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Live Countdown to the #Bitcoin Halving
Recorded: April 19, 2024 Duration: 0:54:01Space Recording
Full Transcription
This video is brought to you by S.T.A.L.A.L.A.L.D.
Hey, guys.
Hello, everyone.
And welcome to Countdown to Bitcoin's Halving, the quaternial event that everybody is waiting
for.
And we are going to discuss what exactly halving is, its impact on markets and miners.
And we have with us an awesome team, starting from Julio Moreno, Head of Research at CryptoQuant,
Marzeng, Managing Partner at Byzantine Capital.
Hello, folks.
How are you doing?
Hello.
Hey, how's it going?
Thanks for the intro.
So, could you just give us an introduction to what exactly is Bitcoin halving just to swallow
the people who are new to the space?
Yeah, sure.
So, basically, halving is the way that Bitcoin monetary policy is regulated, right?
And so, every 210,000 blocks, the block subsidy, which is a part of the block reward, cuts by
half, right?
So, right now, every block, the miner that mines that block, gets 6.25 Bitcoin as a block subsidy.
And after the next two blocks, that block subsidy will cut to 3.125, right?
So, initially, it was 50 Bitcoin per block, and that has been halving every 210,000 blocks.
So, it's every four years, starting from 2012, right?
Yes, exactly.
First one in 2012, and then 2016, last one was on May 2020, and now we have the fourth one.
And it looks like it's an inbuilt code, right?
It's not like a central bank, for example, maybe Federal Reserve or ECB, you know, they
come out every month or every three months, and they announce rate decisions and influence
the fiat money supply.
Over here, it's a program setup.
It's going to run every four years, no matter what.
Yes, exactly.
Exactly.
So, the halving is coded, right?
It's coded in the protocol.
It's one of the rules that the protocol follows.
And, yeah, it's, you know, we know how it will evolve over time, halving every 210,000 blocks.
So, yeah, that we know since Bitcoin inception, we know exactly how the Bitcoin is going to
be distributed, right, to the miners.
Okay, March, is it, am I right in saying that, you know, the pace of supply, supply expansion
is going to be reduced by 50%, so supply will still keep increasing?
Yes, exactly.
That's a great long-term scarcity preposition for Bitcoin holders.
Many might be aware here, but short-term, this might impact the cost of Bitcoin mining.
As the reward blocks are reduced and, in turn, makes electricity costs higher to my scarcer
pool of Bitcoin.
So, it goes two sides, dichotomy.
Yeah, and is, like I'm thinking, is this fixed monetary policy, is it an advantage relative
to the fiat system?
I would think so.
I mean, you can't just print Bitcoins while the U.S. dollar from nominated World Reserve
supply has, I don't know, increased multitudes in the last two decades.
Especially after the pandemic.
So, you know, I mean, I think most people who hope Bitcoin are aware of that.
And long-term holders are probably even more bullish on something like the happening.
But, you know, definitely trading rise.
We're seeing some volatility this week leading up to it.
Also joining us here is Will Foxley, co-founder of the BlockSpace Media and host of the Mining Pod.
Hello, Will.
Hey, Amkar.
How are you doing?
Good to hear from you.
Good, good.
Thanks for joining us.
So, what are your initial thoughts on the impending halving?
Yeah, I mean, this is probably going to be one of the most interesting halvings because
of what's happening with RUNES protocol at BlockSpace.
We've been following that pretty closely.
So, you know, about a year ago, we had this whole thing with ordinals pop up.
And part of ordinals is you add this counting mechanism to Bitcoin.
So, you say you have one Bitcoin and in every Bitcoin, there's a bunch of Satoshis.
We can assign rarity to those Satoshis for like a Bitcoin block that maybe has like an adjustment,
like a difficult adjustment or a new epoch.
That's like one sort of rarity.
But the biggest rarity is the happening block, right?
It's the EpicSat.
And so, this is the fourth EpicSat to be created in Bitcoin's history.
And there will only be, you know, say a few hundred of these EpicSats in all time of Bitcoin's
history.
So, a lot of people think that there could be some speculation around acquiring that
sat, that Satoshi, and then building an inscription protocol on top of it or inscription project
like Taproot Wizards or Node Monks, things like that.
So, what I'm looking for is for a lot of these mining pools to possibly reorg the chain at
the halvening, you know, in a few minutes here.
And we'll see.
I know on the testnet Bitcoin, there's been a lot of test reorgs.
So, we could see in the next 20 minutes something that's pretty rare on Bitcoin, which is a reorg
event.
So, that's mostly what I've been following at BlockSpace Media.
Yeah, that's what we've been doing like a lot of podcasts and tweets and articles about.
And what exactly is Rune Protocol?
Oh, what?
Sorry?
What exactly is Rune Protocol?
Like, are we here trying to bridge the gap between Ethereum and Bitcoin by introducing,
you know, maybe the programming ability to the Bitcoin blockchain?
Yeah, Rune Protocol is this idea from Casey Rotomore.
He also created Ordinals Protocol and their meta protocols, right?
So, they take Bitcoin as like the base layer and then they do something using Bitcoin's
data and they package data within Bitcoin, but they're sort of a separate system.
And you have like this pretty, I think, smart way of doing things because it's not necessarily
on Bitcoin, but it uses a lot of Bitcoin's strengths.
In this case, Rune's is basically a new token standard similar to like ERC20s or, you know,
if anyone in this crowd has used like Solana tokens, Ethereum tokens, but it's for Bitcoin
itself and it uses something called Operaturn data to be able to package data inside a Bitcoin
block, Bitcoin transaction.
And then you can create tokens, mint tokens.
There's been a similar protocol this last year called BRC20.
It's not a great protocol for tokens.
A lot of people have not liked it.
That being said, it's done really well in terms of people trading it and monetizing these tokens.
And I think with Runes, we're going to see, you know, tons of different types of Rune tokens
pop up.
Most of them probably like gambling tokens.
And that's what Casey Rotomore basically purposes for.
He's not actually a big fan of tokens, but he is a big fan of permissionless money and gambling
and those sort of things.
So he says like, have at it.
And I think that's what we're going to see is like a bunch of Runes launch at the happening
block.
And a lot of DJs are getting like their Rune nodes up and their Bitcoin nodes up so they
can directly mint new projects on chain.
So there's going to be plenty of volatility on chain, if not in the markets.
Oh yeah.
Oh yeah.
Because right now I see there's not much happening in Bitcoin's price.
It's pretty range bound.
Talking about mining, as we know, the rewards will be cut in half.
So miners' revenue will be taking a hit.
I'm wondering how miners are positioned ahead of the event.
A couple of weeks back, I think a report came out from CoinMetrix, if I'm not wrong.
I've already said that miners have been selling their coins, like reducing their coin stash
and upgrading their equipment just to ensure that the post having sustainability.
So has the trend continued?
What are we seeing on the mining front?
Yeah, from a mining perspective, I mean, if you're in Bitcoin mining, then you're preparing
for the next halving.
So most professional Bitcoin miners are preparing for 2028.
They're not preparing for 2024 because they've already had their plans lined up.
Now, Bitcoin miners who aren't super professional are probably a little worried about what the
next six months looks like.
So I think for that report you're talking about, yes, there has been some selling activity.
But there's honestly been a lot of selling activity the last 18 months, like since the
last bear market started.
And I think some Bitcoin miners have been holding more so going to this bull market because
why sell the upside?
But that doesn't mean that you won't sell some Bitcoin to get newer machines and those
sort of things to get energy contracts.
But yeah, there's certainly been some selling ahead of the happening.
Like, why not position yourself well with like more money and more USD in the treasury
as opposed to more Bitcoin ahead of something that's typically pretty uncertain.
The last two halvings or so is probably like the only data points we have for industrial
size mining.
And there's been people going out of business, you know, three months after the Bitcoin halving.
So I think to sum it up, miners are ready.
You know, they've been preparing for a while.
So, okay.
And Mark, yeah, go ahead.
Yeah, we just, I just want to say, we just go over the halving a few minutes ago.
So the blog was mine by via BTC.
That's what I'm seeing right now on mempool.space.
Yep.
I just want to say that.
Whoa, via BTC got it.
Yep.
And we already mined another one on our blog after that.
Yeah, really fast.
Brains pool.
Hit it immediately after.
Yeah, just nine minutes to go if I'm not wrong.
Happy halving.
Via BTC.
Okay.
So now the question is, what happens with this rare sat I was talking about earlier?
Foundry put out a notice earlier in the week that they would auction off this rare sat.
And there's speculation it could go for five plus million dollars.
So the fact that via BTC won this means, one, are they going to keep it internally?
And two, what will be the actual auction price we see for that?
Total fees of this halving block, 37 BTC.
So that's huge.
Like really huge.
Wow.
37 BTC in fees, $2.4 million in fees for that block.
Wow.
Subsidy plus fees.
And we've already had our first block at a lower Bitcoin subsidy.
And that one had 4.48 BTC fees.
So the subsidy in fees was 7.6 Bitcoin.
So even with the huge fee in the next block after, we're still going to start scraping by pretty soon here in terms of how much Bitcoin rewards these miners can garner.
But, yeah, congrats to via BTC.
Interesting relationship there with Bitmain and Antpool.
So I think that would be the thing to watch is what does that look like?
Antpool, through its back-end custody and relationships with all these miners, you could say that they have 50% of the network in terms of hash rate.
Or, like, you could, like, hint at that.
Now, they all have different relationships, all these pools of different management.
But they're certainly all tied together.
So the fact that it landed within that camp versus, like, the foundry camp or the independent miners camp is also notable.
It looks like Oncar got booted, Will, if you want to keep it going.
Oh, no.
Okay.
Yeah, I'm happy to keep it going.
I think the thing to look at now is, like, what's going to happen with runes.
So it's certainly going to be a time for DGens right now to be hopping in Discord chats and, like, spamming different runes tokens.
The first runes blocks, the first 10 runes are going to be inscribed by Casey Rotomore.
I think he might start pushing those out soon.
So I'm interested to see what those runes look like.
And I think there's other people bidding on possibly getting those as well.
So he might not even get those, I guess I should say.
And what does that mean?
Well, it's probably, like, there's going to be, like, a bunch of new Bitcoin token projects minted within the next hour.
And people are going to start speculatively bidding on them quite heavily.
So I think we're going to see from there a bunch of different fee rates pop up.
Julio, I don't know if you have any thoughts on that.
But I think that's the thing people should watch out for is, like, the next hour to 24 hours is going to be all about Bitcoin fees, which will probably be some of the highest fee environments we've seen in quite a while.
Yeah, yeah.
Yeah, and actually, I was looking at the, you know, the mempool data.
There's a lot of, you know, transactions on the mempool.
So that tends to pressure fees up.
And, yeah, I mean, for miners, that's what they would want, right?
Because with the block subsidy cut in half, now fees become more and more important, right?
So network activity becomes more important, transactions and all these, you know, new use cases that people are doing now with the Bitcoin and Bitcoin network, right?
So, yeah, fees for miners, that's really important for them now, right?
Yeah, I think that's the thing to watch.
March, I don't know if you have any opinions on that as well.
The one thing I'll note is the fact that the brains block landed right after the halving block so fast means it probably won't have a reorg because you basically have to reorg both blocks.
So it's pretty interesting that that happened so quickly.
Some more data points.
1.26 million sats per vbyte was the fee rate.
Actually, it went up as high as 3.57 million.
And that's, like, a historic block and had about 3,000 transactions within it.
Wow.
Those are pretty interesting statistics.
Do we know what it was like relative to 2020 on those dates?
Yeah, so in 2020, I think it was a lot less interesting.
Similar thing, kind of counting down, watching it.
In that case, F2 pool won the block.
And the most interesting thing was, like, they did, like, another kind of callback to Satoshi in the opera turn and put, like, a little note in there.
And I'm not seeing one right now in this opera turn.
I'm going to go take a look and see if I can find it.
Got it.
Got it.
I think from a trade perspective, I think that was an absolutely amazing technical overview of what just went down with the halving.
But I'll be observing the ETH-Bitcoin ratio.
I think it's been kind of depressed in the two weeks leading up to this moment.
Could expect.
Oh, did we just lose March?
Julio, can you still hear him?
No, I don't hear him.
Okay.
I might have lost him as well.
We're dropping, like, flies up here.
But at least Bitcoin's still working.
That's good.
We know that.
Yeah, nothing in the opera turn.
That's kind of interesting.
Typically, we see a decent amount.
It looks like it was also an RSK block.
So RSK leaves the project.
I'm seeing, like, it says VIP3 mined by boss 120.
Yeah.
Somewhat of a boring opera turn.
Yeah.
So, like, in past history, in Bitcoin's past history, we've certainly seen some interesting blocker words or opera turns with, like, you know, callbacks to, like, news headlines, political things.
And people do that because it's, like, something with permanence, right?
People will look back in 100 years, and if they're using Bitcoin as money, they'll look at this and be like, oh, this is what was happening in history at the time, or at least monetary history.
So, kind of a bummer they didn't put anything in there.
Typically, most pools get ready for that if they do win it, so I'm surprised that didn't happen.
But congrats to ViaBTC once again for winning that block.
37 Bitcoin in total fees.
Completely full block.
3.99 weighted units, which I can explain that if anyone wants to in a moment.
Yeah, $3,000 transaction, I think I said that already.
What do you expect now about for prices?
Now that the supply has been, you know, the issuance has been cut, what do you expect?
Yeah, I mean, I think we're going to have to wait a little bit.
It takes three to six months for this to impact people.
I think mining is becoming less and less important.
Ecosystem, like, before that happening, you know, as of a half hour ago, there was about 900 Bitcoin mined per day.
And so that was potentially 900 Bitcoin sold into the market every day, but in actuality, not that much Bitcoin sold over a period.
So there's a great piece from Fainfield Research writing about this.
It was actually put out, like, last week.
And over a period of, say, a month, there's typically around 30 million Bitcoin sold.
But if you look at the daily production of Bitcoin, 30 million sold from miners, I should say.
But if you look at the daily production of Bitcoin miners, it's about 60 million dollars.
So it's a drop in the bucket is what miners were selling.
Now, what does this do?
Like, the long term, though?
I think it does have some impact.
Like, these ETFs are eating up about 900 Bitcoin per day.
I don't know what the average is, but I've seen that number pretty consistently.
So it probably offsets that.
And we are thinking about the marginal unit when we think about pricing.
So I think long term, it's definitely beneficial and just another step towards a world where miners continue to be less important than they used to be.
Yeah, I mean, I agree.
We also have been, you know, doing some research on that.
And, of course, at the beginning, you know, most of the Bitcoin that was sold came from miners, right?
Because miners were the only, basically the only entities that were active right at the beginning of Bitcoin.
And as the reward got caught, you know, it becomes less important in relative, especially relative to the amount of Bitcoin that holders sell, right?
The long term holders.
And we see this in the data, how the supply coming from long term holders is the one that is most important in determining the price cycle.
Because, you know, the Bitcoin that comes from mining is less and less relative to that.
So that's one thing that we've seen over the years.
And now, more important than that is the demand for Bitcoin, which is, you know, this year has been really, really strong, right?
With the ETFs and also with other entities buying Bitcoin, we've seen unprecedented demand for Bitcoin, especially in the first quarter of this year.
It has slowed down, but I think that, you know, typically what I've seen after the halving is, you know, like you say, like a few months later, the demand increasing, you know, from different market participants like large holders.
I think that's what drives mostly the price cycle is first the demand of large holders.
And then, you know, at the end of the cycle is the amount of supply that comes to the market from the long term holders that are, you know, cashing out at the, you know, near the top of the cycle.
So, yeah, I mostly agree with that, you know, the demand side being now more important and in the supply side, the long term holders.
I just brought up Colin Harper from Luxor Tech to Stage.
Colin, how are you doing?
It is a fabulous halving day, my friend Will.
How are you doing, man?
I'm doing well.
Well, it's sped up really quickly on us.
Yeah.
We kind of talked to you where the happening, actually happening.
Yeah.
We had like what, like three blocks within 10 minutes, within eight minutes, really.
Yeah, that's pretty rare.
Yeah, it's super fast.
Miners obviously chomping at the bit to get these, to get these, to get the halving block, but also these post halving blocks, because I'm sure you probably already touched on it.
But the runes protocol launching for fungible tokens on Bitcoin is driving a lot of transaction fee activity right now.
So, like, I think the high priority right now is a thousand sats per virtual byte, which is, I don't know, has it ever been that high?
Like, do we get this high during BRC 20s?
I don't think, I think this is unprecedented.
What's the website again for looking at?
Mempool.space.
Or, like, the banded waves are looking at it.
Does Mempool support that now, too?
Yeah, they have it.
So, if you go to, like, the top of the Mempool dashboard, you know, there's the front page, or there's the homepage.
And then if you look at the little, like, chart, there's, like, a little chart widget up top next to the lightning bolt.
Yeah.
Yeah.
And so, you can look at, like, one year.
It's going to take a while to catch up, I think, in terms of, because it's going to continue to grow.
Right?
So, you'll see, like, more granularity over the next few hours, like, when you open up on, like, you know, a larger chart view for, like, one year or something.
But, yeah, I mean, from what I can tell, man, like, this is probably the highest fees I've ever gone, honestly.
Can you explain the sats per vbyte to the crowd?
Yeah.
So, when you send a Bitcoin transaction, and I'm just going to take the v out, because it's kind of a technical thing that they implemented.
With Segwit, to, like, for a block size, you know, to kind of obfuscate the block size increase out.
But, basically, whenever you send a Bitcoin transaction, you pay a certain amount of satoshis, which is a micro unit of Bitcoin, per byte of data that you're transacting.
So, like, if you have 100 bytes of data in your transaction, and the transaction is one sat per byte, then you're paying 100 satoshis, you know, for that transaction.
That's a pretty small amount of Bitcoin, right?
So, Bitcoin is denominated, and there are 100,000 satoshis in each Bitcoin.
And so, if you go down and think about, like, 100 satoshis, then that's a pretty small amount, right?
So, right now, we're looking at, like, 1,629 sats per vbyte to get inclusion in the next block on the Bitcoin blockchain.
So, the next block that comes out roughly every 10 minutes, which is insane when you consider that, you know, for, like, in 2022 and for some periods in 2023, it was, like, anywhere from, like, literally, like, 2 sats per byte to, like, 10.
And, like, if you wanted priority inclusion, it would be, like, maybe 10 sats per byte.
So, and a lot of this is basically attributed to the fact that there is a new fungible token protocol called runes that was launched on the halving, and a lot of inscriptions and ordinals traders and collections are trying to mint their runes currently and get ticker allocations.
Sheesh.
Kind of crazy.
This is wild.
Just to compare.
Just to compare the fees, you know, with all these activities that we're having right now, the last block, the last halving, the block in the last halving, fees were 0.9 Bitcoin compared to 40 Bitcoin in this halving block.
So, just to, you know, get a context of the activity on the Bitcoin network due to these projects.
Yeah, that's good context, Julio.
Yeah, I'm looking at this mempool page.
It'll probably take a little bit to update, but, yeah, the last time we had fees in this range was about 540, which was in January.
And that's probably during a lot of the BRC stuff that started kicking up again.
So, yeah, I think we're going to see much more of that over the next 10 blocks or so.
And then who knows what the next 24 to 48 hours is.
I mean, I think the next two weeks we'll see a very heightened fee environment, which means if you would just have Bitcoin in a wallet, it's going to be kind of hard to transact with it because it'll be expensive.
Miners are going to be cleaning up right now.
I don't think this, like, literally will do much for Bitcoin price.
There's not, like, a lot of fundamentals that share between people buying and selling on chain and Bitcoin price.
I'd say it's more of a macro thing.
But I think long term, it does mean that, like, if people are using Bitcoin, you can kind of bring in some utility arguments long term, whether you like those utilities or not.
But, yeah, so that's pretty wild.
I think, Colin, one thing I wanted to throw your way, get questioned about is, like, all these blocks laying it so quickly after one another means that, like, there probably is really no ability for anyone to reorg this block if they hit so fast.
Yeah, I think that if you're going to see a reorg, then it would have happened within the, like, first two blocks or, like, you know, definitely the first block, maybe the second.
But for, like, anyone in the audience who doesn't know what we mean by that, it's like, so the way that Bitcoin works is, you know, multiple miners around the world are all trying to mine blocks at the same time.
Sometimes those miners find the same block, like, within the same time frame.
And then all the other miners basically have to decide whether or not they're going to build on one block to make the longest chain or the other.
And so if you really wanted to game the halving block and, like, take it back from another miner, like, you could basically build on one of the prior chains and try to basically reorg it in such a way where the miner actually might at first end up not becoming part of the longest chain.
And then everyone else builds on the chain that you decided to prioritize.
So that being said, to Will's point, like, we're about three blocks.
Yeah, three blocks have been mined since the halving block, and there's very little chance that we'll actually see a reorg.
But, yeah, I think the big thing, I mean, gosh, fees just keep going up.
This is crazy.
We're at, like, 2,100 sats per byte currently.
And, you know, as you know, obviously, Will, I work on the mining side of things.
So for me, this is very interesting with regards to what this means for the block subsidy.
So, like, right now, you know, like, after the halving, right, the block subsidy drops to half of what it was before.
And so miners are earning half as many Bitcoin from just the new Bitcoin issuance that they would have been they were earning before the halving.
But right now, so, like, that is a huge impact on revenues, right?
And miners are thinking about, like, what is this going to mean in terms of, like, are we going to still be profitable after the halving?
Are we going to be able to make it, like, you know, still make the cut?
And right now, I mean, even in some of these post-having blocks, like, the halving block had 37 Bitcoin worth of fees in it, which is just absolutely insane, considering that the block subsidy was 3.125.
And right now, we still have, like, 16 Bitcoin from the most recent block that was mined.
So miners are literally making, like, basically 5x, the block subsidy, in transaction fees.
So they're actually making more currently in the immediate aftermath of the halving than they were right before it, which has ramifications, I think, for just how much hash rate will immediately come offline after this event.
If the rune stuff continues for, like, a week or so, it won't be any at all until it calms down.
Do you think there's going to be a major sell-off from small to medium size?
Miners, as this inflated environment of fees cools off directly after the halving?
I think probably over a long enough time frame that you will see that.
I think that the miners who are going to thrive going forward in this current halving epoch are probably the ones who can have, like, economies of scale,
to where, you know, they're either securing really cheap power, they're able to secure more favorable pricing,
or maybe even financing for, like, large ASIC purchases for some of the newer ASICs,
and also those who have, like, pretty sophisticated power and hedging strategies.
You know, that being said, I don't know what your, you know, I don't know what your, the details of your operation are.
Maybe you have low enough power costs to kind of grind it out for a little while.
But I'm kind of of the mindset that over a large enough time, a long enough time frame,
most miners are going to be probably integrated, like, directly at power sites or have some sort of deal with power companies.
Because it's just not a long enough time frame, you know.
It's not going to be, like, last halving epoch where you could maybe get a power contract for, like, seven cents, six cents,
and then just kind of ride it out with, like, the newest equipment.
You know, in four years, it's going to be even more difficult to compete as the block subsidy continues to dwindle.
So, you know, in the immediate aftermath, probably be okay.
But, you know, in the next year or so, you'll probably be looking at what you need to do to, you know,
liquidate or kind of, like, wind down your operations unless you have cheap enough power.
Yeah, no, that's exactly what I was thinking.
Because, like, the whole thought about, because I'm in New York,
so they tried to ban mining.
There's a whole thought about that and the whole thought about Bitcoin mining being bad for the environment.
I really think the only way that anyone besides, like you said,
these large miners are going to be pretty much directly attached to power suppliers
is going to be some sort of very cheap renewable energy.
So, hopefully, if we can survive, it'll have to be in a way that counteracts completely all of that bad environment.
So, to bring up some other topics really quickly, a few things that are interesting.
It looks like Spider Pool was actually still trying to rework the halving block as much as three blocks afterwards.
So, all the other pools have moved on to the other blocks.
And Spider Pool, which is a very small pool, was still trying to rework that block.
So, it shows you that we're correct.
Like, there were people trying to rework.
Of course, they didn't have enough hash rate.
It would take someone like a foundry or an amp pool to be able to push that and get lucky.
And then, on top of that, you'd have to, like, kind of churn through all these other blocks that we're building on top of it.
So, funny that we're seeing that.
The other things I'll point out is, with runes, it's already going crazy right now.
It looks like there's a few projects that got, quote-unquote, tickers for runes.
So, basically, like, in these blocks afterwards, people are trying to bid for tickers, like a stock ticker you can kind of think of it as.
And you are natively putting a stock ticker on top of Bitcoin.
And then Bitcoin and the runes protocol can kind of keep track of that in perpetuity.
So, if you're a project like, you know, say, a dog token or something else like that, you probably want some sort of ticker that aligns with your project.
And everyone was bidding to be able to place that data on-chain, that ticker on-chain.
And so, that's why we're seeing a lot of the high-fee environment right now.
And it looks like a few big projects got the tickers they wanted because people are going to bid for these actively against each other.
So, one would be, like, the Wizard Protocol.
Well, they launched a BRC20 last year, and they're trying to launch a rune as well.
And so, they got their ticker.
It looks like Leonidas, who's a popular Ordinal's guy, got one of his tickers.
And we're going to see more of these battles.
So, that's really what's happening with these fees right now is these runes degens are trying to land their project on-chain
so that they can do the mint and sell it out to the tokens to other people.
So, Colin, and maybe Nathaniel or Julio, you guys have other thoughts on this as well.
This is something that's very new to Bitcoin in terms of just, like, the amount of fee pressure on-chain from these sort of token degen gamblers.
It's happened in the past, but I don't think to this degree and with this amount of speculation and eyeballs on it.
Yeah, no, I would agree with that.
I think this is kind of just, like, a new level.
Especially when you consider that, like, this whole runes protocol was, like, created by a guy who basically invented the whole Ordinal's and Inscription Standard for Bitcoin.
So, you know, it's just, like, the amount of speculation that's going to go on and is already going on is kind of unprecedented
and obviously, like, creates a lot of talking points for what are we optimizing Bitcoin for, you know?
Is it kind of unearthed this entire debate about, like, monetary maximalism versus platform maximalism?
No, it's pretty wild to see that we're in stuff happening in real time.
Kind of watching in some chats I'm in.
And, yeah, basically, again, people are taking token projects that they've been working on for the last year or sooner.
And they've been working on them either as, like, Inscription Projects or BRC-20 Projects.
And they're trying to make the equivalent same project on the runes protocol with the hope that, or the theory that runes is going to be bigger than BRC-20, bigger than ERC-20, bigger than anything else.
And other people are obviously trying to snipe that same spot because you can kind of take someone else's project over if you really think about it just by claiming that ticker.
And so that's where all the fee pressure is coming from.
And it's a new paradigm for Bitcoin.
I mean, this could have been launched earlier.
Runes has been in the works since, I believe, September of last year.
But Casey Rotemore, creator of Orignals, decided to wait till the Bitcoin halvening.
And now we're seeing the wild calamity ensuing.
No reorg, though.
I'm a little bummed.
I was hoping there would be some sort of reorg.
Why do you want chaos?
I just love the chaos.
You know that, Colin.
Do you know how many questions we would get about Bitcoin being broken if that happened?
It's very true.
Yeah, no, it's pretty wild.
Julio and Nathaniel, I'll pause there and see if you guys have any thoughts or you want to add there.
I mean, just, I have a question.
I mean, I'm not really familiar with runes, but how is it different from like BRC20s or inscriptions?
I mean, what's the difference and also for the audience?
Yeah, so BRC20 was a project launched last year by a guy named Domo.
I think you could just type that into your Twitter browser, D-O-M-O.
And to my understanding, Colin, correct me if I'm wrong, it used a lot of the same parameters that inscriptions used, but used JSON files instead of like JPEGs.
And you were able to create with a few lines of code a new token on Bitcoin recognized by Bitcoin to a very limited degree and then would be processed by the Bitcoin blockchain.
Much in the same way that on the Ethereum chain, there is Ether, the native currency.
But you also have the ability to create your own contracts that can have tokens within the contract and then people can trade those tokens on Ethereum back and forth.
Now, Bitcoin really hasn't had the functionality to do that.
I mean, like you can kind of whack at it a little bit and make something go together, but it's been too complicated to get any adoption.
BRC20 was probably one of the first ones that sort of broke out the mold because it was easy to use.
Anyone could create something, mint something.
I mean, I minted some of these tokens a year ago.
It was pretty simple.
Still not as good as other chains, but enough for people to use it.
Now, fast forward six months from the launch of BRC20, which was like May 2023.
Runes was announced by Casey Roadmore, again, the creator of Ordinals.
And he said, hey, we have BRC20s.
It kind of sucks as a token standard.
Not only is it bad for users, but it's also bad for Bitcoin because it dumps a lot of data on chain.
And so he's like, let's make this simpler.
Let's make this a little more coherent.
And the end goal was the same.
Like he wanted to enable like token trading and degening on Bitcoin.
Now, he's like, I'd say more of a Bitcoin maximalist, but he's also sort of like a permissionless freedom guy.
So he's like, you know, if you want to gamble on Bitcoin, like here's how you do it.
And he's a developer.
So he made it.
And Runes, to my understanding, I have not read the Runes white paper yet.
It's been on the to-do list, but it's very similar.
It's an op return cell token, just like we've had in the past.
Colin can probably add some color there.
And it trades like any other token.
And people have been building Runes bots, Rune Inscriber things, Rune DEXs over the last three months with the knowledge that KC is going to launch the Runes protocol at the Bitcoin happening, which just happened.
So everyone's been gearing up for it.
And now it's off to the races.
Colin, I don't know if you have any thoughts on prior token standards.
Not really.
I just think that to add to what you were saying about BRC20, I think one of the things that really made them kind of crazy was the fact that you really,
for the first time, had like true kind of minting incentives from that you would like see in Ethereum that would drive up like transaction fees and collection prices.
Like before, you know, like people would just be minting inscription series and it would be like, you know, a collection like Bitcoin punks or like, you know, something like that, where someone would mint all of the inscriptions.
Then they would kind of sell them OTC and like Discord channels, Telegram channels, things like that.
And with BRC20s, whenever someone launched a collection, you basically had an opcode, you would use Bitcoin's opcodes.
And then anyone who copied, you know, the parameters for that collection could then mint their own tokens in the series.
So it was like really kind of interactive in a way that like early inscriptions that were image-based weren't.
And I think like runes is something similar.
It's a kind of different, I think, ballgame though, because when you think about it, it's like you're really just kind of collecting tickers, like, you know, and like tokens within a ticker.
To me, it's like a different meta entirely than if you're like trying to buy, you know, like monkey JPEGs or something and trying to like, you know, collect something that way.
Like, in some ways, it's like the purest form of gambling on Bitcoin.
Dude, gambling is just about to really get going, which I guess from a price perspective will be pretty interesting if that feeds back into Bitcoin.
I do think like it's just going to create a lot of altcoin wash cycles, like we've seen in other chains, but it'd be kind of at least more creative to Bitcoin miners in the long term, which is nice.
One thing that's kind of interesting, and I think I misspoke on this earlier, but like the first 10 runes were kind of like hard-coded and people had to bid on them.
And it looks like Lee and I has got it for a dog go to the moon, which is like a new dog token, because we needed more of those.
So that was etched as rune number three.
Dog go to the moon.
Yeah.
I can't do it.
I fucking can't do it.
Very large pre-mine on this.
Very large.
Hey, how's it going?
Hello, how are you all doing?
Good.
How are you doing?
Hello, I'm not getting you.
So I have a question.
I'm not too well versed in the runes coins.
Basically, what I thought it was was just another BRC20 sort of thing, because it came from the same creator.
Do you guys think that the same sort of environment will happen with these runes token as happened with the BRC, where it inflated the fees so much, where the miners are making so much money, and then they eventually took a dump?
Kind of tying back to my other point with the small to medium miners being really tight as far as capital, since this halving happened.
If they make all this money with this inflated fee environment, do you think that a little bit later on down the line, I don't know what the time frame would be per se, but they would take advantage of these inflated fee environments, and then it would create sort of a sell pressure, because it's going to end just like the BRC20 craze ended, selling off this inflated fees that they got right after this halving.
Do you think it's going to put an exorbitant amount of cell pressure on BTC?
I don't think it's going to put any cell pressure on BTC necessarily.
I do think that, I mean, to answer the first part of your question, if what's going on right now is in the indication, like runes are going to be just as crazy as BRC20, if not crazier.
So I think that we're probably in for, you know, it's hard to say how long, but fees are probably going to be pretty crazy here for a little bit.
And then I do think that just like with BRC20, you'll probably see a winding down of it, because at the end of the day, like, like I said, you're basically just trading tokens under a ticker that you like, you know, it's like, it's like the purest form of speculation, and in such a way where I don't see it as necessarily sustainable.
So, but that being said, it is going to be a pretty big financial game of musical chairs in the meantime, and for whoever can find a seat, you know, they'll probably be able to make some money off of it.
But as for like right now, it's kind of just everyone gunning for like Will said earlier, like these early tickers and trying to mint as many of these as possible while there's still interest.
Yeah, that's, that's why I actually, I mean, just to add to that, what was asking about, you know, what's the difference between BRC20s, runes, because, yeah, with BRC20s and inscriptions, what we've seen for fees is that they increase like in waves, right?
Like there's some, let's say a month of really high fees, and then, you know, that, that really comes down, fees are really low, and then there's, you know, a lot of, another project, right?
Another project that is launching something, whether it's BRC20s or a new inscription collection and all that.
So I think that if, if runes, that's why I was asking if runes is, you know, a little bit of the same, then it's, I would expect like the same behavior for fees, like a wave of really high fees for, for a few weeks or a month, maybe, and then fees coming, coming down again.
So that's, that's, that's at least what we saw in, you know, 2023, especially those, those waves of, of high fees when, when something was launched, a new collection or a new wave of BRC20.
So, yeah, that's, you know, what I, what I would expect.
So, Russ, Shannon, Squire's up to stage as well.
He is a through and through Bitcoin miner.
I think he's seen it all.
So, Shannon, I just want to get your perspective on halving.
I mean, I think a lot of Bitcoin miners like, oh, okay, quick, we know about it, but you shed a tear at all today, thinking about all those rewards you won't win.
Actually, I, I wasn't even paying attention to when the halving actually occurred and then found about this Ruth thing strictly just to come on here and ask you what it was and tell everybody thank you for driving up these fees.
That's the most Bitcoin miner response I could have predicted.
Yeah, runes, runes are big right now.
If you want to learn more about runes, definitely go over, click on Blogspace Media, our Twitter handles somewhere in the sea of people here.
And we've done like a bunch of interviews about runes and ordinals this week.
So, it's a good resource if you're curious about more about that stuff.
I think we're actually going to wrap up.
We're getting close to the top of the hour.
Julio, Nathaniel, Colin, Shannon, thanks all for joining.
A little plug for ConsenSys.
Prices go up for ConsenSys, I believe, tomorrow.
So, if you want to head down to Austin and learn about Bitcoin, crypto, all that stuff, well, get your tickets a little cheaper today than it will be tomorrow.
There's a halving discount.
So, go make that happen.
I'll be down there.
Austin, and thanks for joining today.
Happy halving.
Thank you, guys.
