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good afternoon ladies and gentlemen and welcome to the Bitcoin show. We run this show every Tuesday at 2 p.m. Eastern time week after week where we discuss all things Bitcoin past, present and future. The show is also available on Apple Podcasts, Spotify,
five podcasts wherever you get your podcasts. So feel free to share it with anybody outside of the Twitter verse. Also, if you enjoy the show, if you want to support the show, retweet the tweet that's pinned to the top, it's just the link to this Twitter space. We want to get the show in front of as many eyeballs or as many earlobes as possible.
So definitely retweet that tweet if you want to support the show. And if you have any questions during the show today, just click on that purple bubble on the bottom right corner of your screen right there. We will ask them to our very special guest today. We'll also have a little bit of space later in the show for people to see.
people to come up on stage to ask questions directly. But again, this is the Bitcoin show every Tuesday at 2 p.m. hosted by yours truly on Pio. And then of course, my co host Trevor Owens, the, well, an investor in several Bitcoin startups, a partner
at Bitcoin Frontier Fund, the CEO of Ninja Alerts, if you know you know. And of course, how could you forget the host of the ordinal show and incredibly talented Twitter spaces podcast host in his own right Trevor? How's it going today, buddy? Going great, P.O. super glad and excited to see Eric up here.
I think just been a big force of positive change in the Bitcoin space, always giving out hot takes that are interesting and can open people's minds. And so I'm excited to dive deep with him on the show today. Well, I am too. And I'm excited to introduce our other co-host Aubrey Strobel, who is not here yet.
yet, but she will be here. She's going to be about 15 minutes late. She's on route to I'm sure another, you know, really amazing place. She's always travel and she has a fantastic life. We're all jealous. Anyway, she's a marketing partner at Trust Machines, the host of the observation on YouTube. Make sure you subscribe and just a big time Bitcoin content.
creator overall former head of communications that lolly love having Aubrey on the show wouldn't be able to do the show without her. Of course, we have Publius on stage Bitcoin OG. That's all you need to know. And then that brings me to this week's special guest, a software engineer, a writer, formerly known as the altcoins
Slayer. What a title. The former chief investment officer at Arcane Assets, the founder of some really fun stuff like Simp Dow, tap root wizard number two. Whoa. What a title. That is the one and only Eric. Well Eric, welcome to the show. Thank you for joining us.
So just to be clear, Aubrey invited me to this show and now I'm here and it's two guys, you and Trevor. - That's called a rug pull-around here. - That's what's happening. That's a rug pull.
Yeah, Aubrey is definitely the the forward facing person for the show. I would definitely say but, uh, but nonetheless Eric, we got you here. So we're going to ask you some questions. How are you doing today?
It's $1,000 to ask a question, but I'll let this one slide. I'm doing good. I'm in Portugal. The weather is amazing. I just launched a project which pays me $1,000 each week to answer a question.
question over the blockchain. So I would say life is swell. It sounds swell. We're going to run up a tab during this interview then. I can't wait to see what the final number is. Look, Eric, Trevor mentioned some of the things that you're known for in the Bitcoin world, in the Twitter
world. I guess, you know, leading question and I definitely want to talk about, you know, the fact that you're on Portugal right now and what the environment is over there for Bitcoin and for crypto in general. I think it's very timely given the current situation with Coinbase suing the SEC. But, you know, the first thing I want to ask about
about is you're a very vocal proponent of making changes to Bitcoin culture. I'd like to just leave it kind of like open ended there to you. What needs to change with Bitcoin culture and what kind of results, you know, could you see us getting if those changes are made?
Well, I'm glad that you said that I'm vocal for, I'm known for wanting to make changes to Bitcoin culture and not for wanting to make changes to Bitcoin itself. I think those two are very different things. And I, I'm perfectly, you know, I'm actually a fan of
Bitcoin is an amazing system. It's a great counter force to everything else that is going on in crypto. I definitely understand when people say that they don't want Bitcoin to become more like the rest of the crypto
I'm definitely going to sympathize with the people who feel that way. But the thing with Bitcoin culture that I'm against is that I think that we're seeing a deterioration over time. I don't think that I usually explain this way, but I
joined when I got into Bitcoin. There's a number of different ways that I can tell the story, but I think at its core, at the essence, I had been in the gaming scene, playing computer games and doing at a professional level, and you sort of had your tribe online, and I had that from the gaming world.
coming out of that, like coming out of being a really intense gamer at elite level, you really lose your tribe. And then you're like, "Where's my digital tribe?" It's a very nice thing to have a digital tribe that always follows you around. You're not locked to a particular location everywhere you move.
tribe moves with you. So I was looking for that. I wanted that. And so I was looking for it in all kinds of different places on the web. And that's how I discovered Bitcoin. I really discovered Bitcoin as a potential new digital culture that I could be a part of. And that the big
Bitcoin tribe that I joined in 2012 was an amazing place. It was something that swooped me up on my feet. It was like the way we usually say that's the intersection between all these different sciences and political ideologies and
technologies that are all merged in one very, very interesting place. So I thought that Bitcoin was the most interesting place on the internet that I've ever been in that I've ever found. It was more interesting than, for example, the pen testing community that I'd been in prior to that, which had to do with sort of like white hat hacking. So Bitcoin was
the most interesting place on the internet. It had the most intelligent people that had the most interesting and sort of elevating conversations. So that's the tribe that I joined. That's where I stuck my flag. That's the reason that I was proud to call myself a bitcoiner.
And that tribe doesn't really exist in Bitcoin, in the Bitcoin ecosystem anymore. And I think that's what pulled me in. And I'm wondering how is the current Bitcoin tribe going to be successful at onboarding more people? How I see Bitcoin culture these days, it's not something that appeals to me.
I'm not interested in Bitcoin maximalist laser eyes, stake eaters, and that's not something that I'm like, holy shit, I gotta be part of that. That's like, maybe I could be a part of, like, maybe if I didn't have a better alternative, maybe I could be a part of that. So that's sort of,
The reason why I'm vocally against Bitcoin culture today is that I want that intellectual place on the internet to free exchange of ideas. And I'm not a big fan of the dogma and sort of the gatekeeping of ideas that is prevalent in Bitcoin today. So I just want Bitcoin to be the cool place for people that exchange interesting ideas
about money, philosophy, monetary policy, computer science, all in one, that's what I want. And that's why I'm getting more sucked into the ethereum world these days because that's where I'm finding those conversations. And I want to bring back, I think that there are a lot of people that are interested in Bitcoin.
that are also sort of similar to me and that like to discuss these overarching questions about crypto and society overall. I think that there's a lot of bitcoins like that, but I think that the current tribe in Bitcoin are sort of actively trying to push
those people away to push them away from Bitcoin. And that's sad. So I'm trying to be a force that reignites a culture in Bitcoin that brings these people back together. And the thing that Unites can be that we're fans of Bitcoin.
you don't have to abide by all of these other crazy things that are these things associated with Bitcoin that really has nothing to do with Bitcoin itself. Very well put in great context and that last thing that you said right there, I'm glad that you said it doesn't have to do with Bitcoin itself. When you sort of separate Bitcoin itself versus the culture of humans that you're
talking about that congregate, you know, basically in online communities is largely, I'd imagine what you're talking about. How much material impact on the future of Bitcoin, you know, if you could quantify it or try to quantify it, how much material impact on the future of Bitcoin does that culture actually have?
I think it matters. I think that regardless if we want to make consensus changes to Bitcoin or not, Bitcoin at the end of the day is a technological revolution. It's a technological mission.
We're going to need great technologists to be involved in this ecosystem, to build the wallets and the payment solutions and the ecosystem around it. And if that community is captured by ideological cult, I don't think that that's... I don't think that you know...
dogma is really a great conduit to bring together the smartest people in the greatest innovators. So I think that we can already see the impact today, the fact that the Ethereum community has been much better at
creating a community of people that actually use the system in an on custodial fashion. They've been more successful than the Bitcoiners have and I think that that's. Comes from being more realist being more an understanding product market fit understanding how people interact with wallets and tools so I think.
that the dog mice actually creating like a chilling effect, it's creating, I used to call it the dark ages in Bitcoin, that has lasted since basically the end of the block size war until now. And maybe, maybe ordinals is the thing that will end the dark ages, that's why I'm
a cartoon that wizard right now because that's sort of become the symbol for me to sort of shepherd this new ideology within Bitcoin. Cartoon Wizard number two, mind you. Cartoon Wizard number two, yeah. Yeah, it's actually the reason that I joined this show today because I don't think that
We had a organized party in New York a couple of weeks ago. That was me and Udi and the rest of the Tapper at Wizards team. Some people were there and they were like, "Oh, nice to see you here, Eric. I don't know who invited you." I was like, "What are you talking about?"
founders, like me and Udi were 50/50 co-founders of the Taproot Wizards project, and we've conceded the whole project together and more people joined in later. But since Udi's been the one that has been participating in all these, Twitter space has, some people don't actually know the extent of my involvement.
Incredible. I mean, I was at that party. It was a fantastic party. A sought after party that people really wanted to attend, which is always a good sign. I'm glad that you brought up Ordnals and just a couple of times you brought up the idea of building on Bitcoin. The party itself was a big disappointment to my opinion. I know that a lot of people said, "Oh, it was the best event in New York."
the whole idea of the party was to bring a bunch of people together, dress in wizard costumes, and then set off the fire alarm. So give them all a collective wizard shower. So I was actively walking around with a wand that actually shot fire. I don't know if you saw that, but I had a wand, it shot fire.
was actively trying to point it at the fire sprinklers to set up the alarm to make it like the biggest collective wizard shower in history. And I didn't work. The fire alarm didn't go off. So in my opinion, it was a huge disappointment. And that's the whole reason that I bought the flight ticket and everything.
So it was a big failure, but I'm glad that some people still got some enjoyment out of the digital arc on the walls and so forth. Well, I can understand your disappointment. Yes, at the party, there was a rumor going around that the sprinklers were going to go off, which was absolutely hilarious and spot on. Now I understand that this was coming
from you trying to deliberately set them off, which would have been pretty legendary, but unfortunately didn't happen. And thus, yes, the party was a failure, as you said, but still a great time. You know, you brought up ordinals, you brought up building on Bitcoin. I'd love to know, you know, to you, you mentioned a theorem, you mentioned the building that's happening on that
blockchain. What is the current state of affairs with building on Bitcoin and what needs to change for it to improve in your mind? And then bonus question, what impacts will that have to Bitcoin? Yeah, so I think that one of the most vibrant places for
people who want to make Bitcoin transactions in the world currently is probably the Bitcoin maximalists on Noster is one of the most active, like they're tipping each other with lightning payments. So they take a lot of enjoyment out of installing a lot of Satoshi and sending each other tips
for good, nocturne tweets. And the sad reality is that because you can't have a static recipient address in Lightning, you need... you have these things called "Lighting Addresses". But "Lighting Addresses" are only currently
compatible with custodial lightning wallets. So you can't use like your decentralized lightning wallets. You have to run an HTTPS server, which is the reason that people are using custodial solutions that runs the server for them. So right now, like 95% of all the pain
that are happening on Noster or happening in a custodial fashion. And that's, this is the reason that I was trying to get people interested in developing a ZK roll-up on top of Bitcoin back in 2019. We had tried for like, ages to get drive chains, to get the drive
I've changed BIP 300 and 301 activated on Bitcoin with no success. So I thought that ZKRULObs can be more interesting because if your issue is that you leave the security of the sidechains in the control of miners when you're using DriveChains,
You don't really have that issue with zKaRollops because all the regular user full nodes will validate the serial knowledge proof on the Bitcoin mainnet itself. So you can't really steal anyone's funds in ezkRollops because the Bitcoin consensus layer really won't let you violate
the ZK will upside-chain. So that could potentially be like a better way to build side-chains and then you wouldn't have the issue that you don't have static addresses. You wouldn't have the issue that you need lightning channels and I think that Udi has spoken about this a number of times that when we launched wizard school for Tapper Gwizzards
We had our users make a lightning payment to get them familiar with, you know, interesting aspect of the Bitcoin system that you can make lightning payments. I mean, I'm so fan of the idea itself that you can make instant payments for lightning. But just from that quest, but we are on boarded more users to lightning than, you know, those wallets,
We're aware of so we had like two lightning CEOs writing us and being like can you guys can you stop onboarding so many people to Lightning wallets because we don't really have like the channel Capacit like we need to think about how we're gonna manage the channels for this so I think that the Bitcoin wallet ecosystem
is really unprepared for mass adoption the way that it currently stands. I don't think that lightning necessarily is the best solution for this either. Both me and Udi were really early lightning users. Udi made one of the first main lightning payments and I ran one of the first 500 lightning nodes and we were both of us super optimistic
We were really, really extremely optimistic about lightning. But the fact of the reality is that we've been trying after five years. And still, now if you want to make a payment on Noster, then 95% of users use custodial wallets. That's a failure. That's a big failure for lightning.
If even the laser eye max is on Noster, don't want to use Bitcoin in a decentralized fashion when they're making lightning payments because the UX is so cumbersome, that's a big failure for Bitcoin. And I think that we would have uncovered these truths sooner if we had less of aigmatic cult around Bitcoin.
I mean totally reasonable way of thinking about it in my opinion Trevor you have your hand raised question for Eric. I was just wondering are there Security advantages to a custodial lightning wallet over let's say like you know Coinbase obviously like they use any just to ask you all database kind of a thing Like what is the actual differences are advantage or do you think it's
really just a training wheels for hopefully improvements in protocol development that are probably going to take a lot longer or this issue with the live-ness state until we have phones that are more open and have like extremely big batteries or extremely long life batteries. What are your thoughts on that?
So the reason that Lightning World's Rcustodial is purely out of UX, that's the reason why people use custodial worlds to not have to think about channels, to be able to have a Lightning address, that's the really the big reason. In terms of what the advantage is of doing this at all and not just using
like a coinbase, like internal account transfers, like a coinbase bank, the advantage would be that this system allows you to interoperate with other lightning users using the decentralized protocol. So if you want to make a decentralized payment in lightning,
You can pay these users using lightning systems and you can get paid by them using the same system. So it's sort of this technology allows you to interoperate with decentralized users and sort of like you can't really make an instant payment from a decentralized user to a custodial
Coinbase user, if both of them are not using Coinbase, but in Lightning you can have a bunch of different custodial solutions and non-custodial users interact together. That would sort of the advantage be. But when you are using that custodial system, if you are using one of those systems, then you, well, it's a custodial
system. So the risk to you is the entirety of your balance. So 100% of the funds that you use there could be wrong at any moment. So you've presented the technology solutions to some of the problems that we have and how you would approach it. I guess what would prevent
like what would get in the way of any of this stuff being implemented? >> What would be against introducing a ZK roll up on Bitcoin? >> Exactly. >> It's kind of interesting. I was in a phone call earlier today hearing rumors that, you know,
how you know how block stream has the satellite in space that allows nodes to all over the world to sync a node using blocks that are being beamed down by their satellite. They've recently, so block stream is recently done something that's a little bit surprising but also very
is that they're now lasering down these zero-knowledge proofs from the zero-sync protocol. So it's a way to just think this is nothing to do with the consensus layer, but it allows you to instead of having a node that looks at every transaction and validates it in the normal way to just
run a serenolge-proof system that proves the validity of Bitcoin transactions and Bitcoin headers. So that's something that doesn't require changes to Bitcoin, something that you can do right now. So it's encouraging to see that block stream are doing this with their satellite right now. So you can be in Kyrgyzstan and you can have your node synch
faster because you're using seronolage proofs. But this is like in my head, to my impression, it's showing, you know, I don't think that blockchain would be doing this if they didn't inherently trust the seronolage cryptography that is
being used here because if this technology was super risky and you know had tons of hidden bugs inside of it and people in Kyrgyzstan shrinking their nodes would end up on the wrong chain because the synced their nodes this way then I don't think that blockchain would support it. So I think that you know you have even
some of the most traditional, typical maxi-oriented bitcoins, OG bitcoins maxis that are now really coming around to these seal-nosed proofs. And I think that the step is not that far away to then accept something like
an opcode that actually interprets seronage proofs that the consensus layer, which would allow you to build something like a ZK roll up. And I've heard that Adam back is actually optimistic, like he's, I think he wants to introduce some type of seronage proof, verifying
mechanism into Bitcoin. That's what I heard. But he wants to do it through like a simplicity softwork. So what I'm hearing is that there is actually this is one of the most typical elements when you're discussing protocol changes in Bitcoin that really, really grinds my
gears if I can put it that way, which is that the there's in sort of the Bitcoin technical discussions overall, it's always the way that there's like there's a tier of Bitcoin, you know, the vocal people on Twitter, the Bitcoiners on Twitter who are
very, very maximalist and very dogmatic. And they are not usually that technical themselves. They're trying to interpret sort of what does Greg Maxwell think, what does Peter will think, what does Adam back think. But the reality is in most cases they are wrong about what they don't know what Greg
things. They don't know what pitiful actually thinks. They don't know what Adam back thinks. The reality of the situation is that the people that they think that they're deriving their ideology from are many times more inclined to agree with someone like me on the technical specifics of what we should be doing with Bitcoin and how we should scale the system. And I think this
What I'm hearing that Adam Baggs is actually optimistic that we can introduce a serial knowledge very fine mechanism at the consensus layer of Bitcoin. That's a great example of how confused some of the people that are trying to understand what the true Bitcoin ideology actually is. In most cases, they don't actually know what they're
ideology ideologies, they'll find out a couple of years later that actually Adam back like this idea that just hadn't asked him sufficiently about his stance like they were trying to interpret it maybe from some foreign posts from years ago. They don't actually know what these people think right now. So I think that there's reason to be more optimistic that we can make these changes into Bitcoin
And it may seem like if you listen to a Bitcoin maximalist podcast, it may seem like it's never going to happen. But with they really understand what the people that they're deriving their opinions really think, then the situation actually looks way more optimistic. That's very exciting. And like you said, a reason to be optimistic. Trevor, you have a question for
Yeah, I was wondering if you could just kind of break down like kind of what's needed to add the verifier You know, is it is a covenants and I know covenants is like a Kind of a very broad term actually so it'd be interesting to understand a little bit more about the landscape of that space when it comes to Bitcoin and kind of explain a little bit to the audience
Yeah, so in order to have a ZK rule up on Bitcoin, you need two things. First of all, you need the ability to receive a cryptographic string that is a zero-knowledge proof that proves the validity of some computation. So that would look something like an OP-stark-verify, like an opcode that
takes the cryptographic string as an input and then has assured itself that a computation was valid without actually running that computation itself. That's what a CERAN-OLGE proof does. Then the other thing would be to then use that result to update the state. So that would be really what
you need to do is running some type of state machine. You know how in Ethereum you have variables, you have states, you need to be able to basically update the state machine. You currently don't have that functionality with the Bitcoin UTXOs, how they're only, you only have UTXOs that you can spend and create new ones, but you don't really have a state variable that you can update.
So that's something that you can create using covenants. You can create a state machine in Bitcoin using covenants. For this in particular, you actually need a it's not so when most people hear covenants to think about OPC TV bit one a one one eight that
Covenant is not general enough to really get us to the state machine that we'd need here. It's that one sort of too specific. So we need a generalized recursive covenant that allows for something called transaction introspection. We don't have a covenant for that
yet. So that's another component that we would need. Now there is another team that is running around, I don't know if this gets too technical for people, but there is a team that is running around currently that, I don't want to mention their name, but there is a team that are saying that they have solved the challenge of compiling these two requirements into
a single opcode. So there's a team that are saying that they can using a serial knowledge construction, they can create both the covenant and the serial knowledge proof verifier in one opcode. So there's a team that is saying that it can be done with one opcode. I have yet still to get firm confirmation that that's actually
But to sort of answer your question briefly, we would need to introduce a soft fork into Bitcoin that introduces one or two new op-codes. And objectively speaking, if you're thinking about this from a modern perspective and not like a legacy Bitcoin maximalist perspective, does it
Is it introducing any of this complexity to Bitcoin actually have a material negative impact on, you know, its position as sound money, just any of the fundamentals to the Bitcoin technology? Yes, I would say that it has a risk of introducing new complexity into Bitcoin. So this is the big trade
that you have to really understand, is it worth it? So with the serial knowledge proof very far in Bitcoin, Bitcoin gets the potential to validate basically anything. Like with the serial knowledge proof, you can encode an entirely new virtual machine in Bitcoin
So you can have a ZK roll up and the ZK roll up running at the top of Bitcoin wouldn't be confined to only making Bitcoin transactions. You could run an entire EVM like an Ethereum virtual machine or any type of EVM. You can run something better than the Ethereum virtual machine.
You can have a virtual machine with account abstraction. You can have all the different things that even the Ethereum ecosystem want to introduce into their consensus layer. So with the serial knowledge proof, we are now at the stage where you can basically introduce any type of virtual machine into Bitcoin.
But that means that now you have, because what happens then is that you get the miners now include these serenolage proofs in the Bitcoin blocks. And if there is a lot of like M-E-V, like M-E-V would be the big
danger here. If there's a lot of MEV that you have now connected directly into the consensus layer of Bitcoin, if there's a lot of incentives to re-org these serenology proofs, Bitcoin if that allows you to, well basically
just taking out the serial knowledge proof that another miner put in and putting in your own basically reworking a serial knowledge proof from another miner if that allows you to make way more revenue as a miner than that basically threatens the Bitcoin
system itself. Now the reason why this is maybe not, the reason why this is maybe not like catastrophic to Bitcoin is the fact that we already have like rootstock and we already have stacks that are pushing headers into Bitcoin
That way, so there is already some reason to screw around with a tearing complete logic and NV that could arise in those systems. There's already that type of incentive to some extent that exists on Bitcoin. And the other reason why this wouldn't necessarily be catastrophic is that a lot of people, like you take
Peter Tauder, for example, is arguing that there's a way bigger catastrophic risk that is looming for the Bitcoin system, which is that the Bitcoin system won't be able to generate enough fees on its own. So Peter Tauder is now talking about we need to seriously investigate the idea of introducing tail emissions, so basically
inflation into Bitcoin to make sure that there's a consistent revenue stream to miners. So if you have that lens that the Bitcoin Bitcoin system is sort of already at risk both from systems like root stock and stocks and it's facing a much bigger risk that the security budget is shrinking and it's not going to be sufficient.
to incentivize miners to build blocks in Bitcoin, then a ZK rule up a system on top of Bitcoin is not necessarily that bad of an idea. And you also have to consider like the advantages of having that. I mean, it's always every time that you make a big change to Bitcoin, and this would be a big change to Bitcoin. There are critical
I'm in the camp that is saying that this would the net like if you amalgamate all of these different pros and cons I land in the camp where I'm saying this is probably an improvement of the Bitcoin system but there I understand other people are saying that this is actually a dangerous to the Bitcoin system so that's sort of where we are with that
that the block size of the ZK needs to match the available block space of the Bitcoin layer, is that correct or did I get that wrong? And then if I did get that right, how does that decrease the fees for those transactions or how does it function as a scalability layer, I guess?
Yeah, no, so if you create a zKVM on top of Bitcoin, the transactions inside the VM can actually be considerably smaller. So even though that in the roll-up paradigm, if you want sort of the full security of the Bitcoin system,
The transaction in Bitcoin is a main of Bitcoin is going to be much larger than the smallest type of transaction that you can make in a ZK roll-up. So if you go to John Light's research,
scalability benefit on that he's been looking at is sort of in the range of like 30, 40, 50 X. So you can make like a 50 times smaller transaction in a ZKV VM and still transfer like the
balance between two users in a completely non-custodial decentralized fashion. So the scalability benefit would be that a transaction inside a ZK roll-up even though it uses Bitcoin as a data availability storage are much smaller. So there's like pure real raw data savings.
Trevor follow up. Yeah. I'm curious Eric. What do you think about like polygon? The fact that it's, you know, sort of winning the race for Ethereum, Mel 2's, even though it's a sidechain, they're kind of planning to introduce the ZK aspect now. I think they've, I think they've launched it, but I'm not sure, you know, how much adoption has compared to, you know, optimism
an arbitrum. The recent arbitrum launch, I think, was a little bit of a disappointment. I think, is it a demand thing? Is it like we just need more demand like we had during the bull market on Ethereum and then these solutions become much more viable? And how do you reflect on that when it comes to the stage right with Bitcoin right now?
Yeah, so when you're building a different chain, a different ecosystem, 99% of users are not going to care if it's a proof of stake side chain underlying or if there's a trustless bridge from a roll-up that allows you to bridge in and out of this ecosystem. So at the end of the day,
Relay or two is going to face a business development challenge, an ecosystem bootstraping challenge. The polygon team are just amazing at business. They're just really, really high quality people at getting onboarding users.
and making partnerships with applications, onboarding applications. And they've been very good at being friends with the Ethereum ecosystem. So they've called themselves Ethereum Align. They've got a bunch of Ethereum thought leaders.
to be positively inclined towards their technology and then they've been incredible ecosystem builders on top of that. So they've just been really, really good and strong business builders. So that's the reason why they are sort of leading. I think that Arbitrum is
not that far behind. Polygon will... they may be some distance between them, but I think it's really encouraging to see both that Arbitram, despite Polygon had such a huge leg over Arbitram, such a head start, but Arbitram is still catching up nicely.
and then the fact that Polygon recognizes that they're gonna, if they wanna be the best sort of Ethereum layer 2, then they're gonna have to actually become an Ethereum layer 2. So that's why they're spending so much resources on actually becoming one. So I think that both those two trends are encouraging, although I've been sort of
disappointed to see that so many Ethereum thought leaders sort of helped polygon cement its position as the leading alternative layer to Ethereum even though we knew that we were sort of onboarding them into a much less safe system. Although you could argue that many of these so-called
decentralized role of sanithereum, many of them have for a very long time not really been that decentralized at all. Most of the role of sanithereum are still safeguarded with admin keys and upgradability such that it
becomes a bit of a philosophical difference at the end of the day is a rule of system that is just, you know, just needs to take off its training wheels or safety wheels is that better than polygon that is just, that just has the migration from its proof of stake layer to its
roll-up system, that's what they have to do. So both of these systems have to do something before they're really decentralized. So at the end of the day it becomes like a little bit of a philosophical question. I'm fiercely in the camp that starting inside the roll-up system and then taking off these upgradability as you're sort of more convinced that the system is
is a better route than bringing a bunch of people into a proof of stake side chain and then having the hassle of trying to migrate those users out. But that's, I understand that that's like a bit of an esoteric thing that most people don't care about. Appreciate you giving all the detail. This, of course, ladies and gentlemen, is the Bitcoin show we do the show
every Tuesday at 2 p.m. Eastern time. If you want to support the show, follow the Bitcoin show Twitter account. It is the host of this space right now and retweet the tweet that's pinned to the top. That's just a link to the space to get it in front of as many Twitter users as possible. Eric, if we can change gears just a little bit. I mean, you mentioned that you're in portrait
right now, obviously is now starting to become known as a relatively, you know, strong place in terms of just like crypto acceptance, you know, as far as places that you can live in the world right now a very timely story is coin based suing the SEC. I'd love to know, you know, how
What do you think that this lawsuit against the SEC could potentially impact the overall regulatory landscape for crypto and Bitcoin, of course, in the United States? And then after that, I'd love to discuss a little bit about whether you think the United States is a position right now to fall behind in terms of regulations
what that means. But first off, what do you think of this lawsuit in relation to the regulatory landscape for crypto in the US? Yeah, I think that the last couple of months, the US really has become like really cemented itself as like the second most crypto hostile jurisdiction next to China. And it does
impact, it's not just something that happens on a piece of paper. I'm in the process right now of incorporating two companies, like startup companies in the space, and we are really, really struggling with this idea of incorporating aside the US-Journey
We are still, if you have in like outside investors and many of them are in the US or some of your employees are in the US or some of your founders are in the US, it becomes difficult to sort of shake off the US anyway and that's the reason why we may have to go with
the US anyway, but we are actively on our end, we're actively exploring all avenues and seriously, seriously trying to reconsider and not having to incorporate in the US. I think it's going to bring a lot of innovation out of the US for sure 100%. We're not the only ones that are in the situation. This impacts
every single startup that is incorporating right now. Many of them would be in the US for sure, but now it's like, unless you really, really have to, you don't want to be in the US. So it's a major ordeal, and not great at all for the US.
or for the crypto industry. Okay, and when you say for the crypto industry, what material impact would that have on Bitcoin? Is it a price impact only or, you know, how do you think that, you know, this situation impacts, you know, Bitcoin itself? Yeah, well, I think, you know, there's a, yeah,
For any new technology, you're going to need some companies that are building infrastructure around the currency itself, whether it be wallets or payment solution, like the point of sale system, so whatever it is, you're going to need companies like Coinbase, for example, is one of the most
successful companies and onboarding Bitcoin users in the world. And if companies are not incorporating in the US, it makes it harder for us capital markets to access those companies, which means that there's less capital on a net basis that is able to
to foster innovation for the cryptocurrency sector. So the way that it damages the cryptocurrency sector is by basically there are some investments that are not going to happen now in crypto companies that could have been funded by US capital. So that's not going to happen. And I think it's going to have an impact in the sense that
kids that go to universities in schools or maybe not going to end up at crypto companies and that means that they won't be contributing to the sort of Bitcoin and crypto economy anymore and that's a brainer that means less talent gets into crypto and that's bad for the industry overall.
Yeah, no, I mean very, very reasonable take. And I guess to you, what are the jurisdictions that are doing the best job of creating opportunity for crypto? Yeah, so I'm a technologist. I don't really-- having a global sense of which regulatory area is doing
Better versus the other ones is not really the question to ask me if you want to get a good response. The reason that I'm in Portugal doesn't really have to do with that I was looking for the most regulatory optimal location for crypto even though from a tax perspective it has been
very beneficial area with no capital gains taxes on crypto and in Portugal. Although the reason that there is no capital gains tax on crypto and Portugal doesn't have to do with the fact that it's like a libertarian country and they want to invite crypto people, it's just that way because they don't have anything in their sort of tax law.
that describes crypto, it's just like falling between the chairs, and there is now an active conversation within regulators in Portugal to start taxing crypto, although that the tax bill that I've seen is more similar to Germany where you are only tax liable for capital
little gains that would happen for crypto that you held less than a year. So if you hold it for longer than a year, you would still not have any tax liability from selling crypto. So it's still a beneficial country. I came here actually for a couple of other reasons, but the reason that's probably most interesting to this show would be the
that I was living in Sweden previously and there was a particular thing that actually happened in the Bitcoin sector of in Sweden. So I don't know how much you know about Sweden, but in Sweden you can actually look up a person. If you have a person's name, you can find out their home address, their phone number,
who else lives with them and how much they pay in capital gains and income tax. So if you also know that they're into crypto, you actually know exactly where they live and how much they, you know, how much money they have and if they're into crypto, part of that money is going to be in crypto most likely. So what happened to me,
or sort of to the Bitcoin community that I'm a part of in Sweden is that sort of the number one, when I moved to Stockholm, the number one person that was talking to the media and talking about Bitcoin was a friend of mine who then later left
Stockholm and sort of left the role of communicating with Swedish media to me. That guy was assaulted in his home. So there are actually people, a set of robbers, literally a drove to his house, banged his door open and
beat him until he gave away his crypto. So he got like assaulted in his home in front of his girlfriend. He was traumatized afterwards and you know that could happen to anyone that's active within Bitcoin inside of Sweden. So that was just like not viable for me anyway.
So I had to get out of Sweden because of the way the transparency actually works against you and doesn't protect you. So I feel much safer being in Portugal to be quite honest with you. Yeah, I mean, that's absolutely wild. I did not know that about Sweden. Yeah, I mean, glad to hear that you're out of there.
with that in mind. Publius, you raised your hand for a moment, question for Eric? Eric, thanks for hopping on. Follow you for a while and you have a lot of great takes. Thanks for everything you've done. You know how FTA, other countries harmonized with FTA or
SEC and your opinion just kind of like living in Europe and being more on the ground there. Do you see European countries sort of harmonizing with SEC and it's sort of anti-crypto
sort of stance or do you see them sort of vulcanizing and having their own take on crypto as a move forward because yeah thanks. Yeah great great question. I can describe it from my point of view again not an expert in regulatory questions but we've tried to like influence
Swedish regulators, like the Swedish equivalent of the SEC would be the finance inspection, finance inspection, and we try to have conversations around them and try to get them to understand the benefit of fostering innovation.
and not scaring innovation overseas by having a regulatory hostile climate. I think that it's very much in the way that you say that these regulators are just waiting for, to see how is the U.S. regulating this? And that becomes influential in the EU, and that's
That's how Sweden is later than regulated. So like going to a regulator, I spent, you know, wasted a lot of hours trying to speak with Swedish regulators when at the end of the day, it's just derived from how other bigger countries act like the US. So it does have a ripple effect in an impact.
Sweden's actually become this is another reason that I really wanted to leave Sweden because I was paying a lot of money in taxes and then we just had a new Central Bank governor whose name is Idiq Tadean who was actually one of the most vocal advocates for banning proof of work in Sweden and he wrote
like an opinion piece in the Swedish press where he argued that Sweden is going to run out of renewable energy and not be able to reach its climate goals in the Paris climate agreement because we're going to waste all our renewable energy on Bitcoin mining. And he hadn't even like this
These ideas that he hadn't even talked to any major energy producers in Sweden, actually the main energy producers in Sweden is Vattenfall, and they had a completely different take. They were more on the Bitcoin maximalist side saying that actually cryptocurrency mining is can act as a buffer when you have lower
loads, you can have a buffer using Bitcoin mining, so actually increases your capacity and allows you to harvest more green energy overall and supply the society overall with more green energy if you make these green energy facilities more economical. And he's now the central bank governor of Sweden.
And there's one of the most vocal voices in actually getting the entire EU to ban mining. So the regulatory climate started to disappoint you. If you look to Sweden as a forward thinking country that has brought a bunch of great companies into the world like Spotify and IKEA and the ABAN,
things, you're not going to be very disappointed with what Sweden is doing with crypto and how low the understanding is. And I think what comes down to the end of the day is that Sweden is a country where a sort of authoritarianism has been relatively successful in the sense that most people in Sweden are not really
individuals, they are sort of working underneath the state. Many of them have a company job, not a lot of them are entrepreneurs. They don't appreciate freedom in the same sense that people in the US do. So they have a lot of respect and trust in their institutions. This is one of the reasons that I think that
They see cryptocurrencies as a waste of resources. So yeah, not super impressed with the house building is handling the cryptocurrency situation. Very, very unfortunate. Eric, we were hoping to do a little segment here. So you made several predictions on January 1st.
I mean that you remember that there's a long tweet thread where you actually made 30 total predictions. We were hoping since it's about a third of the year is done from when you actually made these predictions. If we could run through some of them and just see, you know, how you're feeling about the predictions that you made. Sure. Go ahead. Now we'll do a kind of rapid fire
format. Bitcoin's 15.4K was the bottom. That was a great call though, wasn't it? It was. Yeah, it seems like it was. Yeah, I feel good. I feel good about that one. Salana and eight dollars was the bottom. Yeah, I think like 30 minutes after I wrote that, like
literally 30 minutes, it's pumped from $8 to like 12 in the span of like one hour and it hasn't really come close to that level again. I really got a, you know, it's some of these things are psyching me out to the point where people actually mind swan because I wrote it in that track.
The thing is that that type of thing has happened to me so many times now that It's becoming creepy and I'm gonna next time I make a prediction like that I'm gonna make sure that I have a long position in Solana before I make the call But yeah, I mean Solana pumped like way above $20
as soon as I made that call. So that has also been an extremely lucky call, I suppose. You really are a wizard, Eric. Mount Gox coins are finally redistributed. Yeah, so that's one that is sort of close to my heart because I
I'm a Mt. Gox creditor. I was one of the people who lost my entire Bitcoin fortune in the Mt. Gox collapse in 2014. So I've been waiting for those bitcoins for a long time and I've been staying very updated with the bankruptcy
process and I haven't ever said before that it's actually likely that it's going to happen now, but I think that it's actually going to happen this year. I think that I'll have my coins before September. Incredible. I hope you're right. Cardano finally drops out of the top 10.
That's yeah, that one is like wish I made the same prediction last year it didn't go well and I'm gonna keep I'm gonna you know if if I can will so on if I can will this one on the bottom with
my tweets. I'm going to try to will Cardana out of that. That's that's me that's hopeful hopeful wishing I'd say. Nice. Bitcoin pumps above 30k.
And that's already happened. Yeah, good one. Trevor, you have your hand raised? Yeah, small, small question on Cardano. What do you, what do you think is going on there? And, you know, I know you've been, you've been a commentator on the, the hex community. What the hell is going on there?
So, pretty much a very similar thing, I'd say, Charles Hoskinson and Richard Hart and Michael Sayler are actually three sort of similar individuals. They are charismatic, mesmerizing speakers, but I think that ultimately they
use their great communication skills to lead people sometimes astray. So I think that a lot of people have been led astray in the Cardone ecosystem by Charles Hoskins. And like if you listen to him, he's a very interesting person to listen to. He's great at talking, he's great at
like describing big technological trends and talks about old, you know, mosaic and all internet browsers and what made one successful and it seems like he has a really really good grasp of the world. And then when you look inside, so the Cardano system and they have like some of their
scaling solutions like Hydro for example is a multi-party channel-based system. So just in the same way that lightning is a channel-based system, imagine that you have a channel that is between a bunch of different participants in a sort of a multi-party channel. The issue of course is that if one person closes their channel, then the whole
than the whole channel becomes unworkable. So it's like an end out of one out of an vulnerability to sort of shutdowns. So they're really building some really, really ineffective and poor solutions. And I think they're smart contract ecosystem is
reflective of that, that you can't really, even though they've been talking about the right way to architecture smart contracts for years, they're not even like when they finally launched them the last year, you couldn't even build something like Uniswap without having centralized components, helping them order transactions.
So at the end of the day, they couldn't even build the most common application in a decentralized exchange without relying on other centralized components. So that's why the TVL is so low in Cardon, it's because it's really complicated to even use that system to build.
smart contracts. And so this is sort of a symptom of how for a person that's not very technical and listening to Charles, it sounds like he knows what he's talking about, but then he actually doesn't know what he's talking about. So it becomes more like a very savant scammer in a sense, which is sad.
that's why I wanted to drop out of the top 10. Definitely sad. And you touched upon something that I want to briefly discuss. We want to have time to do a full deep dive with you because I think you could probably do, you could probably do like an ebook on this, you know, on this or not an ebook, a audio book on this subjects, which is the cult leaders in the space. But let's go through a couple more
of these predictions quickly. Lightning Network public channel capacity stays below 10,000 BTC. Yeah, I haven't looked at it recently, but I'm gonna I was right the last time. So I made a prediction last time that it wasn't gonna go above I think it was 6,000 and then it was
to slow. So I think that my bearish predictions on lightning capacity has been right before and I think I'm going to keep being right about them. All right, feeling good about that one. Suzu and Kyle Davies miraculously, of course, Suzu and Kyle Davies, the disgraced founders of three-hours capital,
miraculously become influential Bitcoin maximalists Yeah, so it's kind of funny like a couple of days after that Suzu and Kyle were both making like they were the the shit corners of the the shit corners of shit corners they were even they were
two shitt-coini even for Ethereum right there were had Luna and Avalanche in their as the symbols in their names and now that they've sort of fallen from grace you know we were it wasn't just me that had this prediction but we were sort of joking in a in a in a chat
of mind that they were going to try to use their failure to win over to sort of say, "I got burned in crypto, but it was my fault. It was just that crypto is such a scammy and horrible place. That's the reason that I failed." And then I think that they'd be welcome with
open arms back into the Bitcoin ecosystem. I think that some of the tweets that Kyle and Susu has made that are like Bitcoin bullish and where they're blaming the cryptocurrency industry for their failures has been getting some uptake within the Bitcoin industry. But I wouldn't say that they've been so, I mean I was right in the sense
that they are pivoting to becoming Bitcoin maximalist now, but I don't think that it has been true yet that they've been successful at becoming influential leaders within the Bitcoin ecosystem yet. So I still have the rest of the year. I'm hopeful that they're going to make it. Eight more months. We're directionally heading there. It sounds like
last one and then we'll close on that other topic. But last one, taproot adoption doubles and hits 3%. I think we're like closures or 30%. That one has already become true. There are some people that are saying that you only thought that it was going to double. If you
triple then yes you have doubled. If you quadruple you have doubled. So I think that that has already become true. I didn't set like an upper cap on it. I just said that it was going to increase. It was going to double and tap root adoption has doubled and I think that that's one of the some of these predictions you have to take the matter into your own hands.
So I launched Taprit Wizards together with it really just to make sure that we'd get over the threshold with that prediction. So, you know, most of these predictions I'm going to at the end of the day in the last final months you're going to see me make sure that they become true. And I think Taprit Wizards and the Taprit
I'm doing the easiest ones first. It was sometimes you have to do that. Well, very nice prediction there. Look, I want to close on this. We won't have time to do a full discussion on it because like I said, I do think that you have a very strong understanding of this. But you've pointed out, I've heard you talk on other podcasts about, you know, kind of cult leaders.
in the space. You mentioned Sailor, you mentioned Hoskinson from Cardano. Me and my business partner have been talking about this, about the sort of mini cults that exist in the space. What do you make of these different, whether they're sh*t coins, whether they're NFT projects?
these different entities that pop up in the space and are essentially small cults. And I don't know, do you think that that's going to continue to happen or that's just a kind of product of us still being early? Do you think that we'll see new cults start within the Bitcoin ecosystem? Like I'd love to just hear the way you're thinking about this.
in the present day and then how it can look in the future. Yeah, so this is one of the things that I appreciate most with cryptocurrencies and Bitcoin. It's that we're getting, you know, you think that you're coming here and you're supposed to learn about sound money, but then
to really understand Bitcoin, it takes you into so many different aspects of humans and life and anthropological aspects and science and philosophy. These cult leaders are just another really, really super interesting aspect that teaches you about humans. I think that
The reason that it's so exciting here is because if you understand Bitcoin is this microcosmos that if you understand it really, really well, you learn some things about human beings. I'll never understand what
goes inside the mind of a revolutionary Bolshevik, but I will understand the full extent of the ideology of a big blocker. So like Bitcoin is this small ecosystem where I can understand the stances of some people really, really well. And then I can understand, I can see how they congregate and I know the history of what
to this movement. I know the whole history of how their movement got together. Some learning a lot about human beings and cults. So it's extremely interesting to see, for example, how does a thing like Craig Wright
how this great right and Bitcoin's atotious vision, like how are there actually real human beings that are inside that, like it's like flat-eraters, but we got to see them from ground zero, how they got together. There's just some people out there in the world that
But really, I think that they feel a superiority towards their other humans when they have an insight that is, that is rare. So when they think in that particular fashion, they think that they sort of have an edge and they're sort of winning against the rest of society and it empowers them. And then they get together and they
I don't know, I'm just really interested in keeping track and trying to understand. I'm learning about humans. I came here for the technology, but I'm learning so much more just about humans from
from understanding and from analyzing these these cults in depth. So I don't have a great answer why this is happening. I mean, I think that that's just the way that humans are. I think we should just appreciate that we get to sort of look at them and observe them from the first from a first row.
from first row. And I appreciate you saying that the thing that I think is fascinating about it is the fact that you actually end up seeing projects or, you know, entities, businesses having more success when they sort of take the cult approach versus actually delivering products and, you know, the market
it seems to value like cult like leadership and cult like members over actually building a quality product. I think it's pretty fascinating and you know we see it in our space a lot so that's why I asked about it. Look Eric this was absolutely fantastic man thank you so much for joining us any closing thoughts for the audience anything else that you'd want to
share. Yeah well while we're talking about cults I recently talked on Pyramacormax podcast about this a lot and a lot of people were saying that cults are a good thing like you shouldn't cults are a great way if you have a mission a technology that you want
to bring into the world having a group of really, really determined spokespeople for that technology that are, you know, their whole life is concentrated on making that particular technology success. It's not necessarily a bad thing.
I think that there are good cults and bad cults. There are certain cults that are trying to push every of its subjects off a cliff and enrich our particular individual. And there are other cults that can be great for the individuals inside those cults. So I think that something being a cult
I agree with the notion that it's not necessarily a bad thing, but there are things associated with particular cults that are not great. So not necessarily saying that we should not have cults in crypto, cults are great, but let's try to have the ones that are sticking through to some
positive and result and core philosophy inside the cult. I couldn't have said it better myself. Ladies and gentlemen, Eric Wall, software engineer, writer, former chief investment officer at Arcane Assets, founder of Simp Dow, and of course co-founder of Tapru Wizards, the most hyped up
and Ft Project coming out in the Bitcoin world. Anyway ladies and gentlemen, this has been the Bitcoin show. We do the show every Tuesday at 2 p.m. Eastern time also available on Apple Podcasts, Spotify Podcasts, wherever you get your podcasts. Follow the Bitcoin Show Twitter account, share the audio podcast with your friends.
are in the bio of the Bitcoin show Twitter account for all the non Twitter people get those podcasts in front of them. We're going to be back next week with another kick ass guest. One more big thank you to Eric Wall. Make sure you follow him. Check out everything that he has going on. Check out taproot wizards of course and shout out to Aubrey Strobel and Trevor Owen.
my two co-hosts on the show, Publius always kicks ass when he comes on the show, give him a follow. And like I said, we will be back next week. Thanks so much for listening. Catch you all next time. Yeah, I was gonna say stay tuned for tap through twizzards school quest four. So the quest three is done. There's
quest for coming very very soon it's gonna be great uh so join the wizard school if you haven't already um and stay tuned for quest four all right quest four taproot wizards join the wizard school Erica they taking a shower man what what's happening uh it's gonna be something ordinal is related
Okay, ordinals in the shower. Okay, we'll see you'll have to see. You'll have to see ladies and gentlemen, Eric Wall, everybody catch you guys next time next week to PM Eastern.
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