Beyond Satoshi: Defining the Meta on Bitcoin - TOKEN2049 Singapore 2023

foreign so we sit here at a crypto conference in the house that Bitcoin built Once Upon a Time Bitcoin was a source of dynamism of innovative ideas in fact what we see most of the conference talks talking about right now Concepts like layer twos nfts side chains all of it these were Bitcoin ideas about a decade ago but Bitcoin has been dormant and to a generation who entered crypto over the past two to three years Bitcoin has been laser eyes it's been Michael Saylor um and uh and but what's interesting recently is that Bitcoin has seen a level of Bottoms Up adoption from developers from innovators from creators that it hasn't seen in a long time there are some technical triggers for that um but uh Bitcoin once again is is systematically slept on by the crypto industry and uh we're going to talk about what's next for Bitcoin um we've got a terrific panel here and so the first question is um Bitcoin dynamism stability for Bitcoin a conservative approach to its Evolution has been prudent Bitcoin can never change or Bitcoin can change a lot over time what is the right set point for Bitcoin dynamism in your minds let's start with Eric well I think the biggest mistake that we all can do uh the mistake that a lot of laser eye Maxes do is to assume that the success of Bitcoin is guaranteed the philosophy of Bitcoin from way back was that we would take a cautious approach be conservative preserve the resilience of the most important chain the chain but incorporate the minimal uh features that are actually useful from other all uh coin chains learn from them and incorporate them back into the mothership if they make sense uh what has happened in the later years is that there's been like a full resistance to change Bitcoin at all basically we've tried to like inspire a belief that Bitcoin is completely fine as it is we'll just use lightning uh we won't need to change the block size we won't need to do anything and we'll still be able to onboard the masses even if that means that 95 of lightning users use custodial wallets which obviously does not align with the True Values of Bitcoin so there is a need for uh some shake up in the culture maybe I'll just leave it at that and let the other speakers try them in so I would say like first of all I'm feeling extremely underdressed sitting right next to Eric right now but uh but with that said I think like the high level thing for me is uh Bitcoin is not a religion it is a software project and like any software project it needs to be maintained it needs to be upgraded every once in a while and you can have the philosophy that very basic simple things will happen at the Bitcoin L1 layer but I do think when taking Bitcoin to even like a billion people or hundreds of million people it's not going to happen at the L1 right so not only that L1 needs to change to that reality slowly carefully but we'll need very very reliable and fast Bitcoin l2s to be able to actually get get to a billion users yeah I think what I would say is uh I'm continually astonished by the Bitcoin communities inability to look at empirical reality they seem to live in their heads and this sort of idealistic world and then they just entirely deny actual facts about the world as they emerge so take lightning lightning is compelling it's cool it has certain use cases but just objectively speaking it's very small it's niche right so as the preordained scaling approach for Bitcoin it's probably not the way right um take the fact that Greg Maxwell invented the idea of a roll-up or at least was one of the forefathers there Roll-Ups empirically have been incredibly successful in ethereum and yet there is virtually no motivation in the Bitcoin Community to create a soft Fork to insert a roll-up right so this is what shocks me clearly the right pacing is is more than once every decade in terms of a change to bitcoin it's been years and years so it needs to be more than once every five years um and we just need to consider actual facts about the world you know I think it's a very simple thing to do but bitcoiners refused to do it yeah so the argument for ossification is that if we introduce a bug on L1 that would be catastrophic for Bitcoin as the base layer of a financial system and so you know there is some Merit to that idea however we have undergone many changes with Bitcoin over the years Tap Root um segwit you know people forget also bip 39 way back in the day made it much easier to back up you know to write your 12 to 24 words down before that it was actually more complicated so you know these improvements to bitcoin have occurred all throughout bitcoin's history so the ossification Camp chooses to ignore all of bitcoin's development history with this idea that if we introduce anything that Bitcoin introduces risk which is true but you know this is open source code it's these these proposals take a long time to go through you know Drive chains for example were talked about for over eight years I'm not advocating for Paul's method of getting Drive chains initiated or reviewed but you know it has been under review and looked at by a lot of people for eight years you know the Bitcoin Community also like so they go okay you can't build an L1 so go build an L2 and you're like cool so I'll take a look at like DLCs Stacks Roll-Ups and they're like no no no I can't do that you can just build on lightning and lightning and every L2 has its own game theoretic and design trade-offs so I think um I want to see kind of a world where we see l2s Blossom and a lot more you know applications that are specific per L2 yeah well well said I think that there is there's a difference between there's a difference between being very deliberate in what you change and losing the capacity for change as a whole and I feel like that is what we are at risk of as bitcoiners right now um and one challenge that many of us foresee in the future is what happens when the block subsidy declines and what happens if there isn't enough chain utilization for fees to compensate for that um it's it's a big problem that we will need to innovate our way out of and so I would love to hear from from the panel maybe we can start with Nick around what are possible solutions around this Challenge and our are there sacred cows dare I say Taylor missions that could even be part of the solution well we agreed we wouldn't spend the whole panel talking about uh till emissions or the decaying block subsidy but the fact is fees appear to be a race to the bottom on blockchains not just on bitcoin look at ethereum like people create new block space as it gets congested and people will move to cheaper block space to transact that's a fact so banking the future of any L1 on sustained fees appears questionable on bitcoin we've seen yes two High episodes of fees in the history of Bitcoin but right now it's virtually nothing so how can we Bank the entire future is this thing on the existence of fees and now look maybe maybe tail mission is not the way right maybe that violates the inherent Bitcoin social contract that's too difficult to digest you know maybe that's not the way clearly something has to happen though something clearly has to happen I would propose uh that maybe they're not a serious proposal but I'd invite people to consider a model whereby you take coins that have moved in 10 years and you just recycle them into the block subsidy I know it's going to make the laser eyes on Twitter very upset but that way you stay within the 21 million cap and you've unlocked it you know basically immobile tranche of coins to fund security so that would be my humble suggestion so I'll jump in here because I think you know at the core premise of this argument is that the declining subsidy you know is not being replaced by fees you know will there be a moment where Bitcoin security becomes inherently weak and then you know to next next point is block space fungible or is block space unique and will demand for Block space increase over time I think Satoshi had a really interesting quote that kind of summarizes the core argument really eloquently where he says there'll either be a lot of transactions or very little and so in Bitcoins ultimate you know when it comes into maturity if a bunch of L2 l2s have bloomed and there's a lot of activity on those those will have demand for Bitcoin L1 block space they'll be high value container ships or container ships your blog post you wrote a long time ago contain not containers but container ships you know L1 transactions on bitcoin will be high value transactions you know so that that's the core part of this argument is how do we increase transactional demand for l1s and that's where I think the l2s give a pretty compelling argument but I do agree with Nick you know there if there are other ways to fix this problem if it if demand for Block space doesn't increase to the level we need to yeah I would I would say that um there's been optimism around some of the new types of of use cases appearing on bitcoin I think for in the stacks ecosystem in the ordinals ecosystem I think we've seen perhaps like different different fee baselodes and and maybe there's just an organic adoption solution to this uh maybe I'd love for for manip and Eric to comment on how is bitcoin's the a new qualitative uptake for Bitcoin through things like ordinals through what you've seen in the sax ecosystem is that enough can we just use it in different ways all right I'll I'll quickly chime in so I think the first of all uh 2023 has been an amazing year for Bitcoin right like I I characterized the time between 2017 when this block size Civil War happened and 2022 as the dark ages of Bitcoin where not a lot of development is happening like you know uh I joked that I would go to like crypto founder dinners and and people who introduced me as this is munib he's the only person building on bitcoin right that was kind of like a joke but pretty sad that you don't want to be the only person building around Bitcoin and 2023 I think there's a mark shift because of ordinals but you'll hear more about from Eric and um actual Bitcoin fees going up there was a 50x or more increase depending on how you measure it and real interest in both capital and new and Founders and developers to come and build in Bitcoin and that is really good for Stacks which is a Bitcoin L2 we wouldn't get into the debate of like how do you define l2s but effectively we want traffic to move to l2s and new types of use cases to be experimented with on l2s and some of those things would live on L1 like ordinals make ton of sense uh to to live on the L1 but we need a booming experimentation ecosystem of roll ups ltus around the Bitcoin economy and I think it's finally happening 2023 was a remarkable year in the Bitcoin Dev community and I'd love to hear more from Eric I think it's uh easy to get uh too honed in on the specific Protocols of like stacks and ordinals and drive chains I think the more important part to understand and recognize is that there's a fight for the soul of Bitcoin going on at the moment between the people that think that success is inevitable and those that feel that we still have something that we have to fight for that we have to fight for Bitcoin success and there are more of us that are starting to appear over the last year there's a so-called Bitcoin season two emerging that to me is one of the most bullish signals for Bitcoin or perhaps the only bullish signal for Bitcoin seeing as the trodden path that the existing Bitcoin movement for the last couple of years has been headed towards does not in any empirical way appear to lead to any material success in any metric we're losing uh we're losing on on how many transactions uh the blockchain settles we're losing on how much value the blockchain settles we're losing out on being able to use Bitcoin as the number one unit of account in transactions there are more people translate uh pricing things in ether than they are in Bitcoin and this is a if you want to establish Bitcoin is actually hard money for the world which could be like this is this is a pretty important thing that we're trying to do Bitcoin might be the only thing that's like a credible threat to the central banking system I mean I love ethereum I love ethereum I think it's a great alternative but if we lose Bitcoin that's a loss I don't think I don't know if the rest of the crypto ecosystem can recover from that loss so fighting for that culture uh having a Resurgence of innovation experimentation on bitcoin is one of the most important things that we can be fighting for and if you do that through Stacks Drive chains and ordinals doesn't really matter let's just get back to innovating let's get back to building and if you think that I look like a clown on stage well I got news for your people we are [ __ ] clowns in this industry look at FDX look at Michael Saylor look at all look at uh swan look at Prime trust look at Fortress it's it's a frankly a clown show in crypto right now so we might as well start dressing the part until we get to the point where we actually put the industry back in fashion and when we get to that point then we can suit up and say that okay success is inevitable so I look exactly like the way that the industry is in in the moment so we are all clowns sadly this is a very hard point to follow Eric um so but I will say one thing Tron does more fees than Bitcoin right now Tron and uh everyone in the west they hate Char they don't even know what it is it does more fees because people do stable coin transactions on Tron where's the stablecoin utility on bitcoin that's where tether emerged tether first emerged on bitcoin on the Omni blockchain that was deprecated recently stable coins were born on bitcoin and now there aren't any I think part of the the means to increase semantic or economic density which is what we're talking about here increase the value payload attached to each byte on the Bitcoin blockchain you need to look at where the world is going and what people are using blockchains for that appears to be stablecoins I know Daniels make fun of me because you know I shouldn't be on here showing stable coins but people appear to really like using stable coins there's two ways Bitcoin could do that one have them settle on the blockchain maybe with lightning the other creates synthetic stable coins based on bitcoin that way you harmonize Bitcoin is an sov but you acknowledge that people do want to use as an Moe something that's dollar denominated I don't see any discussion the Bitcoin Community about this yeah well said I want to chime in on the this Bitcoin culture thing right so one of the most interesting things for me is that earlier Whenever there would be a debate in the Bitcoin Community people would try to create a fork of Bitcoin like be cash is a big example and then really sort of like Corner themselves like all of these Bitcoin Forks have less than one percent of Bitcoin market cap the interesting thing that's happening 2023 right now is there's a fork of Bitcoin culture without forking the chain right so it's the same chain but there's a different Community a community of Builders like we call them Bitcoin builders most people in this panel would associate more with Builders than than the laser eyes but because you're using the same protocol you can't stop the stacks miners from transacting on bitcoin L1 you can't stop people from using ordinals ordinals is actually now doing more traffic on the L1 than normal payment transactions so I think that makes me very optimistic it's a little bit like we aren't going away Builders are here it's a permission that's open network you can't stop us and and there is more momentum around building on bitcoin than the same old sort of like the culture that that you've been hearing about in the last five years I am frankly very optimistic and bullish on on the future of Bitcoin right now I mean Bitcoin builders that was the original culture of Bitcoin you know when we talked about earlier uh the early culture of Bitcoin being you know uh you had rare Pepes the first nfts in the world started on bitcoin on counterparty you know Bitcoin was the first one to have stable coins usdt using Omni you know so Bitcoin actually had a more permissive open culture again bitcoin's early culture is very radical and liberal um these are people buying drugs on Silk Road after all you know the early early era and so I think you know that that early culture is a big culture of building no one got any uh you know no one through shade for for getting into rare Pepes it was kind of cool if you had one and so we're seeing that kind of come back to bitcoin's original culture I think like currently what happened is a very kind of ultra conservative culture and that took over but started to represent a bigger voice and so I I'm very much looking forward to that culture going back to a builder's culture and what's funny is that the builders culture has a very simple premise Bitcoin is permissionless you can't say [ __ ] if I want to build anything I want on it because it's permissionless after all and there's this weird weird vibe from the ultra conservative folks some people refer to them as laser eyes you know Etc where ordinals came about which did not break any rule of Bitcoin and they called those [ __ ] coins which is ridiculous because it's on bitcoin and it's going back to bitcoin's OG culture of embracing the nfts and other things Etc and so what's hilarious is that their authoritarian they're not actually open at all and that sort of culture where they're anti-nfts or anti-ordinals they're also anti-lending and borrowing they call it uh they call it usury I mean I haven't heard that word since I read like medieval history in [ __ ] grade school right so like you know a very Ultra conservative culture and I think that over time you know the moderates who are kind of the builders inherently will win because they don't you know they're permissionless and they allow a bigger Network effect of individuals to come build and and be embraced yeah I I agree and I said at the beginning that I think Bitcoin is systematically underappreciated and a big part of it is I think that every time we have a new crypto cycle the number of people that joined in that cycle dwarfs the numbers that have joined in previous cycles and so the cohort of 2020 to 2022 crypto entrants are the crypto Market and Bitcoin is not they have no institutional memory for Bitcoin as actually being a source of innovation and I think that's the opportunity to resuscitate it because unlike other ecosystems Bitcoin has legitimacy in a way where others are trying to bootstrap legitimacy by as a function of their of their ecosystem that's grown and so I think it's a very different story which which is why I think it's it's deeply underappreciated and uh and why it's going to be very surprising um we touched on layer two's side chains for Bitcoin um I want to start with mini because I want to give him a layup but I want to hear um for other people as well so it let's pick a time Horizon in the in the medium term future let's call it three years what percent of Bitcoin transactions will occur on layer twos or side chains versus player one yeah so I think um let me start off by saying that I'm I'm having a lot of chat with developers or even web2 companies who want to come and start building in web3 and so on and right now the state of the market is that people are either looking at ethereum which realistically means looking at etel2 like polygon you know arbitrum optimums or whatever that is or the second category is the alt l1s this is the solanas and Aptos and avalanches of the world and interestingly there is the third Market which you're talking about is very underappreciated which is building on bitcoin and when we talk to developers and we talk about bitcoin's durability we talk about you know 500 billion dollar of capital mostly just sitting there not being used in D5 not being made productive like people click with that people understand that yes uh the l2s and L1 infrastructure might be not as mature right now but they see the opportunity right so in terms of like again various works are happening but stacks L2 is kind of like one of them but I think I view Bitcoin L1 as a settlement layer almost as a cold storage wallet very high value transactions would happen on the L1 so I will move my BTC occasionally from cold storage and my hot wallet would be L2 whichever one maybe Roll-Ups in the future if we have the op codes on the on the L1 and I think most transactions like most transactions which just happen on the L2 because that's the future that even eth is going towards right everything is pointing to the fact that l2s on each is the future so if most apps are going to live on l2s anyway why not have a stable durable base layer that Bitcoin L1 sort of like already has and maybe make a few tweaks within the next five years to introduce a verification op codes for Roll-Ups and I think then you can talk about ossifying Bitcoin like you know maybe Bitcoin doesn't need to change after that minus the some of the security budget thing which I think by the way uh their Bitcoin that are on Burn addresses and their ongoing Burns happening and you can actually recycle some of those into the supply as well but the fact that we can have that conversation is actually I think step number one who says Bitcoin is an eco-friendly we can be recycling coins because Eric uh manip mentioned verifying zero knowledge proofs on chain as as an option to have ZK roles for Bitcoin will we have ZK roll ups on bitcoin and if so what do we need to make them a reality to make them a reality I think that we need to re-uh frame or recontextualize the entire dialogue in Bitcoin um Nick was saying previously about Gregory Maxwell I don't know how many people in this audience knows about who Gregory Maxwell is but Gregory Maxwell is basically like the almost Dumbledore of Bitcoin okay and a lot of Bitcoin culture today is inspired by the words of Gregory Maxwell in the Bitcoin maximalism uh in the within the Bitcoin maximalist Camp they often derive their social source of um you know moral compass and direction from the words of Gregory Maxwell but if you actually go back to like back in 2013 and look at what Gregory Maxwell was posting on the forums he was trying to engineer how you could make a blockchain compress like if you would try to compress the computation in a blockchain as much as you could you would leverage zero knowledge proofs and he even said that he went to um in 2013 he went to a a presentation by Ellie Ben sassonus the founder of startware and was blown away what uh what they were doing with Starks and it was like this is something that we actually can use to scale Bitcoin um the technology wasn't mature back then in 2013 that it wasn't performant enough it has gotten into a performance stage right now and when uh Gregory Maxwell was like faced with the the zero knowledge uh like ZK Roll-Ups are actually happening on ethereum he didn't say oh this is like stupid and idiotic he said well those guys had the Venture funding from the you know they had the Ico from ethereum so they had more capital and yeah they pulled it off so it was more like sad that he couldn't take full credit on it not saying that this is a stupid idea or anything like that so in order to get this to actually happen on bitcoin we have to recognize that the smartest people in Bitcoin since bitcoin's in an invention uh since its Inception has always been about like how do we actually leverage uh serial knowledge proof both to scale the chain but also to succinctly verify the computation on side chains that is essentially what Ezekiel Roll-Ups are that is what uh when the block stream company was founded what they wanted to do most of all was to use Snorks and Starks to verify so the way that the Bitcoin Community has thought about ethereum is that fine it's okay to want to do smart contracts on a blockchain but you should not run all the computation in parallel every single node that's just fundamentally unscalable what you should do is you should have a way to succinctly verify the computation of a separate system like a side chain that is basically what we wanted to do with Bitcoin and that is possible right now that is actually what the ethereum community is doing so if we go back to the original philosophy that we're supposed to take the best pieces out of the cake and bring it back to the Bitcoin Mothership that future is now that future is actually here that's right so there are groups around a Bitcoin right there there are uh chat groups where people are talking about how do we actually construct this these serial knowledge proof in a sort of in a technological sense that that would fit well with the Bitcoin culture and like its technology that is happening but in order for that to be a real realistic opportunity we need to reframe the story we need to tell the story from where it actually begun so that the people who came into Bitcoin at 2020 and thought that the only thing you were supposed to do was to buy Bitcoin and hold it and then it'll go to stock to flow model they go to a billion uh we need to like recalibrate them and actually point to those original thought leaders like Gregory Maxwell and said that this is the journey that we're actually on like we are not the people here on this there's we are not the people that are coming in and say hey guys let's change things up let's change change things up it's the Bitcoin maximalism Mists are the true tourists and Bitcoin they are the ones like that sort of invaded here set up camp uh and and took up all this space but sort of the original Bitcoin Community are a bunch of people that always wanted to do this since the very beginning sorry that was a very long-winded answer well said and I think there is a there is a good argument that adding an opcode to verify proofs on chain could be a balance of a minimal upgrade to the chain that allows maximal extensibility in a way that doesn't compromise the ideals behind having a really stoic and solid chain underpinning everything we do I want to shift gears a little bit because we are we're close to time here and I want to talk about bitcoin's Milestones um I think that we I could make the case that that nation-state adoption of Bitcoin was the biggest Milestone that it's achieved thus far Nick what's the next milestone for Bitcoin uh I mean look I wish we had uh better nation states adopting us but uh honestly I think Ezekiel roll up uh op code soft Fork would is one of the most critical things that needs to happen in Bitcoin now it's an easy win it's not very controversial or it ought not be controversial um and it unlocks a huge design space it's an unambiguous massive technological innovation that has been proven on ethereum if the bitcoiners are true to their original vision of bringing the best Innovation from the altcoin space then they'll do this so for me that would be proving the Bitcoin can continue to upgrade itself that's the number one most important thing how about you Dan milestone for Bitcoin that's a tough question um for me with my professional background I do growth marketing user acquisition so naturally new Adoption of Bitcoin is something I care about deeply I think the more speculative it is undeniable that bitcoin's primary adoption Loop is from the speculative Cycles in 1317 and 2021 this is the objective reality it did not come from people buying [ __ ] coffees in Venezuela it came from people speculated in trading mainly in Asian Western and European markets that's important to highlight because a lot of people don't find that as utility but speculation is the initial utility that brings and pulls people in even Satoshi hypothesized this before Bitcoin is worth a penny those speculators the ones that stick around become the hodlers because they truly understand and they're educated about Bitcoin and that's why there's a floor in the bear Market is that there's True Believers so speculation is how they come in and then they stick around for the sound money Bitcoin only has very few speculative games it just has spot trading and what I noticed at nft NYC was a lot of folks you know buying a you know buying an NFC for 0.1 each and flipping it for 0.3 and they had no idea how eth worked they had no idea about the monetary policy but that's how they got introduced to bitcoin or eth and what I realized is is that's the same mechanic of people getting introduced to bitcoin through spot trading and so the more speculative games through ordinals the more nfts we have the more options Futures uh defy on top of Bitcoin that is the next milestone for Bitcoin is bringing Define bringing it back to bitcoin because it brings those speculative games back to bitcoin which brings about greater adoption in a bull run yeah well well said and and I think what you've heard is that what's next for Bitcoin coin it's not about who buys it next it's about can we open a new chapter for how Bitcoins used what's done with Bitcoin in the shape of the Bitcoin ecosystem overhaul um uh let's applaud the panel here they've done a great job and uh thanks guys