Who Stewards Bitcoin? Paul Sztorc on Governance, Drivechain, and the Cost of Complacency

[00:00:04] [SPEAKER_00] This is the Crypto Hipster Podcast. This is not a traditional interview show. These are perspective-driven conversations with founders, builders, and independent creators shaping what comes next.

[00:00:26] [SPEAKER_00] We go beyond headlines, beyond hype, and beyond price to explore ownership, freedom, and opportunity in the digital economy where builders talk freedom, not price.

[00:00:49] [SPEAKER_00] Welcome to the Crypto Hipster Podcast. I'm your host, Jamil Hasan. My guest today is Paul Sztorc, co-founder and CEO of Layer 2 Labs. He's the inventor of Drivechain and an author of BIP300 and BIP301. Paul spent years working on one of the hardest questions in Bitcoin.

[00:01:09] [SPEAKER_00] How do you allow experimentation, new functionality, and scale without constantly asking the base layer to become something it was never designed to be? But today I want to go beyond the mechanics of Drivechain. And I want to talk about Bitcoin governance, innovation, incentives, and something even more fundamental. And that's what happens when a system built to eliminate trusted authorities develops its own form of authority. Paul, welcome to the show.

[00:01:39] [SPEAKER_01] Thanks for having me, and thanks for that great – that was a really good intro. I like that.

[00:01:44] [SPEAKER_00] Awesome. Well, I'm looking forward to this conversation. And, you know, you've been working on Drivechain for a long time, right?

[00:01:50] [SPEAKER_01] It's true. Although it was kind of, you know, I have to stress that it was, you know, kind of a part-time hobby for a while. And then, of course, Bitcoin, you know, it went gung-ho. It was very excited about Lightning Network. It was very excited about some of these other things, you know, Liquid. And then me and my supporters, we gradually realized that those things are actually really bad, like a lot worse than you might think. And so then we kind of dusted it back off.

[00:02:17] [SPEAKER_01] And we recently turned it from kind of like a part-time tinkerist, hobbyist type of a thing into very serious – what we hope is a very serious competing idea. And so it's true that it's kind of – it was like a slow burn for a while, and then it was like ramped up in the last three or four – three or so years.

[00:02:40] [SPEAKER_00] Great. So what do you understand about Bitcoin today, being in a full-time, like other than just a hobby, that you did not understand when you first proposed it?

[00:02:51] [SPEAKER_01] Well, I learned – that's a really good question because I learned an awful lot. There was always this question from the very beginning of Bitcoin of scaling Bitcoin. And this is the first, like, negative email back to Satoshi. This is like the third email in or something when he publishes it for the very first time on the cryptography mailing list. People get back and they say, well, you know, it just won't scale. And this scale thing, it's really hard to talk about because it's gone through the ringer, you know.

[00:03:18] [SPEAKER_01] It's like there was this scaling question, then there was the block-sized war. There were these scaling Bitcoin conferences. It became this huge thing. And now there's almost this fatigue in talking about it. But it's really, really important. I mean, the whole difference between money and something where it's like, oh, we all help each other out in, like, a small village is that money scales, but the other forms of cooperation do not.

[00:03:45] [SPEAKER_01] And so it's a really big – the topic is really, really big. Some other things that I – so the importance of scaling and the fact that Bitcoin is limited to five to seven transactions per second. And it was like, what do we do about that? I learned a ton about that. I also learned a lot about, like, I thought – everyone thought we would just be able to soft fork new features into Bitcoin easily because the soft fork is opt-in and you don't need everyone to upgrade. So you just need, like, a few people to upgrade, 51% of the miners.

[00:04:14] [SPEAKER_01] The miners make more money. The users get more features. The developers get to make new technology. So it was a win-win-win. And you'd think, oh, that – of course, we're just going to keep doing that. But instead, for various cultural reasons, that is – that's gone from being a no-brainer to being basically impossible. Or a no-brainer to, like, a non-starter. So that was one thing that really changed.

[00:04:38] [SPEAKER_01] I think overall, the overconfidence and complacency and just, like, as the community grew, that's also different. Like, in the earlier days, it was very easy for everyone to talk to everyone else. Everyone knew everyone else. And you could easily get on the phone with them or meet them in person. But now the idea that, you know, like, there's not a huge amount of fracturing. So, like, of course, like, very few people could, like, walk up to Michael Saylor, for example, and start talking to him.

[00:05:06] [SPEAKER_01] And – but it's also, like, Michael Saylor, he doesn't even come to, for example, Bitcoin++, like, the technical conferences. And vice versa, the technical people hate the norming conferences. So this is a long-winded answer, but I learned a lot of different things about why the project is – it's a – Bitcoin project is super, super good. But it's actually – it's sort of doomed in a few ways. We might jump all these hurdles and survive, but we also may need to roll up our sleeves or panic even.

[00:05:38] [SPEAKER_00] You paint a picture there. You know, so I guess what you're saying is that problems are not all technical. You're saying – the words like complacency, fatigue, doom, you know. At what point did you realize the hardest part was not technical, that it was getting people to agree?

[00:05:59] [SPEAKER_01] Well, at one point – well, see, that's an interesting question because the whole point of the soft fork is that it did not require everyone to agree. So that was the whole reason it was invented in 2012 was that, oh, it's going to be too hard to get everyone to agree. We'll just do this new thing where the new people do this. But even that became insurmountable. And I think it was a slow boil, like the boiling the frog situation. One moment it became clear to me as I made a slide.

[00:06:27] [SPEAKER_01] I was making a slide for – I was invited to speak at the MIT – not the university, but the MIT, the Bitcoin Expo. They have like a thing there. But it's still prestigious enough. And there was a – they used to be very big. So I think it was maybe 2022 or something. I was preparing this slide. And the slide was like, here's all the soft forks that we've done. And the first seven years of Bitcoin, it was like 16.

[00:06:51] [SPEAKER_01] And then it was only Segwit and Taproot in the last – the next seven years. And then I did – I added to the slide. I was like, how long until it was proposed and then coded? And then it was finally released and activated so it could be used by the user. For Segwit, which was in 2017, that was 20 months. And for Taproot, it was 46 months. So after I made that slide, I was like, oh, my God. This is like really, really, really slowing down. And, you know, you get a little older.

[00:07:20] [SPEAKER_01] You don't realize like the passage of time. Like it kind of starts to sneak up on you, you know. So in the early days, there was no controversy about these soft forks. And then now every – that's the other thing is the crab bucket mentality that I'm sure is a metaphor that people know about. Like after they became scarce, they – it was like someone – Jeremy Rubin would post CTV. But then people would say, oh, what about mine? What about OpCat? What about TXHash? So then they kind of pull that one down.

[00:07:49] [SPEAKER_01] And then the next – so it became like a poverty mindset. This is totally unlike what it was before where it was just throw everything in. Stuff was thrown in such as pay to script hash. That was like 20 – was it 2013? Something like that. And that had like mistakes in it. But it didn't matter because it was like we'll just – you know, we'll just ship it and people use it with the mistakes. And so some things had like embarrassing events. They shipped the thing and they said, you must upgrade by this date. And then not enough people had.

[00:08:18] [SPEAKER_01] So they were like, okay, talking about minors only. But they were like, okay, we'll give you another month or something. So it was much more casual in the past. But at least it did operate. At least it did things. But now it's a ground to a halt. So that's too bad.

[00:08:36] [SPEAKER_00] So I'm hearing – it's interesting because what you're saying, poverty mindset, you know, arrangement, all the stuff that you're talking to the minor side. And on the public side, you hear price. You hear Michael Saylor. Like there's – what's going to – like there seems to be that wall that you mentioned. What's going to take for that wall to, you know, disappear and that like the miners to collaborate with them?

[00:09:02] [SPEAKER_00] How is that all going to work so that Bitcoin ecosystem is healthy going forward?

[00:09:09] [SPEAKER_01] Well, I think they're all related. You know what I mean? Like if you go to a company, let's say you – you know, let's imagine you're hypothetically like a young student and you get the internship at GE or something. Or you get the internship at, I don't know, SpaceX or Tesla or some big company of today. You go and then when you get there, you really don't want to see that all they do is talk about the stock price all day. You know what I mean? Like every time – oh, you're going to go to the factory floor.

[00:09:37] [SPEAKER_01] You're going to go to the marketing department. All they do is talk about the stock price. The stock price is supposed to be kind of the result. You know what I mean? That would be like if you go to the Olympics or you're training for a marathon and people just talk about the number, the time, but they never train. They never practice. There's no like diet. There's no like weight room or whatever they do. There's no stretching. So it's related. The collapse of Bitcoin culturally is related to this focus on the price.

[00:10:05] [SPEAKER_01] And I think it's actually kind of notable that the last time the price went up a lot, there was a very good narrative. And there was a lot of good fundamentals, which was like the COVID 2020 era to some extent. We had money being printed, you know, total collapse of like government, like credibility, maybe even on both sides of this – of the COVID issue. Both people were kind of like not trusting the other. And it was like – people were like, should we trust Donald Trump's vaccine?

[00:10:34] [SPEAKER_01] And then it was like, should we trust any vaccine? And people were like, so things fake. So there was like a kind of pandemonium, lots of money printing. So the price went up. And then the next wave was kind of like there was a huge regulatory clampdown in 20 – you know, after that. Then Trump was elected again. Trump was like, I'm going to fire Gary Gensler.

[00:10:54] [SPEAKER_01] So you can see when the price goes up, I don't think it is – you have kind of a good narrative that's solid and you also have some fundamentals. And that's what you really need. And the question is, have we really gotten that any time lately? And I don't know. I don't think so because I don't think that the narrative can be just about who's buying and what the price is and stuff like that. It has to be about what the software does. Again, the GE kind of example.

[00:11:24] [SPEAKER_01] You'd hope – if you go to Tesla or someplace, you'd hope it's about, oh, how can we build this car better? How can we get the weight down on these tires or something else? You'd think it would be like people actually working on hard problems so that each worker is like at the frontier of hard work and like innovation. So, yeah, all the conversations should be about stuff like the technology, stuff like the user experience, stuff like how to have more competition.

[00:11:53] [SPEAKER_01] So the conversations should be about – in the same world, Michael Saylor would go to something like TabConf in Atlanta, which is TabConf was a big technical conference, but now it's closing down. This is going to be the last year of it. So a lot of things have been fading away. You know, there's like a lot of sacred cows are being slaughtered. A lot of people really like Lightning Networks fading away. People really like Liquid. It got hacked. People really like NVK and Cold Park.

[00:12:21] [SPEAKER_01] So a lot of this stuff is – the fundamentals are weak. And so that's what's needed is to have a project that's actually good. And multiple people could free us from this disaster at any time, but they're just not going to for some reason. And, you know, I have my theories about why, but the more important thing is, you know, it doesn't make any sense. Why wouldn't they? Why wouldn't they rescue us all? But they won't.

[00:12:44] [SPEAKER_01] So the miners, for example, they could take a slightly more active role and say we want to shift the tone of – you know, because they represent a small number of brands, you know, and you could get a few of them together and they could have some kind of branded thing where we say the official position of Foundry USA is that we want more, you know, Bitcoin users paying transaction fees, et cetera. So I don't know. There's a lot to say.

[00:13:14] [SPEAKER_01] It's very – there's so much to explain to people. But, yeah, I think, you know, it may be the case that – well, since the other thing that we're working on is this eCash alternative, which is that it may be either to present something that's alternative for people to adopt and use

[00:13:37] [SPEAKER_01] or to just, like, shock BTC into some kind of competition, kind of having this demonstration of what we should do instead. And most notably, this demonstration, there won't be really any lines of code. This is kind of an overstatement slightly, but not quite. There won't be any lines of code changed as a result. And the technology that we're going to use is something that BTC could use at any time at the drop of a hat.

[00:14:07] [SPEAKER_01] In fact, it was originally prepared for BTC, just given away for free. But for – and it's widely endorsed as well. I don't know if – so we have this layer2labs.com slash friends list. So we have this stuff. Technology already built, given away for free, widely endorsed in the BTC community. We have people like Adam Back, we have Rene Picard who wrote Master of Lightning, or Robin Linus who invented BPM. So it's a long, long list of people.

[00:14:34] [SPEAKER_01] And the answer – the question is, if it's a good idea, why hasn't BTC adopted it? And so the answers are maybe it's a terrible idea, what we're proposing, or, you know, the alternative explanation is just that there's this weird cultural problem in BTC. So that's obviously what I believe. But, yeah, there's, like, so much to try to say and unpack.

[00:14:54] [SPEAKER_00] Yeah, there is. So let's talk about that. So in order for Bitcoin really to last, you need stewardship, right? So does Bitcoin have – actually have governance? Who has all the power, like, right now? Like, is it governance? They just don't call it governance? Like, who is stewarding the system for the long haul if everybody's focused on – or are they publicly focused on just the short-term narratives or, you know, the issues today? What happens tomorrow?

[00:15:24] [SPEAKER_01] Well, no one is, and that's the problem. And it's kind of like leaving a child out, you know, on the streets. It's like, who's responsible for this child? Oh, no one. And so it's actually a bleak answer. It's not like a – Of course, intentional – People are worried about, like, being sued or being whatever, which has happened in the past. So everyone tries to evade naming themselves as a responsible person. Including – And what doesn't really make any sense is the mining pools also. They also say, well, we don't want to get involved. We don't want to be blamed.

[00:15:53] [SPEAKER_01] So unfortunately no one is, and that's the problem. Got it. Got it.

[00:16:01] [SPEAKER_00] So let's move into the drive chain then.

[00:16:03] [SPEAKER_01] Yeah, because think about it again. What I propose is something that's opt-in, ignorable. It doesn't even require everyone to agree. And it's not just my soft fork idea. It's every single one. All of them have not – Since Taproot, there haven't been any. There's been about 16 that were proposed. And remember, there were 16 when I made my slide in, like, the first seven years of Bitcoin from, like, you know, from, like, basically 2009 to 2015, 2016.

[00:16:31] [SPEAKER_01] And since then, there have been only the two. And since Taproot, there have been none. So even the simple one, you have something like – One, the smoking gun is kind of like OpCat, which is this very simple soft fork that a lot of people wanted. These Starkware people and these other things. It's 13 lines of code. It was in the original client. Satoshi added it. Then he took it out. There was a bug in an unrelated thing. He took a bunch of – he sort of panicked and took a bunch of stuff out. But even OpCat had all this support.

[00:17:00] [SPEAKER_01] It had all this people clamoring for it. But even that has made zero progress. No one has made any progress towards doing any soft fork. So what I propose is very, very modest. And even things that are 100 times more modest than that haven't cleared the bar. So the problem is the bar. The bar has been sent into the sky, into the heavens. It's unjumpable.

[00:17:29] [SPEAKER_00] So assume for a second – some of my listeners do know what the BIP 300 and 301 mean, right? But let's assume that they don't. So what becomes possible with what DriveChain is doing that isn't realistically possible today?

[00:17:46] [SPEAKER_01] Well, you know, the DriveChain idea, if it works, it gives us unlimited, you know, scalability to 8 billion people. And this has been tested. You can go on GitHub and run these tests. And you can see for yourself. And you can see the total transactions fee. So scale and privacy, you can get Zcash level total privacy hiding the center of the receiver and the amount. Again, this software is available in test format.

[00:18:13] [SPEAKER_01] And, of course, you know, the question is, do the tests match reality? And you can at least look at the test, though. So many other competing ideas, there's nothing even close to this, where there's even a sketch about how it would work or something. Whereas we have, like, kind of a simulation, how it would work. But more importantly, it sets things up so that there's this, you know, it creates this type of L2 called the DriveChain.

[00:18:38] [SPEAKER_01] And the idea behind DriveChain is, you know, full disclosure of all the good and the bad, is that the DriveChain, the idea is that it will generate so much in fees that everyone will want to keep it around. And there's a little more to it than that. But basically, they have to be healthy. It's kind of like a store or kind of a, you know, a restaurant. You put it out and you're expected to have customers. So, in a way, it's a good thing. It says, like, we're going to clean out all this stuff if there's no users.

[00:19:06] [SPEAKER_01] But if the thing has users and it pays fees, then there's, you know, there's some mathematical modeling involved. But basically, there's a certain amount of coins on the thing and they turn over at a certain rate. And there's a certain amount of fees paid to miners. So, if that works, then you get unlimited scale, unlimited privacy. The amount of money, transaction fee, revenue paid to miners goes up forever. So, that solves the security budget issue without having to deal with, like, other people have proposed.

[00:19:35] [SPEAKER_01] Peter Todd is proposing, like, you know, violating the 21 million coin limit. And people propose all this other weird stuff. Like, they say, oh, it's a good thing. Quantum will steal these coins and buy us more time on security budget. So, that's, like, some wild stuff right there. But with this, we solve that problem in a different way. Just the merge mine revenues rise forever. And then you can do other stuff.

[00:20:02] [SPEAKER_01] Like, if you don't like any of the L2s that there are, you can make your own. So, it's less about the individual solutions and more about the platform kind of saying, okay, if you don't like Bitcoin L1, this is sometimes called a developer capture problem. Because this happened over and over again. Like, some people didn't like, in the block size war, the large blockers, they didn't like the Bitcoin core developers. So, they created Bitcoin Cash.

[00:20:28] [SPEAKER_01] But then, ultimately, they didn't like their own developer and they created other Bitcoin Cash splits. So, all kinds of things split and re-merged again. And there's a lot of, like, live by the fork, die by the fork issues. So, then, of course, a lot of people, so people who did Ethereum, people who did all these other things, Vitalik. Vitalik was originally co-founder of Bitcoin Magazine. He was a one-third owner of Bitcoin Magazine. He was a big Bitcoiner. He tried to do the Ethereum idea on Bitcoin, but he could not.

[00:20:58] [SPEAKER_01] And that's true for a lot of things. A lot of people try to do their thing on Bitcoin first and they can't and they leave. But with BIP300, you don't have to, you can leave and make a new piece of software, but it's still a Bitcoin project. And you can do this unlimited number of times. So, it's actually quite an important problem to solve if this is the solution, which I certainly hope it is. And I think it just has to be enough of a solution to fly. And we certainly hope that it is.

[00:21:26] [SPEAKER_01] And so, it's a very big topic. In addition, it happens to solve scalability and privacy. These are the two big things anyway. I could go into more detail about that.

[00:21:36] [SPEAKER_00] You are interested. Well, let's, I am, but let's talk about from a different angle. Let's say what, what have your critics, you know, because everybody has critics. I got critics. Everybody has critics. What have they, what have they been most critical of and what have they changed your mind about?

[00:21:53] [SPEAKER_01] Well, you know, honestly, I couldn't believe the critics were so, so bad. So, we have the main critic that is, is Peter Todd. And he would be like, he was against this idea for years and years and years. We eventually hired him to write, like, we were saying, okay, well, how don't you write, like, a report saying what your problem with this idea is? And the report was terrible. And we have, we published it. I'll give you the link. I put, like, there's, like, a huge image of the thing and then me kind of going, like, line by line.

[00:22:21] [SPEAKER_01] And basically, almost every single paragraph, sometimes every single sentence in the paragraph is full of mistakes or stuff that is even, he's often contradicting himself. Even, so, even not only is it wrong, but he doesn't, like, know what he means. There's all these questions at the end. We did a podcast. I asked him 10 questions. He, like, evaded answering all the questions. And so, I couldn't believe how bad it was.

[00:22:46] [SPEAKER_01] And, in fact, one of the things that was shocking about it was that this is after we had hired him, but before he had written. We hired him in, like, the summer and then it's, like, September or something. He goes on, this is after we've hired him and paid him, you know, like a few thousand dollars to write this report. He goes on stage at Baltic Honey Badger and he says that, you know, there's a whole thing. So, this, again, is a long-winded answer, but I hope it's interesting enough.

[00:23:12] [SPEAKER_01] There is the, they have this thing called the Unpopular Opinions Panel, which I'm usually on because, and usually Peter and I are both on it because we're, like, kind of, like, you know, gadflies or whatever. We're, like, you know, we're very interesting. We've got interesting stuff to say, usually. But I wasn't there this year. So, they were all there without me. And they consumed the whole, like, 35 minutes talking about Bit300, actually. So, that's the kind of the funny thing is they didn't even go around through unpopular opinions. They just stuck on this one thing and I wasn't even there.

[00:23:40] [SPEAKER_01] So, that was kind of a little bit of a – so, they were talking about it. So, some people were there, of course, supportive. But Peter was there. He was negative. And then he says something like, there's no – no one's written software for any of this. This is just, like, some weird idea. And that is – that was completely false. There's – for two and a half years, there had been, like, test software that has, like, a graphical user interface. You can click buttons and stuff. And then if you went to the site, drivechain.info, it was, like, right at the top, like, download test software.

[00:24:09] [SPEAKER_01] So, it was kind of like – this was even after we had hired him to write this thing. He hadn't visited the project website, like, one time. And he just, like, kind of was riffing this. So, I thought that was terrible. And I know for a fact a lot of people who were – the other critics, they were kind of just following his lead and sort of just copying his test. And so, we have had all kinds of critics over the years.

[00:24:32] [SPEAKER_01] There is a – I think there's a layer2labs.com slash misinformation page where we've collected many tweets. You can read this for yourself. We've collected them into categories. And there's these categories of complaint. And all of them are wrong and just, like, really irrelevant. But we saved the receipts. And you can read all about our critics.

[00:24:52] [SPEAKER_01] I think the critics – to me, the critics do a better job of making the case for it because I think these – I personally, before the critics, I was just thinking, you know, this is some idea that it could be good. And then you – the criticisms are terrible. And you just think, oh, wow, I guess this – you know, and then you think these are the same people who, you know, show cold cards or something. And it's like, wow, why is anyone even – so, it was like, I don't know. But, yeah, we have some critics and we have a big – there's the drivetrain.info peer review section.

[00:25:22] [SPEAKER_01] There's this misinformation section on layer2labs.com. People can find – look all that up because it has to be read by a sober, inquisitive person as to read through it and wrap their head around it because it's a complicated technical thing. It's not – it's hard to summarize just a conversation between two people and none of those people are here to defend themselves. But, yeah, I was blown away. I couldn't believe – year after year, I just think, oh, these are the critics the whole time. And they put in, like, no effort. I understand that you would want to put in effort.

[00:25:53] [SPEAKER_01] If you think an idea is bad, you're not going to spend a lot of time looking into it. But I would have thought after being hired that he would at least visit the project site one time. And then he's going on stage – recorded stage in front of, you know, hundreds of people. And then they're going to be talking about it. And they're just – and it's just like – so I was like, oh, my God. You know, so I was quite shocked by all that. I couldn't believe it.

[00:26:15] [SPEAKER_00] Yeah. Yeah, you got to be sober. You got to – you can't be dashy. You got to be, like, you know – you got to, like, be able to, you know, be the focus, right? Concentrate. So, you know, let's move a little bit into incentives, right? So, like, if I'm buying Bitcoin, then my incentive is hold it – wait for price to go up, right? If I'm not a miner, if I'm not on the technical side, right?

[00:26:39] [SPEAKER_00] But what incentive in Bitcoin do you think people misunderstand the most from the, you know, from the monetary revenue mining side?

[00:26:50] [SPEAKER_01] Well, I do think that if we don't have transaction fees, if we don't have real users of the chain, you know, those are the customers. So, again, the stock price going up, that would be following after the – you know, that's the caboose of the train. And the engine of the train is whether or not you have customers. So, we need to make sure that we have happy users. And it's fine to buy now and say, I'm an investor. We will have those users in the future.

[00:27:20] [SPEAKER_01] But you have to eventually get them. Other than that, it is a Ponzi scheme. And then it will collapse. So, you know, so that's night or day difference.

[00:27:30] [SPEAKER_00] Right. And you – the layer two explicitly presents minor fee generation as part of the drive chain proposition, right? Right.

[00:27:37] [SPEAKER_01] Yes. Right. That's very important. And it's like you would think also that that would, you know, have drawn them to be more curious about it already. So, again, the question is either they don't believe, you know, that we really will bring them more transaction fee revenue, which is strange because we have – again, you have the simulations that show it. And then – so the other thing about this scaling thing is I've been in Bitcoin a very, very long time.

[00:28:03] [SPEAKER_01] And the scalability of Bitcoin is just – you know, it does destroy it. We have a lot of, like, people who have, like, slogans and they are, you know, they sort of – they're cheerleaders maybe or, you know, they're just kind of like – I don't know what the word is, but virtue signaling or something. And when the – reality, you know, you can only ignore reality for so long.

[00:28:30] [SPEAKER_01] So this has happened to me many times since I've been in Bitcoin, which has, you know, been like more than 15 years. And so Bitcoin, it goes from being obscure. Then it goes on – it's on the front page of the Financial Times for the first time, 2014. And there's all this attention. The price goes up and up and up. But now everyone wants to get involved or buy or sell. So the blocks fill up. The transaction fees increase. So then you get, like, a text message from a friend.

[00:29:00] [SPEAKER_01] It's like, oh, you're into that Bitcoin thing. I just saw it in the news. How does it work? You know, what's the deal with that? Kind of like how you would have gotten a text about people, oh, what's this internet thing or what's this computer thing, you know? So you get the text from the friend and then you're like, oh, you try to send them, like, $20 worth of Bitcoin. But the fees now are $5, $6 per transaction. So they only get $14.

[00:29:24] [SPEAKER_01] And then if they send it to themselves or send it to someone else, it's already chopped down to $9. And they just think, well, this is really stupid, you know? And that has happened many, many. That's happened every single time. 2014, that happened to me a few times. 2017, that happened to me a few times. 2020, that happened to me a bunch of times because everyone was stuck at COVID. That was the other thing. Everyone became terminally online because we're all trapped inside in COVID. So everyone was like, oh, let's look into Bitcoin.

[00:29:53] [SPEAKER_01] Let's text the friends about Bitcoin. So this happened, there's like three, I think three or four people did this. And this is the same thing every time. They get curious when we have this huge adoption super cycle. But that's exactly when the layer one fees are too high. When the layer one fees are high, the Lightning Network stops working because it relies on, it's programmed to rely on people, first of all, being able to reach the L1 chain, but also it's programmed on people agreeing on what the L1 fee rate is.

[00:30:23] [SPEAKER_01] So there's a disagreement and uncooperative close. So the Lightning Network stopped working. It stopped working in 2023 when the ordinal craze drove up the fees to sabotage Lightning to some extent. But it's because Lightning is badly designed and our thing does not have that flaw. So that's what I'm trying to say is this little scaling thing, it kind of, you know, it's become like a bullet point on a slide, but really it's strangling everything to death. And it could easily be fixed.

[00:30:51] [SPEAKER_01] So, and it also, the way we scale is through this, you know, we pass the layer one transaction fees down to the miners. So that's, I think that should be everyone's focus is getting more users, getting more adoption. You know, growing the party. Because to some extent, it's a popularity contest. And we want, we want there to be, you know, you know, a million Bitcoiners, 10 million Bitkers, 50 million Bitkers, 100 million Bitcoiners, a billion Bitcoiners. Then there you go, 8 billion Bitcoiners. Then we did it, you know what I mean? We did it.

[00:31:21] [SPEAKER_01] So then it'd be like the internet. It's like TCP IP or, you know, whatever, whatever you want to use. The English, the QWERTY keyboard, USB-C. There's plenty of things that have been adopted. They haven't quite, I sometimes get in trouble because I say, we want it to be adopted by 8 billion people. And then you have the guy come over, oh, actually, it's not going to be 8 billion people. That's not what I mean. The point is, you know, USB-A and USB-C and the QWERTY keyboard layout,

[00:31:47] [SPEAKER_01] you know, they're basically, they're penetrating the whole world. And even English is to some extent, of course, there's China and Japan, but usually just there's this idea of globish that everyone speaks like a pared down version of English. So if you're around the world. And so those things have achieved escape a lot, HTML, you know, the domain name system. There's plenty of things that have been adopted by 8 billion people, even though it's not literally all the people. It's such a huge. So that's what we want.

[00:32:17] [SPEAKER_01] And if we'd have to get to that, and that's, that is the position of myself, the drive chain supporters, Layer 2 Labs, the company. And yeah, you'd be surprised how controversial that is. You'd think like that everyone would be cheering and waving flags and stuff. But it's for some reason, because as you probably know, this narrative has taken over that, oh, we don't need to do anything. And it's just a store of value. And we've already won. And it's this narrative of complacency and overconfidence has taken over.

[00:32:44] [SPEAKER_01] And that's, that's, that has now become a hurdle to the adoption. All right. So.

[00:32:50] [SPEAKER_00] Yeah. And I'm going to get there in about two questions. So I'm, the next one is, is, so one side is sad. One side is smiley. So you talked about a metallic earlier, right? You said that Ethereum basically said that let's make the base, you know, layer extraordinarily programmable. But what I didn't realize is what you said was, I didn't realize that the lightning network stopped working when the ordnance took off.

[00:33:18] [SPEAKER_00] Kind of like, and I made a drawing comparison, kind of like when NFTs were popular on Ethereum, the Ethereum fees took, were way too expensive.

[00:33:27] [SPEAKER_01] Crypto kitties was like killing all this other stuff they were doing off. So yeah, that's exactly right. It's the same. It's the exact same thing. And notice in Ethereum was kind of a pressure release valve. There was this governance crisis in BTC in 2015. There was the scaling Bitcoin era. So there was like crisis in BTC. Instead, we were, we were previously, we were very unified. And then it was like quarreling and people fighting.

[00:33:51] [SPEAKER_01] 2016, that was when Ethereum went from being like 0.0% to like one third of Bitcoin. So there was this huge Ethereum. Everyone was talking about the flippening and everyone was rethinking everything. Some people were. I was always a huge skeptic of Ethereum, but of course it was a pressure release valve. And then stuff filled up on Ethereum. Ethereum started having its own problems. And then you got other stuff. You got, you know, Solana, Avalanche, whatever, all these long list of things.

[00:34:19] [SPEAKER_01] Base, Binance Smart Chain is long list of things that were like, I'm sure I forgot like a hundred of them, but you know what I mean, Polkadot, whatever. These are all these things that are kind of like the big one is Solana, which is like Ethereum squared in a way. It's like even more expensive nodes pushing the envelope further on, you know, centralization, but trying to ramp up the user experience, doing, be doing even weirder, more experimental things.

[00:34:47] [SPEAKER_01] So that's, you know, well, see, what were you asking about? About Vitalik, okay, crypto. Yeah, exactly. So that's exactly what I'm trying to say is that like it, you get your adoption super cycle, but then you regret it because you say some of the users are interfering with other users. And then it leads to new chain. And that's exactly what the DriveChain BIP300 idea anticipated this whole time. Even back when I came up with it in 2015, it was like, there'll be all these different chains of different shapes and sizes.

[00:35:17] [SPEAKER_01] And we'll just have them all be 21 million coins across all the different pieces of software. And then the people running the software maybe hate each other. And they had total disagreements with it. And one, some of them think, oh, cryptography and privacy is the most important thing. And so there's just things, user experience. Other people think something else like not just ossification is the important thing. So they maybe all hate each other. And the crazy, really crazy thing is that Satoshi, when he invented merge mining in 2010, he also foresaw this to some extent. There's this thread.

[00:35:47] [SPEAKER_01] He talks about, you mentioned merge mining that he co-invented. And he says, he doesn't say it directly, but it's clear from the paragraphs if you just read them. And I've highlighted, like, I have things where I circle the phrases and I point it out, clarify it to people. Where he's saying, like, well, we're going to have Bitcoin, which is going to have high fees. He's talking about BTC with the one megabyte block size. But we're going to have Namecoin. We'll have, or what he, there was BitDNS before it was called Namecoin.

[00:36:15] [SPEAKER_01] And then maybe that I have lower fees. And then there'll be like the next dozen or so unrelated networks. He's talking like there'll be all these different networks and they'll all be, you know, they'll all be merged mind, which is, again, something that we support. And it's something that everyone should support, but for some reason they don't. And I think it's just because they haven't quite figured it out all out yet. But that's in itself a mystery. And it's like, you know. So, yeah.

[00:36:43] [SPEAKER_01] So that's a, it's all related to, you know, you have a situation where all these people want to do something. Developers want to develop something. The user wants to use it. They want to pay the transaction fee. The miners want to mine. They want to collect the fee. And yet for some reason they can't. And so that's what we're about fixing, getting rid of all that barrier.

[00:37:05] [SPEAKER_00] So I know that, I know the Litecoin merge rhymes with Dogecoin, but I don't hear about anybody else merge mining yet. Maybe that's coming. Maybe not, you know. But 20 years from now, what design philosophy do you think the history rewards? Ethereum, Bitcoin, merge mining? What do you think, what philosophy do you think that will be still standing in 20 years from now?

[00:37:27] [SPEAKER_01] I think that, you know, you have to give people what they want. And to some extent, Bitcoin, Bitcoin has been number one the whole time. And first of all, we have Bitcoin and Namecoin have been merged mind ever since 2011. But you don't hear about it that much. And the question is, why not? And it's because, it's partly because Namecoin is like an altcoin and people hate. That's the other thing. So the sidechain, the L2 drive chain idea is that it's a merge mind sidechain.

[00:37:57] [SPEAKER_01] That's not an altcoin. So it's, you'd think it'd be the most popular idea ever, but it's just, it's just the cultural reasons that we, you know, it's a long answer about how did we get so messed up? But the, so you gotta give people what they want. And if, so to some extent people want, and Bitcoin has been number one because people like the stability of it.

[00:38:23] [SPEAKER_01] And they, they sometimes people, I think, look at Ethereum and they think, ah, this is a very ambitious attempt, but it's also very different. And it's kind of like, we don't want something that changes too much or that is at the whim of a mad scientist or an eccentric person. We'd rather have, you know, the devil, you know, versus the devil, you don't. And so Bitcoin has been number one the whole time. And it's done very, very well.

[00:38:47] [SPEAKER_01] It said it's gone from being, you know, less than 10 cents to being worth a hundred thousand dollars. It's a 1 million X return. It's the greatest returns in the history of capitalism. So Bitcoin has done very, very, very well. But I do, I think everyone who's been a part of Bitcoin for a long time, all the OG Bitcoiners, all the knowledgeable Bitcoiners.

[00:39:12] [SPEAKER_01] I think we all understand that it's, you know, it's like pre, it's still, it exists as a proof of concept, but it is pre, you know, it hasn't made its great mark on the world. I think, you know, a lot of normal people just think of it as cringe or some weird thing. So I think it's pre, it's pre-success, you know, and I think that that's the issue. You got to give people what they want.

[00:39:39] [SPEAKER_01] If someone else builds, you know, something that is easy to use, is hard for people to hack as the privacy that people want. It has the, because of course a lot of Bitcoin, a lot of crypto adoption is people who want privacy. Some of these people are criminals. They want privacy in a very, but other people are privacy activists. Other people are just like, you know, what are you supposed to do if you're in certain countries? You know, what if you're, if you're in Russia or North Korea or China or something?

[00:40:09] [SPEAKER_01] It's like, you know, you have some, you have some serious problems. And of course, in, you know, Central America, I also, all these places about people, India, you know, people go around, they just, the police. And we don't, not everyone lives in a country that has decent laws and law enforcement. And in a lot of places, people just steal everything. There was an interesting study. And sometimes it's the families who steal, you know, it's like, I saw an interesting study

[00:40:36] [SPEAKER_01] where, I think it was like Northern Africa, people be paid 25% less as long as it goes into a, like a secret account. And so, cause the family knows how much money they make. And so if someone is doing well, someone loses their job, but someone's doing well, everyone comes through the handout or whatever, you know? You know, they say, oh, he's doing so well. So a lot of places come from a culture where there's, there's no, what you might call private, this is what I'm trying to say is this privacy word is a little bit, it's a little bit bigger

[00:41:06] [SPEAKER_01] than just, than just saying, you know, you don't want someone looking at your, you know, your web browser history or something. It's like, you know, this privacy thing is actually big. And so, yeah, if you give people the features they want, easy to use, you know, and well, well-known, recognized, scalable, useful, et cetera. If you solve these problems for people that will succeed. So I think that that is, I think it's a mistake, very, very big mistake for Bitcoin to just be

[00:41:35] [SPEAKER_01] like, oh, we've already won. The only thing we can do now is break everything and change and ruin everything. So we don't want to change, but that is the mainstream view now. So that's mainstream view is not a great one, I think.

[00:41:49] [SPEAKER_00] Yeah. So can something become so successful at preserving itself that preservation eventually prevents evolution?

[00:41:59] [SPEAKER_01] It happens all the time. It happens routinely. There's a famous Silicon Valley book about this called the, the innovators dilemma. He, that was the guy, what's that guy's name? Clayton Christensen or something. He, that guy invented the term disruptive innovation. I mean, supposedly that's what someone told me. So this is a huge book. And the whole point of the book is basically that it's often way easier to just start over because you show up at IBM with your idea about the personal computer and they're just like not set up for that.

[00:42:29] [SPEAKER_01] And even like a well-run companies getting feedback from their customers, but they don't realize that a new type of customer is possible. Like a Henry Ford was saying, if I asked my customers what they wanted, they would have asked for a faster horse. And it's like, yeah. And of course, you know, like Steve Jobs, like, I don't think he would ever, they wouldn't. Steve Jobs would never say like to the customer, oh, what should we design next?

[00:42:59] [SPEAKER_01] They would like do some creative thing that they thought of. And then they would, then they would get the feedback later in the process. And they'd say, hey, what do you think of this thing? And, you know, through sheer force of will, some of these people like a Steve Jobs, they could just make anything new work just from, you know, you get the impression that they're just, they're just leaders in a way. And so there's no way that anyone, you know, what if you ask Beethoven, like Beethoven is not going to, you can't, you can't, certain things you can't do by committee.

[00:43:27] [SPEAKER_01] You know, you have to just, you have to just do it. And so I think all the time, because the question you asked was like, you know, sometimes just do people become complacent and overcome? Yeah. Yeah. The Titanic, the unsinkable Titanic, the fall of Rome, it happens all the time. All the time it happens. It's basically the norm that something is successful for a while. It has its life cycle. It has its time in the sun. And then it, then it's replaced by something better. So yeah.

[00:43:57] [SPEAKER_00] Well, yeah. Well, if I have, it makes sense. So I have one last question. I want to thank you very much for your time today, but I have one last question for you. Say drive chain never gets adopted, right? Was the work that you've done and that you're doing now worth it?

[00:44:14] [SPEAKER_01] I definitely think so. Yeah. Because remember, I've been in the Bitcoin community and the Bitcoin community said unbelievable success. So this is kind of a love. It's almost like paying it back in a way of saying like, okay, Bitcoin community, everyone, everyone has done very well. Like financially over the time that I've been involved. And it's like, but at the same time, since I've been up close, you know, I presented at every scaling Bitcoin conference. I was like on the program committee for a lot of these things.

[00:44:43] [SPEAKER_01] I'm just like very, very active. I get invited all constantly all around the world to speak at Bitcoin events, every single Bitcoin magazine. So it's like, I know I've seen a lot about Bitcoin up close. I know where all the bodies are buried. You know, I know all the details. So it's kind of also like, well, this is what I think, you know, it's out of a responsibility. It's like, I really think we should strongly consider this.

[00:45:08] [SPEAKER_01] And again, what I'm proposing is this opt in reversible, ignorable thing. It's really, really, really, you know, it's literally like I'm saying, even if we were saying something like this is the Titanic and I'm handing people life vests as they board the ship. It's not even that because this life vest thing, you kind of have to carry around and keep track of it and kind of hold it, hold onto it. And then you had to find it after the iceberg, it hits the iceberg. I'm kind of proposing this thing.

[00:45:37] [SPEAKER_01] I'm saying to the captain, hey, here's this magic switch that will teleport us back to London. Can you just put it? Can we just put it in the, you know, in the control room and not look at it? You don't have to look at it unless anything bad happens. It's very much a light touch, I think. So the costs are very, very, very, very, very low. Benefits are very, very, very high. So even if people think that this is like an absurdly low chance of working out, it makes no sense for people to be sleeping on this.

[00:46:07] [SPEAKER_01] So you see, I bring that up because you asked this, was it all a waste of time? Well, it's like, well, I think the idea is pretty good. So here it is. Maybe not every good idea makes it and some ideas are ahead of their time. And so, yeah, I mean, it's like, this is just what I'm seeing. So that's like the way, that's like what it's like from my point of view. And yeah, here's the thing is, what if we never need it? Well, that might mean we never hit the iceberg.

[00:46:33] [SPEAKER_01] You know, maybe like that, maybe everything was fine in Bitcoin and Bitcoin became world adopted worldwide without this thing. In which case that sounds, that sounds pretty good for me. I'm fine with that outcome. Sounds great. It's kind of like a hedge, like an insurance thing. And then it's also like maybe someone invents something even better. And it's like, well, that also sounds pretty good, honestly. So these things all sound great. So I'm kind of, it's a great outcome. It's a great outcome, great outcome, great outcome.

[00:47:02] [SPEAKER_01] And then this last horrible outcome, I'm kind of like fixing that, you know. You don't want to like, because the worst thing would be if Bitcoin failed or something. And then you had to walk around knowing that, oh, if, you know, if we had just had such and such thing, that would have made the difference between Bitcoin being big versus maybe USDT being adopted by 8 billion people and, or some kind of central bank digital currency. So it was like, oh, it came really close.

[00:47:31] [SPEAKER_01] And you knew about this in 2015, but you didn't do anything like that would be frustrating. So this is, so I'm helping myself to some extent.

[00:47:40] [SPEAKER_00] Well, I enjoyed speaking with you. Thank you very much for your time today.

[00:47:44] [SPEAKER_01] Oh, thanks. Thank you.