WEBVTT 00:00.000 --> 00:05.060 What are the differences between Bitcoin Cash and the Lightning Network? 00:06.880 --> 00:11.580 Well before we get into that, let me just talk about why I think that I am a good person 00:11.580 --> 00:14.540 to make a video on this topic and 00:15.480 --> 00:18.820 Before I even do that. Let me just say again. I'm in Japan right now 00:18.820 --> 00:25.960 In case you are curious Alex. I work. I have a job that I have to do which is why I travel 00:27.000 --> 00:28.880 But yeah, hey Alex. Good to see you man 00:30.000 --> 00:35.960 I'm kind of ribbing them a little bit. But yeah, this is Japan. It's Uji. It is absolutely beautiful here 00:35.960 --> 00:40.820 It's a rainy day in April right now. I'm gonna be going to the grocery store 00:41.560 --> 00:47.880 And doing some cooking tonight, but I figured I would jump on a little walk and talk vlog talk about lightning network 00:47.880 --> 00:52.740 And talk about Bitcoin Cash some of the similarities and differences between them 00:54.120 --> 00:54.640 So 00:56.660 --> 00:59.060 Why am I a good person to talk about this? 00:59.660 --> 01:06.220 Well first off I have spent extensive time using lightning and using Bitcoin Cash 01:07.240 --> 01:12.550 As you guys have seen in my YouTube channel. I have spent a 01:13.220 --> 01:15.480 significant amount of time in 01:16.340 --> 01:17.360 El Salvador 01:18.620 --> 01:20.680 Where lightning network was used 01:22.200 --> 01:22.800 for 01:22.800 --> 01:23.480 custodial 01:24.420 --> 01:25.020 apps 01:25.640 --> 01:28.140 That pretend to be lightning but actually aren't 01:28.900 --> 01:34.960 Such as Chivo which I've used extensively, but all of these things I've used and played with and 01:36.600 --> 01:43.100 Bitcoin Cash of course I have used and actively used today. In fact, I pay some of my staff 01:43.100 --> 01:45.000 with Bitcoin Cash 01:45.640 --> 01:50.240 So it's a cryptocurrency that I very much enjoy using I very much like 01:50.820 --> 01:54.580 Because frankly it just works and it works the way that money should 01:55.660 --> 01:57.840 All right, so I 01:58.500 --> 02:00.160 Should also be transparent on 02:01.600 --> 02:04.320 Why I am not a good person to make this video 02:05.940 --> 02:10.640 So the reason is I have not personally run a lightning node or a Bitcoin Cash node 02:11.380 --> 02:14.400 I have not mined Bitcoin Cash. I have not mined Bitcoin 02:15.320 --> 02:16.980 But maybe that's something I do in the future 02:17.740 --> 02:23.500 But I just want transparency on that and I actually to be honest, I think that's a good thing 02:24.040 --> 02:26.140 In a way because for me 02:27.300 --> 02:28.120 I'm a user 02:28.680 --> 02:33.820 I'm not technical and part of the reason that I started making videos on my channel about this topic 02:33.820 --> 02:39.880 Was to show cryptocurrency and Bitcoin being used across the world from the perspective of someone who actually uses it 02:40.380 --> 02:43.840 It's very easy. Especially a lot of people who are into Bitcoin 02:44.420 --> 02:46.480 Who get so into the technical side 02:46.980 --> 02:49.140 They never actually look at what it's like for the end user 02:50.580 --> 02:57.380 This is especially true in lightning where so many people in lightning are these engineers 02:58.160 --> 02:59.740 that kind of ignore 03:00.960 --> 03:06.460 How people actually use the coin and why it's a problem and why business people 03:07.060 --> 03:11.320 Like me don't use lightning and can't use it because it's not a good solution 03:12.140 --> 03:17.800 From a user experience point of view, so let's compare and talk about some of the differences between the two I 03:18.940 --> 03:24.020 Would call them coins lightning is not a coin. It's more like the Bitcoin equivalent of fiat 03:24.540 --> 03:30.360 It's like crypto fiat. It's an IOU token, but yeah, I made some notes, so let's take a look 03:30.360 --> 03:34.640 All right, so let's talk about the first which is just usability since I kind of mentioned that already 03:36.420 --> 03:41.160 So I like I've said I've been in El Salvador and I've used lightning 03:41.760 --> 03:45.980 In fact, I had a problem with lightning so I got on a phone call with 03:45.980 --> 03:47.540 serious lightning user 03:48.240 --> 03:52.480 in fact, this guy is a lightning node operator who's extremely technical and 03:53.400 --> 03:55.560 at that time he was being friendly with me because I was 03:56.360 --> 04:00.220 Very open to having my mind changed about lightning in Bitcoin 04:01.120 --> 04:06.780 So to his credit he did a pretty good job in trying to help me and trying to work out some of the problems that I 04:06.780 --> 04:10.460 Was having with lightning and of course I was documenting everything that was going on 04:11.320 --> 04:17.020 While I was in El Salvador while I was on a live call with him lightning kept failing and he just said well 04:17.020 --> 04:21.720 I don't know so go ahead and try scanning this code and see if you can send money to it 04:24.200 --> 04:28.080 The app is so comically slow, it's so slow 04:31.780 --> 04:34.160 Oh, okay, so try sending five dollars 04:34.880 --> 04:36.720 It's not working is it it can't 04:36.720 --> 04:42.400 All right, so there you go. He is not able to send Bitcoin to my wallet does not work 04:42.400 --> 04:50.640 So that is sort of the first difference between Bitcoin cash and lightning which is reliability. I 04:50.640 --> 04:55.840 Have used Bitcoin cash for many transactions many places around the world 04:56.800 --> 04:59.160 online many situations and 05:00.100 --> 05:06.180 In every single case I've ever used Bitcoin cash or Bitcoin for that matter 05:07.600 --> 05:09.240 I've never had a payment fail 05:10.380 --> 05:10.860 never 05:12.000 --> 05:15.900 Which logically makes sense for money if you have money 05:16.620 --> 05:22.020 Let's say that you go to your local convenience store and you want to buy a bag of chips 05:22.680 --> 05:27.080 You open your wallet and you take out a dollar bill and you hand it 05:27.900 --> 05:29.520 To the guy right 05:29.520 --> 05:30.420 Hey 05:31.000 --> 05:32.020 Imagine you do that 05:32.020 --> 05:38.680 But a percentage of time the dollar bill just like teleports out of your hand and back into your wallet 05:39.700 --> 05:44.440 Like that that's a logical but it doesn't make any sense money can't do that money 05:44.440 --> 05:48.300 You can't like fail to give money from one party to the other 05:49.020 --> 05:50.780 Usable money doesn't fail 05:51.360 --> 05:56.620 Otherwise, it's not usable money needs to have a 100% transaction rate 05:57.520 --> 05:59.620 It's like in terms of success a 06:01.400 --> 06:07.680 100% of the time I want to give someone money that money needs to go to them without magic 06:08.440 --> 06:10.860 stupidity happening with Bitcoin cash 06:12.300 --> 06:19.520 That rate is a hundred percent even with Bitcoin BTC even though it's expensive that rate is 06:19.520 --> 06:22.460 100% as it should be 06:23.660 --> 06:26.000 Lightning on the other hand is not 100% 06:26.960 --> 06:28.280 Lightning on the other hand 06:28.280 --> 06:32.040 Not only is not 100% but in some cases 06:33.140 --> 06:35.660 It actively has a lower 06:36.640 --> 06:40.540 percent success rate the more money you're transaction transacting 06:42.180 --> 06:46.300 So if I try to send someone 50 cents, there is a probability that it will fail 06:47.480 --> 06:51.260 If I try to send someone $10 there is a higher probability will fail 06:51.260 --> 06:56.360 If I try to send someone $1,000 it has an even higher probability of failure 06:56.620 --> 06:57.540 And so on 06:58.080 --> 07:01.540 In some cases the probability of failure might be so high 07:02.900 --> 07:05.500 That it is not even worth sending 07:06.540 --> 07:08.160 Now the reason for this is technical 07:08.940 --> 07:13.640 It's because you need to have liquidity between people you're sending payments to and 07:15.200 --> 07:16.800 The higher amount of money you want to send 07:17.660 --> 07:22.840 The higher amount of liquidity is required for every party that your money is going through 07:22.840 --> 07:30.000 Why this is stupid is because for businesses who want to use lightning to transact large amounts 07:31.320 --> 07:34.380 You have less reliability the higher the amount 07:35.000 --> 07:39.800 But actually businesses want to have higher reliability the larger the amount 07:40.400 --> 07:47.320 If I'm selling my house, so my house is houses worth $500,000. I don't want to spend days or weeks 07:48.080 --> 07:49.020 looking for 07:49.920 --> 07:50.920 reliable channels 07:52.840 --> 07:55.500 I don't want to risk opening a node 07:57.360 --> 07:58.120 With lightning 07:58.800 --> 07:59.980 To send that money 08:00.680 --> 08:04.700 With a party who opens a node and they have to have the liquidity enough money to open that node 08:04.700 --> 08:08.680 They have to have a $500,000 to I have to have $500,000 to open it 08:08.680 --> 08:15.360 Then we transact and then God forbid something happens with my computer and my node goes offline and the watchtower 08:15.360 --> 08:16.460 Towers not trusted 08:17.260 --> 08:20.080 That's a whole nother topic. By the way, we're gonna get into this video watch towers 08:21.020 --> 08:27.000 The point is that things can go wrong with lightning in payments, especially in higher amounts 08:27.900 --> 08:29.000 That is not okay 08:30.260 --> 08:31.020 Kai you do 08:31.560 --> 08:32.040 frog 08:32.800 --> 08:33.280 so 08:34.200 --> 08:36.180 Not good not good at all 08:36.820 --> 08:44.640 With Bitcoin cash it works. It works the first time. It works the last time it works at $1.00. It works at $100,000 08:44.640 --> 08:49.380 It works and it works and it works and it works now if you're smart 08:50.080 --> 08:54.020 You're gonna watch this and say all right all that's true 08:54.020 --> 08:59.240 But to be fair you would never use the lightning network to sell a $500,000 house 09:00.640 --> 09:04.740 Right you'd only use lightning for like buying coffee or cheap 09:05.600 --> 09:07.480 transactions and 09:07.480 --> 09:09.020 You are completely wrong 09:10.120 --> 09:14.300 You are completely wrong and the reason is fairly simple 09:15.740 --> 09:21.060 Let's assume that the writers or the writer of the Bitcoin standard 09:21.720 --> 09:24.500 Which is probably the world's most popular book on Bitcoin is 09:25.440 --> 09:26.200 accurate in his 09:26.780 --> 09:28.560 belief that in the future 09:29.340 --> 09:37.340 Bitcoin transactions are going to be like millions of dollars on the base layer to send Bitcoin will cost hundreds of thousands of 09:37.340 --> 09:39.660 dollars or even millions of dollars where it's as 09:39.660 --> 09:48.040 Difficult to send money or as expensive I should say to send money on Bitcoin as it is to you know have an oil tanker 09:49.040 --> 09:55.360 Send oil across the ocean in that case. I'm sorry, but you're not going to be selling a $500,000 house 09:57.080 --> 09:57.640 on 09:58.300 --> 10:00.080 Bitcoin with Bitcoin 10:00.620 --> 10:07.000 It's going to be too expensive even a hundred thousand dollar transaction fee is gonna be too expensive one fifth of the house 10:07.000 --> 10:08.400 sale you have to pay 10:08.940 --> 10:11.000 To transact the money that doesn't make sense 10:11.000 --> 10:17.600 So you are going to be using lightning if lightning is the solution that people use in the future and in that case 10:17.600 --> 10:19.740 You're going to be using lightning 10:22.080 --> 10:28.860 Using custodians assuming there's any custodians that have that kind of liquidity and this is the big problem 10:30.380 --> 10:33.300 Is we can't have a solution for the future of money 10:34.380 --> 10:37.520 That requires huge fees to send 10:38.460 --> 10:43.560 And the lightning network is not reliable to handle large 10:44.160 --> 10:44.580 payments 10:44.580 --> 10:46.900 And really any payment 10:47.640 --> 10:48.040 reliable 10:49.280 --> 10:52.620 You know, there are many people on lightning who talk about sending 10:52.620 --> 10:58.260 Money on lightning multiple times to try to hope one goes through. I've seen tweets about it 10:58.260 --> 11:02.360 Money cannot fail to be transmitted and received 11:03.980 --> 11:09.280 That's a logical next big difference between Bitcoin cash and lightning is 11:09.960 --> 11:11.360 trusted third parties 11:12.380 --> 11:15.020 With Bitcoin cash, you can use it 11:16.720 --> 11:21.020 You can have Bitcoin cash and you can send it to other people and you don't need banks 11:21.020 --> 11:27.100 You don't need middlemen. You don't need people who observe and watch to make sure everything's fair 11:27.760 --> 11:30.120 You don't need government intervention 11:31.200 --> 11:32.200 You don't need 11:32.980 --> 11:33.920 central banks 11:35.060 --> 11:37.160 You don't need an account. You don't need a phone number 11:37.780 --> 11:44.860 You can just have your Bitcoin cash and you can send it to who you want when you want without having any 11:44.860 --> 11:46.860 One else involved. Okay 11:47.560 --> 11:49.640 With lightning all of a sudden 11:50.640 --> 11:52.520 That doesn't ring true anymore 11:54.380 --> 11:59.000 And there's a few ways that lightning fails in that regard. Let's talk about a few 12:00.120 --> 12:05.280 Let's talk about the least dangerous of all. Okay, the least problematic I'd say which is if I have money 12:05.760 --> 12:09.160 And I want to send money to you and we don't have a channel that's open 12:09.900 --> 12:12.480 We need to have someone in between us a 12:13.580 --> 12:20.700 Third party you could say a trusted third party you could say that I send the money to him and he sends the money to you 12:22.940 --> 12:24.680 That's not that big of a deal 12:25.660 --> 12:26.060 unless 12:27.840 --> 12:28.640 you are 12:28.640 --> 12:36.640 Relying on that person and that person doesn't like you for example, let's say you're an El Salvador and you're someone who has a wallet down there and 12:38.180 --> 12:39.300 the primary 12:40.080 --> 12:46.920 Note operator decides that you have the wrong politics and they're not going to transmit your payment outside of El Salvador 12:48.700 --> 12:51.260 Now this is actually more real than you might think 12:52.180 --> 12:56.240 The reason is because the whole lightning model incentivizes 12:56.880 --> 12:57.920 hub-and-spoke 12:57.920 --> 13:03.080 Situations where you have a primary hub a primary lightning node and all the smaller 13:03.840 --> 13:06.880 Individuals transact from that is the future we're moving towards 13:08.120 --> 13:10.420 With lightning so in that case 13:11.600 --> 13:14.040 You have to rely on a trusted third party 13:15.380 --> 13:19.400 Now personally one of the reasons why you get into crypto or Bitcoin in general is 13:20.120 --> 13:23.380 Because you don't have to rely on third parties custodians 13:24.740 --> 13:27.180 You don't have to rely on other people and 13:28.640 --> 13:32.500 With lightning there is going to be some reliance even in the least 13:33.120 --> 13:33.480 problematic 13:34.900 --> 13:38.920 Example where you have just the middle man who's doing the transaction between the two nodes 13:39.380 --> 13:43.500 And he's not evil and he's not trying to silence you. He's just a business person looking to make money 13:45.160 --> 13:49.560 Okay, fair enough not that big of a deal but still kind of weird you have to trust a third party 13:51.440 --> 13:55.240 Now I'd say that this is the least problematic because in theory not in practice 13:55.240 --> 14:00.200 But in theory you can open a node and that person you want to transact can open a node and you can do stuff between yourselves 14:00.200 --> 14:07.500 But again, that's in theory and the problem with lightning in my opinion and the people who support lightning is that 14:08.220 --> 14:13.580 They're all theory mongers that aren't based in the real world. The real world is that that is not how it happens 14:14.400 --> 14:17.080 The real world is most people do not have the 14:18.020 --> 14:19.280 Money to open liquidity 14:19.900 --> 14:22.620 Especially if they're in El Salvador and they're on lightning 14:23.620 --> 14:26.080 And they do not have a technical ability 14:26.780 --> 14:33.240 Blah blah blah blah, okay, let's get up to more challenging versions of lightning in terms of its 14:33.240 --> 14:36.160 ability to not work with the third party which is 14:36.740 --> 14:37.540 Watch towers 14:38.280 --> 14:43.280 So with lightning if I open a channel and you open a channel and we transact 14:45.180 --> 14:47.060 One of us either of us can close the channel 14:48.600 --> 14:49.920 And that's all well and good 14:51.660 --> 14:57.540 Problem is that when I close the channel it's not closed with necessarily the right amount 14:57.980 --> 14:59.060 So put it like this 14:59.060 --> 15:02.320 let's say that we transact back and forth we open a channel and 15:03.160 --> 15:07.980 It's for ten dollars and I send you nine dollars. So now you have nine dollars and I have one dollar 15:08.460 --> 15:12.380 Well, I can close the channel and say that I actually have ten dollars 15:12.380 --> 15:14.420 Because I open the channel of ten dollars 15:15.060 --> 15:16.220 Well, that's a problem 15:17.400 --> 15:19.780 Because if I do that I just stole your money 15:21.140 --> 15:25.980 Now there's ways at the lightning that work tries to reduce that for example if 15:26.780 --> 15:27.220 you 15:27.700 --> 15:32.620 Say hey actually you owe me nine dollars, and that's the most recent and you 15:33.720 --> 15:37.900 Tell that to the network within two weeks then not only do you get the nine dollars? 15:37.900 --> 15:45.020 But actually I get punished I get punished so you get all the money in that channel if I was dishonest 15:45.020 --> 15:47.460 the problem is I 15:48.140 --> 15:53.740 Have no real incentive to be honest if I already was gonna have no money anyway from that channel when it closed 15:55.340 --> 15:58.520 So the solution to this is watch towers 15:59.360 --> 16:04.820 Watch towers are other notes that watch our notes make sure that our notes are being honest 16:05.420 --> 16:09.640 Now you have to trust a watch tower note that our notes are being honest 16:10.660 --> 16:14.900 Where this gets really problematic is again if we're talking about large amounts of money 16:15.900 --> 16:19.140 And you have to trust a third party 16:20.640 --> 16:28.500 You see where this is going the whole point of Bitcoin coin is not trusting third parties and if the watch tower node 16:29.320 --> 16:33.140 Doesn't like you because you have the wrong political opinion. That's not good 16:33.140 --> 16:37.700 Bitcoin should be trustless. You should not have to rely on anyone 16:37.700 --> 16:41.820 So I could have even gotten into more details about how if your computer goes down 16:43.200 --> 16:48.500 Then it's even impossible for you to catch the other person being dishonest in their note 16:49.300 --> 16:53.520 Projecting the wrong putting out the wrong information again. You have to rely on a watch tower 16:54.320 --> 16:56.460 Which again is all about trusting a third party 16:58.000 --> 17:02.100 Okay, so not good not a good scenario 17:03.320 --> 17:07.420 Finally and the most important when it comes to lightning network is 17:09.140 --> 17:12.830 Liquidity if you are an El Salvador and you make 50 cents a day and 17:13.800 --> 17:15.600 Bitcoin is the money of the world 17:16.600 --> 17:20.600 And you have to use Bitcoin you can't use the odd or any other system 17:22.880 --> 17:27.120 You've got a problem now because if you want to use your money and you don't have much money 17:27.120 --> 17:32.540 To open your own note is extremely expensive. You have to free fund the liquidity for it 17:33.140 --> 17:36.660 Or you have to do what people will actually do 17:37.340 --> 17:39.020 Which is rely on custodians 17:41.280 --> 17:42.660 Now here's the thing 17:42.660 --> 17:47.220 There is a difference. There's a very important difference 17:48.060 --> 17:50.540 between relying on a custodian 17:51.680 --> 17:53.620 Because you can afford 17:54.640 --> 17:55.440 financially 17:57.080 --> 18:01.200 To be independent from relying on a custodian 18:02.300 --> 18:04.700 Because you are a newly user and 18:07.040 --> 18:11.020 You don't technically know how not to rely on a study you understand why that's different 18:13.280 --> 18:19.880 That is a massive massive difference the truth is most people in crypto whether it's Bitcoin cash or Bitcoin or whatever 18:19.880 --> 18:21.540 will not want to 18:22.340 --> 18:28.220 Use non-custodial they don't want to have to worry about losing their keys, you know, whatever and that's fine 18:30.280 --> 18:35.440 That's okay, that's choosing a more simple streamlined solution because 18:36.820 --> 18:38.360 It's technically easier 18:39.880 --> 18:45.060 And you have lower risk of losing it although you have higher risk of a custodial stealing 18:46.120 --> 18:47.780 But lightning is different 18:48.380 --> 18:53.820 Because unless you have the money to seed your liquidity, which most of the world does not 18:55.080 --> 19:00.580 You have to use a custodian even if you don't want to even if you technically can do it yourself 19:01.840 --> 19:03.160 You don't have the money to 19:04.400 --> 19:09.420 That's a different dynamic that's a predatory dynamic totally different situation 19:10.780 --> 19:12.120 And that is why 19:12.820 --> 19:20.200 Lightning the Bitcoin cash are totally different lightning almost guarantees that the most vulnerable people must use 19:20.780 --> 19:21.720 custodial solutions 19:22.500 --> 19:24.340 It's exactly what you see in El Salvador 19:24.860 --> 19:31.060 The most vulnerable people down there that use lightning or use Bitcoin are relying on the El Salvadoran government 19:31.640 --> 19:32.280 which is 19:34.800 --> 19:35.680 Just insanely 19:36.920 --> 19:41.360 Problematic in so many ways and you can watch my documentaries to kind of figure that out 19:42.520 --> 19:46.640 I'm gonna go and get some dinner, but uh, we'll keep talking after I come back up 19:46.640 --> 19:49.920 I got a really nice meal. I'm doing it niku-jaga 19:50.420 --> 19:55.720 Just like a potato meat stew. So I got Wagyu beef potato 19:56.620 --> 20:03.980 onion garlic a whole bunch of stuff and I also got a snack while I walk which is a tofu bar. I 20:03.980 --> 20:06.800 Know it sounds weird, but it's absolutely delicious 20:07.760 --> 20:11.560 I'm probably gonna offend some Japanese by eating it. You're really not supposed to eat walk 20:13.700 --> 20:15.900 And me blogging at blogging at the same time 20:17.040 --> 20:17.600 Right 20:18.180 --> 20:21.540 Let's talk next about scalability the difference between 20:21.540 --> 20:29.000 Lightning network and Bitcoin cash in terms of scaling and onboarding the world to a new form of money that separates 20:29.960 --> 20:35.440 The state from money just like we separated church and state let's separate state and money 20:35.440 --> 20:39.340 So can the lightning network do this can Bitcoin cash do this? 20:39.340 --> 20:42.000 Well, let's answer the question very very simply 20:42.660 --> 20:48.660 Yes, Bitcoin cash can do this Bitcoin cash can scale to be the money of the world fairly easily 20:50.540 --> 20:51.180 and 20:52.020 --> 20:52.660 Bitcoin 20:52.660 --> 21:02.440 What about the lightning network? Well, let's answer that question with looking at some very specific numbers numbers that are 21:03.920 --> 21:07.180 Coming from pro BTC lightning 21:08.040 --> 21:11.980 Proponents these aren't from people who disagree with lightning. All right, first off 21:13.080 --> 21:18.480 To get people on to lightning you actually have to get them on to lightning and that's a problem 21:18.480 --> 21:21.820 The reason that's problem is because there's a lot of human beings on planet earth 21:23.160 --> 21:28.700 As you might be surprised to learn and the Bitcoin network has a one megabyte 21:29.300 --> 21:32.040 More or less one megabyte lock cap 21:32.040 --> 21:36.000 So to get people on to lightning. We need to fill up those blocks 21:36.000 --> 21:42.500 So here's what the math breaks down and tells us if 90% of every bit point 21:43.240 --> 21:48.440 Every 10 minutes is used to onboard people onto Bitcoin's lightning network 21:49.060 --> 21:51.460 We would be able to get approximately 21:51.460 --> 21:52.880 0.85 21:54.340 --> 21:58.100 0.82% of the world's population onboarded every year 21:58.700 --> 22:00.360 About 66 million people 22:01.660 --> 22:03.880 Hmm now Bitcoin network 22:04.720 --> 22:11.900 Has to be renewed. So what that means is that by the time we get through 0.82% of the population 22:14.160 --> 22:15.200 After one year 22:16.400 --> 22:19.740 Lightning that work is basically renewed nodes go down and go back up 22:19.740 --> 22:24.100 Everything gets refreshed and we would lose everyone on the Bitcoin network and have to get them back on 22:24.880 --> 22:25.360 meaning 22:26.500 --> 22:31.760 We can only have 0.82% of the world's population on the lightning network at any given time 22:31.760 --> 22:35.740 This is a limitation that's in the Bitcoin lightning white paper 22:35.740 --> 22:40.440 This is something that they knew about from the beginning. This isn't a surprise at all 22:41.880 --> 22:43.680 That's a problem they knew 22:43.680 --> 22:49.600 So how big would the Bitcoin blockchain need to be to accommodate people the actual world using lightning? 22:52.680 --> 22:55.220 144 megabytes block size 22:56.100 --> 22:57.800 133 pretty close 22:58.560 --> 23:02.360 So we would have to raise the block size limit of Bitcoin 23:03.580 --> 23:10.420 133 times to get it functional enough that the lightning network could be used. All right, I'm in Fukuoka 23:11.300 --> 23:14.800 and the video is jumping at this part because I 23:15.520 --> 23:17.500 lost footage of 23:17.500 --> 23:23.140 One of the points that I included in my list of Bitcoin cash first lightning. So let's get back into it 23:23.140 --> 23:24.660 Here is the next topic 23:24.660 --> 23:29.000 Which is cold versus hot wallets 23:29.620 --> 23:31.380 in lightning versus 23:32.020 --> 23:33.160 Bitcoin cash 23:33.160 --> 23:38.900 This is an important one. This might be the most important topic of the entire video 23:38.900 --> 23:43.860 Even though it seems not that important. So first off, let's define what I mean 23:44.760 --> 23:47.600 What is a hot wallet? What is a cold wall? 23:48.300 --> 23:50.780 put simply a hot wallet 23:51.500 --> 23:53.840 It is sort of like having a wallet in your pocket 23:54.980 --> 23:57.020 Okay, I will wall it with me here 23:57.560 --> 24:00.540 Any cash that's in that wallet is hot 24:01.820 --> 24:05.740 Okay, I lose my wallet if I drop it if I get picked pocket that money is gone 24:06.540 --> 24:12.480 Now money that is in my safe at home. That would be a cold wall. That's harder to access 24:12.480 --> 24:14.520 It's not something I always have on me 24:15.140 --> 24:18.040 So it's the same thing with trypto 24:18.040 --> 24:22.520 So when you have your phone or your laptop that's connected to the internet 24:23.100 --> 24:28.660 That is a hot wallet any money that's on your computer because it can be more easily 24:28.660 --> 24:30.800 targeted by hackers 24:33.000 --> 24:33.520 Now 24:33.520 --> 24:39.380 Cold wallet is where you do not have a device that has the money on it connected to the internet 24:39.380 --> 24:45.440 There are some other examples, but that's sort of a simple way to explain it 24:46.120 --> 24:49.920 Now, I know what you're thinking. Hey, Mark. We're in 2024 2025 24:51.380 --> 24:53.040 Our hackers really a problem 24:54.180 --> 24:54.700 Yes 24:56.460 --> 24:58.980 Yes, yes, yes, and yes 24:59.840 --> 25:06.980 So here's a very specific and real example of exactly why it's such a problem to have your money on a wallet 25:08.420 --> 25:09.980 So I had my 25:11.380 --> 25:15.680 Laptop with me and I went to open it and open my wallet 25:17.380 --> 25:18.720 Exodus at an airport 25:19.500 --> 25:21.960 public airport Wi-Fi and 25:21.960 --> 25:25.180 A hacker got into it and what makes it so scary is 25:26.200 --> 25:30.280 Not only did a hacker get into it, but they managed to get into my treasure treasure is like a key 25:30.280 --> 25:34.200 You can't send money out of your device unless you plug the key into your computer 25:34.660 --> 25:36.280 So I had plugged my key in 25:37.120 --> 25:39.720 And when I went to send the money just a small amount 25:40.680 --> 25:45.820 It makes you confirm twice so I confirmed the first time and then when I confirm the second time you have to hold it down 25:46.720 --> 25:48.060 And wait a couple seconds 25:48.780 --> 25:51.680 The second I touched it the second time and held it down 25:52.440 --> 25:57.060 The address and the amount changed to be my full balance to the hacker's address 25:57.520 --> 26:00.500 And I was able to get my finger off quick enough that didn't send 26:01.320 --> 26:03.720 And guess what I have it on camera 26:03.720 --> 26:09.920 And you're gonna see just how incredibly dangerous it is to have any significant money 26:10.740 --> 26:17.360 on your hot wallet such as a phone a laptop anything that's connected in any way to the internet it is 26:17.920 --> 26:25.360 brutally important that you understand just how dangerous this is and how at risk any device connected to the internet is no matter 26:25.360 --> 26:30.480 What precautions you take even like a treasure or key we think 26:30.480 --> 26:33.020 Mark's wallet has been compromised 26:33.020 --> 26:35.680 so he has a treasure and 26:36.640 --> 26:38.680 it's connected to his computer and 26:39.540 --> 26:42.440 When he attempts to send one bch 26:43.120 --> 26:44.660 Right at the very last screen 26:45.240 --> 26:48.200 it switches the address and 26:49.400 --> 26:54.660 The amount right at the last prompt and we're gonna try to capture this on video 26:54.660 --> 26:56.540 So here's the address 26:56.540 --> 27:02.680 It ends in tqa5 go ahead and try to send one bch. Okay, let's send 27:04.640 --> 27:10.920 Send okay, and now okay watch this so soon as I hit the check it's gonna change it watch 27:11.940 --> 27:17.960 There look it changed it look at that one bch turned into that and notice the address is different 27:17.960 --> 27:19.760 So if he hits 27:20.840 --> 27:24.220 Confirm his entire um, that's fucking crazy, bro 27:24.220 --> 27:30.460 So, I mean you saw it firsthand. Can you believe it? That is how risky it is to keep money on a hot wallet 27:30.460 --> 27:35.060 It's no different than walking around a you know more 27:36.040 --> 27:41.860 touristy area of like Rome with your entire life savings in your pocket. It's not gonna end well for you 27:43.800 --> 27:47.760 So here's where this comes into lightning and into Bitcoin cash 27:48.400 --> 27:50.500 With Bitcoin cash you can have cold wallets 27:51.760 --> 27:54.140 Simple you don't have to have a wallet that's connected to the internet 27:54.940 --> 27:55.340 with 27:55.880 --> 28:00.400 Lightning you do with lightning in order for the lightning network to work if you have your own node 28:01.100 --> 28:03.900 Your device has to always be connected to the internet 28:05.500 --> 28:07.500 Meaning it's vulnerable and 28:08.480 --> 28:13.520 If you take it off the lightning network, you are gonna have to pay huge amounts of money 28:14.340 --> 28:15.700 To get it into a cold wallet 28:16.820 --> 28:22.320 Okay, that's why this is so bad if you trust a custodian which we've already gone through in previous points 28:22.320 --> 28:24.960 This isn't a problem, but then you have a bigger problem on your hand 28:24.960 --> 28:28.600 If it's your own money on your own node and your own device 28:28.600 --> 28:33.900 You always are connected to the internet and while good internet practice like not connecting to a public Wi-Fi 28:33.900 --> 28:37.620 Can help it doesn't mitigate all of the problems 28:38.740 --> 28:45.380 This is really really really dangerous and really important to understand that if you have lightning your money will not be as 28:45.380 --> 28:47.120 Secure as if you have it in Bitcoin 28:47.120 --> 28:55.080 But if the fees to send Bitcoin on chain are hundreds or thousands or tens of thousands hundreds of thousands of dollars as 28:55.080 --> 28:58.240 People in Bitcoin want them to be they want the fees to be that high 28:58.760 --> 29:05.540 Then your money will always be at risk unless you trust a custodian and guess what that's even more risk 29:06.120 --> 29:08.120 Okay, it is not good 29:08.800 --> 29:09.940 horrible horrible horrible 29:09.940 --> 29:11.380 this alone 29:11.920 --> 29:14.160 This point alone makes lightning 29:14.940 --> 29:22.940 Completely irrelevant for being a substitute for money. Okay, let alone all the other points with lightning 29:23.980 --> 29:26.740 You will rely on centralized nodes 29:27.520 --> 29:32.520 Because you need to have liquidity. So if I want to send money from me to you 29:34.320 --> 29:41.380 Especially if it's a significant amount of money, we're gonna have to rely on large payment nodes the same as like 29:41.380 --> 29:44.400 The lightning version of PayPal to transmit that 29:45.440 --> 29:50.880 And that's great and dandy so you realize that large centralized companies like to ban people 29:52.480 --> 29:53.680 Such as PayPal 29:54.500 --> 29:59.580 In stride and all these companies that ban people for having the wrong political views 30:00.340 --> 30:05.160 Or ban people for arbitrary reasons or even non arbitrary reasons. Okay 30:05.820 --> 30:12.000 Banning people off a payment network or what's worse is if any of these large nodes gets 30:13.100 --> 30:19.860 Attacked by a central government which can regulate large companies because you have to understand in order for a lightning to work 30:19.860 --> 30:24.240 You have to have nodes and liquidity and the only people that have enough liquidity 30:24.760 --> 30:31.520 To deal with millions of dollars of Bitcoin being transferred between lots of different people across all the lightning network 30:31.520 --> 30:34.360 going to be large companies that have the 30:34.960 --> 30:35.180 infrastructure 30:35.940 --> 30:39.480 So the nodes don't get down and that way their money doesn't get stolen 30:39.480 --> 30:43.940 Right they have to keep the nodes online all the time and have all the computer infrastructure for that 30:43.940 --> 30:47.600 But on top of all of it. They also need to have the liquid 30:49.020 --> 30:56.900 Bitcoin liquidity to fund it all. Okay, and those are gonna be large very large easily easy to regulate 30:57.660 --> 30:58.100 companies 30:58.860 --> 31:00.860 regulate by the government companies and 31:01.400 --> 31:02.880 When those governments apply pressure 31:03.860 --> 31:11.180 It breaks. Okay, and if one of these large nodes or a few go down through regulation or through 31:13.660 --> 31:19.700 Regulation or through hackers or anything if these large nodes go down the entire payment infrastructure 31:19.700 --> 31:22.420 Of the entire world would collapse 31:22.420 --> 31:27.040 We cannot have a payment system with the vast majority of the world 31:27.580 --> 31:31.380 Has to worry about the infrastructure collapsing because there's no liquidity 31:32.100 --> 31:36.120 Okay, because a centralized node that can ban people and be regulated by the government goes down 31:36.120 --> 31:43.000 It's not decentralized. It's not peer-to-peer electronic cash. It does not solve the problem of scaling 31:43.000 --> 31:46.400 In fact, it makes it makes it substantially worse 31:47.300 --> 31:48.220 So there we go