Read_856 - It's the Settlement Assurances Stupid
01:31:00 Share

This is also an interesting case study in help bitcoin resist duplication. You can create something which looks cosmetically similar to bitcoin, but you cannot replicate the settlement assurances which derive from the costliness of the ledger. The best in bitcoin made audible. I am guy swan, and this is big table.

What is up, guys? Welcome back to bitcoin audible. This is where you learn everything about bitcoin, open source and the technology of liberty. And I M guys won your host, the guy who has read more about bitcoin than anybody else, you know.

And we have got a correction to make on the show today not that I was wrong and never wrong about anything so that's definitely not yet but a wheel said so um who is a great follow, by the way, on twitter and social and isa eel as a new noster definitely should be i'll find his nasty pop key and we've we've read a few pieces by a neil on the show actually but he um put together in response to a thread or something I know no was he was just a post I think on like if you were just learning about or just getting into biton, these are the fundamentals. And I think you put like thirteen or fifteen some list of kind of like biton essences biton fundamentals articles and papers and that sort of thing in order to read. And I click on IT, as I always do for those, and I was like, okay, let's see, let's see what you recommend that I i've figured to you that have some really great recommendations and look in the hold.

I had done all of them in audio. They were all like extremely solid pieces for like getting a foundation in understanding bitcoin. And that's what big on auto has been all about.

So of course, we have them all and audio, except for one. And I know, I know I have done this piece. I know I have read this piece before. I cannot find the audio anywhere. It's not in the feed unless I have accidently changed the name.

I did do that very early on in the show if I didn't, but I didn't like a title I just named IT like the topic rather than the article title itself because obviously we have the commentary we have like just general discussion about IT. So maybe that's what happened. But I cannot find IT, and i've got way to many episodes to search through.

And I couldn't find IT on my computer. But of course, i've got a lot of this archive and kind of stashed away, and I travel. I don't have my linux machine.

So all of that said, i'm fixing IT. I am putting this piece on the one piece that I did not have a direct audio for. I did have unpacking bitcoin, a bitcoin assurances, which is another peaceful net Carter, on the same topic, and it's actually linked to in this article.

So I will have the link to that one as well as this entire list of between en fundamental. If you want to get a four grass, you want to a good picture in your mind. Honestly, those like twelve, thirteen or so episodes are a phenomenal base to to build for yourself. And understanding bitcoin in this piece, in particular, by nick Carter, is also a really good one.

Because IT hits on a particular topic, then, I think is still, to this day, misunderstood what is the value of bitcoin and exactly what security does IT provide and what is a confirmation on bitcoin in comparison to a confirmation on etheria or biton cash? What do these things even mean? And we will be we will be talking about IT in expanding on IT after the read.

But right now, let's go didn't get into our article from a nick Carter and it's titled it's the settlement assurances, stupid by nick Carter. How to evaluate block chains? What is the time to find on major block chains? How long should I wait before considering a bitcoin transaction settled? What are the risk factors which might cause me to demand additional confirmation? How do confirmations affect settlement? Surprisingly, none of these questions have good answers.

Even in two thousand and nineteen, over ten years after the first bitcoin block was mind rigorous investigation into the properties of proof of work has been hampered, both due to a perception that it's just a temporary staging ground for some future superior consensus or civil resistance mechanism, and due to a belief among bickers that its quality is in violent. But these questions are fundamentally, if you believe that public block chains with open validator sets and distributed convergence mechanisms will persist and mediate value transfer for the foreseeable future, they are worth pondering. And if you are an exchange in your livelihood, depends on correctly assessing the number of required confirmation on a variety of block chains.

These questions are critical. First, let me explain why I think settling assurances are the primary thing worth contemplating about any public blockchain. What's the interesting thing about bitcoin? This is a surprisingly difficult question to answer.

Ask ten different big owners and you'll get a dozen different responses, disagreements about what bitcoin is for its teleology. Nearly toward the community, a thunder in the two thousand and fourteen to seventeen period hassi. N.

R. I tried to chronical these competing visions in a peace a while back. Others have noticed this and have covered IT in detail. I particularly like murad models and adam teaches take Daniel crowds covered the topic ability in two thousand and fourteen. Links to these articles will be in the show notes in crowd's peace, he posits that the queen is understood very differently by two major tribes, the investors and the entrepreneur s. The investors.

He pauses its believe that between a new form of high power to money, which primarily upholds the serenity of the individual, the investors tend to believe that bitcoin will catch on because the in eight strings of its monetary properties, for them, evAngelicism is pointless. Price is the best evAngelical st. The entrepreneur s, as he dubs them, are more interested in between en as a global payments system and emphasize its use in commerce.

As anyone who paid attention in two thousand and fifteen to seventeen knows, these two sides felt a bitter civil war over bitcoin ins, telos or purpose. With the block size being the main battle ground. Perhaps these views can be harmonized.

I tend to believe that the interesting thing about bitcoin is its capacity to facilitate the transfer of value through a communication medium with extremely strong assurances. I made an effort to disentangle and evaluate those assurances. Here he provides a link to the article unpacking bitcoin in's assurances, which we also have on the bitcoin audible feed.

The link will be in the shower nuts. I think that bitcoin is a novel institutional technology, high assurance, wealth storage and transfer without reliance on the state or a financial system, which will unlock new modes of human organization and will enable productive commerce in places where property rights are poorly enforced. So if the assurances you get around a settlement are the most interesting thing about the system, how can we evaluate them and how do we make consistent comparisons between bitcoin and other systems with open validation evaluating settlement?

So what are settlement assurances exactly? They refer to a systems ability to grant recipients confidence that an inbound transaction will not be reversed. Why are transfers using a messaging system like swift are popular? In part because they are practically impossible to reverse.

They are considered a safe for recipients because originating banks will only release the funds if they are fully present in the cinders account. This is why the theists behind the one billion dollar bengali desh bank robbery used swift and bank wires. They wanted to leverage their settlement assurances.

In other words, they chose to use a system for the theft, which they knew would be hard to reverse. Ultimately, sixty one million dollars from that highest st remains unaccounted for, far from being evidence of a failure of swift in bank transfers. This demonstrates the systems strength.

Even in this case, where virtually everyone involved wanted to reverse the transaction, they could not. The system is resistant to rollbacks, direction and post hock edits. This doesn't make IT a bad system.

This makes IT a system that gives counterparties a good deal of reassurance that a transaction will be final in a similar manner. Bitcoin is a useful system because IT provides users powerful settlement surana. Just how good? We don't know exactly large.

M, T, wrote probably the most scientific exploration in his excEllent gravity series. Links to the series available in audio on bitcoin auto will also be available in the shows outs. Generally, though, the properties of big quin's proof of work have not been fully explored, IT has suffered a few rewards in its history, but as far as we know, no deliberate adversarial reorganizations where money was stolen.

And we know that minors allocate a staggering amount of real world resources into mining transactions. This means that recipients of a bitcoin transaction can have extremely high confidence that once buried under a few blocks, a transaction is unlikely to be reversed. However, this isn't the case for many competing gypo currencies. While they look cosmetically similar to bitcoin, in many cases, none have the same settling assurances.

This isn't necessarily because of any design flaw, but simply because bitcoins block space has more accumulated cosiness and hints cost to attack per unit of time and because bit when is a near monopolist on its hash function and has dedicated hardware somewhat surprisingly, many weaker chains haven't been exploited even if the cost to do so has been low. This is likely due to the fact that monetizing a fifty one percent attack requires exploiting an exchange, which introduces additional complexities. And quite Frankly, most smaller coins aren't worth much in the first place and don't have any liquidity on the short side. Taping the yield from an attack to get an idea of just how vulnerable many crypto currencies are, take a cursy look at cyp T O fifty one dot APP. The methodology somewhat unrealistically assumes an attacker can, in IT sufficient hardware on nice hash, but IT still nicely to picks a lower bound of the cost to attack these systems.

So what are the key variables for evaluating settlement in a public block chain system? Let's divide them into the easily quantifiable ones and the harder to quantify variables before we jump in less pause for a tiny literature review to credit some prior work in the space for a much more susini to take on the matter read Anthony lizards understanding and mitigating risks for a comprehensive investigation into the qualities of bitcoin s proof work see beyond the dome's day economics of proof of work ency pto currencies by rafael are you of the bank for international settlements for a fascinating implementation of what a model incorporating some of these variables might look like, see a lower bound on minor rewards by Kevin lu of B, K, C, M. Quantifiable settlement variables ledger costliness leger costliness is the most profound and direct variable available to us to evaluate a block chains settlement guarantees.

Put simply, IT is the equivalent to the amount paid to validators or transaction selectors per unit of time in bitcoin. Miners receive a per block subsidy and transaction fees as an incentive to stay honest and quote play by the rules, improve of work miners attached unforgetable proof that they have burned some energy, and hints incurred a cost to each block proposed at the time of winning a block. The minor necessarily has to have burned resources roughly equivalent to the value of the block, typically with a small margin, unless they are extraordinary lucky.

Because of this, minors are incentivized to create valid and rule following blocks. Think of IT as a bit like a school project where you had to read a book and produce a book report. You need to prove to your teacher that you read the book so you produce a book, report a valid block hash with a sufficient number of leading zeros, which you could only have created if you actually read the book, computed sufficient hashes because your teacher is a sticker for style.

You also have to format your book, report correctly, produce a well formed and valid blog. IT would be a tragedy to read the whole book, only to present a digest which is malformed and ends with you. Getting enough proof of work is the same.

The work is up front. With the payoff ff only coming later, you've curled a real cost and your business depends on you Carrying out the final bureaucratic steps to collect your reward so you do your best not to screw that part up. Recently, a minor did all the rec is IT worked to be eligible for a block, but fell at the last hurdle by creating an invalid block.

For a more complete description of how the proof of concept works, read hugo winds peace, the anatomy of proof of work. Also available in dick in audio. In audio, the link will be in the shown notes.

So why does more ledger cosiness per unit of time mean more security for transaction ors? Because a greater salary to miners who are presumed honest means you need a larger army of mercenaries to defeat them. These resources have to come from somewhere.

You need a martial resources and hardware capable of producing hashes electricity and so on. There's an argument out there that since attackers collect the substance when fifty one percent attacking, only the fees provide security, improve of work. I don't have the space here to engage with this fully for now.

I'll just maintain that this subsidy, especially with dedicated hardware, is itself an enormous Cliff, which must be scaled before fifty one percent scenarios can be there. Zed, to sum up, outbidding, the set of honest miners dutifully producing blocks on bitcoin is very expensive. They collectively take a salary of six point nine billion dollars per year right now, and many of them have presumably invested in their businesses in anticipation of future cash flows, meaning that the hardware active on the network might even be higher than current minor revenue would imply.

So bitcoin is protected not only by the daily salary that the protocol pays its miners, but by the discounted rewards these miners expect to earn in the future. This means bakin isn't just protected by the reality on the ground today, but minor expectations about rewards in the future. We don't have an easy way to model expectations, so the easiest thing to do is to simply take the minor salary per unit of time and compare block chains on that basis.

If you stop reading this article now and just retained that one sentence, you would already have a Better understanding of security than most people, very few entities, even those for whom the stakes are very high, like exchanges, bother benchmarking block chains like this usefully. Anthony lisa, I has already done some great exposition ory work on the topic. He introduced the bit conf demonstrating how many confirmations are required for one bitcoin confirmations worth of security on other block chains like, like.

So as to say, most people do not use bit comes or try to index settings to work done. Quite the contrary, the folk theory of settlement holds that settled is a lenie function of the number of comformable. This is sadly a very common view.

Even the light coin foundation website implicity makes this claim quote, like coin transactions are confirmed faster than other cypher currencies like bitcoin, because IT generates a block every two point five minutes as opposed to bitcoin ez ten minutes. This means your money gets to its destination quicker. The initial moment when a transaction is blocked out of the mental and included in the chain is indeed reliably faster in light coin, but in cypher currency, probabilistic settlement must be contemplated.

In other words, if you only care about the first confirmation, then light coin is quote faster. But the moment you start to care about longer term settlement over multiple confirmations, IT becomes clear that IT is much slower. If you believe that light coin and bitcoin confirmations confer the same amount of settled guarantees, then you might depict settlement as follows.

With bitcoin apparently slower here, he just lies up the expected time of blocks and just shows there's many more blocks of light coin for every block that passes in bitcoin. But this is mistaken. Light coin has more blocks per unit of time, but IT accumulates ledger costliness much more slowly.

In reality, bitcoin pays its private army of minor far Better, and as a consequence, they produce far more security per minute in the form of hashes. Bitcoin blocks are heavier with accumulated cost than light coin blocks are. Even if light coin had a ten minute block time, a bitcoin block would still be worth fourteen point five times more than its light coin equivalent.

Confirmations don't really matter the opportunity cost incurred by minors per unit of time does. You can alternatively visualize leger causton inss as blocks getting piled on top of their predecessors, with transactions getting more and more final as they are buried deeper and deeper in the pile of blocks. Here he actually has stacks of blocks comparing bitcoin, atheism and light coin in showing sentiment the cottons quote weight through the size of the blocks.

And you can just clearly see and visualize that the bacon blocks are far, far larger, then both the very thin and small blocks that come in extremely frequently on a theory and in the slightly in the middle of light coin. But both are tiny in comparison to the amount of weight, the amount of security that a single bitcoin block or confirmation can provide. And you can just visually see this site.

I highly encourage you go to the link and see that, uh, graphic. As more and more blocks get added to the heap, IT becomes more and more implausible that they would be reverted and transactions become more final. In this graphic, i've scaled the width of the blocks to the relative ledger cost in court and depicted the grain ulia ity of blocks.

The point here is that settlement in a block chain system is a flow block time is largely irrelevant. A theoria has mini more blocks per hour than bitcoin does, but settling should be compared between the two based on letter cost rather than number of confirmations. Yield from reversal, transaction size ledger costliness isn't the only thing that matters in settlement.

Also important is the incentive someone might have to try to reverse a transaction. The previous qualification of this instance is simply the size of the transaction. If you are a recipient of a fifty thousand bitcoin transaction, you might wait more than the six block rule of thun out of an abundance of cautious.

If you are receiving one thousand sad one, confirmation is a likely sufficient. In short, transactions have more or less perceived settled. This based on the stakes at hand. Elane uu formalize this concept in a fantastic bloomberg article, arguing that recipients should wait until the transactions value and ledger costliness match to consider a transaction settled Allan's formulation handily conjoins two of the most important quantitative variables in blockchain settlement, ledger, cost and yield from reversal. If you wanted to settle a ten million dollar in bound transaction in B, T, C, according to this rule, you'd wait sixty locks or ten hours.

It's a need coincidence that at a Price of thirteen thousand, three hundred and thirty dollars bit, when accumulates leger cosse lineup at a rate of exactly one million dollars per hour hints. Fourth, i'll referred to this simple formula as the u rule. Now that we have the two most critical settlement variables innumerate, let's put down some numbers and compare the major proof word networks.

At the time of this writing, bitcoin has a daily minor revenue of twenty three thousand nine hundred and seventy two million dollars. Revenue per ten minutes is one hundred and sixty six thousand days to settle. One million dollars is point zero four so the BTC finality multiple er is one this is our point of reference, a theory below. IT gets four point one million in daily minor revenue, twenty eight thousand per ten minutes and a point two four settled for one million dollars, which is a multiplier of bitcoin by five point eight longer.

And without going through all of these elements on all of these charts will just go down the multiplier because is one in thea five point eight coin, fourteen point five z cash thirty three point four coin, cash thirty three twenty seven the point S V sixty nine dash ninety one etherium classic one twenty seven manage one thirty three in gold four eight eight thousand coin ninety five one thousand seven hundred and thirty seven vert coin three thousand six hundred and eighty six needless to say, bitcoin is by far the fastest settling blockchain, just including these two variables and none of the other silent ones. Settling even a one million dollar in bound transaction can be extremely slow on mini block chains. Aside from bitcoin, ethereal and IT takes over a day for every other decentralized ledger, including rip and Stellar in these examples because they don't have meaningful to decentralized validation, smaller chains simply do not have enough minor reward to make settlement suitably quick.

Luke child is how many coms offers a dynamically updated version of parts of this table. It's also worth calling attention to the fact that bitcoin cash, bitcoin S V settle transactions thirty three and sixty nine times more slowly than bitcoin, respectively. While they are functionally identical to be coin in most respects because they offer minors less of a bounty, they are vastly slower.

This directly contrast with their common positioning as, quote, faster block chains. This is also an interesting case study in how biton resists duplication. You can create something which looks cosmetically similar to bitcoin, but you cannot replicate the settlement assurances which derive from the costliness of the ledger.

Minors obey economic reality and cannot be cajoled to lend their support to a protocol which doesn't pay them well enough. In fact, as we will learn, biceps cashion and between S, V are even worse off than this table suggests because of a third variable, monopolist on its own hash function. So far, I haven't mentioned a third critical variable, which directly affects the settled guarantees of a given block chain, whether or not IT holds an effective monopoly over the hardware, which is addressable to attach function.

As I implied above, bitcoin cash and bitcoin S V are at a massive disadvantage relative to bitcoin because they have in my new fraction of all the short to fifty six access. What this means is that even a midsized or small pool mining bitcoin could temporarily redirected cash power to one a bitcoin smaller works, and fifty one percent attacked at will. The fact that these block chains have not been attacked yet is not evidence of their security IT may well be the case that there are no minors on bitcoin willing to maliciously interfere with either minority fork today.

But depending on the goodwill ill of miners, makes for an extremely tenuous ous security model. Since this risk is ever present, IT could be positive that neither blockchain ever reaches effective finality regardless of the number of confirmations. This is because there are ample mining pools on bitcoin, which could create a one hundred plus deep reorganization in B, S, V, for instance, without too much difficulty.

This variable introduces more complexity into the analysis. IT is not the case that more hash rate means that a block chain is more secure. IT must also occupy a large fraction of the address of hardware. In this example, i'd characterized blockchain a as less secure than blockchain b, even though IT has more ledger costliness in absolute terms, because IT is theoretically easier to martial enough hardware to attack a.

He has a graphic here where there is a large pool of the hardware and the blockchain a in the larger pool is a small fraction of the entire space of hardware, where there is a smaller blockchain b that has almost all of its addressable hardware market and therefore is actually more secure against the hardware that is available. Then block chain a, even though block chain a has far more overall hash rate or costliness of the ledger. So consider this variable to be a bullying.

If the block chain is a monopolist on its own hardware, the analysis is straight forward. If IT is in the unfortunate position of splitting hardware with one or many other functions and retains a minority share of that hash function, specific hardware IT is likely fundamentally unsafe, but it's hard to determine just how unsafe IT is. The risk of an attack is a function of the attacker's ability to a mass sufficient electricity and hardware.

Less quantifiable settings variables. The three variables mentioned above aren't exhaustive, but simply the easiest to quantify. With those, you could probably build a applausive model, which is superior than those used by many exchanges today.

But there are many more factors to consider yield from reversal. Gold finger attacks. Gold finger attacks take their name from the bond film, in which the villain plans to irradiate all the gold in fort knocks, making all of his gold more valuable.

The term describes a class of attacks where the attacker is motivated by some extra call financial interest. Joseph bono more scientifically describes them as attacks where the quote, attackers have an extrinsic motivation to disrupt the consensus process. The risk of VISA tacks is virtually impossible to quantify, since attackers have a variety of different motivations and they tend not to disclose them a priority before an attack. Here, i'll give two further examples where the yield from reversal dramatically increases, rendering settlement guarantees less certain top heaviness.

This refers to the condition in which a large number of financially significant assets are created as tokens on top of some based layer protocol, for instance, on the assets on bitcoin or E R C twenty on a theme, as these tokens inherit their security from and are holy dependent on the base layer, they are vulnerable to attacks on the underlying chain as the assembly developed between the value of the instruments on top and the calls to attack the base layer, the top heaviness problem starts to manifest. If the a imei becomes large enough, an attacker might seek to take out a short on some instrument on the top layer and simultaneously attack the base layer either by mining empty blocks and dancing the tokens in question, or creating rivers and confusion. We have real world examples of the consequences of top heavy systems.

Attackers have recently made a habit of attacking the underlying index, which sets the Price for derivatives on bit max, since there's a big a symmetry between the collator present on bit max, the top, and the underlying reference market the bottom, it's lucrative to burn funds market selling on bit stamp because the attacker can monetize by causing an outsize move on bit next as margin positions are liquidated. I don't believe any blockchain faces this problem today, but as more instruments are toko, ized and inserted on top of block chains, the returns from attacking the base layer will increase liquid derivatives markets. This is rather straight forward.

Derivatives options, in particular, give financial market participants the ability to obtain leverage and magnify their returns, even relative to a small move in the underlying. As with the top heaviness condition, the risk to the block chain comes when a significant asymmetry exists between the cost to mount and attack and returns from an attack. The creation of liquid derivative markets enables attackers to magnify their returns from predicting Price action, and if they can induce a drop in the Price of the asset by mounting an attack, the settlement guarantees of the chain are potentially at risk as the return from an attack grows.

So does the amount of resources that an attacker is willing to contribute to an attack. So the creation of leverage on the short side potentially impaired a block chains settlement surana. But due to the heredity of actors and uncertainty about the ability to monetize such an attack, it's impossible to quantify this risk and add an appropriate security discount.

Of course, one counterbalancing factor here is the potential unwillingness of the exchange to pay out on a successful bed if they suspect the trader in question was coordinating with an attacker to interfere with the block chain. Additional hardware considerations implicit in the earlier point on hash function specific hardware is the well documented notion that GPU mind coins cannot ever be monopolist on their hardware because there are so many GPU in the world, thanks to gaming and other non crypto currency applications. I won't believe at this point.

David vorrei has cleanly layed out the case for why GPU mind chains are fundamentally at risk and why long term incentive alignment in the form of assets is so critical. Thus, GPU mind coins should always be assessed additional confirmation. It's hard to know exactly what the ratio should be for one GPU mind unit of letter costliness to an asic mind unit, but there absolutely should be a discount for GPU produced security.

It's simply too easy to acquire hardware to mind A G P U mind chain case study crackings confirmation requirements startlingly, from my conversations with exchanges who have a lot to lose from this calibrated rules around settlement IT appears to me that they tend to give a little thought to confirmation rules. I couldn't find a much detail on how many inbound confirmations exchanges reserved until the transaction is considered settled. Hopefully, crack on have made their criteria freely available.

I decided to benchmark crackenbury formation requirements against what a naive implementation of luxury's bit conf would look like, simply requiring that all chains provide the equivalent of six confirmations. On the coin, the results are startling depending on how you put IT cracking makes either extremely stringent demands of bitcoin transactions or extremely loose demands of non dick in chains. While cracking asks for six bitcoin confirmations to consider deposits settled, they ask a mere twelve of light coin where the equivalent indicate security terms would be one hundred and seventy four thirty for a theoria bitcoin equivalent, once seventy three and fifteen four manero, where bichon indexed security would demand two thousand.

My guess is that six confirmation is massive overkill for bitcoin, making crackings lesser settlement demands of other chains more reasonable. Still, when the letter costly is variable, is consistently applied, the results are occasionally comical. Q, T, U, M.

More quantum, for instance, if held to the same standard in bitcoin, would need sixty seven thousand confirmations equivalent to a wait of one hundred and fifteen days. Quantum, they will have some alternative settings mode. I'm not familiar with a computed the numbers simply based on the payout IT makes the validators.

Of course, this is a very naive implementation of the model. A more sophisticated version would include higher security demands for non monopolist chains, G, P, U, mind coins, large in down transactions and so on. I would encourage exchanges like cracking to consider a systematic rule set for inbound transactions.

If they don't already, whatever the particular formula chosen, IT would likely suggest fewer confirmations for bitcoin and more for smaller gains. Some take away. What's the practical significance of all of this? Well, as we continue to await the formalization of these variables into a model that makes sense and is directly applicable to everyday usage of crypto currency, here are a few takeaway.

One block time is arbitrary and changes little. The only thing that a lower block time alters is reducing variance in the time to the initial confirmation. If you are impatient, you probably prefer a blockchain with a two point five minute blocks time, but this doesn't mean that settlement is any faster.

Leger costliness still accuse at the same rate being a function of issuance and unit value per coin. Indeed, bitcoin could reduce its block sized by twenty five percent and switch to a two point five minute block time, and virtually no one would notice the difference. The system would be functionally identical.

The six block rule of thumb would become a twenty four block rule of thumb. So to SHE opted fourteen, then the blocks, because he did not know how well the system would be able to come to convergence. Latency and large blocks interfere with validation and make convergence among nodes more difficult.

A healthy ten minute block time gives the system plenty of breathing room and also gives us an indication of what kind of a system that, though he was in visioning hint, not suited for in person petty cash payments. It's true that the first confirmation matters some small amount since your transaction cannot start to be buried under the wait of subsequent blocks until IT is included in a mind block. Additionally, a lower block time reduces variance in variables like a daily issuance.

However, aside from that block time is completely arbitrary. The security spend per unit of time in addition to the quality of that little costliness is what matters for a lower block time, just means that you're chopping up that security flow into smaller bits. IT doesn't make final settlement any faster too.

Bitcoin is either providing massive security overkill or other block chains are critically at risk. This is the clearest takeaway from the various benchmarking exercises I did for this article. If you measure block chains purely based on the salary paid to transaction selectors, minors and validators poor unit of time, for the most part they look devastatingly weak compared to bitcoin.

Just have a look at this chart. Aside from bitcoin authorities and light coin, virtually nothing is visible on the chart because their security spend is so minimal. This isn't necessarily fatal.

Could be the case that between his way overpaying for security, for instance, and that proof of work is Better than we think. This is actually my current view that due to the current subsidy, can joined with the high unit value of bitcoin. Bitcoin is probably spending too much on security.

But IT does wrap the protocol in a warm blanket, which gives you a good degree of protection as IT is its teenage years. So this data is not necessarily apocalyptic for smaller blogg chains. After all, even those sioco ordained to the six block rules of dumb IT could be the case that, foremost, transactions one or two blocks are sufficient.

This would lessen the heavy load placed on other block chains trying to match bitcoin s security spend. Three settlement is always probabilistic. I will admit that I shave a little bit when new block chains tot their absolute finality.

The only way to truly have finality is to have an organization vouch for transactions, effectively endorsing ing them. But when this happens, authorities that might have an interest in reversing transactions say if they suspect they are related to criminal activity, will typically ask that entity to facilitate the rollback, poking a hole in the perceived finality. Take the example of eos.

Eos has a concept called the last irreversible block, which according to E S. Canada quote means that you can trust with a hundred percent confidence that transaction is final, fully confirmed and immutable. If the block number of a block is lower than the visible block, that means IT is considered final.

According to E. S. Network monitor, the current last irreversible block is trAiling the chain tip by three hundred and dirty blocks, equivalent to about two minutes and forty seconds altogether. This makes eos is claimed time to finality very short, except there's a catch.

IOS has had a bureaucratic process through which individuals could appeal to the eos core arbitration forum and ask for funds from suspended depth to be frozen and return to the victims, productively reversing long settled transactions. One batch of these reversals took place in june two thousand and eighteen. This was possible because there were only twenty one entities the block producers test with processing transactions, and all were known to the leadership and hints accountable, while many onlookers achieved the return of stolen funds.

From a settlement perspective, this undoes the qualities that transaction or seek when they use a block chain. In practice, any mechanism which can reverse settlement can be abused. The reason credit cards in beda fee into transactions is because charge back fraud is rampant.

Imagine a sophisticated sm where someone sold eo for field and appear, appear exchange and then appeal to transaction to the eap and managed to get the eo in the transaction return to him under the guys of having been scammed. These are the kinds of schemes that result from the ministration exceptions to finally, there are any number of examples I could give on this topic, but i'll stick with one for now. In practice, many of the block chains that claim to have full and effective finality also insert the capacity to create directionally rollbacks and account freezes into their system.

You still have to consider the probability of a reversal, even if it's not explicitly qualified for by being open about its security model. Bitcoins proof of work is usefully transparent, echoing elane uu. Once again, one of the most useful features of bitcoins security model is how transparent and easily apprehensible IT is.

The precise guarantees are not easy to determine how many confirmations to settle a billion dollars, but the resources being spent to back stop the system are at any point and online er can trivial ly determined how many hashes and by rough extinction how much energy IT would take to overpower the system. For years now, IT has been clear that no entity outside the most potent state actors could muster sufficient resources to outweigh the honest majority. By contrast, other block chains seek security through obscurity, security through complexity, or through on transparent institutional modes of finality.

Verge four incidents can joined five different hash functions in its exotic proof work model. And that was ultimately its downfall. And attacker realized they could perform a time war attack by targeting just one of the hash functions in lowering difficulty to one.

Far from providing extra security, the insertion of more complexity into the system introduced new attack vectors. Summing up, if there's anything I could have you take away from this piece, it's the following. Instead of viewing settlement as a function of some preconceived number of compromise, think of settling a transaction in approve of work system as the process of wood petrifying slowly IT happens at a given rate and can't be accelerated.

The rate is determined by the variables in nummer ated above, chiefly letter coastline's transaction size and the availability of addressable hardware. Once completed, the wood has been replaced by minerals, and his rock solid no longer soft and malleable. The features of the wood are forever frozen in time.

Similarly, as nix abo has said, block chains are computational Amber. Amber starts life as tree sap, only later becoming hardened in the process of storing bits of information, insect DNA and so on. Within IT, the central process of bearing past changes to the letter under unforgetable cost provided by proof of cost incurred provides the same slow moving settlement assurances as more blocks accumulate, the gravity of the block chain exerts itself and makes distant rewrite colosSally expensive and unwieldy.

The bounty available to minors and hints the cost incurred is a function of issuance, unit Price and fees. None of these, aside from issuance, can be directly programmed in a high issuance alone cannot guarantee security as investors have to buy into the chains, prospects and backstop its value. In this sense, strong settled insurances and approve of work system cannot be planned for.

They can only emerge. Whether you find this to be a dismal conclusion or not is up to you. In this article, I tried to enumerate the variables, which I believe are most critical for evaluating this.

Settled insurance is a block chains, especially those built on proof work. But you'll notice I provide no formal model nor a recommended solution to the problem. Many of these variables cannot be easily quantified, and there are likely some, which I am leaving out a more comprehensive or implementation focus model.

I will leave two subsequent authors. If we ignore these questions, they will be forced upon us through necessity as short side liquidity emerges for a larger share of the market, whole new classes of attacks will open up and exchanges will find themselves targeted more and more equally. As major custodians and clearing houses start to take crypt or currency deposits totalling hundreds of millions or billions, they will need to devise formal rules for what constitutes settlement.

They would do well to think deeply about the security of the block chains that they are reliant on. Are I quick shout out to a fold bunch of give cards right now with a chance to win two hundred and fifty thousand cats that you enter when you get give cards and if you are buying a bunch of holiday season stuff using their gift cards is literally the bet. I mean, this is something that I do every single year and I always get like a very, very solid uh, stacking of sats.

All right now i've got um see seven thousand one hundred ninety three dollars worth of SAT stack and that in two years this cost me ten dollars a month for fold premium. I have seventy two hundred dollars out of IT or excuse me, these are not dollars at seven point six million sats. I'm telling you, if you are trying to be on a bitcoin standard at out of all of my tools, I I think fold is the most indefensible.

You can buy bitcoin directly in IT without any fees. You can deposit bitcoin and salad and push IT straight to your card without any fees. You get seat back on purchases.

You get even more seat back on gift cards. You can do round ups. You can do recurring buys.

IT is honestly one of the most complete packages of integrating bitcoin and banking that I know of least that I ve ever used. I have been a big proponent of these guys for a long time. I highly recommended. There is a link right notion notes to check IT out.

Alright, so this article, I didn't you think one of the best things about this framing is to understand what IT is that you get out of a bitcoin transaction is to understand what IT is the proof of work does. IT is a way to have a measurable means of finality that does not have trust in a person involved. I want you to think about that.

This is a digital leger. This is just a network where somebody is writing a note that says, I used to own these one hundred units, and now I send them to you and you own these one hundred units, and they are signed crypto graphically by a set of keys. And when that note is published, there is a strictly measurable.

There is a quantifiable and completely non trust dependent, do you, of this is never going to be changed. Proof of work is like an independent force field. IT is a force field around a digital record keeping system. And literally the only way to edit that record keeping system, to alter who owns what in the past, is to use the energy created to make the force field in exactly the same degree, reverse IT back in time in order to reach through IT, change something, and then continue forward.

Proof of work provides a measurable, this can be changed metric, and IT does not have a person involved, IT does not have an authority involved, IT does not have some bureaucratic voting system and forms to fill out. And all of the systems that think that they can get around IT, the ethical, an consensus, proof of stake permissions, ed validators nonsense, the eos fill out my forms to counter a transaction board members crap like all of IT. It's either independent or there is a mechanism of trust.

And the whole idea is to replace trust, is to create a digital form and economic structure that creates trust as a metric that you can simply see and is not dependent upon anybody, any authority, any vote, any board, any foundation or any. That is the value of bitcoin. That is what makes IT a profound innovation.

That is what makes IT a thousand year leap in the context of monetary guarantees. IT is a digital network with a degree of physical world security that you can just see. And this gets us back.

I had a conversation with manion million from primal this morning, and we talked about we talked about noster. Obviously he he's a CEO and and founder. Everybody who's doing primal um and they have a really awesome project, but they are have been using the primary way out for a really long time.

But IT was funny like one of the things we talk about is just like why he thought noster was IT and IT didn't matter. Everything that happens in the short to medium term because noster works. And one of the reasons noster works is because IT is simple is because the the degree of how to look at and it's just signed notes sent by really that IT.

It's just signed notes sent over a web server or a node and what kind of relay and how those connections are established. Totally agree on stic not relevant. IT is just signed notes in a simple format and IT just works.

It's very intuitive. It's easy to build on because of that. And in the famous words of infact, s is actually in a neel sesa's list, is why dumb networks are Better by Andrea santoni.

S that is also one that I highly recommend. And then there's also worse is Better by, uh oh my god, um grecia greia. I think I think that's right.

I can't remember the name right now. But its bitcoin is worse, is Better, and is talking about the linux philosophy of worse is Better and just the general protocol philosophes worse, worse is Better. And very, very much a line with the whole dum networks idea is that dumb networks are reliable.

The beauty of simple things is that they just work and all of these other systems in some effort to get something that couldn't Better, faster or whatever IT is, whatever arbitrary thing that they're trying to say, they are token or crypto or whatever is more accomplished ad, inevitably they make something. This vastly more complex, less reliable, has moves out of the realm of quantifiable statistics and moves entirely into the realm of how do we even even measure or understand how secure this is. That is what their whole proof of stake permissions, ed voting system, that a theory has now if you notice all the links.

So this was written back in two thousand and nineteen, released was updated in two thousand and nine. I guess I was probably early two thousand and nineteen that that was written. Um if you actually go to the links, a lot of the things that they actually have are still there, like how many com, how many cops dot com crypt of for the one that APP is still there.

And these are the ones that he linked to the compare, you know bitcoin to a bunch of coins. But you'll notice something is that the theory um has had their approved stake switch since in and because of that, it's not in any of these things because you can't compare them because we've explicitly moved to a system that is now so complex and has so many other random variables that we can even test and can even quantify but is no way to compare them. It's like asking how secure is my bank transfer in comparison debica?

There's no comparison. There's no there's no like how much is put into the bitcoin bank transfer? It's like nothing that doesn't even exist. It's not there. Their security model has nothing to do with how big coin works, and that's the same for a thereon. The only one you'll still find on all of those list is now a thereon classic, which is still which still has the proof work, but the beauty of proof of work, the reason bitcoin uses proof of work and the reason why know I don't think a proof of stake, I don't think a theory um ever, ever would have even gotten off the ground as their casper proof of stake system had had not been for bitcoin coming first.

If the cypher's punks were trying to launch what the theory um is today, back in two thousand and six, two thousand and seven, they would have just gotten laughed of the room nobody ever would have used IT IT would have died on the vine the only reason I think the theory um has survived as long as IT has is because IT was originally just a copy of bitcoin with giant remind and you know insiders that they just hand out a bunch of coins two and they owe seventy percent of the supply. But they got to position themselves as if they are decentralized because they had proof of work, kind of like a fight in the gold standard, is that the ot by itself, like out the gate, never really work. You can't just like be like, oh, well, here's my token by IT, I can print as much as I want, but i'm trustworthy.

So you don't worry, you're going to use IT as money like that never work. You can't sell people on that. That's ridiculous.

But if you get them into a gold system where he says these tokens are worth exactly the amount of gold, and then for one hundred years, you actually redeem that amount of gold, and people just come to build trust, and they they associate the trust with the token itself rather than the goal. And people to start using the token and they forget about the gold. Well, then you can switch from that system to a completely figured system.

But IT is only because you have you've basically stolen the trust. You've defrauded the fundamental nature of the system. And IT takes a really long time for that trust to be bread out of a population.

Essentially, they just get used to money being a certain way. They get used to be looking a certain way. And IT takes a very long time for the Price to took correct and for the trust to completely break down.

But that's kind of war we are right now. That's where this is the transition that I feel like we are in. And in a similar since the build up of trust in a completely different system is also very slow, very difficult, but that's exactly what we're seeing in the novel system, is proof of work consensus on top of bitcoin.

Bitcoin is the innovation. And the beauty of IT is that it's simple, is that the security doesn't have that many assumptions. I mean, bitcoin the network itself is complex and you do have to make economic assumptions.

IT is a probabilistic settlement just like nick arter talks about. But ultimately, IT requires as few assumptions as we could potentially give IT in order to provide the value that bitcoin provides, which is settlement without trust in third parties. The idea that, that transaction is done, period, how done is IT.

Well, in the last this many hours, thirty million dollars worth of ledger depth leger weight has been added on top of that. And the only possible way to undo that is to redo all of that power to find back through the fourth field at that thirty million dollar weight. But here's another interesting thing is that if you're specifically attacking the network externally, like from outside, and you actually have all of this hash power, it's important to remember.

And of course, if you've been listen the show, you know this. But it's important also to remember that this is also while the rest of the network is moving forward. So every ten minutes, like I say, we're talking about a ten hour attack and somebody has exactly the hash power of the entire network and they are trying to go back ten hours.

Well, IT takes them ten hours to go back through IT because IT takes ten minutes to produce a hash if they have same amount of hash power, which means that every ten minutes they go backward. One blog they add another blog that they have to go backward through. This is why it's refer to as a fifty one percent attack with because with fifty percent in network, nobody makes any progress.

You're basically installed. And at a fifty one percent attack you only have a one percent advantage, which means that if you're moving back a hundred blocks, it's going to take you ten thousand blocks worth of time at a one percent advantage. If everything continues forward with in fifty one percent hashing against and forty nine percent hashing forward, in reality there is mostly just going to be a battle at the chain tip of who's got the next blocker, who's reversing one blog.

The likelihood of going back a hundred blocks, like going ten hours deep, is almost non existent with specifically that amount of hashmi for talking about a fifty one percent attacks specifically. Now, nick Carter also brought something up during the early parts of this, uh, this says, quote, there's an argument out there that since attackers collect the subsidy, one fifty one percent attacking only fees provide security, improve of work. I don't have the space here to engage with this fully for now.

I'll just maintain that the subsidy, especially with dedicated hardware, is itself an enormous Cliff which must be scaled before fifty one percent scenario can be therefore zed. Now since then I think nick Carter has written about this and probably expanded and made us views clear on IT. Um but I also want to make a clarification.

People talk about the one at fifty one percent attack. The subsidy is, in fact a wall that has to be broken. Broken through IT does actually protect us. The exactly the thing that does protect against that level of attack because they are specifically giving up their ability to go forward.

They have to get they have to use the subsidy either way, they would get the subset going forward or they get to fight through the subsidy and do the work twice. So no matter what the subsidy that is contributing to the amount of work has to be beaten back, beaten back through. Now what I think this might be referring to her, why some people make this misconception or suggested that there is this element, is because fees only provide security to censorship resistance.

So this is specifically about getting certain transactions in a block and basically having transactions b entirely neutral. So an example is in almost, say, every block is paying out hundred thousand dollars or five hundred thousand dollars in value to every single minor. So every every single blocks is whatever whenever the Prices is.

But that means that whether you put any transactions in a block at at all, or whether you decide to explicit exclude certain transactions cause for there from bad people or whatever you want to say, if you are trying to sensor those blocks in some way, you still get paid five hundred thousand dollars the value of the subsidy of those blocks. Now if you want to reverse those blocks, it's still going to cost you to five hundred thousand dollars to reverse. And only if you manage to succeed and completely outpace the rest of the market is trying to get that five hundred thousand dollars and you double the amount you you basically outpace them to degree that you can rely on IT.

Yes, you still get the subsidy, but you still have to do the proof of work. And you do the proof of work under the assumption or under the risk that you might get nothing at all. So IT remains the proof work doesn't change one way for the other.

And the deeper you go, the more proof work you have to do. And the harder IT is to fight against the the honest miners moving forward. But in the censorship scenario, the fees, if the fees are only ten thousand dollars of that blog, well then you know what's the big deal.

And not adding transactions in if you're going to get five hundred thousand knowledge for blog. Now if the fees are the same as the block sub now, you have a massive cost. Now your decision to sensor a transaction has a massive economic trade off.

So this is why some people have said and have explained in the past, that the subsidy is A H is protection, is one hundred percent protection from a fifty one percent attack, and from all attacks to attempt to reverse transactions. The subsidy protects against that, but the subsidy does not protect against censorship resistance IT protect the censorship resistance of the biton network, because you can still sensor and you will still get paid. The subsidies IT is transaction fees that ensure people do not sensor bitcoin and the h censorship of the network or the the transactions allowed on the network are in fact considered.

All are held equal, so to speak. And the more and more we progress toward a lower subsidy and higher transaction fees. The more secure in the higher that settling insurance will be and the higher the censorship persistence will be at the exact same time.

So that's just an important caveat right there. And again, uh, and we'll have another roundtable very soon. It'll be this week will be recording on wednesday and not sure when we will publish IT.

I'm hopefully sooner rather than later. It'll probably be this week to stay tuned. But a Steve, Steve uses words or or simple. Steve, I think this is can't room. I got his old ones, his old handles stuck in my heads red, but he runs ut XO that live in.

One of my favorite things about IT is that everybody talks about like he's going crazy, and how all over the place everything is in. One of the things that he has shown that I just think is so cool is take all the variants out and the bitcoin, the SAT payout of fees, they're obviously gone up a ton in dollar value. But the sets amount of these on the bacon network have actually been very consistent over very long spans of time is like back to twenty twelve and twenty thirteen, the amount that people were paying in fees was almost nothing.

But IT was these that he was the same sad amount that people are paying today on average. And this is obviously stretched out. Obviously, there are time there.

We spite to fifty five and one hundred dollars per transaction on this crap. Those are short term bursts that don't really have anything to do with the overall trend. So anyway, is just an interesting little bit that I stays stuck in my head.

But I want to repeat the important line for understanding what a confirmation is, what a blockchain, what blockchain security gives you. Because this is the most in brain. And he says, specifically, if you just remember this one thing, you'll be way Better off than the overwhelmed majority of people.

This quote, the easiest thing to do is simply take the minor salary per unit of time and compare block chains on that basis. If you stop reading this article, knowledge is retained. That one sentence, you'd already have a Better understanding of the security than most people, very few entities, even those for whom the stakes are very high, like exchanges bother benchmarking.

Block chains like this is really crazy that they don't do this for things like bacon, cash and thickness of things that have basically asic security. You may not asic, but hash rate security in which they hold a tiny, tiny portion of the market of available hardware. And this is one of those things we've read about this.

I think i've read the David vork PC was link linking to that one might be one of the dead links in this article, but I just remember had all all the links to the ones mentioned. If if you if I miss one or you can't find IT IT is literally in this article. He he posts all the links right there.

So just something to keep in mind. These are all these can be found except for the ones that are dead. There's A A couple of blogs that he was linking to that just aren't available anymore. But this is the thing about GPU coins and about why asic like ultimately be. I you know we thought this for a long time that asic seem to be a negative and there was a lot of discussion, a lot of articles that we talked about on the show.

I kind of during the transition back in two thousand fourteen, fifteen, sixteen and all of this stuff where IT was this huge question is to, you know what, how do we think about security when IT comes to hardware? Because everybody kind of have that one CPU one vote thing in catos. A explanation, his mental model, for how IT was that miners would be outpaced, or excuse me, honest, miners would outpace, outpace dishonest ones. But when the interesting things about the G P U mind coins is in which nicaro specifically says that they should be assessed additional confirmation.

And it's really, really hard to know what ratio this should be because gp user so easy to get a hold of, especially after ai, it's going to be all these data signers that could just completely demolish a bunch of these other crypt o and these specific cyp dos say they argue they're more secure and more decentralized because of this hard where being out there when it's actually not true and their security is actually to read ten because somebody who has made an investment in ChatGPT or some LLM running service. Now, how is all this hardware that they can just devote? They could just completely demolish ten thousand blocks of manero or something.

And there is no real way to secure against that because essentially there is an alternative investment, an alternative way to make money on the hardware, which means the hardware is not an investment in the token. It's not an investment in the network itself. Whereas bitcoin being asic mind and being the only thing that you can really do, it's start to fifty six asic, which has any market to speak of.

Actually IT actually makes IT a security benefit that someone has like a bitcoin becomes worthless. So is the asic. So the investment in the infrastructure itself, in the hardware, in the machines that are plugged into the wall, in the electricity that IT is eating, all goes to bitcoin.

IT actually becomes a really interesting security benefit because of the lack of versatility of the hardware used for the coin mining, because of how unbelievably specific ideas and funny is that there's no way, but you can always make more specific hardware that's Better than less specific hardware that's just aim atic to the nature of things. If you build generalization, IT is less compute efficient. This is why i've talked about this with A I on AI untrained and in previous ezoe, which you can all just now find in this feed now.

But i've talked about why IT is that I think the the race to general A I is such a lost cause or is so misguided, is because general intelligence is just so unbelievably inefficient. And if you're trying to complete a task, if you're trying to get intelligence on one thing, IT makes sense that you would want to build one, build something this extremely specific toward that kind of intelligence. Like if you wanted something that had like great, like really fantastic network intelligence, you wouldn't want to bother using a massive amount of computer on getting IT to understand the english language at the same time so that you could talk to IT.

It's network design. It's a it's a model for network connection. IT should only do network stuff. And it's very similar to the hardware problem of bitcoin mining in general and the idea of the GPU versus an asic is that there will always be an asic that can do IT Better than a GPU.

And funny is that the narrow and a bunch of other coins have actually hard forked a bunch of times in order to try to make sure that people can build asic for them, which is such a problem, which is, I think, a huge security loss, rather than again, and some of them have changed their algorithms, which is a huge loss to the trust and the settlement assurances because not only you restarting the network effect, not only you restarting the cumulative build up of security in the system, but you've also just let IT shifted over to something that nobody has any trust basis for. Now people have to just assume that, okay, well, maybe this new model works as just as good as the other of the old one. And verge being the example that nick Carter, I thought brought up, which was so cool.

We've I think we dug into that on the show probably like five years ago or something like that. But IT was a really great test case in why oh my god, IT would be so funny if I was in the commentary of unpacking bitcoins. Assurance is the other article by nicaro from like literally half decay ago because if that was the case, um it's such a perfect example of why you can't just like split up the hash right like going back to the idea of simplicity as the ultimate form of being trustworthy and being reliable is that they were like, oh, we'll get IT super decentralized ed super mega deal zed, because we're going to have five different hashing algorithms in five different types of hardware, and we're going to be the best.

And what's funny is that they actually made the cost of attack so much cheaper because the the attackers specifically did a time a time warp attack on one difficulty on a hash rate are one kind of, uh, hashing and hardware on the network and basically tricked its mode of interacting or measuring them against each other so that he could have like a that like an unbelievable. Rather than being one fifth of the network, he managed to trick IT into thinking that was, you know, a thousand times the size of its potential impact. And in doing so, literally just phoned the whole network just destroyed.

So they attempt to be more decentralized through more complexity in the literally being its downfall, and why the entire thing just blow up again, dumb networks are Better. Simple metrics, simple, easy to understand, easy to see, easy to quantify, that is an critically important part of security. And almost at almost every single network, every single alternative, every single work of bitcoin is making multiple massive trade, ffs.

They failed to recognize, and they certainly aren't going to talk about openly when they are trying to sell IT to a bunch of people that are being duped locally. That IT literally seems like most of that is just done. I don't think we will have another cycle.

I don't think this cycle will have the uh the secondary cyp to blow up or like hype cycle that IT has had in the past. I think I will be muted. The last one was muted from the two thousand and seven one.

And I think this mom will be even more commuted because more and more, I think, is just nothing even compares. If you if you go back to all the things, all the comparisons that the corner talked about in this one, all of them are worse. Like everything in relation to bitcoin has just gone down.

Bitcoin is more secure in every metric. IT has not changed. IT has not been hard, forked IT is still the same assumptions, IT is more robust, the market is larger, the liquidity is the deeper, the hardware is more advanced and more widespread and more invested in the ecosystem built on top of IT is vastly larger and more diverse.

There are numerous layers and protocols, and still things be even being tested and implemented and innovated on lightning has been growing significantly, like constantly growing as form as a metric in payments and in the amount of traffic has been incredible. I think the last report we saw was that might have actually been the way back in twenty, twenty two. What was the latest arc? Things are invest.

You had like really good like growth graphics, but. The the growth metric then was and things like twelve hundred percent, thirteen hundred percent over the year in amount of traffic through like existing those in the payments. And honestly, I think with with noster with like lightning is crazy because like twenty two years ago, I could not news lightning almost anywhere.

Now I it's it's the default when i'm making a transaction. And I think people really don't appreciate that. Like I interact with, I pay everybody and interact with everybody with lighting.

And if i'm doing something, it's like lightning is expected to be there. You just get a lightning invoice these days or are a lighting address. And that's like the beauty of nosters that I just like exact people like crazy and there's not even any friction.

I don't even think about IT like there. You're just pay people to their addresses. But I think all of my like practically all of my services, can you this one thing I had checked on, though I usually do I do on chain for that one.

I know river has a cash APP has lightning and a new fold does lightning. Um because you can get give cards with fold, it's gonna be a doesn't look like you can deposit lightning even though can just like buy stuff with lighting. Anyway, lightning is all over the place to the point that i'm not even sure when it's not available because it's mostly just expected um and all be dude, alby hub.

I know i've talked about this a couple different times, but if you if you're running your own node and you want to be able to connect this stuff and use noster with your own node, all the hub is such a fantastic tool. If you have not tried IT yet, please take the time he took me like three months of seeing people post about IT and having in my list of like, yes, definitely go to this. You've got to check this out. I know i'm going to be using alby hob.

I can tell that is going to be a great tool and I still procrastinating crainte and I just could not find the time to just set aside from IT literally only took me like fifteen or twenty nine and IT has been a gods' ever since like just being able to like I just open up the ali go while IT and i'll tell you every other mode that I have connected to my main my start nine uh wallet ends like back in my node too has been slow chunk y and frustrating. It's basically because IT all runs IT all has to run over tour and tour socks. Now we hub far away the fastest, the one that just kind of acts like I would think IT would.

That loads fast enough that IT doesn't even register that like I just I just opened up my wallet and IT works. And then because of its use of nostros connect, I can zp people on domains and primer and I don't have I I don't wait for IT, I don't do anything. I don't to confirm.

I literally just I tap and then IT exams them. And mayan from primal, I think, has highly recommended this episode when when IT comes out. It'll be probably this week. Maybe i'm not sure, but I highly recommend listening to IT because he sings and I completely agree with him.

Then in the coming years, the e number one on boarding into bitcoin, into the big coin ecosystem, into the bitcoin technology and into actually using a day to day will be noster like he thinks IT will just trump. IT will basically destroy everything else in terms of metrics of people who come to noster and then find and discover and go down the big one raby hole and start using bitcoin. That will be the number one fund of no corners to be corners.

But anyway, back to bitcoin itself and just talking about how, like all of this is expanded, bitcoin is literally, and not even just in Price, but literally IT is IT is one hundred times the bitcoin IT was three to four years ago. Everything has grown massively. And I honestly think the people who are still thinking that some sid crypto or smart contract platform is the future still just do not understand the monetary economics, do not understand the value that this thing is actually providing, what IT is like, what the utility of money is, where the value of money comes from, and don't realize that they are they're just completely misunderstood.

They've just completely misunderstood. And I think this is one of the simplest framing, one of the easiest ways to begin to see the difference in framing, that this is a tank, a bitcoin transaction in on chain transaction, is like taking a tank to the grocery store, putting your groceries in the back and in driving home. Yes, IT is unbelievably secure, but now IT is not a system designed for retail payments.

IT is optimized for the best, most reliable, highest trusted, most decentralized global neutral settlement of value. Satoh created a brilliant and absolutely brilliant means of coming to global consensus without any trusted entities, without any authority whatsoever. And he had to make explicitly a ton of tradeoff that make IT sock for a retail, a ten minute block time for in person retail.

The fact that it's only a global bidding war and you don't even know if it's going to have a confirmation that is trying to get into the block that the fees aren't reliable, they can change. I had great example actually. I tried to sign in on chain transaction in the other day, and we kind of needed IT in like a quick amount of time, and I just didn't really worry about what and thinking about the fee.

And uh, just after I seen IT, a handful of higher fee transit enough higher fee transaction kind of flooded in that I ended up being two blocks behind. And so what I thought was going to be in the next block ended up not being in the next block unluckily. I just had r bf like non shock just kind of like has those things like just bumped the fee resign and republish.

Um so I was like really easy to fix and I gotten to the next block after I after I realized that a block I go by and I didn't get in. But it's a perfect example of something that require, like you have to have a system like this in order for global consensus to actually be sort IT out and what you in up what you in up with is an auction is an auction like you don't know if your transactions going through. It's a global broadcast network.

And that auction is specifically it's a defense against ddos. It's defense against being just flooded with a bunch of arbitrary or nonsense data. Those fees are critical security mechanisms is not even just the fact that you have settled assurances IT matters.

How you provide those settle insurance is how do you require and how many people are requiring that, that proof of work is even attached to those blocks. How do you define the network? How do you create decentralized? There are so many different factors here. And people who think that because somebody he said that, oh, that would be great if you could use this for retail payments and then it's not being used for retail payments without looking at IT and seeing what IT is and what value IT actually provides. I mean, of course, they're going to be confused.

Of course, they're going to get IT wrong and they are going to redesign and they're not going to give IT the value or understand what its actual purpose is because, you know it's a little bit like you don't know you know nobody knows what this should look like to begin with. So when you give IT the label, when you categorized IT as oh, this should be used for retail payments. And when big is small, it's actually really useful for that.

And it's not because this design is optimized for that. It's because there are no attackers. It's because you don't have to worry about settlement. It's because it's still closed. It's very much like irc and the early use net.

And all of these things is that before they had to worry about spam IT matter, you could just go up, and anybody could just share and post whatever body. Soon as IT starts to scale, soon as he starts to grow, that model falls apart. This is one of the reasons why so many past decentralized networks ended up in centralized silos because there were fundamental spam.

And I think this is whether proof of work came from this. This was the point of email. And how many in, uh, R, P, reusable proof of work like this was not this was not a new problem.

This is the age old problem of the internet. Bitcoin solved IT. And while bitcoin was still small, yeah kind of look like you could just go open by stuff online with on chain transactions.

But I was never designed for that. It's not a retail design system and IT doesn't make sense at that layer. It's a monetary network. It's a monetary structure and consensus system.

And not only is that far more difficult like extremely difficult to maintain and has far different and more nuances ced security assumptions in economic incentives. Not only is all that the case, but it's also orders and orders of magnitude more important and more valuable in a retail payment system. We have tons of retail payment systems. We have exactly zero trustless digital monies up until pick een existed. Just the nature of saying that was an absurdity in two thousand and eight.

So if you still think this battle is going to be one by some crypto token that has like slightly Better privacy even though you could divert you a third of ChatGPT and completely ruin weeks and weeks and weeks of the history of the network if you think it's gonna because of some smart contract, when all you have to do is ties software, the hash of some people of software, to a bitcoin transaction. And you can basically have a non, non interactive oracle system for any network, any trade, any anything in the world, completely eagle stic to any kind of code. You do not have to have smart contracts built right into the system itself.

And if you still believe that between isn't a smart contract system, when that's literally the only thing that IT is, and lightning network is literally a smart contract payment network, that as instant settlement and proof of reserves and is global and can make thousands of payments, tens of thousands, millions of payments in no time at very, very small amounts. If you are still confused by these realities or think that eos or so long, I even know what the the token of the month is these days, but one of those things is going to replace IT or is is Better and has cool features and is going to be bitcoins, going to be the mice space and this is going to be the facebook. You've holy and fundamentally misunderstood everything.

You have completely miscategorized what this is, why IT is valuable, and what IT is doing for the world. And I highly suggest you, you go through a neel set SOS entire list, go through that list. Listen to those episodes.

Or read the pieces. You you'll get a lot more out of IT if you actually just read IT, but I know a lot of people don't have time. That's why the connotation exists.

If you don't pull anything meaningful from IT, that's fine. I will just say good luck, but if you think big corners are worried about your crypto token, nobody cares. Men, I don't even know any any of modern anymore. I could, I could, I could not care less.

And hope for your sake, you realize IT and you move to spend your time, your investment, your building and put your idea that you are hoping to accomplish the feature thing that you want into a bitcoin network in the lightning and something that actually has a foundation and is going to last for a long hall because because simply IT has Better settlement assurances. It's the settlement assurances, stupid. And nothing competes with IT.

As Michael sailor says, there is no second best. And with that, I will get you on the next episode on free to check out fold and the many of fillets we have. I shout out to everybody who boost and zaps I am guys won and until next time everybody take a easy guys.

Any full can know the point is to understand Albert einstein.