WEBVTT

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The chronicle of an emancipationist monetary technology subverted to other ends.

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It is painful to watch since we had the chance to free the world.

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That chance was missed, likely hijacked and subverted.

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Bitcoin gained traction from the earliest days and seemed to offer a viable alternative

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path for the future of money.

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At long last, after thousands of years of government corruption of money, we finally

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had a technology that was untouchable, sound, stable, democratic, incorruptible,

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and a fulfillment of the vision of the great champions of freedom from all history.

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That was the vision.

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Alas, it did not happen.

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This 13 years of my life have been spent trying to make Bitcoin and other cryptocurrencies

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the money of the future.

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The technology has the potential to make the world a radically freer and more prosperous

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place and it will end up being one of the most important inventions of all time.

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I have spent more than a decade evangelizing about the benefits of Bitcoin, funded

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numerous startups within the industry, built my own businesses around it, and have seen

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the price increase by more than 6,500,000 percent.

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Yet this book is not a love story and I wish it did not have to be written.

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The project I got involved with in 2011 has been hijacked and changed for the worse.

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Bitcoin was designed to be digital cash, usable in everyday commerce with minimal

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fees and fast transactions.

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And it worked that way for years.

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But today, Bitcoin is thought to be digital gold, not meant for everyday commerce with

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high fees and slow transactions.

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A complete reversal of the original design.

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It's discussed as a store of value with little care for its utility as a payment system.

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Some people even claim that Bitcoin cannot work as a payment system because it does

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not scale.

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These common ideas are simply untrue.

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The reason that Bitcoin is no longer used as digital cash has nothing to do with the

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underlying technology.

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It's because a group of software developers took over the project, decided to change

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its design and intentionally limited its functionality, whether due to

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incompetence, sabotage, or a mixture of both.

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The takeover happened from roughly 2014 to 2017 and it ultimately resulted in

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the network splitting in two and the cryptocurrency industry fracturing into

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a thousand pieces.

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The original design still exists and remains extremely promising, but it no

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longer trades under the ticker symbol BTC.

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Rapid price appreciation, followed by a crash of 80% or more, is a regular cycle

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that has been repeated several times in Bitcoin's short history.

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The volatility makes for good news headlines, since the general public is

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almost exclusively focused on price.

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But for me, Bitcoin has always been more than just a financial investment.

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It's a magnificent tool for increasing the amount of economic freedom in the

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world.

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I think a lot of people are underestimating the way in which Bitcoin and

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the blockchain are going to change the power structures in society in

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general.

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I grew up in the US and I see all these people like, yeah, I nuke

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everybody in the Middle East and kill them all.

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And then they have the former Secretary of State, Madeline Albright, on 60

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Minutes, one of the most popular news shows in the US.

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And they asked her, they said, like, there's reports that more than half

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a million Iraqi children have died as a direct result of US sanctions.

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And she looks back at her with a straight face and she goes, it was

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a really tough decision, but I think that it was worth it.

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Worth murdering half a million kids because of what the government did.

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I apologize for crying, but it just disgusts me from my core when I see

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government people murdering people around the world.

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It's not just theoretical.

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These are real people with real lives and it's real people.

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And Bitcoin has the power to undermine everything they're doing to

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people around the world.

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And I'm sorry for shouting, but it just disgusts me what these

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people in government do.

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And they do it through central banking and through the control of

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the money supply and Bitcoin takes that away from them.

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The early Bitcoin community was filled with eccentric people and unusual ideas.

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I greatly value human freedom and believe individuals should have

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maximum control over their own lives.

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Bitcoin was naturally appealing to me as it was designed to operate

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without a central governing authority.

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People do not have to ask permission to use it.

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There's no Bitcoin central bank that controls the supply of coins.

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And the technology does not recognize international borders.

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Few things have more potential for increasing global freedom than fast,

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cheap, permissionless, inflation-proof digital money.

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In my mind, Bitcoin gets us one step closer to a more technologically

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sophisticated future in which everybody's life is improved.

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Armstrong, the co-founder and CEO of Coinbase,

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captured this sentiment perfectly in an article entitled,

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How Digital Currency Will Change the World.

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By stating, digital currency may be the most effective way the world

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has ever seen to increase economic freedom.

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If this happens, the implications are profound.

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It could lift many countries out of poverty,

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improve the lives of billions of people,

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and accelerate the pace of innovation in the world,

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reduce wars, make the poorest 10% better off,

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overthrow corrupt governments, and raise happiness.

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My enthusiasm quickly turned into evangelism,

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and I was nicknamed Bitcoin Jesus

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for preaching the gospel of Bitcoin to anybody who would listen

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and to plenty of people who wouldn't.

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By 2015, Bitcoin had built up so much momentum

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that it looked unstoppable.

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Prominent companies from Microsoft to Expedia

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were starting to accept it for payment

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and the young industry was growing exponentially.

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The successes started to pile up.

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Venture capital increased.

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Media coverage became positive.

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Bitcoin was on a direct flight to the moon.

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Fast forward to today.

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Despite being a household name,

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Bitcoin has not yet taken over the world.

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In fact, there's a grim truth

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beyond the headlines and price charts.

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The actual usage of Bitcoin has declined since 2018

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and many businesses have dropped it entirely

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as a payment option.

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In times of network congestion,

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the average fee can reach more than $50

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and transactions can take days or even weeks to process.

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High fees, unreliable payments, custodial wallets,

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and less usage in commerce.

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By other metrics than price,

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Bitcoin has not landed on the moon.

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It hasn't even left orbit.

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On its current course,

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Bitcoin will not empower the average person.

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The project has stagnated over the past few years,

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not because of technological failures,

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but because of human failures,

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specifically bad leadership in a flawed governance model.

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The original scalable design of Bitcoin still exists,

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but it's not traded on cryptocurrency exchanges

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under the ticker symbol BTC.

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It's called Bitcoin Cash and is traded as BCH.

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For years, the industry was thwarted

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by the BTC developers until 2017,

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when a new network was created

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to preserve the original vision of Bitcoin

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as digital cash with low fees, fast transactions,

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and without the need for custodial wallets.

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The BCH network is far less well known than BTC,

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but it has already scaled its throughput capacity

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to more than 30 times BTCs

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with plans to scale exponentially into the future.

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The word Bitcoin by itself

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refers to the underlying technology

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that is used on both networks.

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Both Bitcoin Core and Bitcoin Cash use Bitcoin technology

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and share the exact same transaction history

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until they're split in August 2017.

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The Bitcoin Core developers decided to pivot

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from the original design

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while the Bitcoin Cash developers have stuck with it.

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If this technology really is revolutionary,

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then it threatens the power

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of existing financial and political establishments.

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But on the current trajectory, if nothing changes,

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those institutions will assimilate cryptocurrencies

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and neutralize them.

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If Bitcoin is going to make the world a freer place,

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our window of opportunity is closing.

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The industry is approaching two failure scenarios.

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The first would be total capture

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by existing financial and regulatory systems.

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Mass adoption of custodial wallets makes this possible

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as transactions are easily tracked and controlled

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and governments can force companies

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into compliance without difficulty.

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The other failure scenario would be people simply giving up

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and abandoning the vision

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of inflation-proof digital cash altogether.

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I have seen many talented minds and competent businessmen

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prematurely conclude that Bitcoin cannot scale

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because of Bitcoin Core's failure.

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This disillusionment can be avoided

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if people realize that the original Bitcoin technology

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still exists, works well

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and can scale to handle global adoption.

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Bitcoin Core simply pivoted from this design

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before losing faith in blockchain technology.

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Entrepreneurs and developers need to first experience

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the original version.

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I am constantly trying out new cryptocurrencies

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and Bitcoin Cash still provides me

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with one of the best user experiences after all these years.

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To see past the narrative

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and truly understand the difference

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between Bitcoin Core and Bitcoin Cash,

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we must first understand

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how Bitcoin was originally designed.

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Satoshi Nakamoto had many public communications

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about his invention that explained its design.

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Other great minds and engineers that succeeded him,

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like Gavin Anderson and Mike Hearn,

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also explained the Core ideas in a clear manner.

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There's no single agency that processes all the transactions

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or determines the entries of the ledger.

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Instead, it's maintained and updated

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by a decentralized network of computers around the world,

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giving it no central point of control or failure.

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Miners update the ledger

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by bundling transactions together into a block

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and then adding a special proof.

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This proof is a solution to a math puzzle,

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which is so difficult,

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it takes substantial computer power to figure out.

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All over the world,

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there are warehouses filled with specialized machines

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dedicated to solving these puzzles.

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Each one of these machines requires electricity,

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which means it costs money to be a Bitcoin miner.

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Miners are financially rewarded for their services

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with two mechanisms,

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transaction fees and a block reward.

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The block reward is how new Bitcoins are minted.

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Every time a miner adds a block to the chain,

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he's given a small number of new Bitcoins.

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This reward is cut in half roughly every four years.

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Eventually the reward will be negligible,

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which will leave transaction fees

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as the only source of revenue for miners.

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Big blockers see miners as performing

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an essential service in the Bitcoin industry

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by protecting the network from attacks,

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maintaining the ledger

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and processing all transactions.

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Miners frequently invest millions

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or even tens of millions of dollars

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to upgrade to more powerful equipment.

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Bitcoin mining has high investment and maintenance costs.

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Because of this, most big blockers think

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that miners should have the greatest say

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in the development of Bitcoin.

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Blocks themselves are central

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to understanding the different philosophies in Bitcoin

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which can roughly be split into two camps,

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big blockers and small blockers.

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The larger the blocks,

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the larger the transaction throughput of the network

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and the more resources it takes to process each block.

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Small blockers want to keep blocks small enough

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so that anybody can process them.

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Small blockers tend to have a more skeptical

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or even hostile view towards miners

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because miners are the only ones

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that can add blocks to the network.

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They have substantial power

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and could become a systemic threat

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if mining becomes too centralized.

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Large mining facilities also introduce

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a political risk into the system.

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If governments decide to attack, regulate

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or control the biggest miners,

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they might be able to disrupt or control Bitcoin.

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Satoshi Nakamoto described a method

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for simplified payment verification, SPV,

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that allows users to send, receive

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and validate their own transactions with minimal effort.

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For most of Bitcoin's history,

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the majority of wallets used either SPV

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or other similar methods for accessing the blockchain.

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This trend is reversing in BTC

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due to the proliferation of custodial wallets

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but it remains the norm in BCH.

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SPV allows you to validate your own transactions

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while full nodes allow you to validate

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all transactions on the blockchain.

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Arguably the biggest difference between the big block

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and small block philosophies

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is about the role of full nodes.

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Big blockers think that the vast majority

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of activity on the network

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should be between miners and lightweight wallets

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that use SPV or similar technology.

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They think full nodes are only useful in special cases

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where you need to validate many people's transactions

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in a short period of time.

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For example, if you're running a cryptocurrency exchange

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or payment processor.

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Since the network gives no financial compensation

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to full node operators

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and since most people have no need

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to validate strangers' transactions,

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regular users do not have an incentive

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to run such heavy duty software.

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Satoshi was unequivocally a big blocker

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and as he put it,

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the design supports letting users just be users.

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Small blockers by contrast think

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that full nodes are essential to the network.

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They think that users should run their own nodes

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which is why having small blocks is essential

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since the cost of running a node increases

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with the size of the blocks.

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In fact, the primary reason that small blockers

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have claimed Bitcoin cannot scale

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is because big blocks are more expensive

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for node operators.

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Instead of concluding that regular users

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are not supposed to run full nodes,

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they concluded that Bitcoin cannot scale.

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What evidence do we have

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that Bitcoin was purpose built to be a payment system?

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Well, everything that its creator wrote on the subject.

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In addition to the seminal white paper

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that introduced Bitcoin to the world,

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we have hundreds of online forum posts

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and more than 50 public email correspondences from Satoshi.

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They paint a clear vision for the technology.

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Let's start with the white paper released in 2008.

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Bitcoin, a peer-to-peer electronic cash system.

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Satoshi could have called it an electronic store of value,

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if that's what he intended,

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but instead he called it an electronic cash system.

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Next, the very first sentence of the abstract reads,

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a purely peer-to-peer version of electronic cash

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would allow online payments to be sent directly

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from one party to another

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without going through a financial institution.

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Online payments are literally mentioned

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in the first sentence of the paper,

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introducing Bitcoin to the world.

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After the abstract, the introduction begins.

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Commerce on the internet has come to rely

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almost exclusively on financial institutions,

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serving as trusted third parties

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to process electronic payments.

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While the system works well enough for most transactions,

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it still suffers from the inherent weaknesses

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of the trust-based model.

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In the first two sentences of the introduction,

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Satoshi mentions commerce on the internet,

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electronic payments and transactions.

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He continues, completely non-reversible transactions

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are not really possible

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since financial institutions

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cannot avoid mediating disputes.

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The cost of mediation increases transaction costs,

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limiting the minimum practical transaction size

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and cutting off the possibility

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for small casual transactions.

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And there is a broader cost in the loss of ability

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to make non-reversible payments for non-reversible services.

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With the possibility of reversal,

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the need for trust spreads.

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These costs and payment uncertainties

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can be avoided in person by using physical currency,

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but no mechanism exists to make payments

17:14.670 --> 17:17.750
over a communications channel without a trusted party.

17:18.750 --> 17:21.030
In other words, existing online payment methods

17:21.030 --> 17:22.470
have high transaction costs

17:22.470 --> 17:24.550
due to the inherent trust required in the system.

17:25.350 --> 17:27.310
Credit cards, PayPal and so forth

17:27.310 --> 17:28.610
all depend on companies

17:28.610 --> 17:30.750
with expensive dispute resolution mechanisms.

17:31.410 --> 17:33.950
These costs make small casual transactions

17:34.490 --> 17:36.410
effectively impossible over the internet.

17:36.830 --> 17:38.910
By contrast, physical cash payments

17:38.910 --> 17:40.690
do not require trust in third parties,

17:40.910 --> 17:43.590
but there is no way to use physical cash online.

17:44.270 --> 17:46.530
What is needed is an electronic payment system

17:46.530 --> 17:49.090
based on cryptographic proof instead of trust,

17:49.370 --> 17:51.270
allowing any two willing parties

17:51.270 --> 17:53.470
to transact directly with each other

17:53.470 --> 17:55.650
without the need for a trusted third party.

17:56.390 --> 17:58.930
Transactions that are computationally impractical

17:58.930 --> 18:01.490
to reverse would protect sellers from fraud

18:01.890 --> 18:03.530
and routine escrow mechanisms

18:03.530 --> 18:05.930
could easily be implemented to protect buyers.

18:07.130 --> 18:09.030
In other words, Bitcoin is like cash

18:09.030 --> 18:10.470
because the transacting parties

18:10.470 --> 18:12.110
can exchange directly with each other

18:12.110 --> 18:13.650
without going through a middleman.

18:14.190 --> 18:15.250
In the first few paragraphs,

18:15.530 --> 18:16.610
the white paper makes it clear

18:16.610 --> 18:18.130
that Bitcoin is about commerce,

18:18.730 --> 18:20.390
transactions, payments,

18:21.050 --> 18:23.450
merchants, buyers and sellers.

18:24.270 --> 18:26.130
There is no mention of a store of value

18:26.130 --> 18:27.350
in the entire white paper.

18:27.990 --> 18:30.630
Even in Satoshi's emails and forum posts,

18:31.110 --> 18:33.350
the concept of Bitcoin as a store of value

18:33.350 --> 18:35.190
can only be inferred a handful of times.

18:35.990 --> 18:38.990
Sam Patterson, co-founder of the cryptocurrency company,

18:39.090 --> 18:41.390
OB1, wrote a popular article

18:41.390 --> 18:44.010
in which he cataloged every single mention of Bitcoin

18:44.010 --> 18:47.010
as a payment system versus a store of value.

18:47.610 --> 18:48.210
He concluded,

18:49.110 --> 18:51.070
after reviewing all of Satoshi's writings,

18:51.250 --> 18:52.910
I can confidently state that Bitcoin

18:52.910 --> 18:55.830
was not purpose-built to first be a store of value.

18:56.370 --> 18:57.390
It was built for payments.

18:58.070 --> 19:00.130
Satoshi mentioned payments more than four times

19:00.130 --> 19:01.670
more frequently than store of value.

19:02.350 --> 19:04.050
This evidence might be sufficient

19:04.050 --> 19:05.590
for you to disregard the claim

19:05.590 --> 19:08.690
Bitcoin was purpose-built to first be a store of value.

19:09.210 --> 19:10.430
It's not just the white paper

19:10.430 --> 19:12.370
that makes it clear Bitcoin is about payments.

19:12.930 --> 19:15.410
Satoshi was equally clear in the online forums.

19:18.050 --> 19:20.630
The forums are filled with similar discussions

19:20.630 --> 19:22.150
about using Bitcoin in commerce.

19:22.810 --> 19:24.370
Satoshi and others talked about

19:24.370 --> 19:26.450
creating interfaces for online merchants,

19:27.030 --> 19:28.430
tools for physical merchants,

19:28.910 --> 19:30.390
point-of-sale transactions,

19:31.000 --> 19:33.170
use cases where the customer is uneasy

19:33.170 --> 19:34.450
about using a credit card,

19:34.830 --> 19:37.450
keeping small amounts of Bitcoin on mobile devices

19:37.450 --> 19:39.990
for incidental expenses, and so on.

19:40.690 --> 19:43.130
There is no doubt that Satoshi designed Bitcoin

19:43.130 --> 19:44.130
to be used for payments,

19:44.690 --> 19:46.390
even those as small as a few cents.

19:47.090 --> 19:49.570
In fact, the original version of the software

19:49.570 --> 19:52.990
contained unfinished code for a peer-to-peer marketplace

19:53.560 --> 19:55.930
and even the basic framework for virtual poker.

19:56.810 --> 19:58.490
The broader Bitcoin industry too

19:58.490 --> 19:59.890
was building on the assumption

19:59.890 --> 20:02.110
that Bitcoin was a fast, cheap,

20:02.510 --> 20:04.410
reliable payment system for the internet.

20:05.290 --> 20:07.050
Successful companies like BitPay,

20:07.590 --> 20:10.010
the largest Bitcoin payment processor in the world,

20:10.570 --> 20:12.590
had their entire business model challenged

20:12.590 --> 20:14.290
by unreasonably high fees.

20:15.090 --> 20:18.950
In an interview in 2017, CEO Stephen Pearce said,

20:19.570 --> 20:22.370
at BitPay, the Bitcoin blockchain has stopped working for us

20:22.370 --> 20:24.130
and we have a couple of options.

20:24.790 --> 20:26.610
One is we start using a fork of Bitcoin.

20:27.180 --> 20:29.750
The second option is we start using a fork of Bitcoin.

20:30.390 --> 20:32.970
And the third option is we start using a fork of Bitcoin.

20:33.710 --> 20:36.310
We are really at a point where we have no choice

20:36.310 --> 20:37.910
and that's what we have to do.

20:38.750 --> 20:40.430
BitPay was one of the first companies

20:40.430 --> 20:42.810
that integrated Bitcoin Cash after the split.

20:43.550 --> 20:45.690
Brian Armstrong, the CEO of Coinbase,

20:45.990 --> 20:48.130
also shared the same vision for Bitcoin

20:48.130 --> 20:49.990
as digital cash for the world.

20:50.510 --> 20:52.750
And in a 2017 interview,

20:53.250 --> 20:55.750
he explained why BTC's failure to scale

20:55.750 --> 20:56.750
broke his heart.

20:58.150 --> 21:00.370
The reason why I got really passionate

21:00.370 --> 21:02.190
about Bitcoin and digital currency

21:02.590 --> 21:05.510
is that I want the world to have an open financial system

21:05.930 --> 21:09.390
where all payments are fast, cheap, instant and global.

21:10.110 --> 21:12.530
And Bitcoin ended up not scaling to be that.

21:13.030 --> 21:15.750
I believe you could actually operate the Bitcoin network

21:15.750 --> 21:19.190
even at Visa scale for maybe two to three orders

21:19.190 --> 21:21.730
of magnitude less than Visa is charging today.

21:22.270 --> 21:24.990
So it could be something on the order of one cent

21:25.330 --> 21:28.090
or less to send every payment in the world.

21:28.690 --> 21:31.230
But I think other networks like Bitcoin Cash

21:31.230 --> 21:32.430
are all working on this.

21:32.770 --> 21:34.870
And so that vision is going to be realized.

21:35.230 --> 21:36.730
But it was a little frustrating

21:36.730 --> 21:38.870
to not see the original Bitcoin get there.

21:39.790 --> 21:41.270
Armstrong's opinion was common

21:41.270 --> 21:42.850
among early Bitcoin entrepreneurs

21:43.270 --> 21:44.730
and early Bitcoiners generally.

21:51.220 --> 21:52.680
Calling any existing cryptocurrency

21:52.980 --> 21:56.080
a reliable long-term store value is premature

21:56.800 --> 21:58.520
considering the wild price fluctuations

21:58.520 --> 22:00.320
that are a regular occurrence.

22:01.160 --> 22:04.320
The fact that BTC has greatly appreciated in price

22:04.320 --> 22:05.620
over the past 10 years

22:05.620 --> 22:07.800
does not mean it is a store of value.

22:09.400 --> 22:12.420
Saifudin Ammous has one of the most extreme versions

22:12.420 --> 22:14.260
of digital gold maximalism out there.

22:14.780 --> 22:17.160
He envisions a future in which regular people

22:17.160 --> 22:18.800
don't even touch the blockchain

22:19.400 --> 22:21.600
and on-chain transactions are reserved

22:21.600 --> 22:23.180
for high value transfers only.

22:23.760 --> 22:25.460
In the Bitcoin standard, he writes,

22:26.100 --> 22:29.120
Bitcoin can be seen as the new emerging reserve currency

22:29.120 --> 22:30.240
for online transactions

22:30.760 --> 22:32.580
where the online equivalent of banks

22:32.580 --> 22:34.820
will issue Bitcoin-backed tokens to users

22:34.820 --> 22:37.360
while keeping their hoard of Bitcoins in cold storage.

22:37.860 --> 22:40.140
And in an online discussion, he writes,

22:40.960 --> 22:43.300
Bitcoin on-chain payments aren't for the merchant,

22:43.660 --> 22:44.940
they're for central banks.

22:45.720 --> 22:47.660
You can have all the world's payment networks

22:47.660 --> 22:50.760
built on top of Bitcoin only settling on chain.

22:51.480 --> 22:54.360
BTC is like central bank gold under a gold standard.

22:54.360 --> 22:58.020
This sentiment is echoed by popular Bitcoin commentator,

22:58.300 --> 22:58.840
Tour de Meester.

22:59.580 --> 23:02.340
At full maturity, using the Bitcoin blockchain

23:02.340 --> 23:06.060
will be as rare and specialized as chartering an oil tanker.

23:06.720 --> 23:09.300
These ideas are now discussed as if they have been

23:09.300 --> 23:11.180
the dominant vision since the beginning.

23:11.780 --> 23:13.520
But compared to the original design,

23:13.980 --> 23:15.280
they are wild and unnecessary.

23:16.100 --> 23:18.020
Like so many other public personalities

23:18.020 --> 23:19.980
who speak with confidence about Bitcoin,

23:20.700 --> 23:22.540
Ammous and De Meester merely assume

23:22.540 --> 23:26.300
that additional layers will solve BTC's usability problems

23:26.300 --> 23:27.560
without any issue.

23:28.120 --> 23:30.960
Yet when you actually look at second-layer technologies,

23:31.740 --> 23:33.540
their viability remains uncertain,

23:33.740 --> 23:35.940
especially if the base layer does not scale.

23:36.660 --> 23:38.700
These problems are generally not recognized

23:38.700 --> 23:41.320
by BTC enthusiasts who instead believe

23:41.320 --> 23:44.260
that engineers will fix everything in the future,

23:44.580 --> 23:46.480
despite their poor track record so far.

23:47.060 --> 23:50.160
Furthermore, a future of Bitcoin-backed tokens

23:50.160 --> 23:52.760
is a guarantee that arbitrary inflation

23:52.760 --> 23:54.780
will continue plaguing those of us

23:54.780 --> 23:56.340
who are not central bankers.

23:56.720 --> 23:58.780
History demonstrates that currencies

23:58.780 --> 24:01.240
inevitably lose their backing over time,

24:01.760 --> 24:04.440
and if people are forced to trade promises of Bitcoin

24:04.440 --> 24:05.920
instead of actual Bitcoin,

24:06.580 --> 24:08.760
it's only a matter of time before the promises

24:08.760 --> 24:12.120
are inflated far beyond the actual supply of Bitcoin.

24:12.740 --> 24:15.540
Second-layers only make this inflation easier to conduct.

24:18.280 --> 24:19.900
Within the Bitcoin community,

24:20.300 --> 24:22.400
the narrative started shifting from digital cash

24:22.400 --> 24:25.040
to a store of value over a period of several years.

24:25.580 --> 24:27.680
With each additional merchant accepting it,

24:28.100 --> 24:30.080
Bitcoin gained more credibility and utility.

24:30.720 --> 24:33.000
But after the fee spike in late 2017,

24:33.840 --> 24:35.660
rather than admit there was a problem,

24:36.260 --> 24:38.580
the most influential BTC proponents

24:38.580 --> 24:40.440
cleverly started to change the narrative.

24:41.060 --> 24:43.380
In recent years, people have even been encouraged

24:43.380 --> 24:44.960
not to spend their coins in commerce,

24:45.450 --> 24:48.240
because BTC is for buying and holding indefinitely.

24:49.020 --> 24:51.780
Satoshi understood that the transmissibility of Bitcoin

24:51.780 --> 24:54.220
was a central feature that gave it value.

24:54.460 --> 24:56.940
Yet that feature was intentionally destroyed

24:56.940 --> 24:58.520
by the Bitcoin Core developers,

24:59.040 --> 25:01.720
giving BTC almost no unique value proposition

25:02.170 --> 25:03.700
when compared to other cryptocurrencies.

25:04.980 --> 25:07.000
Not only do other coins have lower fees,

25:07.540 --> 25:10.260
they also have superior non-monetary functionality.

25:11.120 --> 25:13.760
The famous internet entrepreneur Kim Dotcom,

25:14.280 --> 25:15.340
founder of Mega Upload,

25:15.560 --> 25:18.080
expressed similar sentiments in a conversation

25:18.080 --> 25:20.100
in January 2020 saying,

25:20.920 --> 25:22.960
in order to be a very successful cryptocurrency,

25:23.840 --> 25:25.900
you need to provide fast and cheap transactions.

25:26.480 --> 25:27.860
There's no way around that.

25:28.360 --> 25:29.880
It's nice to be a store of value,

25:30.140 --> 25:32.400
but if you really wanna succeed in this game,

25:32.900 --> 25:34.400
you need to be electronic cash.

25:34.780 --> 25:37.440
Kim also pointed out that the vast majority of people

25:37.440 --> 25:39.600
still have no experience using cryptocurrencies.

25:40.200 --> 25:41.980
And in order to onboard them,

25:41.980 --> 25:45.680
fees need to be low and reliability needs to be high.

25:46.300 --> 25:48.000
Most people will go with the currency

25:48.000 --> 25:49.720
that gives them the cheapest fees,

25:50.280 --> 25:53.100
the fastest transactions, the most reliability,

25:53.940 --> 25:56.860
and currently, unfortunately, that is not BTC.

26:00.040 --> 26:02.480
By the time Satoshi Nakamoto left Bitcoin,

26:02.920 --> 26:05.620
there were many enthusiastic and talented developers

26:05.620 --> 26:06.780
working on the project,

26:07.200 --> 26:09.120
but two stand out as exceptional,

26:09.840 --> 26:11.720
Gavin Anderson and Mike Hearn.

26:12.380 --> 26:14.300
When Bitcoin was originally coded,

26:14.860 --> 26:17.460
there was no explicit limit on the size of blocks

26:17.460 --> 26:18.540
that could be produced.

26:18.940 --> 26:23.680
That changed in 2010 when Satoshi added a block size limit

26:23.680 --> 26:26.600
to prevent a potential denial of service attack

26:26.600 --> 26:28.160
while Bitcoin was young.

26:28.840 --> 26:30.980
The initial limit was set to one megabyte,

26:31.400 --> 26:33.240
allowing for a theoretical limit

26:33.240 --> 26:35.060
of seven transactions per second.

26:35.620 --> 26:38.260
The plan was to simply increase the limit

26:38.260 --> 26:39.880
or eliminate it entirely.

26:40.760 --> 26:43.320
Ray Dillinger, another early Bitcoin pioneer,

26:43.740 --> 26:44.500
said the same thing.

26:45.120 --> 26:47.180
I'm the guy who went over the blockchain stuff

26:47.180 --> 26:49.540
in Satoshi's first cut of the Bitcoin code.

26:50.100 --> 26:52.760
Satoshi didn't have a one megabyte limit in it.

26:53.260 --> 26:55.300
The limit was originally Hal Finney's idea.

26:56.080 --> 26:57.920
Both Satoshi and I objected

26:57.920 --> 26:59.860
that it wouldn't scale at one megabyte.

27:00.300 --> 27:02.700
Hal was concerned about a potential denial

27:02.700 --> 27:03.860
of service attack, though.

27:04.400 --> 27:06.740
And after discussion, Satoshi agreed.

27:07.240 --> 27:08.740
But all three of us agreed

27:08.740 --> 27:10.580
that one megabyte had to be temporary

27:11.100 --> 27:12.420
because it would never scale.

27:12.920 --> 27:15.680
To this day, the Bitcoin core developers

27:15.680 --> 27:18.840
have refused to meaningfully increase the block size limit

27:19.260 --> 27:21.760
beyond the initial level set in 2010,

27:22.300 --> 27:23.940
despite the massive improvements

27:23.940 --> 27:26.460
in software, hardware, and networking technology.

27:27.020 --> 27:29.980
Instead, they changed the metric of block size

27:29.980 --> 27:33.320
into block weight and claim the new limit is four megabytes.

27:33.860 --> 27:35.640
But this is mostly an accounting trick

27:35.640 --> 27:37.980
and does not correspond to a quadrupling

27:37.980 --> 27:39.380
of throughput capacity.

27:40.460 --> 27:42.160
The simple reason the core developers

27:42.160 --> 27:43.820
refused to increase the limit

27:43.820 --> 27:46.800
is because they wanted to change Bitcoin's design.

27:47.760 --> 27:49.340
The sooner the blocks became full,

27:49.820 --> 27:51.920
the sooner the transaction fees would rise,

27:52.320 --> 27:53.740
which they viewed as desirable.

27:55.980 --> 27:59.040
Jorge Timon, a core developer, stated,

27:59.760 --> 28:02.300
I agree that hitting the limit wouldn't be bad,

28:02.680 --> 28:05.280
but actually good for a young and immature market

28:05.280 --> 28:06.420
like Bitcoin fees.

28:07.000 --> 28:09.000
While Greg Maxwell stated bluntly,

28:09.520 --> 28:10.920
there is nothing wrong with full blocks.

28:11.360 --> 28:13.500
Full blocks is the natural state of the system.

28:18.520 --> 28:21.260
To appreciate just how radical these ideas are,

28:21.860 --> 28:24.300
contrast them with the ideas you would have encountered

28:24.640 --> 28:26.020
in the early days of Bitcoin

28:26.580 --> 28:28.500
when the Visa network was often used

28:28.500 --> 28:30.760
as a comparison for transaction throughput.

28:31.580 --> 28:33.460
All the way back in 2009,

28:33.780 --> 28:36.780
Satoshi was asked about Bitcoin's ability to scale

28:36.780 --> 28:37.240
and said,

28:37.940 --> 28:40.080
the existing Visa credit card network

28:40.080 --> 28:42.820
processes about 15 million internet purchases

28:42.820 --> 28:43.860
per day worldwide.

28:44.520 --> 28:47.360
Bitcoin can already scale much larger than that

28:47.360 --> 28:50.320
with existing hardware for a fraction of the cost.

28:51.100 --> 28:52.860
It never really hits a scale ceiling.

28:53.660 --> 28:55.820
This was the common understanding for years,

28:56.300 --> 28:59.180
though today we would call it part of Satoshi's vision.

28:59.820 --> 29:01.920
It was nearly everybody's vision back then.

29:03.720 --> 29:06.880
Why would the Bitcoin Core developers want high fees?

29:07.580 --> 29:09.420
To the early Bitcoin enthusiast,

29:09.680 --> 29:11.180
or even to the average person,

29:11.660 --> 29:13.420
it sounds like an obviously bad idea.

29:14.180 --> 29:16.560
Peter Wheela, another Core developer, said,

29:17.160 --> 29:20.080
my personal opinion is that we, as a community,

29:20.700 --> 29:22.800
should indeed let a fee market develop,

29:23.240 --> 29:24.480
and rather sooner than later.

29:25.380 --> 29:27.260
They euphemistically call the backlog

29:27.260 --> 29:29.980
of high-fee transactions a fee market,

29:30.460 --> 29:31.900
where users outbid each other

29:31.900 --> 29:34.600
for the tiny amount of space inside blocks.

29:35.280 --> 29:38.060
This bizarre and unnecessary security model

29:38.060 --> 29:40.880
is why the Core developers celebrate

29:40.880 --> 29:44.260
and encourage high fees and a backlog of transactions.

29:45.220 --> 29:46.460
Greg Maxwell claimed,

29:47.060 --> 29:49.920
fee pressure is an intentional part of the system design

29:49.920 --> 29:52.160
and to the best of the current understanding

29:52.160 --> 29:54.420
essential for the system's long-term survival.

29:55.060 --> 29:56.940
So, uh, yes, it's good.

29:57.580 --> 30:01.260
And when fees rose to $25 in December 2017,

30:01.260 --> 30:04.060
Maxwell infamously responded,

30:05.040 --> 30:07.100
personally, I'm pulling out the champagne

30:07.100 --> 30:10.200
that market behavior is indeed producing activity levels

30:10.200 --> 30:12.600
that can pay for security without inflation,

30:13.060 --> 30:15.920
and also producing fee-paying backlogs needed

30:15.920 --> 30:19.700
to stabilize consensus progress as the subsidy declines.

30:20.380 --> 30:23.480
Of course, Satoshi Nakamoto did not design Bitcoin this way.

30:23.960 --> 30:26.760
Satoshi was asked about the long-term revenue model

30:26.760 --> 30:28.400
for miners. He explained,

30:28.400 --> 30:31.620
in a few decades when the reward gets too small,

30:32.080 --> 30:35.540
the transaction fee will become the main compensation for miners.

30:36.160 --> 30:38.620
I'm sure that in 20 years there will either be

30:38.620 --> 30:41.040
very large transaction volume or no volume.

30:43.260 --> 30:45.500
By artificially limiting the block size,

30:45.940 --> 30:47.820
the Bitcoin Core developers found a way

30:47.820 --> 30:50.020
to completely change the dynamics of the system.

30:50.460 --> 30:52.860
Not only did the user experience change

30:52.860 --> 30:55.400
from nearly instant and free transactions

30:55.400 --> 30:57.740
to expensive and unreliable,

30:58.280 --> 31:01.420
the underlying economic model was radically changed as well.

31:02.020 --> 31:04.700
BTC is gambling on the idea that future users

31:04.960 --> 31:07.780
will be willing to pay hundreds or thousands of dollars

31:07.780 --> 31:09.300
per on-chain transaction,

31:09.800 --> 31:11.680
despite having superior alternatives.

31:12.060 --> 31:13.980
Otherwise, miners will have to shut down

31:13.980 --> 31:14.820
most of their equipment,

31:15.000 --> 31:16.740
because they won't generate a profit.

31:17.440 --> 31:19.680
Given this, it's no exaggeration to say

31:19.680 --> 31:21.420
that BTC was hijacked,

31:21.700 --> 31:23.640
and the original design was replaced

31:23.640 --> 31:25.020
with a new speculative one.

31:25.500 --> 31:26.940
This is why Vitalik Buterin,

31:27.260 --> 31:29.520
the co-founder of Ethereum, publicly said,

31:30.400 --> 31:31.380
I consider BCH

31:31.380 --> 31:33.800
a legitimate contender for the Bitcoin name.

31:34.380 --> 31:36.020
I consider Bitcoin's failure

31:36.020 --> 31:38.680
to raise block sizes to keep fees reasonable

31:38.680 --> 31:41.280
to be a large, non-consensual change

31:41.280 --> 31:42.500
to the original plan,

31:43.140 --> 31:44.800
morally tantamount to a hard fork.

31:45.600 --> 31:47.480
Bitcoin Core's failure to increase

31:47.480 --> 31:50.000
the block size limit was not merely academic.

31:50.580 --> 31:52.200
It had real-world consequences

31:52.200 --> 31:54.060
for the businesses building on Bitcoin

31:54.060 --> 31:56.040
or merely accepting it for payment.

31:56.640 --> 31:58.860
After the 2017 fee spike,

31:59.340 --> 32:01.510
the Bitcoin industry experienced anti-adoption

32:01.740 --> 32:02.580
for the first time.

32:02.840 --> 32:05.240
When the popular gaming platform Steam announced

32:05.240 --> 32:07.100
they were no longer accepting Bitcoin,

32:07.640 --> 32:09.600
they publicly shared their reasons why.

32:10.260 --> 32:12.860
With the transaction fee being so high right now,

32:13.340 --> 32:14.940
it is not feasible to refund

32:14.940 --> 32:17.740
or ask the customer to transfer the missing balance,

32:18.220 --> 32:20.480
which itself runs the risk of underpayment again.

32:20.480 --> 32:23.280
At this point, it has become untenable

32:23.280 --> 32:25.340
to support Bitcoin as a payment option.

32:25.940 --> 32:29.220
We may reevaluate whether Bitcoin makes sense for us

32:29.220 --> 32:31.720
and for the Steam community at a later date.

32:34.040 --> 32:37.260
The public was told that high fees are perfectly fine,

32:37.780 --> 32:39.560
that you aren't supposed to use Bitcoin

32:39.560 --> 32:40.680
for everyday purchases,

32:41.200 --> 32:43.260
and that blockchains actually can't scale.

32:52.980 --> 32:55.300
Bitcoin was designed to scale with larger blocks.

32:55.820 --> 32:58.700
So why would anybody think that big blocks are a problem?

32:58.700 --> 33:03.620
Core developer Vladimir Vonderlan stated in 2015,

33:04.600 --> 33:06.380
I understand the advantages of scaling.

33:06.920 --> 33:09.360
I do not doubt a block size increase will work.

33:09.820 --> 33:12.080
Although there may be unforeseen issues,

33:12.380 --> 33:14.020
I'm confident they'll be resolved.

33:14.580 --> 33:17.120
However, it may well make Bitcoin less useful

33:17.120 --> 33:19.380
for what sets it apart from other systems

33:19.380 --> 33:20.100
in the first place.

33:20.820 --> 33:23.100
The possibility for people to run their own bank

33:23.100 --> 33:25.260
without special investment in connectivity

33:25.260 --> 33:26.600
and computing hardware.

33:26.600 --> 33:29.400
There are several problems with this idea.

33:30.000 --> 33:32.340
Bitcoin was designed so that regular people

33:32.340 --> 33:34.160
don't have to run their own full nodes.

33:35.060 --> 33:37.860
A full node downloads a copy of the entire blockchain

33:37.860 --> 33:40.980
and validates every single transaction on the network.

33:41.620 --> 33:43.580
This is unnecessary for almost everybody.

33:44.200 --> 33:45.500
They can use lighter software.

33:46.100 --> 33:49.400
Satoshi designed Bitcoin with simplified payment verification,

33:49.980 --> 33:51.300
SPV in mind,

33:51.500 --> 33:54.280
which allows users to verify their own transactions

33:54.280 --> 33:55.540
with a tiny amount of data.

33:56.180 --> 33:59.080
Satoshi was not foolish enough to design a cash system

33:59.080 --> 34:00.820
where every user had to download

34:00.820 --> 34:03.120
and verify the entire world's transactions.

34:03.580 --> 34:05.660
There's no way such a system could scale.

34:06.260 --> 34:07.900
The fact that the costs of validation

34:07.900 --> 34:10.420
increase with the size of blocks is not a problem.

34:11.020 --> 34:13.160
Satoshi could not have been clearer when he wrote,

34:13.780 --> 34:16.860
The current system where every user is a network node

34:16.860 --> 34:19.940
is not the intended configuration for large scale.

34:20.540 --> 34:22.500
That would be like every Usenet user

34:22.500 --> 34:24.200
running their own Nntp server.

34:24.200 --> 34:27.400
The design supports letting users just be users.

34:27.940 --> 34:29.700
The more burden it is to run a node,

34:30.020 --> 34:31.340
the fewer nodes there will be.

34:31.940 --> 34:33.800
Those few nodes will be big server farms.

34:34.420 --> 34:35.660
The rest will be client nodes

34:35.660 --> 34:37.820
that only do transactions and don't generate.

34:38.400 --> 34:39.380
And also when he stated,

34:39.600 --> 34:41.540
only people trying to create new coins

34:41.540 --> 34:42.900
would need to run network nodes.

34:43.620 --> 34:45.960
At first, most users would run network nodes,

34:46.100 --> 34:48.440
but as the network grows beyond a certain point,

34:48.680 --> 34:50.580
it would be left more and more to specialists

34:50.580 --> 34:52.900
with server farms of specialized hardware.

34:54.020 --> 34:55.880
Satoshi was so clear about this

34:55.880 --> 34:57.400
that it's impossible to misinterpret.

34:58.060 --> 34:59.720
It's fine to dislike this idea,

35:00.060 --> 35:01.620
but it's how Bitcoin was designed.

35:04.060 --> 35:06.840
The other attempt to rescue the small block philosophy

35:06.840 --> 35:08.760
involves an appeal to secondary layers.

35:09.200 --> 35:11.560
Since if most transactions are off chain,

35:11.820 --> 35:15.080
then perhaps the fees can be low on the secondary layers.

35:15.520 --> 35:18.260
While it does make sense to build multiple layers in Bitcoin,

35:18.800 --> 35:20.000
in order to work correctly,

35:20.120 --> 35:21.520
the base layer must be scalable.

35:21.520 --> 35:23.900
If the base layer can only process

35:23.900 --> 35:25.600
seven transactions per second,

35:25.860 --> 35:28.180
it's not even close to being robust enough

35:28.180 --> 35:29.780
to build additional layers on top.

35:30.520 --> 35:33.240
Second layers still have to interact with the base layer,

35:33.600 --> 35:35.880
so high fees remain a fundamental problem.

35:36.460 --> 35:38.300
For example, the Lightning Network

35:38.300 --> 35:41.320
still requires occasional on-chain transactions to use,

35:41.760 --> 35:43.520
and those fees have to be paid by someone.

35:44.340 --> 35:46.240
Right now, many popular wallets

35:46.240 --> 35:48.440
are subsidizing these costs for their users.

35:48.440 --> 35:51.100
But if $50-plus fees are the norm,

35:51.620 --> 35:53.380
that model is simply not sustainable.

35:54.000 --> 35:57.000
Elon Musk is one person who seems to understand

35:57.000 --> 35:59.720
the value of scaling the base layer for cryptocurrencies.

36:00.480 --> 36:02.660
In a Twitter thread about network design,

36:03.100 --> 36:04.540
he shared his thoughts as an engineer.

36:05.440 --> 36:09.180
BTC and ETH are pursuing a multi-layer transaction system,

36:09.380 --> 36:12.020
but base layer transaction rate is slow,

36:12.420 --> 36:14.140
and transaction cost is high.

36:14.840 --> 36:16.600
There is merit to maximizing

36:16.600 --> 36:18.320
base layer transaction rate

36:18.320 --> 36:20.360
in minimizing transaction cost.

36:20.960 --> 36:23.560
Block size and frequency should steadily increase

36:23.560 --> 36:25.200
to match broadly available bandwidth.

36:26.140 --> 36:27.640
If Musk had been around at the time,

36:28.140 --> 36:29.580
he would have agreed with Satoshi,

36:30.000 --> 36:31.020
Anderson, Hearn,

36:31.260 --> 36:33.340
and most of the early Bitcoin entrepreneurs.

36:33.920 --> 36:35.340
There is just no substitute

36:35.340 --> 36:37.220
for cheap on-chain transactions.

36:40.500 --> 36:44.260
This is the small block perspective on full nodes.

36:46.040 --> 36:48.900
Miners have an incentive to hijack Bitcoin

36:48.900 --> 36:50.560
by changing the rules in their favor.

36:51.060 --> 36:53.020
For example, increasing the block reward.

36:54.300 --> 36:57.300
Miners are prevented from arbitrarily changing the rules

36:57.300 --> 37:00.160
because full nodes do not blindly follow

37:00.160 --> 37:01.520
the majority mining power.

37:01.960 --> 37:04.180
These ideas have become the orthodoxy

37:04.180 --> 37:05.640
and both of these claims are false.

37:06.300 --> 37:08.040
At first glance, it might seem like

37:08.040 --> 37:10.300
miners could profit from creating new coins

37:10.300 --> 37:10.960
out of thin air.

37:10.960 --> 37:13.160
However, this overlooks the reason

37:13.160 --> 37:15.160
why Bitcoins have value in the first place.

37:15.840 --> 37:16.920
Value is not intrinsic.

37:17.440 --> 37:19.480
It comes from a complex web of beliefs

37:19.480 --> 37:21.760
that people have about the entire Bitcoin network.

37:22.460 --> 37:24.040
If the miners decided to produce

37:24.040 --> 37:26.020
a billion new Bitcoins for themselves,

37:26.500 --> 37:29.120
they would destroy the underlying trust in the system,

37:29.480 --> 37:31.380
which would destroy the value of each Bitcoin.

37:32.020 --> 37:34.020
They might have a billion more Bitcoins,

37:34.300 --> 37:36.200
but each one would be worthless.

37:37.080 --> 37:38.940
Miners are not a threat to the system.

37:38.940 --> 37:41.960
If anything, miners are least incentivized

37:41.960 --> 37:44.500
to break Bitcoin since their only revenue

37:44.500 --> 37:47.380
comes from transaction fees and the block reward,

37:48.000 --> 37:50.260
both of which are denominated in Bitcoins

37:50.260 --> 37:51.860
that must be sold on the market.

37:52.240 --> 37:54.700
The second major claim is that full nodes

37:54.700 --> 37:56.880
can somehow prevent the rules of the network

37:56.880 --> 37:58.580
from changing. They cannot.

37:59.220 --> 38:00.880
Full nodes can only verify

38:00.880 --> 38:02.860
whether blocks and transactions are valid.

38:03.600 --> 38:05.500
Imagine that a new bug is discovered

38:05.500 --> 38:07.400
in the protocol that breaks Bitcoin

38:07.400 --> 38:09.820
in an important way and the software

38:09.820 --> 38:12.120
has to be upgraded in a short period of time.

38:12.580 --> 38:14.900
The miners will upgrade immediately

38:14.900 --> 38:17.680
since their profits depend on the network running.

38:18.140 --> 38:20.180
But what would happen if everyone else

38:20.180 --> 38:21.860
running full nodes didn't upgrade?

38:22.520 --> 38:24.000
Would the miners be prevented

38:24.000 --> 38:25.100
from upgrading altogether?

38:25.820 --> 38:28.200
Not at all. Miners would continue on

38:28.200 --> 38:30.060
just fine adding blocks to the chain

38:30.060 --> 38:31.980
and the full nodes would simply

38:31.980 --> 38:33.900
split themselves off the main network.

38:34.120 --> 38:37.040
It doesn't require a large network of full nodes

38:37.040 --> 38:39.420
to notify people that the rules have changed.

38:40.060 --> 38:42.300
It only requires a single honest miner

38:42.300 --> 38:44.420
or even a single honest node.

38:45.180 --> 38:46.760
Anyone can prove to the world

38:46.760 --> 38:48.720
that a particular block or transaction

38:48.720 --> 38:51.060
is invalid according to the old rules.

38:51.660 --> 38:54.420
Even if 100% of the miners were in collusion,

38:54.920 --> 38:56.900
a single full node could still demonstrate

38:56.900 --> 38:58.080
that the rules changed.

38:58.440 --> 38:59.960
Therefore it's essentially guaranteed

38:59.960 --> 39:01.400
that everybody would find out.

39:02.080 --> 39:04.060
I want to be able to run a full node

39:04.060 --> 39:05.180
from my home computer.

39:05.740 --> 39:07.740
Does anybody actually care about that?

39:08.740 --> 39:09.860
Satoshi didn't.

39:09.940 --> 39:12.780
His vision was home users running SPV nodes

39:12.780 --> 39:15.320
and full nodes being hosted in data centers.

39:26.040 --> 39:27.360
By the end of 2010,

39:27.840 --> 39:29.340
Satoshi decided that he needed

39:29.340 --> 39:30.880
somebody else to run the project.

39:31.380 --> 39:33.300
So he chose Andresen, who shared

39:33.300 --> 39:34.520
the same vision for Bitcoin.

39:34.980 --> 39:37.840
With Satoshi's blessing and with great reluctance,

39:38.100 --> 39:39.360
I'm going to start doing

39:39.360 --> 39:41.500
more active project management for Bitcoin.

39:41.500 --> 39:43.360
In 2014,

39:44.080 --> 39:45.500
Andresen said he was shifting

39:45.500 --> 39:48.040
from the day-to-day maintenance of Bitcoin Core

39:48.040 --> 39:49.760
to higher level research

39:49.760 --> 39:51.420
and chose Latimir von der Laan

39:51.420 --> 39:52.320
as his successor.

39:53.040 --> 39:54.900
Van der Laan was an active contributor

39:54.900 --> 39:55.940
to Bitcoin's code,

39:56.380 --> 39:58.340
but he ended up being the most passive

39:58.340 --> 39:59.560
of the three project leaders,

39:59.980 --> 40:02.140
allowing critical decisions to go unresolved.

40:02.680 --> 40:04.880
Shortly after Andresen made von der Laan

40:04.880 --> 40:06.540
the lead maintainer of Bitcoin Core,

40:07.100 --> 40:09.140
the internal factions became more entrenched

40:09.140 --> 40:10.840
and hostile towards each other,

40:11.340 --> 40:13.200
and the block-sized debate went nuclear.

40:14.060 --> 40:15.500
Several key Core developers

40:15.500 --> 40:17.340
formed their own company called Blockstream,

40:17.660 --> 40:19.180
which has been by far

40:19.180 --> 40:20.960
the most influential company

40:20.960 --> 40:22.860
involved with Bitcoin software development

40:22.860 --> 40:25.220
and plays a central role in its capture.

40:26.000 --> 40:27.340
Several prominent developers

40:27.660 --> 40:29.240
publicly warned that BTC

40:29.240 --> 40:31.080
was being hijacked while it was happening.

40:31.740 --> 40:33.320
During this period of extreme division,

40:33.580 --> 40:35.420
the general public remained mostly unaware,

40:35.720 --> 40:37.260
and in late 2017

40:37.260 --> 40:39.680
another enormous wave of investment

40:39.680 --> 40:41.720
caused prices to spike amidst the chaos.

40:42.140 --> 40:43.820
One BTC eventually reached

40:43.820 --> 40:45.740
$20,000, while the average

40:45.740 --> 40:47.580
transaction fee spiked to more than

40:47.580 --> 40:49.560
$50, and average transaction

40:49.560 --> 40:51.840
confirmation times exceeded two weeks.

40:52.620 --> 40:53.800
Blockstream executive

40:53.800 --> 40:55.620
Samson Mao captured this sentiment

40:55.620 --> 40:57.000
by flatly declaring that

40:57.000 --> 40:59.400
Bitcoin isn't for people that live

40:59.400 --> 41:01.300
on less than $2 a day.

41:02.040 --> 41:03.900
The new narrative started to solidify

41:03.900 --> 41:05.520
with books like the Bitcoin Standard,

41:05.520 --> 41:07.660
which despite making blunders

41:07.660 --> 41:09.160
on several critical concepts

41:09.160 --> 41:11.560
has enjoyed widespread popularity.

41:12.280 --> 41:14.000
The same ideas have been uniformly

41:14.000 --> 41:15.700
repeated on all the most important

41:15.700 --> 41:17.500
discussion channels, making the small

41:17.500 --> 41:19.680
block philosophy the only perspective

41:19.680 --> 41:21.960
that newcomers encounter when learning about Bitcoin.

41:22.500 --> 41:24.100
The original vision of big blocks

41:24.100 --> 41:26.120
and universal access to the blockchain

41:26.120 --> 41:27.980
was successfully demonized

41:27.980 --> 41:29.440
and its history obfuscated.

41:30.000 --> 41:31.700
The culture is obsessively focused

41:31.700 --> 41:33.300
on the price of BTC

41:33.300 --> 41:35.480
regardless of its underlying utility

41:35.480 --> 41:37.280
or usage. For example, when the

41:37.280 --> 41:39.220
El Salvador government announced that

41:39.220 --> 41:41.180
BTC was going to become an official

41:41.180 --> 41:43.280
currency, there was almost no mention

41:43.280 --> 41:45.320
of the fact that their government was setting up

41:45.320 --> 41:47.440
purely custodial wallets for their citizens,

41:47.640 --> 41:49.260
meaning the government will be able to

41:49.260 --> 41:51.320
track and censor transactions

41:51.320 --> 41:53.320
made through their app, freeze accounts

41:53.320 --> 41:55.340
or easily confiscate coins

41:55.340 --> 41:57.080
if they decide to. Nobody

41:57.080 --> 41:59.360
thought that a maximum throughput limit

41:59.360 --> 42:01.520
of seven transactions per second was a

42:01.520 --> 42:02.960
great idea. That is,

42:03.320 --> 42:04.780
not until 2013

42:05.350 --> 42:07.300
when developer Peter Todd put out an

42:07.300 --> 42:09.280
animated video entitled Why the Block Size

42:09.280 --> 42:11.360
Limit Keeps Bitcoin Free and Decentralized.

42:11.780 --> 42:13.780
I consider Peter Todd's animation

42:13.780 --> 42:15.440
to be the first example of

42:15.440 --> 42:17.540
well-funded, blatant propaganda.

42:18.360 --> 42:19.460
It's so outrageous

42:19.460 --> 42:21.080
that it stretches credulity

42:21.080 --> 42:23.060
to think it was created from a mere

42:23.060 --> 42:25.120
difference in philosophy. We have

42:25.120 --> 42:27.460
an alternative to increasing the block size,

42:28.080 --> 42:29.440
off-chain transactions.

42:29.440 --> 42:32.340
The block size stays the same

42:32.340 --> 42:33.900
and mining stays

42:33.900 --> 42:35.980
decentralized. You'll still

42:35.980 --> 42:37.580
use the blockchain for large

42:37.580 --> 42:39.720
transactions. Small exchanges

42:39.720 --> 42:41.180
will be handled by payment

42:41.180 --> 42:43.240
processors, which means small

42:43.240 --> 42:44.960
purchases like your morning coffee

42:44.960 --> 42:46.940
don't clog the whole system up.

42:47.680 --> 42:49.540
We can use the very same cryptography

42:50.000 --> 42:51.760
that makes Bitcoin secure

42:51.760 --> 42:53.540
to audit off-chain payment

42:53.540 --> 42:55.460
systems as well as effectively

42:55.460 --> 42:57.600
make it impossible to get away

42:57.600 --> 42:59.040
with fraud or theft.

42:59.880 --> 43:01.780
Imagine a plexiglass bank

43:01.780 --> 43:03.580
where you can easily observe

43:03.580 --> 43:04.700
the inner workings.

43:05.660 --> 43:07.600
Unlike the completely public

43:07.600 --> 43:09.420
blockchain where you can't pick

43:09.420 --> 43:10.880
who mines your transactions

43:11.430 --> 43:13.620
or who you trust to do validation,

43:14.320 --> 43:15.460
off-chain transactions

43:15.460 --> 43:17.400
can be both instant, truly

43:17.400 --> 43:19.300
private and you have complete

43:19.300 --> 43:20.840
control over who to trust.

43:21.640 --> 43:23.080
What can you do

43:23.080 --> 43:24.760
to keep Bitcoin decentralized?

43:24.760 --> 43:26.820
If you're a miner

43:26.820 --> 43:28.660
only mine at pools that

43:28.660 --> 43:30.020
support the block size limit

43:30.020 --> 43:32.720
and ask your pool to publicly say so.

43:33.100 --> 43:34.700
If you are a user

43:34.700 --> 43:36.760
ignore anyone trying to change

43:36.760 --> 43:38.700
the Bitcoin software you use

43:38.700 --> 43:40.440
to increase the one megabyte

43:40.440 --> 43:42.460
block size and tell people

43:42.460 --> 43:44.400
you transact with that you support

43:44.400 --> 43:46.180
keeping Bitcoin decentralized

43:46.760 --> 43:48.620
and out of the hands of the existing

43:48.620 --> 43:49.680
corporate system.

43:50.620 --> 43:52.360
Remember, Bitcoin

43:52.360 --> 43:55.060
is democratic and the only way

43:55.060 --> 43:56.460
the block size can change

43:56.460 --> 43:58.580
is if you agree to let that happen.

44:22.360 --> 44:23.240
In the name of John Dylan

44:23.240 --> 44:25.580
emailed the Bitcoin Development Email List

44:25.580 --> 44:28.340
earlier this morning offering a 500 USD

44:28.340 --> 44:30.200
reward, later increased

44:30.200 --> 44:32.020
to 1000, to anyone

44:32.020 --> 44:33.560
who implements a transaction

44:33.560 --> 44:35.160
replacement by fee patch.

44:35.760 --> 44:37.880
That's an idea I posted on the email list

44:37.880 --> 44:39.860
two days ago. Peter Todd proposed

44:39.860 --> 44:41.920
the replace by fee

44:42.580 --> 44:43.520
RBF patch

44:43.520 --> 44:45.900
which said that when two conflicting

44:45.900 --> 44:47.260
transactions are seen,

44:47.820 --> 44:49.500
the one with the higher fee wins.

44:49.500 --> 44:51.300
In his mind,

44:51.660 --> 44:53.660
zero-conf transactions aren't safe enough

44:53.660 --> 44:55.580
and uninformed users just

44:55.580 --> 44:57.160
don't realize it. So

44:57.160 --> 44:59.880
to prevent people from getting attached to zero-conf

44:59.880 --> 45:01.660
transactions, RBF

45:01.660 --> 45:03.720
would break their functionality once and for all

45:04.080 --> 45:05.540
because in his words, if the

45:05.540 --> 45:07.560
miners decided to implement something like

45:07.560 --> 45:09.760
RBF, zero-conf would break

45:09.760 --> 45:11.600
anyway. Replace by fee

45:11.600 --> 45:13.800
prompted many people to speak out against it.

45:14.300 --> 45:15.520
Charlie Lee who was the

45:15.520 --> 45:17.440
engineering manager at Coinbase said

45:17.440 --> 45:19.400
Coinbase fully agrees

45:19.400 --> 45:20.100
with Mike Hearn.

45:20.940 --> 45:23.400
RBF is irrational and harmful to Bitcoin.

45:24.180 --> 45:25.180
Even Adam Back

45:25.180 --> 45:27.480
who later played a big role in derailing Bitcoin

45:27.480 --> 45:29.540
agreed, I agree with Mike and Jeff.

45:30.160 --> 45:31.380
Blowing up zero-confirmed

45:31.380 --> 45:32.900
transactions is vandalism.

45:33.280 --> 45:35.180
Yet in late 2015

45:35.940 --> 45:37.480
RBF was successfully

45:37.480 --> 45:38.620
added to Bitcoin Core.

45:39.520 --> 45:41.460
Zero-conf payments are understood to be

45:41.460 --> 45:43.220
an essential feature in Bitcoin

45:43.220 --> 45:45.380
cash and developers have been

45:45.380 --> 45:47.600
actively working on ways to further improve

45:47.600 --> 45:48.760
their security and reliability.

45:49.780 --> 45:51.680
In November 2013

45:51.680 --> 45:53.400
Dylan was apparently

45:53.400 --> 45:55.240
hacked by some angry Bitcoiners

45:55.240 --> 45:57.360
when his Bitcoin talk account

45:57.360 --> 45:59.340
posted its own thread entitled

45:59.340 --> 46:00.400
John Dylan.

46:01.200 --> 46:03.280
We can leak things too, you trolling pieces.

46:03.940 --> 46:05.160
The post contained

46:05.160 --> 46:07.200
a single link to an archive of private

46:07.200 --> 46:08.460
correspondence from Dylan

46:08.460 --> 46:11.360
as well as conversations about him from other

46:11.360 --> 46:13.280
developers. The authenticity

46:13.280 --> 46:15.120
of the leak has not been disputed.

46:15.540 --> 46:17.580
Dylan appears to be coordinating with Todd

46:17.580 --> 46:19.660
and funding multiple projects that

46:19.660 --> 46:21.200
supported transforming Bitcoin

46:21.200 --> 46:23.240
into an expensive settlement system.

46:24.020 --> 46:25.700
By far the most interesting exchange

46:25.700 --> 46:27.980
is an email between Dylan and Todd

46:27.980 --> 46:29.540
in which Dylan claims

46:29.540 --> 46:31.560
to be involved with the intelligence community

46:31.560 --> 46:32.340
saying

46:33.000 --> 46:35.520
just so you know this stuff about Tor has me worried.

46:36.040 --> 46:37.600
Please don't make this public

46:37.600 --> 46:39.620
but my day job involves intelligence

46:39.620 --> 46:41.940
and I'm in a relatively high position.

46:41.940 --> 46:44.500
These emails read like something out of a spy

46:44.500 --> 46:46.120
novel. It's impossible

46:46.120 --> 46:47.980
to know whether Dylan was telling the truth

46:47.980 --> 46:50.220
but it's worth noting how suspicious

46:50.220 --> 46:51.580
the whole situation is.

46:52.420 --> 46:54.000
All of this happened around the most

46:54.000 --> 46:55.920
revolutionary financial invention in

46:55.920 --> 46:57.780
history which directly challenges

46:57.780 --> 46:59.880
established governmental, financial

46:59.880 --> 47:01.460
and banking powers around the world.

47:02.280 --> 47:03.900
Readers can come to their own conclusions

47:03.900 --> 47:05.860
but in my mind by late

47:05.860 --> 47:07.700
2013 Bitcoin

47:07.700 --> 47:09.700
had already been targeted for capture.

47:11.380 --> 47:12.020
Blockstream

47:12.020 --> 47:13.540
would end up being the most influential

47:13.540 --> 47:15.040
company in Bitcoin's history.

47:15.400 --> 47:17.880
Blockstream was founded as a for-profit company

47:17.880 --> 47:19.840
a fact that made other Bitcoiners

47:19.840 --> 47:21.700
immediately curious about their business model.

47:22.300 --> 47:23.800
Shortly after its formation

47:23.800 --> 47:25.760
the culture shifted, disagreements

47:25.760 --> 47:27.700
turned hostile and the most radical

47:27.700 --> 47:29.600
small block position which hardly

47:29.600 --> 47:31.780
anybody had taken seriously became more

47:31.780 --> 47:32.800
vocal and aggressive.

47:33.540 --> 47:35.740
Blockstream engineers started to insist

47:35.740 --> 47:37.740
that Bitcoin could not scale the way

47:37.740 --> 47:39.540
it was originally designed while censorship

47:39.540 --> 47:41.820
began in the online forums. In a Forbes

47:41.820 --> 47:43.620
interview CEO Adam Back shared

47:43.620 --> 47:45.680
one part of their monetization strategy

47:45.680 --> 47:47.600
saying Blockstream plans

47:47.600 --> 47:49.400
to sell sidechains to enterprises

47:49.400 --> 47:51.540
charging a fixed monthly fee, taking

47:51.540 --> 47:53.700
transaction fees and even selling hardware.

47:54.620 --> 47:55.860
Blockstream has released

47:55.860 --> 47:57.620
their version of a sidechain called

47:57.620 --> 47:59.660
the liquid network. The liquid

47:59.660 --> 48:01.740
network is a federated sidechain

48:01.740 --> 48:03.800
which is better understood as a centralized

48:03.800 --> 48:06.120
sidechain or even an altcoin.

48:06.120 --> 48:08.120
The basic security of their

48:08.120 --> 48:09.980
network requires trust in a small

48:09.980 --> 48:12.480
hand-selected group they call the liquid federation.

48:12.940 --> 48:13.620
In early

48:13.620 --> 48:16.220
2016, eyebrows were raised

48:16.220 --> 48:17.700
when Blockstream completed a

48:17.700 --> 48:20.000
$55 million round of Series A funding.

48:20.300 --> 48:22.380
One of the primary investors was a AXI

48:22.380 --> 48:24.260
strategic ventures, a branch

48:24.260 --> 48:25.920
of the French multinational firm

48:25.920 --> 48:27.820
AXA. At the time

48:27.820 --> 48:30.040
the CEO of AXA was Henri

48:30.040 --> 48:32.020
de Castry, a magnate of the

48:32.020 --> 48:33.400
international financial system.

48:33.400 --> 48:35.460
De Castries was also

48:35.460 --> 48:37.040
chairman of the Bilderberg Group, a

48:37.040 --> 48:38.740
collection of political and business leaders

48:38.740 --> 48:40.680
from Europe and North America that meets

48:40.680 --> 48:43.160
in private every year to debate megatrends

48:43.160 --> 48:44.760
and major issues facing the world.

48:45.420 --> 48:47.280
When Blockstream was created, their

48:47.280 --> 48:49.000
initial funding came from establishment

48:49.000 --> 48:51.200
financial companies including Mastercard,

48:51.440 --> 48:52.760
a direct competitor of Bitcoin.

48:53.500 --> 48:55.140
The digital currency group is another

48:55.140 --> 48:56.880
venture capital firm which has raised

48:57.400 --> 48:59.320
suspicions after investing in a huge

48:59.320 --> 49:01.200
range of cryptocurrency projects

49:01.200 --> 49:02.300
Blockstream included.

49:03.260 --> 49:05.000
Early Bitcoin adopter and internet

49:05.000 --> 49:07.120
personality, Stefan Molinou, had this

49:07.120 --> 49:08.980
concern as early as 2014

49:08.980 --> 49:11.320
when he predicted that existing financial

49:11.320 --> 49:13.140
and political interests would recognize

49:13.140 --> 49:15.220
Bitcoin as a threat and try to

49:15.220 --> 49:16.200
slowly capture it.

49:16.480 --> 49:19.580
My caution, my advice, my concern

49:19.580 --> 49:21.180
is that what I see in the Bitcoin

49:21.180 --> 49:23.260
community is quite

49:23.260 --> 49:24.840
a bit of optimism

49:24.840 --> 49:26.900
and I would also a little bit of

49:26.900 --> 49:29.120
political naivete. I think it's

49:29.120 --> 49:31.140
really, really important to understand

49:31.140 --> 49:32.900
how big

49:32.900 --> 49:34.880
the behemoth is

49:34.880 --> 49:36.560
that Bitcoin

49:37.120 --> 49:38.160
is facing.

49:39.380 --> 49:40.980
There will of course be

49:40.980 --> 49:43.400
efforts made on the part of

49:43.400 --> 49:45.020
the financial

49:45.020 --> 49:46.360
government complex

49:47.060 --> 49:48.460
to keep the technology

49:48.880 --> 49:51.200
at bay. Now, my guess

49:51.200 --> 49:52.380
is that they don't

49:52.840 --> 49:54.900
and they won't. I would say, well

49:54.900 --> 49:57.020
let's not kill it completely, let's not kill it

49:57.020 --> 49:57.380
outright.

49:59.480 --> 50:00.960
Because it's big enough now

50:00.960 --> 50:02.880
that people will see what we've done and nobody

50:02.880 --> 50:04.920
it really disturbs the villagers when a body

50:04.920 --> 50:06.960
falls through the sky. So what they're going

50:06.960 --> 50:08.600
to try and do is they're just going to try

50:08.600 --> 50:09.960
and not

50:10.720 --> 50:13.340
take out the revving engine with an airstrike

50:13.340 --> 50:14.900
but just throw little bits of sand

50:14.900 --> 50:16.880
in it, little bits of sand in it, little

50:16.880 --> 50:18.440
bits of sand in it until

50:19.200 --> 50:20.760
most people find it too difficult

50:20.760 --> 50:22.560
and cumbersome to use and then say, well it was

50:22.560 --> 50:24.800
an interesting idea, just didn't quite work out

50:24.800 --> 50:26.460
the way that people wanted.

50:27.340 --> 50:28.940
Low fees are also critical

50:28.940 --> 50:30.900
to the long-term success of programmable

50:30.900 --> 50:32.740
money. The attitude towards

50:32.740 --> 50:34.740
high fees has shifted today, but

50:34.740 --> 50:36.800
originally even a 5 cent transaction

50:36.800 --> 50:38.900
fee was considered laughably high.

50:39.620 --> 50:40.740
In a famous interview

50:40.740 --> 50:42.400
Vitalik Buterin commented,

50:42.880 --> 50:45.200
Right now, Bitcoin transaction costs 5 cents

50:45.200 --> 50:45.840
which is

50:47.000 --> 50:48.640
fine right now because

50:48.640 --> 50:50.360
PayPal's fees are even stupider

50:50.360 --> 50:52.540
but the internet of money

50:52.540 --> 50:54.500
should not cost 5 cents a transaction.

50:54.980 --> 50:56.180
It's kind of absurd.

50:56.600 --> 50:58.380
Nobody captured this sentiment

50:58.380 --> 51:00.460
better than Mike Hearn in a public

51:00.460 --> 51:02.400
email thread with Greg Maxwell.

51:03.160 --> 51:04.740
Hearn started the email

51:04.740 --> 51:06.620
by quoting Maxwell who was

51:06.620 --> 51:08.600
trying to argue that tiny blocks were

51:08.600 --> 51:09.940
always the plan from the beginning.

51:10.460 --> 51:12.940
Look, it's clear you have decided

51:12.940 --> 51:14.460
that the way Bitcoin was

51:14.460 --> 51:16.540
meant to evolve isn't to your personal liking.

51:16.920 --> 51:17.620
That's fine.

51:18.240 --> 51:20.360
Go make an altcoin where your founding

51:20.360 --> 51:22.360
documents state that it's intended to

51:22.360 --> 51:24.320
always run on a 2015

51:24.320 --> 51:26.340
Raspberry Pi or whatever it is

51:26.340 --> 51:27.520
you mean by small device.

51:28.660 --> 51:30.320
Remove SPV capability

51:30.320 --> 51:32.260
from the protocol so everyone

51:32.260 --> 51:33.420
has to fully validate.

51:34.200 --> 51:36.000
Make sure that's the understanding that

51:36.000 --> 51:37.980
everyone has from day one about

51:37.980 --> 51:40.120
what your altcoin is for. Then when

51:40.120 --> 51:42.300
someone says, gee, it'd be nice if we had

51:42.300 --> 51:44.340
some more capacity, you or someone

51:44.340 --> 51:45.980
else can go point at the announcement

51:45.980 --> 51:48.080
emails and say, no, Greg

51:48.080 --> 51:50.460
coin is meant to always be verifiable

51:50.460 --> 51:51.500
on small devices.

51:52.000 --> 51:54.080
That's our social contract and it's

51:54.080 --> 51:56.020
written into the consensus rules for that reason.

51:56.680 --> 51:58.040
But your attempt to convert

51:58.040 --> 52:00.260
Bitcoin into that altcoin by exploiting

52:00.260 --> 52:02.120
a temporary hack is desperate

52:02.120 --> 52:04.300
and deeply upsetting to many people.

52:04.960 --> 52:06.040
Not many quit their

52:06.040 --> 52:07.860
jobs and created companies to build

52:07.860 --> 52:09.820
products only for today's tiny user base.

52:10.480 --> 52:11.880
Nobody put it better than Mike

52:11.880 --> 52:12.960
Hearn then or now.

52:13.460 --> 52:15.540
After seeing the failures of Bitcoin

52:15.540 --> 52:17.220
and what it's turned into today,

52:17.540 --> 52:19.480
I think Hearn's anger and frustration were

52:19.480 --> 52:21.520
justified and he was certainly not alone.

52:22.100 --> 52:23.420
Andreas Antonopoulos

52:23.420 --> 52:25.320
who has since become a popular advocate

52:25.320 --> 52:27.360
for Bitcoin and cryptocurrencies also

52:27.360 --> 52:29.220
expressed his frustration at the behavior

52:29.220 --> 52:31.600
of the core developers and Mr. Maxwell

52:31.600 --> 52:32.260
in particular.

52:33.100 --> 52:35.360
Maxwell has previously posted several

52:35.360 --> 52:37.240
misattributed quotes and then

52:37.240 --> 52:39.400
failed to retract them or apologize.

52:40.200 --> 52:41.580
The only thing that mattered

52:41.580 --> 52:43.360
in this debate was the opinion of

52:43.360 --> 52:44.640
the three to four developers

52:44.640 --> 52:46.820
who did not want any process

52:46.820 --> 52:49.080
that resulted in anything but what they

52:49.080 --> 52:50.020
had already decided.

52:50.680 --> 52:52.760
They twisted, turned and rationalized

52:53.270 --> 52:55.160
but in the end did exactly what they

52:55.160 --> 52:56.200
intended from the beginning,

52:56.820 --> 52:58.900
censorship of particular opinions

52:58.900 --> 53:00.660
by exclusion and decree.

53:01.640 --> 53:03.220
All hail our new overlords.

53:03.680 --> 53:04.900
They're not just coders,

53:05.140 --> 53:07.160
they are press directors and own Bitcoin

53:07.160 --> 53:08.880
as they often say

53:08.880 --> 53:10.980
if you don't like it, fork.

53:12.200 --> 53:14.220
Mike Hearn and Gavin Anderson

53:14.220 --> 53:15.780
had previously created

53:15.780 --> 53:17.260
an alternative implementation

53:17.260 --> 53:19.260
called Bitcoin XT

53:19.260 --> 53:21.480
to make some non-critical changes

53:21.480 --> 53:22.240
to the software.

53:22.680 --> 53:25.100
It was this alternative implementation

53:25.100 --> 53:27.400
that was chosen to be the big block

53:27.400 --> 53:28.960
replacement of Bitcoin Core.

53:29.380 --> 53:31.140
The block size limit would be increased

53:31.140 --> 53:32.400
on Bitcoin XT

53:32.400 --> 53:34.380
making it incompatible with Core

53:34.380 --> 53:36.800
and if a critical mass of miners used it

53:36.800 --> 53:39.040
the network would be successfully upgraded

53:39.040 --> 53:40.280
at long last

53:40.280 --> 53:41.760
to allow for larger blocks.

53:42.760 --> 53:44.760
Satoshi described this upgrade mechanism

53:44.760 --> 53:45.840
in the white paper stating

53:45.840 --> 53:48.640
proof of work also solves the problem

53:48.640 --> 53:50.040
of determining representation

53:50.040 --> 53:51.500
in majority decision making.

53:51.780 --> 53:54.500
Proof of work is essentially one CPU

53:54.740 --> 53:56.500
one vote. The majority decision

53:56.500 --> 53:58.180
is represented by the longest chain

53:58.180 --> 54:00.040
which has the greatest proof of work

54:00.040 --> 54:01.200
effort invested in it.

54:01.780 --> 54:03.660
Miners vote with their CPU power

54:03.660 --> 54:06.100
expressing their acceptance of valid blocks

54:06.100 --> 54:07.500
by working on extending them

54:07.500 --> 54:09.560
and rejecting invalid blocks

54:09.560 --> 54:11.080
by refusing to work on them.

54:11.580 --> 54:13.200
Any needed rules and incentives

54:13.200 --> 54:15.580
can be enforced with this consensus mechanism.

54:16.940 --> 54:17.500
BIP101

54:17.500 --> 54:19.600
was considered a hard fork upgrade

54:19.600 --> 54:21.480
because it would be incompatible

54:21.480 --> 54:23.180
with previous versions of the software

54:23.180 --> 54:25.220
as opposed to a soft fork

54:25.220 --> 54:26.700
which maintains compatibility.

54:27.480 --> 54:29.600
Peter Willow from Bitcoin Core stated

54:29.600 --> 54:31.840
if we are willing to go through the risk

54:31.840 --> 54:33.520
of a hard fork because of a fear

54:33.520 --> 54:34.540
of change of economics

54:34.540 --> 54:37.440
then I believe the Bitcoin community is not

54:37.440 --> 54:38.660
ready to deal with change at all.

54:38.980 --> 54:41.240
In hindsight the drama surrounding

54:41.240 --> 54:42.860
hard forks looks overblown.

54:43.560 --> 54:45.560
Nearly every cryptocurrency project

54:45.560 --> 54:46.700
undergoes hard forks

54:46.700 --> 54:48.960
because they are an essential mechanism

54:48.960 --> 54:50.540
for upgrading critical code

54:50.540 --> 54:53.260
fixing bugs and reducing technical baggage.

54:53.520 --> 54:55.420
Ethereum regularly undergoes

54:55.420 --> 54:57.540
hard forks. Bitcoin cash

54:57.540 --> 54:59.380
has undergone several since its release

54:59.380 --> 55:01.360
but back in 2015

55:01.360 --> 55:04.000
this precedent was not yet established

55:04.000 --> 55:06.060
and Core was able to stoke fears

55:06.060 --> 55:07.840
that a hard fork could break the network.

55:08.240 --> 55:10.460
With the widespread international agreement

55:10.460 --> 55:12.020
that the block size limit

55:12.020 --> 55:13.000
must be raised

55:13.000 --> 55:15.660
the power and influence of Bitcoin Core

55:15.660 --> 55:17.680
looked like it was coming to an end.

55:17.940 --> 55:19.860
If a super majority of minors

55:19.860 --> 55:20.900
followed Hearn and Anderson

55:20.900 --> 55:23.020
the small block vision of Bitcoin

55:23.020 --> 55:24.960
would be relegated to an altcoin

55:24.960 --> 55:27.960
and the Core developers would effectively be fired.

55:28.540 --> 55:29.780
So there was an immediate

55:29.780 --> 55:32.100
widespread campaign to shut down XT

55:32.100 --> 55:33.900
before it gained too much momentum.

55:34.840 --> 55:36.360
BTC's powerful narrative

55:36.360 --> 55:38.040
repeated everywhere in the media

55:38.040 --> 55:40.020
did not spontaneously emerge

55:40.020 --> 55:41.760
nor was it the result

55:41.760 --> 55:44.180
of free and open discussion among Bitcoin enthusiasts.

55:44.980 --> 55:47.160
The two most important discussion platforms

55:47.160 --> 55:49.020
on which the overwhelming majority

55:49.020 --> 55:50.030
of conversations happened

55:50.300 --> 55:52.110
were BitcoinTalk.org

55:52.340 --> 55:54.080
and the R Bitcoin subreddit.

55:54.500 --> 55:56.380
Both platforms happened to be controlled

55:56.380 --> 55:57.320
by the same person

55:57.320 --> 55:59.300
known by the pseudonym Themos

55:59.300 --> 56:01.540
who also owns the Bitcoin wiki.

56:02.060 --> 56:03.780
That's one person with enormous power

56:03.780 --> 56:06.100
to shape narratives and direct the flow of information.

56:06.380 --> 56:07.740
And when the time came

56:07.740 --> 56:10.360
he was not hesitant to exercise this power.

56:10.800 --> 56:12.340
In August 2015

56:12.340 --> 56:14.100
Themos announced a new

56:14.100 --> 56:15.760
moderation policy on R Bitcoin

56:15.760 --> 56:17.760
that censored all discussion

56:17.760 --> 56:18.820
of Bitcoin XT.

56:19.540 --> 56:21.840
The key message was that all hard forks

56:21.840 --> 56:23.880
are illegitimate without a consensus

56:23.880 --> 56:24.880
of Core developers.

56:24.880 --> 56:26.320
Because of this

56:26.680 --> 56:28.700
Bitcoin XT was not really Bitcoin

56:28.700 --> 56:30.960
and therefore could no longer be discussed

56:30.960 --> 56:31.680
on the platform.

56:32.060 --> 56:34.980
I know almost for certain that there is no consensus

56:34.980 --> 56:36.280
to the change in XT

56:36.280 --> 56:38.160
because Bitcoin Core developers

56:38.720 --> 56:40.480
Latimer, Greg and Peter

56:40.480 --> 56:41.640
are opposed to it.

56:41.880 --> 56:43.520
That's enough to block consensus.

56:44.020 --> 56:46.200
This isn't some democratic country

56:46.580 --> 56:48.020
where you can always get your way

56:48.020 --> 56:49.340
with sufficient politicking.

56:49.560 --> 56:52.320
Get consensus, live without the change

56:52.320 --> 56:54.440
or create your own altcoin.

56:55.460 --> 56:56.800
The Bitcoin community

56:56.800 --> 56:57.360
was livid.

56:57.960 --> 57:00.120
Themos' announcement was another dark milestone

57:00.120 --> 57:01.140
in Bitcoin's history

57:01.140 --> 57:03.380
and it generated a huge reaction.

57:04.020 --> 57:06.280
The threat accumulated more than a thousand comments.

57:07.100 --> 57:08.860
Themos was not shy about his decision

57:08.860 --> 57:10.680
and he revealed his censorship

57:10.680 --> 57:11.960
strategy and conversation

57:11.960 --> 57:13.640
that would eventually be leaked.

57:14.440 --> 57:16.740
You must be naive if you think it'll have no effect.

57:17.420 --> 57:18.760
I've moderated forums

57:18.760 --> 57:19.960
since long before Bitcoin

57:19.960 --> 57:21.180
some quite large

57:21.660 --> 57:23.700
and I know how moderation affects people.

57:24.220 --> 57:25.760
Long term banning XT

57:25.760 --> 57:27.060
from R slash Bitcoin

57:27.060 --> 57:30.000
will hurt XT's chances to hijack Bitcoin.

57:30.480 --> 57:31.660
There's still a chance

57:31.660 --> 57:32.720
but it's smaller.

57:33.180 --> 57:35.600
This is improved by the simultaneous action

57:35.600 --> 57:36.960
on bitcointalk.org

57:36.960 --> 57:39.680
bitcoin.i and bitcoin.org

57:39.680 --> 57:41.720
I do have power over

57:41.720 --> 57:43.060
certain centralized websites

57:43.060 --> 57:46.000
which I've decided to use for the benefit of Bitcoin as a whole.

57:46.480 --> 57:47.560
The decision to

57:47.560 --> 57:49.760
censor all discussion of Bitcoin XT

57:49.760 --> 57:51.460
did not just infuriate

57:51.460 --> 57:52.460
regular Bitcoiners.

57:52.900 --> 57:54.500
It also upset fellow moderators.

57:55.160 --> 57:57.080
A few days after Themos' announcement

57:57.080 --> 57:58.600
a dissident moderator

57:58.600 --> 58:01.540
J. Ratcliffe 63367

58:01.540 --> 58:03.460
wrote a sharply critical article.

58:04.220 --> 58:05.320
Only 10 days after

58:05.320 --> 58:06.980
his public criticism of Themos

58:07.280 --> 58:09.600
he was removed as a moderator from our Bitcoin.

58:10.320 --> 58:10.960
Unfortunately

58:10.960 --> 58:12.880
mass censorship and propaganda

58:12.880 --> 58:15.840
were not the only tactics used against Bitcoin XT.

58:15.840 --> 58:18.040
The core developers were not happy

58:18.040 --> 58:19.880
about the idea of letting miners decide

58:19.880 --> 58:22.140
what the main software implementation should be.

58:22.540 --> 58:24.300
Just like with the block size limit

58:24.300 --> 58:25.920
they argued that it would harm

58:25.920 --> 58:27.520
Bitcoin's decentralization.

58:27.820 --> 58:30.180
Hearn pointed out that without such a mechanism

58:30.180 --> 58:31.960
the obvious threat to decentralization

58:32.620 --> 58:34.840
would be cores monopoly over the protocol.

58:35.480 --> 58:36.200
Right now

58:36.200 --> 58:38.920
the people doing the most to hurt decentralization of Bitcoin

58:38.920 --> 58:40.500
are Blockstream and Vladimir

58:40.500 --> 58:42.040
by telling people that

58:42.040 --> 58:44.180
using the blockchain as a voting mechanism

58:44.180 --> 58:45.920
as was done in the past

58:45.920 --> 58:48.700
is reckless and will destroy Bitcoin's value.

58:49.100 --> 58:50.450
The logical implication

58:50.700 --> 58:52.380
of this argument is that only

58:52.380 --> 58:53.720
Bitcoin core developers

58:53.720 --> 58:55.480
and really only Vladimir

58:55.890 --> 58:58.280
can change big chunks of the Bitcoin protocol

58:58.280 --> 59:00.220
and thus that they are effectively

59:00.220 --> 59:01.880
the CEOs of Bitcoin

59:01.880 --> 59:04.680
which is the opposite of decentralization.

59:05.200 --> 59:06.140
A moderator

59:06.140 --> 59:07.540
of r slash Bitcoin

59:07.930 --> 59:09.400
user hard left one two one

59:10.050 --> 59:11.920
reacted positively to Hearn's post

59:11.920 --> 59:14.140
saying that everyone should read this

59:14.140 --> 59:16.040
it wasn't supposed to be like this

59:16.040 --> 59:17.440
Mike and Gavin are right

59:17.440 --> 59:19.480
hard left one two one

59:19.480 --> 59:21.820
was also removed from his position as a moderator

59:21.820 --> 59:22.600
by Themos.

59:23.320 --> 59:26.020
Brian Armstrong was interviewed by Bitcoin magazine

59:26.020 --> 59:27.460
about Coinbase's position

59:27.460 --> 59:29.800
with regards to BIP101

59:29.800 --> 59:31.220
and Bitcoin XT

59:31.730 --> 59:32.440
he responded

59:32.440 --> 59:35.660
in my view Bitcoin XT is the best option

59:35.660 --> 59:36.460
I've seen so far

59:36.460 --> 59:38.880
not just because it has working code

59:38.880 --> 59:41.040
but also because it has a simple

59:41.040 --> 59:42.940
implementation that is easy to

59:42.940 --> 59:44.720
understand the block size

59:44.720 --> 59:46.520
increases seem about right to me

59:46.520 --> 59:48.860
and I have confidence in the people behind

59:48.860 --> 59:50.900
the project we will upgrade

59:50.900 --> 59:52.760
regardless of whether Bitcoin

59:52.760 --> 59:53.960
core is updated

59:54.740 --> 59:56.860
I've been disappointed to see how slow Bitcoin

59:56.860 --> 59:58.440
core has moved on this issue

59:58.440 --> 01:00:00.780
and we're open to switching forks

01:00:01.440 --> 01:00:03.000
the day that interview was

01:00:03.000 --> 01:00:04.940
published it was linked to on our

01:00:04.940 --> 01:00:06.800
Bitcoin upsetting Themos

01:00:06.800 --> 01:00:08.900
who immediately warned that Coinbase could be

01:00:08.900 --> 01:00:10.900
punished and censored from the online

01:00:10.900 --> 01:00:12.760
forms for their act of disobedience

01:00:12.760 --> 01:00:14.700
if Coinbase promotes

01:00:14.700 --> 01:00:17.480
XT to customers on Coinbase.com

01:00:17.480 --> 01:00:18.760
and or switches

01:00:18.760 --> 01:00:21.180
all of its full nodes to BIP101

01:00:21.180 --> 01:00:23.180
software then Coinbase

01:00:23.180 --> 01:00:25.060
is no longer using the Bitcoin currency

01:00:25.060 --> 01:00:27.160
and it doesn't belong on our Bitcoin

01:00:27.160 --> 01:00:28.860
this also applies

01:00:28.860 --> 01:00:30.540
to BitcoinTalk.org

01:00:30.540 --> 01:00:32.900
where Coinbase would be restricted to the all

01:00:32.900 --> 01:00:35.140
coin section Bitcoin.it

01:00:35.140 --> 01:00:37.480
and Bitcoin.org have similar policies

01:00:40.740 --> 01:00:42.760
in December 2015

01:00:42.760 --> 01:00:44.920
Coinbase announced that they were running

01:00:44.920 --> 01:00:46.500
Bitcoin XT on their servers

01:00:46.810 --> 01:00:48.540
and supporting Bitcoin XT

01:00:48.540 --> 01:00:51.020
though they were still open to other proposals

01:00:51.020 --> 01:00:53.000
in response the owners of

01:00:53.000 --> 01:00:55.000
Bitcoin.org promptly removed

01:00:55.000 --> 01:00:56.260
Coinbase from their website

01:00:56.830 --> 01:00:59.400
a remarkable move considering that Coinbase

01:00:59.400 --> 01:01:01.180
might have onboarded more people to

01:01:01.180 --> 01:01:03.080
Bitcoin than any other company in the

01:01:03.080 --> 01:01:05.000
world the removal was made

01:01:05.000 --> 01:01:07.000
by one of the owners of Bitcoin.org

01:01:07.000 --> 01:01:09.080
another shadowy figure known

01:01:09.080 --> 01:01:11.200
by the pseudonym Cobra who stated

01:01:11.200 --> 01:01:13.120
Coinbase is now running

01:01:13.120 --> 01:01:15.020
Bitcoin XT in their production

01:01:15.020 --> 01:01:16.980
servers XT

01:01:16.980 --> 01:01:19.020
is in contentious hard fork attempt

01:01:19.020 --> 01:01:20.740
that will create a new all coin

01:01:20.740 --> 01:01:22.660
and split the community and blockchain

01:01:22.660 --> 01:01:24.440
should it ever go into effect

01:01:24.880 --> 01:01:27.280
if this ever happens Coinbase's customers

01:01:27.280 --> 01:01:28.920
may find that they no longer

01:01:28.920 --> 01:01:30.320
own any actual Bitcoin

01:01:30.320 --> 01:01:32.100
this announcement again

01:01:32.100 --> 01:01:33.800
raised the ire of many Bitcoiners

01:01:34.320 --> 01:01:35.920
developer Jameson Lopp wrote

01:01:35.920 --> 01:01:37.960
the potential for forking

01:01:37.960 --> 01:01:39.440
does not an all coin make

01:01:39.440 --> 01:01:41.560
until such time as a BIP

01:01:42.040 --> 01:01:43.340
101 fork occurs

01:01:43.340 --> 01:01:46.160
companies running XT are definitely running

01:01:46.160 --> 01:01:48.240
Bitcoin if a hard fork does

01:01:48.240 --> 01:01:50.280
occur said companies may still

01:01:50.280 --> 01:01:52.280
be running Bitcoin it would have

01:01:52.280 --> 01:01:54.160
to be judged which fork is the winner

01:01:54.160 --> 01:01:55.120
post fork

01:01:55.120 --> 01:01:58.120
removing companies as not running

01:01:58.120 --> 01:02:00.300
Bitcoin when no fork has occurred

01:02:00.300 --> 01:02:01.160
is jumping the gun

01:02:01.820 --> 01:02:04.080
Bitcoin veteran Olivier Janssen

01:02:04.080 --> 01:02:06.100
claimed that the move was retaliation

01:02:06.100 --> 01:02:08.020
for Coinbase having dared

01:02:08.020 --> 01:02:09.520
to speak up against CoreDev

01:02:10.120 --> 01:02:12.140
there is something funny about the use of the

01:02:12.140 --> 01:02:14.360
term consensus to describe

01:02:14.360 --> 01:02:16.180
the position of a handful of core

01:02:16.180 --> 01:02:18.120
developers as opposed to the

01:02:18.120 --> 01:02:20.320
overwhelming majority of industry participants

01:02:20.320 --> 01:02:22.360
if there was any actual

01:02:22.360 --> 01:02:24.100
consensus in 2015

01:02:24.100 --> 01:02:26.160
it was that the block size limit

01:02:26.160 --> 01:02:27.500
needed to be raised immediately

01:02:27.500 --> 01:02:37.350
XT posed a real threat to small blockers

01:02:37.350 --> 01:02:38.810
so they attacked it

01:02:39.250 --> 01:02:41.210
claiming it risked the integrity of the

01:02:41.210 --> 01:02:42.430
entire Bitcoin network

01:02:43.110 --> 01:02:45.130
because the core developers did not approve

01:02:45.130 --> 01:02:47.270
XT was deemed controversial

01:02:47.270 --> 01:02:48.990
and therefore too risky

01:02:48.990 --> 01:02:51.330
or even reckless for anyone to

01:02:51.330 --> 01:02:53.150
support yet this way of

01:02:53.150 --> 01:02:54.910
upgrading Bitcoin was described by

01:02:54.910 --> 01:02:57.030
Satoshi himself all the way back

01:02:57.030 --> 01:02:59.210
in 2010 it can be

01:02:59.210 --> 01:03:00.990
phased in like if block

01:03:00.990 --> 01:03:03.390
number greater than 115,000

01:03:03.390 --> 01:03:05.090
max block size

01:03:05.090 --> 01:03:06.210
equals larger limit

01:03:06.730 --> 01:03:09.070
it can start being inversions way ahead

01:03:09.070 --> 01:03:11.110
so by the time it reaches that block

01:03:11.110 --> 01:03:12.270
number and goes into effect

01:03:12.870 --> 01:03:14.790
the older versions that don't have it

01:03:14.790 --> 01:03:15.890
are already obsolete

01:03:15.890 --> 01:03:18.170
when we're near the cutoff block number

01:03:18.170 --> 01:03:20.230
I can put an alert to old versions

01:03:20.230 --> 01:03:21.910
to make sure they know they have to upgrade

01:03:22.730 --> 01:03:24.290
Satoshi's method was simple and

01:03:24.290 --> 01:03:25.510
straightforward as usual

01:03:25.510 --> 01:03:28.050
he recommended creating a hard fork

01:03:28.050 --> 01:03:30.150
upgrade that would increase the block

01:03:30.150 --> 01:03:32.110
size limit at a predetermined time in the

01:03:32.110 --> 01:03:34.150
future despite the open support

01:03:34.150 --> 01:03:35.770
for larger blocks in

01:03:35.770 --> 01:03:37.530
BIP 101 in particular

01:03:38.050 --> 01:03:39.950
some miners started to get cold feet

01:03:39.950 --> 01:03:41.990
due to the controversy created by core

01:03:41.990 --> 01:03:44.470
supporters ant pool a mining pool

01:03:44.470 --> 01:03:46.090
accounting for roughly 20%

01:03:46.090 --> 01:03:47.830
of the hash rate at the time stated

01:03:47.830 --> 01:03:49.850
we like the idea of increasing the

01:03:49.850 --> 01:03:51.710
maximum block size but if Bitcoin

01:03:51.710 --> 01:03:53.990
XT is too contentious we also don't

01:03:53.990 --> 01:03:55.410
want the community to be divided

01:03:55.410 --> 01:03:57.630
it's not hard to understand why miners

01:03:57.630 --> 01:03:59.110
would prefer the easiest option

01:03:59.110 --> 01:04:01.030
which would have been core coming to their

01:04:01.030 --> 01:04:02.830
senses and raising the block size limit

01:04:03.270 --> 01:04:05.330
the entire industry desired the same

01:04:05.330 --> 01:04:07.170
thing which is why it took years

01:04:07.170 --> 01:04:08.990
before Bitcoin XT was created

01:04:08.990 --> 01:04:10.950
however as time went on

01:04:10.950 --> 01:04:13.270
it became clear that core would not

01:04:13.270 --> 01:04:15.290
change their minds and to believe otherwise

01:04:15.290 --> 01:04:16.610
was simply wishful thinking

01:04:17.230 --> 01:04:19.170
Bitcoin core would find another way

01:04:19.170 --> 01:04:21.310
to obfuscate and delay by organizing

01:04:21.310 --> 01:04:23.710
a series of scaling Bitcoin conferences

01:04:23.710 --> 01:04:25.450
that tried to persuade miners

01:04:25.450 --> 01:04:27.070
to keep running core software

01:04:27.710 --> 01:04:29.830
at these conferences they agreed

01:04:29.830 --> 01:04:31.950
that the block size limit had to be raised

01:04:31.950 --> 01:04:33.570
but only to 2 megabytes

01:04:33.570 --> 01:04:34.750
instead of 8 megabytes

01:04:34.750 --> 01:04:37.110
miners were urged to keep trusting core

01:04:37.110 --> 01:04:39.650
and wait a little longer for more substantial upgrades

01:04:39.650 --> 01:04:41.930
in August 2015

01:04:41.930 --> 01:04:43.610
the CEO of Blockstream

01:04:43.610 --> 01:04:44.650
Adam Back wrote

01:04:44.650 --> 01:04:47.510
my suggestion 2 megabyte now

01:04:47.510 --> 01:04:49.890
then 4 megabyte in 2 years

01:04:49.890 --> 01:04:52.150
in 8 megabyte in 4 years

01:04:52.150 --> 01:04:53.250
then reasses

01:04:53.250 --> 01:04:55.590
and later in December of that year added

01:04:55.970 --> 01:04:57.970
there is consensus from developers

01:04:57.970 --> 01:05:00.630
miners that 2 megabyte is next step

01:05:00.630 --> 01:05:02.490
over the following years

01:05:02.490 --> 01:05:04.250
this 2 megabyte compromise was

01:05:04.250 --> 01:05:05.870
agreed to several times with core

01:05:05.870 --> 01:05:08.090
ultimately breaking their agreements every time

01:05:08.090 --> 01:05:10.230
when XT failed Mike Hearn

01:05:10.230 --> 01:05:11.610
considered it a demonstration

01:05:11.930 --> 01:05:13.990
that Bitcoin could not overcome the human

01:05:13.990 --> 01:05:16.270
social and psychological barriers

01:05:16.270 --> 01:05:17.490
limiting its own success

01:05:18.030 --> 01:05:18.950
he would later write

01:05:18.950 --> 01:05:21.210
that was the point where I decided

01:05:21.210 --> 01:05:23.090
it had all become a waste of my time

01:05:23.090 --> 01:05:24.970
the vast majority of mining

01:05:24.970 --> 01:05:26.750
hash power was controlled by people

01:05:26.750 --> 01:05:28.490
who were psychologically incapable

01:05:28.490 --> 01:05:30.450
of disobedience to perceived authority

01:05:30.450 --> 01:05:33.150
on January 14th 2016

01:05:33.150 --> 01:05:34.950
Hearn penned the last of his

01:05:34.950 --> 01:05:36.470
excellent essays entitled

01:05:36.470 --> 01:05:38.990
the resolution of the Bitcoin experiment

01:05:38.990 --> 01:05:40.770
in it he explained

01:05:40.770 --> 01:05:42.910
why he considered Bitcoin a failed project

01:05:42.910 --> 01:05:44.890
it has failed because the

01:05:44.890 --> 01:05:45.890
community has failed

01:05:45.890 --> 01:05:47.690
what was meant to be a new

01:05:47.690 --> 01:05:50.010
decentralized form of money that lacked

01:05:50.010 --> 01:05:51.910
systemically important institutions

01:05:51.910 --> 01:05:53.350
and too big to fail

01:05:53.710 --> 01:05:55.610
has become something even worse

01:05:55.610 --> 01:05:57.970
a system completely controlled

01:05:57.970 --> 01:05:59.450
by just a handful of people

01:06:00.110 --> 01:06:02.130
there is no longer much reason

01:06:02.130 --> 01:06:04.150
to think Bitcoin can actually be better

01:06:04.150 --> 01:06:06.230
than the existing financial system

01:06:07.990 --> 01:06:10.010
at the beginning of 2016

01:06:10.010 --> 01:06:12.130
more than 90% of the network

01:06:12.130 --> 01:06:13.850
hash rate expressed support

01:06:13.850 --> 01:06:15.630
for increasing the block size limit

01:06:15.630 --> 01:06:16.890
to at least 2 megabytes

01:06:16.890 --> 01:06:19.530
while Bitcoin XT was not chosen as the

01:06:19.530 --> 01:06:21.550
implementation to make the increase happen

01:06:21.550 --> 01:06:23.390
another quickly took its place

01:06:23.390 --> 01:06:26.030
Bitcoin Classic, led by Gavin

01:06:26.030 --> 01:06:27.330
Anderson and Jeff Garzik

01:06:27.750 --> 01:06:29.510
immediately gained popularity as a

01:06:29.510 --> 01:06:31.570
conservative alternative to Bitcoin Core

01:06:31.570 --> 01:06:33.550
by only increasing the limit

01:06:33.550 --> 01:06:34.550
to 2 megabytes

01:06:35.150 --> 01:06:37.330
like XT, Classic would increase

01:06:37.330 --> 01:06:39.510
the block size limit only after reaching

01:06:39.510 --> 01:06:42.070
a threshold of 75% of the hash rate

01:06:42.070 --> 01:06:44.570
just days after Classic's website

01:06:44.570 --> 01:06:46.410
was created, 50%

01:06:46.410 --> 01:06:47.950
of the hash rate stated their support

01:06:47.950 --> 01:06:48.910
for the new implementation

01:06:49.790 --> 01:06:51.470
despite its instant popularity

01:06:51.470 --> 01:06:53.830
not everybody was ready to fork away from Core

01:06:54.870 --> 01:06:55.870
the strategy

01:06:55.870 --> 01:06:58.250
of waiting for Core to increase the block size

01:06:58.250 --> 01:07:00.170
was not one with a good track record

01:07:00.170 --> 01:07:02.270
Eric Voorhees, the creator

01:07:02.270 --> 01:07:04.070
of the extremely popular Satoshi

01:07:04.070 --> 01:07:05.890
dice game and the shapeshift exchange

01:07:05.890 --> 01:07:08.270
would comment on BTCC's position

01:07:08.270 --> 01:07:10.050
urging them to support Classic

01:07:10.050 --> 01:07:12.750
if only to pressure Core into compromise

01:07:12.750 --> 01:07:14.490
the only circumstance under which

01:07:14.490 --> 01:07:16.250
Core would go to 2 megabytes

01:07:16.250 --> 01:07:18.030
is if they feel an imminent hard fork

01:07:18.030 --> 01:07:19.730
toward Classic or something else

01:07:19.730 --> 01:07:22.010
if your desire is to get Core to add

01:07:22.010 --> 01:07:24.110
2 megabytes, signing on to Classic

01:07:24.110 --> 01:07:25.930
is probably the most affected sick path

01:07:27.230 --> 01:07:28.550
by the end of February

01:07:28.550 --> 01:07:30.650
2016, it looked like

01:07:30.650 --> 01:07:31.930
the pressure was starting to work

01:07:31.930 --> 01:07:33.910
an emergency conference was organized

01:07:33.910 --> 01:07:35.850
in Hong Kong with several large minors

01:07:35.850 --> 01:07:38.030
companies and key Core developers

01:07:38.030 --> 01:07:40.210
on February 20th

01:07:40.210 --> 01:07:42.010
an agreement was reached now called

01:07:42.010 --> 01:07:43.210
the Hong Kong Agreement

01:07:44.010 --> 01:07:45.630
the two key components were

01:07:45.630 --> 01:07:48.010
a hard fork upgrade to raise

01:07:48.010 --> 01:07:49.990
the block size limit to 2 megabytes

01:07:49.990 --> 01:07:51.650
a soft fork upgrade

01:07:51.650 --> 01:07:52.890
to enable Segwit

01:07:52.890 --> 01:07:55.410
Brian Armstrong was a notable critic

01:07:55.790 --> 01:07:57.570
and he flew back from Hong Kong

01:07:57.570 --> 01:07:59.350
convinced that Bitcoin Core

01:07:59.350 --> 01:08:01.490
needed to be replaced as soon as possible

01:08:02.030 --> 01:08:03.330
some Core developers

01:08:03.330 --> 01:08:05.630
and Adam Back have stated that Bitcoin

01:08:05.630 --> 01:08:06.710
is not a democracy

01:08:07.370 --> 01:08:09.090
while this description is correct

01:08:09.090 --> 01:08:10.430
for the current governance model

01:08:10.430 --> 01:08:13.350
with the censorship, character assassinations

01:08:13.350 --> 01:08:15.150
attacks against anyone

01:08:15.150 --> 01:08:16.710
who disagrees with the party line

01:08:16.710 --> 01:08:18.710
and sabotage against free choice

01:08:18.710 --> 01:08:21.810
the current governance is more similar to North Korea

01:08:21.810 --> 01:08:23.250
the magazine

01:08:23.250 --> 01:08:25.870
Cointelegraph covered the story of F2 pool

01:08:25.870 --> 01:08:27.510
a Chinese mining pool

01:08:27.510 --> 01:08:29.550
accounting for more than a quarter of Bitcoin's

01:08:29.550 --> 01:08:30.290
total hash rate

01:08:30.290 --> 01:08:33.250
being attacked immediately after allowing their minors

01:08:33.250 --> 01:08:33.970
to run classic

01:08:33.970 --> 01:08:37.090
the attacks began to target the F2 pool

01:08:37.090 --> 01:08:39.190
Bitcoin mining pool almost immediately

01:08:39.190 --> 01:08:41.590
after the F2 pool team announced their decision

01:08:41.590 --> 01:08:43.130
to test Bitcoin

01:08:43.130 --> 01:08:44.970
classic by launching a

01:08:44.970 --> 01:08:47.150
sub pool in which minors can mine Bitcoin

01:08:47.150 --> 01:08:47.970
classic blocks

01:08:47.970 --> 01:08:51.670
once again the attacks proved remarkably effective

01:08:51.670 --> 01:08:53.090
Bitcoin Classic

01:08:53.090 --> 01:08:55.270
enjoyed its highest support around the middle of March

01:08:55.270 --> 01:08:57.510
2016 before rapidly

01:08:57.510 --> 01:08:59.290
declining so to a large

01:08:59.290 --> 01:09:01.150
number of minors trusting Core

01:09:01.150 --> 01:09:02.330
seemed like a safer option

01:09:03.100 --> 01:09:04.830
unfortunately their trust was misplaced

01:09:04.830 --> 01:09:06.670
and Brian Armstrong's criticisms

01:09:06.670 --> 01:09:07.890
would prove prescient

01:09:07.890 --> 01:09:10.870
the core developers missed their deadlines for both the

01:09:10.870 --> 01:09:13.190
seguit upgrade and block size increase

01:09:13.190 --> 01:09:15.330
they did not adhere to the Hong Kong

01:09:15.330 --> 01:09:17.210
agreement and the blocks kept getting

01:09:17.210 --> 01:09:17.650
fuller

01:09:18.810 --> 01:09:21.010
meanwhile the war to control Bitcoin's

01:09:21.010 --> 01:09:22.470
dominant narrative was raging

01:09:23.150 --> 01:09:24.790
rampant censorship was not the most

01:09:24.790 --> 01:09:26.010
extreme tactic used

01:09:26.010 --> 01:09:28.630
the owners of key informational websites

01:09:28.630 --> 01:09:29.830
became even more brazen

01:09:30.570 --> 01:09:31.930
in July 2016

01:09:32.450 --> 01:09:34.230
the Bitcoin.org owner

01:09:34.230 --> 01:09:35.750
Cobra came up with an idea

01:09:36.490 --> 01:09:38.630
perhaps newcomers could be prevented from learning

01:09:38.630 --> 01:09:40.230
about Bitcoin's original design

01:09:40.230 --> 01:09:42.190
by changing the white paper itself

01:09:42.190 --> 01:09:44.450
I feel like the Bitcoin described

01:09:44.450 --> 01:09:46.390
in the paper and the Bitcoin described

01:09:46.390 --> 01:09:48.650
on Bitcoin.org are starting to diverge

01:09:48.650 --> 01:09:50.710
at some point I think the paper

01:09:50.710 --> 01:09:52.310
will start to do more harm than good

01:09:52.310 --> 01:09:54.450
because it tricks people into believing

01:09:54.450 --> 01:09:55.430
they understand Bitcoin

01:09:55.430 --> 01:09:57.690
Cobra then makes the extraordinary

01:09:57.690 --> 01:09:59.570
claim that the white paper is not

01:09:59.570 --> 01:10:01.870
meant to explain Satoshi's original design

01:10:01.870 --> 01:10:03.470
but rather to explain

01:10:03.470 --> 01:10:05.430
how the present Bitcoin Core software

01:10:05.430 --> 01:10:07.630
works I have seen people

01:10:07.630 --> 01:10:09.590
promote toxic and crazy ideas

01:10:09.590 --> 01:10:11.770
and then cite parts of the paper

01:10:11.770 --> 01:10:13.470
in an effort to justify it

01:10:13.470 --> 01:10:15.570
academics are also regularly

01:10:15.570 --> 01:10:17.590
citing the paper and basing some

01:10:17.590 --> 01:10:19.110
of their reasoning and arguments

01:10:19.110 --> 01:10:20.710
on this outdated paper

01:10:21.430 --> 01:10:23.470
by Cobra's logic even if the

01:10:23.470 --> 01:10:25.610
core developers wildly change the code

01:10:25.610 --> 01:10:27.510
to lose all resemblance to the original

01:10:27.510 --> 01:10:29.530
Bitcoin the white paper should

01:10:29.530 --> 01:10:31.210
be altered to reflect those changes

01:10:31.210 --> 01:10:33.390
they most immediately commented

01:10:33.390 --> 01:10:35.430
on the thread agreeing that the white paper

01:10:35.430 --> 01:10:37.330
misleads people interesting

01:10:37.330 --> 01:10:39.650
suggestion the paper is definitely

01:10:39.650 --> 01:10:41.530
outdated and I do often see people

01:10:41.530 --> 01:10:43.510
saying just read the white paper

01:10:43.510 --> 01:10:45.470
as if the paper is still a good

01:10:45.470 --> 01:10:46.510
way to learn about Bitcoin

01:10:47.450 --> 01:10:49.330
fortunately this proposal was met

01:10:49.330 --> 01:10:51.390
with sufficient resistance to block the change

01:10:51.390 --> 01:10:53.410
though it would not stop them from

01:10:53.410 --> 01:10:54.510
trying again in the future

01:10:54.510 --> 01:10:57.150
they most would later make another outrageous

01:10:57.150 --> 01:10:59.210
proposal that companies should

01:10:59.210 --> 01:11:01.050
be required to pledge their allegiance

01:11:01.050 --> 01:11:02.470
to the small blocker narrative

01:11:02.470 --> 01:11:04.830
in order to have their products listed

01:11:04.830 --> 01:11:06.650
on the Bitcoin.org website

01:11:07.310 --> 01:11:09.310
Cobra chimed in again criticizing

01:11:09.310 --> 01:11:11.330
the white paper and calling for it

01:11:11.330 --> 01:11:13.170
to be revised or replaced altogether

01:11:13.950 --> 01:11:15.330
the white paper is

01:11:15.330 --> 01:11:17.090
to blame for all these dangerous beliefs

01:11:17.090 --> 01:11:19.230
we seriously need to rewrite it

01:11:19.230 --> 01:11:21.290
or produce a completely new white paper

01:11:21.290 --> 01:11:23.470
and call that the Bitcoin white paper

01:11:23.470 --> 01:11:25.110
two unknown people

01:11:25.110 --> 01:11:27.050
who control the most prominent websites

01:11:27.050 --> 01:11:28.690
in Bitcoin are eager to

01:11:29.070 --> 01:11:30.610
censor, propagandize

01:11:30.610 --> 01:11:33.350
and even rewrite history to push their narrative

01:11:33.350 --> 01:11:35.250
the average user does

01:11:35.250 --> 01:11:36.950
not even know of the existence of

01:11:36.950 --> 01:11:39.130
Thamos and Cobra much less

01:11:39.130 --> 01:11:41.150
so the history of how they pushed a version

01:11:41.150 --> 01:11:43.070
of Bitcoin that is diametrically

01:11:43.070 --> 01:11:44.250
opposed to the original one

01:11:44.250 --> 01:11:49.210
neither do prominent investors that I

01:11:49.210 --> 01:11:50.590
have significant independent research

01:11:50.590 --> 01:11:52.630
or long-term involvement in the industry

01:11:52.630 --> 01:11:53.510
to figure out

01:11:55.770 --> 01:11:57.050
2016 came

01:11:57.050 --> 01:11:59.010
and went without Segwit or a block

01:11:59.010 --> 01:12:01.290
size increase and the next year

01:12:01.290 --> 01:12:03.170
would become the craziest in Bitcoin's

01:12:03.170 --> 01:12:03.450
history

01:12:04.230 --> 01:12:06.310
in January 2017

01:12:07.090 --> 01:12:08.650
blocks were regularly running at

01:12:08.650 --> 01:12:10.350
90% plus capacity

01:12:11.010 --> 01:12:12.670
occasionally bumping into the one megabyte

01:12:12.670 --> 01:12:14.710
limit and by March the average

01:12:14.710 --> 01:12:16.410
transaction fee passed $1

01:12:16.410 --> 01:12:18.990
early Bitcoin entrepreneur Charlie

01:12:18.990 --> 01:12:19.570
Schramm wrote

01:12:19.570 --> 01:12:22.570
if we don't implement bigger blocks ASAP

01:12:22.570 --> 01:12:24.170
PayPal will be cheaper

01:12:24.170 --> 01:12:26.490
Bitcoin I already pay a few dollars

01:12:26.490 --> 01:12:28.410
per TX stop hindering growth

01:12:28.410 --> 01:12:30.170
the next alternative

01:12:30.170 --> 01:12:32.010
implementation started to gain steam

01:12:32.010 --> 01:12:34.490
the Bitcoin unlimited BU team

01:12:34.490 --> 01:12:36.330
wanted to replace the hard-coded block

01:12:36.330 --> 01:12:38.590
size limit with emergent consensus

01:12:38.590 --> 01:12:40.390
the basic idea was

01:12:40.390 --> 01:12:42.150
simply to allow miners and nodes

01:12:42.150 --> 01:12:44.450
to set their own limit without needing approval

01:12:44.450 --> 01:12:46.710
from anyone. Economic incentives

01:12:46.710 --> 01:12:48.410
were strong enough to keep the network

01:12:48.410 --> 01:12:49.810
coordinated and functional

01:12:50.450 --> 01:12:52.950
despite gaining momentum in early 2017

01:12:52.950 --> 01:12:54.610
BU was hated

01:12:54.610 --> 01:12:56.410
by the typical characters and attacked

01:12:56.410 --> 01:12:58.590
on Reddit multiple

01:12:58.590 --> 01:13:00.850
anonymous users shared their intentions

01:13:00.850 --> 01:13:02.790
to exploit any bugs they could

01:13:02.790 --> 01:13:04.050
find for maximum effect

01:13:04.050 --> 01:13:06.530
they succeeded and in the middle

01:13:06.530 --> 01:13:08.390
of March over half the Bitcoin

01:13:08.390 --> 01:13:10.690
unlimited nodes were successfully brought

01:13:10.690 --> 01:13:12.130
down in a coordinated attack

01:13:12.130 --> 01:13:14.290
the bug did not cause much damage

01:13:14.290 --> 01:13:16.130
itself but it did damage

01:13:16.130 --> 01:13:18.350
the reputation of BU at a critical time

01:13:18.350 --> 01:13:19.870
a Bloomberg article

01:13:19.870 --> 01:13:21.150
covering the attacks wrote

01:13:21.980 --> 01:13:23.550
unlimited had in recent weeks

01:13:23.550 --> 01:13:25.350
when the backing of influential miners

01:13:25.350 --> 01:13:27.750
as some decided to give up on reaching

01:13:27.750 --> 01:13:29.810
a community consensus after

01:13:29.810 --> 01:13:31.330
more than two years of discussion

01:13:31.980 --> 01:13:33.750
the bug raises uncertainty about

01:13:33.750 --> 01:13:35.690
whether miners will follow through on their support

01:13:35.690 --> 01:13:37.770
another conference was organized

01:13:37.770 --> 01:13:39.030
this time in New York

01:13:39.030 --> 01:13:41.630
the largest economic players were invited

01:13:41.630 --> 01:13:43.470
along with key core developers

01:13:43.470 --> 01:13:45.570
an agreement was quickly reached

01:13:45.570 --> 01:13:47.210
a conservative one resembling

01:13:47.790 --> 01:13:49.610
the Hong Kong agreement that was previously

01:13:49.610 --> 01:13:51.030
agreed upon Segwit

01:13:51.610 --> 01:13:53.550
would be activated with an 80%

01:13:53.550 --> 01:13:55.310
minor threshold and a

01:13:55.310 --> 01:13:57.190
2 megabyte block size increase

01:13:57.190 --> 01:13:58.670
would happen within six months

01:13:58.670 --> 01:14:01.270
this would become known as the New York agreement

01:14:02.570 --> 01:14:04.830
the overwhelming majority of the industry

01:14:04.830 --> 01:14:06.830
agreed that upgrading Bitcoin's capacity

01:14:06.830 --> 01:14:09.010
was urgent but the Bitcoin core

01:14:09.010 --> 01:14:10.630
developers were absolutely

01:14:10.630 --> 01:14:12.670
unwilling to increase the block size

01:14:12.670 --> 01:14:14.850
limit at all so other

01:14:14.850 --> 01:14:16.830
developers would have to make it happen on a

01:14:16.830 --> 01:14:18.250
different software repository

01:14:18.830 --> 01:14:20.730
Jeff Garzik was chosen as the lead

01:14:20.730 --> 01:14:22.050
developer for this new project

01:14:22.050 --> 01:14:24.670
and the code he was working on would be called

01:14:24.670 --> 01:14:27.290
Segwit 2X or S2X

01:14:27.290 --> 01:14:28.550
once again

01:14:28.550 --> 01:14:30.290
core was at risk of being fired

01:14:30.740 --> 01:14:33.070
if the majority of miners running Segwit

01:14:33.070 --> 01:14:34.750
2X produced a block

01:14:34.750 --> 01:14:35.930
larger than 1 megabyte

01:14:35.930 --> 01:14:38.630
the miners running core would be forked off

01:14:38.630 --> 01:14:40.850
the network perhaps more importantly

01:14:40.850 --> 01:14:42.550
the keys to Bitcoin's code

01:14:42.550 --> 01:14:44.290
would finally be ripped from core's hands

01:14:44.290 --> 01:14:47.130
so another campaign was waged to demonize

01:14:47.130 --> 01:14:49.050
anybody supporting Segwit 2X

01:14:49.050 --> 01:14:50.550
Greg Maxwell wrote

01:14:50.550 --> 01:14:52.330
a couple of well-meaning dips

01:14:52.330 --> 01:14:54.110
went to China a few months back

01:14:54.110 --> 01:14:56.310
to learn and educate about the issues

01:14:56.310 --> 01:14:58.570
and managed to let themselves get locked

01:14:58.570 --> 01:15:00.570
in a room until 3 to 4 a.m

01:15:00.570 --> 01:15:02.650
until they would personally agree to

01:15:02.650 --> 01:15:04.670
propose some hard fork after Segwit

01:15:04.670 --> 01:15:06.630
despite claiming for

01:15:06.630 --> 01:15:08.230
years in the name of unity

01:15:08.230 --> 01:15:10.810
that a fork should be avoided at all costs

01:15:10.810 --> 01:15:12.550
core supporters demonstrated

01:15:12.550 --> 01:15:14.690
that they had no real desire for cooperation

01:15:14.690 --> 01:15:16.510
when the time came

01:15:16.510 --> 01:15:18.350
they were ready to divide the community

01:15:18.350 --> 01:15:20.690
and attack their opponents by whatever means

01:15:20.690 --> 01:15:22.510
necessary if Segwit

01:15:22.510 --> 01:15:24.050
turned out to be a bad idea

01:15:24.450 --> 01:15:26.450
or if its adoption caused a chain split

01:15:26.450 --> 01:15:28.670
or if the 2X block size

01:15:28.670 --> 01:15:29.930
increase fell to occur

01:15:29.930 --> 01:15:31.730
there had to be a plan B

01:15:31.730 --> 01:15:33.990
so an alternative implementation

01:15:33.990 --> 01:15:36.050
was created to safely split off

01:15:36.050 --> 01:15:38.530
from BTC and form a separate chain

01:15:38.530 --> 01:15:40.070
without Segwit

01:15:40.070 --> 01:15:41.810
and with an immediate increase of the

01:15:41.810 --> 01:15:43.570
block size limit to 8 megabytes

01:15:43.570 --> 01:15:45.790
this implementation was called

01:15:45.790 --> 01:15:46.930
Bitcoin ABC

01:15:46.930 --> 01:15:49.750
the ABC standing for adjustable

01:15:49.750 --> 01:15:50.850
block size cap

01:15:50.850 --> 01:15:53.590
which would allow miners to set their own limits

01:15:53.590 --> 01:15:55.310
without needing the approval of developers

01:15:55.930 --> 01:15:58.190
Bitcoin ABC brought about a new network

01:15:58.190 --> 01:15:59.930
and therefore a new coin

01:15:59.930 --> 01:16:01.430
called Bitcoin Cash

01:16:02.190 --> 01:16:03.790
that's how BCH started

01:16:03.790 --> 01:16:06.190
not as an immediate replacement for BTC

01:16:06.190 --> 01:16:08.250
but as a contingency plan

01:16:08.250 --> 01:16:10.190
by the biggest miners in case the BTC

01:16:10.190 --> 01:16:11.050
upgrades failed

01:16:11.050 --> 01:16:13.030
it turned out to be a good idea

01:16:13.030 --> 01:16:15.190
instead of avoiding forks

01:16:15.190 --> 01:16:17.670
Bitcoin looked like it would split into 3 different chains

01:16:17.670 --> 01:16:18.890
by the end of 2017

01:16:18.890 --> 01:16:21.070
the Segwit 1X chain

01:16:21.070 --> 01:16:22.010
S1X

01:16:22.010 --> 01:16:24.790
the Segwit 2X chain S2X

01:16:24.790 --> 01:16:26.970
and Bitcoin Cash BCH

01:16:26.970 --> 01:16:28.750
the name Bitcoin

01:16:28.750 --> 01:16:31.110
would be assigned to whichever chain accumulated

01:16:31.110 --> 01:16:32.210
the most hash rate

01:16:32.740 --> 01:16:34.770
regardless of whether it was S1X

01:16:34.770 --> 01:16:35.750
or S2X

01:16:36.480 --> 01:16:38.210
by September 2017

01:16:38.790 --> 01:16:41.030
roughly 95% of the hash rate

01:16:41.030 --> 01:16:42.610
was signaling for S2X

01:16:42.610 --> 01:16:45.450
practically guaranteeing that the Bitcoin name

01:16:45.450 --> 01:16:46.350
ticker symbol

01:16:46.350 --> 01:16:49.770
and network effects would go with the 2 megabyte chain

01:16:49.770 --> 01:16:51.930
Core became even more aggressive

01:16:51.930 --> 01:16:53.910
and tried to get the government involved

01:16:54.790 --> 01:16:56.690
Core developer Eric Lombroso

01:16:56.690 --> 01:16:58.230
called S2X a

01:16:58.690 --> 01:16:59.890
serious cyber attack

01:16:59.890 --> 01:17:02.390
and threatened to take legal action against it

01:17:02.390 --> 01:17:02.790
stating

01:17:02.790 --> 01:17:06.850
a good portion of the community wants to keep the legacy chain

01:17:06.850 --> 01:17:08.870
attempts to destroy it

01:17:08.870 --> 01:17:10.910
will be treated as an attack on the property

01:17:10.910 --> 01:17:11.850
of all these people

01:17:11.850 --> 01:17:14.990
it constitutes a serious cyber attack

01:17:14.990 --> 01:17:16.890
in decisive action against it

01:17:16.890 --> 01:17:18.550
both technical and legal

01:17:18.550 --> 01:17:19.830
has been prepared

01:17:20.790 --> 01:17:22.910
Blockstream co-founder Matt Corralo

01:17:22.910 --> 01:17:24.970
wrote directly to the SEC

01:17:24.970 --> 01:17:27.130
to ask them to intervene

01:17:27.130 --> 01:17:28.750
and provide consumer protection

01:17:28.750 --> 01:17:29.710
from the fork

01:17:30.570 --> 01:17:32.150
Samson Mao took to Twitter

01:17:32.630 --> 01:17:34.930
suggesting that Coinbase was breaking the laws

01:17:34.930 --> 01:17:36.730
of the bit license in New York

01:17:36.730 --> 01:17:38.450
tagging both Coinbase

01:17:38.450 --> 01:17:40.690
and the New York Department of Financial Services

01:17:40.690 --> 01:17:41.650
he wrote

01:17:41.650 --> 01:17:45.010
is that Coinbase breaking the terms of bit license

01:17:46.410 --> 01:17:47.050
endorsing

01:17:47.050 --> 01:17:48.950
2X fork definitely raises

01:17:48.950 --> 01:17:49.910
safety concerns

01:17:49.910 --> 01:17:51.610
in addition to lawsuit threats

01:17:51.610 --> 01:17:54.210
they also used more direct ways of attacking businesses

01:17:54.210 --> 01:17:55.750
that did not define Bitcoin

01:17:55.750 --> 01:17:57.470
by Bitcoin Core software

01:17:57.470 --> 01:17:59.770
wallet providers for example

01:17:59.770 --> 01:18:02.230
could face waves of fake one star reviews

01:18:02.230 --> 01:18:02.830
on their apps

01:18:02.830 --> 01:18:05.610
warning users of potential lost funds

01:18:05.610 --> 01:18:06.650
or malware

01:18:06.650 --> 01:18:09.190
because their company would not support the

01:18:09.190 --> 01:18:10.430
real Bitcoin

01:18:10.430 --> 01:18:13.410
another round of DDoS attack started

01:18:13.410 --> 01:18:15.010
against the New York Agreement supporters

01:18:15.010 --> 01:18:17.270
the constant demonizations

01:18:17.270 --> 01:18:19.010
character assassinations

01:18:19.010 --> 01:18:20.610
and online harassment

01:18:21.110 --> 01:18:22.970
extended even to people who were guilty

01:18:22.970 --> 01:18:24.850
of associating with declared enemies

01:18:24.850 --> 01:18:27.210
when Bitcoin.org

01:18:27.210 --> 01:18:29.570
was discussing the removal of the BTC.com

01:18:29.870 --> 01:18:31.050
wallet from their website

01:18:31.050 --> 01:18:32.370
Cobra responded

01:18:33.070 --> 01:18:35.690
they're associated with that monster Jihan Wu

01:18:35.690 --> 01:18:37.350
so I don't mind if they get removed

01:18:37.350 --> 01:18:38.090
because of this

01:18:38.090 --> 01:18:39.590
they're terrible people

01:18:39.590 --> 01:18:42.650
I definitely feel like a line has been crossed here

01:18:43.270 --> 01:18:45.470
Jihan Wu is the co-founder of Bitmain

01:18:45.470 --> 01:18:47.550
the largest chip manufacturer

01:18:47.550 --> 01:18:48.870
for Bitcoin miners

01:18:49.350 --> 01:18:51.410
he was also the first person to translate

01:18:51.410 --> 01:18:52.870
the white paper into Chinese

01:18:53.470 --> 01:18:55.630
despite getting involved in 2011

01:18:55.630 --> 01:18:57.670
in building one of the most successful

01:18:57.670 --> 01:18:59.170
Bitcoin companies in the world

01:18:59.170 --> 01:19:01.410
Wu was smeared as a monster

01:19:01.410 --> 01:19:03.890
for his lack of total obedience to Bitcoin Core

01:19:03.890 --> 01:19:05.630
in fact since nearly

01:19:05.630 --> 01:19:07.470
all the miners were supporting 2X

01:19:07.470 --> 01:19:08.130
instead of Core

01:19:08.130 --> 01:19:11.450
the narrative quickly shifted to outright hostility

01:19:11.450 --> 01:19:12.670
towards miners generally

01:19:12.670 --> 01:19:14.590
as if Segwit 2X

01:19:14.590 --> 01:19:16.270
was a minor takeover of Bitcoin

01:19:16.270 --> 01:19:18.330
the proper role of miners

01:19:18.330 --> 01:19:20.470
was no longer to protect, secure

01:19:20.470 --> 01:19:21.570
and scale the network

01:19:21.570 --> 01:19:24.510
it was to quietly run software provided

01:19:24.510 --> 01:19:26.190
to them by the Core developers

01:19:26.190 --> 01:19:28.690
amid the controversy and confusion

01:19:28.690 --> 01:19:30.730
the cryptocurrency exchange

01:19:30.730 --> 01:19:32.510
Bitfinex found a way

01:19:32.510 --> 01:19:35.210
to raise the costs of following through with Segwit 2X

01:19:35.210 --> 01:19:36.870
unlike most of the industry

01:19:36.870 --> 01:19:38.850
they decided that the ticker symbol

01:19:38.850 --> 01:19:40.710
BTC would not

01:19:40.710 --> 01:19:42.290
be assigned based on hash rate

01:19:42.290 --> 01:19:44.150
instead it would be given to the

01:19:44.400 --> 01:19:45.430
incumbent implementation

01:19:45.430 --> 01:19:47.130
their announcement read

01:19:47.130 --> 01:19:50.890
we have elected to designate the Segwit 2X fork

01:19:50.890 --> 01:19:52.730
as B2X for now

01:19:52.730 --> 01:19:54.570
the incumbent implementation

01:19:54.570 --> 01:19:57.210
based on the existing Bitcoin consensus protocol

01:19:57.210 --> 01:19:58.810
will continue to trade

01:19:58.810 --> 01:20:01.170
as BTC even if the B2X chain

01:20:01.170 --> 01:20:02.630
has more hashing power

01:20:02.630 --> 01:20:04.370
for the time being

01:20:04.370 --> 01:20:06.870
BTC will continue to be labeled as Bitcoin

01:20:06.870 --> 01:20:08.630
and B2X

01:20:08.630 --> 01:20:10.450
will be labeled as B2X

01:20:10.450 --> 01:20:12.250
this will remain the case

01:20:12.250 --> 01:20:14.170
unless and until such time

01:20:14.170 --> 01:20:16.450
that market forces suggest an alternative

01:20:16.450 --> 01:20:17.810
more appropriate

01:20:18.350 --> 01:20:20.530
labeling scheme for one or both chains

01:20:20.530 --> 01:20:22.770
a few other smaller exchanges

01:20:22.770 --> 01:20:24.430
would soon follow the same policy

01:20:24.430 --> 01:20:27.070
that meant users could find themselves trading

01:20:27.070 --> 01:20:28.850
BTC for one price

01:20:28.850 --> 01:20:29.750
on Bitfinex

01:20:29.750 --> 01:20:31.970
a wildly different price on Coinbase

01:20:32.370 --> 01:20:34.450
and payment processors like BitPay

01:20:34.450 --> 01:20:36.610
might not even recognize their coins at all

01:20:36.610 --> 01:20:38.730
essentially a nightmare scenario

01:20:38.730 --> 01:20:39.590
for the average user

01:20:40.410 --> 01:20:42.550
on November 8th 2017

01:20:42.550 --> 01:20:45.130
roughly a week before the plan fork

01:20:45.130 --> 01:20:46.630
BitPay wrote a letter

01:20:46.630 --> 01:20:48.850
calling for the cancellation of Segwit 2X

01:20:49.570 --> 01:20:50.670
shortly afterwards

01:20:50.670 --> 01:20:52.590
a joint announcement was made by some of its

01:20:52.590 --> 01:20:54.290
strongest backers including

01:20:54.290 --> 01:20:56.250
the lead developer Jeff Garzik

01:20:56.250 --> 01:20:58.650
our goal has always been a smooth

01:20:58.650 --> 01:20:59.590
upgrade for Bitcoin

01:20:59.590 --> 01:21:02.170
although we strongly believe in the need

01:21:02.170 --> 01:21:03.430
for a larger block size

01:21:03.430 --> 01:21:06.230
there is something we believe is even more important

01:21:06.230 --> 01:21:08.150
keeping the community together

01:21:08.790 --> 01:21:10.310
unfortunately it is clear

01:21:10.310 --> 01:21:12.490
that we have not built sufficient consensus

01:21:12.490 --> 01:21:14.190
for a clean block size

01:21:14.190 --> 01:21:15.250
upgrade at this time

01:21:15.850 --> 01:21:17.550
continuing on the current path

01:21:17.550 --> 01:21:18.670
could divide the community

01:21:18.670 --> 01:21:21.050
and be a setback to Bitcoin's growth

01:21:21.050 --> 01:21:23.950
this was never the goal of Segwit 2X

01:21:23.950 --> 01:21:26.090
as fees rise on the blockchain

01:21:26.090 --> 01:21:28.230
we believe it will eventually become

01:21:28.230 --> 01:21:30.250
obvious that on-chain capacity

01:21:30.250 --> 01:21:31.530
increases are necessary

01:21:31.530 --> 01:21:33.890
when that happens we hope the community

01:21:33.890 --> 01:21:35.870
will come together and find a solution

01:21:35.870 --> 01:21:38.250
possibly with a block size increase

01:21:38.250 --> 01:21:39.730
until then

01:21:39.730 --> 01:21:41.510
we are suspending our plans

01:21:41.510 --> 01:21:43.430
for the upcoming 2 megabyte upgrade

01:21:43.430 --> 01:21:45.150
and with that

01:21:45.150 --> 01:21:46.710
the New York agreement failed

01:21:46.710 --> 01:21:49.390
just like the Hong Kong agreement did before it

01:21:49.390 --> 01:21:51.010
and like Bitcoin Unlimited

01:21:51.250 --> 01:21:52.750
Classic and XT before that

01:21:53.350 --> 01:21:55.710
the failure of S2X would demonstrate

01:21:55.710 --> 01:21:56.830
once and for all

01:21:56.830 --> 01:21:59.590
that Bitcoin Core had totally captured BTC

01:21:59.590 --> 01:22:02.210
and would permanently overhaul its design

01:22:02.210 --> 01:22:03.830
anybody adhering

01:22:03.830 --> 01:22:05.310
to the original vision for Bitcoin

01:22:05.310 --> 01:22:07.390
as digital cash would be forced

01:22:07.390 --> 01:22:08.630
to move to a different project

01:22:09.290 --> 01:22:11.670
Bitcoin Cash immediately provided that outlet

01:22:11.670 --> 01:22:12.950
as big block Bitcoin

01:22:13.430 --> 01:22:14.990
without the burdens of Blockstream

01:22:14.990 --> 01:22:16.070
and the core developers

01:22:16.070 --> 01:22:19.430
3 days after the cancellation of Segwit 2X

01:22:19.430 --> 01:22:21.390
Gavin Anderson identified

01:22:21.390 --> 01:22:23.270
BCH as the continuation

01:22:23.270 --> 01:22:24.950
of the original Bitcoin project

01:22:25.590 --> 01:22:27.830
Bitcoin Cash is what I started working on

01:22:27.830 --> 01:22:28.650
in 2010

01:22:28.650 --> 01:22:31.190
a store of value and means of exchange

01:22:31.950 --> 01:22:33.630
Bitcoin's darkest time was during

01:22:33.630 --> 01:22:34.690
its Civil War era

01:22:34.690 --> 01:22:37.330
and it resulted in a successful hijack

01:22:37.330 --> 01:22:38.410
of the original project

01:22:38.410 --> 01:22:41.390
but fortunately its story does not end there

01:22:42.170 --> 01:22:43.230
maximalist will insist

01:22:43.230 --> 01:22:44.910
that the battle for Bitcoin is over

01:22:44.910 --> 01:22:48.090
that the core developers are now the final authority

01:22:48.090 --> 01:22:50.010
and that the price appreciation

01:22:50.010 --> 01:22:51.790
of BTC has vindicated

01:22:51.790 --> 01:22:53.210
the small block philosophy

01:22:53.830 --> 01:22:55.170
none of these things are true

01:22:55.170 --> 01:22:57.670
Bitcoin technology is still new

01:22:57.670 --> 01:22:59.250
and with big blocks

01:22:59.250 --> 01:23:01.630
it can compete against any cash system

01:23:01.630 --> 01:23:02.110
in the world

01:23:02.110 --> 01:23:05.250
the core developers might control BTC

01:23:05.250 --> 01:23:07.550
but they do not have any control

01:23:07.550 --> 01:23:08.270
over BCH

01:23:08.270 --> 01:23:11.090
the price of each coin depends on the quality

01:23:11.090 --> 01:23:12.750
of information within the economy

01:23:12.750 --> 01:23:15.610
if misinformation is currently widespread

01:23:15.610 --> 01:23:17.250
then prices are destined

01:23:17.250 --> 01:23:19.130
to adjust as better information

01:23:19.130 --> 01:23:19.910
becomes known

01:23:20.860 --> 01:23:22.750
Bitcoin's original ambitious goal

01:23:22.750 --> 01:23:24.590
was to be a fast, cheap, reliable

01:23:24.590 --> 01:23:26.070
payment system for the internet

01:23:26.070 --> 01:23:28.570
without needing to trust a centralized authority

01:23:28.570 --> 01:23:30.730
that project is alive and well

01:23:30.730 --> 01:23:32.390
it just got delayed a few years

01:23:33.370 --> 01:23:34.830
immediately after the failure

01:23:34.830 --> 01:23:35.930
of Segwit 2x

01:23:35.930 --> 01:23:38.990
there was a real possibility that Bitcoin Cash

01:23:38.990 --> 01:23:40.930
would simply replace BTC

01:23:40.930 --> 01:23:42.310
as the real Bitcoin

01:23:42.910 --> 01:23:45.050
within a month the price of BCH

01:23:45.050 --> 01:23:46.850
went from around $650

01:23:46.850 --> 01:23:48.810
to an inner day high

01:23:48.810 --> 01:23:49.970
of over $4,000

01:23:49.970 --> 01:23:51.930
for a brief period

01:23:51.930 --> 01:23:54.350
it looked like Bitcoin was going to free itself

01:23:54.350 --> 01:23:55.790
from core once and for all

01:23:55.790 --> 01:23:58.130
the momentum did not continue however

01:23:58.130 --> 01:24:00.830
and in the face of suffocating information control

01:24:00.830 --> 01:24:02.190
the price of BCH

01:24:02.190 --> 01:24:04.530
has steadily decreased relative to BTC

01:24:04.530 --> 01:24:05.650
for the past few years

01:24:05.650 --> 01:24:08.430
Bitcoin core supporters are eager to declare

01:24:08.430 --> 01:24:10.410
a victory because of the large price difference

01:24:10.410 --> 01:24:11.410
between the two coins

01:24:11.860 --> 01:24:12.850
but this is premature

01:24:12.850 --> 01:24:16.170
the higher price of BTC is almost entirely

01:24:16.170 --> 01:24:18.150
due to the inheritance of network effects

01:24:18.150 --> 01:24:21.150
not because people were excited about small blocks

01:24:21.150 --> 01:24:22.510
since years later

01:24:22.510 --> 01:24:24.590
there is still hardly anybody who understands

01:24:24.590 --> 01:24:26.510
the difference between big and small blocks

01:24:26.510 --> 01:24:28.250
the most potent weapon

01:24:28.250 --> 01:24:30.450
in the arsenal of BTC maximalists

01:24:30.450 --> 01:24:32.170
has always been narrative control

01:24:32.170 --> 01:24:34.270
so immediately they went to work

01:24:34.270 --> 01:24:36.570
using their old tactics of smearing people

01:24:36.570 --> 01:24:39.210
and directing the flow of information online

01:24:39.210 --> 01:24:40.670
Bitcoin Jesus

01:24:40.670 --> 01:24:42.830
was inverted to Bitcoin Judas

01:24:42.830 --> 01:24:44.870
a campaign was created

01:24:44.870 --> 01:24:46.870
to only refer to Bitcoin Cash

01:24:46.870 --> 01:24:48.130
as B Cash

01:24:48.130 --> 01:24:50.590
to discredit and distance BCH

01:24:50.590 --> 01:24:51.810
from the Bitcoin brand

01:24:52.610 --> 01:24:54.650
honest discussion about Bitcoin Cash

01:24:54.650 --> 01:24:56.230
was once again heavily suppressed

01:24:56.230 --> 01:24:57.970
and often censored outright

01:24:58.590 --> 01:25:00.210
having seen these tactics before

01:25:00.610 --> 01:25:03.070
many big blockers assumed the B Cash campaign

01:25:03.070 --> 01:25:05.210
was coordinated by the same bad actors

01:25:05.210 --> 01:25:06.850
and leaked conversations

01:25:06.850 --> 01:25:08.470
strengthened that suspicion

01:25:08.470 --> 01:25:11.110
in a slack conversation between

01:25:11.110 --> 01:25:12.250
Adam Back and Cobra

01:25:12.250 --> 01:25:15.610
the pseudonymous co-owner of the Bitcoin.org domain

01:25:15.610 --> 01:25:17.710
Back tries to convince Cobra

01:25:17.710 --> 01:25:19.530
to hand over the domain to somebody else

01:25:19.530 --> 01:25:21.690
because he accuses Cobra of being

01:25:21.690 --> 01:25:23.570
secretly sympathetic to the big block

01:25:23.570 --> 01:25:25.730
philosophy. To make his case

01:25:25.730 --> 01:25:27.110
Back points out that Cobra

01:25:27.110 --> 01:25:29.430
just said B Cash has advantages

01:25:29.430 --> 01:25:31.050
and didn't call it B Cash

01:25:31.610 --> 01:25:33.450
as if merely not using the term

01:25:33.450 --> 01:25:35.270
B Cash was suspicious behavior

01:25:36.090 --> 01:25:37.870
BCH developer, John Fugbaugh

01:25:38.370 --> 01:25:39.630
wrote an article summarizing

01:25:39.630 --> 01:25:42.590
his thoughts about the motivation behind the B Cash campaign

01:25:42.590 --> 01:25:44.510
he explained it's simple

01:25:44.510 --> 01:25:46.610
they want to disassociate

01:25:46.610 --> 01:25:47.870
Bitcoin Cash from Bitcoin

01:25:48.430 --> 01:25:50.630
they are hoping new users won't even realize

01:25:50.630 --> 01:25:51.910
there's another version of Bitcoin

01:25:52.510 --> 01:25:54.610
they are hoping those users won't realize

01:25:54.610 --> 01:25:56.750
that Bitcoin was originally peer-to-peer

01:25:56.750 --> 01:25:57.870
electronic Cash

01:25:58.250 --> 01:26:00.130
not the settlement layer that Core is pushing

01:26:00.130 --> 01:26:02.250
and ultimately they are hoping

01:26:02.250 --> 01:26:04.510
people don't see that Bitcoin has changed course

01:26:04.510 --> 01:26:06.730
and that there's a version of Bitcoin

01:26:06.730 --> 01:26:08.450
that stayed with the original formula

01:26:08.450 --> 01:26:10.790
the Bitcoin maximalist play

01:26:10.790 --> 01:26:12.050
book should be clear by now

01:26:12.050 --> 01:26:14.290
relentlessly push a narrative

01:26:14.290 --> 01:26:16.350
and attack anybody that questions it

01:26:16.350 --> 01:26:17.730
censor discussion

01:26:17.730 --> 01:26:19.590
and revise history if necessary

01:26:19.590 --> 01:26:22.230
utilize social media to harass

01:26:22.230 --> 01:26:24.290
shame and bully people

01:26:24.290 --> 01:26:25.010
into submission

01:26:25.890 --> 01:26:27.690
anybody willing to dig beneath the surface

01:26:27.690 --> 01:26:29.470
will quickly find holes in their story

01:26:30.270 --> 01:26:32.270
while there are endless examples

01:26:32.270 --> 01:26:34.290
of outrageous deceptive behavior

01:26:34.290 --> 01:26:35.950
not every criticism

01:26:35.950 --> 01:26:38.010
of Bitcoin Cash comes from bad actors

01:26:38.010 --> 01:26:40.050
information has been tightly

01:26:40.050 --> 01:26:41.750
controlled online for several years

01:26:41.750 --> 01:26:44.010
so most people are simply confused

01:26:44.010 --> 01:26:46.130
because they have only heard one side of the story

01:26:48.210 --> 01:26:50.130
the developers are bad

01:26:50.130 --> 01:26:52.090
for the first year after

01:26:52.090 --> 01:26:53.310
the Bitcoin Cash fork

01:26:53.310 --> 01:26:55.910
this was one of the most popular smears against

01:26:55.910 --> 01:26:58.050
BCH but it has become

01:26:58.050 --> 01:26:59.910
notably less common since

01:26:59.910 --> 01:27:01.370
an event in late 2018

01:27:01.910 --> 01:27:03.650
when a BCH developer named

01:27:03.650 --> 01:27:05.730
Alminy discovered a catastrophic

01:27:05.730 --> 01:27:08.250
bug in the Bitcoin Core software

01:27:08.250 --> 01:27:10.170
of all the possible bugs

01:27:10.170 --> 01:27:11.990
in Bitcoin inflation bugs

01:27:11.990 --> 01:27:14.150
are one of the worst if exploited

01:27:14.150 --> 01:27:16.190
it could have allowed somebody to secretly

01:27:16.190 --> 01:27:18.110
create new coins out of thin air

01:27:18.950 --> 01:27:20.330
Alminy was so shocked

01:27:20.330 --> 01:27:21.670
by the severity of the bug

01:27:22.030 --> 01:27:23.870
and the fact that it passed peer review

01:27:23.870 --> 01:27:26.070
from people like Von Der Laan and Greg Maxwell

01:27:26.070 --> 01:27:28.290
that he wondered whether it was intentional

01:27:29.150 --> 01:27:30.010
Alminy discovered

01:27:30.010 --> 01:27:32.090
this bug in September 2018

01:27:32.670 --> 01:27:34.590
despite experiencing the hostility

01:27:34.590 --> 01:27:36.050
of the core developers for years

01:27:36.050 --> 01:27:38.270
he decided to disclose the bug

01:27:38.270 --> 01:27:39.050
to them privately

01:27:39.050 --> 01:27:41.330
and not exploit it for financial gain

01:27:41.790 --> 01:27:44.010
he could have seriously damaged the reputation

01:27:44.010 --> 01:27:44.970
of Bitcoin Core

01:27:44.970 --> 01:27:47.010
and the credibility of BTC

01:27:47.010 --> 01:27:48.530
but chose not to

01:27:48.530 --> 01:27:50.470
his goodwill was not returned

01:27:50.470 --> 01:27:51.910
and instead of gratitude

01:27:51.910 --> 01:27:54.790
his disclosure was met with more criticism

01:27:54.790 --> 01:27:57.510
and the individuals involved refused to take

01:27:57.730 --> 01:27:59.590
responsibility for the catastrophic bug

01:27:59.590 --> 01:28:01.370
after this event

01:28:02.050 --> 01:28:04.010
Maximilis still refused to give Alminy

01:28:04.010 --> 01:28:04.830
the respect he deserved

01:28:04.830 --> 01:28:07.890
but it did quiet down claims that Bitcoin Core

01:28:07.890 --> 01:28:10.090
had a monopoly on all the competent developers

01:28:11.730 --> 01:28:13.610
forking away from Bitcoin Core

01:28:13.610 --> 01:28:15.430
allowed the Bitcoin Cash developers

01:28:15.430 --> 01:28:18.230
to improve more than just the block size limit

01:28:18.230 --> 01:28:19.970
other features that

01:28:19.970 --> 01:28:22.090
Satoshi built into the original design

01:28:22.090 --> 01:28:23.270
have been reactivated

01:28:23.270 --> 01:28:26.030
and other innovations have improved BCH's

01:28:26.030 --> 01:28:28.510
capacity to create smart contracts

01:28:28.510 --> 01:28:29.570
seamlessly

01:28:29.570 --> 01:28:31.670
issue tokens and maximize

01:28:31.670 --> 01:28:32.850
transaction privacy

01:28:33.670 --> 01:28:35.750
entrepreneurs and developers now have

01:28:35.750 --> 01:28:37.850
more tools available for them to build directly

01:28:37.850 --> 01:28:39.730
on Bitcoin without having to

01:28:39.730 --> 01:28:40.970
worry about their product breaking

01:28:40.970 --> 01:28:43.530
due to the extreme limitations of small blocks

01:28:43.530 --> 01:28:45.950
freed from Bitcoin Core's roadmap

01:28:45.950 --> 01:28:47.830
the BCH developers could

01:28:47.830 --> 01:28:49.610
finally return to the original focus

01:28:49.610 --> 01:28:50.890
in purpose of Bitcoin

01:28:50.890 --> 01:28:53.830
the controversial replace by fee feature

01:28:53.830 --> 01:28:55.750
was removed making instant

01:28:55.750 --> 01:28:57.590
transactions much more reliable

01:28:57.590 --> 01:28:59.470
for merchants and payment processors

01:28:59.470 --> 01:29:01.650
Schnorr signatures led to the

01:29:01.650 --> 01:29:03.070
creation of cash fusion

01:29:03.070 --> 01:29:05.770
a privacy protocol that offers a practical

01:29:05.770 --> 01:29:07.750
way to recombine fragmented

01:29:07.750 --> 01:29:09.670
anonymous transactions in a

01:29:09.670 --> 01:29:11.690
secure way without the server

01:29:11.690 --> 01:29:13.030
being able to steal the funds

01:29:13.030 --> 01:29:14.530
or de-anonymize users

01:29:15.410 --> 01:29:17.250
cash tokens enables decentralized

01:29:17.250 --> 01:29:18.850
applications on BCH

01:29:18.850 --> 01:29:21.450
in a similar fashion to the Ethereum network

01:29:21.450 --> 01:29:23.330
with the added scalability

01:29:23.330 --> 01:29:24.350
of big block Bitcoin

01:29:25.290 --> 01:29:27.010
researchers have long been interested

01:29:27.010 --> 01:29:28.950
in pushing the limits of on-chain scaling

01:29:28.950 --> 01:29:31.010
Bitcoin cash already has

01:29:31.010 --> 01:29:33.250
a 32 megabyte block size limit

01:29:33.250 --> 01:29:34.790
but that's obviously

01:29:34.790 --> 01:29:36.650
not sufficient for global adoption

01:29:36.650 --> 01:29:39.010
all the way back in 2017

01:29:39.650 --> 01:29:41.110
Dr. Peter Risen

01:29:41.110 --> 01:29:43.090
used the BCH testnet

01:29:43.090 --> 01:29:44.770
a sandbox for testing without

01:29:44.770 --> 01:29:46.910
affecting the main chain and successfully

01:29:46.910 --> 01:29:48.690
mined a one gigabyte block

01:29:48.690 --> 01:29:50.830
given the pace of development

01:29:50.830 --> 01:29:52.210
of computer technology

01:29:53.010 --> 01:29:54.090
Satoshi's statement that

01:29:54.090 --> 01:29:56.490
it never really hits a scale ceiling

01:29:56.490 --> 01:29:57.570
looks correct

01:29:58.090 --> 01:30:00.010
far from the claims of Bitcoin

01:30:00.010 --> 01:30:02.210
core supporters, the original Bitcoin

01:30:02.210 --> 01:30:03.890
has extreme scaling capability

01:30:03.890 --> 01:30:06.370
and it is finally being realized

01:30:06.370 --> 01:30:07.850
on the Bitcoin cash network

01:30:07.850 --> 01:30:10.250
every cryptocurrency has supporters

01:30:10.250 --> 01:30:12.090
that loudly proclaim that their coin

01:30:12.090 --> 01:30:14.230
is superior for one reason or another

01:30:14.230 --> 01:30:16.210
instead of making abstract

01:30:16.210 --> 01:30:17.970
arguments or a marketing pitch

01:30:17.970 --> 01:30:20.010
I strongly suggest readers experiment

01:30:20.010 --> 01:30:21.550
with Bitcoin cash for themselves

01:30:21.550 --> 01:30:23.450
the fees are extremely low

01:30:23.450 --> 01:30:25.410
which means you will not lose a bunch

01:30:25.410 --> 01:30:27.510
of money and transaction fees by playing around

01:30:27.510 --> 01:30:29.410
the experience is so good

01:30:29.410 --> 01:30:30.770
when compared to other projects

01:30:30.770 --> 01:30:31.950
it speaks for itself

01:30:34.170 --> 01:30:35.330
most people simply

01:30:35.330 --> 01:30:37.110
do not know the story of Bitcoin core

01:30:37.110 --> 01:30:39.270
they do not know that blockchains

01:30:39.270 --> 01:30:40.230
can scale just fine

01:30:40.230 --> 01:30:43.650
and that the Bitcoin network was intentionally redesigned

01:30:43.650 --> 01:30:44.510
to have high fees

01:30:45.050 --> 01:30:47.230
they do not know that blockstream profits

01:30:47.230 --> 01:30:49.110
by diverting traffic onto their own

01:30:49.110 --> 01:30:50.070
proprietary blockchain

01:30:50.070 --> 01:30:53.210
they do not know about the failures of the lightning network

01:30:53.210 --> 01:30:55.190
and the inevitable proliferation

01:30:55.190 --> 01:30:56.430
of custodial wallets

01:30:56.870 --> 01:30:59.250
they do not know that the information they consume

01:30:59.250 --> 01:31:00.950
online has been tightly

01:31:00.950 --> 01:31:02.670
controlled and censored for years

01:31:02.670 --> 01:31:05.230
to promote a single dominant narrative

01:31:05.230 --> 01:31:06.710
but they are totally

01:31:06.710 --> 01:31:09.090
on board with the idea of sound digital money

01:31:09.090 --> 01:31:11.310
that is not controlled by a centralized

01:31:11.310 --> 01:31:11.930
authority

01:31:11.930 --> 01:31:14.850
a beautiful vision that simply cannot

01:31:14.850 --> 01:31:16.550
be realized on the BTC network

01:31:16.550 --> 01:31:18.890
so in one sense despite the widespread

01:31:18.890 --> 01:31:19.530
misinformation

01:31:19.530 --> 01:31:21.930
the hardest sell is already done

01:31:22.510 --> 01:31:24.390
switching from one blockchain to another

01:31:24.390 --> 01:31:26.790
is easy compared to getting sold on the idea

01:31:26.790 --> 01:31:28.450
of cryptocurrencies in the first place

01:31:28.450 --> 01:31:30.870
we are at the beginning of a monetary

01:31:30.870 --> 01:31:31.550
revolution

01:31:31.550 --> 01:31:33.650
from a historical perspective

01:31:33.650 --> 01:31:35.790
the blockchain is still a brand new invention

01:31:35.790 --> 01:31:38.330
and like any powerful new technology

01:31:38.330 --> 01:31:40.330
it can make the world a considerably

01:31:40.330 --> 01:31:41.630
better or worse place

01:31:41.630 --> 01:31:43.450
if we are not careful

01:31:43.450 --> 01:31:45.170
it might be co-opted

01:31:45.170 --> 01:31:46.990
and used to track and control people

01:31:46.990 --> 01:31:48.910
at an unprecedented level

01:31:49.410 --> 01:31:51.770
but if we unlock its potential for good

01:31:51.770 --> 01:31:53.610
it will usher in a new

01:31:53.610 --> 01:31:54.910
era of sound money

01:31:55.270 --> 01:31:56.870
personal freedom and prosperity

01:31:57.450 --> 01:31:59.410
the benefits of sound digital

01:31:59.410 --> 01:32:00.510
money are enormous

01:32:00.510 --> 01:32:03.330
as enormous as the risks of unsound digital money

01:32:03.330 --> 01:32:05.450
transactions that are not

01:32:05.450 --> 01:32:07.530
peer to peer require third parties

01:32:07.530 --> 01:32:08.550
to facilitate them

01:32:08.550 --> 01:32:11.290
and the old financial system is largely composed

01:32:11.290 --> 01:32:12.070
of third parties

01:32:12.070 --> 01:32:14.230
banks, payment processors

01:32:14.230 --> 01:32:17.290
credit card companies, regulatory agencies

01:32:17.290 --> 01:32:20.010
and central banks manipulating the money supply

01:32:20.010 --> 01:32:21.950
middlemen are everywhere

01:32:21.950 --> 01:32:23.630
profiting in some way

01:32:23.630 --> 01:32:25.230
from every transaction they touch

01:32:25.230 --> 01:32:27.250
Satoshi's version of Bitcoin

01:32:27.250 --> 01:32:29.070
used for everyday commerce

01:32:29.070 --> 01:32:31.210
with large blocks and universal

01:32:31.210 --> 01:32:32.410
access to the blockchain

01:32:33.230 --> 01:32:35.090
routes around these intermediaries

01:32:35.090 --> 01:32:37.850
we may never know the true motivation

01:32:37.850 --> 01:32:39.690
behind Bitcoin Core's decision

01:32:39.690 --> 01:32:41.310
to overhaul Satoshi's design

01:32:41.310 --> 01:32:43.210
maybe it happened in good faith

01:32:43.210 --> 01:32:45.590
maybe it happened because Core

01:32:45.590 --> 01:32:46.450
was infiltrated

01:32:46.450 --> 01:32:49.110
regardless the result is the same

01:32:49.370 --> 01:32:51.150
a small block version of Bitcoin

01:32:51.150 --> 01:32:53.190
that is considerably less disruptive

01:32:53.190 --> 01:32:54.230
to the status quo

01:32:54.230 --> 01:32:57.390
if interested parties did not directly

01:32:57.390 --> 01:32:59.270
corrupt Bitcoin they certainly

01:32:59.270 --> 01:33:00.530
benefit from its corruption

01:33:00.530 --> 01:33:03.050
the same can be said for the rampant

01:33:03.050 --> 01:33:04.050
censorship online

01:33:04.050 --> 01:33:06.550
the widespread information control

01:33:06.550 --> 01:33:08.610
and the social media engineering

01:33:08.610 --> 01:33:09.830
that surrounds this topic

01:33:10.490 --> 01:33:12.630
even if the opposition did not cause it

01:33:12.630 --> 01:33:14.350
they certainly benefit from it

01:33:14.350 --> 01:33:16.750
if any cryptocurrency is going

01:33:16.750 --> 01:33:18.470
to compete against existing financial

01:33:18.470 --> 01:33:20.550
systems we need to coordinate

01:33:20.550 --> 01:33:22.570
with each other the more coordination

01:33:22.570 --> 01:33:24.230
that exists on the same project

01:33:24.230 --> 01:33:26.350
the stronger it will become over time

01:33:26.350 --> 01:33:28.830
if everybody builds on a separate network

01:33:28.830 --> 01:33:30.630
none of those networks will succeed

01:33:30.630 --> 01:33:32.470
this is why I am focusing

01:33:32.470 --> 01:33:34.770
primarily on Bitcoin Cash right now

01:33:34.770 --> 01:33:37.090
because I know the underlying technology

01:33:37.090 --> 01:33:38.790
can scale and it has

01:33:38.790 --> 01:33:40.990
already been battle tested in the real world

01:33:40.990 --> 01:33:42.990
the vision for fast

01:33:42.990 --> 01:33:44.670
cheap reliable inflation

01:33:44.670 --> 01:33:46.790
proof digital cash is still alive

01:33:46.790 --> 01:33:48.730
but it requires a network

01:33:48.730 --> 01:33:50.550
of people to bring it into existence

01:33:50.550 --> 01:33:52.850
software alone cannot improve

01:33:52.850 --> 01:33:54.690
the world humans are still

01:33:54.690 --> 01:33:55.190
required