0:01

Exercise, endurance,

0:04

milk.

0:06

Om. Exercise, endurance, milk. Om.

0:15

Exercise, endurance,

0:17

milk. Yum.

0:29

What the hell is

0:32

going on with all the fees? And

0:34

why is everybody talking about Bitcoin shitcoins

0:36

and NFTs?

0:38

We're going to pause our reading material

0:41

today in order to have a Guys

0:43

Take episode about why it's

0:45

not nice to poop in the park.

0:48

This is Guys Take number 66,

0:52

pooping in the park.

1:09

What is up guys? Welcome back

1:11

to Bitcoin Audible. I am

1:13

Guy Swan, the guy who has read

1:16

more about Bitcoin than anybody

1:18

else you know. And

1:21

there's a bit of weather on the

1:23

blockchain, on the time chain lately.

1:25

You

1:26

know, when we talk about the mempool and

1:28

the fee rate and the backlog of transactions

1:32

that are

1:33

vying for space in

1:35

the time chain, I like to think about

1:37

it as weather. There's no central

1:40

authority, it's just kind of this chaotic

1:42

response to conditions for

1:45

people all over the world. And there's this

1:48

raw open market that

1:51

has no coordinator in

1:53

which people are just broadcasting

1:56

to try to get their data in the chain.

2:00

actually a really, really good read on it that

2:02

I hadn't thought about in a

2:04

long time, but it's by Zane

2:07

Pocock and it's way

2:09

back in...

2:11

It's years ago that we

2:13

covered this on the show, but it's called

2:16

Bitcoin's Town Square.

2:18

And it's basically

2:20

talking about... It's theorizing

2:23

or

2:23

creating an analogy to visualize

2:27

what the mempool is and what

2:29

the

2:31

gossip network or the network

2:33

that is broadcasting and propagating

2:35

transactions around the global Bitcoin

2:37

space and how everybody has their own

2:39

mempool. They have this

2:42

batch of transactions that are waiting to be

2:45

placed into the Bitcoin chain.

2:47

And it's a really fascinating

2:49

article and I always loved the thought experiment.

2:52

I think it's a really awesome way to

2:54

visualize and think about

2:57

what's happening on the Bitcoin network.

2:59

But currently fees are high

3:02

on the Bitcoin network because there is a

3:04

huge backlog of data that

3:06

is trying to get itself stamped into

3:08

the Bitcoin

3:12

chain.

3:13

And now the fees here aren't the problem. The

3:15

fees right now last I

3:17

checked just a little while ago

3:20

is like $6 or $7 or something was the median

3:22

fee for the next block.

3:25

Now this is not actually the problem.

3:27

And I think a lot of people have misunderstood

3:30

what either they've failed

3:33

to paint a clear trajectory

3:35

for themselves for Bitcoin's future, or

3:37

they're just wrapped up in

3:40

the fact that that's the most

3:42

in your face. It's the most like

3:44

you're directly related to

3:46

it consequence of

3:49

what is happening right now that's causing this. But

3:51

I think people are wrongly suggesting

3:54

that the high fees are the bad

3:56

thing that we need to stop.

3:58

Granted that's not a very large number of people. but

4:00

I think there are some who are kind of

4:02

getting lost in the more

4:05

important issue.

4:07

And so what is that issue? Why

4:09

are the fees so high? Like what's going on

4:11

that's causing the backlog

4:15

on Bitcoin right now? Well,

4:17

that's where we get to ordinals

4:19

and inscriptions.

4:22

Basically, people are stamping JPEGs,

4:25

they're stamping NFTs into

4:28

the Bitcoin blockchain, and

4:30

they are now inscribing

4:34

shitcoins. There is a new BRC

4:37

protocol, which is very

4:40

similar to what

4:42

they do on Ethereum to just issue

4:44

shitcoins, just tokens

4:47

everywhere. And of course, they're

4:50

running wild. And now they're

4:52

bloating the Bitcoin chain,

4:55

the Bitcoin system, with a

4:57

bunch of shitcoin data on the Bitcoin

4:59

chain. Bitcoin

5:02

is a public good. It

5:04

is like a public utility. We

5:07

are all stewards of

5:09

this chain, of this thing that

5:11

we need to hold

5:14

all of the data for, validate all

5:16

of the data for, and keep a permanent

5:19

record of in order

5:21

to know and secure

5:23

the Bitcoin network for all of the

5:25

people in the world who need it, to

5:27

maintain global sound

5:29

money. It's like a public park.

5:32

And we are all stewards of keeping this thing

5:35

in order of maintaining it, keeping

5:37

it clean, and making sure it works for

5:39

the people who need it. Bloating

5:41

the chain with a bunch of shitcoin data

5:44

that is not even relevant to Bitcoin consensus

5:48

is like taking a dump in the park.

5:51

And now everyone else has to deal with it.

5:54

Now a lot of people are making

5:56

this a much bigger deal than

5:59

it actually is.

6:00

at least in my opinion.

6:02

But there may be something that we can do about

6:05

it and I think there is an honest conversation to

6:07

have about the

6:09

incentives that have led to this

6:12

and that something can actually safely

6:15

potentially safely be done to mitigate

6:19

some of this behavior. Or at least

6:21

I think it's worth having

6:24

the conversation about whether

6:26

or not the trade-off for some

6:28

of the decisions that led us here

6:31

are still worth it.

6:33

But we have a couple of basics of this

6:35

situation to cover like people

6:37

are talking about like the discount on transaction

6:41

signatures, the UTXO

6:43

bloat, and we have to understand what these things

6:46

are. A lot of you may already know, may

6:48

be aware, but I want to cover them for

6:51

the people who might not be following all

6:53

of this. Really quick though let's thank

6:55

our sponsors and then we will get into

6:57

the meat of it.

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with that, let's jump back into

8:54

today's guys' take. All right,

8:56

so what are ordinals and inscriptions?

9:00

So just so you know, this is a,

9:03

these are loose details

9:06

as to how this stuff works.

9:08

Because I just read a handful of explanations

9:11

about this as when it blew up the first time

9:13

with NFTs on the blockchain.

9:16

And it just doesn't interest me. It seems

9:20

kind of irrelevant.

9:22

And you know,

9:24

people were paying a lot and I figured it was going

9:26

to die down and it did. It,

9:28

you know, it had a big spike. And that's probably

9:31

what we'll see with this whole shit coin stuff. It'll

9:33

be another spike and then it will die down. And

9:36

if we're considering this a spam attack,

9:38

which there's a lot of

9:41

somebody, I think it was

9:43

the Francis Puyo was sharing

9:45

out or screenshotting a whole bunch

9:47

of accounts that were spamming

9:50

out the exact same messages about how

9:53

ordinals are, I can't even remember what it was, but

9:56

it was just chilling this crap,

9:57

which might just be somebody paying a

9:59

bunch of crap. crap accounts, like a bunch of robot accounts

10:02

or whatever, to just

10:04

spam out nonsense and reply to people.

10:07

But it could legitimately mean that

10:09

maybe there is some sort of a coordinated attack here

10:11

that this is actually

10:14

someone with funds trying to cause a

10:16

problem. I personally

10:18

think it's just a bunch of people

10:21

in crypto doing

10:24

what they've always done and

10:27

not caring about being good stewards and

10:29

not really caring about sound money because all they ever wanted

10:31

to do was gamble on trash.

10:34

Which I'm not even saying gambling on garbage

10:37

is a bad thing. You want

10:39

to gamble on bullshit? That's fine,

10:41

go do that. But the idea

10:43

that you're putting this cost on

10:46

the sound money foundation

10:49

of our future is just kind

10:51

of a shitty thing to do, honestly, in

10:53

my opinion. I mean, it's not like

10:55

there's a whole lot of things that we can do

10:58

about it. We can't censor it. And it's not

11:00

as if Bitcoin isn't designed to handle

11:02

spam attacks.

11:04

But this one is a little bit unique

11:07

because of how the signature

11:09

data works and because of

11:11

a discount that was put in place

11:14

because of a negative incentive on

11:16

the front end of this thing that

11:18

was being corrected. This

11:21

is why a lot of people are mad and we're like, oh, we need to

11:23

remove segregated witness, which

11:25

is just absurd. Anything to quote

11:27

unquote mitigate or correct this that

11:30

involves even a soft fork

11:32

or a hard fork, any fork of any kind

11:35

or risks a split in the network, I

11:37

think is unbelievably foolish. I

11:39

would much rather just buy another hard

11:41

drive for my Bitcoin node

11:44

slightly sooner than I had originally

11:46

intended. This will all still

11:49

run on a raspberry pie. The sky

11:51

is not falling. It's not the end of the world. Everybody

11:53

take a deep breath. It's just shit

11:55

coins.

11:57

Bitcoin is designed to survive

11:59

a lot. lot worse

12:02

than this. However, it's

12:05

not nice to poop in the park and

12:07

there might be something we can do about it.

12:10

First, let's go back to ordinals and

12:12

inscriptions. Again, this is

12:15

a brief overview,

12:17

it's vague and

12:19

if there are any details that are wrong,

12:22

sue me, I'm just

12:24

trying to share the general idea of what's

12:26

going on. So ordinals

12:29

is literally just a protocol

12:32

or it's just a piece of software

12:34

that has a very explicit

12:37

set of rules about how to put all

12:39

of the satoshis in order.

12:42

All the satoshis that exist. Every Bitcoin

12:44

that has ever been mined is just broken down

12:46

into 100 million satoshis and

12:49

then as those UTXOs,

12:51

as those Bitcoin are being spent and

12:53

broken up, it just has an order

12:56

of events in which it is counting down

12:58

those satoshis

13:00

to basically label

13:02

every single one of them a number. Even though

13:04

the Bitcoin consensus rules doesn't care,

13:07

like one satoshi is no different from another satoshi,

13:10

this is attempting to do that.

13:12

This is a external network

13:15

that is just creating an arbitrary

13:17

means by which we are putting them in order. I mean, it

13:19

could be flipped. Like, let's say, you

13:21

know, for the first 50 Bitcoin that

13:24

are mined in the genesis block

13:26

is that this would, these would be satoshis 1

13:29

through 500, I mean, 1 through 5

13:34

billion. Now, if one

13:37

Bitcoin is spent from that,

13:39

that Bitcoin would represent

13:41

satoshis 4,900,000,000 up

13:43

to 5 billion. It basically counts down the list

13:51

as transactions are made from that UTXO.

13:54

So the change address with the 4.9 billion

13:57

are 1 through 4.9 billion.

13:59

And so this goes on when

14:02

that next, when that one original one

14:04

Bitcoin is spent, then that breaks

14:06

down again from highest to lowest.

14:09

But again, that's arbitrary. It could be completely

14:12

flipped. It could be that the first Bitcoin that you spent

14:14

is from Satoshi one to

14:16

Satoshi 100 million.

14:18

It's just a set of rules about putting them in order.

14:21

And then you can look at the chain and

14:23

you can be like, oh, I actually have

14:25

some satoshis in my UTXO

14:28

today from in a balance of Bitcoin that I

14:30

have that are from like block 10,000

14:34

or something, you know, way

14:36

back from 2009. Now

14:38

people are saying, or at least I have

14:40

heard some people suggest that this

14:43

destroys or harms the fungibility

14:46

of Bitcoin. And that's

14:48

not true at all because it has nothing to do with Bitcoin.

14:51

The Bitcoin network itself cannot or does

14:53

not care

14:55

what, which ordinal it

14:57

has or which numbered Satoshi is

14:59

in which address. It's

15:03

just people outside

15:05

external to the network consensus rules valuing

15:09

one address more than another address,

15:12

which, you know, you could arguably say

15:14

like the address itself or one balance

15:16

of Bitcoin rather than a different balance. And

15:19

you could arguably say like that's true of the address

15:21

itself. Like you might like want a

15:23

vanity address

15:26

that has like guy at the beginning

15:28

of the address or something like that.

15:30

And it's not unlike someone valuing.

15:34

Granted this actually has a different metal

15:36

content, but let's say the metal content

15:39

is exactly the same. Bitcoin valuing

15:41

a quarter from like 1942 over a quarter

15:43

from today, like a 2023 quarter.

15:49

It's like, okay, so somebody collects

15:52

the coins and quote unquote, that coin

15:54

isn't fungible, but you can still go to the store and

15:56

it's still just worth a quarter.

15:58

Same thing here with Bitcoin.

15:59

matter that some random person somewhere

16:02

gives a crap whether or not they're,

16:06

you know, it's a high ordinal number or low

16:08

ordinal number that they're getting in there. The

16:10

sats that they've been sent,

16:12

it does not affect the fungibility

16:15

of Bitcoin. So that out of the

16:17

way. A lot of people are saying

16:19

ordinals are JPEGs

16:23

or NFTs or shit coins.

16:27

And as I understand, and I don't

16:29

know if maybe the

16:31

client, like the program that's

16:34

doing this is equating them or

16:37

if people are wrongly equating them, but I don't see

16:39

how the NFTs and the

16:41

shit coins being issued. These things

16:44

are inscriptions, which granted

16:47

ordinals are what enabled this because

16:49

you have to be able to keep a track, keep track

16:51

of the transfers that are taking

16:53

place.

16:54

But these are

16:57

inscriptions are ways

16:59

to pack arbitrary

17:02

information into a transaction

17:04

script. And you know, one thing that's like really

17:06

kind of fascinating about all of this is that

17:09

to think about the game theory and

17:11

the incredible difficulty in engineering

17:13

an open network, an adversarial network,

17:16

when you have to take all of these considerations into account

17:18

and how people might use these things. And

17:20

that's exactly why Bitcoin was

17:22

designed as it was designed. And

17:25

why it's so important to be insanely

17:27

conservative with any changes or thinking

17:30

about how these things affect it because we are stewards

17:32

of the time chain

17:34

and it's very easy for an unintended

17:36

consequence or having

17:38

slightly too expanded

17:41

use case or a feature

17:43

set on something that can turn into an attack

17:45

vector.

17:46

So part of me is just a little bit like this is fascinating

17:49

to think about how, you

17:51

know, merging the game theory and the incentives

17:53

between just packing

17:56

this thing full of data that's irrelevant versus

17:58

using it for sound.

17:59

money. But I don't want to get ahead of myself.

18:02

Inscriptions are

18:04

a way to pack arbitrary

18:06

data in. And the

18:09

explanation that I read, again,

18:11

I haven't like technically broke down.

18:14

I didn't read any white paper or anything like

18:16

this. It was some article. But

18:18

that

18:19

you can do, you know, basic

18:22

if else sort of statements in Bitcoin

18:24

script. And then that's where you

18:26

would place, you know, keys and hashes

18:29

and all of these things. And

18:32

instead of doing that, instead of

18:34

placing keys and hashes in the if

18:36

else statements, you can just

18:38

basically keep doing a bunch

18:40

of arbitrary script

18:42

calls and just

18:45

put it with packets. You know, let's say you've got like

18:47

a limit of 80 bytes or 80

18:49

bits or something for, you know, sticking

18:52

in an if statement or something like that. I don't

18:55

know what it is, whatever the limit is. But

18:58

well, why do I

19:01

need to put a signature in that? Why do I need to put a

19:03

key or a hash in there? Why not

19:05

just stick one

19:07

five hundredth of a JPEG

19:10

image

19:11

in that just a little packet, and then do

19:14

else and do another packet and if else

19:16

and just whatever, just make a bunch of arbitrary

19:18

calls and just keep sticking in packets

19:21

of my JPEG until my transaction is freaking

19:23

huge

19:24

because it's, you know, one UTXO, it's one

19:27

address with just this that

19:30

this huge arbitrary

19:32

bunch of scripting that

19:34

is actually just there, squeeze

19:37

all the information for a JPEG

19:39

into a Bitcoin transaction.

19:41

And with multiple improvements, a

19:43

combination of improvements that have happened in the past,

19:46

soft forks that have happened

19:48

on Bitcoin, first segregated witness

19:51

and then taproot, essentially

19:53

there is no limit on the size of

19:55

the signature data. So they can just kind

19:57

of pack it in until it reaches the max.

19:59

max transaction size,

20:02

which is one megabyte.

20:03

While if you've heard anyone mention about

20:06

the discount, the 75% discount for signature data,

20:10

well, that was actually, that was

20:13

implemented at the same time as

20:15

SegWit. And this was actually

20:17

a good thing. This actually

20:19

made a logical sense in, for

20:22

exactly this problem actually,

20:24

to disincentivize UTXO

20:27

bloat. And I'll explain it in

20:29

detail in just a minute, but essentially

20:32

what it did is it corrected an imbalance

20:34

between spending and creating

20:37

UTXOs such that

20:40

they, it was no longer, there was

20:42

essentially an incentive already to bloat

20:44

the UTXO set.

20:46

So actually a way you might

20:48

think about it

20:50

is that

20:51

because there was, there were different costs

20:54

in creating a UTXO and spending

20:56

a UTXO, it's not

20:59

so much that it's a discount for signature

21:02

data as it is a correction

21:05

for a disembal, for an imbalance

21:08

between the entry side

21:11

of a UTXO set and the exit side of

21:13

a UTXO set.

21:15

But in combination, this make

21:17

a script as big as you want,

21:19

which was also for

21:21

the point of like, we don't know how many

21:24

because of Taproot, there's another little technicality

21:26

here is Taproot runs on Schnoor

21:28

signatures. And because you

21:30

can

21:31

essentially create an unlimited

21:34

or a very, very big

21:36

tree of signatures and all sorts of

21:39

stuff, you know, fees are

21:41

going to be high. Like we're talking about like fees

21:43

like $6, $7 today.

21:45

Fees will at some point, the

21:48

whole purpose of the Bitcoin subsidy and

21:51

security model is that fees

21:53

will be very, very high one day. It'll

21:55

probably still be, you know, 20 or 30 years before it

21:57

needs to be like $40 to $50.

21:59

for every single block of transaction

22:02

that gets put on chain, but it will probably be that

22:04

high. If this becomes a global standard,

22:07

the vast majority of people will be operating

22:10

with

22:11

Bitcoin, will be interacting with Bitcoin

22:13

in large pools of, you

22:15

know, commitment sort of transactions on the

22:17

Lightning Network. I think a Lightning wallet will

22:19

be the

22:21

entry point for quote unquote sovereignty

22:23

and Bitcoin will be thought of as a court that you

22:26

have to pay $50 or $100 in order to get your quote unquote

22:31

case seen for

22:33

moving large amounts of capital.

22:35

And I think that's an inevitability, just like

22:38

we already went through this huge transition.

22:40

We'll have to rethink how this is going to work and

22:42

how we interact with it. And

22:44

you know, we need this long span of time

22:47

to develop and incentivize and have these points

22:50

of pressure to move things to higher

22:52

layers. I think this will be another

22:54

boon for the Lightning Network in the

22:57

short to mid term because it only reveals

22:59

the obviousness of where this

23:02

is going and the fact that we do need to

23:04

be preparing for this and we do need to think about be

23:06

thinking about it like this. So I don't really

23:08

think having this pressure right now is so

23:12

deeply negative in the context of

23:15

again, I don't I don't think the fees are the issue here.

23:18

Going back to Taproot is

23:21

because that will be our interaction

23:23

with it,

23:25

we will likely have very

23:27

large, very complex trees

23:30

of alternative paths and

23:32

commitment payouts and these sorts of things

23:35

in a single UTXO. And

23:38

one prediction that I made some numerous

23:40

years ago, I

23:42

think probably back in 2017, there's probably

23:45

a tweet for it somewhere. I don't know. What

23:47

I said is something along the lines of

23:49

and I still believe this wholly and

23:51

completely today is that the

23:54

idea of one person earning

23:56

a single UTXO entirely on their

23:58

own will become

23:59

a pretty rare thing in the

24:02

distant future of Bitcoin.

24:04

That the overwhelming majority of people who

24:06

interact with Bitcoin will be part of a fetiment

24:09

network, will be part of a large multi-city,

24:12

will be part of a channel pool, whether

24:14

they even know it or not, of

24:17

a lightning

24:18

node or a lightning network or an

24:20

off-chain, a hierarchical

24:23

channel system, which

24:25

is a whole other thing actually that landed

24:27

kind of recently. But just the idea that it

24:29

will be a layer two or a layer three technology

24:32

or protocol of some sort that

24:35

utilizes the tank-like

24:38

value and assurance of a Bitcoin transaction

24:41

and extends it into an entirely new

24:43

network and a

24:46

series of

24:47

security and ownership trade-offs.

24:50

So I think having

24:52

a large space, now

24:55

Taproot, what Taproot does in Schnoor signatures

24:57

is that on the front end when you're making

25:00

the transaction,

25:02

you actually only have the Taproot.

25:04

You only have a single signature

25:07

or the root of this large

25:10

signature tree and all of these potential

25:12

paths that you can have in some big joint agreement

25:15

or a thousand, a $99

25:18

of a thousand multi-sig or whatever it is, you

25:21

literally actually only have to publish to the chain this

25:23

tiny little piece of data. However,

25:26

on the back end, whatever tree,

25:29

whatever branch, so in the context

25:31

of like a Taproot

25:32

is that it's like you have multiple different

25:34

branches for how you can spend this thing. You

25:37

could wait 10 days and spend it with these two

25:39

keys. You can spend it now with these

25:41

seven keys. You can wait 30 days

25:44

and spend it with these other two keys.

25:48

You can wait a year and spend

25:50

it with just this one key, et cetera. You can just have

25:52

all these different paths, these options.

25:55

Now,

25:56

for all of the people that are involved,

25:59

you

25:59

If everyone just kind of agrees

26:02

with all the separate keys and what's going on

26:04

is that you can all just kind of sign it collectively

26:07

and never even really reveal any

26:09

of the branches that were possible in

26:12

this script and

26:13

Publish it like a normal transaction

26:15

is still just got like one signature because you can combine

26:18

signatures with taproot However,

26:20

and you know signature data is the

26:22

big part of the transaction data just to

26:25

also make that clear

26:26

But if you're spending that transaction

26:29

if you're if you're trying to get a valid signature

26:31

for that and you're only using one of those Branches

26:34

you're using one of the alternative branches.

26:36

That's not just the fulfillment of all the keys

26:38

Let's say you waited 10 days and you spin it from

26:41

you know, the two keys or whatever which

26:43

was one of the possible paths well,

26:45

then what you have to do is you have to reveal that one

26:48

branch

26:49

of the tree and prove that That

26:52

hash or that signature does in fact unlock

26:54

the root

26:56

According to those conditions now

26:58

someone on the front end when that transaction is

27:01

originally made and it's sent to that address

27:03

You can't see the tree. You can't see the

27:05

different options. Um, if you're using

27:08

taproot and schmoor signatures

27:10

but whatever option or path is

27:13

Is actually used to unlock it does

27:16

have to be revealed in the signature But

27:18

because the schmoor signature can be

27:21

condensed down it

27:22

can literally be a thousand keys Well,

27:25

you don't want to have some

27:29

Conflicting limit on how

27:32

complex you can make the tree so In

27:35

on the back end you don't know exactly. I mean,

27:37

I guess you technically do when you're constructing

27:40

the transaction How big each path

27:42

would be but still you if

27:44

you need 999 signatures

27:47

You don't want to be putting a few kilobyte caps

27:50

on the signature data Because you

27:52

may literally have you know, it might not

27:54

be a super complex setup that

27:56

genuinely needs that much data

27:59

There are a pro a probably a lot

28:01

of really important and fascinating use

28:03

cases for mutual

28:06

arrangements and shared custody

28:09

of UTXOs and of Bitcoin

28:11

balances

28:12

that could use pretty significant signature

28:14

trees. So now,

28:17

the discount. What does that mean

28:19

and what the hell is it for? So

28:23

to put it simply, the signature discount

28:25

for SegWit. Think

28:28

about it like this. Best way to do it

28:30

is probably with an example. So

28:33

first off, the discount is because

28:36

when you send Bitcoin

28:38

to an address

28:40

versus when you spend the address, the

28:42

UTXOs. The UTXOs, again,

28:44

we've talked about this in the Bitcoin basics, but just in case,

28:47

the UTXOs are all of

28:49

the active Bitcoin balances. They're

28:52

the latest place that

28:54

a Bitcoin was sent and therefore someone

28:56

could spend from those. Now,

28:59

all of the history of Bitcoin is still there. So

29:01

like if somebody sends a Bitcoin to me and

29:03

then I send a Bitcoin to you,

29:05

you have the UTXO and everybody

29:08

needs to keep your address in their

29:10

RAM and their memory listening for

29:13

new Bitcoin transactions because you are the

29:15

one who has the balance. My transaction

29:17

is still there because my transaction

29:20

is necessary to prove that yours

29:22

is valid. It needs to be traced all the

29:24

way back to when that Bitcoin

29:26

was mined. But mine is no longer

29:28

a UTXO because it's been spent.

29:31

That address no longer has anything in it.

29:33

So it can confirm

29:36

my transaction and the transaction before

29:38

that and the transaction before that and then when that Bitcoin

29:40

was mined and then it knows that your

29:43

transaction is valid. It followed

29:45

all the rules. The Bitcoin exists. It's

29:47

being fully audited. All of that good stuff.

29:50

All of the validation. All the rules have been followed

29:53

and that you have the opportunity. You

29:55

have the ability to spend it. And

29:57

so all of ours, all

29:59

of our other

29:59

transactions in that chain can

30:02

be validated and then just kind of discarded

30:04

or just put on the hard drive and dealt with

30:06

later. And only if anybody needs

30:09

it, is it necessary.

30:10

Your transaction, your UTXO

30:13

needs to be kept in RAM, in

30:16

the live memory on

30:18

a computer. And so UTXO

30:21

bloat

30:22

really increases the cost

30:24

of running a node because, you know,

30:26

if you only have 8 gigs of RAM and you

30:28

have billions of people using

30:31

Bitcoin and they each have multiple

30:33

UTXOs, multiple addresses, well

30:36

then suddenly the RAM cost of running

30:38

a node becomes really, really high.

30:40

Because ultimately that's a lot of data.

30:43

So why did SegWit discount

30:45

the signature data and what does it have

30:47

to do with this? So originally,

30:50

going back to an example, is that

30:53

if, let's say, I have

30:56

a wallet and I have 0.1

30:59

Bitcoin, 3 addresses,

31:02

I have had 3 transactions sent to me.

31:04

I have 0.1 Bitcoin, 0.1 Bitcoin and 0.3 Bitcoin.

31:10

Now if I am sending a transaction

31:12

to someone, I'm sending a transaction to you of 0.2

31:14

Bitcoin, well

31:16

there is actually incentive and incentive

31:19

for me to create a new

31:21

UTXO, to add to the

31:24

UTXO bloat and spend it

31:26

from my 0.3 address. Why?

31:30

Because my 0.3 address

31:32

is

31:33

fewer UTXOs, is fewer addresses

31:36

than spending it from both of

31:38

the 0.1. When I have to include both

31:40

of the 0.1, I now have 2 signatures and 2 addresses,

31:42

which is

31:45

a lot more data to publish to the chain.

31:48

However, as a steward of the network

31:50

and putting load onto other

31:53

nodes, that is actually the more

31:55

cost effective from the public

31:57

perspective, from the... You

32:00

know the tragedy of the commons perspective is

32:02

that my individual incentive is Different

32:05

from the incentive or from the best

32:08

practices from the context of the

32:10

network as a whole So a wallet

32:13

that is trying to economize that is trying to get me

32:15

the lowest cost transaction because

32:17

all the signature data is on the spending side

32:19

not on the receiving side

32:21

is going to grab the

32:23

point 3 Bitcoin address and

32:25

Spend the point 2 from that

32:27

and then I am still going to have three UT

32:29

XOs because I got a change address now of point 1

32:31

point 1 and point 1 and You

32:34

have a single UT XO of point 2

32:37

we expanded the UT XO set

32:40

Whereas with the discount

32:42

is it shifts the cost

32:45

to the UT XO set away

32:47

from the signature?

32:49

so that essentially the cost on the front

32:51

end of creating a new UT XO

32:53

is roughly equal

32:56

to the cost on the back end of Spending

32:59

that UT XO so it doesn't even disincentivize

33:03

The UT XO bloat so to speak

33:05

it just makes it so it's not an economic

33:08

decision so that it's the same because

33:10

right now or before

33:12

Segwit

33:14

Because of the signature data that now had to be

33:16

put in the transaction it costs a lot more to spend

33:18

a UT XO an address than

33:20

it does to create it But

33:22

after segregated witness after this signature

33:25

cost balancing now

33:27

It's basically the same or

33:29

that was the intent at least and that's

33:32

also what it did for a very long

33:34

time So how does this relate to

33:36

inscriptions and ordinals?

33:38

Well, let's take a break for our sponsor and we'll

33:40

get into that in just a moment Swan

33:43

Bitcoin did you know that

33:45

you could automatically buy Bitcoin

33:48

all the time?

33:49

Just like every week every month and

33:51

you didn't even have to like go do it And

33:54

then they just zip it right up to you and your own

33:56

cold keys and that is automatic,

33:58

too I do that once

33:59

And it just runs all the

34:02

time. So when I'm shooting stuff, I'm

34:04

stacking Bitcoin. When I need to know

34:06

what's going on in space, I have updates

34:09

all the time. And they even tell me what shitcoin

34:11

exchanges are about to blow up so I can tell my friends

34:14

to get their crypto crap out of FTX

34:16

or whatever and put it back into Bitcoin and just

34:18

take it over to SWAN. I mean, they shouldn't have been doing

34:20

that shit anyway. And if they'd been reading on some SWAN

34:22

Bitcoin, they would have known that. And if you want

34:24

to be like all responsible and have like a retirement

34:26

account, apparently it's like super easy

34:29

to do that too. But you can check it all out if you just

34:31

go SWAN Bitcoin.com slash guy and

34:33

they got like stuff and stuff. You should check

34:35

it out.

34:37

So before SegWit and

34:39

the signature discount,

34:40

the basic economic incentives of a wallet

34:43

was to create

34:46

more UTXOs than it was

34:48

to spend UTXOs. And

34:50

thus there was a discount for signature

34:52

data

34:53

and UTXOs in comparison

34:56

were made more costly.

34:58

However, when we're talking

35:00

about JPEGs, when we're talking

35:02

about shitcoin transactions,

35:05

these are actually instilled,

35:08

these are stamped into

35:10

UTXOs that are never meant

35:12

to be spent in the first place.

35:15

In fact, because of all of this arbitrary

35:18

spending data, we're all just like

35:21

nonsense script information that's

35:23

just

35:24

slamming in packets of JPEGs. None

35:26

of that can actually be fulfilled from a cryptographic

35:28

standpoint. So it's non it's

35:30

unspendable.

35:32

If it was spendable, it would be even

35:34

that more costly in order to spend

35:36

it, which is the imbalance that it was trying to

35:38

solve.

35:39

However, the creation of these new

35:42

UTXOs that now have to be kept

35:44

in RAM forever because they are quote unquote

35:46

valid Bitcoin transactions

35:48

that could potentially be spent one day.

35:50

Well,

35:51

it means all of this data for

35:53

creating this UTXO is sort

35:56

of getting a discount

35:58

in an effort to balance it again.

35:59

against a spending transaction

36:02

to destroy that UTXO that's

36:04

never even going to come, that

36:07

can't even take place.

36:09

And by having this, these huge

36:11

JPEG transactions are technically

36:13

paying less of a fee for

36:15

their data while contributing

36:18

to UTXO bloat.

36:20

And thus increasing the data

36:22

needed to store, to run a node, the

36:24

validation costs, the computation costs,

36:26

all of these things.

36:28

Again, this isn't the end of the world. We

36:30

were going to have full blocks. It's good

36:32

to have full blocks. But I think it's

36:35

perfectly fair to call this spam because

36:37

it's just got nothing to do with Bitcoin

36:39

ownership. And now I've argued with a

36:42

number of different people on Twitter

36:44

and in a number of different platforms

36:47

and places. And

36:49

I don't even discount some

36:52

of the arguments, like Danny Deasy, who's

36:55

made some NFTs or whatever, and he's, you

36:57

know, we went back and forth quite a bit on

37:00

Twitter about it. And

37:02

he

37:03

rightfully says, you know,

37:05

like this is a subjective determination

37:08

that this is equivalent to pooping in the

37:10

park. And I completely

37:12

agree that whether or not NFTs are valuable

37:14

is subjective, whether or not shitcoins

37:17

are of any value is subjective. But

37:19

I do not think it is subjective that

37:22

the stewardship, that the purpose

37:26

of the Bitcoin time chain,

37:28

or the highest value of the Bitcoin

37:30

time chain is in maintaining

37:33

a sound censorship resistant global

37:35

money. It is in maintaining the consensus

37:38

rules and the security and ability

37:41

to secure the Bitcoin

37:44

canonical history,

37:45

to make sure that the time chain is

37:48

doing what the time chain does. And

37:50

there's two different reasons why I think it's subjective.

37:53

One is that the only reason

37:56

you can trade things is because you have a

37:58

sound reliable monetary.

37:59

Signal in order to do so is because

38:02

we have money that we can exchange back and forth

38:04

which means any individual utility Money

38:06

ends up reflecting the value of all utility, right?

38:09

it ends up reflecting the value of food of

38:12

Making cars of dry wanting to go places

38:14

of wanting to stay home like everything that

38:17

Happens in an economy ends up becoming a mirror

38:20

The the money of that economy

38:22

of that network ends up becoming a mirror image of all

38:25

of those utilities That's why you don't want money to be

38:27

good at one thing over another

38:29

other than just being good money like for

38:31

instance the market for

38:34

Jewelry or the market for electronics

38:36

probably is a better example just because it's newer

38:39

actually distorts the price

38:41

of gold in relation to a lot electronics

38:44

differently than it distorts than

38:46

the price of gold is for other industries

38:49

and for other goods and items Because

38:51

gold would actually be consumed in

38:53

the process or in the market for electronics

38:55

And it's used and it would be used not for

38:58

its monetary properties. It would be valued

39:00

not because of its money

39:01

Characteristics,

39:03

but because of its conductivity

39:06

and its malleability But

39:08

the reason money works the reason money

39:10

is great is because its value in

39:12

relation to any individual utility or any

39:15

industry or any product or service is Equal

39:17

that its relationship to all of those things is

39:20

the same because you specifically

39:22

don't use money for anything

39:24

other than money It's not a consumable good.

39:27

You don't eat money. You don't make shirts out of it It's

39:29

not part of the production process of anything.

39:32

It doesn't get consumed It's

39:34

simply there to allocate and organize

39:37

the consumption

39:38

and production of all of these other goods So

39:40

gold is actually a worse

39:42

money in relation to

39:45

pricing electronics than it is

39:47

as a money in relation to pricing everything

39:49

else because it can be used in electronics

39:52

and

39:52

still is Granted,

39:54

it's tiny but still that's an example.

39:57

So in this same context going

39:59

back

39:59

the ordinals and inscriptions and stamping crap

40:02

into the blockchain is that

40:04

the only reason stamping shit into

40:06

the blockchain is valuable is because the

40:09

time chain works, it's resilient, it's secure,

40:11

and there's hundreds of thousands of nodes securing

40:13

and validating and protecting this thing.

40:16

And the only reason it's worthwhile to sell a bunch

40:18

of

40:19

shitty NFTs or a bunch

40:21

of shitcoin tokens is because you can then get

40:24

sound digital global money for

40:26

those things. And you participate in a

40:28

broader monetary network,

40:30

which means both the delivery mechanism

40:33

and the value of these things is

40:35

a derivative

40:37

of the value and the purpose of Bitcoin,

40:39

which

40:39

means this is objectively

40:42

shit

40:43

in the context or in the comparison

40:46

to what the purpose of Bitcoin is,

40:48

to the more important

40:51

data set in the Bitcoin time

40:53

chain.

40:54

So maybe an analogy to kind of back

40:56

up this argument that I think this is an objective

40:59

hierarchy of what

41:01

is valuable and what is not is to imagine

41:04

there's a machine that can do

41:06

a lot of different things,

41:08

but that it's the only machine that

41:10

can produce food, water,

41:12

and shelter for everyone who uses it.

41:14

However, in order to do this, it can only

41:16

do it in a certain amount or to a certain

41:18

degree and you essentially

41:21

are vying

41:22

for your spot in the line

41:25

to get this machine to give food, water, and shelter to everybody.

41:28

Now this machine can also scan

41:31

photocopies of people's asses.

41:33

Now

41:33

it doesn't break the machine

41:35

and it's probably only funny

41:37

or interesting because you're

41:39

using such a critical and important machine

41:42

to do something that is stupid and frivolous.

41:45

But if it is affecting someone

41:47

else's ability

41:49

to get food, water, and shelter

41:51

from that machine, I think I can

41:53

objectively call that behavior

41:56

stupid and frivolous because it

41:58

is specifically using the

41:59

machine for its lowest purposes

42:03

rather than its highest. And I can

42:05

already anticipate an argument that like, oh,

42:07

it's the person who will pay the most for it. But

42:10

that's not the part of Bitcoin we're talking about. We're

42:12

not talking about the fee for the transaction

42:14

itself. We're talking about the costs

42:16

and the resiliency of the network,

42:19

of the stewardship of the network, which is

42:21

a public good which does have the

42:23

tragedy of the commons problem. It's

42:26

the same as

42:27

discussing whether or not somebody is creating

42:29

more UTXOs or fewer UTXOs

42:33

is that that's not necessarily bad for

42:35

them and there's nothing

42:36

genuinely negative about it outside

42:39

of the fact that it raises the cost of

42:41

securing and validating the network for

42:44

other people

42:45

by economizing for

42:47

the individual when the signature

42:49

imbalance is the way it used to be.

42:52

We're talking about those things being at

42:55

odds. We're not talking about an individual

42:57

transaction or how much someone else is

42:59

willing to pay to get food, water and shelter

43:02

out of this machine and that, oh, you're willing

43:04

to pay more to get a photocopy of your ass.

43:07

We're talking about the fact that everyone

43:09

who is running the machine is doing

43:11

so to try to provide food, water and shelter

43:13

for everyone and now they have to process

43:15

your ass photocopy forever

43:17

into the future to keep the machine running smoothly.

43:20

And it might just mean that a few people

43:22

stop helping to maintain the machine

43:25

because there's too many photocopies

43:27

of asses on it because it just

43:29

so happens those are slightly more

43:32

data and maintenance intensive

43:35

things to manage for the machine than

43:37

the food, water and the shelter.

43:39

Now, that's a dumb analogy, but

43:42

I think it illustrates the point that

43:44

in the context of whether or not these are trading

43:46

cards and NFTs

43:50

or shitcoin tokens are actually useful

43:52

in some context is largely

43:54

irrelevant because I think it must

43:56

be

43:57

by necessity, it must be subservient.

44:00

to the maintenance and operation

44:02

of the network itself. So

44:05

the question, I guess, is what do you do

44:07

about it? You know, you don't want

44:10

to set the precedent that

44:13

like when it was just NFTs, I mean,

44:15

I guess it makes perfect sense that it would be shitcoin

44:17

tokens anyway, but I just didn't think anybody would

44:19

do that.

44:20

Not because of any altruistic

44:23

reason or like the Bitcoin didn't work for shit

44:25

coins, but just because there's like multiple protocols

44:28

already to,

44:30

to do shit coins. There's RGB,

44:33

there's counterparty. Like these things are old,

44:36

old protocols. Now there's

44:38

Taro, there's liquid. I mean, there's

44:40

so many different ways to do

44:42

this

44:43

on Bitcoin.

44:46

Why the excitement about ordinals?

44:49

Like why the sudden excitement of BRC

44:52

tokens and just making all of this stuff all

44:55

of a sudden, like

44:56

did these, all these people not realize

44:58

that there's all these other different ways that you could do this

45:00

this whole time? But in that also

45:02

makes me think that this is just pure hype.

45:05

Um, that this is all going to die down kind

45:07

of like NFTs did on the first time

45:10

around and has multiple times. It

45:12

just kind of keeps,

45:13

it just kind of keeps having resurgence because

45:16

I mean the crypto market arguably

45:18

has done largely the same thing. Um,

45:20

because it has to battle with the

45:22

new people coming in over and over again. Like

45:25

the, the ignorance argument

45:28

and the,

45:29

the novelty of it has an entirely

45:31

new

45:32

audience that has no idea what is going on over

45:37

and over and over again. And

45:39

every hype cycle that audience

45:41

explodes.

45:43

And I think probably what's happening is just the

45:45

novelty of doing this like

45:48

explicitly in the

45:50

Bitcoin chain, like straight up on

45:52

the chain in the block data

45:54

is just

45:55

like the new cool thing. But

45:58

you give it enough time. It's going to be like, Oh, well, this is still

46:00

just NFTs and shitcoins.

46:03

But let's say it is a persistent problem and

46:07

this does have a meaningful impact because

46:10

the script data

46:12

for these NFTs, because

46:15

they are only on the front side, there's

46:17

no spending of these UTXOs,

46:19

it's just pure UTXO bloat

46:22

because they're not intended to be, they can't be spent.

46:25

That's why they're made or that's how they're made.

46:27

So it essentially has

46:29

this SegWit discount in

46:32

preparation of balancing

46:34

the act when you're spending that UTXO,

46:37

but it's giving that discount to a UTXO that's

46:40

never going to be spent.

46:41

So does that counter, does

46:44

the benefit or the discount

46:46

for creating, for that

46:49

UTXO bloat,

46:51

counter the incentive

46:53

to consolidate

46:56

or to create more UTXOs rather than consolidate

46:59

that the balancing

47:01

act of the script cost or the signature cost

47:04

with SegWit was trying to correct? I

47:07

don't think we know yet, and I don't think we can make

47:09

that measurement today about

47:12

whether or not it means

47:15

a net UTXO bloat if

47:17

we leave or we don't disincentivize

47:21

this behavior in some way because

47:23

it may just peter out

47:26

on its own and may just kind of become meaningless.

47:28

And there is also something

47:32

called, and we talked about this recently actually in the Lowell

47:34

Elite piece that we just did, about

47:36

UTXO, which

47:39

is potentially a way to mitigate,

47:43

it's a client side improvement that would

47:45

do wonders to mitigate the consequence

47:48

of the UTXO bloat,

47:50

the costs associated with it, so

47:52

to speak, in running a node. So maybe

47:54

there are just problem, or excuse

47:57

me, maybe there are just solutions from a cryptographic

47:59

sense. or from a management sense

48:01

and now we have to

48:03

just deal with this kind of new reality,

48:06

this new

48:08

elements of how Bitcoin is going

48:10

to be used in order to...

48:13

We have to fine tune again, right? Is

48:15

that we have to address this new

48:17

thing that is now on the chain that

48:19

we have to figure out how to mitigate

48:22

the costs of it because

48:24

it has fallen to the tragedy of the commons.

48:26

There is this cost and this burden being put

48:29

on node runners

48:30

and on the validation process that

48:32

ought not be there,

48:34

but maybe it can be mitigated locally or maybe

48:36

it can just be mitigated by further efficiency

48:39

or optimization, like

48:41

the many, many different optimizations and

48:44

honing down to exactly

48:46

what needs to be done and what tricks and hash

48:50

tables and trees and all of these things, filters

48:53

and things that we can do. Maybe

48:55

it is just something as simple as UTreexO

48:58

that allows us to hold a

49:01

root hash of all

49:03

the potential UTreexOs that can be

49:06

spent and then you just on the client side

49:09

adopt that filtering

49:11

mechanism or that UTreexO

49:13

mechanism on the node. Without

49:16

a soft fork or without a hard fork or anything,

49:19

you do wonders to mitigate that cost to

49:21

that issue.

49:23

Then another potential solution, which I think it

49:25

was Francis Puyo who was

49:27

talking about this, I saw this and this

49:29

is a really intriguing idea, but

49:33

it goes back to whether or not

49:35

the imbalance

49:37

with signatures

49:39

before SegWit and the

49:42

imbalance with incentivizing

49:44

shitcoining and pooping in the park

49:47

post ordinals,

49:49

how do those each weigh,

49:51

is removing the discount because this can actually

49:53

be done without a soft fork. This can be

49:56

done totally client side of

49:58

nodes where

49:59

I could update my node policy

50:02

just on my

50:04

computer basically that

50:06

says I no

50:10

longer discount. I calculate

50:12

what goes into the block based on my

50:15

mempool, based on the transactions

50:17

that I received purely by the

50:19

bytes, purely not by the signature

50:22

weight or the UTXO weight and

50:24

doing some clever discount thing.

50:27

It's not part of the consensus rules and

50:30

it's purely just how I

50:32

organize my mempool, the

50:35

transactions that I think are going to go into

50:37

the next block. And so we could

50:39

en masse, you could put it into the

50:41

Bitcoin core client, you could push

50:44

to have everybody update

50:46

and we could increase the cost

50:49

of pooping in the

50:51

park. You could increase the cost of shit coining

50:53

and stamping NFTs into

50:55

this by having

50:58

them pay that cost of the signature upfront full

51:01

on the same as the UTXO cost.

51:04

And then that might help mitigate the UTXO bloat

51:07

on the ordinal and inscription

51:09

side of things,

51:12

but it may lead to an increase

51:14

in the problem. I don't even know how much that

51:16

balancing act of those incentives has

51:19

made a huge difference in the UTXO bloat.

51:22

There's probably some solid measurement somewhere as

51:24

to how effective was this.

51:27

Solid incentives are a big deal.

51:31

And I also don't think that removing

51:33

that discount would necessarily, like

51:36

I don't think the discount really

51:38

completely fixes the UTXO bloat issue to

51:40

begin with. It just puts the incentives in the

51:42

right place.

51:43

And I don't think removing it

51:47

and leaning that cost towards

51:49

inscription and for paying for all of that

51:51

scripting data will get rid of

51:53

shit coins or will get rid of NFTs. They're

51:56

just willing to pay tons

51:58

of fees in order to...

51:59

put a photocopy of their ass into this machine.

52:02

So I don't think there's a, we should

52:05

jump the gun and just

52:07

immediately remove the SegWit discount, we should

52:09

start running this client or whatever.

52:11

But I think there is a really

52:14

important conversation to be had

52:16

about where the balance in those incentives

52:18

lie.

52:20

Because again, this is a public utility.

52:22

This does fall to the tragedy of the commons

52:25

issue. Like my brother actually

52:27

wrote an article about it during the block

52:29

size war,

52:30

because that was the same issue. That was the same

52:33

failure to understand the problem

52:35

that the block size is a tragedy

52:38

of the commons issue. Is that

52:41

in order to have

52:42

the most people, have

52:45

the individual be able to use it

52:47

from a fee perspective, it

52:49

had to be difficult.

52:51

Raising the block size made it more difficult to

52:54

make it run or to run it and to validate

52:56

it and to manage the

52:58

chain, the entire network itself

53:01

and the entire system

53:03

efficiently and easily

53:05

from the side of the node runners, from the

53:07

perspective of those who were maintaining

53:10

the network itself. So

53:12

I think that's a important conversation

53:14

to have. Does this

53:17

justify

53:18

removing the signature discount? Now

53:21

in the context of what can be done about

53:23

this, I do not believe censoring

53:26

transactions is smart at

53:28

all. I do not believe anything

53:31

that involves a soft fork or hard fork is

53:34

even slightly worth the trade off.

53:36

At the end of the day, this is just a

53:39

bunch of arbitrary crap in transactions.

53:42

And it's

53:45

not as if we were expecting there to never

53:47

be full blocks. We should have, this

53:49

was designed to survive this, like I

53:51

have said.

53:52

But another idea that my brother

53:54

actually mentioned just a little while ago on the phone,

53:58

which I thought was actually kind of cool. And it's more of a, of

54:00

a olive branch maybe so

54:02

to speak, or potentially

54:04

would reveal the intentions

54:07

of what's going on here because a lot of people are saying this

54:09

is a deliberate spam attack. But

54:12

the thing about anchoring something, because

54:14

none of the Bitcoin consensus rules

54:17

matter in or excuse me, none

54:19

of the shit coin consensus rules or the NFT

54:21

rules or the ordinal rules have

54:23

anything to do with the Bitcoin consensus rules. Like

54:26

stamping all of this stuff into

54:28

the chain is not really relevant

54:31

to whether or not it actually exists or

54:33

whether or not it actually does anything.

54:36

You can just do this with hashes. You

54:39

can do this in a tap script

54:42

and just produce the tap root

54:45

and then prove that it is still exactly

54:48

that, like that it's entirely that JPEG

54:50

or that thing that has been

54:53

stamped

54:53

into the signature

54:56

into this transaction

54:59

without actually putting all of the data on

55:01

there. It would be a far more efficient way

55:04

to have the same level of provenance.

55:07

It would cost way, way less in transaction

55:09

fees and obviously wouldn't bloat the

55:11

chain. It would still have UTXO bloat,

55:14

but it would make a meaningful difference. Is

55:16

rewrite or fork the client

55:19

for the ordinals and the inscriptions and

55:22

literally do it while just anchoring

55:25

it to the chain and then essentially

55:27

sell it as a cheaper way to accomplish the

55:29

same task, to have the same level of

55:31

assurances? Probably

55:34

they won't switch over to it. They probably

55:36

like the fact that they're just forcing

55:39

all this garbage into the chain. In

55:42

fact, the Antima morons,

55:44

for lack of a better word, who basically

55:47

go crap in the park and take selfies

55:49

with it and then literally think they're special

55:51

because they took a crap in the park and don't

55:53

really care about the park and don't care about what

55:56

any of it means. It may very well

55:58

be that it's only

55:59

if they are crapping in the park

56:02

that

56:03

it's interesting that they get to do this at all.

56:06

That's why they didn't use RGB or

56:08

they didn't use counterparty because it

56:10

doesn't really bloat the chain in the

56:12

same way.

56:13

And that's actually all they wanted to do.

56:16

Granted they're poking fun at the dumbest

56:19

maxis who don't even

56:21

really understand the problem and then propose

56:24

rather absurd solutions, quote

56:26

unquote.

56:27

But it would at least be interesting

56:29

to isolate

56:32

what exactly the goal is if

56:35

you made an alternative client

56:38

that cost a whole lot less if they

56:40

would still just burn resources to do it a different

56:42

way or to do it the worse way.

56:44

Now some people are literally saying

56:47

that we need to undo

56:49

taproot or segwit or

56:53

block ordinals. None

56:55

of that is going to succeed. Not

56:59

only do I think a fork is way worse than

57:01

just putting up with the

57:04

situation as it is, like a

57:06

lot worse actually, but undoing

57:09

any of these things is actually almost is necessarily

57:12

a hard fork. I don't even think

57:14

you can soft fork any of this stuff out.

57:17

And then to attempt to block

57:20

ordinal transactions,

57:22

I don't see how there's any way

57:24

that we can do that in which it's not just

57:27

really easy to get around. And

57:29

if we're talking about some sort of consensus rule

57:31

about like the size of script, again

57:34

that is necessarily a hard fork because

57:37

we already have things in the chain that

57:40

would violate that rule that we

57:43

would be creating. Like it either is

57:45

valid for the entire history, that's why

57:47

I'd soft fork has to restrict

57:50

the rules, it can't expand the rules.

57:52

Because if you can't validate the full history of

57:54

it, if there's something in the history that validates the current

57:56

rules, well then you're not able to validate

57:58

everything.

57:59

have this introduction of trust

58:02

where the rules changed.

58:04

So not only do I think that's not even a good

58:06

trade-off

58:08

just on its face, because I don't think there

58:10

was anything wrong with SegWit or Taproot,

58:12

but like slightly higher maintenance

58:15

costs of the chain and UTXO

58:17

bloat is a lot

58:19

easier to deal with than

58:22

trying to

58:23

undo something like that. Or,

58:25

and in the context of like trying to block ordinal

58:28

transactions, there's no

58:30

way, like it's just going to be too easy to get

58:32

around with get around that sort

58:35

of blocking or censoring

58:37

or anything on chain. I don't think there's any feasible

58:39

way to do that. It's too easy

58:42

to,

58:43

like you can't, because it's not part

58:45

of the Bitcoin consensus rules and

58:47

the information itself is just arbitrary, it's

58:49

just hidden. It's going to be like trying to block

58:51

Bitcoin transactions from being broadcast

58:54

from a different

58:55

mechanism. You can, you know, Andreas talks

58:57

about it. Like you can encode them into

59:00

a bunch of emojis and send them over Twitter

59:02

or you can send them over Morse

59:05

code on a telegraph line or something. It doesn't,

59:07

there's nothing really stopping them from just

59:10

changing what they're doing and

59:12

any attempt to identify or

59:14

specifically detail out this particular

59:16

mechanism. It's just going to be too easy to get

59:19

around and then you're just going to fork then

59:21

or you're just going to have a problem with the rest of the nodes

59:23

on the network. And we don't get, it just, it's

59:25

just, there's nothing feasible

59:27

about those options. Like

59:29

I got the idea of bringing those up I

59:31

think is just

59:33

largely ignorant of the real problem and

59:36

particularly of the costs it would

59:38

take to do anything about it

59:41

in that way. However,

59:44

all of that being said, I

59:46

think there is a legitimate conversation to have. If

59:50

someone is pooping in the park, I

59:53

think we should sit down and talk about, is

59:55

there a proper way? Is there

59:58

an easy, extreme,

59:59

low-risk way to disincentivize

1:00:02

this.

1:00:03

And honestly I would be for it. I

1:00:06

mean given obvious caveats

1:00:08

about what that issue was or what the

1:00:10

mechanism was, I mean I'm intrigued

1:00:13

by the idea of removing the discount just

1:00:15

on the client side, just in simple

1:00:18

node policy.

1:00:19

But I think there is a lot of wiggle room or a

1:00:21

lot of argument to be made as to whether or not

1:00:23

that worsens the UTXO

1:00:26

problem in a different way while

1:00:28

still not properly

1:00:31

stopping anyone.

1:00:33

Like it won't have like a meaningful

1:00:36

amount of traffic difference on ordinals

1:00:39

and inscriptions and shitcoins, BRC

1:00:41

tokens or whatever

1:00:43

on Bitcoin

1:00:45

in the short term and probably

1:00:47

even in the midterm. But if

1:00:49

we already think in the long term

1:00:51

that this thing's just gonna fizzle out like

1:00:54

it has in the past,

1:00:56

well then do we just let it run its course? And

1:00:58

if it does stick around in some capacity,

1:01:00

okay. You

1:01:02

know it's not like again the fees

1:01:05

are not the problem. If somebody's telling you that the high fees

1:01:07

are the problem, they're

1:01:09

just not recognizing the trajectory

1:01:11

that Bitcoin was on and the necessity

1:01:15

of the fee market going forward. And

1:01:17

the fact that we're probably gonna need Taproot

1:01:20

and SegWit and these signature

1:01:22

schemes still to mitigate

1:01:24

that and to have those complex

1:01:28

multi-sig and UTXO

1:01:31

sharing

1:01:32

arrangements

1:01:33

in order to still have trustless or

1:01:35

extremely trust-minimized relationships

1:01:39

on chain

1:01:40

while still batching enormous

1:01:42

amounts of transactions. Whether it's a lightning,

1:01:44

whether it's on channel pools and fetiments

1:01:46

and the plethora of other networks

1:01:50

and mechanisms by which we can

1:01:52

leverage the security

1:01:54

and resiliency of Bitcoin's base

1:01:57

layer to extend it to

1:01:59

everyone in

1:01:59

the world to extend that security and

1:02:02

that soundness

1:02:03

to everyone.

1:02:05

So anyway, I wanted to take a day and

1:02:07

just

1:02:08

have a conversation about that

1:02:10

just because it's like the thing

1:02:13

right now. And also make sense of it

1:02:15

for people who are

1:02:17

not sure what is going on or got

1:02:20

a really

1:02:21

rough version of it.

1:02:23

Granted, this is still a little bit rough, but

1:02:25

I think it's probably a clearer picture as

1:02:27

to

1:02:28

what the problem is and what can be

1:02:30

done about it.

1:02:31

But I just

1:02:34

think it's worthwhile to start a conversation. I

1:02:36

think it's

1:02:38

perfectly fair to consider that

1:02:40

this might need to be disincentivized.

1:02:43

And what might that look like

1:02:45

if it was possible to do so with

1:02:47

little to no risk? So anyway,

1:02:50

anyone who listens, you got any great ideas, share

1:02:52

them. Read it

1:02:54

out, boost or send me a message

1:02:57

on Fountain. I'm intrigued. I've

1:02:59

heard a couple of interesting ideas already. But

1:03:02

let me know. We will be back tomorrow with

1:03:04

another read. A huge thank you to

1:03:06

our sponsors, to Swam Bitcoin, to

1:03:09

Fold and to Coinkite for

1:03:11

making this show possible. And

1:03:14

I will catch you all on the next episode of

1:03:16

Bitcoin Audible. And until then

1:03:18

everybody, please quit

1:03:20

pooping in the park.

1:03:37

Money

1:03:37

is one of the greatest instruments

1:03:39

of freedom ever invented by

1:03:41

man. It is money which

1:03:44

in existing, society

1:03:46

opens an astounding range

1:03:48

of choice to the poor man. A

1:03:50

range greater than that which not many

1:03:53

generations ago

1:03:54

was open only to the wealthy. F.A.

1:03:58

Hayek. This

1:04:00

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1:04:02

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