We’re all bullish on bitcoin, but will transactions take place on Lightning Network or other layers and tech? Udi and Eric join me on the show to discuss. 

  • Monetary demand for bitcoin
  • How much payment demand is there? 
  • Privacy, custody and other trade offs
  • Stablecoin payment demand
  • Platform risks of ETH

Links: 

Sponsors:

Stephan Livera links:

Podcast Transcript:

Stephan Livera:

Udi and Eric, welcome to the show.

Udi Wertheimer:

Hey!

Eric Wall:

Thank you.

Stephan Livera:

So guys, we’ve got this little you know, discussion, debate, whatever we want to call it. I think it’s going to be a bit more of an informal discussion. I think it might be best if we actually let Eric set the context. Why is this a little debate happening?

Eric Wall:

Yeah, so it all started with I wrote a a blog post it’s called Eric’s November thoughts where I’m extremely bullish on Bitcoin. And it took, in that blog post, I go through all the catalysts that we’ve had recently, that’s driving up the price and how for the first time when people say, you know, this time, it really is different. I don’t feel like that’s a joke in any way. I really do feel like we are at the point in time now where Bitcoin has entered the world stage in a much more confident way. And also it also in a way that feels like it’s not going to go back from here where like, once you get the level of endorsements and acknowledgements from the mainstream industry, and I’m talking about investors such as Paul Tudor Jones, Bill Miller, Stanley Druckenmiller once we reach that point, it’s going to be extremely hard to put the Bitcoin genie back in the bottle, but it took me a couple of days after writing that post.

Eric Wall:

And I just woke up one morning when I had this Holy shit type of moment, where I realized that all these dreams that we’ve been having in Bitcoin for such a long time, and I’ve been in the Bitcoin industry for eight years now. And I just got extremely excited because the store of value proposition of Bitcoin is getting cemented in a way where we see that Bitcoin is becoming something that every hedge fund in the world is currently looking at. I mean, I just previous to this call, I was just on a call with a major hedge fund that were seriously looking into Bitcoin. And I met them a couple of years ago at the top. The type of discussion that we’re having about Bitcoin is no longer, you know, how does the technology work? Is this something used by criminals is it a tulip bulb?

Eric Wall:

It’s just like, how do we get exposure in the best possible way? And it’s the liquidity sufficient for us to enter this asset? So I just got extremely excited about this and once I sort of fully took it in the full effects of what’s going to happen once Bitcoin becomes established as this type of asset class then the next I can sort of leap forward from that and understand that, you know, if Bitcoin is going to succeed as a store of value, that it is going to be on par with gold, then the natural evolution of that thought process is that, you know, Bitcoin is an internet based asset. Once you have it as something that people store their value in, the next step, which is for Bitcoin to start to transition into a medium of exchange is very natural.

Eric Wall:

I mean, once you use it to store your value, then why wouldn’t you just accept payments in that same asset directly? If the currency is specifically built for being transferred easily across the world. And that as soon as I then these sort of hints of hyperbitcoinization really start to feel real. And it’s in that moment, when I think about you know, hyperbitcoinization, is not this weird dream, it’s just a natural progression of Bitcoin succeeding as a store value asset that these, these negative thoughts come to me and these negative thoughts are that we haven’t really solved how we are going to conduct this medium of exchange use case. Now, I wrote in the chat, I have a chat with Udi and a couple of other guys where I said like, Oh my God, things are just so bullish for Bitcoin right now.

Eric Wall:

But it just sucks that lightning isn’t where we hope it would be. So Udi joined that conversation and we started talking about lightning and my issues with lightning, I can go through them like the weaknesses and the challenges and the reasons why I’m not as optimistic and bullish about lightning as I mean, don’t get me wrong. I mean, I was, when lightning was new with my company and we were one of the 501st lightning nodes, I I tried to contribute to the lightning discussion. And I am like in my heart, a lightning bull, but I just don’t see that the challenges, the technical challenges with the protocol make it such that it is going to be the ideal transfer mechanism for the masses. So Udi came into this conversation and well, maybe it’s best for you. It would be to go into this yourself. But to what I took away from it was that Udi basically envisions a future where lightning is going to be conducted custodially. And that, like, when I start to think about that, that’s when I start to get bearish on it or like, I start to get bearish on bitcoin and I want to think about like, how do we, how are we actually going to conduct a Bitcoin transaction in the future? So yeah, maybe it would be good.

Stephan Livera:

Yeah. Let’s hear a little bit from Udi.

Udi Wertheimer:

Right. So I wouldn’t say necessarily that I think that’s lightning would be used custodially, but here are my thoughts on this. So I first of all I think I need to be nicer to Eric because if he’s been in Bitcoin for eight years, then he can probably buy me out. So Eric, you’re my best friend from that one. This is the first thing. Second thing is I, of course I agree with the bullish side of his analysis. I am not convinced that we necessarily need a payment system at all for Bitcoin to succeed. I think it can be great. It would be awesome to have it, but I’m not sure we need it. It seems like so far, and I don’t know all of the Bitcoiners in the world, but it seems like so far Bitcoiners are not necessarily very big spenders.

Udi Wertheimer:

I think of course some people, some Bitcoiners are, but I think if you, I don’t have any data in this, but it looks like, you know, Bitcoiners tend to think about, you know, saving. They tend to think about having equity in things and not necessarily consuming. It’s kind of a big thing in the Bitcoin story. And I think that’s why you know, a payment system right now just doesn’t seem to have a lot of demand in the Bitcoin community. I mean, we all love lightning. I, think so. I mean, I get excited by it. I’ve been excited by it for years. I’ve been, you know, building on it in various ways from 2016. And I think it’s great as a technology. It’s very innovative and it’s exciting, but I’m not sure that there’s demand for it right now. And I’m not sure there’s going to be maybe I don’t know.

Udi Wertheimer:

I honestly don’t know. So it looks like one, Bitcoiners or some of them, at least probably a bigger, you know, a bigger percentage of Bitcoiners is kind of frugal. When compared to just the general population. I think that, you know, a lot of people who spend Bitcoin in the past, probably most of them tend to regret it nowadays. So, you know, it’s the usual story. You open up your wallet or whatever. And you look at some transaction when you bought something three years ago, and you’re just, you’re just devastated. So usually Bitcoiners are just not, you know, they regret spending money. So they’re really not looking for a payment system right now. Some people are, there are some use cases. I’m not saying they are definitely people are using lightning. I think it looks like the usage is growing.

Udi Wertheimer:

But you know, it’s still, I think the demand is pretty small. And even if there’s going to be demand for a payment system at some point, and it’s possible I do think that it’s most likely that people will choose a custodial system for it regardless of the state of lightning. So, you know, I can imagine people who, you know, maybe Bitcoin becomes this standard you store of value and everyone holds a few sets and then people will choose to maybe use PayPal to transfer Bitcoins because maybe the merchant wants to accept the Bitcoins as an asset. They don’t care about the custody of it just don’t care about it. Just like they don’t care about custody right now, but maybe they just value the Bitcoin asset and they want to receive it as payment. So PayPal is going to allow people to pay custodially with Bitcoin or, you know, it can be a currency that you can pay with your visa card or your MasterCard or whatever.

Udi Wertheimer:

So I’m not necessarily saying that it’s great. I mean, I obviously I see the benefit of using a system that let you be in self custody, but I’m not sure that the people are gonna care about that, but, you know, let’s say, I don’t know, I don’t know what the future holds. So let’s say there is a demand in the future for the centralized payment system for a self custody system that allows for payments. In that case, I think lightning will get there. I think that, you know, a big part of why lightning is kind of developing in a somewhat slow way, although, you know, if you’re really involved in the development in lightning, I don’t think you will say that it’s slow because it’s so fast. It’s really hard to keep keep up to date with the changes.

Udi Wertheimer:

But you know, the growth isn’t very fast and so you could say that it’s not just, it’s not growing really fast, I guess you could say that. And I think a lot of the reason for that is just that the demand isn’t there right now, and if it will be there, then I think that you’ll see the lightning products improve very quickly, much quicker than they did now. Now in the last year just in the last 12 months, I think that user experience in lightning in the new wallets like Phoenix and and Breez and some of those like kind of next generation lightning wallets, I think they’re amazing. They’re really easy to use. They’re really great. They solved a lot of the problems and there’s already this roadmap of how other problems are going to be solved.

Stephan Livera:

Udi if I had to summarize your point there it’s essentially that, you know, essentially a lot of Bitcoiners are mostly HODLing. And so from your point of view, if they’re only spending a small amount or not spending at all, well, maybe it’s not a huge deal that they’re using some of these not perfectly self-sovereign, you know, custodial, lightning sort of things. But I guess I think we should go back to Eric here and get Eric’s view on exactly what are the problems he sees with lightning transactions, you know, today and why Eric believes that they wouldn’t be overcome in future.

Eric Wall:

Yeah. So first I would just like to address this point Udi talks about there not being demand for lightning transactions. And I mean, it feels to me like you’re already at, now in this conversation, having a way too restricted view of the future that I want us to talk about in this conversation. So what I, the reason that I want to have this conversation is to explore what happens after Bitcoin succeeds as a store of value asset. And I think that I think that, I mean, the reason that I am leapfrogging to this later stage of Bitcoin’s lifeline is because I feel like the hurdles in order for Bitcoin to achieve a store of value status have already been passed. It’s just a matter of time now, before the meme spreads and it gets into sufficient amount of people’s portfolios.

Eric Wall:

That’s why, and I, and the situation we’re going to be in at that point is going to be completely different from now. I believe that once Bitcoin has grown to such a stage where it is something that most people have experienced with and are comfortable using as a store of value, the natural progression of that is that we’re going to start to want to use it also for transactions and the store of value and the medium of change use cases. Those two have synergic effects between each other that allow Bitcoin to transition from so much more than it would have just been. If it was just an asset that we just stored our value. And it’s essentially like if Bitcoin just becomes a store of value asset, then it’s limited us a gold or alternative. And that’s an asset class in the range of $10 trillion. If Bitcoin becomes what I want Bitcoin to become, which is universal hard money, and I’ve talked to you about this universal hard money, it’s basically a money that we use that is a scarce or scarcer that scarcer than gold.

Eric Wall:

Once you start using that asset, that is scarce, that is finite, that is appreciating in value over time as also the form of money. Then it’s going to be, it’s going to spread even more as a store of value because it’s going to be like the Lazy thing to do. You receive some payment from somebody and you just keep it there. That’s how you get Bitcoin to transition from being worth $10 trillion to $200 trillion. But in order for us to reach that point where Bitcoin can become universal hard money, not just a store of value asset, we need to have a system to transfer Bitcoin with that preserves. Well, at least it has the possibility to preserve the properties of Bitcoin that makes it useful and interesting and in the first place. So actually I would like to kick back the question to you.

Eric Wall:

It would be because you were the one, I think that you are better at steel manning. Why you think that lightning will be used custodian? I mean, I can to answer your questions, Stephan I can answer why, why I think that there is a strong likelihood that lightning will not be suitable for this role. And I think it’s because I’m not sure what type of transactions lightning is good for. Is it good for small payments? Because I don’t really think that it’s good for small payments because if you’re a counterparty signs an invalid state and puts it on the main chain, you have to make a justice transaction, you have to, and then if the fees on the main chain are very high it’s not going to be worthwhile to try to rescue a smaller amount than what the fees are on the main chain.

Eric Wall:

So I think that inherently you cannot expect lightning to work well for the end-user for small payments, unless this using a custodial channel, which can do this for you. So I really do, and I don’t see that it’s good either for large payments because inherently lightning is made up of channels. And if you want to route a large payment throughout a large network that is consisting of multiple tubes, if just one of those tubes are too small, your transaction won’t make it to the end point. And it’s also difficult for large payments. If you are, let’s say I’m selling tickets or something over lightning, and I need to, like, let’s say I’m selling tickets for a total of $10,000. I need to have $10,000 of liquidity pointed towards me in order to be able to aggregate all those payments.

Eric Wall:

And then you have issue like who’s going to direct that liquidity, or are you going to rent that liquidity? I mean, that’s pricey. So I don’t know what type of payments are lightning good for. They’re not, it doesn’t seem to me that it’s very good for small payments. It doesn’t seem to me that it’s very good for large payments, and I’m not even certain that for the payments in between the lightning could potentially be good for, I’m not even sure that a it’s going to be good for that because we haven’t really understood yet, or we haven’t really addressed, like, what are the fees going to be if you are using liquidity that isn’t your own, how much are you going to pay for that liquidity?

Stephan Livera:

Okay. So I guess before we, yeah, I guess there’s probably a few answers, I guess we would just want to clarify from Eric before we go back to Udi here. So I think with the small payments there, I mean, you mentioned that, okay, you might need to do, what’s called a penalty close or a justice transaction in like the lightning labs terminology. My understanding is that kind of thing doesn’t really happen that often it hasn’t been a big deal right now. So I guess my question would just be, why do you think that’s going to become such a huge thing? And also around large payments, I mean, I’m sure you’re aware. But I guess the typical answer would be, Hey, look, a lot of people now have MPP and routes retrying, meaning they can try the route in different ways. So I guess, Eric, do you have any kind of counter-arguments on that or is it just, you think in practice, it’s gonna be a problem still?

Eric Wall:

I mean, the, your counter party, if he can close the channel in a way that benefits him, like he earns money by doing it and it’s too costly for you to make a justice transaction and prevent that behavior. I don’t see. I mean, I think that the reason why this isn’t happening so much is because right now, lightning isn’t consisting of that many adversarial actors, but that’s going to become a problem once the masses start using this. I mean, I may be wrong about this. I’m very happy to, I mean, the reason we’re having this call, it’s not like I don’t want to be this person that has this negative agenda about lightning. I want us to sort of reach a mutual conclusion about what the future could look like. So if I’m wrong in thinking that way, that lightning isn’t perfectly suited for small transactions and I’m very happy to learn, and then we can sort of identify what lightning is good for and what it isn’t?

Stephan Livera:

Yeah. Okay. Udi, did you want to respond to anything there?

Udi Wertheimer:

Yeah. So you know, specifically to your kind of pain points with lightning you know, I think the issue with first of all, with small payments, so the way I think, you know, the way I think about lightning is that you like the Bitcoin base layer protocol is just not very good for payments. It’s not just for the scaling reasons. It’s a big reason, but it’s not the only one. You know, just keeping track of UTXOs is weird. It has weird privacy concerns that are very counterintuitive for normal people. And it’s just a mess, the way that you’re going to send, you know, just sending money to an address is, pretty messy. You really want to have invoices that specify amount, and you want someone to kind of confirm that this is the amount that they asked for.

Udi Wertheimer:

And it’s great if it’s part of the protocol. So lightning kind of gives you a lot of nice features that are just missing. They could be done on base layer Bitcoin, but it makes more sense in second layer. And then what you end up with is you end up with a balance, which is something you don’t really have on base their Bitcoin, but you end up with, because you have UTXO there, but in lightning, you end up with a balance and you change this balance over time. And if something goes wrong on the main layer, then you can do this justice transaction process and get something that is approximately that balance back to you. Now it’s possible. It’s likely that, you know, one, you know, if you’re goinna use lightning to make transactions every day, then it’s possible that like the last transaction that you make, you might lose its value because the fee might be bigger, right?

Udi Wertheimer:

So maybe you made a $5 payment in the last day before someone tried to cheat you and you caught them and you had to pay the mining fee and those $5 are not lost, but you also had a history of hundreds of days before that, that are accounted for. So, you know, you pay the mining fee once. The whole point is that you kind of, you get to use that mining fee for many transactions and not just one. So I think it’s still valid for small payments. I think it’s still okay. If you’re making one small payment, then it’s obviously not useful, but if you’re going to make a lot of them, I think it’s fine. Stephan brought up AMP which should you know, alleviate the issue of, you know, what happens if on the way you have just channels that are too small. I’m saying alleviate alleviate is a big word, but it’s should help mitigate it. It should make it less common and, you know, similarly with liquidity. So if you’re gonna look at, at again, those newer consumer wallets, like Breez and Phoenix, like the experience there is amazing. You don’t even know, they don’t tell you about the channels. If you don’t really look into it and they just make sure that you have a channel and when you get a payment, they’re gonna open a channel for you. If you don’t have one. And it’s seamless, like you’re not even told about it. It’s really works great.

Eric Wall:

Like if you’re gonna try, is that customer acquisition acquisition strategy, or is it really something that is scalable? Like can they really do that for the long term for hundreds of thousands of users?

Udi Wertheimer:

Well, they might, they might need to charge for it in some way, for sure. It might some point this service might be charged you know something that they charge for, or they might have some other way to monetize but yeah, for sure, they can’t do it for free, it’s costly, but you know, that’s fine when you’re connecting to the internet your ISP has some expenses, that’s fine. But they’re able to do it because they have a monetization strategy. I don’t see anything wrong with that. The important thing is that anyone can be an ISP now that’s not necessarily true in the internet world. It’s some, you know, some places you’re going to need a license for that. I guess that depends on the jurisdiction. The question is if you want to be, you know, a lightning service provider, that’s gonna open channels to its users.

Udi Wertheimer:

What are the challenges to becoming one of those? And I think it’s a pretty low bar. I think that that probably anyone could be one, you know, as long as you have a way to attract users or customers I think you can do that because, you just need to open channels, basically. You don’t need to ask for anyone’s permission and, you know, if you’re in a jurisdiction that requires you to ask permission, then you can go somewhere else. That’s the beauty of Bitcoin. Right? So I think that it’s pretty good. It’s not, you know, it’s not this magic bullet that just works and that the switch that you just turn on and everything works, but I think that it’s pretty good. It’s already pretty good. And, you know, things like, you know lightning labs just introduced the lightning pool tool.

Udi Wertheimer:

I think it was a couple of weeks ago, obviously it’s very early right now. I would say that it’s, you know, kind of a testing thing right now, or at least that’s how I would define it. But it’s obviously going to grow this specific product or something like it is obviously going to grow and people are gonna use it. And eventually they are going to be good tools to use it. And I guess this goes back to my main point. I think, you know, if you want to use something like lightning pool right now, we probably gonna need to be an expert, but if there’s going to be an actual, real demand for merchants to have significant incoming liquidity, then people are going to supply tools to do it because, you know, there’s going to be money in doing it. So someone’s going to do it. It’s just right now, you know, you’re going to see a lot of developers kind of arguing about what’s the best technical way to do stuff just because there’s not a ton of demand right now. And when there’s going to be demand, there’s going to be urgency. Then, you know, things are going to start falling into place quicker.

Eric Wall:

Well, you know it sounds to me like you’re saying, you know, many of these pain points with liquidity and having reliable counter-parties to have your channels with are going to be alleviated by peering with these lightning service providers, these trusted, these well-defined good actors that help you get onboarded to the lightning network.

Udi Wertheimer:

I wouldn’t say they’re trusted. Well, they have a role, but I wouldn’t say they’re trusted. Like, what are you trusting them with?

Eric Wall:

Well, what you’re creating is essentially a dependence on specific actors in the lightning network that you will need to be connected to in order to have a good experience while using the network, while in the same sentence that you said, all that in the same, in the same earlier in the sentence you were talking about how Bitcoin wasn’t really good as a transaction layer, but lightning was good because it had all these privacy feature. Now I want to ask, like, what level of privacy do you think you’re going to get on lightning? If you are a gateway to lightning, are these established lightning service providers? Don’t you think that the amounts can be linked if you pay through a lightning service provider? If all the payments goes through the specific gateways in the system and you pay the specific amounts and they end up at the end points those transactions can be linked.

Eric Wall:

I mean, I don’t think that lightning has, I think that lightning has even more poorly understood privacy features. I mean, we know that Bitcoin basically privacy isn’t good, but at least we know how bad it is. I think lightning is worse in a way because people expect the privacy to be good. When in reality, I can come to think of so many different attacks on lightning from a privacy perspective from, just figuring out how much how much is in a channel. I mean, you can see all the channels that are being there’s too much metadata that’s being leaked when you open lightning channels. You can also figure out like how large is in someone’s lightning channel. And you can try to figure out what their node is. And since everything needs to be online all the time, that comes with a whole other category, I mean, you can’t even receive a payment in lightning without being online and leak. And then gossiping data about who you are in the network. I mean, yes, those are things that you can get the wrong, but it’s like you’re creating this larger ship with a much larger attack surface to attack from a privacy perspective. So I don’t think that the lightning is a good solution to privacy at all. I think it’s like probably it’s not worse than Bitcoin, but it’s not.

Udi Wertheimer:

It’s hard to tell. I think it’s really hard to tell right now if it’s a great solution or not because there’s A) not enough usage yet to really analyze it seriously. B) there hasn’t been a ton of research into it. There’s been some, but not a ton of research into it. I think it’s very early to tell even though it’s early to tell, I think we can all agree that spare than just Bitcoin is just basically a Bitcoin is, but yeah it’s hard to tell. I think, you know, generally when it comes to privacy, I am kind of pessimistic on the possibility of the existence of some tool that, you know, you just press the button and it makes you private. I think you probably gonna need to be whatever you choose to use. You’re probably gonna need to be kind of involved in at least have some idea of what’s going on.

Udi Wertheimer:

If you’re hoping to achieve privacy. So with lightning, you know, you’re going to need to use Tor probably for you node or your wallet or whatever it is, and you’re going to need to use it intelligently too. There’s a bunch of stuff you’re gonna need to do. And and I think the nice thing though, is that lightning creates the opportunity for you to do it. So in Bitcoin, if you’re gonna pay someone to a standard address, it’s going to be very hard for you to do it privately. It’s just difficult. With lightning, if you know what you’re doing, you have an opportunity to tap into this liquidity pool that is potentially kind of dark. You know, you can make a payment through, you can make sure that you’re not connecting to a very popular lightning node, you know, that you connected to a smaller one and to have a route that is not, you know, it doesn’t stand out too much.

Udi Wertheimer:

And that the participants in that route cannot grasp all of the information you have that option, and you’re connected to the same network. So you’re still, you know, you can still be accessible. So what I’m trying to say is you can choose, you can pick and choose if you want to be that consumer that wants the simplest solution. Then you can go with one of those simplest solution, maybe sacrifice some, some privacy. And we know, you know, even the those two wallets. I remember I’m not sure about Breez, but I think Phoenix made some statements about how they know that privacy isn’t great right now with Phoenix and they’re gonna improve it in a few ways, but it’s not amazing right now. But the nice thing is you can pay someone who’s using Phoenix with your completely involved custom setup that you made on your own.

Udi Wertheimer:

So you can have your own setup and you get to connect to the same network and pay to someone who’s using those simple consumer wallets. So that’s, I think that’s where the real value is. Like everyone’s connected to the same network and the protocol allows for privacy. Of course, some people are not going to be private, maybe a lot of them, but the protocol allows for it. And if you’re careful you can participate well keeping your privacy. So I think that’s the biggest benefit now, how it’s going to look like what’s, you know, what the stats are going to be, how many, what’s the percentage of actually private transactions going to be? It’s very hard to sell right now, really hard to tell, but I think that if someone wants to, they can. So I guess we’ll know how many people want to.

Stephan Livera:

Yeah, I think it’s also, it’s a complicated thing to talk about, but it’s probably fair to say that we shouldn’t let the perfect be the enemy of the good and the fact that we use lightning enables dramatically more transactions for far less of a fee, even if there’s still some risk of things like penalty close or justice transaction, or in this case privacy leakage, which, you know, I think some of these things are openly admitted by some of the developers. And, you know, If you look back at some of my earlier episodes with say, Rusty Russell or Christian Decker, they’ll talk about some of these things openly and say, it’s possible right now. If, you know, if you have like a really well-connected big lightning node, then yeah. You might have some ability to try to understand what’s going on in terms of, you know, where likely the payment is coming from and things like that.

Stephan Livera:

But it’s not. I think, you know, also if you talk to them, they’ll say, well, there’s other technologies coming and things like, hopefully once we get taproot, then we’ll have, you know, point time locking and we’ll have some of these, you know, more fancy technologies that will improve our privacy also. So it’s kind of, yeah, I think also it’s fair to say, it’s probably fair to say that, you know, if you’re doing an on chain payment and you’re not using any kind of Coinjoin and privacy techniques that is on the chain forever, whereas at least to surveil a lightning transaction, it kind of takes a bit more than that. Right. You have to actually have the nodes set up and you have to like have routing and it’s not as easy to just simply surveil as compared to Bitcoin. Right?

Eric Wall:

All right. So I want to take this conversation to the logical next step, and this is very difficult for me for how to bring this up, but I’m sure from listening to the two of you and, and from having had this conversation for a long while now it feels to me that there are quirks of lighting protocol that make it difficult to maintain your privacy and harm the user experience for normal users that will either require users to be very sophisticated and know what they’re doing when they’re interacting with lightning, or they will need to make trade-offs in terms of, you know, maybe they’ll accept completely custodial lightning wallets in order to get their channels perfectly balanced and to be immune to certain types of attacks. I think that these categories of solutions like either having to be a sophisticated lightning user, which is a hard thing to be, or being a completely custodial user, which I don’t think is good either.

Eric Wall:

I don’t think that those two options that we have are the only options that we have for transacting Bitcoin in a trust minimized scalable at private way. So this is the whole reason. I mean, nowadays people, they don’t think of me as a proper Bitcoiner anymore, because I’ve started to pay attention to things that’s going on inside other protocols. So I’m gonna just go out and say it if you haven’t been following my Twitter, you have perhaps seen that I’m doing this experiment called the zkSync torch. Now, the reason that I’m doing that is that I believe that perhaps if we swim out for a little bit, and we think that lightning is not the longest solution, maybe the best way to transfer Bitcoin, was after all to do it on the side chain, because on a side chain, you don’t have these issues with channels.

Eric Wall:

I mean you can send your Bitcoins to whoever you want who has some address on a Sidechain? There is no, inaudible channels. There are no online requirements. There are no liquidity requirements you can transfer to wherever you want. But I mean sidechains are, the two side chains that most people are aware of which is the completely custodial multisig based customer federated customer custodial model that liquid has this one. The other one is where instead of having a Federation in a multisig be in custody of your Bitcoin, you have the miners being custody of your Bitcoin, which is the drivechain option. I don’t think that those two options are the best way to have a Sidechain. I think that the tBTC the trusted Bitcoin on Ethereum, which uses an SPV proof like an Ethereum. Ethereum runs an SPV wallet, basically where it looks at Bitcoin blocks and is able to based on an SPV proof coming from the Bitcoin chain.

Eric Wall:

That’s how it allows Bitcoin tokens to be minted and how the funds are protected, there are people who there are, there are people who receive the real Bitcoin on the Bitcoin main chain, but those people that are holding the real Bitcoin, they are they are unable to steal those Bitcoins because if they do, they will lose a bond of ether and it doesn’t have to be ether. It can be any asset on Ethereum right now it’s either they will lose that bond. So I think that side chain model where you tokenize Bitcoin on another chain using SPV logic. And where are the assets that are held on the main chain are being protected from being stolen because they are bonded, they are bonded by ether on the other chain. I think that’s a genuinely interesting sidechain solution because you don’t have the multisig, the Federation liquid for the Federation can’t run away with the Bitcoins the miners in drivechains.

Eric Wall:

They can’t run right way with the Bitcoins. This is this is a better model to protect Bitcoins on a Sidechain. And we have that on ethereum now and what we also have on Ethereum or other scaling technologies and the most popular one right now, are called roll-ups and in a roll-up you can transfer around these TBTC tokens. That’s what what my zkSync torch experiment was about. You could transfer around these tokens in a rather scale, not the scalable list, I think, but rather scalable transaction system. You don’t have any channels, so I can send these TBTC tokens to your address without you having set up a channel without you having any inbound liquidity without you being online. That’s why I wanted to do the experiment, just to show people how easy it is to accept payments without having to deal with all these other complicated things that we on the Bitcoin in the Bitcoin world associate with Layer 2 and we can also solve privacy in these Layer twos because we have a fantastic category of technology called zero knowledge proofs and zero knowledge proofs can be made to anonymize.

Eric Wall:

I mean, that’s how Zcash does it, right? That’s how they get the perfect anonymity of both the sender, the recipient, and the amount we can have the technology inside a roll-up Ethereum. And if you’re saying that we have to either deal with this messy lightning solution, or we have to do with custodial lead, like if those two aren’t the ideal options. I mean, I’m not saying that the Rube Goldberg, the Rube Goldberg machine, that I’ve just mentioned the side chain peg on the theory and the, roll-up it, I mean, that’s also a complicated solution of course, but is it any worse than the two other options that we have talked here about here today?

Udi Wertheimer:

Yes. So I’m sorry, Eric but I think it’s a ridiculous proposition that this is somehow, you know, an easier solution and, and there are a few reasons for that one. First of all, you know, I think that your torch thing experiment is cool. I think it’s you know, it’s a cool idea. I think Hodlonaut doing it with lightning was cool. And I think that trying it out with other tech is also cool. That’s great. But you know, you have to, when you see, you know, when you get those user experience that are pretty good you know, we have those on lightning too. So as we just said, you can download Breez or Phoenix and just start using it. And it just works. It works now, you don’t need to mess with channels. You don’t need to think about them.

Udi Wertheimer:

You don’t need to do anything. It just works. Now you’re going to save but privacy, but this but that, okay. So look, you’re going to use the tools that you use, right? You’re going to use a web page that someone made, you don’t know what’s in the webpage. You’re going to connect it to some web extension that you don’t know anything about. It’s going to connect to some server probably on AWS that stops working when Amazon is down, you know, it has all of those pain points that if Ethereum people will just say, well, because it’s still in development, but it’s always in development. So it’s just, you know, it’s not better in any way. So in Phoenix and Breez, they have their trade-offs that they chose to use in order to give you a better user experience. And at the same way, those experiments, and they are experiments like something like zkSync isn’t anywhere as advanced as lightning is right now.

Udi Wertheimer:

It’s you know, it’s an idea it’s not implemented anywhere to the same level that lightning is, which is fine because it’s newer. But anyways, they chose tradeoffs too, and their trade offs are, for example, you are not, you know, you’re gonna trust that AWS doesn’t go down or whatever server backend they’re using and so on and so on. And I’m not gonna go through the entire way that it works similarly for TBTC, which is, you know, an entirely different construct, which you have to believe and trust. TBTC, you know, you mentioned the, eth collateral in order for the inaudible collateral thing to work, you need to have some source of a BTC to ETH price, which is very hard to do in a decentralized way. I don’t want to get into how tBTC does that, but I hope that it’s obvious that it’s at least a concern.

Udi Wertheimer:

And just today, as we recording this just today, I think a compound user lost about $50 million not a lot, just 50 million, five, zero, and then six more zeros. So he lost $50 million because of a Oracle that was exploited basically. I don’t think it was a technical exploit. It was monetary exploit or financial exploit but the point is they trusted an Oracle, which they probably shouldn’t have trusted and lost. It lost just $50 million. So those things happen the thing. So when you using something like tBTC, and when you using something like, perhaps those second layer networks on Ethereum, you’re kind of putting all of your eggs in the same basket. You, you have this all of those risks on top of each other, and which are very hard to evaluate, and you end up with something that, you know, with lightning, if something goes wrong in one channel, then that’s it, that’s what’s lost this one channel with TBTC and with the zkSync stuff if something goes wrong, then potentially everything is lost everyone’s money.

Udi Wertheimer:

Which is why they’re huge targets. And it’s just, you know, just saying that they’re somehow better or easier I think it’s absurd. I think there are cool things there, there are ideas that are interesting. I think that the notion that someone will choose to use that for Bitcoin payments, I find it absurd. I mean, it’s so out there I can see people use it for you know, they’re gonna use tBTC for for loans, for lending, for whatever to say, they’re going to use it for payment. I mean, maybe of course, you know, but I don’t know what the future holds, but I think that it’s really not easier than lightning anyway. And I want to say one last thing about the whole trade-off issue. So there are always going to be trade offs.

Udi Wertheimer:

I think that, that, you know, right now with merchants let’s take the most extreme Bitcoin merchants in existence. Okay. The ones that really care about self custody, there, aren’t a lot of those, right? Most of the merchants that accept Bitcoin are just going to go to some payment service and have them handle everything and pay them with fiat. Those are that’s a majority, but let’s go to the most extreme of them who are going to host their own like BTC pay server. And they’re gonna have the BTC Pay server, send the funds to go to a public, you know, to a Cold wallet that isn’t even connected to the server itself. We’re going to take all of those steps to set everything up. These people are still trusting the server. Those merchants are still trusting the server because most of them are not going to have the server at home, right.

Udi Wertheimer:

Because they need to, you know, they want to serve customers and they want to make sure that they have a very good uptime. So they’re probably gonna host the BTC Pay server on Amazon or whatever it is. And Amazon is not going to hold their keys, but Amazon is going to generate the addresses that customers are going to send money too. So, you know, if Amazon turns evil, they could just show you addresses that are actually going somewhere else. So you have to have the trust. Merchants will almost always have the trust with if someone with some service provider, just because they, you know, they do the calculus and they’re saying, okay, it’s a business decision. I can host my own server, but it’s going to be costly, or I can outsource it. And then I take some risks there and I can, you know, I can take the 0.1% risk that limited something bad happens in the limited way and affects a small amount of my sales than hosting it myself. And then it goes down for 5% of the time and I lose more sales. So it’s, you know, it’s a very basic calculus there. So merchants are almost always going to trust some service provider in some way. So to say that they’ll go through the, you know, very convoluted system Ethereum that has you trust all weird people just to avoid what to avoid, having a service provider? Merchants love service providers. They want someone to take care of it. They don’t want to do it themselves.

Eric Wall:

Okay. So let me stop you there, because you said, you said that this was a completely ridiculous notion. So I want to ask is using a sidechain, like any side like if we, if we can just think of around them hypothetical side chain, is, do you think using a side chain to conduct Bitcoin transactions? Is that absurd?

Udi Wertheimer:

I think very often it is again, it depends on the use case. I don’t know if you can come up with a good use case. Maybe I think that to do it for payments it’s kind of absurd because it’s so convoluted that I can’t see it. Okay.

Eric Wall:

Okay. Well, I don’t think that using a side chain to make Bitcoin payments is absurd. And I think if you look at most of Bitcoin history where we were a couple of years ago, I mean, everybody wanted and envisioned that we would make Bitcoin transactions on-side chains . I mean, that’s what was, why Blockstream the company was founded on so I think it’s a niche opinion that you have that side chains would be sort of an absurd way to make transactions.

Udi Wertheimer:

I’m not trying to represent anyone. Those are my opinions.

Eric Wall:

Sure. But if we, if it’s possible for me to maintain the making Bitcoin transactions on a side chain, it’s not absurd. And I think that I’m not the only one that believes that. Then if you have a side chain and you’re going to make a Bitcoin transactions on it, wouldn’t you want the most trust, minimized pegging mechanism that you could have for it? Well, the the construction that I’ve just explained the TBTC mechanism, it is the most trust minimized.

Udi Wertheimer:

I don’t know what to tell you, Eric, I wouldn’t use a sidechain for payment, so I really don’t know what to tell you. I don’t think that it’s a good idea. And if you’re gonna, you know, if you can say maybe the TBTC construction is better, I honestly don’t think so, but maybe it is. You know I’m not, I don’t have the tools to judge that, but I really just wouldn’t do it. I wouldn’t use any side chain. I don’t, I wouldn’t use liquid for payments. Right. I don’t think that it’s, you know, okay. Maybe I happen to have some liquid Bitcoins and the person I’m paying it happens to want liquid Bitcoin. So maybe I’ll send them the truth. The same can be true for tBTC most likely it’s not going to happen. Neither of them are probably going to happen. So I don’t know what to tell you. I mean, I don’t see that this scenario is likely.

Stephan Livera:

Yeah. And I just want to add one point in here as well, guys. So Eric, you’re saying, okay. Using tBTC on Ethereum might be more trust, minimized, but ultimately, and I think to the point, audio was making earlier anyone using that is also taking on platform risk of Ethereum. Whereas if we just stay in Bitcoin and lightning, we understand that model more and we’re not taking on another whole platform worth of risk. What would you say in response to that?

Eric Wall:

Well, I think that lightning which is the option here, it’s it also comes with a number of specific risks. And I don’t think, I don’t agree that these risks are only isolated to specific channels. I think that lightning as a protocol. I wish I wish I had the list of examples of the different the sign or the sign based attacks that are not only, it’s not only griefing attacks that you can make, is not only DDoS attacks. They’re actual attacks that you can burn your counterparty’s balance and that attack is not isolated only to one channel. I mean, we could we could have bugs in lightning code basis just in the same way that we have bugs any end code base. I don’t think it’s fair to say that you know, this one solution has platform specific risks that can encompass all the transactions being made there.

Eric Wall:

And the solutions that you guys have described are somehow immune to that. I think at the end of the day, if you want high security, the only way we’re going to get high security in open source protocols is to have something that is frequently used by everybody. And that has a lot of eyes on it. And how do we get a lot of eyes on something? How do we get a lot of people investigating and testing out a single tool? Well, it needs to have a good fundamental user experience when you get to use, once you get the users using the thing, because they like the properties, like let’s see how it has good privacy and the easy ways to make payments that doesn’t have all these complex ways to make them, once you have that you’ll attract a large user base. And then that transactional layer is going to have the most eyes on it. So whatever the bugs that could be in there are, will get discovered in that protocol. First, I think that the easiest way that you end up with having a buggy system is by building a solution, which has hurdles to entry so that nobody’s using the thing. People are barely looking at it because it’s not a popular solution enough. So I think popularity in open source, that’s the best way to attain a high degree of security.

Udi Wertheimer:

The popularity of Bitcoin payment solutions on Ethereum is somewhere between zero to one users. It’s because maybe Eric, you were using it. But that’s it no one is using,

Eric Wall:

yeah, it’s always going to be the case with cutting edge technology that nobody’s using it in the start. Like I’m looking at the fundamental properties of these technologies and I’m seeing that we have the from a completely objective. And when I’m not looking at usage statistics, I’m only looking at the properties of what it could become. Then I see a tremendous potential in that you have a transaction system, which isn’t based on channels, where you don’t need to be online. Anybody can receive a payment and you can implement zero-knowledge proofs technologies, which anonymizes spoke receiver on the center and the amount, I mean, the properties that I’m talking about there, that could, I think that’s, what’s gonna happen first. It’s gonna, it’s going to attract usage for stable coins. And I have, I have a long thesis about why I think that stable coins will be the first thing that we will use a lot for medium of exchange transactions. And once you win that use case, then other cryptocurrencies are gonna start to latch on to that transactional system. And I think that Ethereum is the network today that is making the most stable transactions. Those stable coin transactions are going to migrate to the layer two solutions, the systems in Ethereum and that’s those technologies are going to get perfected because there’s a lot of demand for making those types of transactions.

Udi Wertheimer:

Well, but there’s not there isn’t demand for payments in USDT right now there isn’t, there’s demand for trading with you as there’s demand for speculating with is that you there isn’t demand. That’s the point? That’s my point from the beginning of the discussion. There isn’t demand, not for Bitcoin payments, but definitely not for stablecoin payments. It just doesn’t exist right now. Now it might exist.I’m not, I can’t tell the future. I don’t know. It might happen in the future.

Eric Wall:

Yeah. But even on that, why do you think that stable coins? I mean, why, why do you think, why would you even conceive that the stable coins? I mean it’s a dollar without bank account and it could be made almost completely, perfectly private. Why wouldn’t that in the future become a very attractive, like, why wouldn’t you use it? Wouldn’t you use, if you had a bank balance, if you had a dollar account?

Udi Wertheimer:

I’ll tell you why I’ll tell you why? Because I think first of all, you know, it’s not without a bank, there’s an issuer that you trust. And I think that’s a pretty important part of this.

Eric Wall:

No, not without, you don’t have to have the account.

Udi Wertheimer:

It’s true. You don’t have to have an account for now, maybe regulations change, but for now

Eric Wall:

You don’t have to swear which circumvent. There are not perfect one success in right now, but we’ll, I think, you know, there’s a big, like.

Udi Wertheimer:

I don’t know what the future holds. I can only talk about what I see. And I think that the reason that you’re not seeing demand right now for stablecoin payments is because, you know, PayPal and Venmo are good enough. I think that’s the reason why I know you’re gonna say, well, you know, some things you can’t use Venmo for, and that’s true. And I think that for them, they’re going to be their own custodial services. So if you accept that, USDT is a good medium of exchange. I don’t know. I don’t want to judge that myself, but if you believe that it is, then you can go ahead and deposit your USDT on Binance or whatever, and use that to transact. And people do that. So when you’re going to have this secondary solution it’s going to have to compete with that.

Udi Wertheimer:

And you’re going to have to convince people that they should install. I don’t know, a, node, that should be a wallet. I don’t know what they have to install. They should trust the Oracle and that they should trust the compression system. And they should trust all of those things because why, why is that better than just using Binance to send stablecoins around? And I believe that most people are not going to care that much. Some people will, especially a lot of, you know loudmouths on Twitter might. I think most people are not. Especially when you see that the stable coin is already trust-based, it’s not like, you know, it’s not like if you you’re using it without Binance, the trust disappears, it’s already trust-based. So I think that most people are going to be okay with trusting some trusted party to facilitate those payments. They already do. You know, most people don’t, I don’t want to say most, a lot a ton of people do not ever let their stable coins touch their self custody wallets, because there really isn’t much of a point. They move them between exchanges. Some people seem to like having them on their own wallets on their ledger or their phone or whatever it is. But a lot of people don’t. So,

Eric Wall:

Oh, okay. You know, I’m fine with, I’m fine with saying let’s keep Eric’s Ethereum roll up tBTC let’s that remain be my pet theory, if you will.I’m okay with us not seriously entertaining that idea, but if we go back then, because I, this whole stablecoin discussion is just another pet theory of mine, but this, how I think that payment system will end up gaining popularity. So it’s not really to the main, the core of the point, if we go back to the core of the point, because I really want to reach some kind of conclusion here, which is if it’s not the, on a side chain do you, how do you think that we are going to be if we reach a point of Bitcoin hyperbitcoinization, how do you think that the majority of transactions are going to be conducted? Do you think it’s going to be custodial systems? Is that how we’re going to make transactions?

Udi Wertheimer:

I think the most likely option is what’s that?

Eric Wall:

is it lightning or no?

Udi Wertheimer:

No. I think it’s going to be custodial. I think the most likely option is, you know, what, how Feeney predicted back in 2010 or whenever it was that people would just use Bitcoin banks for payments. I think that’s the most likely option that most people will use. I’m not, you know, I’m not sold on it for 100%. I think it’s the most likely option. I think that’s what, assuming that people are going to want to spend their Bitcoins at all. I think that that’s, that’s the way they’re going to want to do it. The mainstream, at least lightning can still coexist in this. So, you know, you can have those networks interoperate, if you want. A custodial service can implement some of the lightning technologies.

Udi Wertheimer:

It can implement the invoicing protocol. For example, it can implement LN URL. It can implement even the the way the channels work, just custodial. It can be like this mix, right? And then you could choose some people could choose to use lightning in a self custody manner. So I think that’s, that’s something that is likely again, if people even want to pay with Bitcoin, want to spend Bitcoin which is not something I’m entirely sure they will, but if they do, then I think that’s a possible scenario. The most likely one, I would say I think also lightning is pretty, you know, it could happen. I just, I’m just not sure that people, you know, want this hard enough, but if they do, if there’s demand, if, you know, if people actually like you think here, Eric, if people actually prefer self custody solutions, then I think lightning can get there.

Udi Wertheimer:

I really think it can. I think that, you know, we already, again, we’re already seeing that the apps that exist today are really, user-friendly, they’re really great. They just work it, you download them and the work. They’re really good and they’re gonna get better. So yeah, you’re going to have a service provider there. You’re not going to do it on your own. You’ll need someone to manage channels for you probably. But it can be done in a self custodial way. I think it’s, you know, I think it’s pretty good. I think it’s a pretty good way.

Stephan Livera:

And we might also see this kind of in-between model as well. We might call it the uncle Jim model, right. So we might see like a person, one person in the family who runs a lightning bank, let’s say for the family and they will have kind of all onboard to that. Right. And maybe, for example, even today, if they’re running blue wallet and lnd hub, or if they’re running, I think there’s coin OS as well. So they can like, kind of run a coin OS instance. And like the technical guy can like manage the channels underlying and then everyone else in the family or close friends might just use that. And it’s kind of custodial, but with a semi trusted, you know, it’s like a family member or a close friend. So that’s kind of, that’s also an option as well as an entry point.

Udi Wertheimer:

That’s a very good point I think. Kind of the you know, the, the property of Bitcoin being permissionless allows for all of those funky setups and people are just going to form their own communities to do that. Some of them are going to be technical and offer that service to close friends or family, or more than that. And some are not, but that’s, you know, that’s fine. That’s how people choose to do their business.

Eric Wall:

Yeah. I mean, I think I kind of agree. I mean, I was before we had this conversation, I was sitting last night on my balcony and I have personally most of my net worth in Bitcoin. And then I have my regular salary, which is a Norwegian kroner on a bank account. And how do I feel about that? You know as long as I can have the majority of my funds, like the store of value portion of my capital stored non-custodially then I’m happy and if I can use my salary and everyday spending. So, you know, that’s, I suppose that’s an acceptable way. And I think that is indeed how most people are going to choose to do this. But I do think like if my conclusion is that most people are gonna be using Bitcoin custodially, then I think wanting to experiment with Bitcoin on a side chain where you have better privacy. I think that’s definitely, I mean, if the option is to do custodial or a funky lightning solution, I think that we shouldn’t think that the people who want to try a different way are necessarily weird or you know, absurd for thinking that there might be a third way that we can explore before we accept that these are two only solutions.

Stephan Livera:

Right so I think one interesting point that might be good to discuss now is just what kind of data points would we look at? So let’s say, you know, a year from now, or five years from now, what sort of data points would we externally look at to say, Oh, okay. Yeah, that was kind of the story there. So a couple of examples that I can think of I know Eric, you’ve done a bet based on total value locked. Another one we could look at, you know, how many lightning nodes are there, how many lightning payments are there, how many stores use lightning? What kinds of yeah. What kind of external data points would you guys look at here?

Udi Wertheimer:

That’s a great question. It’s funny because, you know, with lightning, you can always kind of almost move the goalposts in a way, because you can say, well, what maybe those channels private and maybe, you know, we just wouldn’t know about it. And with, you know, with taproot is going to be even harder to know about those channels. So and it’s, I mean, it’s in a way it’s moving the goalposts in another way it’s also true. Like, in theory, if it couldn’t exist, like a huge lightning network, now that we’re not aware of probably not, but, you know, theoretically possible. And it, so it’s hard. I think that, you know, when you’re going to look at things like total value locked I know, I think I know the bet that you were referring to that Eric made, I think with Giacomo if I remember correctly.

Udi Wertheimer:

Yeah. So the thing is, I think, I don’t remember what the bet was, but if we’re, if the idea is to compare the size of value locked on on second layer solutions on Ethereum to money locked on lightning, that’s not a good comparison because there’s probably gonna be more money on Ethereum simply because this is, you know, the Ethereum stuff is used for speculation while the lightning stuff is being used for payments. And the demand for payments is just much lower. If you’re going to look at payments on second layer solutions Ethereum I’m not sure how to measure that, but I believe it’s going to be roughly zero for the next five years, at least. I don’t think people are interested in making payments on Ethereum payments, Bitcoin payments on Ethereum, I don’t think that’s something that, you know, anyone has any interest in right now. I don’t know how to measure that, but, you know, I can, I can imagine that there’s going to be some meaningful usage of Bitcoin on Ethereum, second layers, but it’s not going to be for payments.

Eric Wall:

Yeah. I think we just fundamentally disagree there. I think that the private dollar that is I mean I just think that it’s, a really, really big use case. And I think that I personally would want a wallet that I have where I can transfer my dollars privately and no one can see which transactions I’m making. I think that, you know, with the whole way that the internet is going that everybody starts to care more about their integrity. I think that people will start to prefer those types of solution, but I mean, that’s will be just something that we’re going to have to see it develop, I think regarding which data points to measure. I also think that that’s very hard. I think that the bet that I made with Giacomo and Ryan is probably the best one that you can do, but I also kind of agree with Udi that’s.

Eric Wall:

It was, it was a bad bet for them to make, because there are so many other reasons to put in Ethereum funds in a layer two than there are to do it for Bitcoin. So I think they’re going to lose that bet and it’s not going to be a super good metric, but I think like in general, I’m not sure that we need so many metrics to understand where this place is headed. I mean, we know like, just from just interact with your fellow Bitcoiners, you’re going to know that lightning usage is pretty low right now, or extremely low, even you could say I think that we’re gonna know a few years from now, if it’s picking, if it’s becoming a big thing that people are using, if you’re using it with your friends, then you can some other people are also using it with their friends. So I don’t know. We’ll just have to wait and see, I think,

Stephan Livera:

Yeah, my speculation would just be that look, most people are HODLing Bitcoin, but there will be some small percentage of the Bitcoiner population out there who are either all in Bitcoin or they only earn Bitcoin. So they need to spend, and then given that they need to spend, they might, they probably would look at using lightning. But even as a driver there, we probably need, we quote, unquote, need the fee spikes to happen. And so that might happen, let’s say this next year also we see this kind of bull run happen. There’s a lot of on chain usage, maybe at that point. That’s where that’s the driver for these people to start using a lot more lightning transactions. That’s kind of my speculation. But I think also just to add, to kind of the point we were talking about with like how many people are going to be on these stablecoins and so on, like, it just comes down to it we’re all fundamentally bullish on Bitcoin. And so we see the world is, you know, repricing into Sats, you know, whether that’s over the next 10 or 20 years, people are going to want to hold Bitcoin. And so then as we see that network grows there only then will we see more people who actually want to spend it because as Udi has pointed out. And I think Eric, you probably agree. There’s not a huge amount of people spending right now, but that will change, right?

Eric Wall:

Yeah, of course that’s when Bitcoin becomes universal hard money that we’ll really start to see it. There’s being a demand for making transactions. And I think just to wrap up, at least the points that I heard in this conversation is that I do accept that most people will probably want to use at least the transactional portion of their Bitcoin in a completely custodial system. And I think that if that’s the case, then what we should perhaps focus on where the real fight is going to be is making sure that those custodians abide by proof of reserves like that we can audit their funds and we make sure that they are not inflating the Bitcoin supply by making more internal tokens than they actually have in their holdings. I think maybe that’s an easier thing to, I mean, maybe that’s you’re here right now. Maybe that’s the conclusion but proof of reserves is what’s going to matter.

Stephan Livera:

Yeah. And Udi, do you have any kind of closing thoughts for the listeners and also actually while we’ve got you here maybe give us your thoughts on whether you’ve really left Bitcoin Twitter for good, or are you coming back?

Udi Wertheimer:

So okay. Just to sum up my thoughts. I agree with Eric on everything because he’s been on Bitcoin for eight years and I disagree with him on everything. So and about Twitter yeah, I left it’s over, it’s over. If anyone wants to still follow my escapades, they can go to HaveFunStayingPoor.com and sign up and they’ll find me there and that’s it. I’m gone no more Twitter. It’s terrible.

Eric Wall:

You can also mention that your account is up for sale as I understood it. How much, how much?

Udi Wertheimer:

Well, I’m not sure. I’m not sure I can sell it anymore because I think it’s apparently deleted at this point, but if someone really is in a super, super fast, then I think that $70,000 is a good price.

Eric Wall:

Okay. All right. Can you also just give one explanation because you tell me that it’s my fault that you have deleted your Twitter.

Udi Wertheimer:

Yeah. You blocked me or something for a few seconds and broke my heart.

Eric Wall:

So now I can hear what they say, your voice, that you’re being sarcastic. So I don’t have to live with the guilt.

Udi Wertheimer:

True. No, it’s not really your fault.

Stephan Livera:

And Eric, just for listeners and to want to follow you online, where can they find you?

Eric Wall:

It’s @ercwl on Twitter.

Stephan Livera:

Well, look, thanks very much, guys. I think you’ve guys both made some great points, a really interesting discussion. So thank you for joining me.

Eric Wall:

Thanks for having us.

Udi Wertheimer:

Thanks.

Leave a Reply