Full Transcript for Bitcoin's 3 Biggest Challenges | NEHA NARULA

change the way money works. Convinced him and then started the digital currency initiative at MIT. 27 00:02:05,100 --> 00:02:33,900 So Jeremy is actually the progenitor of this. I wasn't there, but I kind of give him credit for this. Yes. I mean, obviously, you know, he was a student. He had to get a lot of people on board. Good for him. Yeah. But I think he got the ball rolling. I want to give him credit for that. So, you know, did a lot to bring Bitcoin to MIT and to, I guess, orange pill a lot of people that we didn't use this that term at the time. And what was also happening simultaneously was there was the Bitcoin Foundation. So I don't know if you remember the Bitcoin Foundation. 28 00:02:34,800 --> 00:02:37,460 I've heard about it. I wasn't there when it was relevant. 29 00:02:37,900 --> 00:02:46,360 Yeah, me neither. But underwent a lot of drama, you know, various like directors getting elected and getting pushed out and things like that. 30 00:02:46,460 --> 00:02:49,100 And basically the Bitcoin Foundation kind of collapsed. 31 00:02:49,100 --> 00:02:54,920 What was the original, just for folks who might not be familiar, like who started the Bitcoin Foundation? 32 00:02:55,200 --> 00:02:56,080 What was the original goal? 33 00:02:56,200 --> 00:02:59,080 I don't even know. I don't know. I didn't. I wasn't actually there. 34 00:02:59,160 --> 00:03:02,860 I know Patrick Merck was the executive director at the time. 35 00:03:02,860 --> 00:03:05,480 And was the idea to fund Bitcoin development? 36 00:03:05,620 --> 00:03:10,040 Yes. The idea was that it was there to work on Bitcoin to fund. 37 00:03:10,160 --> 00:03:12,920 So they employed three Bitcoin developers at the time. 38 00:03:13,240 --> 00:03:17,240 Gavin Andreessen, who was the lead maintainer, you know, the one Satoshi sort of passed the reins to. 39 00:03:17,760 --> 00:03:23,240 Vladimir Vanderlaan, who became the lead maintainer after Gavin and Corey Fields. 40 00:03:23,560 --> 00:03:25,600 So they were working for the Bitcoin Foundation. 41 00:03:26,600 --> 00:03:34,060 The Bitcoin Foundation, like, raised funding to do this and to also, I think, kind of be a voice in D.C. a little bit. 42 00:03:34,100 --> 00:03:34,320 Okay. 43 00:03:34,320 --> 00:03:35,840 You know, to kind of, like, advocate for Bitcoin. 44 00:03:36,040 --> 00:03:36,580 Like, politically. 45 00:03:36,920 --> 00:03:37,940 I think so, yeah. 46 00:03:38,040 --> 00:03:39,580 I mean, like I said, this was before my time. 47 00:03:39,880 --> 00:03:40,960 When was this? 48 00:03:41,280 --> 00:03:41,720 2014? 49 00:03:42,420 --> 00:03:44,580 Yeah, 2014 was around when it collapsed. 50 00:03:44,580 --> 00:03:49,100 And so, again, I wasn't there firsthand. 51 00:03:49,240 --> 00:03:50,400 I'm telling the story secondhand. 52 00:03:50,400 --> 00:03:59,740 But, you know, what happened was they were like, oh, no, these three developers who are critical to the success of the Bitcoin open source project are going to be out

of a job. 53 00:03:59,800 --> 00:04:00,220 What do we do? 54 00:04:00,660 --> 00:04:06,620 And so a group of people were kind of trying to figure out, could we get some universities together to kind of like support them? 55 00:04:07,260 --> 00:04:10,000 Long story short, none of the other universities really worked out. 56 00:04:10,120 --> 00:04:11,060 We just hired them at MIT. 57 00:04:11,500 --> 00:04:14,360 So that's what we started the digital currency initiative around. 58 00:04:14,540 --> 00:04:18,840 So those three Bitcoin Foundation developers came to MIT. 59 00:04:19,220 --> 00:04:19,440 Yes. 60 00:04:19,440 --> 00:04:22,640 And we don't know what do we know why the Bitcoin Foundation collapsed just out of curiosity? 61 00:04:22,820 --> 00:04:25,800 I think you read about it online. I don't want to like go into the details. 62 00:04:27,180 --> 00:04:28,180 We'll avoid the drama. 63 00:04:28,200 --> 00:04:32,380 There are a lot of characters who are involved. You can you can you can go have a yeah, you can go look that stuff. 64 00:04:32,400 --> 00:04:32,900 Sounds juicy. 65 00:04:33,120 --> 00:04:36,700 Yeah. I don't think I'm the right person to talk about it, but maybe you should do an episode on it. 66 00:04:37,020 --> 00:04:44,380 And so anyway, so they came to MIT. MIT has this like MIT is a really unique place. Right. 67 00:04:44,380 --> 00:05:08,480 So it's an academic university, but it's very technical. And the motto of MIT is mens et manas. So mind and hand. OK. And what that means is that, like, it's not just about learning the academic theory. It's not just about, like, writing papers. People get their hands dirty. They build stuff. They do stuff. And there is a rich history of open source software at MIT. 68 00:05:09,100 --> 00:05:12,400 Richard Stallman was like a character who was around for a long time. 69 00:05:12,520 --> 00:05:14,620 The Kerberos Project was based out of MIT. 70 00:05:15,340 --> 00:05:18,560 W3C, the World Wide Web Consortium, is based out of MIT. 71 00:05:19,320 --> 00:05:27,920 So MIT kind of has this like storied history of like not just being the academic research institution, but like actually supporting these open source projects. 72 00:05:27,920 --> 00:05:30,660 So it wasn't totally crazy. 73 00:05:30,980 --> 00:05:31,860 That's all I'm saying. 74 00:05:31,920 --> 00:05:32,640 It wasn't totally crazy. 75 00:05:32,800 --> 00:05:33,560 It made sense. 76 00:05:33,700 --> 00:05:33,820 Yeah. 77 00:05:33,980 --> 00:05:36,240 I mean, it was like it was like it was a nice story. 78 00:05:36,320 --> 00:05:37,920 So they came to MIT, part of the Media Lab. 79 00:05:38,480 --> 00:05:39,580 But not really local. 80 00:05:40,720 --> 00:05:42,100 You know, they were in different parts of the world. 81 00:05:42,340 --> 00:05:46,140 And then, you know, it wasn't until a year later that I joined the DCI. 82 00:05:46,220 --> 00:05:54,640 But the idea was that DCI was going to be a place that would bring together

researchers, open source developers, be a little bit interdisciplinary. 83 00:05:55,160 --> 00:05:56,120 So we were in the Media Lab. 84 00:05:56,200 --> 00:05:57,940 We're not in the computer science department. 85 00:05:58,100 --> 00:06:01,040 And the Media Lab, a lot of people are very confused about it because of the name. 86 00:06:01,040 --> 00:06:02,060 They're like, what does that mean? 87 00:06:02,200 --> 00:06:02,600 Is it marketing? 88 00:06:02,880 --> 00:06:03,620 Is it like newspapers? 89 00:06:03,840 --> 00:06:03,980 No. 90 00:06:04,380 --> 00:06:06,120 So the Media Lab was founded 40 years ago. 91 00:06:06,120 --> 00:06:12,960 and it was really where the people who founded the Media Lab really saw the internet coming, 92 00:06:13,120 --> 00:06:17,660 saw technology coming, and were like, this is going to change the way so many industries and 93 00:06:17,660 --> 00:06:23,440 so many businesses work, and we want to be at the epicenter of that. And so a lot of really 94 00:06:23,440 --> 00:06:28,200 interesting, crazy technologies have come out of the Media Lab. E-Ink, like in your Kindle, 95 00:06:28,300 --> 00:06:35,240 was developed at the Media Lab. Guitar Hero, like the game. It's a place where art and design 96 00:06:35,240 --> 00:06:42,120 and hardware and science and tech just like mix in like really interesting creative ways. 97 00:06:42,240 --> 00:06:46,120 So the way I like to describe it is like down the hall from me on the third floor of the 98 00:06:46,120 --> 00:06:48,540 Media Lab is a group called Opera of the Future. 99 00:06:49,080 --> 00:06:51,940 They write operas like that's what they do. 100 00:06:52,060 --> 00:06:56,780 Like really interesting technology forward, like cool operas, but like operas. 101 00:06:56,780 --> 00:07:01,540 So, you know, there's someone who's like invented a bra that can detect breast cancer. 102 00:07:01,680 --> 00:07:03,160 It's like a creation lab. 103 00:07:03,280 --> 00:07:03,500 Yeah. 104 00:07:03,500 --> 00:07:08,380 But like really hardcore science and like art, like really real stuff at the core of it. 105 00:07:08,480 --> 00:07:14,200 So, you know, not the computer science department, not the economics department, not the finance department. 106 00:07:14,380 --> 00:07:14,940 It's multidisciplinary. 107 00:07:14,940 --> 00:07:15,840 It's multidisciplinary. 108 00:07:16,260 --> 00:07:17,080 That's probably the key. 109 00:07:17,360 --> 00:07:22,780 And very connected to humans, which I think is so important, like really creating technology for the benefit of humans. 110 00:07:23,260 --> 00:07:26,060 And so I feel like it's a great fit for what we do. 111 00:07:26,380 --> 00:07:29,580 Makes us very different than other universities who are working in the space. 112 00:07:30,240 --> 00:07:34,480 And also, I mean, I think, you know, you understand we really started in Bitcoin. 113 00:07:34,480 --> 00:07:45,240 Like, you know, there was an interest in filling in the foundations of the

underlying field, which is like if Bitcoin were to disappear tomorrow, I would still be interested in this technology. 114 00:07:45,440 --> 00:07:57,220 I would still be interested in the future of money and, you know, changing the financial system and making an open censorship resistant payment system that, you know, billions of people can use. 115 00:07:57,220 --> 00:07:59,260 I will always be interested in that. 116 00:07:59,580 --> 00:08:02,420 It's not specifically tied to Bitcoin existing. 117 00:08:02,700 --> 00:08:04,760 But that said, we have our roots in Bitcoin. 118 00:08:04,940 --> 00:08:10,160 And I think most of the people there feel like Bitcoin is a very strong chance of achieving that vision. 119 00:08:10,160 --> 00:08:14,640 Like potentially the more promising of all the options on the table for accomplishing this. 120 00:08:15,040 --> 00:08:22,900 And like personally, I am just like, I don't know, I have very strong feelings about fairness and about launch and about like decentralization. 121 00:08:22,900 --> 00:08:30,480 And to me, Bitcoin, you know, is is the best candidate for fulfilling that is the best candidate for for realizing that vision and future. 122 00:08:30,720 --> 00:08:35,080 OK. Yeah. So that's kind of a little bit about who we are, what we do, our history. 123 00:08:35,360 --> 00:08:43,980 Something a lot of people don't know is from the very beginning, we have been interested in like money broadly, like digital cash broadly. 124 00:08:43,980 --> 00:08:50,320 Right. And I think it was 20. So DCI started in 2015, 2016. 125 00:08:50,320 --> 00:08:55,380 we hired this guy from the Bank of England who had been writing like a lot of crazy stuff for 126 00:08:55,380 --> 00:09:00,320 the Bank of England about virtual currency and virtual cash and like how could we build a 127 00:09:00,320 --> 00:09:06,720 different type of cash? And, you know, I think from like a fiat perspective, yes, from a fiat 128 00:09:06,720 --> 00:09:12,680 perspective. But it was like, how can we make fiat work better? Right. How can we bring fiat into 129 00:09:12,680 --> 00:09:18,860 the 21st century and how can we make digital cash? And and I think, you know, we've always been 130 00:09:18,860 --> 00:09:23,060 interested in that question as well. I see them as like two sides of the same coin. We're interested 131 00:09:23,060 --> 00:09:28,380 in both. So and you guys have done some you've done work not just with the Bank of England. It 132 00:09:28,380 --> 00:09:31,320 sounds like there I didn't even know about the Bank of England, but I know that there was there's 133 00:09:31,320 --> 00:09:35,360 been a handful of potentially Federal Reserve folks that you've worked with. We've worked with 134 00:09:35,360 --> 00:09:39,060 the Boston Fed. We've worked with the Bank of Canada and we're currently working with the 135 00:09:39,060 --> 00:09:44,660 Bundesbank. So the Germans, very privacy pilled, very concerned about privacy and digital cash, 136 00:09:44,780 --> 00:09:48,580 actually. So more than other states. Oh, yes. Which makes a lot of sense when you think about 137 00:09:48,580 --> 00:09:53,060 what has happened in Germany over the many decades. Right. You know, they've been through a lot 138 00:09:53,060 --> 00:09:59,240 historically. And so the populace is very concerned about privacy and their spending habits. Yes. 139 00:09:59,340 --> 00:10:03,640 It's interesting. So like the governments are actually they're they're moving this forward, 140 00:10:03,780 --> 00:10:07,380 this vision, because they believe the electorate cares about privacy. 141 00:10:07,380 --> 00:10:11,500 Yeah. Culturally, just Germany is like super into this. And like you have to realize like 142 00:10:11,500 --> 00:10:15,720 governments are not monoliths. There are very different people with different value systems. 143 00:10:15,720 --> 00:10:35,180 You know, for us, it's about self-sovereignty, controlling your money, privacy, open access, permissionlessness. Cash kind of embodies a lot of these values. Right. And so we want to bring cash into the digital realm. I mean, that was like a lot of the motivation behind the people who originally created Bitcoin. Right. 144 00:10:35,180 --> 00:10:37,360 was it came out of e-cash. 145 00:10:37,480 --> 00:10:39,000 It came out of kind of that design 146 00:10:39,000 --> 00:10:40,420 of can we create digital cash? 147 00:10:40,920 --> 00:10:42,980 So yeah, so still really interested 148 00:10:42,980 --> 00:10:44,360 in that original question, 149 00:10:45,040 --> 00:10:46,420 you know, interested in it 150 00:10:46,420 --> 00:10:47,420 from a research perspective. 151 00:10:47,840 --> 00:10:49,980 We are not a Bitcoin advocacy group, 152 00:10:50,220 --> 00:10:51,120 you know, like I know, 153 00:10:51,240 --> 00:10:53,140 and there are Bitcoin advocacy groups 154 00:10:53,140 --> 00:10:53,960 out there, that's great. 155 00:10:54,360 --> 00:10:55,680 It's their job to get everybody 156 00:10:55,680 --> 00:10:57,420 using Bitcoin, to advocate for Bitcoin. 157 00:10:58,220 --> 00:10:58,920 That's not who we are. 158 00:10:59,060 --> 00:11:00,540 We are researchers and developers. 159 00:11:01,400 --> 00:11:02,800 You know, some of us believe one thing, 160 00:11:02,860 --> 00:11:04,020 some of us believe another thing. 161 00:11:04,500 --> 00:11:06,120 We're very passionate about this. 162 00:11:06,380 --> 00:11:10,820 And, you know, I personally want to dedicate a large amount of my time to working on this. 163 00:11:11,160 --> 00:11:14,080 But it's not my job to convince the world to use Bitcoin. 164 00:11:14,320 --> 00:11:15,860 Like, you know, I'm a scientist. 165 00:11:16,140 --> 00:11:17,520 Like, that's what I'm interested in doing. 166 00:11:17,720 --> 00:11:19,400 I'm an academic at the moment. 167 00:11:20,060 --> 00:11:21,540 You know, I want to build this stuff. 168 00:11:21,740 --> 00:11:22,940 I want to research this stuff. 169 00:11:23,400 -->

00:11:25,360 And there's different roles for different people. 170 00:11:26,060 --> 00:11:33,620 I want to definitely kind of spend, I think, a good portion of this interview talking about sort of governance and the role of these different organizations that fund developers. 171 00:11:33,620 --> 00:11:37,220 and governance. But before we do that, while we're on the subject, since you brought it up, 172 00:11:37,680 --> 00:11:43,300 I feel like we're kind of like circling a little bit the sort of CBDC's conversation, right? 173 00:11:43,540 --> 00:11:44,840 Yes. Sure. 174 00:11:44,940 --> 00:11:46,140 Which I know has come up. 175 00:11:46,400 --> 00:11:47,480 It's a four-letter word now. 176 00:11:47,540 --> 00:11:48,780 Yeah, I was going to say. 177 00:11:48,780 --> 00:11:49,240 CBDC's a dirty word. 178 00:11:50,460 --> 00:11:55,520 Controversial topic. But, you know, obviously it sounds like DCI has sort of gotten involved in 179 00:11:55,520 --> 00:11:58,980 some research related to DCI. It sounds like that's very clear from what you're saying. 180 00:11:59,260 --> 00:12:01,500 From like eight years, 10 years ago. Yes. 181 00:12:01,500 --> 00:12:18,260 Right. So, I mean, when you're working with governments, like, I mean, how do you kind of square some of the risks or how do you kind of speak with them about the negative potential externalities of CBDCs, which I think Bitcoiners obviously are very well connected to? 182 00:12:18,260 --> 00:12:30,900 So I will say, like I said, we started this work 10 years ago and we were really approaching it from the perspective of cash, which I think is an incredibly important freedom preserving technology. If you can think of physical cash. 183 00:12:30,900 --> 00:12:31,660 Peer-to-peer cash. 184 00:12:31,800 --> 00:12:34,160 Like separate from store value, just peer-to-peer cash. 185 00:12:34,340 --> 00:12:34,960 Just cash, right? 186 00:12:35,020 --> 00:12:35,740 Like think about cash. 187 00:12:35,820 --> 00:12:36,500 It's very private. 188 00:12:36,760 --> 00:12:40,400 You know, if I pay you 20 bucks right now, that is not recorded in a database anywhere. 189 00:12:40,600 --> 00:12:45,300 That is not like indelibly broadcast on the internet for anyone to see. 190 00:12:45,500 --> 00:12:48,380 That is a private interaction between you and me. 191 00:12:48,440 --> 00:12:52,160 And it's private in a way that's not just like, you know, obviously private. 192 00:12:52,220 --> 00:12:54,340 But like people get it culturally private. 193 00:12:54,480 --> 00:12:56,200 Like they know that cash is private. 194 00:12:56,320 --> 00:12:57,080 They can feel it. 195 00:12:57,140 --> 00:12:57,980 They understand it. 196 00:12:57,980 --> 00:13:00,340 They know that they're not being eavesdropped on, right? 197 00:13:00,340 --> 00:13:22,460 But, you know, cash doesn't require a bank account. It doesn't require an ID. You don't have to KYC to get paid in cash. You don't have to KYC to use cash. Super important technology

embodies a lot of freedom preserving principles. Yes, it is fiat. OK, you know, and if you are like inflation, money printer, go burr. I get it. You don't like fiat currency. That's cool. 198 00:13:22,460 --> 00:13:41,360 It is the thing that the majority of people in the world are using right now. And, you know, I'm not going to like ignore that. That might make sense for some people to use this over Bitcoin. So, you know, I totally understand if to use to use some version of. Well, most people are not using paper cash. 199 00:13:41,360 --> 00:13:42,700 No, but to use fiat currency. 200 00:13:42,920 --> 00:13:47,660 Right. But it's interesting because when you're saying cash is this important technology, which I actually really agree with. 201 00:13:47,800 --> 00:13:51,320 But in its in its physical form, it has privacy preserving. 202 00:13:51,740 --> 00:13:52,000 Yes. 203 00:13:52,480 --> 00:13:56,700 Elements. But in the way that most people use cash today, it's not privacy preserving at all. 204 00:13:56,860 --> 00:13:59,520 You mean the way most people use digital payments? 205 00:13:59,800 --> 00:14:00,720 Payments. Exactly. 206 00:14:00,720 --> 00:14:03,460 We do not have digital cash today. 207 00:14:03,600 --> 00:14:03,820 Right. 208 00:14:03,860 --> 00:14:08,380 That does not exist. What we have is we have ACH transfers. 209 00:14:08,380 --> 00:14:32,160 We have credit card payments. We have applications like Venmo or Cash App or whatever. And these do not have the properties of digital cash, right? They don't have, by default, privacy-preserving properties. They usually do require you to have an account with someone where you've given them your driver's license or your social security number or your KYC'd. 210 00:14:32,160 --> 00:14:48,300 They are not censorship resistant. There's an institution that is mediating an electronic message being sent from a client to a server and like saying, should this payment go through or should I delay it or should I hold these funds? Like they're not self-custodial, right? There's an institution that is holding these funds for you. 211 00:14:48,300 --> 00:15:09,480 So we do not have digital cash today. The things that, you know, I think you're thinking of these payment systems are not digital cash. And what we were interested in is whether we could build something like digital cash. And it's like it gets like a bit complicated and subtle because there's many different ways to design a central bank digital currency. 212 00:15:09,480 --> 00:15:19,500 And there are plenty of dystopian ways to design a central bank digital currency where there is no privacy, where it's not really self-custodial, where you do have to KYC to use it. 213 00:15:19,740 --> 00:15:21,320 We were not working on that. 214 00:15:21,560 --> 00:15:26,280 We were working on trying to design it to look more like physical cash, but in the digital realm. 215 00:15:26,520 --> 00:15:37,140 It's interesting that you say that, though, because I would presume and I think a lot of Bitcoiners do assume that the incentives of these governments is to create CBDCs almost for the purpose of surveillance. 216 00:15:37,140 --> 00:15:58,540 And I'm not here to like advocate for CBDC. I'm here to say that, look, I think it's inevitable that they will release something digital, like just the way the world is going. Fewer and fewer people are using physical cash. Like I don't carry physical cash with me every day. I don't. Sweden has been like on the cutting edge of this. Right. 217 00:15:58,540 --> 00:16:15,960 And so the question is, if we don't have something built to look like what I'm calling digital cash, then our only option in the digital realm will be these payment systems that don't have these properties or things like Bitcoin or maybe even Zcash or Monero. 218 00:16:15,960 --> 00:16:40,360 Right. But, you know, at the time, these these things are not ready to take over global payment systems. They do not scale. They just do not scale to that level. So like trying to kind of tell the story, it's like, all right, looking forward 50 years, I would be very surprised if we're still carrying around $20 bills, $50 bills in our wallets. Right. All right. Then how are we paying in that future? How do we move money around? How do we mediate money? 219 00:16:40,360 --> 00:17:06,940 And if that the only way to move money is through these payment systems that add a lot of friction, add a lot of control, like take control away from people, that's not a future that I want. And so I was looking towards how do we move towards a future where we can have privacy preserving, self-custodial, free to use digital cash. And and that's the equivalent of the physical cash we have today, but in the digital realm. 220 00:17:06,940 --> 00:17:20,220 Do you not see it? And I promise we won't spend too much time on the topic, but now we're into it. Yeah. Do you kind of not see it as like, you know, there's potentially this like conflict of interest where it's like as long as it is fiat government issued money. 221 00:17:20,220 --> 00:17:42,960 No, no, no. But this is where we get to governments are not a monolith. They're actually really different. So we are working with central banks. Central banks are so weird. They are like pseudo government. They're kind of like like in and they're all different, like in different countries. Like in the United States, the Federal Reserve is is not totally part of the government. It's like pseudo public private. 222 00:17:42,960 --> 00:17:47,640 it. You have the board of the Federal Reserve, and that kind of is part of the government. But then 223 00:17:47,640 --> 00:17:51,420 you have the 12 Federal Reserve banks, like the Bank of Boston, the Bank of New York. And those 224 00:17:51,420 --> 00:17:55,440 are kind of independent. Those are private institutions. They're the ones that actually 225 00:17:55,440 --> 00:18:01,500 like do a lot of monetary stuff, like they kind of

control cash or like hold the New York Fed 226 00:18:01,500 --> 00:18:05,860 holds a bank account for the government. And so you have this like weird split, this like weird 227 00:18:05,860 --> 00:18:11,520 pseudo public private split. And then also they have like incredible independence, right? Like, 228 00:18:11,520 --> 00:18:35,400 You know, if you think about what's probably in the news today, it's probably like Trump talking about how he's going to fire Jay Powell. He can't really fire Jay Powell. Like there's like it's it's great. Like the Federal Reserve is this really weird legal entity with a lot of strange protections, a lot of autonomy. And the reason that central banks are designed this way is to have independent monetary policy. So monetary policy doesn't come under the control of the government. 229 00:18:35,400 --> 00:18:55,440 So when it comes to like the government, there's like law enforcement, there's the FBI, there's the Treasury, and then there's the central bank. And the central bank has very, you know, it depends again on the country. They have very specific mandates. In the United States, the mandate of the Federal Reserve is price stability and employment. 230 00:18:55,440 --> 00:19:15,160 And so they're not here to eavesdrop on Americans. That is not their mandate. They don't want to know how you're spending money. They have zero interest in getting in the middle of that. That doesn't mean that the Treasury doesn't want them to know that. That doesn't mean that, you know, Department of Homeland Security wouldn't be super excited to know how Americans or anyone in America is spending money. 231 00:19:15,160 --> 00:19:21,540 relationship between the two in the sense that the president, like, I mean, they're instituted 232 00:19:21,540 --> 00:19:24,560 by the governments, right? Like the Fed Powell was hired by a government. 233 00:19:24,820 --> 00:19:27,200 They were appointed by Congress. 234 00:19:27,520 --> 00:19:27,680 OK. 235 00:19:27,720 --> 00:19:27,980 Yes. 236 00:19:28,120 --> 00:19:29,740 So Congress does a relationship. 237 00:19:30,020 --> 00:19:35,880 But Congress has to pass a law to, like, change the way the Fed works. Like, it's a big deal. 238 00:19:35,900 --> 00:19:39,720 But the heads of the Fed, the people who actually work at the Fed and are making centralized 239 00:19:39,720 --> 00:19:44,160 decisions ultimately, which is the perfect segue back into our governance conversation in a moment. 240 00:19:44,160 --> 00:19:50,340 But those people are ultimately, like you say, so Congress appoints. There is some relationship between government. 241 00:19:50,340 --> 00:19:54,020 There is a like, yeah, it's centralized. It's a centralized thing. It's an entity. 242 00:19:54,240 --> 00:19:59,880 Right. And it's called a central bank. This is like the point. Fiat currency is fiat currency. 243 00:19:59,880 --> 00:20:05,580 It is governed by a central bank. And I'm not making a comment on to like, is that good? Is that bad? 244 00:20:05,880 --> 00:20:12,500 Do we want, you know, fiat currency or whatever? It's like the dominant thing in the world right now. 245 00:20:12,580 --> 00:20:15,660 So, you know, I mean, somebody wants it and it's happening. Right. 246 00:20:15,760 --> 00:20:20,160 And maybe there's a future where fiat currency no longer exists. I don't know. We're super far from that world. 247 00:20:20,340 --> 00:20:26,500 But I'm saying, given the way it works right now, you know, it's I think I think you'd end 248 00:20:26,500 --> 00:20:30,060 up you would be doing a disservice to yourself if you bundled all this stuff together. 249 00:20:30,200 --> 00:20:34,820 Central bankers think very differently than the law enforcement part of government or even 250 00:20:34,820 --> 00:20:37,720 like the Treasury sort of financial ministry parts of government. 251 00:20:37,720 --> 00:20:38,720 They have different goals. 252 00:20:39,340 --> 00:20:51,346 They they want to do a different thing And it helps to understand the motivations of all these different parts and stakeholders I think the centralization piece is actually perfect mostly because it is a good segue into I think the rest of this interview 253 00:20:51,906 --> 00:20:59,326 But the centralization piece, I think the key part there is that ultimately, and again, this is just the issue with fiat currency, including regular cash. 254 00:20:59,746 --> 00:21:01,406 But, well, it's a little different, actually. 255 00:21:01,406 --> 00:21:10,086 You know, if you have a centralized authority controlling whatever this cash is, this e-cash is, then they can make changes to the rules. 256 00:21:10,326 --> 00:21:11,206 Yes, 100%. 257 00:21:11,206 --> 00:21:14,286 And the Fed can change the interest rates, right? 258 00:21:14,386 --> 00:21:15,706 Can change monetary policy. 259 00:21:15,826 --> 00:21:22,186 Could change potentially even like the privacy properties or like any technical properties associated with this thing. 260 00:21:22,526 --> 00:21:23,726 They can fork, essentially. 261 00:21:24,166 --> 00:21:26,586 I mean, that is the risk, right? 262 00:21:26,586 --> 00:21:33,126 And so that's why we were encouraging them to build it in a way where there were cryptographic privacy assurances. 263 00:21:33,466 --> 00:21:36,786 So at least if it changed in the future, you couldn't see what had happened in the past. 264 00:21:36,946 --> 00:21:47,586 So you would say like one of the things you're doing that's kind of interesting is like you're you're I mean, it sounds maybe not advocating is the right word, but talking to governments about kind of the importance. 265 00:21:47,586 --> 00:21:56,006 Yes. How to like we wanted them to know that it was possible to build like cryptographically privacy preserving cash. 266 00:21:56,006 --> 00:22:00,906 like they didn't even know it was possible i don't know if they're gonna do it right like that's a 267 00:22:00,906 --> 00:22:07,066 much bigger political

question that like we are not well suited to you know we're like a small 268 00:22:07,066 --> 00:22:13,006 group of nerds at mit right it's not your alley we're not gonna like go influence like the ecb to 269 00:22:13,006 --> 00:22:17,646 to build it this way but we can at least show them that it's technically possible right whether 270 00:22:17,646 --> 00:22:22,906 they actually do it as like yeah it's a political their political that's how i saw our role as like 271 00:22:22,906 --> 00:22:28,286 let's make sure they at least are not just getting their information from like large consulting 272 00:22:28,286 --> 00:22:32,306 companies that they're paying millions of dollars to like build prototypes and like 273 00:22:32,306 --> 00:22:36,966 here's stuff you know they were just getting like wrong technical information so it's like can we at 274 00:22:36,966 --> 00:22:42,786 least show them what's actually possible and also some things we don't even know if it's possible 275 00:22:42,786 --> 00:22:47,026 and so that's our role do the research to figure out if it's possible out of curiosity and then i 276 00:22:47,026 --> 00:22:53,446 promise we'll move on is what is the technical cryptographic like choice like choice cryptography 277 00:22:53,446 --> 00:22:58,946 that you were recommending that is this perfect privacy protecting not perfect so yeah it depends 278 00:22:58,946 --> 00:23:03,146 on what trade-offs you want to make right and so there's a lot of different cryptographic primitives 279 00:23:03,146 --> 00:23:09,006 you can use to achieve you know do you do you want to hide the values so you can't see how much 280 00:23:09,006 --> 00:23:14,546 people are transacting do you want to hide the transaction graph um that's much more challenging 281 00:23:14,546 --> 00:23:16,686 to hide completely the transaction graph? 282 00:23:16,926 --> 00:23:18,386 Is it sufficient to like, 283 00:23:19,126 --> 00:23:21,106 maybe you're not completely hiding the trends. 284 00:23:21,186 --> 00:23:24,066 So this is like, you know, 285 00:23:24,106 --> 00:23:26,726 the difference between like bulletproofs on Bitcoin 286 00:23:26,726 --> 00:23:28,986 versus Monero versus like Zcash. 287 00:23:29,706 --> 00:23:33,146 And, you know, and as you like kind of go down 288 00:23:33,146 --> 00:23:35,966 the using stronger and stronger cryptographic primitives, 289 00:23:36,146 --> 00:23:38,126 you make a trade-off with things like throughput 290 00:23:38,126 --> 00:23:40,086 and latency and complexity. 291 00:23:40,606 --> 00:23:43,186 And so, you know, there's no easy answer. 292 00:23:43,186 --> 00:23:49,266 It's not like, oh, just do this and you get perfect privacy and, you know, there's no problems whatsoever. 293 00:23:49,726 --> 00:23:53,266 And you can, you know, it'll work in a country with like a billion people. 294 00:23:53,406 --> 00:23:58,066 Like, no, you have, you know, they have to make policy decisions about those tradeoffs. 295 00:23:58,206 --> 00:24:03,766 And for us, it was about surfacing this complexity, getting them to understand that there might be a way through. 296 00:24:04,086 --> 00:24:06,726 Yeah. And just so they didn't think it was impossible. 297 00:24:06,726 --> 00:24:15,646 Yeah. So so I mean, it sounds like it's fair to say that DCI, that digital currency initiative in general, is much more focused on sort of the technical research behind these things. 298 00:24:15,646 --> 00:24:28,246 This question of what is possible. Right. And basically, you know, whoever needs to understand that information, you want to make sure that they essentially have security, scalability, privacy and usability. 299 00:24:28,246 --> 00:24:42,066 So those are like the four areas that we focus on. And it's all about, you know, our mission is to to empower users to move money the way they move information and to help them financially flourish. 300 00:24:42,566 --> 00:24:53,046 So how does the Digital Currency Initiative make decisions about where to put research efforts, dollars, resources? Like, how do you make decisions about exactly what to work on? 301 00:24:53,046 --> 00:25:02,686 We raise all of our own funding and we do that through grants and research collaborations and just like donations, gifts. 302 00:25:03,186 --> 00:25:09,406 So meaning like people, when you say we raise our own funding is the distinction there, like we are not getting paid to do specific research. 303 00:25:09,486 --> 00:25:10,166 Is that what you mean? 304 00:25:10,386 --> 00:25:12,966 No, because sponsored research is kind of that. 305 00:25:12,966 --> 00:25:14,246 There is sponsored research. 306 00:25:14,446 --> 00:25:17,286 But it's not like a consulting kind of a thing. 307 00:25:17,506 --> 00:25:21,146 Like it's not like it's, you know, universities are like we're independent. 308 00:25:21,366 --> 00:25:22,026 We do research. 309 00:25:22,026 --> 00:25:26,786 The idea is that you don't know what the output's going to be. You can't promise like a specific output. It's research. 310 00:25:26,786 --> 00:25:29,106 They're giving you a question. They pay you to look at a question. 311 00:25:29,346 --> 00:25:29,986 Yeah, exactly. 312 00:25:30,446 --> 00:25:33,386 Without any attachment to the answer. They actually want to just know the answer. 313 00:25:33,426 --> 00:25:38,246 Exactly. Yeah. Like like you can't sort of yeah, you can't sort of know how this is going to come out. 314 00:25:38,386 --> 00:25:42,206 You can't just say we need you to show that X is true. It's got to be like. 315 00:25:42,226 --> 00:25:45,786 It's not like big pharma coming out and saying like, hey, can you prove that? 316 00:25:45,906 --> 00:25:48,326 Like, can you make the data look like our medicine works? 317 00:25:48,326 --> 00:25:49,106 Exactly. It's not like that. 318 00:25:49,106 --> 00:25:52,006 Exactly. Exactly. And there's a risk that like it might not work. 319 00:25:52,026 --> 00:25:55,206 Like whatever it is that we're

trying to figure out, we might find the negative. 320 00:25:55,406 --> 00:25:57,706 Like we might we might be like, yeah, we couldn't do it. 321 00:25:57,726 --> 00:25:58,746 Like there's always that risk. 322 00:25:58,746 --> 00:26:03,006 And these payments are made or these sponsorships are made on a project by project basis. 323 00:26:03,126 --> 00:26:07,066 So it's not like you're incentivized to keep them happy so that they renew or something. 324 00:26:07,206 --> 00:26:11,166 Yeah, no, that's like half of our work is is kind of sponsored research. 325 00:26:11,266 --> 00:26:15,026 And the other half is just like donations, basically. 326 00:26:15,186 --> 00:26:17,126 Just straight up donations from whomever. 327 00:26:17,306 --> 00:26:17,806 Yeah. Yeah. 328 00:26:17,806 --> 00:26:28,266 OK. And so how much of the budget goes to like specific research projects versus like just funding independent developers to do whatever they want? 329 00:26:28,686 --> 00:26:35,926 Yeah. So we raised some money just to fund our Bitcoin side of the house a while ago. 330 00:26:36,026 --> 00:26:39,566 So people who were donating to that knew that it was just going to that. Right. 331 00:26:39,606 --> 00:26:45,146 So we have like a Bitcoin meaning just going to independent developers basically working on Bitcoin or specific Bitcoin projects. 332 00:26:45,146 --> 00:26:53,526 It was going to independent developers working on Bitcoin and students like funding students to do research projects around Bitcoin. 333 00:26:53,666 --> 00:26:58,526 Specific research projects that were dictated by the person sponsoring? 334 00:26:58,526 --> 00:26:59,266 No, no, no. 335 00:26:59,366 --> 00:27:01,026 Just just you guys got to decide. 336 00:27:01,166 --> 00:27:05,226 They had no they were just like no strings attached donations by people. 337 00:27:05,406 --> 00:27:08,066 And just the idea that it was like going to further Bitcoin in some way. 338 00:27:08,226 --> 00:27:14,586 And they trusted us to make decisions on what that is based on our track record and based on who we were and what we were doing. 339 00:27:14,586 --> 00:27:18,826 So some of it is independent developers who just basically are sponsored to work on what they want. 340 00:27:18,926 --> 00:27:21,786 And then students working on specific research projects. 341 00:27:21,866 --> 00:27:23,826 How are those research projects decided? 342 00:27:23,946 --> 00:27:28,206 Like, how do you decide what those research or do the students decide which research projects they want? 343 00:27:28,306 --> 00:27:29,106 We talk about it. 344 00:27:29,106 --> 00:27:32,586 Like we discuss and we're like, OK, I have like these three ideas. 345 00:27:32,686 --> 00:27:33,126 What do you think? 346 00:27:33,166 --> 00:27:34,006 What are you most interested in? 347 00:27:34,046 --> 00:27:35,106 Well, this is exciting because of this. 348 00:27:35,186 --> 00:27:36,106 This is exciting because of that. 349 00:27:36,226 --> 00:27:44,066 So like one of the projects, you know, I've been really worried about Bitcoin's long term economic security when the mining subsidy goes away. 350 00:27:44,066 --> 00:27:48,566 the block subsidy, right? And I've been wanting to work on this. Yeah. And so I've been wanting 351 00:27:48,566 --> 00:27:51,486 to work on this. And so we had a student and we're like, hey, do you want to like, 352 00:27:51,886 --> 00:27:54,726 there was this prints and paper. It was really interesting, but it made all these assumptions. 353 00:27:55,366 --> 00:27:58,446 Therefore, we don't think it was quite realistic. Do you want to reexamine 354 00:27:58,446 --> 00:28:02,806 kind of this question by removing some of those assumptions? Maybe we can get some clarity. 355 00:28:03,346 --> 00:28:05,986 And she was like, yeah, this sounds really exciting. And so we did it. 356 00:28:06,486 --> 00:28:08,086 Is there results yet? 357 00:28:08,086 --> 00:28:14,006 Yeah. Yes. Yes. Yes. She presented at the MIT Bitcoin Expo and there's her thesis. 358 00:28:14,746 --> 00:28:15,586 It's online. 359 00:28:15,706 --> 00:28:16,446 It's on our website. 360 00:28:16,706 --> 00:28:18,686 Key takeaways on the security budget declining. 361 00:28:19,286 --> 00:28:27,926 We really need to make sure there is a not only a backlog of transaction fees, but like a like even continuous backlog of reliability. 362 00:28:28,586 --> 00:28:32,486 Ordinals aren't going to cut it like speculative assets as a way of creating fees. 363 00:28:32,606 --> 00:28:32,966 Don't cut it. 364 00:28:32,966 --> 00:28:37,346 Spikes are like not good for mining for mining security. 365 00:28:37,646 --> 00:28:40,506 We really need to make sure there's too much of an incentive to fee snipe. 366 00:28:40,966 --> 00:28:45,766 You really need like solid, continuous, like reliable transaction fees. 367 00:28:45,766 --> 00:28:47,326 Which basically means you need payments. 368 00:28:47,566 --> 00:28:49,186 You need payments to actually be used. 369 00:28:49,186 --> 00:28:50,906 You need use cases that result in that. 370 00:28:51,546 --> 00:28:51,986 Okay. 371 00:28:52,286 --> 00:28:57,746 Are there any ideas other than digital cash of those use cases that could? 372 00:28:57,766 --> 00:28:58,186 I don't know. 373 00:28:58,286 --> 00:28:59,006 People are creative. 374 00:28:59,106 --> 00:29:00,166 They might come up with something else. 375 00:29:00,306 --> 00:29:00,346 Who knows? 376 00:29:00,346 --> 00:29:07,446 That was kind of outside the scope of this specific project was what, you know, how do we actually make the shape of the transaction backlog look that way? 377 00:29:07,586 --> 00:29:10,306 But she presumes something that I think many of us probably intuit. 378 00:29:10,306 --> 00:29:15,706 She basically proved that's something we intuitively know, which is that we need a consistent, reliable fee market. 379 00:29:15,926 --> 00:29:19,506 Yes, yes. And there were some really interesting results out

of that. 380 00:29:19,506 --> 00:29:25,986 like if there are very spiky, high fee transactions or very like sparse, high fee transactions, 381 00:29:26,806 --> 00:29:32,866 the incentive based on the setup of this research is for miners to do really weird things, 382 00:29:32,866 --> 00:29:38,826 like only mine one transaction per block because you want to leave as much for people to be 383 00:29:38,826 --> 00:29:44,106 incentivized to build on your block as possible. Like you just get all these weird. Because reorgs 384 00:29:44,106 --> 00:29:47,446 Basically, it's all about reorg risk. 385 00:29:47,606 --> 00:29:53,406 In order for you to get the money of the transaction fees, you need people to build on your block and not ignore your block. 386 00:29:53,546 --> 00:29:55,386 And so it's about incentivizing that. 387 00:29:55,606 --> 00:29:56,286 You know, it's so funny. 388 00:29:56,326 --> 00:30:00,006 And we're going to circle back and do more on the quantum conversation probably in this episode. 389 00:30:00,006 --> 00:30:10,086 But I was talking to Avi Hu, who is the CPO of Starkware, who created this Fino Hash, quantum safe Bitcoin without a soft fork, et cetera, et cetera. 390 00:30:10,366 --> 00:30:13,226 And I said, well, we already can do that. 391 00:30:13,226 --> 00:30:21,426 But, you know, it could, excuse me, quantum safe Bitcoin, this this scheme that he came up with is dependent right now on private mempools because they're nonstandard transactions. 392 00:30:21,426 --> 00:30:29,146 And I was like, well, what's the point of this? Because, you know, if you just use Slipstream, if you use a private mempool, it's already quantum safe because they're completely private. 393 00:30:29,146 --> 00:30:34,286 Like as long as you trust the miner, then those keys aren't, you know, exposed in the mempool anyway. 394 00:30:34,386 --> 00:30:37,866 And he said, no, no, no, no, no, that's not true because of the reorg risk. 395 00:30:38,206 --> 00:30:42,006 He said you need something. Slipstream alone will not cut it. 396 00:30:42,006 --> 00:30:44,246 But using a private miner alone will not cut it. 397 00:30:44,246 --> 00:30:52,806 People love to game theory about like, oh, if this guy had a quantum computer, they would do this, they would do that. 398 00:30:52,906 --> 00:30:56,966 And I think a lot of things people are not thinking about is reorgs. 399 00:30:57,146 --> 00:31:08,746 Like the mining security, like when you want to talk about Satoshi's coins and like, oh, you know, like there's a massive incentive to just like start reorging and to try. 400 00:31:08,746 --> 00:31:24,126 But I think probably what would happen, maybe I'll get another student to work on this, is something similar to what we saw when we were looking at this question from the perspective of like when the block subsidy goes away is maybe the incentive is just take like a little bit of Satoshi's coins and leave the rest. 401 00:31:24,566 --> 00:31:26,266 You know, anyway, I'm speculating at this point. 402 00:31:26,286 --> 00:31:32,206 This is a good research project for somebody at DCI is to actually like game theory out some of this quantum stuff. 403 00:31:32,206 --> 00:31:32,346 Exactly. 404 00:31:32,346 --> 00:31:35,386 Because that's the biggest question that I get about quantum is the game theory. 405 00:31:35,386 --> 00:31:56,786 Not armchair game theory, but like there's actually a science behind this. It's hard, it's complicated and it's imperfect. Like you have to you have to create a model and prove things in that model and models are like by design, not reality and leave a lot of detail out. But sometimes you can you can learn interesting things. So I think I think, yeah, I think this would be really interesting. 406 00:31:56,786 --> 00:32:05,606 No, this is a super important. I mean, I would not be surprised if you guys got like some sort of offer just to literally do that kind of research. Literally just game theory quantum for us. 407 00:32:05,606 --> 00:32:10,506 I would say my DMs are open, but my DMs are not open. But send me an email. We'd love to work on this. 408 00:32:10,506 --> 00:32:23,626 Well, I have some connections to make for you guys. Well, OK, so OK, so that kind of gives a little bit of a sense of DCI, which is quite different than some of these other organizations that are funding Bitcoin development. 409 00:32:23,626 --> 00:32:28,126 Completely different. Right. I mean, we're not like, yeah. So, I mean, you want to talk about the landscape. 410 00:32:28,306 --> 00:32:31,306 Yeah. Like there's there's only there's not that many organizations. 411 00:32:32,226 --> 00:32:34,406 So they're all different in how they operate. 412 00:32:34,406 --> 00:32:40,006 Brink, which is also a nonprofit, you know, and takes donations. So they also have to raise all of their own money. 413 00:32:40,146 --> 00:32:48,146 And they're independent. They're not connected to academic institution, which is, I think, just totally independent nonprofit, really focused on Bitcoin core. 414 00:32:48,146 --> 00:33:09,186 So that is like only Bitcoin core and, you know, also has to raise all their own money. Right. And has a bunch of core developers. Then there are Chaincode and Spiral. Right. Those two are unique in that they do not raise any money. They do not have to raise any money. They are sort of funded, you know, in the ancient Wales. 415 00:33:09,186 --> 00:33:17,866 But in the case of Chaincode, they are funded by two individuals who co-founded a hedge fund and want to do this and want to get back to Bitcoin. 416 00:33:18,326 --> 00:33:20,626 But they don't raise any money. You don't go donate to Chaincode. 417 00:33:20,826 --> 00:33:22,046 They do like, no, they don't need it. 418 00:33:22,046 --> 00:33:25,286 They just privately fund like 50 percent of Bitcoin developers, no big deal. 419 00:33:25,426 --> 00:33:26,846 Whatever they want to do, right, for now. 420 00:33:27,686 --> 00:33:30,006

I think that's right, right? I mean, just so that I'm getting the numbers right. 421 00:33:30,026 --> 00:33:34,526 I don't know that it's 50 percent. I wouldn't say that, but I don't really know for sure how many there are. 422 00:33:34,526 --> 00:33:39,126 It's like in the multiple tens of percentages, though, of full-time Bitcoin developers. 423 00:33:39,186 --> 00:33:49,726 That might be true. I would not be surprised if that were true. And then there's Spiral, which is in Block, the company that does Cash App and Square and is led by Jack Dorsey. 424 00:33:49,726 --> 00:33:52,326 And Jack Dorsey basically funds that or is it like Block Money? 425 00:33:52,766 --> 00:33:59,386 It's Block Money that funds it, but it's Jack Dorsey as the CEO of Block saying, I want to put some of our balance sheet behind this. 426 00:33:59,646 --> 00:34:06,766 And they run it, you know, very independently from Block. It's like there are Bitcoin developers. So I'm on the board of Block. 427 00:34:06,766 --> 00:34:09,206 It's not like four blocks profit motive. 428 00:34:09,366 --> 00:34:09,586 Exactly. 429 00:34:09,746 --> 00:34:12,306 And you think that's defensible, super defensible. 430 00:34:12,446 --> 00:34:18,786 Like there's people who work like Cash App has Bitcoin features and there are people who work on Bitcoin for Cash App. 431 00:34:18,926 --> 00:34:19,606 That's not Spiral. 432 00:34:19,746 --> 00:34:22,346 Spiral is like open source, independent development. 433 00:34:22,886 --> 00:34:23,026 OK. 434 00:34:23,706 --> 00:34:24,466 So those are. 435 00:34:24,586 --> 00:34:25,266 So that's four. 436 00:34:25,266 --> 00:34:26,806 I mean, those are the big four. 437 00:34:26,826 --> 00:34:30,626 Are there any like meaningful other contributors, like funding organizations for developers? 438 00:34:31,026 --> 00:34:33,186 So there's 2140 in Amsterdam. 439 00:34:33,506 --> 00:34:35,066 There's local host in San Francisco. 440 00:34:35,286 --> 00:34:36,186 That's brand new, right? 441 00:34:36,246 --> 00:34:36,346 Yes. 442 00:34:36,346 --> 00:34:49,866 Pretty much. These are these are both pretty new. And those are both like a little bit more like Brink. So nonprofits need to raise all their own funding. And then there's like there's something called Maelstrom, which I don't know very well. I think that's Arthur Hayes is behind that. 443 00:34:49,866 --> 00:34:51,786 Oh, interesting. I didn't know he was doing that. That's cool. 444 00:34:51,906 --> 00:34:56,646 Yeah. I mean, don't you know. And there's there are probably more that I don't know about. 445 00:34:57,266 --> 00:35:07,386 Then there are a couple of cryptographers at Blockstream who like really work on LibSecP and, you know, who are working on some really important stuff for Bitcoin as well. 446 00:35:07,466 --> 00:35:10,806 Yeah. Blockstream is kind of like a unique example in this. 447 00:35:10,806 --> 00:35:18,926 Right. Because they're obviously a for profit company, but they clearly so much

of what they do is just like working on the guts and bones of what Bitcoin is. 448 00:35:18,926 --> 00:35:31,206 Yeah. So, OK, so and to your knowledge, like how do you what's your understanding of how all the ecosystem, the term that you use, makes decisions about what to work on? 449 00:35:31,266 --> 00:35:37,226 I mean, do they just hire I mean, just chain code, just hire developers and say, have a blast, work on whatever you want. 450 00:35:37,226 --> 00:35:43,986 So far, there has been an incredible amount of autonomy and choice in people deciding what they want to work on. 451 00:35:43,986 --> 00:35:54,226 Right now, that said, is Chaincode going to give you a full time job if, you know, you haven't proved yourself already as being a person who can make good decisions about that and get stuff done? 452 00:35:54,226 --> 00:35:55,446 And meaningfully contribute. 453 00:35:55,926 --> 00:36:02,106 Like, I'm not going to, you know, we at DCI in particular, our focus has been more on senior long term developers. 454 00:36:02,106 --> 00:36:05,526 So we aren't like training the next generation necessarily. 455 00:36:05,766 --> 00:36:10,046 We're really focusing on like, you know, a long term home for senior developers. 456 00:36:10,146 --> 00:36:11,766 They don't have to worry about going out for grants. 457 00:36:11,766 --> 00:36:15,746 They don't have to worry about, like, am I am I going to have health insurance next year or whatever? 458 00:36:16,066 --> 00:36:19,466 You know, they have a home as long as as we have the funding to do that. 459 00:36:20,346 --> 00:36:25,906 And so, you know, again, we're taking people who already have a very strong proven contribution record. 460 00:36:26,206 --> 00:36:29,086 Right. But that said, you know, we don't tell them what to do. 461 00:36:29,186 --> 00:36:33,346 We have discussions. We talk about, well, what have you done and like, why is that important? 462 00:36:33,866 --> 00:36:36,366 There has to be some level of accountability. Right. 463 00:36:36,366 --> 00:36:39,306 when you're directing funding in such a world. 464 00:36:39,486 --> 00:36:42,126 But it's definitely not like a top-down, 465 00:36:42,326 --> 00:36:43,306 you have to work on X. 466 00:36:43,546 --> 00:36:45,426 But the accountability piece is a little bit, 467 00:36:45,546 --> 00:36:46,646 it's a little ambiguous. 468 00:36:46,646 --> 00:36:48,686 It's not like a super definable thing. 469 00:36:48,766 --> 00:36:49,666 It's not like there's a board 470 00:36:49,666 --> 00:36:51,466 where people like have to show their work 471 00:36:51,466 --> 00:36:53,506 and it's like, okay, does this like pass the snuff test 472 00:36:53,506 --> 00:36:54,646 of meaningful contributions? 473 00:36:54,646 --> 00:36:56,626 I think Brink has a board where they decide 474 00:36:56,626 --> 00:36:58,946 how to give out, so Brink also does grants. 475 00:36:59,266 --> 00:37:01,266 And so I think they have like a grant committee 476 00:37:01,266 --> 00:37:02,406 or something like that. 477 00:37:03,226 --> 00:37:04,206 Spiral does grants. 478 00:37:04,326 --> 00:37:06,026 I don't know what their process is for grants. 479 00:37:06,366 --> 00:37:07,586 Well, and then there's the grant organizations. 480 00:37:07,726 --> 00:37:09,106 There's actually a totally different conversation. 481 00:37:09,426 --> 00:37:09,666 100%. 482 00:37:09,666 --> 00:37:11,686 OpenSATs, you know, all these types. 483 00:37:11,906 --> 00:37:12,126 Right. 484 00:37:12,366 --> 00:37:12,566 Totally. 485 00:37:12,586 --> 00:37:15,286 That's a whole other way that development funding happens. 486 00:37:15,526 --> 00:37:15,766 Yes. 487 00:37:16,006 --> 00:37:16,186 Yes. 488 00:37:16,786 --> 00:37:17,226 Yeah. 489 00:37:17,406 --> 00:37:22,446 And I mean, it's very, it's not very well organized. 490 00:37:22,826 --> 00:37:23,946 There is a lot of overlap. 491 00:37:24,266 --> 00:37:28,566 There's a lot of frustration that I hear from people who have to go through these processes. 492 00:37:29,126 --> 00:37:30,966 It's not necessarily super transparent. 493 00:37:31,186 --> 00:37:31,766 It's ill-defined. 494 00:37:32,046 --> 00:37:32,126 Yeah. 495 00:37:32,266 --> 00:37:33,926 But, you know, we're dealing with it. 496 00:37:34,086 --> 00:37:35,326 Everybody's moving forward. 497 00:37:35,326 --> 00:37:38,266 We're, you know, people are trying to figure it out. We're doing the best we can. 498 00:37:38,546 --> 00:37:44,126 And to your point, I mean, this is a tradeoff. We're going to use this word a lot in this interview, I have a feeling. 499 00:37:44,586 --> 00:37:46,726 This is a tradeoff of decentralized government. 500 00:37:47,566 --> 00:37:53,146 Governance, excuse me. You know, it's a little messy. It can be a little disorganized. 501 00:37:53,146 --> 00:38:00,646 I think there was a hope that companies that really like their, you know, their business really depended on Bitcoin. 502 00:38:00,646 --> 00:38:09,146 there would be a natural sort of incentive to hire Bitcoin core developers, like kind of like the way Google and IBM hired like Linux developers. 503 00:38:09,466 --> 00:38:15,966 Right. That hasn't played out so much like there used to be a Bitcoin developer to a Coinbase. 504 00:38:16,586 --> 00:38:23,066 That might change as more big corporations have greater stake in Bitcoin, though, which I think we'll probably touch on at some point. 505 00:38:23,246 --> 00:38:25,386 Coinbase has a pretty big stake in Bitcoin, I'd say. 506 00:38:25,386 --> 00:38:26,566 But, you know, yeah. 507 00:38:26,566 --> 00:38:28,346 But they haven't. 508 00:38:28,426 --> 00:38:30,686 Well, we'll just get into it now. 509 00:38:31,106 --> 00:38:37,446 You know, for the most part, they don't care about a lot of these like kind of minor changes that have been being made. 510 00:38:37,546 --> 00:38:39,686 There's no like major existence. 511 00:38:39,766 --> 00:38:44,666 If there was an existential threat to their Bitcoin that

mattered at a technical or developmental level. 512 00:38:44,686 --> 00:38:50,006 Right. But in order to be ready to contribute, you have to have done the you have to have had the person. 513 00:38:50,426 --> 00:38:53,186 Well, you can't just be like, oh, no, quantum today. 514 00:38:53,186 --> 00:38:53,926 I'm going to wake up. 515 00:38:53,926 --> 00:38:57,246 ah, maybe I should have had a Bitcoin developer on staff and been a part of this process. 516 00:38:57,246 --> 00:38:58,366 Like, too late. 517 00:38:58,366 --> 00:39:02,746 Well, I think what we're really getting into is, like, is the system going to change, right? 518 00:39:02,846 --> 00:39:04,046 I think it's about maturity. 519 00:39:04,386 --> 00:39:05,506 It's about long-term thinking. 520 00:39:06,166 --> 00:39:09,586 And I think that people have just been very short-term focused. 521 00:39:09,886 --> 00:39:14,266 And as everybody matures, they will become more long-term focused. 522 00:39:14,566 --> 00:39:19,266 Hopefully, they'll start to realize, ah, the next time there's one of these things, 523 00:39:19,326 --> 00:39:22,126 I want to have had that experience. 524 00:39:22,126 --> 00:39:25,026 I want to have had that bench to draw on so that I'm ready. 525 00:39:25,206 --> 00:39:28,546 And this existential threat doesn't just like jump, you know, in my face. 526 00:39:28,766 --> 00:39:32,406 Yeah, it's funny because I think this is this is we've kind of been circling this. 527 00:39:32,486 --> 00:39:34,486 This is coming up in the quantum conversation. 528 00:39:34,486 --> 00:39:47,546 This is the first time where we have major corporations with serious financial stake in Bitcoin, very concerned about the nuts and bolts of what's happening with Bitcoin at the core technical developmental level. 529 00:39:47,546 --> 00:39:54,346 And completely unprepared to engage and like have a conversation about it in a productive way. 530 00:39:54,486 --> 00:40:00,666 Right. Although I have a feeling they're in the process of catching up quick because they are seem pretty motivated. 531 00:40:00,666 --> 00:40:09,166 Like I think over the next year we're going to see more major corporate players getting more deeply involved in one way or another. 532 00:40:09,346 --> 00:40:17,186 And it is going to be so interesting because like, you know, I think a lot of these people maybe weren't around 10 years ago when we went through the block size wars. 533 00:40:17,186 --> 00:40:22,446 And I just hope we don't repeat some of the mistakes that we had back then, you know. 534 00:40:22,726 --> 00:40:24,466 I prepared, FYI, for that. 535 00:40:25,486 --> 00:40:26,786 I'm strapped in. 536 00:40:27,786 --> 00:40:30,526 It's going to be interesting to see how this turns out, for sure. 537 00:40:30,966 --> 00:40:34,806 All right, guys, taking a quick moment to thank my new sponsors of the show. 538 00:40:35,266 --> 00:40:40,426 First off, the one and only Layer 2 Labs, pushing forward research and development

of DriveChains. 539 00:40:41,066 --> 00:40:46,386 DriveChains were first introduced as a software proposal to Bitcoin, a.k.a. BIP300, BIP301. 540 00:40:47,106 --> 00:40:53,226 These BIPs essentially propose a bridging mechanism between Bitcoin and Layer 2s that are incentive-aligned with miners, 541 00:40:53,526 --> 00:40:56,906 and they've gotten a ton of attention over the last couple of years. 542 00:40:57,446 --> 00:41:00,586 If you're curious about how drive chains could work in practice, though, 543 00:41:01,026 --> 00:41:05,326 check out Layer2Labs.com and download their alternative frontend to Bitcoin Core. 544 00:41:05,806 --> 00:41:09,506 It lets you play with drive chains and see how they actually work in real life. 545 00:41:10,226 --> 00:41:12,186 I'd also like to introduce Hashi, 546 00:41:12,186 --> 00:41:21,866 An alternative primitive to traditional L2s that allows users to execute a wide range of Bitcoin DeFi activities without having to trust a federated bridge. 547 00:41:22,326 --> 00:41:34,472 With Hashi Bitcoin is controlled by an MPC wallet that requires a quorum of proof of stake validators on the SUI network to execute Bitcoin transactions based on the validity of smart contracts 548 00:41:35,172 --> 00:41:40,152 At least a third of the staking power of the SUI validators network is required to execute 549 00:41:40,152 --> 00:41:45,752 these MPC mint and redeem transactions, which is a substantive improvement in trust assumptions 550 00:41:45,752 --> 00:41:48,632 relative to other L2s or sidechain bridges. 551 00:41:49,592 --> 00:41:55,532 Hashi's commercial team is also stacked, including a crew of former builders from the crypto division of Meta. 552 00:41:56,112 --> 00:42:00,872 I think we're going to see a suite of super competitive Bitcoin DeFi products built with this protocol. 553 00:42:01,092 --> 00:42:05,032 So definitely check out the Hashi page on sui.io if you're curious. 554 00:42:06,232 --> 00:42:08,952 Last but not least, shout out to Bitbox. 555 00:42:09,492 --> 00:42:14,512 Bitbox is one of the easiest and most simple to use Bitcoin hardware wallets on the market right now. 556 00:42:14,512 --> 00:42:26,052 If you have friends or family members that you want to make sure stay safe and use cold storage, but maybe they're not the most Bitcoin native people in the world, I highly recommend checking out Bitbox. 557 00:42:26,212 --> 00:42:34,112 They're completely open source, no compromises on security, but they're also super easy to use, really intuitive UX. 558 00:42:34,492 --> 00:42:40,252 Plus, you can use them with concierge multisig services like Unchained, which I'm personally a big fan of. 559 00:42:40,252 --> 00:42:47,192 If you want to check out their hardware wallets, go to bitbox.swiss and use code Bitcoin Rails to get a discount. 560 00:42:47,732 --> 00:42:48,972 All right, back to the show. 561 00:42:49,492 --> 00:42:56,592 It's funny because even pre-quantum, like, exploding as a narrative, I have had this thought and I think others have had this thought, too. 562 00:42:57,252 --> 00:43:09,952 You know, in the future, when hopefully we have live in a hyper-Bitcoinized world and, you know, Bitcoin is the global reserve currency, like, is it still going to be run by, you know, less than 100 independent developers just working on whatever they want? 563 00:43:09,952 --> 00:43:13,132 It can't be. It can't be. It can't be. It won't be. Yeah, there's no way. 564 00:43:13,152 --> 00:43:24,952 This has occurred to me that this current system as it exists, the way that sort of governance currently works, isn't really sustainable in a truly hyper Bitcoinized world. 565 00:43:24,952 --> 00:43:43,052 Yeah. So, OK, we're talking about this hypothetical future. Right. So I 100 percent agree with you. I think that in a world where Bitcoin has achieved that level of integration into the global economy, is that critical? Is that important? It's not going to be left. 566 00:43:43,052 --> 00:43:45,032 you know, I don't know exactly. 567 00:43:45,032 --> 00:43:46,012 To Luke Dash Jr. and his friends. 568 00:43:46,112 --> 00:43:48,232 Yeah, it's not going to be, you know, 569 00:43:48,392 --> 00:43:53,472 political memes on X with like quantum cats 570 00:43:53,472 --> 00:43:56,092 and that's like, you know, like screaming for soft works. 571 00:43:56,152 --> 00:43:57,632 That's not how it's going to work anymore. 572 00:43:58,072 --> 00:44:01,072 I don't know what that world looks like exactly. 573 00:44:01,412 --> 00:44:03,772 I mean, you know, I think our world today 574 00:44:03,772 --> 00:44:04,892 is like the base case. 575 00:44:04,892 --> 00:44:06,292 It's just different institutions 576 00:44:06,292 --> 00:44:08,192 and different power players, right? 577 00:44:08,392 --> 00:44:09,672 But, you know. 578 00:44:10,052 --> 00:44:11,372 Who are probably funding developers 579 00:44:11,372 --> 00:44:14,752 to do actual specific things that they want them to do. 580 00:44:14,892 --> 00:44:19,872 Exactly. Yeah. And, you know, the economic incentives start to get really different 581 00:44:19,872 --> 00:44:26,872 because it becomes economic actors hiring developers to do things probably is what it's going to look like 582 00:44:26,872 --> 00:44:31,492 rather than like warm hearted, fuzzy developers just working on what they love. 583 00:44:31,752 --> 00:44:39,232 Volunteering. Yes. And the question is like, OK, but the thing that makes Bitcoin unique and interesting 584 00:44:39,232 --> 00:44:46,672 and valuable is this decentralization, is this fact that you can get developers to build 585 00:44:46,672 --> 00:44:48,732 whatever you want them to build. 586 00:44:48,812 --> 00:44:52,052 That doesn't mean that the Bitcoin network is going to adopt it, right? 587 00:44:52,272 --> 00:44:52,452 Correct. 588 00:44:52,492 --> 00:44:53,112 I run a node. 589 00:44:53,472 --> 00:44:54,452 This is the magic of Bitcoin. 590 00:44:54,632 --> 00:44:54,652 You run a

node. 591 00:44:55,252 --> 00:44:57,992 You know, nobody's telling me what to run on my node. 592 00:44:57,992 --> 00:45:02,792 That said, you know, I think what people might forget about that is that everyone's 593 00:45:02,792 --> 00:45:03,812 node is not created equal. 594 00:45:04,272 --> 00:45:04,672 Yes. 595 00:45:04,672 --> 00:45:21,232 There are certain nodes that are more economically valuable, economically meaningful. We are all bought into this monetary system and there are incentives at play. And so, you know, that's the question is really what will the economic, you know, is it like. 596 00:45:22,592 --> 00:45:32,312 Is the system different enough because like it's still, you know, whoever has the most economic weight gets to say things, gets to choose things. 597 00:45:32,452 --> 00:45:33,752 Wins the fork war, basically. 598 00:45:33,752 --> 00:45:46,172 But, you know, like the block size wars were really meaningful to me because we saw almost every major company in Bitcoin get on one side and get behind one proposal. 599 00:45:46,392 --> 00:45:47,892 And that is not the proposal that won. 600 00:45:48,252 --> 00:45:50,992 The community overrode that proposal. 601 00:45:51,152 --> 00:45:54,412 And if you remember Segwit2x and all of that, right? 602 00:45:54,972 --> 00:45:59,092 And like Bitcoin's really different and it is a little bit different. 603 00:45:59,092 --> 00:46:08,972 And so I think that there is this sort of like memetic power, decentralized narrative like there there is this, you know, is that arguable at all? 604 00:46:09,012 --> 00:46:14,352 Like, you know, you also often hear about like, you know, Coinbase, even just like the choice of the ticker made a difference. 605 00:46:14,352 --> 00:46:17,832 Right. Like the BTC, you know, the BTC ticker. 606 00:46:18,092 --> 00:46:19,332 Maybe that was the tipping point. 607 00:46:19,372 --> 00:46:24,872 And the reason why that one was because what we now think of as Bitcoin got to keep the Bitcoin ticker. 608 00:46:24,872 --> 00:46:29,792 And so more people held the Bitcoin ticker who maybe aren't day to day connected to this narrative. 609 00:46:29,792 --> 00:46:32,972 And I mean, that's the Bitcoin versus Bitcoin cash kind of. 610 00:46:33,012 --> 00:46:33,172 Right. 611 00:46:33,252 --> 00:46:33,912 That part. 612 00:46:34,452 --> 00:46:37,872 But before that was Segwit versus 2X. 613 00:46:38,472 --> 00:46:38,872 OK. 614 00:46:39,072 --> 00:46:41,252 And they were all on the side of 2X. 615 00:46:41,332 --> 00:46:43,872 They were all on the side of hard fork, block size increase. 616 00:46:44,252 --> 00:46:45,572 The community was on the side. 617 00:46:45,772 --> 00:46:48,252 Which companies and why were they on that side? 618 00:46:48,292 --> 00:46:49,972 I'm not familiar with this piece of history. 619 00:46:50,552 --> 00:46:51,672 Like all of them. 620 00:46:51,932 --> 00:46:52,752 I mean, it was really. 621 00:46:52,752 --> 00:46:53,652 Like the exchanges and stuff? 622 00:46:53,652 --> 00:46:53,852 Yeah. 623 00:46:53,852 --> 00:47:00,612 Yeah, it was Grayscale and Barry Silbert and Coinbase and Brian Armstrong and like Biko and Mike Belshi. 624 00:47:01,072 --> 00:47:03,612 And just I think this is super interesting. 625 00:47:03,712 --> 00:47:07,112 Just break down like so what were the two sides and why did they want one or the other? 626 00:47:07,292 --> 00:47:09,372 So the debate was how to scale Bitcoin. 627 00:47:10,192 --> 00:47:15,672 And it was really interesting because almost at every company you saw a CEO-CTO divide. 628 00:47:16,232 --> 00:47:18,612 Like the CEO was like, we need a hard fork. 629 00:47:18,692 --> 00:47:19,932 We need to increase the block size. 630 00:47:20,432 --> 00:47:21,872 Because they wanted fees to go down. 631 00:47:21,872 --> 00:47:23,552 They just wanted cheaper transactions. 632 00:47:23,552 --> 00:47:25,852 They wanted more block space and they wanted cheaper transactions. 633 00:47:25,932 --> 00:47:26,292 Bottom line. 634 00:47:26,372 --> 00:47:28,932 They wanted to like build, expand, you know. 635 00:47:28,932 --> 00:47:29,472 Grow, grow, grow. 636 00:47:29,532 --> 00:47:30,052 Lower fees. 637 00:47:30,212 --> 00:47:30,312 Yes. 638 00:47:30,312 --> 00:47:30,472 Okay. 639 00:47:30,852 --> 00:47:36,332 And the CTOs were, I mean, this isn't like universally true, but this is partially true. 640 00:47:36,392 --> 00:47:40,192 We're like, no, that destroys what we can't hard fork like that. 641 00:47:40,192 --> 00:47:47,592 You know, SegWit is like a great compromise that like threads the needle and is effectively a block size increase. 642 00:47:47,672 --> 00:47:49,352 But with a soft fork, we should do this instead. 643 00:47:49,492 --> 00:47:51,692 And so it was it was really interesting to see that battle. 644 00:47:51,692 --> 00:48:02,052 Why do you think in that instance, the CTOs, for lack of a better term here, won over the economic nodes, the CEOs? 645 00:48:02,052 --> 00:48:27,712 Because I think the economic nodes are exchanges and custodians, and they are serving at the behest of their customers. And it was like, you know, I mean, most customers maybe don't care that much, but like the customers that really do care, they had opinions and they were very vocal and very strong about it. And, you know, they made their case. 646 00:48:27,712 --> 00:48:57,132 Yeah. Interesting. OK, so ultimately it was like the companies wanted to grow, grow, grow, but they had to be accountable to their users who had a point of view. Yeah. So in that way, the people did win. Yeah. Right. Yeah. And you could make the argument the end user. Yeah, I would say the end user won. Right. Yeah. Yeah. Yeah. Yeah. Yeah. If you agree, that was the right thing to do, which, you know, it's yeah. And yeah. So I don't know what would happen today. I don't know what would happen today. But, you know, I think eventually we'll find out. 647 00:48:57,132 --> 00:49:06,712 eventually there

will be this battle. And that's why I care so much about getting making Bitcoin usable for as many people as possible. 648 00:49:06,952 --> 00:49:12,312 I think this is like incredibly important. The more people who can hold it and use it themselves, the better, 649 00:49:12,892 --> 00:49:22,412 because that is the counterweight to the heavy head of large financial institutions and custodians. 650 00:49:22,412 --> 00:49:28,512 Do you think that the fact that the end users threw their weight around ultimately, though, is also kind of an economic argument? 651 00:49:28,752 --> 00:49:28,932 Yes. 652 00:49:29,232 --> 00:49:29,472 Right. 653 00:49:29,652 --> 00:49:29,852 Yeah. 654 00:49:30,072 --> 00:49:33,192 It is ultimately still like the money kind of wins. 655 00:49:33,332 --> 00:49:34,052 It's all incentives. 656 00:49:34,312 --> 00:49:34,452 Yes. 657 00:49:34,452 --> 00:49:34,592 Right. 658 00:49:34,892 --> 00:49:35,052 Right. 659 00:49:35,072 --> 00:49:35,632 I agree with that. 660 00:49:35,812 --> 00:49:36,032 Yes. 661 00:49:36,292 --> 00:49:38,432 So this is interesting. 662 00:49:38,552 --> 00:49:40,552 OK, so let's back up for a second. 663 00:49:41,552 --> 00:49:44,192 This is I could go in so many different directions right now. 664 00:49:44,192 --> 00:50:12,952 But so we still don't really have like a clear picture of like what this governance structure could potentially look like in like a hyper Bitcoinized world or whatever. But it seems like quantum might be a catalyst to maybe pushing us in a direction of assessing. Right. I mean, this is, again, the first time that we're in a situation where major corporations are probably it's looking like are going to take a really strong hand in technical issues. 665 00:50:12,952 --> 00:50:18,692 certainly since the block size wars, et cetera. And my gut on this is it will be even more intense 666 00:50:18,692 --> 00:50:22,732 because there's just so much more institutional capital right now than there was back then. 667 00:50:24,092 --> 00:50:29,872 You've written about quantum quite a bit and you actually framed it, which I really appreciated, 668 00:50:30,052 --> 00:50:36,632 in the context of trade-offs. How do you see the quantum question in the realm of trade-offs? 669 00:50:36,632 --> 00:50:42,292 Can you explain a little bit how you see the quantum conversation as being ultimately a 670 00:50:42,292 --> 00:50:49,332 discussion about trade-offs. Yes, absolutely. So I think the quantum question is really something 671 00:50:49,332 --> 00:50:53,312 new for the Bitcoin community to address. Like anyone who's like, oh, we've done stuff like this 672 00:50:53,312 --> 00:50:59,032 before, it'll be fine. I don't think that's entirely true. And it does come down to trade-offs. 673 00:50:59,032 --> 00:51:11,632 There is no technical solution that doesn't have a trade-off. So what's going on? So at the very top 674 00:51:11,632 --> 00:51:16,652 level, it's do we do anything at all, right? We don't

know that a quantum computer is going to 675 00:51:16,652 --> 00:51:21,692 appear. There might never be a quantum computer. There might never be one. So why take on this 676 00:51:21,692 --> 00:51:26,592 burden, this risk of like changing the cryptography in Bitcoin, of doing all this work when there's a 677 00:51:26,592 --> 00:51:29,772 chance that there might not be a quantum computer? And it's not just work. I mean, to your point about 678 00:51:29,772 --> 00:51:33,892 trade-offs, it's not even just work. It's also like Bitcoin will function differently. It will 679 00:51:33,892 --> 00:51:37,792 function differently. If we execute some of these changes. Yes, exactly. It will function differently. 680 00:51:37,792 --> 00:52:02,792 And so even at that high of a level, there's this tradeoff between the future is unknown. There is a risk. How do we measure that risk? How do we decide when it's worth it to bite the bullet and make the changes and do this? And people are going to disagree about that. And we don't have a clear cut answer. We just don't. And so somebody, we just have to make a call. We just have to go for it. Right. 681 00:52:02,792 --> 00:52:14,372 Right. And I think now, finally, you know, the most people are on the page of like, all right, if we really want to be, you know, secure money for the next hundreds of years. 682 00:52:14,372 --> 00:52:19,152 Yeah, you're right. Like cryptography will break. We have to fix this. We have to have some way of fixing this. 683 00:52:19,532 --> 00:52:26,332 I think, you know, from what I've seen over the last week, people have gotten onto this page, which I'm like, yes, good progress. Excellent. 684 00:52:27,132 --> 00:52:35,632 Elliptic curve cryptography, this is sort of like my take on that, is elliptic curve cryptography currently is arguably like the greatest single point of failure for Bitcoin right now. 685 00:52:35,632 --> 00:52:38,892 Right. Like if that breaks, the whole project basically dies. 686 00:52:39,072 --> 00:52:42,052 Yes. So like let's maybe not rely just on that. 687 00:52:42,232 --> 00:52:43,712 Yeah. Let's build in redundancy. 688 00:52:43,992 --> 00:52:44,112 Right. 689 00:52:44,292 --> 00:52:46,032 Let's build in cryptographic agility. 690 00:52:46,392 --> 00:52:47,852 Let's like fix this problem. 691 00:52:47,852 --> 00:52:48,252 Right. 692 00:52:49,112 --> 00:52:53,752 Especially when you're saying you're going to be like secure, uncensorable money for the next hundreds of years. 693 00:52:53,852 --> 00:52:54,292 Yeah, exactly. 694 00:52:54,492 --> 00:52:56,252 That's kind of you got to you kind of got to fix this. 695 00:52:56,332 --> 00:53:00,312 So even at that top level, though, there's this tradeoff of like, do we do it? 696 00:53:00,352 --> 00:53:00,992 When do we do it? 697 00:53:01,032 --> 00:53:01,632 How do we do it? 698 00:53:01,672 --> 00:53:01,852 Right. 699 00:53:02,372 --> 00:53:06,532 Then you kind of start to get into the weeds of, all right, fine. 700 00:53:06,792 --> 00:53:07,772 So what do we need to do? 701 00:53:08,532 --> 00:53:13,032 Well, we need a signature scheme that, you know, is post-quantum. 702 00:53:13,032 --> 00:53:13,972 We need a post-quantum. 703 00:53:13,972 --> 00:53:15,092 We need post-quantum cryptography. 704 00:53:15,672 --> 00:53:20,192 We got to provide a way for people to move to this post-quantum signature scheme. 705 00:53:21,212 --> 00:53:23,772 And this is like a multi-step process. 706 00:53:23,772 --> 00:53:45,572 And then at some point, we might actually want to stop supporting a vulnerable scheme. Maybe we want a break glass in case of, like, if a quantum computer were to appear literally tomorrow, do we have a plan for what we could do? Do we have a plan for people who don't move but might wake up in five years and be like, oh, no, I missed it, to move then? 707 00:53:45,572 --> 00:54:08,372 You know, so there's a tree of coins. Exactly. So there's like all these different parts and phases and like use cases that you want to be able to handle. And they all require tradeoffs. They're all like, do you privilege the people who are active now and are ready to go? Or do you try to design something that is more targeted towards the people who are going to wait and be lazy? 708 00:54:08,372 --> 00:54:32,932 Do you, you know, do you just say like, hey, if you if you're using this stupid wallet that reveals your public key that's on you, don't use that wallet? Or do you say people are using wallets that reveal their public keys? We need to do something about this, like even if it's imperfect, you know, is it OK that it's a little bit more inefficient, you know, to move to even something that like creates post-quantum optionality? 709 00:54:32,932 --> 00:54:37,012 or do you say, no, no, no, it's got to be cheaper than what we have now or nobody will move? 710 00:54:37,492 --> 00:54:41,452 Do you like, how do you choose the post-quantum signature scheme? How do you trade off between 711 00:54:41,452 --> 00:54:46,152 like, this one's really big. This one has additional like cryptographic security assumptions. 712 00:54:46,492 --> 00:54:51,072 This one's really slow. This one, you know, doesn't let us do any of the cool cryptographic 713 00:54:51,072 --> 00:54:54,152 tricks that we like really like doing in Bitcoin. So there's all these things. 714 00:54:54,872 --> 00:54:58,692 Nothing checks all the boxes. So it's like, which box are you going to leave unchecked? 715 00:54:58,692 --> 00:55:10,972 Do you have a point of view, A, about, you know, what kind of proposals that we've seen around this so far that you, you know, like or do you intentionally not take a position on such things? 716 00:55:11,032 --> 00:55:14,732 No, no, I'm happy to take a position, but I'm just kind of getting into this. 717 00:55:14,832 --> 00:55:17,252 Like, I'm not a cryptographer by training. 718 00:55:17,332 --> 00:55:18,872 I'm a computer scientist, but not a cryptographer. 719

00:55:19,052 --> 00:55:21,232 And so, you know, I haven't been. 720 00:55:21,652 --> 00:55:22,392 You're reviewing. 721 00:55:22,732 --> 00:55:23,812 I'm reviewing. 722 00:55:24,012 --> 00:55:24,432 I'm looking. 723 00:55:24,632 --> 00:55:24,852 Right. 724 00:55:24,852 --> 00:55:28,072 And these things are like subtle and nuanced. 725 00:55:28,072 --> 00:55:44,412 And sometimes you're like, yeah, this seems like a great idea. And then you're like, oh, wait, actually, for this wallet and use case, it's super important. It makes this tradeoff that is not great and it's not going to work out well for people. And so it takes like a lot of time to get your head around all of these things. I mean. 726 00:55:44,412 --> 00:55:59,792 And it's very emotional for people. I mean, like, I think I'm noticed something that I notice is when you bring this topic up, people a gut reaction, what we think we should do when they really haven't done the research of like understanding any of the implications of the problem itself or the solutions. 727 00:56:00,212 --> 00:56:07,132 Yeah. Yeah, totally. 100 percent. I mean, what's out there right now, there's BIP 360, which I know you are an author on. 728 00:56:07,252 --> 00:56:10,892 And I'm not just saying this because you're an author, but it seems seems like a good idea. 729 00:56:10,892 --> 00:56:40,492 I mean, I'm like, I'm like, it's a very conservative baby. It's a good foundational and to be clear, non-controversial, relatively non-controversial. It is not the end of the road. But I think it seems like a pretty good idea to me. It's step one of like 100. Yeah. But yeah, Merkle route. I think I think solid. A lot of thoughts gone into it so far. Seems like a good idea. Need some more time to think about it. But overall, I'm like, yeah, just came from Up Next where I saw Jonas Nick gave a talk about the work he's been doing on 730 00:56:40,492 --> 00:56:45,872 signature schemes. He came on the show yesterday. We talked about shrinks and shrimps on the show 731 00:56:45,872 --> 00:56:50,932 yesterday. I have a feeling that I mean, it sounds like that BIP is coming. Yeah. And it's super cool. 732 00:56:51,112 --> 00:56:57,632 I was very apprehensive about the statefulness beforehand. And I understand it a little bit 733 00:56:57,632 --> 00:57:01,432 better now. Slightly less apprehensive about it, given the fallback mechanism. 734 00:57:02,052 --> 00:57:06,952 Want to understand the fallback mechanism better. Want to get some wallet developers involved to 735 00:57:06,952 --> 00:57:12,492 understand how they feel about the statefulness. Also, still giant signatures, still big ones, 736 00:57:12,632 --> 00:57:17,192 you know, like still it's not it's not more stateful, the smaller they are. But paying for 737 00:57:17,192 --> 00:57:21,452 anyone who doesn't know what we're talking about to go watch the Jonas Nick episode. Yeah. So but 738 00:57:21,452 --> 00:57:27,532 very cool work. Great presentation. Need some people to beat their heads against it for a while 739 00:57:27,532 --> 00:57:33,912 and like pick over all the corners and things like that. But, you know, pretty cool. And then, 740 00:57:33,912 --> 00:57:41,412 you know in the far out future uh would be great if isogeny based crypto turns out to be something 741 00:57:41,412 --> 00:57:47,952 that that works for bitcoin because it has a lot more structure and so we can still do a lot of 742 00:57:47,952 --> 00:57:53,112 really cool things um cryptographically i didn't know that yeah but it's not ready yet it's like 743 00:57:53,112 --> 00:57:59,052 pretty theoretical right it's like it's still like needs a lot of shaking out um one thing i worry 744 00:57:59,052 --> 00:58:06,412 about is like we rely on NIST to kind of like standardize cryptographic primitives. Right. 745 00:58:07,092 --> 00:58:11,012 And if Bitcoin goes in a different direction than what everybody else is looking at, 746 00:58:11,012 --> 00:58:15,152 that means that the stuff that we have is going to have less eyes on it, is going to be less 747 00:58:15,152 --> 00:58:21,632 well tested, is going to be less robust. And so, you know, I'm wondering, do we want to get 748 00:58:21,632 --> 00:58:26,292 involved in the NIST process? Do we want to start poking them and making sure that like the people, 749 00:58:26,292 --> 00:58:29,432 do we want to start getting the people who are hardcore working on post-concept 750 00:58:29,432 --> 00:58:34,012 cryptography to understand the Bitcoin use cases and needs better so they can 751 00:58:34,012 --> 00:58:37,172 incorporate them? Do they have an incentive to do that? Will they even bother? 752 00:58:37,352 --> 00:58:37,892 I don't know. 753 00:58:37,992 --> 00:58:41,012 A lot of Bitcoiners just don't like NIST because of its government ties, right? 754 00:58:41,152 --> 00:58:41,532 All right. 755 00:58:42,652 --> 00:58:44,512 It's just funny. It's just interesting. 756 00:58:44,512 --> 00:58:47,752 They're doing free work for you. They're standardizing. Like, look, okay, 757 00:58:47,832 --> 00:58:50,192 just like take advantage of it where you can get it. I understand. 758 00:58:50,832 --> 00:58:54,792 There might be a backdoor, blah, blah, fine. But it's like you have, you know, 759 00:58:54,792 --> 00:58:56,892 It's the highest level research we have on these. 760 00:58:56,992 --> 00:59:01,732 Yeah. I mean, it's like, yeah, yeah. And I wouldn't ignore it. Let me put it that way. 761 00:59:01,992 --> 00:59:07,372 So that's something that I'm thinking about right now. And, you know, we'll see. We'll see where this goes. 762 00:59:07,372 --> 00:59:31,632 Yeah. Do you have a point of view about it's funny because, you know, many people are saying, well, yeah, we can have a million technical arguments about the PQ signatures and those will continue to go on. But fundamentally, that's a much easier problem to solve than something like Satoshi's coins or what do we do about quantum vulnerable

coins? I think that's where most people are presuming the consensus government challenge will really arise. 763 00:59:31,632 --> 00:59:42,292 Yeah. And I mean, I get it. But like, we don't have to answer that question right now. And we don't have to let that gate this other really important work. 764 00:59:42,612 --> 00:59:43,312 Oh, that's interesting. 765 00:59:43,592 --> 00:59:50,952 Yeah. Like, like that question becomes relevant when there is a quantum computer. I'm not saying we don't have to have a plan in place. 766 00:59:51,052 --> 00:59:53,232 Right. Well, I was going to say you need to have a plan for that as well. 767 00:59:53,312 --> 00:59:59,532 You need to have a plan. But how about we give everybody the option of moving to quantum safe cryptography first? 768 00:59:59,532 --> 01:00:03,532 And then see how many quantum vulnerable coins basically are left to deal with. 769 01:00:03,532 --> 01:00:11,492 Like right now, they're like other than, you know, Avihu's QSB thing, which I'm sorry, is not practical. 770 01:00:11,792 --> 01:00:14,532 Yes, it's not the way that we're going to actually make Bitcoin quantum safe. 771 01:00:14,532 --> 01:00:15,572 Really bad tradeoffs. 772 01:00:15,652 --> 01:00:16,652 Even he says so. 773 01:00:16,752 --> 01:00:16,892 Yeah. 774 01:00:17,092 --> 01:00:24,752 And, you know, like aside from that, literally there's no way to make your coins quantum safe right now. 775 01:00:25,052 --> 01:00:26,192 Like really quantum safe. 776 01:00:26,272 --> 01:00:26,372 Right. 777 01:00:26,372 --> 01:00:33,092 You can hide them behind a hash, but that's not for short exposure attacks. 778 01:00:33,092 --> 01:00:38,832 Yeah, exactly. It's not a good solution. And so how about we give people that option now? 779 01:00:39,072 --> 01:00:49,032 We create a robust, like, real way for people to do that. Let's not hold that up on a philosophical conversation about, like, what to do about Satoshi's coins. 780 01:00:49,112 --> 01:00:54,012 We don't have to answer that to do this. Let's do this. This is the most important thing to do right now. 781 01:00:54,012 --> 01:01:13,132 It's interesting because, you know, one of the conversations that I've had at length with people like Hunter and Michael Casey and some of these folks that I've been working on these proposals with is, you know, well, the cleanest way to handle this would be to have like one nice little Qubit activation that includes everything to quantum heart and Bitcoin in one go. 782 01:01:13,372 --> 01:01:13,452 No. 783 01:01:13,952 --> 01:01:16,152 Very interesting that you. 784 01:01:16,292 --> 01:01:16,492 Right. 785 01:01:16,612 --> 01:01:22,052 But but basically what you're saying is, is like that will actually stall progress on a lot of important things. 786 01:01:22,052 --> 01:01:25,412 I think if you have to answer everything all at once, it's not going to happen. 787 01:01:25,772 --> 01:01:25,952 Yeah. 788 01:01:26,172 --> 01:01:30,132 I say let's make Bitcoin quantum safe as soon as possible. 789 01:01:30,552 --> 01:01:30,932 Let's figure that. 790 01:01:30,932 --> 01:01:33,892 Just at the transaction level, not the quantum vulnerable coins level. 791 01:01:33,972 --> 01:01:34,832 Let's give people an option. 792 01:01:35,152 --> 01:01:35,992 This is my take. 793 01:01:36,172 --> 01:01:37,852 And I'm open to being convinced otherwise. 794 01:01:38,112 --> 01:01:41,252 But I think that would do a lot to alleviate uncertainty. 795 01:01:41,252 --> 01:01:43,192 And I totally respect. 796 01:01:43,372 --> 01:01:48,012 There's some people who are like, what's the point of that, Neha, if we haven't resolved this bigger problem? 797 01:01:48,012 --> 01:01:52,592 because even if 50% of the coins move, 798 01:01:52,672 --> 01:01:54,652 60% of the coins move, 70% of the coins move, 799 01:01:54,892 --> 01:01:57,012 if 30% of the coins are still quantum vulnerable, 800 01:01:57,172 --> 01:01:57,732 Bitcoin's broken. 801 01:01:58,052 --> 01:02:01,212 I'm not convinced beyond a shadow of the doubt 802 01:02:01,212 --> 01:02:04,172 that the answer to that, that that's true. 803 01:02:04,172 --> 01:02:06,292 I think that we could like... 804 01:02:06,292 --> 01:02:18,078 But there clearly a strong probability that it true or a possibility that it true We need to do more work to understand that I think and I think some allocators and this is where the technical people often are wrong 805 01:02:18,078 --> 01:02:23,198 And the actual like smart money often has more information is that the allocators have actually 806 01:02:23,198 --> 01:02:27,618 run the numbers on that. The technical people have not. The developers have not. They run the numbers 807 01:02:27,618 --> 01:02:32,338 from the perspective of like could the market handle if you dump coins on the market. I don't 808 01:02:32,338 --> 01:02:36,378 care if the price of Bitcoin crashes temporarily. Like that's not what I'm optimizing for. I know 809 01:02:36,378 --> 01:02:38,858 if some people care about that. And I understand they're optimizing for that. I don't think it'll 810 01:02:38,858 --> 01:02:43,498 be that. I mean, temporary, though, Neha, it's like temporary for like a decade, like temporary 811 01:02:43,498 --> 01:02:47,398 for I mean, like, you know, I don't think it's going to be a quick, quick down. Yeah, true. 812 01:02:47,398 --> 01:02:52,258 Is there but is there a version of Bitcoin that can continue operating in that environment? I don't 813 01:02:52,258 --> 01:02:57,158 know the answer to that question. Right. I understand. Yeah. I just I don't know the answer 814 01:02:57,158 --> 01:03:01,958 to that question. I would like to figure I would like to get more confidence either way from an 815 01:03:01,958 --> 01:03:06,338 economic perspective, from a price perspective, also from a technical security perspective, 816 01:03:06,338 --> 01:03:10,918 like we've just talked about, I think that mining could totally break down if that happens.

817 01:03:11,258 --> 01:03:11,418 Exactly. 818 01:03:11,418 --> 01:03:11,638 Exactly. 819 01:03:12,018 --> 01:03:13,318 And that means it doesn't work anymore. 820 01:03:13,558 --> 01:03:13,838 Exactly. 821 01:03:13,998 --> 01:03:15,938 But I don't know that that's true. 822 01:03:16,198 --> 01:03:16,858 And this is like... 823 01:03:16,858 --> 01:03:20,178 Well, and also there is, I mean, again, so you're still in research phase here, but like 824 01:03:20,178 --> 01:03:23,618 to your point, there's a lot to look at with that conversation. 825 01:03:23,618 --> 01:03:29,258 And I think the thing that I think is really important is if I knew one way or the other, 826 01:03:29,258 --> 01:03:33,098 I could convince other people and I think it would be a lot easier to have this conversation. 827 01:03:33,418 --> 01:03:40,738 I think part of the reason that it's just like people talking past each other and like debate is because we don't actually have the facts. 828 01:03:40,878 --> 01:03:44,578 Everybody's kind of operating based on vibes or like kind of like assumptions. 829 01:03:44,958 --> 01:03:53,478 Well, yeah, exactly. And so the more clarity we can get, the more the more factual we can get, then the easier it's going to be to get everybody on the same page. 830 01:03:53,478 --> 01:04:20,718 Well, and one thing that I mean, you know, again, the sort of economic node conversation, I hear this a lot, like people saying basically, well, like it doesn't really matter what happens with the fiat price because like Bitcoin is still going to be Bitcoin no matter what. But it is interesting because ultimately the economic nodes, they care about the price. And so they will have some they're going to do their thing, which is probably advocate with their money as to what we should do with Satoshi's coins no matter what. 831 01:04:20,718 --> 01:04:23,758 So it starts to get you start to get into the circular conversation. 832 01:04:23,758 --> 01:04:29,538 Game theory is complicated and it is recursive and it depends on what everyone thinks everyone else is going to do. 833 01:04:29,878 --> 01:04:31,958 And yeah, it's super interesting. 834 01:04:32,338 --> 01:04:32,658 Yeah. 835 01:04:32,938 --> 01:04:38,478 I do think your point is very well taken that we don't need to figure out Satoshi's coins right now. 836 01:04:38,478 --> 01:04:43,198 And I do think that will be the most controversial piece of this for sure. 837 01:04:43,198 --> 01:04:48,958 and to stall on some of these other really important kind of technical elements 838 01:04:48,958 --> 01:04:52,838 until we figure out, get consensus on Satoshi's coins is like a disaster. 839 01:04:52,958 --> 01:04:56,638 I don't think we need to get consensus on that before we can do good things. 840 01:04:56,638 --> 01:04:56,778 I agree, yeah. 841 01:04:57,058 --> 01:04:59,078 But, you know, I'm open to being convinced otherwise. 842 01:04:59,218 --> 01:04:59,538 No, no, no. 843 01:04:59,598 --> 01:05:01,758 I

mean, I've thought about this a lot. 844 01:05:02,258 --> 01:05:03,298 And I think you're right. 845 01:05:03,398 --> 01:05:04,778 I actually think that that's really good. 846 01:05:04,778 --> 01:05:22,718 I wonder how calming it will be to the market if, you know, just having the post-quantum transactions piece kind of handled, how much that will mean to the economic actors who I think are mostly focused on the Satoshi's coins issues right now. 847 01:05:23,198 --> 01:05:27,418 But I do think that at the very least there's some like meaningful. 848 01:05:28,098 --> 01:05:28,338 Yeah. 849 01:05:28,778 --> 01:05:29,658 That's an interesting question. 850 01:05:29,738 --> 01:05:30,638 I don't know the answer to that. 851 01:05:30,798 --> 01:05:31,098 Yeah. 852 01:05:31,478 --> 01:05:32,618 I mean, we'll see. 853 01:05:32,618 --> 01:05:33,198 We'll see. 854 01:05:33,198 --> 01:05:40,338 But I do think to your point, like, no matter what, it's definitely moving in the right direction to just get the post-quantum transactions piece underway. 855 01:05:40,578 --> 01:05:43,498 I don't know that we're going to decide what happens with Satoshi's coins. 856 01:05:43,638 --> 01:05:46,078 I suspect there will be a fork. 857 01:05:46,178 --> 01:05:46,538 I agree. 858 01:05:46,718 --> 01:05:49,418 And so, you know, there will be fork wars. 859 01:05:49,558 --> 01:05:50,138 Yeah, exactly. 860 01:05:50,378 --> 01:05:54,838 And so, you know, it's just kind of like it's going to go both ways and we'll see what happens. 861 01:05:55,078 --> 01:05:55,718 I mean, I agree. 862 01:05:55,798 --> 01:05:57,758 I think it's not probable. 863 01:05:57,998 --> 01:06:02,198 It's unlikely that we're all going to, like, come to consensus about what to do. 864 01:06:02,198 --> 01:06:04,458 It's more likely going to get battled out. 865 01:06:04,678 --> 01:06:10,558 Unless it's so clear that Bitcoin cannot work and everyone becomes convinced of that. 866 01:06:10,718 --> 01:06:10,898 Yeah. 867 01:06:11,218 --> 01:06:12,838 I mean, I think there's a slight chance. 868 01:06:13,038 --> 01:06:16,098 Because of like mining incentives or like something at a fundamental technical level. 869 01:06:16,278 --> 01:06:18,218 Not just all the institutions fail. 870 01:06:18,218 --> 01:06:18,778 No, no, no, no. 871 01:06:18,778 --> 01:06:20,298 It's got to be deeper than that. 872 01:06:20,598 --> 01:06:24,638 But at a very fundamental technical level, if we can prove it doesn't work. 873 01:06:24,678 --> 01:06:25,218 From a mining. 874 01:06:25,378 --> 01:06:27,378 Mostly it's got to be mining related at that point. 875 01:06:27,438 --> 01:06:30,618 That's where fiat and Bitcoin meet, right, is the area of mining. 876 01:06:30,618 --> 01:06:31,298 Yeah, yeah. 877 01:06:31,298 --> 01:06:45,218 Yeah. I mean, it's not even fiat and Bitcoin. It's incentives. And it's like, can you progress the blockchain? Can you continue? It is a technical question. And I think that's the one that's at the top

of my mind right now. There might be other technical questions, but I think if you can prove it breaks. 878 01:06:45,218 --> 01:06:59,218 But the harm of Satoshi's coins ripping, liquidating, basically, is fundamentally tied to fiat price destruction, right? Like that is the harm in it. Like those coins just launching onto the market, if there's no trading value, it doesn't really matter, right? 879 01:06:59,218 --> 01:07:25,478 Well, OK. No, it's about the reward to the miner and is the miner incentivized to continue building on that chain. And miners are incentivized by the fiat price. Exactly. This is what I'm saying. But it's not about like the price tanking because Satoshi's coins are on the market. It's about like. But if the price tanks, then that fundamentally changes the economics of mining. That is also another way. That is also another reason why mining might break. But it's a little bit different than the reason that I'm saying. Yeah. 880 01:07:25,478 --> 01:07:42,118 But there's there's a lot. The way it's funny, like working at Mera, I've been thinking about this so much lately. It's like I really realized that, like, you know, the the mining is the part is the technical part of Bitcoin where you can't ignore fiat anymore. 881 01:07:42,118 --> 01:08:00,818 Right. Because electricity is currently paid for in dollars. So until we're on a Bitcoin standard and you're buying energy in Bitcoin and the entire world agrees that energy is priced in Bitcoin, Bitcoin is fundamentally at a security level tied to fiat and the trading value between Bitcoin and fiat because of mining. 882 01:08:00,818 --> 01:08:05,898 And they're short markets. Short markets are another place where they are intricately tied together. 883 01:08:05,898 --> 01:08:25,498 Exactly. So it's interesting. But OK, so question for you, circling back to the governance. Do you think on this like quantum conversation, like how do you see this playing out? So corporations are obviously taking interest in how the tech evolves in the short term, like in the next like year, two years, three years. 884 01:08:25,498 --> 01:08:43,698 Like, are we going to see, you know, companies who have big stakes in Bitcoin and really want to make sure that, you know, this problem is handled higher developers or fund developers? Like, how are we going to start to see corporations potentially right now? They're just talking to people. Right. But but that could change as this. 885 01:08:43,698 --> 01:09:10,138 Yeah, I think it's inevitable. I think it'll start with the corporations funding developers or funding developer organizations more closely and being like a little bit more like we want you to work on focus on this. Right. Like it won't be like you guys have to build X, but it'll be like we want to fund this organization that's really going to focus on, you know, mining, like what happens when when the block subsidy goes away or like really going to focus on the quantum question or something like that. 886 01:09:10,138 --> 01:09:19,558 And then I think, yeah, I think eventually there'll be more, you know, if Bitcoin succeeds, then there will be more of a tie in. 887 01:09:19,678 --> 01:09:22,098 Like they'll realize they need to have a role. 888 01:09:22,618 --> 01:09:27,458 However, I think there'll be less of an incentive to have a role, the less work that needs to be done on Bitcoin. 889 01:09:27,918 --> 01:09:34,758 So maybe once we navigate quantum, once we navigate the mining subsidy block reward question. 890 01:09:35,038 --> 01:09:35,558 The existential threats. 891 01:09:35,698 --> 01:09:36,198 Yeah, exactly. 892 01:09:36,198 --> 01:09:38,798 Once the existential threats are handled, then they won't care anymore. 893 01:09:38,798 --> 01:09:47,718 Yeah, well, because it'll just kind of work, right? And so, you know, there's less of an incentive. So I think you'll have those two things kind of like working against each other. 894 01:09:47,718 --> 01:10:08,278 Are those the two existential threats that you think about is like quantum and the fee market and the subsidy declining? Are those like the two things that like, yeah, there's three, actually. So one is, yeah, one is quantum. One is what happens when the block subsidy goes away. And then the third is... 895 01:10:08,798 --> 01:10:19,658 I really think that if Bitcoin is just custodied by even if it's hundreds of large financial institutions, I think it loses its narrative as digital gold. 896 01:10:19,898 --> 01:10:22,398 Like, I think it becomes no longer interesting. 897 01:10:22,638 --> 01:10:25,118 I think, you know, it'll just it'll die. 898 01:10:25,118 --> 01:10:25,818 Well, what's the point? 899 01:10:26,058 --> 01:10:28,898 Yeah, I mean, and this is a huge I completely agree. 900 01:10:28,898 --> 01:10:30,898 I think this is like the custody conversation. 901 01:10:31,838 --> 01:10:32,058 Yes, exactly. 902 01:10:32,058 --> 01:10:42,698 Which is intimately linked with the scaling conversation, right? Because right now, it's not even possible for 8 billion people to self-custody their assets. There's just not enough throughput for that, right? 903 01:10:44,518 --> 01:10:48,938 Interesting. I wasn't sure if we were going to get to L2. We really went through my whole list just now. 904 01:10:48,938 --> 01:10:49,578 Yeah, it's all connected. 905 01:10:49,778 --> 01:10:54,278 It's all connected. It's all connected. It's so funny. I wasn't sure we were going to get into the L2. 906 01:10:54,278 --> 01:10:54,798 Essential risk to Bitcoin. 907 01:10:54,798 --> 01:11:09,018 Yeah. Yeah. But I think that that's something that people don't really realize. You know, people think about scaling and they think about like new use cases, but they don't necessarily realize that like scaling is actually about self-custody, like the ability to self-custody. 908 01:11:09,018 --> 01:11:24,518 I need to and Robin Linus talks about this a lot. I've spoken about this with him at at length.

If I need a third party to execute my purchasing power, like to make payments, to turn my store of value Bitcoin into actual goods and services and use it as payments. 909 01:11:24,518 --> 01:11:35,138 If I can't do that self custodially, if I need, you know, to exchange for dollars or, you know, whatever, you know, some other custody solution, do that. It's not permissionless. Like, what is the point? 910 01:11:35,138 --> 01:11:58,298 Yeah, yeah, yeah. No, yeah, I agree. Or if you if you need an institution to allow you to move your Bitcoin, that's that's not self-custody. And and I really think you have to be comfortable thinking on the edges here. Like I under look, I understand most people in the world aren't going to self-custody. That's OK. That's fine. I am a firm believer. 911 01:11:58,298 --> 01:12:03,798 You don't think there's ever a universe where the UX problems get solved and people can just self-custody? 912 01:12:04,078 --> 01:12:05,238 That would be super cool. 913 01:12:05,538 --> 01:12:06,298 That would be awesome. 914 01:12:06,718 --> 01:12:09,478 That would be I am not holding my breath for that world, but that would be great. 915 01:12:09,598 --> 01:12:10,638 I don't know that it's impossible. 916 01:12:10,778 --> 01:12:11,258 Let's dream. 917 01:12:11,378 --> 01:12:12,038 Yeah, let's dream. 918 01:12:12,138 --> 01:12:12,298 Sure. 919 01:12:12,298 --> 01:12:14,258 But, you know, whatever. 920 01:12:14,478 --> 01:12:17,058 I mean, I think there's always a risk to self-custody. 921 01:12:17,198 --> 01:12:18,458 Like it might you might lose it. 922 01:12:18,598 --> 01:12:22,938 And so there's always going to be people who want like a little bit, you know, want someone else to handle that for them. 923 01:12:23,038 --> 01:12:23,258 Maybe. 924 01:12:23,478 --> 01:12:26,018 And maybe we invent some super cool way for them to have back. 925 01:12:26,018 --> 01:12:29,018 Or maybe Fetty is like this type of middle ground solution or whatever. 926 01:12:29,398 --> 01:12:30,398 That's not self-custody. 927 01:12:30,698 --> 01:12:31,598 No, no, no, no, no. 928 01:12:31,598 --> 01:12:33,698 But middle ground solution in terms of like. 929 01:12:34,338 --> 01:12:34,518 Yeah. 930 01:12:34,678 --> 01:12:35,018 No, no, no. 931 01:12:35,018 --> 01:12:35,838 Yes, yes, yes. 932 01:12:36,098 --> 01:12:37,358 Custody on a spectrum. 933 01:12:37,798 --> 01:12:38,138 Yeah, totally. 934 01:12:38,238 --> 01:12:40,478 At least I get to choose my custodian kind of thing. 935 01:12:40,638 --> 01:12:40,898 Yes. 936 01:12:41,818 --> 01:12:46,878 So I'm not I don't believe that like everyone in the world is going to self-custody. 937 01:12:46,958 --> 01:12:48,418 They're going to make the choice that's right for them. 938 01:12:48,518 --> 01:12:50,058 And I'm a firm believer that that's OK. 939 01:12:50,358 --> 01:12:54,258 You meet people where they are and you don't assume you know what's best for them. 940 01:12:54,258 --> 01:12:58,818 You let them choose what's best for themselves. That's self-sovereignty. That's how it works. 941 01:12:59,098 --> 01:12:59,498 Yeah, totally. 942 01:12:59,978 --> 01:13:07,918 And so, but I think this is super important. I think that anyone who wants to self-custody 943 01:13:07,918 --> 01:13:15,038 should be able to. Okay. And that is a very different thing. And that means I think everyone 944 01:13:15,038 --> 01:13:20,298 who wants to self-custody should be able to. You have to be able to support that. And if you can't 945 01:13:20,298 --> 01:13:26,398 support that. That's a big problem. It means people are going to be trapped. And it you know, 946 01:13:26,418 --> 01:13:30,658 I think you start to very quickly lose the plot. 100 percent. I think Robin Linus is going to like 947 01:13:30,658 --> 01:13:34,898 this. We should clip this and send this to Robin Linus because this is what he's banging the drum 948 01:13:34,898 --> 01:13:40,618 on is basically it's like, OK, yes, we can't control adoption, basically, of self-custodied 949 01:13:40,618 --> 01:13:43,138 solutions. And I don't want to. I don't want to tell people what to do. That's not like me 950 01:13:43,138 --> 01:13:47,278 personally. I'm like, you do you. OK. Right. Not my goal to tell you how you should be living your 951 01:13:47,278 --> 01:13:53,778 life. But we should at least be able to technically have the capability of offering 8 billion people 952 01:13:53,778 --> 01:13:59,458 self-custodial tools for payments. The people who want to, yes. And if there's anyone who can't, 953 01:13:59,618 --> 01:14:04,378 that means that, yeah, I mean, I don't know if it's possible, though. I don't know if it's 954 01:14:04,378 --> 01:14:09,258 technically possible to do that with the tradeoffs of decentralization. But I don't know that it's 955 01:14:09,258 --> 01:14:14,198 impossible. That's what's kind of exciting. We seem to be working towards it. Yeah. 8 billion 956 01:14:14,198 --> 01:14:18,878 people is a lot of people. It's true. So what are your I mean, do you have favorites on the L2 957 01:14:18,878 --> 01:14:27,798 scaling solutions? Yeah, I think I mean, what? OK, what I really wish is that we had the primitives 958 01:14:27,798 --> 01:14:34,558 in Bitcoin script to open up the design space here. Right. Like credit to Robin Linus for 959 01:14:34,558 --> 01:14:40,158 torturing Bitcoin script. Yeah. Like every other month he comes out with something new and I'm just 960 01:14:40,158 --> 01:14:44,778 like, oh, my God, like, this is crazy. You know, credit to him for being able to figure out that 961 01:14:44,778 --> 01:14:51,898 stuff. He should not have to be doing this. Like, we should have the ability to explore the design 962 01:14:51,898 --> 01:14:56,758 space of expanding the number of people who can self-custody with the minimal number of tradeoffs. 963 01:14:56,918 --> 01:15:01,678 And in layman's terms, what you're actually saying is we should have more expressive opcodes that 964

01:15:01,678 --> 01:15:06,998 enable trustless payments. Yes. Okay. Yeah. I don't like the word trustless, but yes, like, 965 01:15:06,998 --> 01:15:11,778 you know, it's always about what are your security assumptions. This is my this is like my pet peeve. 966 01:15:11,798 --> 01:15:18,038 Bitcoin's not trustless. You are assuming that there isn't a quantum computer out there that has broken ECDSA and Schnorr. 967 01:15:18,218 --> 01:15:25,738 Like, you know, there are security assumptions. Whenever you're using these systems and cryptography and this technology, 968 01:15:25,738 --> 01:15:31,978 you're assuming 51 percent of the miners are including and don't have like a fork double spending you the last time you received Bitcoin. 969 01:15:31,978 --> 01:15:36,358 there's no such thing as trustlessness. I know a lot of people disagree with me on that. They 970 01:15:36,358 --> 01:15:40,678 really like that as a shorthand. I think of it as like the fewest additional security assumptions 971 01:15:40,678 --> 01:15:44,238 above and beyond vanilla Bitcoin. But fundamentally, not to get too off track here, 972 01:15:44,378 --> 01:15:48,398 we're talking about soft works for opcodes, right? Like you would like more expressive opcodes. 973 01:15:48,418 --> 01:15:52,738 I think that'd be great. I think that'd be cool. I think that that would enable us building 974 01:15:52,738 --> 01:15:57,278 really exciting things and not, you know, futzing with the base layer. Like, yeah, 975 01:15:57,278 --> 01:16:09,058 That'd be great. Do you have any concerns? And again, I'm broadly on your team there. But do you have any concerns about, you know, potential negative externalities associated with increased expressivity? 976 01:16:09,058 --> 01:16:36,558 The biggest negative externalities are the following. Number one is MEV, right? So, again, going back to how is this going to incentivize miners and is this going to be a centralizing force on miner, on miners, on mining? That is the biggest concern. We need to work that out. I don't think it's like, I don't think you can just bring it up and say, therefore, we can't do this. I don't think that's true. 977 01:16:36,558 --> 01:16:39,298 Yeah, there might be solutions. MacRolle is working on solutions. 978 01:16:39,338 --> 01:16:46,858 And I suspect that the MEV problems will be on the L2s, not on the L1. So I don't think we should worry about it that much. 979 01:16:47,198 --> 01:16:47,518 Interesting. 980 01:16:47,758 --> 01:16:53,758 But yeah, I think we need to work it out. We need to figure it out. There's just too many things to work on. That's probably the biggest one. 981 01:16:53,758 --> 01:17:00,738 The second one is people are worried that everyone will move their Bitcoin into L2s. 982 01:17:00,778 --> 01:17:02,058 They'll lock it up and put it in L2s. 983 01:17:02,678 --> 01:17:08,258 And to that, I say, well, yeah, if people like, again, I'm it's not I'm not here to tell people what to do. 984 01:17:08,458 --> 01:17:13,798 But if people offer interesting services that they want on L2s, they're going to go use the L2s. 985 01:17:14,018 --> 01:17:15,518 And that's OK. 986 01:17:15,898 --> 01:17:18,138 The problem there, though, becomes the fee market issues. 987 01:17:18,138 --> 01:17:21,078 Right. That's why people are concerned about Bitcoin getting locked on L2s. 988 01:17:21,078 --> 01:17:31,178 Yeah, I'm not as concerned about that. If there's a tremendous like economic activity, valuable activity happening on L2s, that will come down into the L1 fees. 989 01:17:31,178 --> 01:17:46,298 You feel confident about that. Has there been any? It's actually interesting because we talk about this all the time also with Mike Casey and them. Has there been real research on that? Because that's a question that I'm like, I want to see the math. I actually don't know how that is going to play out. 990 01:17:46,298 --> 01:17:59,738 I mean, I think it's use of Bitcoin. And so it leads to transaction fees. Right. But but it's but it's by definition, like your limit, you're reducing use and fees that would be paid on L1 to move to L2. 991 01:17:59,738 --> 01:18:20,818 I guess I'm like a big believer in Yevon's paradox, right? You know, Yevon's paradox. The Jones paradox is like this idea that if you make a technology cheaper, actually, like, OK, if you make a technology cheaper, it increases use. But actually, you can make way more money. Like the demand will go up massively because you've made it cheaper. 992 01:18:20,818 --> 01:18:25,418 And so, you know, that's what, you know, the idea was like, I think I forgot. 993 01:18:25,658 --> 01:18:29,298 Like it was originally with like the coal and steam engines or something like that. 994 01:18:29,438 --> 01:18:35,518 Like it turned out, even though they made engines more efficient to use less coal, overall, we used way more coal. 995 01:18:35,718 --> 01:18:37,378 Because there's more demand for the products because they were cheaper. 996 01:18:37,498 --> 01:18:37,818 Exactly. 997 01:18:38,118 --> 01:18:38,218 Right. 998 01:18:38,318 --> 01:18:41,298 And Robin Linus makes this point, too, on a regular basis. 999 01:18:41,298 --> 01:18:43,538 Yeah, and I think we've just seen that happen so many times. 1000 01:18:43,618 --> 01:18:43,918 But that's theoretical, right? 1001 01:18:43,978 --> 01:18:49,878 Like is there real, I guess it's impossible to do the research because it depends on an assumption that adoption will happen. 1002 01:18:49,878 --> 01:18:51,138 This is the core challenge here. 1003 01:18:51,138 --> 01:18:53,278 I think we want to build for a world where this is successful. 1004 01:18:53,638 --> 01:18:55,138 I mean, otherwise, what are we doing, right? 1005 01:18:55,338 --> 01:18:58,538 Like, are we building for a world where like 20 people use Bitcoin? 1006 01:18:58,978 --> 01:19:00,558 Is it chicken or the egg, though? 1007 01:19:00,678 --> 01:19:02,498 Is it I mean, what do we see

happening? 1008 01:19:02,738 --> 01:19:04,798 You know, adoption of what comes first? 1009 01:19:05,018 --> 01:19:09,858 Adoption of payments that push, you know, actual technical solutions for payments forward? 1010 01:19:09,918 --> 01:19:12,378 Or do we need the tech to exist in order to see the adoption? 1011 01:19:12,558 --> 01:19:13,478 This is the big question. 1012 01:19:13,598 --> 01:19:13,838 Yeah. 1013 01:19:13,838 --> 01:19:15,178 And the answer is both. 1014 01:19:15,178 --> 01:19:18,878 And and but the tech to me is the physics. 1015 01:19:18,878 --> 01:19:24,038 like it's gravity. If gravity doesn't work, you can't do things with gravity. So you have to make 1016 01:19:24,038 --> 01:19:27,998 it work so that you can you can bring the use cases. You're right. The use cases might not come. 1017 01:19:28,098 --> 01:19:32,318 But then what were we doing anyway? It was never going to work. Interesting. Well, this has been I 1018 01:19:32,318 --> 01:19:37,738 am amazed that we got through like literally all of the topics that I was like thinking. I was like, 1019 01:19:37,798 --> 01:19:42,878 I was like, you know, kind of framing my conversation with Neha. And these were all 1020 01:19:42,878 --> 01:19:45,678 things I was like, well, if we have time, we'll get to this. But you're right. They're all 1021 01:19:45,678 --> 01:19:50,518 connected. What was the theme? Like, yeah. Well, originally I was like, let's talk about governance 1022 01:19:50,518 --> 01:19:54,978 and that will like kind of naturally kind of move into a conversation about how quantum is affecting 1023 01:19:54,978 --> 01:19:58,918 governance. Right. And that was sort of the original theme that I wanted to talk about here. 1024 01:19:58,918 --> 01:20:03,778 But in my sort of backup list of questions, I was going to ask you about the fee market, 1025 01:20:03,978 --> 01:20:09,458 other existential threats to Bitcoin, L2s. I mean, these are all your areas of expertise. So 1026 01:20:09,458 --> 01:20:14,318 and we kind of touched on everything. So it kind of worked out perfectly. Great. Yeah. Well, 1027 01:20:14,318 --> 01:20:15,698 Thank you so much. 1028 01:20:15,698 --> 01:20:16,478 Thank you for doing this. 1029 01:20:16,478 --> 01:20:17,198 This is really fun. 1030 01:20:17,318 --> 01:20:19,078 This wide ranging conversation. 1031 01:20:19,318 --> 01:20:20,058 Super fun. 1032 01:20:20,198 --> 01:20:25,458 Any final like last like shout outs you want to make related to DCI or MIT or like what 1033 01:20:25,458 --> 01:20:26,738 are you guys working on right now? 1034 01:20:26,858 --> 01:20:29,978 Like what are you like really excited about with DCI right now? 1035 01:20:30,718 --> 01:20:34,758 OK, this is like a little in the weeds, but I'm really excited about a project. 1036 01:20:34,898 --> 01:20:37,758 One of the engineers that DCI is working on called Bitcoin Kernel. 1037 01:20:37,758 --> 01:20:44,298 OK, it is a project to modularize and put like all of Bitcoin's core, Bitcoin core 1038 01:20:44,298 --> 01:20:55,318 BitcoinCore's consensus code like in one place. And what I think the reason I'm so excited about this, people might not realize BitcoinCore is like a wallet, a GUI, like a peer to peer network. Like there's all these different parts to it. 1039 01:20:55,318 --> 01:21:10,698 Oh, interesting. Not just the validating the blockchain, like important parts, staying in consensus with the network. Once you encapsulate that, I think it'll be possible to have kind of like break the core monopoly, so to speak. I think people can build different things around that. 1040 01:21:10,698 --> 01:21:14,398 So it actually affects governance ultimately, right? It does. I think it does. Yeah, yeah, yeah. 1041 01:21:14,398 --> 01:21:17,778 It'll be easier for people. I mean, basically, are you saying if you're able to kind of like... 1042 01:21:17,778 --> 01:21:23,798 People could grab that part and just plug that in and then do other cool things. Now, this doesn't 1043 01:21:23,798 --> 01:21:27,658 solve the problem of like, well, what if you want to build something different consensus-wise, 1044 01:21:27,798 --> 01:21:31,018 right? Like if you want to add new opcodes, if you want to like add new signature schemes, 1045 01:21:31,098 --> 01:21:32,738 that's still in that part. That's a different ballgame. 1046 01:21:32,938 --> 01:21:36,298 Yeah, that's a different ballgame. But I think this is a step along the way to multiple 1047 01:21:36,298 --> 01:21:41,638 implementations, to more diversity, to hopefully it being easier for more people to work on. 1048 01:21:41,718 --> 01:21:47,278 Are you pro? Well, I think broadly, I think this is generally people are interested in having more 1049 01:21:47,278 --> 01:21:50,978 implementations and competitiveness around implementations. But yeah. 1050 01:21:50,978 --> 01:21:54,778 The risk was always, what if these implementations diverge on the network? 1051 01:21:55,098 --> 01:21:58,318 Right. That's always the risk. And so this alleviates that risk. 1052 01:21:58,618 --> 01:22:01,978 Oh, it does. Because you think people basically will take this kernel and they'll sort of 1053 01:22:01,978 --> 01:22:03,778 essentially fork it, right? 1054 01:22:03,938 --> 01:22:05,958 They'll build on the kernel, and the kernel 1055 01:22:05,958 --> 01:22:07,938 will encapsulate all of the core consensus 1056 01:22:07,938 --> 01:22:10,078 part, and thus you can build 1057 01:22:10,078 --> 01:22:12,058 your cool mobile 1058 01:22:12,058 --> 01:22:13,998 whatever node, or your this, or your 1059 01:22:13,998 --> 01:22:16,038 that, and you know you'll stay in consensus 1060 01:22:16,038 --> 01:22:17,838 with the rest of the network. Oh, interesting. So the kernel 1061 01:22:17,838 --> 01:22:19,858 is the consensus piece that basically 1062 01:22:19,858 --> 01:22:21,918 cannot break in order to not hard fork, 1063 01:22:21,998 --> 01:22:23,938 essentially. But you can do your 1064 01:22:23,938 --> 01:22:26,198 own relay policy and your own everything else 1065 01:22:26,198 --> 01:22:27,958 around it. Wow, that 1066 01:22:27,958 --> 01:22:30,198 is really cool. Oh my god. 1067 01:22:30,198 --> 01:22:36,438 Well, I'm very bullish on Bitcoin kernel now because we're going to see all these interesting new relay things. 1068 01:22:36,618 --> 01:22:37,818 Yeah, I hope so. Yeah. 1069 01:22:38,198 --> 01:22:42,018 Awesome. Cool. Well, thank you so much, Neha. That's awesome. I will look out for that. 1070 01:22:42,258 --> 01:22:45,978 And yeah, anywhere that people can find you. Anything else that. 1071 01:22:46,158 --> 01:22:48,278 On X at Neha. Yeah. 1072 01:22:48,438 --> 01:22:51,238 OK. Yeah. Awesome. Cool. Well, thank you so much for coming. This was awesome. 1073 01:22:51,238 --> 01:22:52,558 Thank you. Yeah. Thanks.