Welcome everyone, thank you for joining us today
We're gonna get started in a minute just gonna let the room fill out
Hope you guys are enjoying some smooth lo-fi jazz tunes getting ready for the halving
Welcome everybody joining us. We're excited for this conversation today
Got a whole we got a full house already. I love it
I think it's time we get into it
Welcome everyone and thank you for joining us for today's webinar
Meet the halving is Bitcoin designed to pump forever
I'm Tony your host and community manager here at Casa
We're just days away from one of the most anticipated events in the Bitcoin cycle the halving
Every four years the Bitcoin protocol automatically cuts block rewards received by miners in half
This small code change has profound implications for Bitcoin's economic and market dynamics to explain this phenomenal event
We have legendary cypherpunk and Casa's chief security officer Jameson Lopp joining us today
But before I hand it over a quick disclaimer
Please note the following content is provided for entertainment purposes only and is not intended as financial legal tax
Accounting or investment advice Casa urges you to consult a qualified professional for any such advice or service
Here's how today's webinar will flow first
I'll introduce Jameson who will then present for around 40 minutes covering the technical details of the halving process
Expected impacts historical context and analysis for the upcoming event
After that we're opening it up for a 20-minute Q&A session where Jameson will take questions from all of you for on the halving and its broader effects
With that out the way, let me briefly introduce our special guests
We're excited to have Casa co-founder and chief security officer Jameson Lop joining us a
Techno as a technologist his mission is to make cryptographic protocols accessible and power individuals to take self-custody and manage that Bitcoin securely
For more than a decade he has he has curated a go-to hub for Bitcoin resources at Bitcoin dot page and research many facets of the Bitcoin protocol and its origins
His work is pivotal in adjusting the balance of power between authorities and individuals globally
We're thrilled to have Jameson lay out the technical details and economic forces at play with the upcoming halving event
Jameson the floor is yours
Alright
Let's see if we can get some screen-sharing action on here
So that we can begin
Alright looks good, so yeah, here we are yet another halving
this is you know a once every four years event and
It seems like it always spurs a great debate every time people are never sure
Is it going to be different this time or will we see you know continuation of what we have experienced the past few times?
So, you know, what is the halving I'll jump in here and just assume that people don't know anything
but you probably at least know that Bitcoin is meant to ultimately be a deflation area asset and
That basically means that the rate of inflation the rate of newly created Bitcoin
Is going to go down over time so far so good
You know this is built into the protocol and what we're approaching right now is one of those trigger points at which the protocol
will change some of the consensus and
validation rules to basically say that the maximum amount of allowed newly created Bitcoin that a miner is
Allowed to claim in a new block in the coinbase output is going to get cut in half
And so what you can see here is this chart of
The inflation rate in the red
Really annual inflation rates as you can see the first
Four years the first mining epic had a really high inflation rate that finally came down to about
30% by 2012 and then we've been hitting these step functions and
Sort of asymptotically approaching a zero for each new mining era
And so of course in the blue you then see the total amount of Bitcoin that exists because that's
It's really just an aggregate of all of the inflation rates over the years
So what is actually happening here?
Basically the the miners they are gonna have to deal with this economic shock and of course
It's not a surprise
We've known that this is going to happen ever since the very first Bitcoin block because it is encoded into the protocol and
As a result some miners will likely become unprofitable
Basically, the miners that have been operating closest to the edge of profitability or most likely to get knocked out of the game so to speak
those miners who are operating at
perhaps an industrial scale or operating in a
Unique situation where they have a unique competitive advantage and have
extremely low electricity rates or other
Operational costs that can undercut
Less efficient miners on the network. They're gonna keep going and and so
Well, what should we expect to happen with the mining hash rates?
Well, you know some of these miners are going to leave but I can tell you I was
Actually at a conference last weekend and spoke to some people from large mining farms
and they're actually continuing to add hash power and
That's kind of the name of the game. They've been working on this for a long time. It's a long-term play
They knew what was going to happen and they have already put themselves in a position where they
expect to be profitable even after the block reward gets cut in half
so what's going to happen at the actual date of the halving which is just a few days away as
A result of this, you know, we should expect probably a slight decrease in hash rate overall
But like I said, some miners out there are going to be increasing hash rate regardless. So
Overall, it's going to balance out. But whatever does happen after this late Friday early Saturday
halving depending on what time zone you're in
It really really only lasts probably about a week in terms of the
blocks being either slower or faster because
The the halving is actually about in the middle of a difficulty adjustment
So we go another week and based on whether the blocks are coming in slower or faster
The network difficulty will adjust accordingly and we should get back to you know approximately 10 minute block times
now one of the long-term questions that comes up
Basically with every halving is the question of you know, what's going to happen several halvings or 10 halvings?
Down the line when there's basically no more Bitcoin that's going to be mined and this is the perennial question
You know, we know the subsidy the newly created coins is going to keep going down. However
the offset to this is the fact that miners get to collect transaction fees and
While some people say this won't be an issue for another 100 years
I think it'll probably or at least
Potentially start to become an issue in 10 or 20 years because we will be really really close to zero new coins
after a few more halvings, I think after this one we will be going from 6 to 3.125
I think 6.25 to 3.125 Bitcoin mined with each block so just a few more and
Will be in a well under one Bitcoin mined per block so
Once we get to the point where there's no more coins being mined
That's when you'll really be able to say that Bitcoin is deflationary right now Bitcoin is still inflationary, but it's
predictably inflationary
So why do miners even put up with this, you know, why do they allow their salary to essentially get cut in half?
Well, they don't have much choice
And this is part of the name of the game of this balance of power amongst different players on the network
The miners they do have some power in a sense the miners are essentially the
Entities that are securing the network. They are pushing the blockchain forward by mining new blocks
But you know, there's counterbalance to that one of the other major constituent groups in Bitcoin are the node operators
And those node operators always have the power to reject blocks that they don't like for whatever reason so
It's possible and in fact it has been done before at the first halving in 2012 that miners may decide
That they want to mine a block that continues giving themselves the higher amount of Bitcoin a
Few miners did this in 2012. They said, you know, we want to keep getting 50 Bitcoin per block
We don't want to cut it down to 25
And so they modified the code on their nose that they used to generate the block templates and they mined some blocks
And what did they find out?
Well, fairly predictably they ended up off on a fork that was no longer Bitcoin because
All of the nodes on the network rejected their blocks
So they were essentially mining these blocks that had no value because they couldn't they couldn't take those
Coinbase outputs those newly mined quote-unquote Bitcoin and actually send them to anyone else on the network
Much less like send them to an exchange or pay bills with them so on so forth
So essentially they were wasting their electricity and they figured out pretty quickly that the
rational thing for them to do was to go back to actually following the Bitcoin protocol along with everyone else and
mine the block subsidy that got cut in half so that they would actually receive something of value for their hard work
Haven't heard of anybody else even attempting to try to do that again lesson learned
So where are we on this?
100 year long timeline
Here we have the step function
Basically what I've done is on the left hand side. This is the actual
Annual inflation rate that we have seen as a result of the the rate of blocks being produced over the years
As you can see, it's a little bit volatile
you know mining is a somewhat random process and also there's some other variables in there that cause
Miners to create blocks faster or slower than every 10 minutes
And so that's what results in a little bit of volatility though on the long-term
Time frame it pretty much evens out and as you can see it pretty closely mirrors the
Expected inflation rate and so as you can see we're here
approaching one two three four the fourth halving and
We definitely will expect that we'll be getting down to that
Sub I think sub 1% right around 1% inflation rate after this halving
so far so good and that this halving we always say it's every four years
But technically it's every 210,000 blocks which because a block happens
Approximately every 10 minutes means that it's approximately every four years that we're running into this now
historically, it's always been somewhat less than four years and that's because of
improvements in the hardware that we're actually using to mine. So one interesting phenomena with
the mining hash rate is that hash rate doesn't merely increase over time if you've ever looked at a chart of hash rate this log chart
is a little bit deceptive because it is log scale so it's going up in orders of magnitude if you look at it on a linear
Chart, it's really a hockey stick, you know, it's just up and to the right and up up up and that's because hash rate
Historically is not just increasing. It's actually accelerating
Every year over a year we add more hash rate at an even faster pace than the year before and
this is a combination of both improvements in the hardware and of course the fact that over long-term time frames the exchange rate goes up and
I will I will definitively state because this is always another somewhat controversial thing but
My perspective is that hash rate follows price, price does not follow hash rate
Basically the the amount of hash rate on the network is a function of what the total value is
That the the network in aggregate is paying to the miners
Sometimes I think people get confused about this relationship because it's not
It's it's not a real-time relationship there are
extreme amounts of lag, you know in the months to if not year long lag time and the relationship between
the Bitcoin exchange rate and the hash rate and that is once again
Due to sort of the industrial scale at which a lot of the mining is going on right now where
You know, we're seeing tens if not hundreds of millions of dollars put into investing in mining infrastructure and this is all being done on
year long if not multi-year long time frames, so
And when people are investing hundreds of millions of dollars into a mining business
They're not gonna suddenly change their mind because the Bitcoin exchange rate crashed for a few months or a year
Whatever they're already aware of these very long market cycles that are happening. They're already aware of
The relationship and variables at play with regard to all of their capital expenditure cost their operational expenditure costs and
and generally hedging against as much of the volatility as possible, so
While we're not seeing quite the same rate of acceleration that we did in previous mining epics because
We were seeing orders of magnitude improvements in the efficiency where for the first two years
You could only really mine with the CPU on your computer and then once people figured out how to use graphics cards
and those were hundreds if not thousands of times faster and more efficient than the CPUs and then
You know within a few years after the sort of graphics card error
We hit the the ASIC error the application specific integrated circuit and this is where
People basically started fabricating their own custom silicon
In order to create these mining machines that we see today and you know, it started off at really high
Cheap processes and the like hundred something nanometer range and you know, this chart is a few years out of date, but basically
Where we are right now with the state of mining hardware is essentially on par with
top of the line silicon fabrication technology where I think we're seeing chips in the five nanometer if not smaller range now, so
We should expect as a result of that that since we've essentially hit the the threshold of
Silicon fabrication technology that at this point the acceleration in the hash rate is only really going to be driven by
exchange rate increases and by other means of finding it lower power costs around the world. We're not going to really see much more acceleration as a result of
hardware improvements unless the world in general somehow comes up with something that essentially
Breaks Moore's law and pushes this to some new completely new type of
Computing technology and sort of related to that I've got a number of charts from previous research where I was looking at some of the phenomenon of
Blocks and different errors. So once again, this is that GPU era where we're seeing insane level of
relative hash rate increase and on the the y-axis here we have the sort of total number of blocks within this period of block 85,000 to 130,000
The the red curve is the expected count of blocks
That took that many seconds to mine after the last block
So, you know the 600 second mark over about three quarters of the way on the right side of the screen
That's the 10-minute mark where we would expect everything to be kind of clustered around that and and in general that the counts would
Follow that red line, but as you can see the block counts that are at the like 100 to 200 second mark
Like blocks coming in faster than every two minutes that that count was really really high during that period of time
and that's because people were adding these relatively fast mining graphics cards that were just causing the Bitcoin network to constantly have to
Trigger the difficulty to make it slower to basically make it more difficult and slow down the blocks because they were coming in way too fast
So, you know, that's quick history, but you know, what can we learn from that? Where are we going?
How sure are we that?
Bitcoin isn't gonna completely blow up at the halving and I was actually there for the first halving and it was a little bit tenuous because we had never been through it before and
I really remember when it happened. I was like, okay, it happened and nothing happened really other than the
Subsidy, of course getting cut in half at that time, you know, we didn't see like a massive
Jump in the exchange rate. We didn't see really any other network activity
That was worth talking about. It was it was a pretty quiet
First halving and that was I think a good thing, you know, you you want these
Quote-unquote major changes to go off without a hitch
So looking forward, I think we can be pretty confident that this halving
Algorithm is going to work for quite a while and how do we know that? Well, the Bitcoin test network is actually due to a
multitude of eccentricities and edge cases and special rules
Currently operating at block 2.5 something million, which if test net blocks
Only came in every 10 minutes that would be equivalent to operating somewhere in the year 2057
So a test net is basically the exact same as the main Bitcoin network
Except for a few rules around the mining difficulty that have led it to be where it is today at this really high block height
That would be equivalent to being decades in the future. So we know that it works for at least
What is that 30 more years?
There's a Bitcoin improvement proposal number 42 that is actually 10 years old now and
Bip42 was an adjustment to the
Block subsidy logic what happened back then this anonymous developer called ditto B who we've never heard from before or since
basically opened an issue on the Bitcoin code repository and
They said hey, there's an issue with the halving logic
It's an edge case an overflow problem that won't happen until far in the future, but just for
A little nerding out here in the the purple code I put in the bottom right
It's really it was two lines of code and it's a very compact very dense
And even if you're a developer it's probably a little hard to read if you're not familiar with bit shift operators
This is not something that you see a lot in normal
Software development at least at least in web software development and essentially what was the the block subsidy logic saying it was saying, okay?
We're gonna start off and it's gonna be 50 Bitcoin for every block and
Then you know every 210,000 blocks that come through
We take the number of halvings that have happened by basically taking the block height dividing it by that
210,000 block limit and for each one of those halvings we're going to shift this subsidy number to the right we're gonna we're gonna bit shift it
And what does that do? Well that it's just a fancy way of saying we're going to cut it in half
due to the way that binary numbers are represented and that actually works quite well until you've done it
For so many times that you run out of room in which you can shift the bit over to the right again, and so there's this
eccentricity to doing this operation in C++ which it's there's an overflow problem. So basically I
Think once we got down to something like 64 halvings, you know hundreds of years in the future
We would hit a problem where that bit would shift from being to the most right
Which would essentially be equivalent to you know block subsidy
Of one Satoshi if not probably actually far less than one Satoshi
But it would shift over to the right and it would turn into what I believe would be the equivalent of
92 billion Bitcoin so basically a few hundred well a hundred years from now
We would go all the way down to zero Bitcoin. We would then go for another hundred years with zero Bitcoin, but all of a sudden
About 200 something years in the future we would restart but not only would we restart we would start creating like 92 billion Bitcoin with every new block
Of course that is not desirable so
What happened well is basically like an additional two lines of code that BIP42
Enables which just checks for an overflow and it says, you know, if we've already done 64 halvings or whatever then stop doing the bit shifting
so that was a simultaneously major change to the protocol it was
You know a consensus change and yet it was also probably the least
controversial consensus change of all time and in fact there was there was basically no debate around it
There was not even any sort of signaling or flagging or anything it just went into the next release of the Bitcoin client and
so far so good because you know that extra two lines of code isn't even going to get executed for several centuries
So where does this put us on the economics side of things?
Well, as I mentioned, you know, we can look at previous
halvings and we can see that yes the hash rate probably will go down
But that's going to be temporary
That's going to be some small subset of inefficient miners that are currently teetering on the brink of profitability
And they get pushed into unprofitability turn off their miners, but even then
Most of that hardware is unlikely to simply get thrown in the trash
those unprofitable miners are going to do the the most rational economic thing and
They're going to sell that hardware probably pretty cheaply and that hardware is going to get shipped somewhere
Somewhere likely with much lower electricity costs get plugged back in and
Keep going so I do expect we'll see something similar here
where it's like a temporary short drop in the hash rate and then we just continue chugging forward and
This is actually related to that issue of what happens as the the block subsidy goes to zero and you know
Miners aren't getting paid anymore. You know another way of looking at this is
Don't just look at what is the amount of Bitcoin that the miners are receiving but if you look at the
combination of the issuance of the new Bitcoin plus the fees that they're collecting and especially if you look at it in terms of
You know fiat or some other somewhat more stable form of value then we can see that actually
This bootstrapping seems to be working quite well
Where even though they're getting less Bitcoin in each mining epoch
They're actually getting a lot more value and of course able to reinvest that value into their businesses
I'm not going to be worried about the block subsidy getting cut in half with regard to
You know long-term incentives and being able to pay for this thermodynamic security of the network
I'm not even going to really start worrying about that until we go for like an entire
Four-year period and the Bitcoin exchange rate doesn't even double in value
Because as long as it's doubling in value that will offset
You know the subsidy getting cut in half and of course we're also seeing those fees start to increase as well. There's still
somewhat negligible generally like less than 10 percent of
The block subsidy though, you know after this halving I think they're probably going to be more like 30 to 50 percent and we've already seen
for some short periods of time when the fee revenue actually exceeded the block subsidy
So I think that's going to just start happening more and more frequently and that you know if the trends and the patterns continue
then we're going to see the the total revenue of these miners you know continue to increase and offset that change
So what's going to happen with the price? Well history may repeat itself. I'm optimistic that history will repeat itself
Generally it takes six months or so or at least a few months after a halving for us to see an exchange rate increase and
This is one thing that is different and I've seen some traders and speculators and you know on-chain analysts and whatever
Saying that you know, we may be in a new era that is kind of shifting the normal cycle
Forward and you're shifting it to the left on the time frame because this is the first time that Bitcoin has ever hit an all-time
High before the halving and you know, maybe this is due to the ETF,
Institutional, and nation-state adoption
There's a lot of reasons to speculate as to why that is the case
But I think the the short version is you know Bitcoin is still growing adoption is still increasing and so
This ought to continue the so-called virtuous cycle, you know, we're cutting the rewards in half
that continues to push us towards a deflationary monetary supply and if some people say that
Because the amount of newly issued Bitcoin that is entering into existence is getting cut in half that that means there's less
Being sold by miners. I don't think that that is the case at least not anymore and that's for several reasons
first reason is that the amount of Bitcoin that's being created in any given day, it just pales in comparison to the volume of Bitcoin that are being traded on exchanges
So I think it's kind of a drop in the bucket at this point
What I do think that is happening and the reason why this
The cycle is probably going to continue is really around narratives in memetics
It's that you know every time there is a halving
We have even more confidence that you know Bitcoin from an incentive structure from an economic design is continuing to work as
expected and this is creating
Kind of fuel for another hype cycle just brings more attention to the space gets more people interested in it and
You know as each mining epic goes by
We have more and more years of history where people can kind of point to it and say look it's working. It's solid
This is not a high-risk speculative vehicle. This is actually one of the lowest risk least speculative
assets in all time at least in
the way that it has certain assurances around its properties and
And so that I think is what we're going to see happen this time as well
And we'll have the additional benefit of at least some of these huge
ETF issuers and brokers and so on and and possibly even
Registered investment advisors now going around and actually using this narrative to help pitch Bitcoin as you know sound
monetary asset to an entirely new class of people is
It's going to go up because of the stock to flow model
That I really don't know
It's really hard to say with any of these models that try to predict Bitcoin's price
You know is it is it just happening to?
Look to us to our monkey brains to be a good fit
You know is it really?
Causation or is it just correlation due to some unknown set of other factors?
So I don't put really too much stock in almost any model
You know models are really meant to be broken, but I think that just thinking about this in terms of
narratives memetics and
overall time in the market that and that longevity
Continuing to fuel the credibility of the network bring
More people in and especially with each cycle bring
More people with higher credibility in so you know now we're seeing the the fund managers of you know
Trillions of dollars of assets basically hyping up Bitcoin because they understand it
We're seeing heads of small nation states hyping up Bitcoin to their peers at other nation states
So that's all kind of a part of the the virtuous cycle of adoption as long as Bitcoin continues operating as expected
Hopefully this means that cutting Bitcoin subsidy and half does continue to make us all wealthier
But I think that there's you know a lot more to it than just that one
Simple act. It's the fact that we see this happening and we've known that it's going to happen
But as we see it continue to play out as expected
It's just that you know the predictability of the network and it's
It's credibility continue to rise as a result of that. So here we are. We are
a little over two days away from it
I've been pushing hard trying to get that
420 meme out
I think if we're lucky it'll be April 20th in Europe when the halving happens
But at this point it looks like America is unlikely to get that
memetic narrative, but I think as long as some part of the world is there then we can go for it now
We seem to be a little bit further away from the 69,000 mark
So that's gonna be a little bit tougher to hit
But I'm sure if we all band together we can get there. So
Think we should be good to go now
About 40 minutes for some Q&A
Thank you, Jameson that was very insightful
Yeah, really huge. Thank you. That was a lot of invaluable knowledge and great perspective
I don't know if anybody has questions. I see that the hands are raised
You can also use the Q&A feature to facilitate questions that might be a bit easier
But we can field a few questions. I see Adam has his hand raised
I'm gonna press allow to talk Adam if you have a question about the happening to Jameson. You're the floor is yours
Adam if you can unmute ask your question
It might be easier to facilitate questions through the Q&A feature if you guys want to type your question that also works
And you mentioned the happening which if I recall correctly the the happening
term actually originated from Dogecoin and
For whatever reason it got kind of co-opted and used by
Really every other crypto network that has a similar supply schedule
So I don't think halvening was a term before like 2016 2017
It was always halving
That I was just a mispronunciation on my on my end
But Adam, uh, did you have a question? Are you are you able to unmute because we're starting to get answers questions in the Q&A function
I don't know if Adam is going to be able to ask their question
We can move we can move on to the next person. Um, I see Brandon
Brandon want to allow you to talk because you want to first people to
Come up Brandon. Do you have a question for Jameson?
Yes, uh, can you hear me? Okay. Yes
Awesome, but Jameson, thank you for the info. I have a question
I guess about the the general concept of the halving and I'm not I'm not a software guy
But I understand the bit shift and then how that works and it's a division
By two but it it translates to like this very unique concept of the supply issuance like in your first slide where
A lot of bitcoin are issued up front and then there's like a very long tail end
Uh, you know, are there any other reasons that that you can think of that that?
That we would want that concept besides just oh it comes from a bit shift or I guess
Is there any precedent in like computer science or any other field where this kind of concept?
Was was put into use
Yeah, uh, so I believe I forget if it was an email or a forum post
but Satoshi was essentially trying to model this off of gold mining or precious metals mining really any sort of mining in generally real physical mining
and you know, this is kind of the way that you you can actually see
Uh output from miners, you know, over long historical time scales
Because you know, what happens is they start off mining the stuff really close to the surface. It's very easy
In many cases like with gold, they might be just literally going around and you're picking it up
out of rivers and in really topsoil but once you exhaust that really easily
captureable and refinable or then you have to start digging and really the the deeper you go the harder it becomes and and generally
The output becomes less unless you start investing more and more
Into your infrastructure and improving your efficiency and so on and so forth. And so I think that was
That was kind of the primary impetus around why Satoshi started off this way. It was that with
Really trying to incentivize bootstrapping the network because you have to remember
In those first few years Bitcoin had no value
So you're essentially giving away a lot of nothing
Uh in trying to incentivize people to get into it, you know, kind of under the hope that maybe someday
It would be worth something and that they would be greatly rewarded
but of course there was there was no guarantee of that and
It seems to have worked out
By the first halving bitcoin had an actual value. I think the exchange rate
at the first halving was somewhere in the like 20 to 50 dollar range. So it already gotten up
To a reasonable amount and you know, here we are several
halvings later and it's just order of magnitude orders of magnitude greater
There is a lot of discussion that could be had around well
Isn't this halving a kind of abrupt supply shock like wouldn't it be better or more optimal if we had a nice
smooth function and you can certainly make some arguments about that but I would suspect that once again like the reason that satoshi shows
This particular emission schedule is because of how simple the algorithm was
Literally two lines of code if you wanted a smoother issuance, then it would require
You know more complex algorithm for creating and then verifying it
so that's what we're stuck with
this is the great experiment that seems to have hit on a lot of parameters that worked out well
But there's a ton of other networks out there that have you know different issuance schedules
Or a lot of them that you know just started off with huge
Preminds or insta mines and then kind of eaked out small amounts of
newly created coins over a long period of time
So a lot of speculation. Thank you
Thank you, brandon. That was a great question. Appreciate you coming up and asking jameson
So we got some questions in the chat
Some they I'm gonna ask this one last
That's a good one because it kind of takes us a bit off topic
But uh, someone asked nil nil roseman if you had to guess and I know it's a guess
What do you think the hash rate will be exactly four years from today?
And what do you think the average fees per block would be four years from now?
Oh boy, I don't have the chart right in front of me but
I would bet it's at least 10 times higher. Where are we like five? I think we're around 600 exahash
So yeah, I mean I would I would guess probably at least in the you know, 5000
exahash range, of course, that's a completely new prefix. I don't even
I don't even know what's next after exahash off the top of my head
Now fees yeah fees that's tough because there's a lot more going on
My hope is that several years from now
We see more of the layer two technologies and networks that are being proposed and developed right now
And we see those in much higher usage
So that creates a interesting dynamic where it
Should decrease the total need for block demand or demand for block space
But if you think of the main bitcoin blockchain as a sort of cryptographic accumulator for a lot of off-chain activity
then there is a lot of a give-and-take there and and
Basically high fees on the main chain are going to price out
Activities on that main chain and the the real question is
How many of those activities will be able to get pushed to a second layer bitcoin network?
Or are those people going to just
Completely leave bitcoin for some other network that's not related to bitcoin. That's that's the much harder thing to answer
At the very least directionally
I would say fees are going to be a lot higher and if fees don't keep getting higher
Then we have to start worrying because maybe you know, we are losing
Competitively to other networks and protocols
Because our scaling efforts are not to doing as well
Neil I hope that answered your question appreciate you asking
We got another question of multiple people are asking will the recording be posted?
Yes, the recording will be posted
So don't worry if you showed up late or if you know someone else that registered and was not able to attend
We will definitely have that available for you
This is a question. What would happen if the 50 bitcoin in the genesis block was ever moved?
Would it affect the network? Some of these questions aren't directed to the halving but I still want to hear your your uh input
uh, well technically the 50 bitcoin in the genesis block cannot be spent and
This is due to another weird quirk.
Possibly an oversight from satoshi more likely satoshi didn't really care. I have
A lot of research and things that I've written about satoshi that basically led me to the conclusion that they
Had no intention or interest in spending the the bitcoin that they mined for their own personal gain
getting back to the actual question the
The genesis block is like hard coded into the bitcoin client software
and generally, what happens is you start up your node it connects to other nodes
It starts downloading blocks and the transactions and as it's doing that it is
It is creating and updating
its view of the utxo set the unspent
Transaction outputs also known as like the bitcoins that are spendable
and for whatever reason like I said probably satoshi just didn't care it and think about it
There is no logic in any of the bitcoin node software that actually
constructs and stores unspent transaction outputs for the coinbase transaction in the genesis block as such
even if satoshi came back and constructed and signed a transaction to spend, you know those genesis block outputs
The block the transaction outputs don't actually exist in the databases of any of the nodes on the network
And so they would end up rejecting
That transaction and saying it's invalid because it would hit the rule where it checks to see if
The transaction outputs exists and are spendable and it would each node would say oh, they don't exist
so even though the transactions value it would get rejected but that's a
So it's just another of those weird eccentricities of the protocol
Thank you for that question anonymous attendee. I don't be you got your answer from jameson. I appreciate you
this question is from josh
Jameson thinking of the future of bitcoin. Do you see individual custody becoming a legacy?
quirky and uncommon future and other words does the advancement of the network have centralization risk if hyper bit coin
Initiation theory is real not realized. Thanks josh
Yeah, I mean there's definitely
Risks, this is one of the bigger issues that I'm worried about these days is what happens
If bitcoin goes mainstream
Faster than we are able to scale the ability for people to do self-custody
And especially with the fact that ETFs and your traditional financial vehicles
Tends to be a lot more user friendly than going through the whole process of
Setting up your exchange account setting up your self-custody withdrawing to that self-custody
Managing keys so on and so forth
This is in our tendency for humans to prioritize convenience
overall else so I do expect that in terms of like total number of people if we continue on the path that we're on right now
A sort of mainstream hyper bitcoinized world would mean that most people
Probably just have bitcoin IOUs in some in one of the huge centralized custodians
This is where I think there's a lot of debate to be had around
Scaling the network and what does that mean?
You know, there are many different variables at play trade-offs
things that we prioritize
And reasons why scaling bitcoin is difficult because there are a lot of
valuable aspects to the network that we don't want to compromise.
One potential dystopian future which would be you know, great
I think for anyone who is already here and already holding bitcoin
But not so great for the rest of the world
Is one in which it's just so expensive to do anything on the main chain
That only you know, the earliest adopters and essentially the the biggest whales who have the most bitcoin
Are able to afford doing that
There's a lot of different paths that we could go down here and we're starting to see some early
experiments in other sorts of
custodian ship arrangements, especially when we're starting to talk about second layer networks and
This is where things get interesting also more complicated to talk about of if it is determined that it is not a priority
That we're that bitcoin is able to get you know a utx o into most people's hands for self-custody
Then what are the next best things? What are the security models that we can make available
via second layer networks or some sort of utxo sharing protocols and virtual utxos are starting to be thrown around
Um, like I said, there's there's many different paths that this can go down and they all have different trade-offs. So
The most important thing is for us to just keep discussing keep developing
I once again one of the things that I'm more worried about is just people stopping to work on this
There's still so much work to be done
I can tell you right now like if we stop working on improving bitcoin
Then that dystopian future where very few people actually have self-custody
Have the strongest available security model to them where they can really be sovereign onto themselves
You know, that's just not going to be feasible for more than the the smallest percentage of elite early adopters
Appreciate that question josh. I hope the answer from jameson was sufficient. Um
We have another question
This one's a little funny
Can we send miners to space on a satellite and how the late disadvantage would they be from that distance?
Like we're sending it to the moon
Yeah, you know, I think you could do low earth orbit without any problem
um
You know as long as you're in the
You know milliseconds like sub second range
It's not too much of a problem
You know once your latency to be able to transmit at least the 80 byte block header to the the main network and get it
Propagated around like once you start getting into you know, several seconds or beyond
That's when you start halving real orphan risk of
People or other miners finding a block after you but uh being able to propagate it to the network before you
Causing you to to lose out on your money so, until we
Achieve some sort of faster than the light communication
It really is going to be all about, uh, you know, how many light seconds away are you from the main network on earth?
Hope your question got answered
Anonymous attendee and we have a lot of questions. Yeah, I see people who are trying to say
Make sure you ask my question. But if you're anonymous, it's it's hard to follow
Who who ask what and what question to follow up on? Um, but another question from
That one is they're trolling. Um
Let's see someone asked about observing the halving in real time
There's actually like a website to do that. Uh, mempool.space has a little halving, um,
Adjustment, uh, clock on the main page. Bitcoinblockhalf.com. Uh, is another a good one that's really more dedicated to that.
But, uh, you'll notice that, uh, none of them are really in consensus with each other. And this is because there are many variables at play and different halving
Countdowns make different assumptions. And so, you know, we are only a few days away now. So
The main thing you can generally calculate it yourself because you can see, like, how many blocks are we away?
And then the main question is how quickly do you assume the blocks come in?
And I would look at like how quickly they've been coming in over the past week since the last difficulty adjustment.
And, uh, can I actually, uh, tell you how quickly they've been coming in over the past week since the last difficulty adjustment?
And I would actually check right now, uh, on mempool.space, we can see
That blocks have been coming in every 9.8 minutes. So, you know,
Would you basically multiply total number of blocks left?
321 right now by 9.8 minutes to get a
slightly more accurate
estimate, but like we said, uh
Hash rate is unpredictable. Um, it's very difficult to know what the true hash rate is at any given time and it can always change.
And there's luck involved. So
Miners could have a streak of good luck or bad luck and that can greatly affect the perceived hash rate, uh, at a global level for a short period of time.
Thank you for that response, jameson. Someone asked about, um,
Any thoughts on the power law vis-a-vis stock to flow scene popping up on x? Are you familiar with that?
Yeah, I mean, like I said, like I think
All models look great until they get broken. So I don't really ascribe to any more of them.
I don't really ascribe to any model. Um, especially anyone who's out there who's like pitching their model is being great. Uh, they're probably just trying to
Market themselves and you know get more attention
The likelihood of any of of really anyone developing a great predictive model. I think is pretty low
Appreciate that answer. We had one question about using layer twos. Uh, why would you use a layer two and not just go to bitcoin?
layer twos have pros and cons
a second layer network is I'm pretty confident to state never going to be able to offer as strong a security model as bitcoin on the base chain
however second layer networks are able to
Do a lot more that you can't do on the base chain
They can also be developed a lot faster because they aren't consensus networks
They are at least in many cases. They aren't a side chain can be its own consensus network
They can also scale a lot better and faster and make you know trade-offs between
centralization and self sovereignty and often be able to
Make breaking changes, uh, you know without halving to get the entire network to to update and coordinate
so it's it's you know faster iterative development there and
The features that they can offer are only really limited by the creativity of the protocol developers on there. So, you know, this is why I'm
Generally bullish on saying a lot more activity
where developers are talking about proposals for second layers and and even
you know, certain soft forks to the bitcoin protocol that would enable easier
second layer development, especially if we can ever
Actually achieve the promise of the permissionless two-way peg. You know, this was actually promised to us a decade ago
In the block stream sidechain white paper. We were told you know, two-way pegs are coming and
That has yet to materialize, but I think it's still possible
And if we can actually get to that point
Then that will potentially
Unleash a new wave of innovation
Where it'll be much easier for people to go off and create their own sidechains and second layers
without speculating as to whether or not they'll get you know
permission or consensus to to make changes on the base protocol
Appreciate that answer. You kind of tackled a few questions. Um, and with that answer. So appreciate it
Jeffrey
You asked if we could make a video on how to consolidate utxos those in the casa app
Yeah, we can work on that for you. I see that I just wanted to answer that live
Um, so I appreciate you asking asking that question and I know we're coming up on time. So the one question I'm interested in
Uh, Johann asks what meme what meme are you loading up for for the for the halving?
Uh, well, see, I wasn't sure if that was just a general reference to me talking about narratives and memetics
One of the great things about bitcoin is that
You can create your own memes and narratives like this is this is kind of this is one way that uh,
Bitcoin is self-reinforcing and kind of you know viral
Uh, I think it was
Pump back in the day was the one who coined the phrase like the virus is spreading and then of course he stopped doing that after the pandemic
um, but that's because
You know bitcoin is a kind of mind virus like there's a lot of interesting
Incentive structures around it that of course help it to operate
but there's also of course the incentive to help grow the network because
If you own bitcoin, then you understand probably
Metcalfe's law network effects the fact that you know the value of a network goes up
as the total number of participants in the network grows up goes so
We are all incentivized to get more people to participate in the network because you know theoretically that should make the bitcoin
that we hold worth more and How do you do that? Well, I think
People need to use the skills that they already have
It's been a while since I've had this misconception thrown at me, but at least
For a long time in the early days a lot of people assumed that like the only way that you could contribute to bitcoin was by being a
Programmer and by actually writing software, but I would say we're at the point now where
Pretty much any skill set at least any like white collar skill set can
Contribute you know from a career perspective you can probably find a job or you can work in the industry and contribute
If your skill set is on the communications and marketing side, you know
Perhaps your way of contributing is by creating memes and if some of those memes go viral
You know, it's really hard to quantify
What your total contribution is there, but it certainly can't hurt
You know, you make a crappy meme. Nobody sees it. No harm. No foul. You make a great meme
Uh, who knows you might become the next michael sailor. This is um
This is one of the things I think I actually tweeted just in the past week or two
That you know one way to earn your quote-unquote bitcoin phd
Is to come up with a new way of explaining bitcoin
to a new audience, you know from a new perspective and
You know, that's one of the things that I think michael sailor has done that has made him so great
Not just the fact that he bought a bunch of bitcoin
It's that he actually came up with a novel way of explaining it from a like a corporate treasury
perspective and there are a lot of other people in the space who have done that and uh, I would say are you know
Have earned their honorary bitcoin phd's
Well, thank you jameson, uh, just to respect your time. I think this is a good place to end it. Um, those are some awesome questions everyone and apologies
If we weren't able to get to your question
Uh, thank you again jameson for that incredibly informative and insightful insightful presentation
Um, those were some great visuals great examples. Um, you really drove home the impact
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Go to casa.io and book a call and we'll be hit. We'll be happy to walk you through any of your options
Um, and this wraps up our deep dive into the 2024 bitcoin halving. Thank you all for participating and I hope you have an excellent day