148 – Kyle Torpey: Diving Into Bitcoin - The Debates, The Issues and What's To Come

Transcript

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cryptocurrency wallets hi welcome to epicenter the show which talks about the Technologies projects and people driving decentralization and the global blockchain Revolution my name ISO and my name is Brian faan crane we're here today with Kyle torpy and now I've been aware of kopy for two and a half years or almost as long as I've gotten into into this whole area he's an excellent writer and journalist about Bitcoin cryptocurrencies blockchain Technologies he centralized Technologies uh there's not a lot of them but there's a few and and Kyle certainly I think is the one that stands out to me the most in terms of having like really indepth

well researched and intelligent uh writings about these topics so he's is writing uh currently for Bitcoin magazine and coin Journal but he's also written for all kinds of other Publications and of course we'll be linking to quite a few of his articles in the show notes as well so uh thanks so much for coming on Kyle thanks for having me thanks for that uh intro one of the reasons also why we wanted to have you on besides of course having been fans of your work for a long time is that we've not been doing so much coverage about uh Bitcoin and and partially it's Al because we feel well there's a few reasons one is that there's just not as many new projects it seems to talk about and another thing is

also that we are just not quite as in the loop anymore so this is going to be a great chance to kind of talk about Bitcoin talk about a lot of things that have been going on around Bitcoin a lot of the important debates and and topics and Kyle has been specifically also writing about that writing about you know everything from scalability to the new uh the new things happening in Bitcoin core development I think also like last maybe like six or seven months ago we were just talking about scalability scalability all the time and at some point I think we're both like let's let's talk about something else for a while but yeah it' be good to get a bit of an update on on what's Happening and uh you know what what what what we can expect coming to bitcoin NFL

in the coming months so to start off um yeah as Sebastian said we often talked about scalability can you give us just your perspective of on a very high level what is what is being debated here and what have the different the most important stages been in that debate so this debate has been going on for years even since the earlier days of Bitcoin when everything was going on in IRC and then it finally came to a head when we started getting closer to the one Mega megabyte block side limit and that's when Gavin and my Kar decided

to uh first those bip 101 and then they couldn't get it into core so they tried to fork with Bitcoin XT that didn't work and then they tried to fork with classic that hasn't worked and now it seems like uh the core road map from December of last year is still what's being pushed forward um there's not really there there's some dissenting viewpoints but they're not really gaining much traction among the miners uh who would have to activate the hard Fork

eventually but there is there is a small community that still wants the uh the hard Fort I I mean one of the things that comes to my mind when you say these things of course is also that a lot of the people who wanted the hard Fork may just have left and disengaged a little bit because it seems like a very small number of people essentially control core development they're not going to uh and they're against it right they they uh think the Better Way Forward is not a hard fork and that uh there's certainly reasons for that but then uh there doesn't seem any way to have a voice in this process right so at some point us to say well right let's step back so I

think you know my Cent has essentially left the Bitcoin Community G Reon I'm not sure I mean he's certainly not very present anymore um and I think the same is true for a lot of people so to say uh most people agree on not doing a hard Fork is I I think it's a little bit problematic statement I I think um with with Bitcoin you have to get uh consensus not like not necessarily social consensus but you know the the network runs in consensus all the time so making any change to the network is going to be extremely

difficult especially when we're at a 101 billion market cap and people want to be very conservative about changes to the code so uh it's it's true that these people didn't get their viewpoints uh or their philosophies merged into Bitcoin core but that that happens with everyone I mean if even just because your Viewpoint doesn't get merged today doesn't NE I mean I should put this a different way uh you can't expect Bitcoin to be what you want it to be it's it's what it's what it was from the

start and changes to that are going to be extremely difficult so so we're we're going to speak a lot more about hard Forks in a bit but around the scalability debate one of the events that got a lot of attention at the time was this thing called the Hong Kong consensus and I to be honest I don't perfectly remember what exactly it was but would you mind just uh running us through what happened back then H and what the kind of outcome larger out come of that was sure so there was a meeting in Hong Kong between some of the miners in China and some of the Bitcoin core developers but

not all of them uh and Adam back who is I guess wasn't a core developer at the time but he's the president of blackstream so they came to consensus and decided that the plan would be to essentially continue with the core road map put out segregated witness but also put forth code that would eventually activate a hard fork for increasing the block size limit and there was a lot of controversy because some people in the community thought the core developers that were there broke their promise essentially to release hard Fork code and also the segwit code because it got

delayed but there wasn't actually any promise of when any of that code would be released it was more of just like a estimate of like the scheduling of when it would happen so now we're at a point where segregated witness is about to be well it's already put into 0 point version 0.13 of Bitcoin core and activation code should be merged relatively shortly and I I mean the core developers who were said they were going to create code for the hard Fork are still working

on it I remember uh Peter Todd had a meeting with some of the other developers in New York where they were putting they trying to figure out what they were going to put in the hard Fork besides the uh black size limit increase but the thing is like that they can't speak for the entire uh community of Bitcoin core Developers ERS so they can make a pull request but it doesn't necessarily have to get merged there was also a point where uh Jihan wo from antpool said that he might delay uh the activation of segregated witness if that hard for code wasn't

also available but my sense is that uh I haven't confirmed this with him but my sense is that that that's no longer the case which makes sense because they Bas he segregated witness also includes an increase to the block size limit effectively so they'd basically be blocking the very thing that they want so it wouldn't really make much sense so amongst the proposals for increasing the capacity of the scaling capacity of Bitcoin uh so segregated widness uh just as you mentioned just came out uh was merged in version 0.13 uh we're still waiting for miners

to vote for that to be activated we can talk about that in just a bit um what are some of the other uh possible solutions being explored or debated in order to raise this raise the the transaction limit even higher because I think I read somewhere that the effective um scalability increases was somewhat through the order of 1.7 megabytes per block with segregated witness you if if Bitcoin is to become successful as I think most of us agree it should uh will probably need much more than that so what what are some of the other um proposals being put forth in order to you know be able to do like thousands of

transactions hundreds if not thousands of transactions per per second potentially so there are a lot of different things that are being worked on right now some of them are mainly focused on rather than increasing the capacity fitting more transactions inside the capacity that we have right now that's kind of what segregated witness does that's also what schnor signatures kind of do where they just they make transactions smaller so you can fit more of them in a block essentially so just on that I'm curious how big of of an effect is that with schnor signatures and would schnor signatures also require hard fork or is it possible to do that for example

uh with segregated witness uh once I'm not sure if snor requires segwit but it uh effectively it would I think it would increase the capacity by a third but I'd have to double check uh Aaron at Bitcoin magazine did a really good article on a schnor signatures a few months ago so I would definitely check that out and actually a side effect of schnor is that it could actually incentivize people to use coin join transactions because uh the way it works is when you combine your transactions with multisig they actually become smaller as opposed to like a bunch of

different transactions being put being put in a block if you combine them in multisig then it it lowers the overall size of the transactions which means uh lower fees would you'd be paying lower fees for your transactions so you're actually incentivized to mixer uh or use coin join transactions but that's only one of there's there's another uh this is more like very early uh days but there's there's this concept of signature aggregation which has become which first came up like publicly with the uh recent California meeting where the miners and the developers went out

to California and they made one stop at Stanford for a cryptography talk and I forget the professor's name but the professor at Stanford was talking about signature aggregation where you basically in a similar way to snor you combine the transactions uh signatures together so instead of having like hundreds or thousand in of signatures per block for transactions you combine them all together and you only have one uh it's like one effective signature uh transaction signature in the block and that's what

uh I don't know if you guys saw the mimble wimble proposal for privacy but I I believe that also uses that technology what was the name of that proposal uh I don't I don't think it had like a specific name it's just a general concept of signature aggregation I wasn't familiar with that uh with that paper um but so all these Solutions these proposed Solutions are are interesting they they I think solve the short-term problem of scalability by adding some capacity but also if you Tak he witness for example is like a clear optimization of the protocol uh and also fixes some other problems like

transaction malleability but so what are what what are sort core developers and the people attending these conferences uh the scaling the scaling um uh workshops what are they expecting or what what types of things do they expect from the protocol if it were to scale like massively uh are are they sort of betting on offloading transactions on things like the lightning Network or do they ex is there some sort of expectation that Bitcoin should the core protocol should um handle the bulk of these transactions right so in addition to the parts I just talked about about where you're basically stuffing more transactions into each block that say

stays the same size uh side chains and lightning Network are also being worked on and lightning seems to be the the thing that everyone's betting on although I know Jeff garik seems to think that uh side chains might actually be better for uh micro payments and things like that uh and it's ALS I mean root root stock is mostly viewed as like an ethereum spin-off but it it it also increases capacity to 300 transactions per second uh via a side chain so I mean that's side chains can be used that way to like basically put

put those micro payments or payments that don't need as much security onto another chain and the way root stock is starting it their side chain it's it's not going to be merged mind at first it's a Federated uh model where they have a bunch of Bitcoin companies basically signing the transactions I guess what you're saying is there's sort of a general consensus that Bitcoin should scale horizontally and not necessarily vertically is have have the core developers sort of come around that idea they definitely don't want to increase the block size limit right away so and there isn't really another way to I mean when you're talking about EXP fential

scalability I think something like lightning is or um side chains for micr payments is going to have to be the answer it it just it's not going to be able to work otherwise so there's going to essentially there's going to need need to be some kind of tradeoff where some transactions don't have the same level of security as like the core main blockchain like as a lot of people say like you don't need the entire Bitcoin Network to confirm your coffee purchase at Starbucks in the morning necessarily so people who actually need uh that censorship resistant quality of

Bitcoin they can still use the main Bitcoin blockchain but if say like say uh lightning was activated tomorrow I think a lot of the network would move there just cuz a lot of the network is still like people moving money between exchanges or to and from exchanges so you're basically taking all of that off the blockchain completely and you're leaving uh the core blockchain for uh those censorship resistant regulatory Arbitrage use cases that people actually need Bitcoin for let's take a short break to talk about bitfinity the Miami blockchain

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thank bitfinity for their support of epicenter so we have side chains and uh lightning Network and secur witness Etc there are certainly some things happening that being said I think it was maybe two years ago that we had Mike her on this podcast and he said something that got a lot of attention at the time which he said that Bitcoin uh development had ground to a halt and that not a lot was happening and and you know famously or he left the community afterwards and since then others have comeing out in similar way for example there was recently post by Brian Armstrong I think of coinbase or or Fred ome maybe it was uh also arguing that

actually today in ethereum you have much more um a much more quick progress much more activity and I think that's certainly the perception of a lot of people now you having H you know following this very closely what's your opinion do you think that Bitcoin development has uh you know has it kept pace has it decreased in in its Pace compared to let's say two years ago has it increased and and how is that compared to let's say ethereum at this point I think with any of these uh public blockchains Bitcoin has just kind of run the course of how development works

because like in the early days obviously it was just Satoshi doing whatever he wanted and he could update it whenever he wanted and release uh upgrades and then Gavin took over and he had the same kind of like benevolent dictator role on the protocol and then when he left around that time is when was probably a little after but that's when Bitcoin like everyone realized it's a thing and it's it's probably going to stick around for a while and the market kept shot up so once once you have all these new people coming into the ecosystem then it's a lot harder to make a change that doesn't uh compromise a minority of users or

like what their philosophy on what Bitcoin is it's like a general progression so like obviously ethereum and all these other altcoins or blockchains can they they can be a lot more flexible just like Bitcoin was in its early days because they just don't have the wide user base that Bitcoin does but but back to the question do you think that uh so so you think initially there's a lot of flexibility with you know Satoshi and and Garin and and a lot of I guess changes because of that and that then I guess around when Garin step back a lot of new people came in and there was not so much agreement and

progress slowed down and do you think now that essentially you know people around blockstream control a lot of the development uh do you think that has accelerated again I I wouldn't say new people came in like to the development process but it was definitely a change in how the development process worked when Vlad took over because he he was he was much more conservative and he would only make changes if they had completely wide consensus uh that that still seems to be the case like that's still how it works and a lot of

the koi developers view this as a good thing I know some people don't but it again it like it emphasizes the decentralization of the network when it's extremely difficult to make a change it's a much better sign for decentralization when you're not able to Fork the chain and reverse the uh implications or the actions of a smart contract you see that does not make sense to me so if you had a large proportion of the network there certain a large proportion of the community right that were for example in favor of a block size increase there was certainly a significant majority that were in favor of that at some point and then that didn't happen essentially because of

centralization right because there is so much power in a small set of developers many of you know a significant number of them uh paid by blockstream and employed by blockstream and that's a sign of decentralization cuz you couldn't make an upgrade I mean I would agree with you that in the case of ethereum they were able to do this Fork because of centralization to an extent but it seems to me that in Bitcoin there's no Fork also because of centralization of development the I think the point here is that democracy is also a form of centralization right you're allowing the majority to be the centralized

controller of what should happen instead in Bitcoin it it's more decentralized because even the majority cannot force the minority into a change that they don't want does that make sense yeah it sort of makes sense although I don't think it's an act I wouldn't look at it as an accurate description of what's going on no because it you have not more not as much decentralization as with democracy but you have less decentralization because it's a small set of essentially the core developers which whatever is five seven people or something that have a lot of power and of course they cannot do it all on their own and then they need miners to buy in ETC right but the point is they're not forcing their change to the

protocol on other people they're sticking with what the protocol is like they're they're starting with they're sticking with what it is they're not changing it yes right no no that's well it's true to to to to much extent right although of course for segregated witness they have made some changes which in case of segregated witness I guess was fairly uncontroversial and people were generally in agreement that this was a good thing if I can jump in I think it's also really important to point out that it's pretty much impossible to judge consensus on these networks as like that's another thing that ethereum hard Fork showed like they said they took like a vote of like the

coin vote in the minor Vote or whatever and but it was actually a very small segment of the people who own ethereum or M ethereum that voted and they had like 85% support I think I don't remember the exact number and then everyone said oh this ethereum classic thing isn't going to be a thing at all it's we're going to fork and it's just going to be like nothing happened then they forked and within hours everyone was like popping uh I remember seeing pictures on Twitter of ethereum developers popping champagne and ping themselves on the back and Brian Armstrong and Gavin andreon

jumping to say that like this proves that we should be hard forking right now and then poniac lists ethereum classic and the story changes today's magic word is Insider that's i ns i d e r are head over to Let's bitcoin.com to sign in into the magic word and claim your part of the listener [Music] reward so we mentioned earlier that uh uh the core client uh 0.13 just came out and there's a certain number of uh updates in this client notably the most important one is segregated witness uh

which we've been waiting for for a long time and enables a lot of new things so it like like you mentioned enables lightning Network and also fixes some uh some problems uh can you talk about uh well what this means essentially for the network I mean what type of of uh uh what is the advantage of having segregated witness and also what other things uh are included in this new release segwit includes a variety of uh advantages like I mentioned the 1.7 megabyte effective block size increase but it also changes the way that uh the developers can completely change

the uh scripting Bitcoin scripting system so it it makes it much easier to uh add new OP codes to the system uh and Johnson Lao is currently working on uh a proposal called Mast that enables a few new OP codes and re-enables uh some old ones uh it also fixes transaction malleability which is what enables the lightning Network and things like that to exist uh for those who remember transaction malleability is also what Mark carelis blamed uh those uh with the when

people basically like when Mount coox was losing all those Bitcoins he was blaming it on transaction malleability uh it also enabled fraud proofs which uh could be useful for uh improving the security of SPV clients but there's a lot more research that still needs to be done there but uh the general sense that I get from the core development team is like they're all extremely excited about this and uh bip n which is uh called it version bits because it allows them to uh make upgrades to bitcoin and make it a more powerful system with where you can make

more powerful smart contracts and it makes that process of adding new features to bitcoin uh much more fluid and uh much simpler right C can we come back on this is I I remember I can't remember which episode it was we did uh where we talked about segre winess uh into in detail but it was with the one with um I think it was Eric L broso yeah Eric lros right right right and so I'd like you to to come back on this uh uh on this last point and how it enables uh new OP codes to be tested I'm not sure how it works technically but I know I've talked to

Johnson Lao who's working on uh enabling new OP codes and re-enabling the old ones through uh a bit called Mast which uh will essentially it will enable some new uh smart contract features that for Bitcoin and like he was he essentially told me that he would not have been able to make these changes to bitcoin without the addition of segregated witness so that and and as far as I'm aware he's he's like relatively new developer to the uh core development team but I'd have to double

check that last Point okay and so then um now that it's been merged and it's in in in this latest version and people are updating their clients uh I mean all all wallets I guess are going to have to uh you know now update uh their codebase to support SEC witness and the next step then is for miners to uh accept this new version of the code uh um how long do you think that process will take until we see this actually well we see like you know these new segregated witness transactions uh occur on the network so the code for segregated witness is already in the Bitcoin core

client it was added in 0.13 but the code to activate or signal support for segregated witness is coming in the next version which will be 0.1 3.1 and it it seems like that's uh close to being released maybe if I had to guess I would say in the next month or so it would be released so the next step after that would be uh all the 95% of the miners have to Signal support for this change to the protocol and then as you said also so the the wallet developers also have to

upgrade their wallets for this change but I I think the difficulty of doing that has been uh overblown at least because uh Nicholas dorer who uh he controls or he runs the N Bitcoin uh library and he's already implemented segue into that and I believe Bitcoin J is pretty pretty much done that as well but I I have to check I I think with the right amount of assistance from people familiar with

segwit that I mean I mean I've talked to Eric LOM broso a lot who you guys have had on the show and he says he's been able to implement it in wallets in only a few days and I know like you have you have to have a lot more testing and everything with when you're talking about a live network but I I think I don't know if it's going to take as long as some people are making it out to be I think I think the real uh issue will be the activation from miners I think that's that's what might take even longer we'll have to see well you know let's say in in some amount of time you know most transactions uh on the Bitcoin Network are now seg transactions uh can

we expect to see some uh now that we we'll have more higher effective block size can we expect to see transaction fees to go down is that uh uh an a potential outcome here is that miners would get less transaction fees well the miners could get to set whatever fees they want uh so it depend I mean it depends on how many more transactions happen on the network too I imagine fees might go down a bit since at least at first since we won't be hitting the uh the effective block size limit but uh once yeah once you hit the limit that's when the fee Market kicks in and those who really want their

transaction confirmed right away have to pay a higher fee so they yet it just depends on how many transactions are going to be on the network once this uh Segway is activated okay so let's talk about then the the road map uh what's coming in what's expected to come in the new next versions of Bitcoin so by the way it's like is there somewhere where because I I certainly don't know where but where we can see the roadmap for development like what's coming in version4 15 Etc uh there's a general outline on bitcoin core.org it it all stems from a post Greg Maxwell made on the mailing list after I think it was

ing bit Bitcoin in Hong Kong uh where he laid out uh everything that he and others thought they should do and then everyone just kind of uh agreed or disagreed on the mailing list and they eventually came to consensus that like this is what we're going to do going forward as far as other changes that are being made uh compact blocks was also included in uh version 0.13 of Bitcoin core which I believe is similar to an idea called iblt that Gavin andreon used to was working on two one or two years ago and the idea is to basically make

sure that transactions on the network aren't sent twice to lower the overall amount of bandwidth needed and it also so like when you send out a transaction uh that transaction essentially gets around the network again once the block is mined cuz it's included in that block so this is a way to like when someone's when a minor mines a block it'll get sent out to the network and it'll just kind of like if you already have because if you already have a but all these transactions in your uh M poool you don't need to the minor doesn't need to let you know about those transactions so it's a way to like limit the amount of data that needs to

be sent around the network and then that's more about bandwidth and then with uh Matt Carell's relay network was also recently improved to be faster and more decentralized and that really helps the issue of latency which has really been the main one of the main uh things preventing Bitcoin from scaling uh higher because it it it essentially gives advantages is to the biggest miners if when you mine a block it takes a long time for everyone else to learn about that block on the

network the lightning network is also possible and I remember Jose of punon saying who's one of the lightning co-authors you guys had on the show I think he said that basically that the lightning network will be ready for at least testing on the live Network whenever segregated witness is activated so his original uh estimate was the summertime but seg what's T taking a bit longer so whenever that's uh activated we'll get to play around with the lightning Network so the lightning Network actually will be use usable on bitcoin when segregated witness is is

out I mean of course I I know there's a whole bunch of other stuff that has to happen in terms of the lightning Network Nos and and there's some complexity there and the wallets have to integrate it Etc but at least From bitcoin's perspective uh that at that point one can go ahead yeah uh segue is the last change that's needed for lightning and other things there's a bunch of different payment Channel related proposals but lightning is just the most popular one but yeah segt is the last uh change that's needed needed before those can be uh workable on the Bitcoin Network because they because segwit fixes

transaction malleability do you know if like payment service providers and wallet uh developers are doing anything to prepare for uh the lightning network uh to be uh to be ready uh I haven't confirmed that with anyone but I know a lot of uh wallet developers are excited about it but I I I think uh I'm more familiar with wallet already integrating segregated witness than I am uh the lightning Network yeah I suppose it probably is a bit early um before we move on to the next topic uh let's let's let's come back to uh to another topic which we uh had discussed earlier which was the the having so uh I guess it's

been about two months since uh uh we had the block size uh sorry the block reward having so went from uh from 25 to 12.5 Bitcoin and at the time you know there was um a lot of discussion around what would happen it was sort of a you know much anticipated event and uh and I mean sort of like you know like Y2K you know like what's going to happen after the having kind of thing and um and now two months later uh well Bitcoin is still running um you know miners have not I guess I think so have not turned off their Hardware like massively uh where you know so what what basically uh happened you in these last two months uh

in your from your perspective yeah I didn't think it would have much effect at all and it didn't when the having actually took place but there was that run up in the price before uh the having happened so I don't it might have been related to having I'm not really sure uh the hash rate is actually higher I was checking it last night I think it's higher around the same as it was before the having um and I talked to some of the miners before the having took place and none of them were really worried I think they they they thought like a

slight decrease in the hash rate might have been uh possible which we did see at first but now it's already recovered uh it's important to remember that they all these like bit Fury and uh bit main they just came out with like brand new mining chips that people are were buying in like December and early this year so it's not like they're going to buy these spend all this Capital to buy these chips in December and then turn them off like six months later that's like these those brand new uh that's this is like a long-term play and

a lot of the miners are also holding Bitcoin so they're they're not necessarily uh if they're long Bitcoin they're not necessarily worried about short-term price movements but yeah it's been since the having it's been like pretty non-event I'd say let's take a short break to talk about Jax Jax is a multi-coin wallet created by the people at the central now in the past if you had a whole bunch of cryptocurrencies it was a pain to handle them you either to leave the money in exchange which is insecure or you had to have all these different wallets which was a hassle fortunately now with Jax those medieval days of darkness misery

and suffering are over Jack supports multiple cryptocurrencies and new ones are being added but it's not just storing cryptocurrencies you can do with Jack but you can also exchange them directly from with inside the wallet thanks to their shape shift integration and since there's only one seed Jax makes it super easy to back up and sync to the other devices Jax works with Windows Mac OS Linux Android iOS and has browser extensions for Firefox and chrome so go to ja.io that's jx. to download the wallet and get started today we'd like to thank Jax for their support of epicenter we've talked a little bit before about forking and I want to come

back to that topic uh to some extent so you mentioned how hard it was for ethereum to assess or to know really you know what what do the people think the the holders of ethereum the coins think the currency or the minus Etc and that's certainly true right they had some polls but there was such low participation that you couldn't really make inferences overall so I I think that's very accurate description and to an extent the same thing is true in Bitcoin but don't you think that exactly that is why Forks are so essential cuz they're really the only way of seeing which you know which alternative prevails which one is stronger which one really has the

support of of the coin holders also the miners Etc right because for example with ethereum um there's a very powerful way uh to do that no because all of a sudden you had ethereum and now you have eth and ethereum classic right so I as a user and ethereum holder now I have a voice here I can say I'm going to sell one and get the other right so and then I don't just have a voice but I also have an incentive to make that bet and say okay which one's going to succeed in the future and now with Bitcoin right there's also this debate like what's the right way forward should there be a block size increase or not and people like me for example hold some Bitcoins don't really have anything to say here

but if you had a fork and you had two versions well you could have that say and also miners right they could choose where they direct their hash rate so don't you think that a fork is really an essential way for uh for decentralized cryptocurrencies and communities to to evolve the protocol and and make those kind of decisions I think it when it comes to hard Forks it might not be the best thing to compare ethereum to bitcoin because they're basically trying to do two different things bitcoin's trying to be this beer ecash or digital

gold a store of value so really it's just it's just about holding that value and making sure nothing disrupts that and when you you do a hard Fork you're you're basically creating going from one network to two networks so now whatever network network effect Advantage your chain had is now perhaps decreased because now you're you're split into two different networks for for your thing that's supposed to be like a store of value so I think it it it creates a lot of complexities with people who just want to uh store have this store value that they know is going to be or they believe is going to be gaining value

over time and they don't want to deal with uh separate chains and and things like that I think I I agree with you on that point where you know Bitcoin is a store of value if you know if you have uh some sort of forking event and and all of a sudden uh you know the price of Bitcoin goes down or you know goes down by half and so that that's massively has a massive impact on the ecosystem uh then again I think that in in order for Innovation to happen you know disruption does in some cases uh sort of U you know help Innovation move forward and perhaps at this point uh because it is quite early in bitcoin's you know life it's

only been around for you know less than 10 years uh maybe now is the time to you know you know get that disruption going by having sort of these really hard shocks to the network uh with hard Forks Etc um so that Innovation can occur and then what you know whatever the network effect uh is you know whatever Network effect happens to towards one chain or another would sort of happen naturally I don't know what do you guys think about that I think it's helpful if everyone is building on the same chain too just for the purposes of network effects like it would be helpful if everyone was building on Bitcoin in some way I think that's really all I have to

add to that yeah that's certainly true although I think if you look at let's even if you say look at something like ethereum and and the Forte which didn't you know certainly wasn't ideally executed and and probably the conservative Bitcoin developers would do you know a more thorough job in in something like that but uh even there right you you really very quickly had you didn't have a division on the level of developers right there was maybe a few new ones like um Charles hoskinson that said okay now we're going to get engaged do something Etc but most developers they you know they just kept with eth even though there was a market significant

market cap for ETC I mean I I think always the the idea that there would be an ongoing split of the community is I I I I think the networks are there and there's a strong incentive to sort of align around a winner but ethereum for for different reasons ethereum Fork because of sort of a massive hack on the system and it was a reactionary event whereas the you know the the discussion around forking for Bitcoin is around you know um around implementing features which would allow the network to either succeed or fail and and it's all it's all really about uncertainty I think to this point I mean uh there's a lot of

uncertainty on whether you know increasing the block size would cause more centralization Etc and I think that the yeah the reason for forking is completely different and that's what I mean when I say that it it could provoke Innovation where if we test these things out then we we know okay we know we did this hard Fork we know it failed and then so we have this other version uh that we can always move back to yeah that's a really good good point and uh that's why when it I mean when it comes to uh the reasons for forking on ethereum and Bitcoin are really different and the like I'm not even sure if I think the uh the network effects would be more towards like if Bitcoin tried to if someone tried to Fork

Bitcoin like they did ethereum to 2 megabyte blocks I don't think that would be enough for a community to start around 2 megabyte blocks with ethereum it was pretty much the philos the philosophy that the chain should be as immutable as possible which is a very core like belief on public blockchains so it was pretty obvious at least to me and a few others that there was going to be two chains after the fork happened just because that's such that's you're creating that's such a differing philosophy that I some people definitely aren't going to go along with

the uh bailed out chain or whatever you want to call it and I I also think it's important to point out that ethereum classic is actually the original ethereum chain and when you think about it it what we call ethereum now is actually kind of an altcoin of what we call ethereum Classic it just kind of took the Ledger made a change and started from scratch it has the bigger marker cap now but ethereum classic is the is the original chain still well so that depends how you define it right if you look at it in in sort of through the lens of this immutability above everything then yes

right but if you look at it for example in terms of community then uh eth in ethereum is the original Community right so I mean I think this depends a lot on where one f focuses and how one looks at this right but I think the immutability is why we're here though when it at least when it comes to public blockchains so if you want to have like a a a public blockchain based on Democracy I don't think you really need proof of work maybe like you might be better to have some type of election or something and have notaries on like blocks on The Ledger or

something or just use Fiat well so a a lot to discuss here I mean first of all immutability is certainly a very important aspect of of public blockchain there's no question about that and I think uh it is essential right now of course there's sort of the question whether it is one factor of many or whether it is the you know the absolute one thing that can never be compromised and personally I would think it's it's one fact Factor but it has to be balanced against other factors I think it goes back to what we were the differences between ethereum and Bitcoin too where mutability is definitely a lot more important on uh Bitcoin because it's supposed to be this Bearer

ecash right ethereum is like a platform for smart contracts so maybe I mean it might mutability might not be as important I don't I don't know for but it's definitely seems like it'd be of the utmost importance on uh on bitcoin because it's it it's it's just trying to be money it's just it's just it's trying to be cash so like you can't reverse transactions or anything yeah I certainly agree there can be different weights as well and and Bitcoin has put a lot of weight on the immutability aspect and and one can yeah argue whether whether that to what extent that makes sense and to what extent it doesn't make sense

um it's certainly true that if you look at the idea of Bitcoin being this digital gold type thing then stability is very important and uh hard Fork would most certainly at uncertainty and from that point it is a is a risk right so you have to balance that sort of against maybe saying but you get more skillability you get more Innovation Etc so there's it's it's not necessarily an easy uh tradeoff to make there's a lot of different systems that could uh offer a lower amount of decentralization and kind of do what ethereum is trying

to do like I know you can do people have been talking about open transactions for a really long time but that company there's a company stash run by Chris Odum that is finally actually developing something with it and uh you can do smart contracts on a system of Federated servers with that software so that might Al that might be another way to do the tradeoff and you don't need a like a separate ether token for to use that platform so there's a there's a lot of different ways you can get that tradeoff so let's come to our last topic which is the the kind of topic of where is Bitcoin at like is it reaching is it

making progress uh in terms of becoming more wiely adopted and reaching this Main stream which is is a topic that has often come up so before this episode actually I went back and I looked at some of our earliest episode and I looked at some of the topics uh some of the companies that were and projects that we talked about back then so let me give a uh just read out four of the earliest ones so one was hi hi was a a wallet which has recently been suspended and Neo and B we talked about once on the show uh very early on and neon B for those who don't know was the Cypress

based uh Bitcoin Bank type thing that got a lot of attention and turn out turned out to be some sort of scam yellow pay which was a payments company Bitcoin payments kind of like bit pay a little bit in the Middle East they also just closed down swarm uh also had lots of uh lots of claims but I think that project is pretty much dead so uh all of those are kind of gone and that's certainly quite representative from if you look at projects back then so you you mentioned uh kind of when we talked before the show uh some mainstream applications that are now launching that maybe have a chance to make it you know make it big

and get a whole lot of users so mention some like arra yours open Bazaar purse why do you think those have a shot what's different now from years ago the main value proposition of Bitcoin is regulatory Arbitrage or getting around regulations things like that and I've been thinking about this recently A lot of these apps that are coming out like uh yours Abra Brave purse even pop chest it doesn't look like it at first but they actually do still involve regulatory Arbitrage in that uh the the process

of being being a payment processor and complying with all these regulations when you're a custodian of funds is so it costs so much to be compliant that uh the you can't really do microtransactions without Bitcoin and I recently talked to Andrew Lee from Pur about this because I was wondering like why why does your platform actually need Bitcoin why couldn't you just do this with like PayPal even or anything like that and it's it's it's because he he sent me back this document that was like a few thousand pages long and it was from visa and it was like their version of your reversible micro

payments and he was like Well we'd have to comply with this and it could change at any time and it's and it's also when you're a centralized payment system sometimes you're you say you're not reversible until you the government comes in and says you have to reverse a payment which is I think that happened with uh okay pay uh back in the day with because they had some Mount gox funds and uh I remember early in the days of Bitcoin there was also this exchange called Trad Hill where you used to be able to make deposits with uh dwala and then apparently dalla told Trad Hill that uh they don't need to worry about

their customers like depositing via dwala and then taking Bitcoin from The Exchange and then reversing the dalla transaction they were basically saying it's irreversible and then dalla realized I guess you can't really do that in the United States so they Bas uh trade Hill basically had to shut down because people deposited with dalla traded it for Bitcoin and then reversed all their dwala transactions but uh yeah so uh basically a lot of these apps that are coming online now involve micro payments in some way so you got uh yours who I I just saw you guys interviewed

maybe last this week or last week uh the project from ryanx Charles where you're basically it's basically a Content a monetization platform for Content creators uh and Their audience can just like upload them there a very simplified way of putting it but just uploading with Bitcoin basically uh Brave is doing a similar thing with content monetization only it's a browser and it's it's actually the browser I use every day now so even if it didn't have Bitcoin in it I would I'd still want to use it because it's it's blocking it's like an ad blocker browser basically and then you can choose to send payments instead of

looking at ads and then pop chest is another one where they actually did an experiment with this guy nerd rage who's like a YouTube celebrity I don't really watch his stuff but he has like hundreds of thousands of sub subscribers and he decided to try out pop chest and he made more money on pop Chess By charging like 25 cents per view or something like that than he did than he would have on uh YouTube advertisements and one one last point on the mainstream applications I think Abra if they do it right could be the first mainstream Bitcoin wallet because they're essentially there's no

volatility involved they're hiding Bitcoin completely uh by hedging it on exchanges I think they originally wanted to do smart contracts on top of Bitcoin to make it completely decentralized but now they're hedging on exchanges so I'll have to see exactly how it works but if you can do Bitcoin without the volatility that's going to be a very power tool it's like venmo worldwide without restrictions so I agree that all of these applications have huge potential like specifically things like yours uh they address really you know hard problems that you people have been trying to solve for many years uh you know I invite our listeners to go back two episodes uh to to listen to that if you haven't done so open bizarre too

like having a decentralized eBay is a great thing um and you know has a lot of potential uh especially in the developing world now the the it seems like a lot of these projects that have had Bitcoin integrated as a payment mechanism the problem with it I mean the the value uh that Bitcoin brings is this regulatory Arbitrage and so this en this enabler of permissionless innovation and and and permissionless payments but the the issue is also Bitcoin like Bitcoin is all is at once the value and the problem because it's hard to get people into Bitcoin um you know there's still that

friction between the finan you know traditional Financial world and owning Bitcoin so that you can participate in these systems uh so would you would you agree with that and and if you do what do you think finally needs to happen for all of these really great apps like there's all kinds like we're just citing a few here but there have been others that have died as well to make it into the mainstream and to go sort of um go above this problem that that is getting people into Bitcoin yeah so and you guys talked to char Ryan about this uh when you talked to him about yours uh I would it is difficult still to get Bitcoin I would say I just mentioned Abra that

could be an app where people want to use it because the volatility is gone so it's it just looks like dollars or Euros or whatever on their phone and uh coinbase and circle kind of do this too where you can hold you don't need to use Bitcoin at all so I I think the key thing here is like these that you need to hide Bitcoin basically so like I this is another another conversation I had with uh Andrew from Pur I told him like he shouldn't have Bitcoin or like mentioned at all on your website it should just be deposit dollars to

coinbase send it to purse it can be a Bitcoin transaction behind the scenes and you get the discount and you don't even know that Bitcoin was providing that discount so there needs to be a lot more of that that's something uh I remember seeing a talk Brock Pierce and teren yang who uh invest their VCS were talking about this same concept last year um and there's also creative way that you can give give people like a little bit of Bitcoin and I think pop chest is thinking about doing like the reverse of their system where instead of paying to watch a video you get paid a little bit of

Bitcoin to watch an advertisement and when it comes to that kind of stuff where you're getting a little bit of Bitcoin in your wallet I think that a lot of that relies on the lightning Network cuz you're talking about those like micro or Nano payments so we might see more of that one once lightning uh is active on the network yeah absolutely so I I think that would be very interesting to see whether this whether you're right and whether this new generation of applications uh really do break out I think there certainly is it's certainly the case that this original idea why a lot of people got interested in Bitcoin and and all this possibility and potential is still there and and the idea of a cryptocurrency global

cryptocurrency makes so much sense so it something like that I think is going to happen and and it would be great to see if some of those applications really manage to drive that yeah I forgot to mention uh bip 75 too I don't know if you guys wanted to talk about that but it's it's finally solving that problem of having to like scan QR code or like writing down a Bitcoin address and or copying pasting it like you're we're almost at the point where it's going to be like an email address so I'll be able to send Bitcoin to Brian epicenter bitcoin.com and you'll get a return address with it so there's bit 75 and bit 47 which is a more bit bit 47 seems to have better

protections when it comes to privacy and censorship resistance although I'm not sure if the trade-offs will be enough for people use that but I just put up an article on that I've been working on on a coin Journal that compares the two so I I recommend people check that out okay perfect well we're going to link to this certainly in the show notes so um Kyle thanks so much for coming on it's it's been a pleasure talking with you and it's all been a pleasure following your readings over the years and we certainly look forward to many more fantastic articles also by the way thanks so much for all the great articles you've written about episodes of this show too hey you guys put out a lot of good content so but yeah thanks thanks for having me on and for this discussion

yeah so we're going to we're going to link to to Kyle's article uh in in show notes quite a few that we've talked about and some other ones as well so you can check them out for anyone who hasn't been following uh his articles I highly recommend that you do so he really is as far as I can tell at least the best writer on uh Bitcoin and uh cryptocurrencies so and to listeners thanks so much for listening U so epicenter is part of the LTB Network you can find this show and lots of others at let of bitcoin.com of course you can also subscribe to the show uh and get it every Monday and do so either via your favorite podcast application or via uh video on

youtube.com/ epicenter Bitcoin and uh thanks so much and we look forward to being back next [Music] week no [Music]