's, you know, there's
the possibility of being
873
00:45:54,440 --> 00:45:56,840
censored and there is a
willingness to do the censoring.
874
00:45:57,120 --> 00:46:00,280
And I think the latter isn't
there at the moment because
875
00:46:00,280 --> 00:46:03,080
exchanges are just a much easier
place to say, hey, why don't you
876
00:46:03,080 --> 00:46:06,560
freeze those coins?
Yeah, but also there's kind of
877
00:46:06,560 --> 00:46:10,640
no point in censoring some
smaller coin if people can just
878
00:46:10,640 --> 00:46:11,920
keep using the bigger coin,
right?
879
00:46:11,920 --> 00:46:13,720
Like you either do to
censorship, right?
880
00:46:13,720 --> 00:46:15,440
Or.
Yeah, but by some smaller coin
881
00:46:15,440 --> 00:46:18,120
you mean Tether?
Oh, I wasn't going.
882
00:46:18,120 --> 00:46:20,560
To name names, but like that,
that's one of those things that.
883
00:46:20,560 --> 00:46:26,560
Could yeah, it's it's tether has
been surprisingly I.
884
00:46:27,680 --> 00:46:29,400
Mean it.
It does freeze coins.
885
00:46:29,400 --> 00:46:32,320
So in this in a sense there is
some such happening, but not at
886
00:46:32,320 --> 00:46:34,320
the kind of scale that.
That is true that.
887
00:46:34,320 --> 00:46:36,720
Would happen on an exchange for
example, where you really have
888
00:46:36,720 --> 00:46:39,120
to KYC every transaction before
you can even make it.
889
00:46:39,720 --> 00:46:43,120
Yeah, OK.
Was that it?
890
00:46:43,920 --> 00:46:46,000
I think we've covered most of
the things that were on the list
891
00:46:46,000 --> 00:46:48,320
and we've covered a lot.
Great.
892
00:46:48,480 --> 00:46:53,680
So the future of mining is still
kind of hopeful potentially.
893
00:46:53,800 --> 00:46:55,680
I think sure, that's what we're
going for.
894
00:46:55,760 --> 00:46:57,560
That's that's what we're going
with, not.
895
00:46:57,560 --> 00:47:01,000
That yet and thank you for
listening to Bitcoin.
896
00:47:01,160 --> 00:47:01,920
Explain.