WEBVTT - Why Bitcoin Is The Most Secure Network In The World 0:00:04.640 --> 0:00:07.720 So the big question is this, how do investors like 0:00:07.920 --> 0:00:11.800 us get access to the ideas, information, and most importantly, 0:00:12.039 --> 0:00:14.880 the right people that give us the tools and information 0:00:15.000 --> 0:00:19.000 we need to make informed and educated decisions to have success. 0:00:19.600 --> 0:00:22.360 That is the question, and this podcast will give us 0:00:22.400 --> 0:00:25.520 the answers. This is Mark Moss, your host. Let's get 0:00:25.520 --> 0:00:28.760 this started, all right, everyone, Welcome to another episode of 0:00:28.760 --> 0:00:31.960 the Market Disruptors podcast. Today I am with Dan Held. 0:00:32.000 --> 0:00:35.440 He's the co founder of Interchange, and he writes a 0:00:35.520 --> 0:00:38.960 lot about bitcoin, bitcoin security, bitcoin as a store of value, 0:00:39.040 --> 0:00:40.920 a lot of really good stuff on medium that's caught 0:00:40.960 --> 0:00:42.960 my eye and so I wanted to dive in deeper 0:00:43.000 --> 0:00:45.320 with him today. So, Dan, welcome to the show. Thanks 0:00:45.320 --> 0:00:47.840 for having me excited. Yeah, I'm excited to jump into 0:00:47.840 --> 0:00:50.360 some of these topics. Now. Um, I've read a lot 0:00:50.400 --> 0:00:52.960 of your stuff, as I just said, but maybe for 0:00:53.000 --> 0:00:54.400 those that haven't, why don't you just kind of tell 0:00:54.480 --> 0:00:57.320 us who you are, what you're doing, and kind of 0:00:57.360 --> 0:00:59.520 how you got here to this space right now? Yeah, 0:00:59.520 --> 0:01:02.400 that sounds like good place to start. So I got 0:01:02.440 --> 0:01:07.200 involved in the crypto space, or specifically bitcoin, because bitcoin 0:01:07.280 --> 0:01:09.319 was the only thing and when I got in back 0:01:09.319 --> 0:01:13.360 in and I had a friend paid me back for 0:01:13.440 --> 0:01:16.320 a beer with a capacious coin and for those who 0:01:16.319 --> 0:01:18.880 don't know what that is, that's the physical bitcoins that 0:01:18.920 --> 0:01:21.080 you see in all the news articles and that they're 0:01:21.120 --> 0:01:26.040 using different b roll footage on TV TV programs, And 0:01:26.120 --> 0:01:27.960 so that was a good way for me to kind 0:01:28.000 --> 0:01:32.280 of bridge that analog to digital world. And after I 0:01:32.280 --> 0:01:34.920 got that, I googled what is bitcoin? Read a little 0:01:34.920 --> 0:01:37.200 bit into it found that it had a really really 0:01:37.240 --> 0:01:41.200 cool monetary policy that was rooted in Austrian economics, and 0:01:41.240 --> 0:01:44.280 for me, as a libertarian and you know, Austrian economics guy, 0:01:44.680 --> 0:01:50.240 that's what really attracted me to bitcoin. And January I 0:01:50.320 --> 0:01:54.040 was relocated to San Francisco worked at a small investment firm. 0:01:54.360 --> 0:01:57.720 They relocated me out here, and while out here, I 0:01:57.760 --> 0:01:59.960 got plugged into the bitcoin meetup scene, which at the 0:02:00.040 --> 0:02:02.920 time was only a dozen people including Jesse pal Crack 0:02:02.960 --> 0:02:06.720 and Charlie Lee from light Coin, Jed Michaelo from Riple Stellar, 0:02:07.040 --> 0:02:11.639 Fred and Brian from coin Base, and there's basically all 0:02:11.639 --> 0:02:17.000 of us and a cooler PBRs and then March hits 0:02:17.000 --> 0:02:20.400 and that's when the people forget that two specul of 0:02:20.400 --> 0:02:24.320 the bubbles March when it went from ten to sixty, 0:02:24.520 --> 0:02:27.080 and then like November December when I went from a 0:02:27.160 --> 0:02:31.760 hundred to twelve hundred. So and then at first run in, 0:02:33.000 --> 0:02:35.639 everyone had a problem in terms of checking the price, 0:02:36.120 --> 0:02:39.720 the real time price of bitcoin, and so I saw 0:02:39.800 --> 0:02:42.920 that as a potential opportunity. And while I didn't know 0:02:42.919 --> 0:02:45.919 what the hell I was doing building products, I found 0:02:45.919 --> 0:02:48.000 an engineering buddy of mine and I said, hey, let's 0:02:48.080 --> 0:02:50.880 let's go build this. So I spent a bunch of 0:02:50.919 --> 0:02:54.040 time looking at different other doing the research and other 0:02:54.320 --> 0:02:56.799 mobile products, and I knew enough in photoshop that I 0:02:56.840 --> 0:03:00.920 could design it. The dirty secret there being that I 0:03:00.960 --> 0:03:05.400 couldn't design anything more complex. So people really liked the sleek, 0:03:06.200 --> 0:03:08.800 simple aesthetics of the product, but truth be told, I 0:03:08.800 --> 0:03:12.760 couldn't design anything anything with more complexity than that. So 0:03:13.880 --> 0:03:15.880 that turned out to be a great thing because people 0:03:15.880 --> 0:03:18.560 found value in the product right away. It was simple 0:03:18.560 --> 0:03:21.000 and easy to use, and it became the most popular 0:03:21.000 --> 0:03:26.200 crypto mobile product. Was that it's called zero block. Zero 0:03:26.200 --> 0:03:28.960 block okay, yeah, and zero block had acquired by blockchain 0:03:29.000 --> 0:03:32.280 dot Com in December and I came on board. There 0:03:32.320 --> 0:03:35.440 was the first product manager, Zooming Forward, a bit to 0:03:35.520 --> 0:03:38.280 keep the keep it kind of short. It was another 0:03:38.280 --> 0:03:40.640 product as a product manager at another crypto company called 0:03:40.720 --> 0:03:44.000 change Tip, which is micropayments over social media. After that, 0:03:44.040 --> 0:03:46.160 I went to Uber where I worked on Writer Growth, 0:03:46.560 --> 0:03:49.040 which is the Writer product team, Writer being the app 0:03:49.120 --> 0:03:53.320 that we all called Uber. And then UM went after 0:03:53.400 --> 0:03:55.640 that to come back to the crypto space where I 0:03:55.680 --> 0:03:58.640 go found out a company called Interchange and we build 0:03:59.320 --> 0:04:04.760 particuliar reconciliation tools for institutional traders and infrastructure. Cool. Well, 0:04:04.760 --> 0:04:09.480 that's that's quite a history, UM looking back now today, 0:04:09.560 --> 0:04:11.720 I mean, imagine how cool that is to sit around 0:04:11.800 --> 0:04:14.560 with a case of PBS with with those with those 0:04:14.600 --> 0:04:18.240 industry uh industry people. Was was probably pretty cool. You 0:04:18.520 --> 0:04:22.039 probably didn't realize at the time, right what you had. Yeah, 0:04:22.040 --> 0:04:23.760 I don't. At the time, I was I thought it 0:04:23.800 --> 0:04:25.440 was just cool that people might up and talked about 0:04:25.440 --> 0:04:29.080 bitcoin in person. Yeah, because that there was more than 0:04:29.160 --> 0:04:31.280 like me and my my one buddy, you know, So 0:04:31.360 --> 0:04:35.359 that was that was pretty cool. Yeah, that's interesting. I UM, 0:04:35.400 --> 0:04:38.440 I have been an online pioneer. I started online business 0:04:38.480 --> 0:04:40.200 in two thousand one at the bottom of the dot 0:04:40.279 --> 0:04:42.440 com crash, which was a horrible time, but did did 0:04:42.480 --> 0:04:46.320 really well. I've been kind of a professional investor for 0:04:46.320 --> 0:04:49.520 twenty years as well. UM and I and being on 0:04:49.560 --> 0:04:51.919 the online space, I had heard of bitcoin. I remember 0:04:51.920 --> 0:04:56.320 specifically the bubbles as you're talking about, UM, but it 0:04:56.360 --> 0:05:00.599 wasn't really until when I decided to jump in. And 0:05:00.600 --> 0:05:03.680 and as you talk about with your kind of monetary 0:05:03.720 --> 0:05:06.520 theory or your your ideologies that you have, I kind 0:05:06.520 --> 0:05:07.960 of have the same. Where I grew up in a 0:05:08.000 --> 0:05:14.560 really conservative home. UM. In high school, my parents sent 0:05:14.600 --> 0:05:17.680 me to John Birch Camp. If you know what that is, um, 0:05:17.800 --> 0:05:21.080 you'll know how you don't know how libertarian and right 0:05:21.120 --> 0:05:25.520 wing I I was. And yeah, I was following a 0:05:25.560 --> 0:05:28.559 newsletter from from called Sovereign Man. If you know about 0:05:28.560 --> 0:05:31.920 that Simon Black, and uh, he's all about like having 0:05:31.920 --> 0:05:34.240 the sovereign life and uh who's you know talks about 0:05:34.240 --> 0:05:37.480 the importance of having secondary passports and off shore bank 0:05:37.480 --> 0:05:40.799 accounts and and uh. Then I was like, well, bitcoin 0:05:40.920 --> 0:05:44.640 is the same thing. Like I can have my sovereign 0:05:44.680 --> 0:05:46.640 life with bitcoin, and so that's that's kind of I 0:05:46.680 --> 0:05:49.880 was like, man, I gotta jump all in. So anyway, Uh, 0:05:50.000 --> 0:05:53.360 same ideologies, but that brought us there. But that's cool. 0:05:53.400 --> 0:05:56.240 So you've been around the space for quite a while. Um, 0:05:56.279 --> 0:06:00.520 you've seen bitcoin rise in fall many times. Uh. One 0:06:00.560 --> 0:06:02.440 of the things that you've been talking about that caught 0:06:02.440 --> 0:06:05.680 my eye was the bitcoin security model. And I know, 0:06:05.839 --> 0:06:08.960 when we just went through this bear market, the price 0:06:09.000 --> 0:06:13.760 of bitcoin, you know, crashed too, then crashed again, and 0:06:13.760 --> 0:06:17.159 there was a lot of talk about this this death spiral, 0:06:17.600 --> 0:06:20.760 right because the prices would drop so far that the 0:06:20.839 --> 0:06:23.960 security of the network would would be in jeopardy. And 0:06:24.000 --> 0:06:26.640 I think maybe that's what kind of led to some 0:06:26.680 --> 0:06:29.320 of these articles that you wrote. Yeah, you're talking about 0:06:29.320 --> 0:06:32.680 the mining death spiral, right, Well, yeah, because if the 0:06:33.040 --> 0:06:34.960 mining death bar goes down, the security of the network 0:06:35.040 --> 0:06:39.239 is then affected. Yeah. Well, you know, It's the reason 0:06:39.240 --> 0:06:41.320 why I wrote this article is that there's a certain 0:06:41.320 --> 0:06:46.440 group of individuals of another prominent cryptocurrency, Um, and they 0:06:46.680 --> 0:06:51.960 like to use, uh, the potential issues with Bitcoin's long 0:06:52.080 --> 0:06:55.880 term security as a way to try to undermine confidence 0:06:55.960 --> 0:07:00.880 to Bitcoin, which I find hilarious considering this currency, by 0:07:00.880 --> 0:07:03.640 the way, it's called Ethereum. I find it hilarious that 0:07:03.680 --> 0:07:07.120 the ethereum community looks at a hundred year potential issues 0:07:07.160 --> 0:07:11.240 with Bitcoin while their own existing monetary policy is totally garbage. 0:07:11.600 --> 0:07:17.920 So um or or lack of policy maybe right, precisely, right, yeah, 0:07:17.960 --> 0:07:22.400 the lack of monetary policy of a laughable um sort 0:07:22.440 --> 0:07:25.480 of way they go about choosing an inflation rate. And 0:07:25.560 --> 0:07:27.680 so for them to criticize Bitcoin, this is like the 0:07:27.800 --> 0:07:30.520 lost ditch effort to try to undermine confidence in bitcoin, 0:07:31.160 --> 0:07:34.560 because if you undermine confidence in bitcoin's long term security, 0:07:35.000 --> 0:07:38.840 it brings into question bitcoins twenty one million hardcap because 0:07:38.880 --> 0:07:41.520 some hypothesize that you would need to have tail emission 0:07:42.160 --> 0:07:45.680 essentially a low level of inflation passed the twenty one 0:07:45.720 --> 0:07:49.000 million hardcap, and that violates, I think, from the core 0:07:49.080 --> 0:07:52.000 tent of bitcoin. And after doing my research, I found 0:07:52.000 --> 0:07:54.720 it's totally unwarranted. And when you say and when you 0:07:54.720 --> 0:07:57.600 say that the tele emission you're talking about, so after 0:07:57.680 --> 0:08:01.320 the miners stop earning rewards, meaning they don't make any 0:08:01.360 --> 0:08:04.440 money anymore, what would be the point of them continuing too? 0:08:04.480 --> 0:08:08.080 Mind blocks, that's what you're referring to it. Essentially, so 0:08:08.200 --> 0:08:11.880 miners are they sink capex and opex, So capex being 0:08:12.000 --> 0:08:15.920 the by bitcoin mining equipment, and opex is the electricity 0:08:16.080 --> 0:08:21.520 miners expend that that expense Um too then earn a 0:08:21.640 --> 0:08:25.360 percentage of block rewards going into the future, and a 0:08:25.440 --> 0:08:28.080 block reward is every ten minutes a new block is 0:08:28.120 --> 0:08:31.760 created in Bitcoin, and that block contains newly minted bitcoins, 0:08:31.760 --> 0:08:34.640 which is called the block subsidy, and then it contains 0:08:34.679 --> 0:08:38.959 transaction fees. The block subsidi decreases over time, and that 0:08:39.080 --> 0:08:43.120 eventually produces twenty one million bitcoins. And some people worry 0:08:43.160 --> 0:08:46.160 after the block subsidiy ceases to exist or after all 0:08:46.160 --> 0:08:49.760 the bitcoins have been minted, which is in the year approximately, 0:08:50.559 --> 0:08:55.520 that um that transaction fees won't compensate the miners enough 0:08:55.600 --> 0:09:00.760 to protect the network, right, and so um, you've basically 0:09:01.679 --> 0:09:03.920 kind of uncovered that may not be the case. I mean, 0:09:03.960 --> 0:09:06.680 after that, those still have plenty of incentives. After that, 0:09:06.840 --> 0:09:10.080 those rewards go away totally. Well a lot of this 0:09:10.240 --> 0:09:12.720 So the ethereum crowd like to like to poke at 0:09:12.760 --> 0:09:15.000 this because they felt like it would undermine the confidence 0:09:15.040 --> 0:09:17.640 in bitcoin and the confidences that the twenty one million 0:09:17.679 --> 0:09:22.720 hardcap would would potentially be manipulated, which is a pretty 0:09:22.760 --> 0:09:25.160 good social attack factor. And so I felt like this 0:09:25.400 --> 0:09:28.840 needed to be comprehensively addressed. And once I dug In deep. 0:09:28.880 --> 0:09:32.280 I found that most of their thoughts behind this being 0:09:32.280 --> 0:09:35.560 an initiative, we're predicated on a few papers from Ivy 0:09:35.600 --> 0:09:39.640 League schools like Princeton and Harvard. And I read some 0:09:39.679 --> 0:09:42.600 of these papers and after reading, you know, you read 0:09:42.600 --> 0:09:45.640 a page or two in and you go, what the 0:09:45.640 --> 0:09:53.520 hell because these papers essentially made ridiculous assumptions um absolutely 0:09:53.640 --> 0:09:58.160 ridiculous assumptions. So for example, they assume the coins price 0:09:58.240 --> 0:10:02.079 never increases. It's like, oh, of course the security is 0:10:02.120 --> 0:10:05.839 going to be a problem if it never increases, right right, um? 0:10:05.880 --> 0:10:07.920 Which also, if the price net for increases, that means 0:10:07.960 --> 0:10:10.160 that the shared illusion of the number of participants in 0:10:10.200 --> 0:10:13.760 the bitcoin network never grew. So bitcoin net grew beyond 0:10:13.760 --> 0:10:16.400 ten or twenty million people, which means I think it 0:10:16.520 --> 0:10:20.160 kind of failed. And the reason why the price increases important, 0:10:20.520 --> 0:10:23.800 I'm guessing, is because of the of the blocks that 0:10:23.920 --> 0:10:26.640 the happening that's coming, right, So the block reward is 0:10:26.679 --> 0:10:28.800 getting cut in half, and it continues to get cut 0:10:28.800 --> 0:10:32.240 in half, and so therefore the amount of bitcoin they 0:10:32.280 --> 0:10:34.960 get goes down, but the value of that bitcoin should 0:10:35.000 --> 0:10:37.480 be going up at the same time. That's right, And 0:10:37.480 --> 0:10:39.520 that's what we've seen the last two happening in cycles. 0:10:39.559 --> 0:10:42.520 Is that after the happening cycle, the price increases exponentially. 0:10:43.240 --> 0:10:46.880 The increase in price brings around greater awareness and speculation, 0:10:47.000 --> 0:10:50.760 which thereby draws in more users who thereby transact. So 0:10:51.480 --> 0:10:54.560 the happening events create a supply shock. That supply shock 0:10:54.800 --> 0:10:57.199 kick starts a new bowl run, and then that bowl 0:10:57.280 --> 0:10:59.640 run brings the new people to transact, and those transaction 0:10:59.679 --> 0:11:02.559 fees are place the decreased blocks up speak, got it. 0:11:03.080 --> 0:11:06.040 I really liked your point about the miners. I mean 0:11:06.080 --> 0:11:09.600 they're buying the equipment, which is a long term investment 0:11:09.640 --> 0:11:11.880 that they have to recoup their their investment on, and 0:11:11.920 --> 0:11:15.720 then they have their electricity investment as well. So, um, 0:11:15.760 --> 0:11:18.680 I think that aligns them to the network right there. 0:11:19.040 --> 0:11:21.360 They need to be good actors. They need to see 0:11:21.400 --> 0:11:24.000 their their investments returned to them over a long period 0:11:24.040 --> 0:11:26.280 of time, right Yeah. And so this I think is 0:11:26.280 --> 0:11:31.080 a good good segue into how bitcoin security model works. Essentially, 0:11:31.120 --> 0:11:35.600 bitcoin security works based on game theoretic um game since 0:11:35.600 --> 0:11:38.280 you game three where the elements are around bitcoin mining 0:11:38.320 --> 0:11:43.240 and revenue, so miners are compensated to protect the network. Um. 0:11:43.360 --> 0:11:45.480 They think that that up from costs to be of 0:11:45.520 --> 0:11:47.640 the machines, and then they have the continuing cost of 0:11:47.640 --> 0:11:50.439 the offex of electricity, and then they get a certain 0:11:50.440 --> 0:11:53.079 percentage of the block rewordpoint in the future, and the 0:11:53.200 --> 0:11:56.040 percentage is determined based on how many other people are mining, 0:11:56.640 --> 0:11:59.480 So what what percentage of the hashway they have? Essentially 0:12:00.640 --> 0:12:05.760 and um what what has to happen is that bitcoin 0:12:05.880 --> 0:12:09.760 miners are incentivized to behave properly because they're given a 0:12:09.800 --> 0:12:12.440 block reward when they do. So. When they're given the 0:12:12.440 --> 0:12:15.960 block reward, they've already sunk in cost, remember, so they're 0:12:16.000 --> 0:12:18.280 just recouping their cost and they're hoping that they make 0:12:18.280 --> 0:12:21.800 the profits. So the confidence and stability of the protocol 0:12:21.840 --> 0:12:24.360 is paramount for them because they already have up front 0:12:24.360 --> 0:12:27.240 costs and they're trying to make their money back. So 0:12:27.880 --> 0:12:31.480 the game throoretic element here is that bitcoin miners will 0:12:31.559 --> 0:12:34.600 largely not try to amenitbulue the network. We're engaging fifty 0:12:34.679 --> 0:12:37.439 one percent attacks even if they had the hash rate, 0:12:37.440 --> 0:12:39.920 because they would damage the confidence of the protocol, which 0:12:39.920 --> 0:12:42.480 would damage their future cash flows. So that's the game 0:12:42.480 --> 0:12:46.680 through retic element. UM. Now, the attack factor that most 0:12:46.679 --> 0:12:49.360 people are worried about is a government attack factor where 0:12:49.400 --> 0:12:52.320 they don't care about burning the money. So governments may 0:12:52.360 --> 0:12:55.000 not care about buying billions of dollars of money equipment 0:12:55.520 --> 0:12:58.160 and then that mining equipment becoming useless after they attack 0:12:58.200 --> 0:13:02.480 the network. So that's what this covers is, you know, 0:13:02.520 --> 0:13:06.360 what's the first of all, what's an appropriate um? It's 0:13:06.360 --> 0:13:10.360 an appropriate level of security spend that makes the network secure? 0:13:11.160 --> 0:13:15.160 How bad is an attack? Um? You know, will transaction 0:13:15.200 --> 0:13:17.160 fees replace the box ups the over time? What have 0:13:17.280 --> 0:13:19.480 we seen historically? What we see that, what does that 0:13:19.559 --> 0:13:22.600 look like projected into the future, and then some modeling 0:13:22.640 --> 0:13:26.880 around okay, what what does what do transaction fees look like? 0:13:27.360 --> 0:13:30.840 And we'll we'll consumers and will businesses pay that transaction 0:13:30.920 --> 0:13:33.600 fee to transact on the bitcoin network Because a lot 0:13:33.640 --> 0:13:36.080 of people now a lot of the old bee cash 0:13:36.120 --> 0:13:38.520 or crowd or the bitcoin is made for payments crowd, 0:13:39.120 --> 0:13:42.199 they feel really strongly around how much it costs to 0:13:42.240 --> 0:13:45.839 send a bitcoin transaction. And so I kind of comprehensively 0:13:46.080 --> 0:13:51.559 cover the price elasticity of a on chain transactor transactor 0:13:51.600 --> 0:13:54.000 that's using a block space, not just bitcoins, but any 0:13:54.000 --> 0:13:57.680 block space, and then other real world comps as to 0:13:57.720 --> 0:14:00.320 what they'd be willing to spend on the transaction. So 0:14:00.360 --> 0:14:02.640 let's try to break this down for the average person 0:14:02.800 --> 0:14:05.120 that's that's kind of listening to this. And and as 0:14:05.160 --> 0:14:08.160 you said, right, that's one of the big attack vectors 0:14:08.160 --> 0:14:11.120 that when when I hear people say, you know, what 0:14:11.200 --> 0:14:14.960 could go wrong with bitcoin? Kind of that The two 0:14:15.040 --> 0:14:17.520 maybe are ones that you've already addressed. One like as 0:14:17.520 --> 0:14:20.280 you said, a nation state of sovereign trying to attack 0:14:20.320 --> 0:14:23.880 it or to changing the hardcap. And so going back 0:14:23.880 --> 0:14:25.760 to what you just said, with like a sovereign doing 0:14:25.760 --> 0:14:30.160 an attack, they don't care about their investment. Um, people 0:14:30.240 --> 0:14:32.600 think that's a risk. They think, oh, well, all the 0:14:32.680 --> 0:14:35.640 mining is consolidated in China, so China could just take 0:14:35.680 --> 0:14:38.400 over all the miners right there and do it. Um, 0:14:38.520 --> 0:14:41.680 how big of a risk do you think that is? Um? 0:14:41.800 --> 0:14:43.720 And I guess so, how big of a risk do 0:14:43.760 --> 0:14:46.160 you think that really is? And and uh, yeah, that's 0:14:46.160 --> 0:14:49.960 a great question. So you know, when I when I 0:14:50.120 --> 0:14:53.080 store my bitcoin and the bitcoin ledger, I essentially have 0:14:53.240 --> 0:14:56.560 ownership over x amount of coin that's represented in the ledger, right, 0:14:57.560 --> 0:15:01.640 and bitcoin miners what they do is through proof of work, 0:15:01.720 --> 0:15:04.520 so through the mining equipment plus electricity, they are producing 0:15:04.560 --> 0:15:09.479 new coins, and then they are essentially validating and permanently 0:15:10.160 --> 0:15:14.800 etching transactions into the recorded ledger via those new blocks. 0:15:15.240 --> 0:15:18.320 So you can kind of think about it as uh, 0:15:18.440 --> 0:15:20.760 you know, with the electricity spent by the miners to 0:15:21.400 --> 0:15:24.920 mental bitcoin to protect the into validate transactions in that block. 0:15:25.400 --> 0:15:28.280 It's essentially like layers and layers and layers of energy, 0:15:28.680 --> 0:15:33.000 right that are that are continually pressing down upon all 0:15:33.080 --> 0:15:38.280 the blocks previous before it. And and so when it 0:15:38.320 --> 0:15:42.080 comes to when it when it comes to like essentially 0:15:42.120 --> 0:15:47.520 the security the network, um, you know, when when these 0:15:47.520 --> 0:15:50.360 transactions are validated. What people worry about is if you 0:15:50.400 --> 0:15:54.080 had a entity that had the hash rate, they could 0:15:54.280 --> 0:15:56.680 try to double spend or try to manipulate the tip 0:15:56.680 --> 0:16:01.080 of the chain. Even even if that happened, though, it 0:16:01.160 --> 0:16:04.600 still takes a tremendous more amount of energy to unwind 0:16:04.760 --> 0:16:07.640 the chain. And even if someone tried to do that, 0:16:08.280 --> 0:16:11.920 each individual who stored their money into the bitcoin ledger, 0:16:12.840 --> 0:16:14.800 we all agreed upon a certain set of rules, and 0:16:14.800 --> 0:16:17.320 those rules didn't have someone going, hey, I'd like to 0:16:17.400 --> 0:16:20.640 unwind all of these transactions. So in the event that happens, 0:16:20.680 --> 0:16:24.000 Bitcoin still don't die because all of the participants in 0:16:24.040 --> 0:16:26.800 the network have their ledger balances and they can all 0:16:26.840 --> 0:16:29.760 simply say, Okay, this malicious actor started to try to 0:16:29.800 --> 0:16:33.360 unwind everything at point A, let's just start over at 0:16:33.400 --> 0:16:38.000 point A. Um, so the chain, yeah, and for the chain, 0:16:38.040 --> 0:16:41.280 which is an extreme case, right, this is a non 0:16:41.720 --> 0:16:45.720 none advantageous sort of sort of environment. Right. But even 0:16:45.760 --> 0:16:51.120 if a government did successfully try to influence the ledger 0:16:52.000 --> 0:16:55.280 through a talk, they still would have a difficult time 0:16:55.360 --> 0:16:59.240 on winding transactions because bitcoin, like every other money, is 0:16:59.280 --> 0:17:01.400 merely a social insensus. We all believe in it and 0:17:01.400 --> 0:17:04.040 that gives it value. So people aren't going to just 0:17:04.119 --> 0:17:06.560 abandon the bitcoin blockchain and join another one, which would 0:17:06.600 --> 0:17:08.960 all those other chances with people grew by the way. 0:17:09.320 --> 0:17:12.199 People are going to say, hey, let's start over from 0:17:12.240 --> 0:17:15.239 this point before these militilation has happened and change it 0:17:15.400 --> 0:17:18.120 or figure out ways to protect it. So that's kind 0:17:18.160 --> 0:17:22.399 of like a last resort. That's like a worst case scenario. Um. 0:17:22.440 --> 0:17:26.440 But how resilient would it be to fending off an attack? So? Um, 0:17:26.480 --> 0:17:29.280 I think the longer that an attack doesn't happen, the 0:17:29.280 --> 0:17:32.919 harder it gets. I would guess, right, So, um, a 0:17:33.040 --> 0:17:34.720 year from now, the attack would be harder than it 0:17:34.760 --> 0:17:38.280 would be today, and then secondary which would mean it 0:17:38.280 --> 0:17:40.879 would cost more money. But and also could the other 0:17:41.000 --> 0:17:45.800 non bad actors, the other miners work to fight that off. Yeah, 0:17:45.800 --> 0:17:48.600 that's right. I mean good actors could throw more hash 0:17:48.680 --> 0:17:50.800 rate onto the network and that might super that might 0:17:50.880 --> 0:17:55.360 become bigger than the malicious attacker. And so yeah, that's 0:17:55.359 --> 0:17:57.679 a lot less to ch effort. There's many other I 0:17:57.720 --> 0:17:59.920 think steps in between them that kind of make the 0:18:00.040 --> 0:18:03.480 sort of attack not realistic. One even purchasing that much 0:18:03.480 --> 0:18:07.320 equipment when everyone would notice it. You can't just you 0:18:07.400 --> 0:18:09.440 can just jump onto the network with that much equipment 0:18:09.440 --> 0:18:11.159 and no one would know that you even made that, 0:18:11.560 --> 0:18:13.199 or that you tried to buy that equipment or by 0:18:13.240 --> 0:18:16.800 the raw materials. Right, we'd all know that the Yeah, 0:18:16.920 --> 0:18:20.000 we'd all known advance. Um, and if and if China 0:18:20.200 --> 0:18:22.960 was moving their military to take over every single center, 0:18:23.440 --> 0:18:25.359 we would know about we'd probably hear about that in 0:18:25.400 --> 0:18:27.720 advance as well. Yeah, let's put it this way. In 0:18:27.720 --> 0:18:30.240 a connected internet world, I don't think anything stays secret 0:18:30.280 --> 0:18:34.400 for that long. And so you know, you know one, 0:18:34.880 --> 0:18:37.920 it's you know, like, one, it's really hard to buy 0:18:37.920 --> 0:18:41.280 all that equipment without anyone noticing. Two, you have to 0:18:41.320 --> 0:18:43.080 be willing to burn the money, which you have to 0:18:43.200 --> 0:18:46.440 go to your tax base and go, hey, by the way, 0:18:46.520 --> 0:18:49.879 we decided to burn right now, that's five billion dollars, 0:18:49.880 --> 0:18:51.560 but in the next bowl run, it might be a 0:18:51.600 --> 0:18:55.240 hundred or a hundred billion dollars a year on mining revenue. 0:18:55.800 --> 0:18:58.000 So hey, we're willing to burn fifty billion dollars to 0:18:58.080 --> 0:19:00.600 attack on network that you all use. We have to 0:19:00.640 --> 0:19:03.959 remember that citizens of these countries participated in decoin network, 0:19:04.440 --> 0:19:08.119 and allies of it of this country participate in the network. 0:19:08.160 --> 0:19:10.119 So if a country like the United States were to 0:19:10.160 --> 0:19:13.920 attack Bitcoin, they would be attacking themselves and other countries. 0:19:14.440 --> 0:19:17.200 So this isn't still cut and dry as to like, hey, 0:19:17.240 --> 0:19:20.840 bitcoin is the enemy. Bitcoin is every one of us. Right, 0:19:21.320 --> 0:19:26.000 were your friends, family, military members owned bitcoin? So when 0:19:26.000 --> 0:19:29.920 you do that, you're permanently you're permanently attacking them. So 0:19:30.200 --> 0:19:32.159 it's and you have to explain why you wanted to 0:19:32.200 --> 0:19:35.760 burn fifty to a billion fifty billion dollars to the 0:19:35.840 --> 0:19:38.600 people who don't even care about bitcoin, like, hey, I 0:19:38.640 --> 0:19:40.440 don't even care about bitcoin? Why did we waste that 0:19:40.520 --> 0:19:43.199 much money on this and you're not even guaranteed success 0:19:43.240 --> 0:19:48.679 to destroy it? Yeah, exactly. So the biggest fear that 0:19:48.720 --> 0:19:52.040 most people have as of a sovereign wanted to destroy it. 0:19:52.080 --> 0:19:55.960 And the reality of it is pretty slim. I mean, 0:19:56.000 --> 0:19:58.520 anything's possible, but the reality is pretty slim. And we 0:19:58.640 --> 0:20:00.840 all know in advance. I think that's the biggest thing, right, 0:20:00.840 --> 0:20:04.000 we all know advance, we'd have the ability to figure 0:20:04.040 --> 0:20:07.000 something else out. And then the changing the hard cap, 0:20:07.760 --> 0:20:10.119 that's another one I hear all the time. Um, but 0:20:10.240 --> 0:20:12.840 again that would I mean, we saw how long SeGW 0:20:12.880 --> 0:20:15.320 it took to get through, right, Um, imagine how hard 0:20:15.320 --> 0:20:17.280 it would be to change the hardcap. So again we'd 0:20:17.280 --> 0:20:20.040 know about that way in advance, which would all give 0:20:20.080 --> 0:20:23.560 us a chance to make adjustments. Right. Well, yeah, you know, 0:20:23.640 --> 0:20:26.760 to kind of finish out at the first part there. Um, 0:20:26.800 --> 0:20:29.920 you know, as Bitcoin and the next bowl run, the 0:20:30.000 --> 0:20:32.840 spend on mining annually and the revenue on mining annually 0:20:32.880 --> 0:20:34.920 will be so large that it basically makes an attack 0:20:35.040 --> 0:20:38.240 not feasible. Right now, Bitcoin with five billion dollars in 0:20:38.280 --> 0:20:42.399 mining revenue annually is still somewhat weak. Um, but I 0:20:42.400 --> 0:20:44.359 don't think governments really care about it at this moment, 0:20:44.400 --> 0:20:47.160 so bitcoin is fortunate to have governments kind of look 0:20:47.200 --> 0:20:49.800 the other way. UM the next bull run, I think 0:20:49.800 --> 0:20:52.920 it becomes strong enough from a threshold security model, threshold 0:20:52.920 --> 0:20:58.040 being like how much spend annually is is bitcoin bitcoin mining? 0:20:58.560 --> 0:21:01.919 Or like how much revenue and generating UM. So I 0:21:01.960 --> 0:21:04.240 think I think bitcoin is still a little weak right now, 0:21:04.280 --> 0:21:07.760 but it's the strongest of any other cryptocurrency UM. But 0:21:07.920 --> 0:21:09.560 in the next bull run, I think it will be 0:21:09.720 --> 0:21:13.280 resistant to any attack by even the largest of countries. 0:21:14.160 --> 0:21:16.679 Now switching gears back over to the twenty one million 0:21:16.720 --> 0:21:20.880 hardcap essentially with the ethereum side, and some of these 0:21:21.760 --> 0:21:27.200 intellectually dishonest researchers from those Ivy League schools hypothesizes that 0:21:27.560 --> 0:21:32.119 Bitcoin's long term security is either not adequate or unstable, 0:21:32.160 --> 0:21:35.840 which they use ridiculous assumptions to make that up. One 0:21:35.880 --> 0:21:38.960 is that bitcoin's price and for increases. The other is 0:21:39.000 --> 0:21:43.080 that there is no Layer one efficiency gains. For example, 0:21:43.680 --> 0:21:47.040 they hypothesize that Layer one will never be more efficient 0:21:47.040 --> 0:21:49.919 in terms of white size for transactions, which we have 0:21:49.960 --> 0:21:52.000 smaller signatures coming up in the next year or two. 0:21:52.080 --> 0:21:56.560 So that's pretty ridiculous um. They also they also hypothesize 0:21:56.600 --> 0:22:01.280 that minors, instead of being focused on long term revenue 0:22:01.280 --> 0:22:05.080 potential of their mining equipment, so focused on the you know, 0:22:05.480 --> 0:22:08.399 so as as mining equipment essentially reaches the limits of physics. 0:22:08.400 --> 0:22:11.639 So miners the ASICs that they purchased, the chip sizes 0:22:11.680 --> 0:22:13.880 get smaller and smaller and smaller, but eventually they can't 0:22:13.880 --> 0:22:17.399 get smaller than that because of physics. Once that happens, 0:22:17.400 --> 0:22:19.720