Hello and welcome to an all new episode of the Bitcoin new show right here on the CryptoCast
network.
Thank you ladies and gentlemen again so much for joining us on this beautiful Sunday or
whenever you're joining us.
So if you missed the live show, make sure to join us in the comments below.
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So we very much thank you guys for all your donations and all your feedback.
We just try to bring out the Bitcoin truth to you guys as much as we can.
So with that aside, let's stop the screen sharing and get into the quick bit section
before we go ahead and get to our main three topics guys.
Let's see if we can find the notes.
It's around here somewhere.
There we go.
Okay, here we go.
So quick big section guys, the crypto exchanges out there, be careful everybody as usual,
but the crypto exchanges out there are still complete amateur hour guys.
We have some people on Kraken that flash crash that thing down to $100 if you guys didn't
catch that.
So make sure you guys are very, very careful if you are day trading on these crypto exchanges.
They are simply not up to snuff yet, but I expect this to change going over over the
next few years, three to five years specifically, people are going to start complaining about
this more and more.
So then we got Samurai Wallet releases their public open source code of their dojo software.
So this is really cool.
Up until now, of course, you've had to need to trust the Samurai servers, but now with
your public keys, but now you can run your own server instead.
So make sure you guys check that out.
Samurai Wallet still doing awesome privacy stuff, awesome privacy work for Bitcoin.
Make sure you guys check them out.
Then BCH, everybody loves them.
They have the BCH chain suffered a 51% reorg just recently where some transactions were
reversed due to some miners colluding with each other to reverse a transaction.
Make sure you guys check that out.
BitMEX did a pretty good write up on that, as they usually do.
The BitMEX research team over there, guys, make sure you check that blog out, blog.bitmex.com.
And then we got the Human Rights Foundation that have published a guide for activists
and journalists to use Bitcoin privately.
So this is really, really cool.
This is important, guys, because Bitcoin is not very simple to use and to use it privately,
it's even more difficult.
So articles like this really, really help the people that need it the most, that need
the privacy on the Bitcoin blockchain the most.
So check that article out by the Human Rights Foundation.
And then HODL, HODL, the non-custodial exchange over there in Latvia, they have enabled mainnet
trading via Lightning Network.
And I expect this trend to continue more and more exchanges enabling Lightning Network
activity wallets or Lightning Network wallets so that you can at the very least be able
to exit out of the exchange via Lightning.
So that maybe if you don't want to do trading with the trades in and out with Lightning,
you might at least be able to withdraw your funds over the Lightning Network.
So that's going to be really cool.
I expect that trend, again, to continue more and more exchanges supporting Lightning Network.
Then we have the Bitcoin symbol has been introduced into Apple and Microsoft platforms.
So this is a sign of the times, guys, Bitcoin becoming more and more mainstream.
We have now officially have the symbol in our desktop application software, our office
software.
So make sure to check that out.
It's pretty funny.
Then we got LND watchtowers, guys.
They're almost here.
I believe a pull request was recently created.
So this is getting us really, really closer.
Watchtowers are going to be very important for those wallets that are non-custodial.
So if you guys are not, if you guys don't have a custodial wallet and you're taking
care of your own, running your own Lightning Network node and taking care of your own transactions
there, this is going to be really important to have.
So make sure you guys check that out.
Again, article from Bitcoin magazine.
Those guys continue to kill it.
Shout out to Bitcoin magazine.
And then Ledger integrates native Segwit BEC32 support.
This is really cool.
BEC32 has a number of features over the standard transaction.
So guys, make sure you check that out.
More and more people are supporting that as well.
And finally, Tippin, the Lightning Network Tippin bot over there for social networks
like Twitter has released a version 1.0.
So those guys continue to keep killing it over there, keep supporting new features.
So if you guys want to really test out the Lightning Network, tippin.me wallet is a great
way to do that.
They are, I believe, custodial right now.
But I think they are having options to run it non-custodial as well coming soon.
So with that aside, guys, let's go ahead and introduce our amazing panelists.
We're going to have a tech show today, guys, when we're talking about some of the latest
tech in Bitcoin.
So I'm really excited about this.
Of course, it's near and dear to my heart.
So let's introduce some of these guests.
We have Mr. Patrick Miller, our returning guest here, guys.
He's a Bitcoin enthusiast and pundit.
Patrick, how are you doing?
I'm doing great.
Good to be here.
Thanks so much for having me again.
You bet, man.
Thanks to have you on again.
We've had Patrick on a number of episodes.
Make sure you guys check that out.
And then we got returning again, Mr. Gabriel Devine, again, Bitcoin enthusiast, entrepreneur,
and to date has never been served a gag order.
Gabriel Devine.
How are you, man?
I can't actually tell you right now.
And I've taken off the Warren Canary from my website after a visit from some men in
black.
No, I actually have not.
I have not.
I can speak totally freely.
I have been approached to promote scams a few times on Twitter.
It's always very entertaining to read their pitches in my direct messages.
So please keep sending them.
They are hilarious.
Come on, Gabriel.
They're the best, best, best profitable ICO for you.
All right.
And finally, guys, introducing the special guest today, joining us on the last minute.
So we really, really extra appreciate it.
Mr. Jameson Lopp.
You guys all know him.
Cypher Punk and CTO of Casa, Jameson, how are you doing?
Not bad.
Glad I could join you today.
Yeah, man.
Really appreciate that last minute request.
Of course, Elena was supposed to be on, but she couldn't make it due to some scheduling
conflicts.
So we're more than happy to have you as well, Jameson.
So thanks so much, man.
Let's go ahead and get right to it, guys.
We've got our three main topics.
It's going to get a little technical, but we do want to try to explain the main points
of these technologies to try to get across the pluses and minuses.
So let's go with you, Jameson, first.
The first topic we have here, guys, is the Bitcoin developers propose stronger, faster
blockchain network via Erlay.
So this is a new protocol spelled E-R-L-A-Y, created by Gregory Maxwell and Peter Woolley.
It alters the way these transactions are relayed so that they use significantly less bandwidth.
Jameson, let me ask you, could this be considered maybe a bit of a game changer for the Bitcoin
network?
Because we are talking possibly about bandwidth speeds, increases of 75%.
What is your take on this?
Yeah.
So I mean, that's one of the most, I think, prevalent improvements that we've seen in
the Bitcoin protocol over the past few years is efficiency improvements, performance improvements,
trying to continue to decrease the cost of running a fully validating node.
And I can tell you personally, from the nodes that I run, you can even go look at the stats
on statoshi.info.
Bandwidth is by far one of the biggest bottlenecks, especially if you're running a node that is
highly connected.
So my node, for example, maxes out all 125 peers or so.
And if you actually drill down on the bandwidth page, you can specifically see what the different
protocol messages are that are using the different amounts of bandwidth.
And surprisingly, one of the highest uses of bandwidth is the INV message.
And if you're not familiar with the low-level protocol, INV basically means invitation.
And it basically means you are asking another node or another node is asking you, hey, do
you have this piece of data?
Do you have this transaction?
Do you have this block?
So this is not actually being used to transmit the blocks and the transactions, but rather
as a part of almost like a SYN act type of back and forth handshake of saying, hey, do
you want this information in the first place?
And just due to the way that the data propagates on the network right now, it is incredibly
redundant.
And I'm probably just pulling this out of thin air.
But if, for example, you're connected to 100 peers, I bet that you receive INV messages
more than 50 times for every transaction and block that comes through you.
Because many, many of your different peers are going to be sending you these messages,
and then you're going to be sending to the other peers basically as the transaction or
the block floods out through the entire network.
There's really no sophisticated logic to it, it's a spray and pray to everybody, which
means it's very massively redundant and robust.
You're very likely to get your message out to the entire network very quickly, but you're
also going to be sending a lot of redundant back and forth to your peers.
So this improvement is basically changing it so that you're only going to be directly
talking to a subset of your peers, and then there's going to be a reconciliation phase
later just to make sure that you didn't miss anybody.
That's really cool.
I like the reconciliation phase later.
So just to quickly recap, guys, make sure you do check out statoshi.info.
This is Jameson's site, where he posts a lot of stats about the Bitcoin blockchain, including
some of this data here that he's saying.
And the spray and pray, I like that description more than the flood network.
Spray and pray, essentially that's what these nodes do, which has downsides and upsides
of course, but one of the downsides is the redundancy.
So essentially the main idea then is instead of announcing every transaction to every peer,
announcements are only sent directly over a small number of connections.
So that's going to be interesting.
And apparently they say that if outbound peer count was increased to 32, Erle would save
around 75% of the bandwidth.
So that is really interesting because, guys, one of the most important things we can do
for the Bitcoin protocol is to make sure that everybody can still run a full node.
So that is very, very important to be able to validate your own transactions.
That is one of the main use cases and value propositions of the Bitcoin blockchain.
So Gabriel, let's go to you.
What are your thoughts on Jameson's comments and this new protocol, this called Erle, the
ability to have faster block propagation?
How important do you think this is to the Bitcoin network in the future and how likely
you think this is of getting software in?
I just love this type of low level research and development and of course, innovation
and high massive increases in efficiency and without too bad of tradeoffs just because
it's a better invention, you know, replacing little chunks of the code that were there
as like, well, we can, you know, gossip protocol, just slap it together.
It'll work.
We've only got six users, you know, it's 2009, 10, whatever, you know, it's just like
popping it together and just make a couple of, you know, improvements, small improvements
over time.
And then, you know, in 2011, I'm sure people were like, okay, this is, there's quite a
few of these INV messages, you know, probably I'm sure people were already noticing back
then and someday this is going to be an issue and maybe we should try to come up with something
better.
And that's probably what Max, you know, Greg Maxwell and Peter Willey were doing when they
came up with mini sketch, which is a like hardcore mathematical invention that they,
you know, made public, I believe was about two years ago.
And that's for the set reconciliation, because you need to, you know, instead of sending
messages to everybody and just flooding and going, hey, let's hope it works, you know,
you're talking about dividing it up into chunks.
And that always introduces risks unless you're really careful with the mathematics and check
everything to make sure that it's provably not, you know, scammable and all that.
And so they had to invent mini sketch first before they were even able to put together
this transaction relay protocol early, which I guess is maybe kind of named after efficient
relay.
I'm not sure the other names of innovations that we're going to be talking about today.
I have my notes here in my in my special book have much more clever names early is a little
bit clunky.
But you know what?
It's short, which is great.
So it works.
And yeah, I'm not going to I'm not here to to to critique the you know, the statics here.
The point is that this thing exists.
It's not just Greg Maxwell and Peter Willey.
It's also Gleb Nalmenko and his advisors at UBC, which are Alexandra Fedorova and Yvonne
Beshashnih.
So these five amazing, you know, people put together this this incredible set reconciliation
thing.
It's really, you know, pretty intense.
You know, it's a little above my head.
But I know that, you know, that's it's it's this is how these protocols work.
It's totally incredible.
Actually, all of the subject matter that you pick today is is like totally mind blowing
vortex.
I knew that this stuff was coming out because I've been reading this stuff.
But like these three things are totally amazing.
And early is just such a great example of the type of really essential building block
low level work that guys like Willie and Maxwell have been doing for several years now that
are just things that the users will just you just won't see it.
And everything will just work a little bit better and a little bit more efficiency.
And it's like this stuff that I mean, we're obviously working on on UX stuff, too.
And you know, lightning and stuff that's really like more, you know, on the on the user end
where you can kind of notice it more as a layperson.
But this is the stuff that we really need to take care of now, because, you know, after
two years ago, when transaction malleability, the largest bug in Bitcoin was fixed.
Now we have all these efficiency issues that aren't bugs.
They're just inefficiencies that we know the core developers are rightfully very focused
on because it's conceivable that as time goes on, the protocol, the Bitcoin protocol itself
will begin to what you call a gel or congeal a bit and become more resistant to changes
that are at the low level, whereas now people are real open to it.
And especially when you have a situation where, you know, mini sketch is an efficient library
for set reconciliation.
It's a mathematically provable situation.
Now, of course, sometimes people overlook things and there's vulnerabilities that you
didn't foresee.
But in general, if you can, you know, mathematically prove things.
And that's a theme through actually all three of these subject that you chose today that
is totally amazing.
So really fantastic situation where basically the efficiency is increased by 75 percent
with hardly any with no trade off just because it's a superior design.
I would mention there is one small trade off.
This is not a 100 percent perfect solution.
And the trade off is I think they estimated it would take one to two seconds longer for
a transaction to propagate across the entire network.
So the trade off is a very, very slightly slower propagation across the network for
a very huge efficiency gain in the total amount of bandwidth used across the network.
Do you have off the top of your head, I know you, you know, with Satoshi, you deal with
the stats a lot.
Do you have any idea what the average transaction propagation time is lately?
Yeah, actually, if you look on bitnodes.earn.com, they have a stats page with block and transactionally.
And I think that it's only in the realm of three seconds.
OK, so that's actually a pretty big percentage wise.
That's actually a pretty nasty knock.
That's like a 20, 30, 50, even up to 50 percent slam on the trend on the propagation time.
So that's that's moderately large.
Well, so they had several graphs in the actual paper that was released.
And of course, they had simulated various sizes of networks.
So there were a few assumptions at play, but I don't think that it'll slow down the propagation
by more than a few seconds, which, you know, we're mainly discussing, you know, what is
really going to impact the user here.
And I think that from an end user impact, they'll see a lot more positive impact by
the bandwidth reduction than they will from having to wait a couple of seconds on a transaction
propagating.
Yeah, that's clear to me, too.
Yeah, it's all about tradeoffs, guys.
You know, this is what the Bitcoin Core developers and developers working on Bitcoin are just
just just live to do.
They just live to create more efficiency and find more efficiency.
And when we find even just five to 10 percent gains, just everybody kind of on the on the
mailing list pretty much jumps up and down.
But when you can find 75 percent gain, guys, that's pretty, pretty impressive, especially
when we're this far into the protocol development.
Patrick, let's get your comments in here before we end this topic.
Go ahead.
I just want to quickly wrap up what I was going to say to you guys out there just to
give you an idea where this is at.
The white paper is out and it's there, you know, soliciting feedback on it.
And once people begin to, you know, gather toward consensus on early, they will be creating
a bit because I'm assuming that they're actually Jameson, if you could comment on what's required,
what would be required, the type of thing that will be required in the bit, because
this is something that requires changes, obviously, to the Bitcoin Core protocol.
Change change is just a, you know, a data networking relay change.
So I imagine it's not going to be that difficult.
I don't, you know, it would be speculative to say, like, how are we going to implement,
you know, like a handshake, I guess, of, like, how do we know which peers we can do this
set reconciliation with?
Does it have to be a bidirectional thing?
I'm not entirely sure what level of, like, compatibility it will have with nodes that
aren't performing that.
But it's definitely not a consensus change.
So I think that it should be fairly, fairly simple to to spec out and get consensus on
implementing.
Very interesting.
Indeed.
All right, Patrick, let's get your comments in here before we end this topic.
Go ahead.
Yeah, I read the paper as soon as it came out as really exciting.
The propagation time tradeoffs that were made there, they did mention the paper that that
can be adjusted.
So if they if there was, you know, they decided to maybe maybe reduce those propagation times
a little bit more, they could they could make a tradeoff for a little bit, a little bit
more bandwidth usage for a little, little faster propagation times.
But in the paper, they mentioned they specifically chose that because they seemed that was like
the right tradeoff.
I don't have much more to add for these guys.
I just think this is the this is the important work that needs to be done in order for the
Bitcoin network to really scale.
So even, you know, if, you know, as, you know, as let's say blocks continue to grow in size
and, you know, there's more bandwidth pressures on nodes, more transactions, this is the exact
type of innovation we would want in place if there was ever going to be further growth
in the block size and more trends on more on chain transactions.
And also, which I'm not sure if that's going to happen.
But also, this is, you know, this just reducing this bandwidth is really important for allowing
full nodes to operate on really small devices.
And that's and that's the key point here is that this is kind of a game changer for, you
know, very like mobile devices are very low power, low, you know, IoT type devices and
stuff like that will benefit strongly from from this.
Yep.
Great points.
Great points, Patrick.
I mean, again, I mean, what everybody has said here is that this is the low level guys
iterative work that really results in orders of magnitude efficiency over time.
This is just just the really important work, the stuff that's not sexy that we can't just
place on a big conference or anything like that.
But just one final point I wanted to add is that, remember, all this guys is happening
simultaneously.
Right.
So we have amazing improvements like this, you know, to block propagation bandwidth.
And we have, you know, people working on the financialization of all of Bitcoin.
And then we have, you know, people working on UX, right.
Some of the improving wallets and things like that.
So this is all of this stuff, guys, is happening because Bitcoin is actually a truly decentralized,
the only decentralized blockchain at scale in production, in my opinion.
So it's very exciting to see all this stuff happening.
And again, guys, you know, Bitcoin is scaling.
We have faster block propagation than ever.
We have blocks consistently over one megabyte and we have more and more work being done
on the Lightning Network.
So very, very cool stuff, guys.
Let's go ahead and move on to the next topic here.
Before we do that, we would ask that you could just please, if you guys are new to the channel,
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So thanks again, guys, for joining us.
Let's go ahead and move on to the second topic here.
Hyperloop, more technology coming out of LND over there, the technology or the company
being run by Elizabeth Stark is that is actually invested in by the Twitter CEO, Jack Dorsey.
So it's pretty one of my favorite companies because of that.
So interesting stuff, guys, Hyperloop, a new concept by lightning or by by LND Labs aiming
to solve liquidity problems.
So this is pretty cool because they did release some of this technology earlier called loop
in.
They released it about a couple of months ago.
And of course, we covered it here on the channel.
You know, this this service allows users to fill or empty lightning channels without closing
them, thus reducing on chain fees.
So it really helps, you know, manage your liquidity.
And so James said, again, let's go with you first here on this.
What this Hyperloop concept, you know, it does rely on something like signature aggregation.
And so maybe it would work even better with Schnorr and that type of things.
But what is your what is your thoughts on this technology?
And again, like how difficult is this going to really to be used on the network?
Any soft forks or any crazy things like that?
We need that that we need to to get this working.
I mean, from a technical standpoint, it's it's already usable.
I mean, it's it's basically it's using a technology called atomic swaps.
And more specifically, it's using something called submarine swaps, which Alex Bosworth
and Rosebeef both kind of came up with independently.
And this is really just another method for using a quote unquote hash time lock contract,
which is one of the fundamental features that is used for lightning network channels.
But instead of just creating a lightning network channel, instead you are you have two different
people who are interacting with a middleman.
Now this middleman is not a trusted custodian, but rather the middleman is kind of the one
who is helping bridge the liquidity gap.
And so you've got one person who has on chain funds and wants off chain funds.
You've got another person who has the opposite.
They have off chain funds and a lightning channel, but they want on chain funds.
And the middleman is basically the one bridging the gap where that swap.
Right.
That's why this is the swap.
You can do traditional on chain atomic swaps without any middleman.
But essentially, the middleman here is helping provide the liquidity where they're accepting
the on chain deposit and there's a little bit of cryptographic magic going on with regards
to the lightning network invoice, where there's this like preimage of some data in the invoice
such that once that invoice gets paid, they can then take possession of the on chain deposit.
So it is a trustless atomic swap, but it is going from on chain to off chain funds.
So this gives you a new way to manage liquidity.
The thing is, though, I think the bigger question is like, how do we actually use this technology?
How do we make this technology easy for someone to just like click a button and have it all
happen under the hood?
Because if you're requiring people to go out and like find a liquidity provider somewhere
and manage the sort of peer to peer aspects of it, that's not going to be a very user
friendly experience.
And so they have this software that you can run that basically enables you to become a
liquidity provider.
I cannot speak much more to how well it works because I haven't actually tried out the software
myself.
So it's still mostly theoretical from my perspective.
Yeah.
And this, again, this is very interesting, you know, batching together using some technologies
that we already have and ideas, concepts we already have, combining it with the lighting
network seems to be really fascinating.
I mean, batching all of these inputs together with signature aggregation.
And it is a bit of a chicken and egg, you know, kind of problem that we have here with
lightning, you know, because and even with Bitcoin when it comes to merchants, but really
with lightning, too, when it comes to liquidity, you know, it would be easier to have more
people, easier to get liquidity if more people were on the lightning network.
But of course, to get more people on the lightning network, you need more liquidity.
So it's a bit of a chicken and egg.
But the same the thing that solves this problem every single time, guys, is simply time, right?
Real time and allowing more people to adopt to the system over time.
So this is really interesting, you know, I really think that's cool about this technology
is that it's kind of future proof.
So it's it's right now it's it's prepared to using to be used with amps, right?
Atomic multipath payments, these these are essentially allow users to receive multiple
transactions as if they were one of reducing the on chain cost of sending multiple transactions
to the same party.
But it's also ready to go for, you know, for future things like Schnorr to be able to even
prove it even more.
So that is really interesting to see, because remember, this is using all these previous
technologies that we were talking about, like was see if I have a list of all of the ones
that are happy.
There was I had a list.
There were so many in here.
But I've got it.
I got it.
Go ahead.
Listen, Gabriel.
OK.
Well, first of all, lightning loop.
Right.
So Hyperloop is a development on top of lightning loop.
Lightning Loop was created, I believe, certainly using, like you said, the amps, atomic multipath
payments, but also music, which is the the new multi-signature protocol that was created
by by Greg Maxwell, I believe.
And that but that depends on that serves as a building block for Taproot.
And but and then Schnorr and Taproot are going to both make Hyperloop more efficient.
So like, you know, I actually wanted to.
Can I chime in now?
And Gabriel, you already have to go ahead.
Yeah.
Because something you said, I really wanted to talk about here.
And this is so important to understand for anybody into Bitcoin and anybody into software,
you know, free open source software, FOSS, as they call it.
One of the things that makes it so incredibly powerful is this combinatorial aspect where
you never know what individuals are going to think of.
You know, developers are constantly looking to improve things, make new things and make
things more efficient.
And there's this the idea of the layered protocols and inventions being created that are independent
from one another and can be used modularly and can and stacks, as they call them software
stacks.
That's because protocols that are developed in layers are much easier to work with than
than many other structures.
So over time, we've all kind of zeroed in on this approach of layered protocols with
free open source software.
And because nobody is, you know, Schnorr is an example of non FOSS that whose legal entanglements
finally ran out and now free open source software projects can use it.
And because it wasn't part of the open source ecosystem, everybody in the world was losing
out on the huge efficiencies that this amazing invention, you know, supplies to the world.
So but everything else involved with Bitcoin is totally open source to where we're having
these situations where all these examples that you found today are built on these incredible
protocols.
I mean, you go all the way back to, you know, simple cryptographic primitives from the ancient
world all the way up through the 19th century with Charles Babbage, who created the very
first mechanical computers.
And he really kind of laid out the ideas that led 100 years later in the mid 20th century
to Alan Turing, who created in a white paper, the idea of a quote unquote universal machines
today what we call a computer, which was the word they used back then for people with slide
rules doing math.
Now we use this for the quote unquote universal machine.
And every step along the way, then we had the networking inventions through the mid
20th century.
Everything's been building up, building up, building, building up 2008 Bitcoin was invented.
And now we have lightning, you know, from 28 years after that.
And now we're building all these new things that are and people are not randomly coming
up with something.
I mean, yes, maybe more on the math side.
They're like, hey, let's make an even more efficient cryptographic primitives or something.
That's the most abstract side.
Then there's the most practical side where the UX people are like, how can we hide this
stuff so that regular people who don't understand this stuff can use it, you know, and all the
way to, you know, you know, highly efficient things in these amazing new inventions.
So I just want to point that out that this combinatorial aspect of free open source software
is possibly its most salient and powerful feature.
It's by combinatorial, you have to recognize the power of exponential math, where if you
have two things, okay, then you can make four combinations, right?
If you have 16 things, though, you can make thousands and thousands and thousands and
thousands of combinations.
And that's kind of what we're seeing here with these amazing inventions.
So Hyperloop is really cool.
You know, lightning has some as in its raw form, as well understood by Joseph Poon and
Tansha, who invented it, they knew that there was a lot of blank spots that made the usability
challenging and that it was the raw kind of concept that needed to get out there.
And there's a bunch of things like, you know, balancing the amounts and channels, being
able to receive, which we'll talk about in the next subject, you know, there's a lot
of pain points with lightning.
But the thing is that everybody that really understands this technology, when lightning
came out, they knew that lightning, the lightning paper is actually by far the hardest part.
And filling in the gaps is actually easier.
So all the naysayers who were like, it's not going to be usable, were countered by the
supporters saying, hey, yeah, you're right, it's not that usable.
But all these 11 weaknesses of lightning are way easier to solve than the original hash
time locked concept, you know, contract concept that, you know, they that they came up with.
So that's kind of what we're seeing here is this amazing combinatorial explosion, which
is the term they use in biology of amazing inventions where, yeah, all of these incredible
inventions are now being put together and they're solving all the problems that we have
in Bitcoin that are pain points for usability and efficiency and everything else.
Absolutely.
I mean, again, guys, example of iterative improvements, this being able to this affecting
liquidity, you know, there's a lot of people that are like, look, lightning will never
work because we have to auto balance because we have to balance our own channels.
But look, people are already writing algorithms to auto balance channels and wallets.
And that's going to be a big thing as well coming down the pipe.
So I try to tell people that are trying to like do the math on how many, you know, transactions
that lightning can support and versus on chain with the current size to be able to figure
out if lightning can scale or not.
And I try to tell people, guys, that is useless.
There's going to be things that we're going to invent that is going to provide order of
magnitude efficiencies.
So Hyperloop, in my opinion, is one of those things where we're talking about aggregate.
We could be aggregating what snores in there, you know, thousands, tens of thousands, maybe
millions of signatures, millions of these transactions of lightning in a single transaction,
sorry, millions of these interactions in a single transaction.
So this is just really, really, really important to keep an eye on to understand that Bitcoin
doesn't move like this.
OK, it freaking is like it is as S curve type of iterative like what Gabriel was talking
about with these exponential increases.
So this is this is not the last, this is not the first.
And we're going to see many more of these things.
So great comments so far, guys, Patrick, let's go to you finally on this topic and get your
thoughts on this.
Yeah, I was going to say as a signature aggregation obviously is huge for a lot of reasons.
I mean, it doesn't just affect this or else it's also going to affect coin joins in the
future.
And then, you know, any type of any type of batching and transaction batching.
And I will say that I believe that this the problem, the U.S. challenges here are going
to be solved.
And the reason I think that is because when you look at what's happening with coin join
right now, with like wasabi and the samurai, they are they are solving all the U.S. problems
with coordinating multiparties in these types of transactions.
I don't.
So I I really think that these are these are going to be minor issues and that there will
be a U.S. will be developed that will be very easy for users to enter into these multiparty
setups so they can open, you know, get channel liquidity.
Those are the two main points, but I also want to say that, you know, in my opinion
is that lightning is already a huge game changer, even if there was no further innovations on
it.
I believe that as it stands right now, lightning is incredibly functional and useful.
And already, you know, you can open large channels now and the liquidity is there to
route payments pretty much.
I haven't really had issues for the last year outing payments personally and with liquidity.
And it's only getting better and better just, you know, and even though if you look on like
one M.L.
Dotcom and you see that like the channel liquidity, the actual like public liquidity is actually
there's less now.
If you look at that chart, however, the it's the quality, not quantity here as well.
So quality is really important when it comes to channel liquidity.
Yeah.
So I'm just really optimistic for this feature.
I'm also I just I think all of these US challenges will be solved in time.
And yeah, they say is going to continue to naysay.
But like like you guys have pointed out, this is open source software and people are building
on it, whether people like it or not, it's going to happen.
Patrick, what determines the quality of a lightning channel versus obviously quantity
is obvious.
Yeah.
I mean, I think that Ellen Bigg has written quite a bit on this and done a lot of experimentation.
And I know that I'm sure Jameson's really interested in this because of CASA and it's
ultimately those those connections, those channel connections between parties.
You know, is it is it note up note up time?
You know, are these are the are the channel fee rates, you know, are the routing fees,
you know, set?
How are those set?
How do those play into how liquidity is routed?
I actually believe people should be raising their routing fees and not lowering them.
I think that raising them is better because, you know, I want to see I want to see what
people are willing to pay it around.
I personally am happy to pay more money to route if it's going to route better.
So I just I really believe that like lightning is a beautiful market based solution to liquidity
and getting making the U.S. of making payments with Bitcoin totally solved.
I mean, you can the instant transactions, the private transactions, all these things
on lightning are what make it really useful.
I don't know why people keep thinking you can do this stuff on chain.
No one's going to wait.
No one's going to wait for 10, you know, 10, 30 minutes for a block when they can just
use lightning and they have an instant settlement.
I mean, it's a no brainer.
So yeah, you know, that's my opinions about lightning.
And I just firmly believe that all these these problems around Hyperloop and courting multiparties,
I don't think it's going to be a problem at all.
Jameson, any final comments on that in response to that?
I think liquidity is going to be one of the bigger challenges.
Really I wrote about that like three years ago as being one of the bigger unknowns of
sort of the topology of the network and how it's going to evolve over time and what tools
can we build to better understand liquidity issues and prevent certain types of liquidity
attacks that I don't think have even really even happened yet.
There's certainly some interesting things that could happen if a well-funded attacker
tried to start screwing with the I guess the balance of liquidity at not just a micro level
but even a macro level and trying to like imbalance a lot of channels to try to like
split the network in various ways.
So these these various tools for rebalancing channels and allowing them to be more long
lived and and will also make them more robust against various types of liquidity attacks
that could cause routing issues on the network.
So it's a really complicated problem and I'm not aware of any similar type of problem that
has ever been done before that like you know there's certainly been plenty of networking
challenges that have been addressed over the years with the internet in general but I'm
not aware of any networking with this type of liquidity issue on top of it.
Yep absolutely man when protocols can have value that is very very interesting yeah thanks
a lot but for that I really appreciate it I think we can move on to our final subject
of the day guys before we do that please again I would ask if you are listening to the audio
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guys and of course you can always add tips in the the YouTube chat there with the super
chat as well so let's go ahead and move on to our final topic you've been a very technical
show guys and I'm really looking forward to this topic as well again I mean Bitcoin guys
it's technical this is the stuff we care about this is really really important stuff we're
we don't talk too much about stable coins on this channel and STOs and LEOs and whatever
else we have today so but this is this is the important stuff guys so final topic today
we got state chains state chains scaling idea has been released a novel layer two non-custodial
off-chain Bitcoin transfer protocol has been proposed and this is pretty interesting I
want to get everybody's thoughts on this because you know this is another layer two scaling
protocol similar you know or similar to lightning as far as the layer goes you know another
layer two scaling idea which is facilitated by a multi-sig federation which which doesn't
have you never has complete control so it is a little bit kind of like the liquid federal
sidechain federation there but it is interoperable with the lightning network so it does you
know allow the opening rebalancing closing of channels to occur off-chain you know in
the state in these state chains and it can actually even make a lightning instant you
know lady onboarding instance so let's go to Gabriel first on this change it up here
Gabriel what are your thoughts on this particular idea of state chains is this is this a real
scaling solution and how is this different or better than sidechains well you know going
back to the aesthetics of it I forgot to mention what a great name hyperloop is of course it's
that you know they're making a joke about their Elon Musk train thing underground like
vacuum train thing of course it's built on lightning loop and the idea of the loop was
that they wanted to make sure the inbound and outbound liquidity or were able to be
balanced so you had to create a loop there where they could kind of talk to each other
and then you know they're like making it more flushing it out more so of course it's a hyperloop
which is very cute coming back to the state chains I like anything chain is kind of like
a fun word you know that obviously block chain but state chains is really I like that I like
state because like this you're doing something with the state and I like that name for some
reason but yeah this is this is an interesting proposal from Ruben Thompson a little bit
familiar with his work because he's been presenting and stuff for over a year but um it's different
from lightning so this is really plays into the centralized to decentralized spectrum
which you know bitcoin well the internet itself really like you know planted a flag where
you know TCP IP is very decentralized obviously the world wide web is something we would we
would you know describe as sort of middle ground between you know like a private corporation
and the internet itself where the web is like a semi you know it's it's a reg it's like
a it's it's I wouldn't you know it's relatively centralized it's got a little bit of a sort
of federation aspect to it you know maybe not in the center between center centralized
the web is pretty like as far as domain registration and stuff it's pretty centralized you know
the domain registries and everything you know possibly getting less and certainly in the
future we'll have ways to decentralize it more bitcoin very decentralized you know we
could say close to as decentralized as the internet TCP IP which is fantastic I mean
that was you know there's really hardly anything else out there between you know 68 and 2008
that was like as decentralized of a system as bitcoin and the internet and and then lightning
you know really quite decentralized you know there's some some sort of risks of a little
bit of centralization possibly with hubs or you know possibly with node creation and routing
and stuff but it's very decentralized and that was one of the reasons why we were all
so excited about it when the when the white paper came out three years ago this and then
and then then we have a liquid which came out blockstream corporation created it it's
a federation it's pretty centralized but yet it does it is you know definitely a bit less
centralized than many other solutions and has a lot of safeguards built into it and
so once again we're exploring that middle ground that hardly had anything in it just
before the last few years and that's what state chains is it's something kind of in
the middle which is you know once again exploring new territory in this sort of decentralized
spectrum it's not really possible to quantify a lot of those aspects people you know so
but this is a general sort of conversation you know ambiguously speaking this is kind
of you know a little bit more centralized than lightning so people might have issues
with it because it's got a little bit more trust there's there's more there's possibly
more risks of people trying to rip you off but it does have safeguards and they're obviously
very aware of the safeguards and and working to you know put as many safeguards in as they
can to prevent problems with the you know transfers that happen between the entities
you know the the centralization is the state state chain entity it's kind of like a federation
and then there's the users that that kind of communicate with it this is an amazing
once again combinatorial example you know with this sort of semi you know semi decentralized
situation there's so many just like bitcoin itself put together all these different cryptographic
techniques from the 70s through you know 1999 or 2001 you know for the for the for that
paper and then with some you know unique inventions in the code like the difficulty adjustment
same thing here with with Ruben he's put together a number of amazing bitcoin inventions together
in a new configuration that's very cool you know he's using L2 which we we already discussed
first which is amazing he's got adapter signatures which is the type of scriptless script which
comes out of the anonymous Mimblewimble paper you know some of these things are actually
dependent on bips that haven't even come through yet so this is a still you know relatively
abstract protocol it's not quite possible to use yet and there's lightning interoperability
so it's amazing because you have these protocols not only can you build stuff on top of things
but then if they're in the same layer or in a separate area you can create you know interoperability
situations where it's they're completely independent where not one thing builds on the top of another
but they just have a you know they're separate kind of data silos that still can have interoperability
so that's amazing because they're two layer two protocols that you know can make each
other better because they're different from each other they have different trade-offs
and different abilities which is totally amazing and especially state chains is good for the
onboarding offboarding for lightning channel so it makes it even that much smoother you
don't need to have the liquidity already open channels things like that it's also utilizing
blind signatures this is because you want to protect your privacy as a user you're communicating
with these state chain entities where normally they would be able to see everything but with
blind signatures they can't see anything so you have a situation where it's completely
blind they have no idea what you're doing you have 100% privacy and then over tour it
can't be leaked either or it's harder to leak and then of course it will be you know
snore signatures which are aggregation signatures and graph root which is like a really complex
thing that it's so hard for me to wrap my head around because it's so low level but
apparently state chains can also utilize that so this is a huge long list of different inventions
that's just the you know the main layer of course each one of those depends on many amazing
sort of technological primitives that built up that but this is this amazing sort of multi
sig system where you create these incentives or disincentives to theft and and and you
get you gain you know of course instant transaction highly private transactions so that's uh that's
kind of my summation there that's awesome stuff man so much technologies guys sidechain
snore adapter signatures blind signatures l2 graph through others this is this is this
is what we talk about you know iterative development you know over over years this type of stuff
can be built these type of technologies cannot you know be built from in the traditional
i think in the traditional manner where you get investment you come up with something
you get investment and then you go and try to build it like that's not quite how how
these technologies are going to be built and these these open source technologies continue
to be built in just that that free open source realm that is where the most amount of information
my opinion can be transferred you know in the least amount of time so that's what we
that's what we get we get a really high signal to noise ratio in open source software so
a lot let's go with you next on this Jameson so what is your comments on on this so far
and i have a kind of a specific question for you Jameson um how would you compare this
to like chomium cash and is this better or worse than that right so i think an initial
question is what is the state chain actually doing well in bitcoin you know there's no
such thing as a bitcoin there are just transaction outputs and there are transaction outputs
that have been spent and then there are transaction outputs that are unspent and it's the unspent
transaction out points that are actually the bitcoins now when you're using state chain
you're basically entering into this two of two multi-sig smart contracts and the state
chain uh i forget what the they called it but basically the entity the controller the
federation what have you that is on the other end of that uh two of two multi-sig entity
yeah the entity allows you to really swap ownership of your utxo with something else
you know some other utxo it might not even be a bitcoin utxo once you add in some of
the the privacy uh features that they're saying that they're working on then you do essentially
end up with a blinded chomium ecash server and chomium ecash is great from a privacy
perspective and from a scalability perspective the downside is that it relies upon a single
server that could potentially you know cease to exist and prove all of your money is gone
so at least with the state chain setup you get those privacy and scalability benefits
but you no longer have the trusted aspect of it where if the entity cease to exist you
still have ways to recover your funds on chain by broadcasting transactions so i guess the
real question is like what will this be used for you know will it be used for mixing will
it be used for decentralized exchange will it be used as uh some sort of new entry way
and and like sort of on and off ramp to lightning network uh there's there's definitely a number
of different possibilities there and i guess the real question will come down to incentives
of will we see many of the state chain entities operating what is the risk to the the entities
you know what's what income can they make from offering these services this is assuming
that all the underlying technology is sound and a lot of it is still you know fairly theoretical
then i think it's mostly going to come down to incentives of of you know what are people
going to benefit from from operating these services and from using these services and
there's definitely plenty of potential there but uh you know it could be years before we
really see these things uh get used uh mainstream usage yeah absolutely it's kind of funny how
people still talk about mainstream and we were just so i just i try to tell all the
time james i try to tell people all the time it's early days but nobody seems to listen
to me everybody seems to want 4k video in 1995 and it's just really really strange you
know talking about you know bringing this we got to bring this to the mains room we have to get
this to the main we have to get this to more people and it's like no i try to tell people
that look bitcoin is going to evolve just like the internet did at the pace that is comfortable
with the internet you know it's really all market based at this point right so you know if more
people want more bandwidth well there's going to be more companies that create more isps and
create better bandwidth so you know as bitcoin gets bigger and bigger the intense the incentives
will grow larger and larger and bitcoin will get more and more into the mainstream as the market
wants it you know again this is you know for the most part free market you know uh base uh behavior
here guys so bitcoin is absolutely early early guys guys i i try to say we're around circa like
1991 maybe 92 because we're still using so many of these command line interfaces and there's still
so much more protocol development that has to still be put into the base layer here uh for
for bitcoin to really uh to shine in the future as this private new money outside of the state so
i am really looking forward to shows like this and technologies like this on that we've discussed on
the show that come because this shows that bitcoin continues to iterate continues to evolve and is
not slowing down or stopping anytime soon guys this is uh the the money that the market is choosing
to be that secondary choice to fiat and uh this is i don't think again it's going to slow anytime
soon so a great comment so far guys patrick uh last but not least my friend let's let's get you
in here uh for this last topic go ahead yeah i think uh this is really interesting technology
as like we were mentioning earlier you know this is technology is going to fill in more gaps of
usability in various places for in the software that we don't maybe have yet uh you know as james
mentioned you bitcoins are like utxos they're on these unspent transaction outputs and really what
this is doing is allowing people to lock these utxos and then pass these utxos around to each
other off chain and then that final user can withdraw that that utxo without the permission
so there are some there are definitely some benefits the downsides or you do seem to be that
you have to deal in these whole utxos for the most part the upsides being that um there you know you
have a lot a lot of freedom to do with those what you want to do with those utxos once it's in the
state chain which opens up a bunch of different use cases like uh like this you know this article
basically mentions um you know betting and you know maybe maybe this will have opportunities for
doing decentralized like betting or oracle based stuff um uh you know using colored coins maybe
makes sense to have utxos of like a colored coin or something like that where where you know you're
working with these small very small amounts um and as long as people are dealing with you know it's
like one unit if it's a bunch of single units passing around maybe that's how it will be used
for some type of chami and ecash functionality um there's you know basically coin join essentially
it's like a similar to coin join or everyone you know kind of puts their utxos in and then and then
the mixing happens so this is essentially you know could be could be evolved to work in a sort of
coin join fashion as well um so there's just a lot of unknowns i think how this is going to be used
but um i really i really think it's it's cool technology i'm fascinated to see like what the
next use case or the first use case that comes out of this yeah it's really it's really crazy
to see you know every couple years just just more of these amazing technologies for bitcoin come out
you know uh people like to say that you know there's not a whole lot of uh innovation on bitcoin
but then you see all these papers every single year and it's just crazy i i'm pretty much only
pay attention to bitcoin and this is you know pretty much a full-time job so i don't i wouldn't
even have time to pay attention to anything else because so much continues uh to happen in bitcoin
and guys again these are some of the like three different technologies that we talked about today
but just just just these three technologies alone enable dozens dozens of new use case scenarios
could possibly enable orders of magnitude scaling in the next few years this is this is such important
stuff guys and again this is this is the basically about the least of sexy of stuff as you can get
okay this is not ethereum 2.0 guys we're not going to have you know unicorns up on the stage but
this is uh the stuff that these people are working on literally i like to say all the time bitcoin is
the mount everest guys of engineering and it attracts the most intelligent people uh in the
space on the planet that working on this stuff and i have been working on this stuff for many many
many years so thanks again guys i really really appreciate it for joining uh we're gonna i think
we can end it here uh let's go ahead and say goodbye to our guest patrick uh where can we
find out more about you sir uh yeah i mean just just follow me on twitter i think uh i think my
my latest handle on twitter is probably the last one i won't change it in the future but uh at p
underscore miller underscore on twitter feel free to follow me and uh yeah i just i just tend to
generally tend to talk about technical topics that's kind of why i'm on twitter i'm really
not on twitter so i can be social with a bunch of random people on the internet i really am on
twitter so i can uh i can get into this signal and because i found that's where that's where
you know it's really easy to hone the signal by following the right people and blocking
the wrong people so you're one of the toxic maximists out there all right
you guys follow patrick guys he's got a lot of great technical tweets that he does tweet all the
time i retweet uh patrick all the time so make sure you check him out uh mr gabriel divine where
can we find out more about you sir you can find out more about me in patrick's living room with
his lamp there i really like it actually no um i am also available on twitter to have stupid
weird conversations i am mostly there uh to talk to stupid random people on the internet uh usually
about bitcoin and my username on twitter is gabriel divine letter d v i n e and um you can
also send me a direct message once again if you want to solicit uh me to shill stuff i will have
be very entertained by that and reject you but i will love it no but uh feel free to jump in and
say hi i really appreciate a few messages that i get occasionally where people uh say that they
appreciated my commentary and that's very encouraging to me it makes me want to do more
shows with like this with vortex and i i'd like to also say that it's been wonderful to be
on with a couple of uh intellectual luminaries patrick and Jameson so so that's been an honor
absolutely man i i could listen to you guys talk all day i could listen to all three you guys talk
all day about bitcoin uh this is some fascinating stuff and yeah gabriel i tell you you always bring
back the dms the 2017 dms man that was absolutely nuts uh you know just people offering tens of
thousands of dollars uh to either be um you know uh on the top uh what do you call an advisor on the on the of the coin
or just to simply promote the coin so yeah it's just crazy stuff crazy stuff uh all right Jameson
we all know and love you man but let the world know where can we find out more about you sir
it's lop on twitter that's l-o-p-p or lop.net where you can find my educational resources
and attempt to contact me either by expending 30 seconds of proof of work in your cpu or by sending
me a hundred dollars worth of bitcoin to show me that you mean it nice man i gotta start doing that
guys holy crap Jameson that's pretty smart uh so if you want to contact Jameson you better be it
better be a serious serious question this guy doesn't have time for amateur stuff so uh really
awesome Jameson thanks again man so much for being on really really appreciate it guys these guys are
donating their time of course we don't pay them or anything to get on the show of course i don't get
paid uh this is a youtube uh community supported youtube channel so again guys thanks so much if
you do enjoy content like this please think about donating over there uh checking out our
crypto cast dot network website we would really appreciate it so until next time guys keep talking
bitcoin we'll see you later bye