S15 E23: John Carvalho on Lightning, Synonym & Bitcoin

0:48Vlad CosteaAnd welcome to season 15, episode 23 of the Bitcoin Takeover Podcast. I am Vlad and my guest today is someone who has been on the show three or four times before. But the last participation that he had on the show was during the Christmas of 2020, when we did an interview where we discussed all sorts of stuff about music and video games. And he introduced me to a few bands. But nowadays he's the CEO of Synonym and that keeps him busy. And it's really interesting how being the CEO of this company has helped him evolve as a Bitcoiner and adjust some of the views that he previously held.

1:28It's really good to have you, John. This is, I think, your fourth or fifth time on the show. And it's been a while.

1:36John CarvalhoWell, thanks for having me back.

1:39Vlad CosteaSo what's new with Synonym? I remember reporting back in early 2020 or 2021. I'm not sure. These two years are still mixed in my head about the launch of the company. It promised to create this atomic economy. It was operating on the Omni Layer of Bitcoin, which I guess was still maintained at the time. But since then, there were some major changes in the product and the philosophy of the company, and it's not quite the same.

2:10John CarvalhoI would add some nuance there. The company hasn't changed that much in the regards that you mentioned as far as what our interests are in the atomic economy and trying to build out that concept. Also, we weren't on Omni so much as researching whether we were going to support it in our products. And we did put time into that and we did demonstrate, for example, the first Tether transaction, quote unquote, on Lightning using OmniBOLT. And then a month later, we dropped the whole thing. Basically, I don't know if you want the details on that, too, but yeah, that's some nuance there. What's new, I guess, was another part of the question. Do you want me to get into that, too?

2:57Vlad CosteaYou can go ahead. I think it's interesting to a lot of people. I mean, your experiences and findings... At one point you even started The Biz podcast for the sake of sharing some insights on how you're running the business. And I don't think you explained too much about the idea of using Omni, which used to be called Mastercoin. It was the world's first ICO, and then it became the layer where Tether was launched, USDT.

3:25John CarvalhoWell, the interesting thing about Omni was that it was just a very simple way to do tokens on Bitcoin. It was where Tether was born in the first place. As far as the ICO, I actually think that came a little bit after. In other words, the ICO thing became a thing. I don't remember when it happened, but the token was not actually integral to the protocol at all. And so I just saw it as, all right, this is a practical way that we can do a Bitcoin-friendly or a Bitcoin-compatible way of doing tokens, because I feel that you do need some way to express credit and business-issued credit particularly in the post-Bitcoin economy.

4:05But yeah, I just didn't want to bootstrap that whole thing. As far as, well, reboot strap, I should say, revive it, because it was starting to get deprecated and removed from exchanges. And it just seemed like a bad idea right in the middle of where Lightning Labs was raising 70 million or whatever it was so they could build tokens on Lightning again. And so at that point, I was just like, nah, I'm not going to fight that fight. I know what it's like trying to convince people to do something that is not the hype thing.

4:36As far as what's changed and what's new at Synonym, what's new, we're about 19 people now. We just hired a couple, and we have been in pseudo-stealth mode for the past six-plus months. With Bitkit, we're currently doing an audit on it to prepare for coming out of beta to actually formally release the app. Not really a lot of new features in the past six months or so, just trying to get LDK tamed and working and dealing with all of the intricacies of Lightning and trying to have a decent user experience, which is a lot easier said than done.

5:19With Slashtags, we ran into some legal issues with the name of it. And so we actually have a whole new brand and name that we'll be unveiling for it. And coincidentally, we also kind of reworked the design, a lot of it, with the learnings that we've had in the past couple of years. So we'll also just be relaunching the whole thing. So that will happen towards... Actually, we'll start releasing pieces of it in a couple of months. But the actual culmination of all of that work will be in Q3, Q4, about late October probably.

5:52We'll probably announce that stuff at Plan B again in Lugano. Blocktank, what's changed and evolved there is we originally had a lot of aspirations for business models for it, and we even created some business model-oriented products like Blocktank Instant. But as we did more research on the legal side, we're based in BVI as a legal entity, and they've already adopted all of the VASP laws and license requirements. And our lawyers are a little more risk-averse than probably most lawyers, and we just decided we didn't want to get a license to be able to do LSP stuff.

6:27And so we limit the size of the channels we sell and the customers that we sell to only being Bitkit users now. So we've just narrowed the scope of Blocktank a lot. We were hoping to make a whole open-source LSP, everybody use our thing, this is the future. We have all these services, everybody's shopping from our LSP, but it's just, I don't want Synonym to be that kind of company where we have a compliance team and all those kinds of things. And so we just steered away from it and minimized it.

7:02We did evolve and create the LSP Spec group, which has actually grown and has become pretty elaborate. And so that was a good positive change forward for Lightning and LSPs. That work is still in progress and will be in progress for a long time, but some of the specs are already ready and some of them are already being implemented by people, so that's cool. Otherwise, we have a new product that we'll announce and launch the, I don't know if it'll be Alpha or Beta, what state it will be in for sure.

7:36But again, we'll launch that at Plan B in Lugano as well.

7:40Vlad CosteaRight, but according to your tweets, you are not very positive on the Lightning Network. I recall very precisely that five years ago, you were with Luke Dashjr when he said that he wants to reduce the block size on his node to 333 kilobytes, so that this would accelerate Lightning adoption. Now, you don't seem to be as positive about either reducing the block size or onboarding users to Lightning. What happened?

8:14John CarvalhoA few things. One, we built a product with Lightning in it. That's probably the biggest thing, is just learning the degree of complexity and fragility of Lightning, and especially for the use case that people intend for it, which is like end users running their own nodes. And even more crazy, end users running their own routing nodes. It's just very, very fragile, and going through that experience just made me realize that the design is kind of a joke. We can make it work. We can do our best, but all of the kind of narratives that came with it in the first couple years were really exaggerated.

8:54Things like Lightning is going to kill Visa, and everybody will be using Lightning, and there are a lot of issues with scaling it economically. There are a lot of issues with dealing with all of the multiple implementations and incompatibilities, and again, the fragilities causing force closes, liquidity management, and it just goes on and on and on. And all of the things that people that aren't engineers and aren't building these products, even if they feel like they fully appreciate the complexity because they study it a lot, they still don't get it.

9:27It's just so much worse than people think to actually make this stuff and string it together. What was the other part of your question? I mentioned about Lightning.

9:37Vlad CosteaAnd reducing the block size.

9:39John CarvalhoYeah, so my intentions back then were multiple. So one, I wanted to show Luke support because I thought that he was very innovative in how he handled the whole SegWit thing and being able to do the block size with a soft fork. He kind of had a little reputation for himself for kind of whipping out these interesting solutions to things in the past, at least two or three times. And so I was like, all right, maybe this guy is onto something here. And I was feeling that way at the same time that I was feeling like...

10:17Finally realizing that we did really increase the block size, because that kind of aspect in 2017, it wasn't hidden so much as it was masked. Like it was for people that were at my stage of learning and below, it was just like, okay, they say this is in there and just, they just say it as an afterthought and it just is what it is. Cool. And like, I later realized there's just like, wait a minute, like we really did like make it as if that we were not going to do this hard for it, but not just because hard forks are dangerous, but also because we didn't want to increase the block size, but we did increase the block size effectively.

10:52And I felt a little bit like duped, partly by my own ignorance, but I think that's also partly the responsibility of the elders of Bitcoin and such to make sure that doesn't happen. And so I supported that idea and also, yeah, I wanted more people to use Lightning. My motives were a little bit immature, a little bit naive. Now looking at it, I would say the idea of reducing the block sizes is absolutely absurd. Like it would just, I don't know where to start. I would say one issue that I think Bitcoiners definitely don't weigh heavily enough is how increasing fees are very centralizing.

11:33Like everybody worries about node costs being like being centralized and like, oh, if we make the blocks too big, people won't be able to afford initial block download and disk space and et cetera. And I'm just like, I just can't imagine that the cost of that would ever be as obnoxiously exclusive as constantly rising on-chain fees. And like, if you can only, if, you know, suppose it costs a thousand dollars to an on-chain fee that like prices out like most of humanity, you know what I mean?

12:05And like, that's a very, very centralizing factor. And I think that Bitcoiners, they just make these kind of convenient leaps just to pump the bags. And so if you say something that pumps the bags, then they're going to support you. If you say something that doesn't pump the bags, then you are dumb and ignorant. You don't understand Bitcoin. And that's kind of the level of things. And at this point, I think it actually, and in the past year or two, I've actually lost a lot of respect for Luke because his chaos factor is just out of control.

12:39You know, I still think he has it in him to design interesting things, but he hasn't done that in a while, in my opinion. And the things that he's put his kind of, dug his heels on in the past couple of years, they've just made me lose that kind of respect that I used to have for him to support him somewhat ignorantly.

12:58Vlad CosteaMaybe it's not useful to add up to this, but I lost my respect for Luke a year ago when he lost 200 Bitcoin. And then he started tagging FBI and CIA and tweets saying, help me. I mean, that was the moment when I realized, well, what's wrong with this guy? I mean...

13:15John CarvalhoI don't know what I would do if I lost 200 Bitcoin. So I don't want to judge it too closely, but yeah, it is kind of like, all right, this guy did lose a lot of Bitcoin and he's supposed to know what he's doing. Yeah.

13:27Vlad CosteaYeah. And it's still unclear what happened there. Last I heard Peter Todd told me that he, meaning Luke, basically did a too complex setup and he regrets it and he doesn't want to talk about it because his mistakes were pretty silly. I don't know. But then he came up with the filtering software and he asked people to run that on their nodes. And I was like, why would anyone want to run software from the guy who just lost 200 Bitcoin? That was my first reaction.

13:59John CarvalhoWell, you know, that was the, my original impression of Luke was bad. My first impression of him a long time ago, because he originally was the first guy to add blacklisting to Bitcoin. He encouraged blacklisting back, I don't know, was Bitcoin Classic when they were doing Sybil nodes or something when they were trying to Sybil attack the network. But there was some point where he was just like, he had a blacklist and I was just like, oh man, this guy doesn't get it. And I think that's just that, you know, regurgitated again.

14:26He's just another, it's just another blacklist. I think the whole argument about censoring and versus spam is obnoxious. Like I think I try to stay out of it, but I think both sides sound pretty stupid. And I just think the idea of that, like somehow you could define them something as spam, even though it pays the fee and follows the rules is just a really dangerous idea. And so I'm surprised to hear it from people like him and Giacomo.

14:54Vlad CosteaBut John, I do remember at one point it was probably last year you tweeted out that we can always increase the block size to enable more scaling, to put more transactions into blocks, into main chain blocks. And Roger Ver came back and said something along the lines of I told you so. And if I recall correctly, he was also very skeptical of Lightning Network and said it takes too many years to develop. And this was back in 2017 that he said this. And my question for you right now is if you did the same interview that you did in late 2017 with Roger, would you do anything differently?

15:37John CarvalhoOf course I would do something differently. I would do a lot of things differently. I'm a much different, not much different person, but I have had a lot of experiences since then. So I would have to be different just on what I've been through as a person. But a few interesting tidbits in this topic. I have tried to do an interview with Roger Ver at least twice, formally attempted. Most recently was just a month ago. He refuses to do it unless I apologize publicly to him. Another interesting fact is I already have apologized publicly to him some years ago where I tweeted out that I was sorry for that.

16:21I wasn't intentionally trying to troll him. I forget what I said, but something along the lines of I wasn't intentionally trying to troll him. And I was particularly sorry for the accusations about the sock puppet things because I didn't actually have any evidence. It just seemed like a good guess. And the last thing I intended because, oh, I know what it was. I saw an interview with him where he likes, he kind of could see on his face and in the words you use, I forget, but he still seemed like he regretted that and that he felt bad about it.

16:50Not that he felt bad about what he did so much as he just felt embarrassed, I guess. And I don't want to make people feel bad. That's not my goal. I know that that's probably crazy for some people to hear, but my intention is not to hurt your feelings. My intention is to discover the truth and correct idiocy and things like this. And so I did apologize for those aspects, but he wanted me to apologize for like trapping him and tricking him and trolling him. And I'm sorry, I'm just not going to apologize for saying BCash, naturally.

17:23It's just stupid. And so the interview hasn't happened. I don't recall his exact arguments with Lightning. It was a little bit before I was, I think it was just after I stopped caring about what he said a little bit before I was actually super hard into Lightning. And so I don't know that I followed it that closely. And I also think that I recall the arguments being more centered around something like that it wasn't actually Bitcoin and it was a shitcoin and it was centralized. And none of those are my concerns even with Lightning today.

18:01I don't think the centralization of Lightning is the problem. In fact, it's the only solution. And yeah, I just don't see it as a shitcoin. I see it as actual Bitcoin transactions. See, Lightning is more like a custom mempool turned into a network than a shitcoin. So, yeah.

18:19Vlad CosteaYeah. So, Roger, if you're listening to this, please talk with John. If you don't feel comfortable, I can moderate the discussion. It can happen right here on live stream.

18:29John CarvalhoYep. Peter McCormack offered, but yeah, he was the one that tried to negotiate the last attempt. But yeah, the deal broke. Well, I'm not going to publicly apologize for things I don't feel sorry for.

18:40Vlad CosteaYeah. So, just to be sure, Roger, if you're listening to this and watching this once again, I'm going to ask John to do the BCash dance once again, just to be sure that you don't get the impression that you'll ever apologize for that. So, you can do it, John.

18:54John CarvalhoNo, I'm not doing the dance. And I don't know why people are like, you did troll him, but I didn't dance until after he flipped me off. So, I don't understand when I was trolling. It must just be saying BCash, naturally. I just don't get it.

19:12Vlad CosteaYeah. I think it's a very fine line because in some regards, Roger was right. He made a lot of public bets in 2018 with people and said, I bet you that Bitcoin Cash BCH is going to get more traction and merchant adoption than Lightning within five years or something like that. Obviously, it did not. And he thought just because it's technically complex and by it, I mean the Lightning Network, he thought it was not going to get traction. And this is where he was most wrong because Lightning did get traction and you don't need a PhD in computer science to use it as he phrased it.

19:52But it does take a lot of time to develop and fully shape in a way that's usable and stable. And I think mostly the users of the Lightning Network have used it in good faith and did not steal from each other. But technically, you can do a lot of ugly stuff with forced channel closings and you can trigger that punishment system where you steal other people's coins and you need watchtowers to further centralize the network to make sure that stealing doesn't happen. I mean, there are some tweaks that you need to do for Lightning to work properly, so Roger was right that it's too complex, but he was wrong about what the users are going to do, so he predicted this wrongly.

20:35John CarvalhoIt's tricky for me to, like, isolate exactly where he was right and where he was wrong so much as he was definitely right about more than Bitcoiners give him credit for. And some of his intentions were more pure than many Bitcoiners today. What he definitely had wrong was just his own like he was very arrogant and he was very arrogant in a way where he was willing to lie and he was willing to twist the truth in order to deliver his message. And he was willing to fork Bitcoin. And so he basically like he fired himself from Bitcoin when he thought he was saving Bitcoin. But he really should have seen that and he didn't and he doesn't to this day, as far as I know.

21:22And so I think his problem is just, you know, his ego is too twisted to be able to carry through and truly serve whatever intentions of his portion of his intentions were pure. Like, I think the intention to like have as many people be able to use Bitcoin as possible is a good one. I think the intention to want to be able to use Bitcoin as currency day to day is an interesting one. Even if it's not possible, you know what I mean? Like those intentions that in other words, I see ideals as a direction and I like moving in those directions more than moving in other directions.

21:57But he just went totally off course. And that was his downfall.

22:03Vlad CosteaYeah. And it's been 19 minutes since we started this interview. I got to present an ad. I apologize. I apologize, John, for putting you on pause for a moment. I got to talk about Wasabi Wallet, which is the main sponsor of the show and has been for like three years. Recently, they added a very interesting feature, which is topical to what we're discussing right now. They have this buy anything button, which opens up a Tor-routed interface to shop and bid. And you're talking with one of their salesmen and you tell them what you want to buy and where you want it to get delivered.

22:38And they're going to prepare that delivery. They're going to send it. You pay with Bitcoin. You pay with Bitcoin that you used in CoinJoins, because there was always this FUD that once you put your Bitcoin in CoinJoins, they're not going to be accepted on exchanges. Now it's different. You deal with a merchant which actually prefers Bitcoin with a greater degree of privacy. And you have this option and it's very good for the Bitcoin economy. You pay directly to a website, which is basically Amazon, but with a concierge service.

23:11So if they don't have something, they're going to bring it for you. And you can get Wasabi Wallet for free at WasabiWallet.io for amounts lower than 0.01 BTC. You don't pay a coordination fee. And they also did just today, they announced this 20 percent increase in the size of the minimum CoinJoin. It used to be at least 150 participants. Now it's 180 participants. So the number goes up all over the board. WasabiWallet.io, check them out. Did you ever use Wasabi, John?

23:47John CarvalhoNot in a long time. I used it and they'll remember this. I used it and there was a bug and I thought I lost some Bitcoin in there. And then after that, I was just I played with it and did it a while, but I don't have the same belief in CoinJoin as some people. And I just don't really I know they're going to hate me for saying this, but I just don't really have that much to hide in that regard. And so and I think that like there are other methods of achieving it that are cheaper and more effective.

24:18And I've talked with the Wasabi guys a lot about my philosophies, about privacy. And they seem to think that the way I look at it is interesting and we can have civil conversations, but I don't actually use CoinJoin.

24:34Vlad CosteaInteresting. So what is your recommended method to make your Bitcoin private?

24:39John CarvalhoI mean, my recommendation is don't tell people what you do to make your Bitcoin private. That's that's probably step one. But no, I think that there are like I think Paul "Sports" actually did... I think he made like a little software tool for just randomly sending Bitcoin to yourself. That's probably not that much worse than just CoinJoining. It might even be better depending on what who you're trying to hide from. I think that CoinJoining and anything like that is good for like avoiding amateur surveillance.

25:15I think it's much more questionable for avoiding state level or similar surveillance. So, yeah, that's some perspective on that.

25:24Vlad CosteaThe value proposition of a CoinJoin is that even if you know that people use it, you don't know the outputs. So you might as well KYC all of the inputs. You might know who they are. But in the output section, you're not going to know which is which, because there are some divisions, there are some consolidations that happen randomly. And if there is a second CoinJoin, which is generally referred to as a remix, it's going to be even more difficult to figure out anything. I think the off ramp, the moment when you spend is the one when you reveal what actually happened there.

25:58But maybe that you're going to spend a much smaller UTXO than the one with which you entered. So that still grants you a pretty good amount of privacy. And maybe that you never use the KYC off ramp and you're going to sell for cash or something like that.

26:15John CarvalhoWell, I mean, so far, I actually was kicked off exchanges like years ago before CoinJoin was even a thing twice. And but since then, I've been lucky enough to keep my accounts. And so I don't really need to worry about that too much. I suppose that could change. But to get into a little detail, what you mentioned, my concern with CoinJoining is that it's difficult for people that don't know how to monitor it. It's a lot less difficult for people that do. And the crux of it basically being that they don't care if they know somebody in that set is who they want to watch.

26:53They'll just watch the whole set and dedupe it over time. And so the issue is that eventually that the people that care about privacy less than you start merging the UTXOs and start revealing their identity through KYC or identifiable usage, and that they eventually can triangulate things very accurately. And I don't think they're going to share how easy it is or how hard it is for them to do that. And so you're never really going to know how protected you really are.

27:28Vlad CosteaYeah. Another aspect is that Bitcoin privacy is still difficult. You still need to watch out for every UTXO and see what which address it's connected and who might know about it. And you need to track all of this process with each of your UTXOs if you want to remain private. And just one random consolidation that you make can actually taint you or a dust attack. I think that used to be a thing. Now it's no longer a thing due to high fees.

27:59John CarvalhoYeah. Yeah. Pretty much what I'm saying that the people that care less about privacy than you will end up compromising your privacy. That's one of the issues.

28:09Vlad CosteaBut I also think that Bitcoin has a built in fungibility system with fees. So basically the Bitcoin that gets paid out as a transaction fee is going to get mined into a block and released into the free market.

28:24John CarvalhoI feel like I'm the one that taught you this because I discovered this a long time ago and I feel like I probably shared it with you at that time because it's something that I've never heard anybody say in public other than me. Maybe you learned elsewhere. But yeah, I was informed of this back when I was talking about how Bitcoin is not fungible and all of the reasons that it's not. Somebody pointed out, oh, but actually fees are and you can do it this way. And so I've always wondered, you know, when you see those times where it's like so and so accidentally did like a 20 Bitcoin fee.

29:01I always wonder if that's actually the miner, you know, just washing some coins.

29:07Vlad CosteaYeah, that's possible. But you never know which mining pool is going to pick up that transaction unless they have every other mining pool on speed dial, you know.

29:18John CarvalhoNo, but when they when they make the block, they can just include it in the template and just inject it into the block. They don't have to put it in the pool.

29:27Vlad CosteaWell, that too. I also know that, for example, there's, which exchange, I think it's F2Pool. They have a trademark two sats per byte transaction that they make for their own internal affairs and they sign it accordingly. It's funny when you see it's almost like they're making fun of the rest of the network, like, oh, we can do this and you can't.

29:54John CarvalhoI guess there's no point in overpaying yourself a fee. But yeah, well, except other than the point I just mentioned.

30:02Vlad CosteaYeah. So what is your current vision on the Lightning Network? I remember four years ago, maybe you were on calls with Adam Back trying to convince him that Liquid is not the way and Blockstream should go full Lightning. And this is where I guess you disagreed with him. But you seem to also have changed your opinion on Lightning a bit.

30:27John CarvalhoI would say that I still think that that effort was accurate. In other words, I do think Blockstream should have done that and they took way too long to do it, but they eventually did. And Greenlight is like the most successful Blockstream product that I know of right now as far as like people actually caring about it. You know, it's helping Breeze redefine their company. It's getting a lot of traction with people who want a simpler way to implement Lightning. They finally got Green with some Lightning in it, the Green wallet.

30:58I thought it was absurd that they had all this like siloed project kind of behavior in their company where Green wallet, they had one part like making a whole Lightning implementation, which is really hard work. And then the other part just not caring. No effort to put Lightning on mobile. I just thought it was absurd. And then Liquid. Yeah, I'm glad you remember that because it was like a, I don't know, three or four hour call that I had with him. Where I think I told you the story where my Romanian girlfriend at the time was like, she thought I was like having an affair because I was yelling at somebody on the phone.

31:33And she was like, what's going on there? Who was that? And like, she was like jealous. And I'm like, no, it was Adam Back. She's like, no, it wasn't. But yeah, I have been anti-Liquid since literally day one. And I hope that people like realize that when they see me making memes, you know, as recently as yesterday about making fun of it and making fun of how people portray it, at least. Yeah, I do think they should have done that. I do think that Lightning is a better pursuit than Liquid.

32:09But as far as like my view changes on it, well, part of it comes from having, you know, dealing with implementing it and all of the kind of loose ends that we have to tie to get it to work, but also just thinking more about the economics of it and, you know, how the complexity affects things. I'm a little bit scared basically to make it simple. I'm a little bit scared that all of the or most of the savings that Lightning is going to provide by providing high frequency transactions are currently being subsidized by like investment into the industry and people having like liquidity that is really cheap.

32:52Like to be able to create channels with it. Like, for example, like we have a good deal with Bitfinex for the Bitcoin for our node. Phoenix, or Eclair and ACINQ, they also must have a really good deal because nobody is charging, you know, what I would consider market rates for locking up this Bitcoin and putting it at risk in a hot wallet. And so I'm worried that basically it's an illusion that Bitcoin is actually saving people a lot of money and able to do microtransactions and that the overall cost to the user is just going to keep going up, that eventually you're going to hit fees of like at least one to three percent for routing.

33:36You're going to have to pay up front for the amount of time that you're locking up the Bitcoin, probably at an APR of something between one to six percent per year. And this is all going to add up to like a trend where transacting on Lightning is just going to continually approach the price of transacting on-chain. Will it reach it exactly? Probably not. But will it come much closer than people are comfortable with? I'm pretty sure. Yeah. And that means that the kind of last certainty with Lightning is for B2B transacting, which those are like people that actually do a lot of high frequency.

34:15Just the example I bring up is Bitfinex has an integration with Bitrefill. And so Bitfinex users can buy gift cards with their Bitfinex balances and Bitfinex and Bitrefill can settle all of those transactions one to one dynamically without having to have credit terms with each other. And that's like the primary use case of Lightning. And you don't even really need the network aspect for that. And that's really the most complex part and the worst part of Lightning, which is also another reason why I'm not a big fan of Taproot Assets, because they lean on this part of Lightning as a transfer method.

34:52And I just think that that's not going to work. Yeah. Rant over.

34:58Vlad CosteaOh, yes, I do recall someone telling me a few months ago that Lightning was oversold and overhyped as this retail solution for the average user to save money on transaction fees and also be able to run their own node from home on a Raspberry Pi. And maybe that Lightning is fine for business, as you said, B2B, that's abbreviation for business to business, as opposed to it being for the average user to make small transactions on a regular basis and also be able to manage their own node, which for the record, I did try to manage my own node twice.

35:35And I tried to route transactions and that became increasingly hard. I was losing channels. I had to rebalance. And I think overall, I think I lost more money in fees than I would have paid if I just did on-chain transactions when they were cheap, which is super ironic. That should have not been the way. But I guess it's the price to pay for it being...

35:59John CarvalhoSorry. That was one of the narratives and scams I didn't like that was promoted about Lightning, like saying it's going to be the next Visa is one thing. It's somewhat harmless, although it is vast miseducation, but telling people that they'd be able to passively earn income on their Bitcoin by putting it on Lightning. This was a big lie. This was like, no way, like PlebNet was such an embarrassment, not because plebs were trying to be involved, but because they actually thought that they were going to make something out of it like they were fooled.

36:28And I don't think that's cool.

36:30Vlad CosteaYeah, yeah, I do recall I was part of Rings of Fire and I was part of Lightning+ and stuff like that. And I was opening channels with people and someone who was some sort of architect was making plans for these circles of users opening channels with each other. So in the event that a payment was going through, everyone was going to route it. It was pretty ingenious for its time, but the hardware that we were running was not reliable. We were all running Tor nodes, which was making every transaction much slower and not reliable.

37:06And in the end, I think I was making like 60 satoshis a month from routing and I was paying much more for just one on-chain transaction to rebalance.

37:19John CarvalhoAnd it's hard because you either end up in a situation where people where there's inefficiency and people can help with it. But eventually this will consolidate and all the subsidies will fall away and you will see like what's actually left over and what it actually costs. And I think people are going to be disappointed. That doesn't mean that I quit Lightning or that I think Lightning is bad. It just means that I have a much more realistic view of where to draw the line. I haven't drawn the line at giving up on having it in a personal wallet with a mobile LDK node.

37:53I still think we can pull that off as best we can. I'm just a little worried that even if we pull it off, the fees will just eventually be too much of a deterrent for people. Like if they have to pay $50 to open a channel because on-chain fees like we end up usually having to pay the closing costs. And so if on-chain fees are like consistently rising and we can see that trend where we know that by the time this person closes, it's probably going to be an even higher fee than when it opened.

38:19We're inclined to charge at least double the on-chain fee because we have to pay it twice. And so this just makes the channels like I'm not paying $100 to use Lightning. I'm not paying $50 to use Lightning. Most people will say so. Yeah.

38:37Vlad CosteaI received a message from Paul Sztorc, or as you call him, Sports. And he told me I should read this in the middle of the stream for no reason. And he says, "Is Blockstream going downstream? Has RGB got you down and brown and ground? After a long day of listening to Peter McRetard, why not feel something for a change? Feel alive. Join LayerTwo Labs and make everyone feel sad and frustrated and angry. Our next ritual is at 3 a.m. in the ancient forest. See you there. I'm Paul Sztorc and I approve this message." Or do I?

39:17John CarvalhoI hope he paid you for that.

39:20Vlad CosteaI hope he doesn't pay me for this.

39:22John CarvalhoIt's potentially libelous, so he should. So I'll take this since he took the time to interrupt my time and I would never support a sponsorship from Layer-whatever Labs. I will say that I am very disappointed in Paul and LayerTwo Labs and Austin, I think his name is, whoever that guy is. I think they've embarrassed themselves. They've burnt bridges they didn't need to burn just to be able to meme or make half-assed attempts at promoting their proposal. I think that it's okay to have the proposal. I don't think it's evil to, you know, to try to do what they're doing.

40:04I don't think it is nearly as interesting as they think it is. And I really don't think it'll ever be on Bitcoin. So I don't think it's worth making an ass of yourself to promote it. And they have done that. And Paul has lost my respect because of the ways he's behaved to me and others. And LayerTwo Labs is just a clown show, honestly. So there's your ad, Paul.

40:28Vlad CosteaI hope he's going to watch this. Pretty sure he is. Anyway, I was going to ask you something because you mentioned at one point that you're more open to the idea of increasing the block size than you were in the past. You tweeted about this a while ago. And I was going to ask you if there is any reasonable approach or limit to doing this.

40:53John CarvalhoSo I think I saw one of the guys in your tweet about this interview complaining about my takes on this. I believe he called me the most intellectually dishonest person in Bitcoin. I obviously do not agree with this assessment. But what I'll say is what I'm trying to promote is critical thinking when making decisions about what to care about with Bitcoin. And so there's always a context to what I'm speaking about. And I try to make that context clear. Sometimes I'm more cryptic and that comes off abruptly.

41:30And I'm not going to apologize for that so much as say I can't help it. But what I want is for people to be just as interested, if not more interested, in doing research about the actual costs of things and the demographics that are affected or excluded by costs of things. So they can make a proper judgment as to whether they should be considering this vast amount of complexity to say add soft forks to Bitcoin so something like Lightning can happen. Or whether to do something like add a zero conf flag that even though might not be perfectly enforced might get us through 10 years of Bitcoin with instant transactions and raise the block size a little bit in order to not be exclusive to people.

42:20On on-chain fees. And so I'm just trying to get people to be able to have a mental model that is rational and makes sense. This is also why I like Eric Voskuil's work so much, because he's the only one that actually tries to provide this mental model, and nobody else even tries. They just kind of bullshit associative rant on every podcast. And when they get backed into a corner, they just revert to some new topic and they don't have a mental model that they can confidently walk around and like he does.

42:49And like I'm trying to build. So I would say I do think that block size is not only okay, but inevitable block size increase. I don't I'm not going to pretend to prescribe the best way to do it so much as I would obviously like to see any proposal that is taken seriously be a soft fork to some degree, even though Eric would say he doesn't believe in soft forks and they're all effectively new splits and such. Or at least potentially splits. But yeah, so I don't want a hard fork.

43:25I'm not advocating for a soft fork right now and I'm not advocating for any soft fork for anything, whether it be block size or CTV or whatever. I just don't think any of that is even half as important as the engineers that made it make it out to be. But I do think it would be interesting to always be aware of who we are excluding from Bitcoin and in what quantity as certain costs rise. Whether they be on-chain fees or block size increases and that we are reasonable and just say, look, like we accepted X, Y, Z cost proportion for size and bandwidth 10 years ago, and now all of the costs have decreased this much and we would unlock, you know, a million more people having access to Bitcoin.

44:14If they, you know, we increase fees, I mean, increase block size, reduce fees by X percent, increase cost of node running by X or Y percent and the math checks out and just have awareness of it. If the math doesn't check out, then we have awareness of that, too. I'm not saying I'm going to ignore reality so much as I think mostly everybody else is ignoring reality. Complexity is much more expensive than people are making it out to be. Things like sharing a UTXO for channel factories, for CTV and Lightning covenants, this stuff, like after having been through Lightning, it's all bullshit, man.

44:56Like it'll get used by a few people. It'll get invested in by half a billion dollars of startups and then that half a billion dollar subsidy will go away and then everybody will realize it just wasn't as big a deal as people thought it was. I don't mind having, you know, UTXO sharing as an option for people. I just don't think it is actually a scaling solution. I think it's just a niche use case and it becomes permissioned and centralized at scale. It has all kinds of weird after effects when you're like unfurling these things.

45:28I think it's a mess and we already have one mess we can barely deal with.

45:33Vlad CosteaYeah, that's definitely interesting because it seems like we're focusing on adding more complexity when in fact the goal is to help it scale more. And the complexity is designed in a way that it purposely avoids this idea of increasing the block size, which is taboo. It became taboo. And whenever you mention it, people say, oh, you haven't read The Blocksize War. I think that's the name of the book.

46:02John CarvalhoBut I did read it, actually. Yeah, I lived it and I did read it. So fuck you, whoever says this. Yeah, maybe another way to look at it is I can actually do research to measure the impact of a block size increase. I can't do research to measure the impact and cost of the Lightning Network. It's so much harder to measure that. And to measure it preemptively. We can measure the network and the cost of things right now and have real data. Yeah, we'd have to trust the data collectors and such, but the reality is here and we can measure it.

46:40I can't predict what it will cost and how long it will take to do Lightning covenants or channel factories and such. I have no idea how to provide an analysis for that. Nobody does. But I can do that with block size increases. And if I can do that and show you that it's reasonable, you have no argument. You know what I mean? That's how I see it.

47:04Vlad CosteaOh, they do have arguments. I did see BashCo, who is the moderator of r/BTC on Reddit. He said that if you have more block space, it's going to be filled with more Ordinal inscriptions. So basically you're enabling cheaper spam. And that's the argument that a lot of people use when you say, you know, we should have more users.

47:24John CarvalhoThat doesn't mean anything. That's like saying there are transactions that I don't like. And if you increase the block size, the proportion of them will be larger. So what? Who cares? Like, that's not the point. The point is that you're providing a deeper spectrum of fee availability. It's like right now there'll be a floor of, I don't know where it is right now, probably 35 vsats or whatever it's called. And that would be reduced by some amount because you would be reaching deeper into the mempool length, more blocks into the mempool length.

47:58Now, if it's an insignificant amount, then I would say, no, like don't increase the block size. Don't waste the time of trying to pull off a soft fork and whatever risks are around that. It's not worth it. But if I saw that, like, you know, 10 percent of the global south could now actually use Bitcoin, I'd be like, hmm, that's interesting. You know, it's worth it's research worth doing, data worth measuring. And the whole Ordinals thing is just a nonsense argument. I just can't accept it. It's not spam.

48:31They're paying the fee. And if you care about nonsense things like security budget, which seems to come with the same people, well, then having bigger blocks is more fees for miners too. So like, what are you talking about? It just doesn't make sense.

48:46Vlad CosteaWell, they have a very puritan view of what Bitcoin should be used for and how it should be used. And they, at least the non-technical guys, and there are some technical guys who are not intellectually honest, but they say that if they filter this use case, this type of transacting, then all the spam is going to go away. And then you have Mike In Space. I'm not sure if you are aware of his STAMPs, but these are much worse. They are basically multisigs, which take up a lot of block space and they are much more inefficient with the UTXO set.

49:20It's a disaster. If people who do Ordinal inscriptions switch to that instead, even if it's more expensive, it's terrible.

49:30John CarvalhoBut this is a problem that is separate from the block size. In other words, if there are complexities in Bitcoin that allow people to do things with Bitcoin that are unintended, you can have a discussion about changing Bitcoin so those use cases are not possible. If you can't do anything about that, in other words, if the use case is just always going to find a way, it's just a flaw in Bitcoin that you have to accept. And so I don't think that Ordinals people are somehow more rich than non-Ordinals people and thus spam to them is something they can infinitely afford.

50:05This is nonsense. Eventually, anybody spamming you runs out of money. A DDoS attack is not infinite. They run out of resources. They get bored. They stop having a way to profit off their behavior and it goes away. I see it more like the weather. And so when I talk about a conversation about whether or not block size increase would be interesting, it's just totally separate than what those blocks are filled with. If you don't like what the blocks are filled with, then change the rules of Bitcoin itself.

50:32But good luck with that.

50:35Vlad CosteaI did have a similar conversation with Kevin Loaec, I'm not sure how you pronounce that correctly, but he's the CEO of Wizardsardine and he co-created Liana wallet, and he was pretty upset at these people screaming spam, because he said, okay, first of all, the fee is the spam filter, so that one is in place to prevent spamming. And as long as you pay the fee, it's fine. And if it respects the consensus rules, it's also fine. And if you don't like them, why don't you use the free market instrument, which is you outbid them, you pay more than they pay, so that they don't have their transactions confirmed.

51:17But it seems like, for some reason, the culture was absorbed by these hippies who want everything to cost one sat per vbyte, and if it doesn't, they're gonna be upset. But they don't want a block size increase either. So it's a paradox there. And then they say you should withdraw your coins from exchanges. But if you have less than $20 or something, it's not economical, because you're gonna pay just as much for the fee. And I don't know, how are we going to...

51:48John CarvalhoAnd then on Tuesday, they're gonna say Liquid is scaling, and Fedimints are awesome, and scale Bitcoin through custody. There's a lot of dissonance in Bitcoin.

51:58Vlad CosteaUncle Jim. You gotta trust Uncle Jim, right?

52:01John CarvalhoThis is what happens when you learn through memes. Because memes are just narratives that have been oversimplified, and then people are always fascinated by the part of a meme or the part of a metaphor that is wrong. That's the part that fascinates them. Not the part that you're actually trying to use as an example, as a learning instrument. They care about the part that's wrong the most, because it's the most magical, because it's not true. And so people build their mental models off of number go up, infinity over 21 million, and all these ridiculous things.

52:34And in the end, what they don't want to admit is they only care about things that they believe will pump their bags. And they don't really care about your privacy problems, your fee problems, any of this stuff, scaling. They don't care. They just care about what looks like their ability to measure the trends and see whether or not they should be a tastemaker and whether this is a yes or a no. And once they can identify that within their tribe, they subscribe to that, you know, that taboo or that rule.

53:05And that's that. And now anytime you say something that is against that, you get your, oh, you're not part of my tribe. Let's kill your tribe. It's just primitive, unintelligent nonsense.

53:19Vlad CosteaOh my God, John, you're so lucky right now that these people don't listen to my show.

53:26They're not going to follow you on Twitter. You're fine.

53:28John CarvalhoI mean, I'm not saying this here because of that. I'm saying this because I would say if anybody asked in any venue on stage, doesn't matter. Like this is me. At least me now, at least.

53:43Vlad CosteaIt's definitely interesting to see how your views have evolved over time, even though the intentions have remained the same. It's just the means and your understanding of these means that has changed. And that's pretty fascinating. But what are your issues with Liquid and Fedimint? Just to make it clear.

54:04John CarvalhoSo again, to add nuance, I don't have an issue with custodians. I don't have an issue with people using custodians if it solves their problems. That's not the topic. The topic is simply that you have to actually know how to think about these things and where to put them in your mental model. And the fact is that there's no way to meaningfully distinguish Liquid from a shitcoin, from wrapped Bitcoin, from all of these things that people are considering taboo. But it's okay when you put a Blockstream sticker on it or a Bitcoin sidechain sticker on it.

54:42And that to me is like, it's ignorant. It's manipulative on the other side. It doesn't make any sense. So my issue with Liquid specifically is that it's like just a bank. Like it's just a group of people that will hold your bitcoins for you and give you a shitcoin that does a lot of the same things Bitcoin does, plus a few more. And then when you want to stop using this shitcoin, they are making a promise that they will enforce the exchange rate of one to one.

55:10And that's it. It's just it's a shitcoin that you can only buy using Bitcoin. That's it. And if you conflate this with scaling or make this compromise to include this in your Bitcoin product, you just aren't a Bitcoin maximalist. Like you're literally telling people to use something else, and that's just not using Bitcoin. And I make this acceptance for something like Lightning, even though it's not purely on-chain the way normal Bitcoin transactions are, because Lightning is at least something you can self enforce, has the unilateral exit, and it's literally Bitcoin transactions.

55:47And so it's like it's hard for me to say, okay, like the this is also a shitcoin or this is totally trusted, because you can reasonably and rationally point out how like, okay, like I can definitely handle enforcing this myself. I can definitely see how I could provide an advantage to certain people, granted less people than I used to think, but people nonetheless, I can rationalize that. But with Liquid or Fedimint, you know, the Fedimint thing is just like it's just the same thing as Liquid, just rearranged and repackaged.

56:23It's just a group of people that get to hold all your Bitcoin and you somehow in the Liquid case have to figure out how to trust those people, even though you don't know who they are. And then in the Fedimint case, you have to basically choose your mint and like who you're going to trust. And I don't think anybody has like three people that they would nominate to hold their Bitcoin for them. Maybe in these niche communities, like how Bitcoin Beach Wallet does, and maybe I don't know anything about the culture of Africa and it's just, Fedimint is going to go wild there.

56:56But I'm skeptical because they already have Tether, they already have, you know, other means that they can do Tether on Tron and it's just going to be simpler for them. They're not going to have to deal with the things they have to deal with. It's going to be probably the same user experience or better because it's cheaper. I don't know how it's going to play out, but I think that some of the narratives and assumptions around ecash and mints are just trends. It's like with Lightning, like at first it's magic and everybody's willing to accept a bunch of like fuzzy edges around what it can do and what it can't do and what it's good for and what's viable for.

57:30And then after a year or two in the next bear market, everybody's going to be just giving up because it didn't help them pump their bags. They can't raise money on that narrative anymore and they'll make a new narrative. Like, I just don't think that innovating banking technology is a Bitcoin topic. And I think that Bitcoin is the last thing that you should be having be in custody. Like if you want to use custodial stuff, custody dollars and the amount that your monthly bill is and just use a credit card or custody gift cards or, you know, like actually have a relationship that is complimentary to you.

58:07Like I would rather have a gift card from a company that I actually shop with than credit from three guys that I don't know that I can trust or credit from this federation of anonymous things, which I don't even know how many of them are the same people or not. It doesn't make sense to me.

58:27Vlad CosteaMy God, John, you just said 90 percent of what Paul Sztorc says when he promotes drivechains. Can you remind me where you disagree with him and drivechains?

58:38John CarvalhoPaul Sztorc and I were together the day the Liquid white paper was released. We were at the same event and we both went back to our rooms to read it when it was released, if I remember correctly, how it worked. So and we both came out of our rooms to talk shit about it after we were done reading it. So like this is like the most bonding moment I've had with Paul is about how Liquid is nonsense.

59:01Vlad CosteaOkay, but where do you disagree with drivechains?

59:05John CarvalhoBecause they're also shitcoins. Like there's no blockchains are logically distinct. They are logically separate assets. And so you can't scale a block chain with a block chain. You can just say use a different block chain. And there's no advantage to bitcoiners to have that directly, basically the ability for miners to escrow bitcoins in order to back a extra block chain. That feature is not a feature for bitcoiners. It's a feature for miners who want to diversify their income to shitcoins. And I don't want incentives to be warped on bitcoin and I don't need shitcoins.

59:43If I wanted a shitcoin, I have many to choose from. I don't need one to be on bitcoin, quote unquote, because it wouldn't be on bitcoin. What would be on bitcoin is this method to be able to escrow with miners so you can anchor these things to bitcoin. And then you have this like delayed exit thing, which is basically just going to result in some sort of discount on the bitcoin. And every single sidechain is probably just going to trend to zero because nobody wants to take the added risks of those sidechains.

1:00:10Like it's really more. I honestly think that shitcoins are better than drivechains. That's why I don't support them.

1:00:19Vlad CosteaWell, that's a big statement because you call pegged bitcoin on the sidechain a shitcoin just because it's zSide or whatever, like a Zcash sidechain. And you're arguing that it's a shitcoin because the peg is not going to hold out and it's not going to be worth one BTC at all times?

1:00:40John CarvalhoWell, those are just side arguments. What I'm saying is they're all shitcoins. All blockchains are shitcoins because the definition in my book of a shitcoin is a blockchain that's inferior to Bitcoin, particularly in security. That can be because it's more centralized or it's actually less secure, whatever way you want to manifest that. But shitcoins are just other blockchains that compete with Bitcoin that are less secure than Bitcoin. And this would be true of every single drivechain. And it would be true of every single shitcoin. As far as I know, I don't know of any that have some kind of great design that somehow makes it more resilient than Bitcoin.

1:01:14But I guess it's possible. I doubt it. But when a shitcoin is mentally and logically distinct, instead of logically distinct, but mentally gray area of drivechain, then you actually know what's going on. You can rationally think about it. You can say, okay, do I want to convert and take the risks of this shitcoin to do what I'm trying to do because I can't afford to do it on Bitcoin or because I want bigger blocks, blah, blah, blah, blah. Like the actual qualities of the blockchain affect its value.

1:01:46And so one BTC does not equal one DBTC, drivechain Bitcoin. They're just not equal. And you can make all the arguments you want about that this can be arbitraged, et cetera. But the point is that it will just trend to zero as soon as people don't like the security trade off. And I just think that's just useless. I think it will be an experiment. It'll fade away. Maybe we'll discover some niche thing that people like to do it for, like maybe the Monero drivechain kills Monero.

1:02:15I don't know. But I just don't care. I don't need it. And I don't like how it changes the incentives on Bitcoin and affects people that don't use it potentially. So I just don't think it's worth the risks. If you want another blockchain, you have many to choose from already.

1:02:30Vlad CosteaThat is definitely an interesting take because it assumes that every other blockchain, which is not Bitcoin, acts as a bona fide scaling layer because other users can use that to perform some financial actions which are not on Bitcoin. Of course, they're shitcoins, but they're useful for other people. And essentially, maybe that they don't afford Bitcoin. Maybe that the 10 minute confirmation time is too long for what they're trying to do. So they're going to do that. Elsewhere. And you also mentioned Tether on Tron, which I think is an interesting topic because I went to Argentina to LABITCONF in November and I tried to buy stuff with Lightning and I realized that I couldn't buy merchandise.

1:03:15I couldn't buy some stuff that they were selling there because they would not accept it. They said it's fine if you give us Tether on Binance or Tether on Tron or maybe Ethereum. But the fees are too high. And I was like, is this a Bitcoin conference? And they said, it doesn't matter because this is what this market uses mostly.

1:03:39John CarvalhoYeah. I mean, it's not the first time I've heard that. I've never used Tether on any chain. So I can't really comment firsthand. But yeah, I've heard from many people that this is happening in various parts of the world. And I can't argue that it doesn't make sense.

1:03:58As far as, there was something you said earlier, I would just add the nuance that Eric Voskuil might disagree with me on this, or he at least would portray it differently. I don't actually consider other blockchains to be a method of scaling Bitcoin because I consider them all blockchains to be competitive. And this is maybe something where we differ. But that could just be because I don't fully understand his model yet. And maybe I'll agree with him eventually. But at the moment, I do see all blockchains as competition. And so I don't think that I would call that scale because you're just using something else. Right. So when you say you're scaling, you always have to be clear about what you're scaling. Are you scaling Bitcoin? Certainly not. Are you scaling using blockchains? Sure. You know, are you scaling using cryptocurrency or Tether? Maybe. It's definitely not scaling Bitcoin to use something else. And that includes drivechains.

1:04:54Vlad CosteaWell, the assumption is that after you're done using Tether, you're going to be buying Bitcoin with that. And there is a competition for the ability to buy Bitcoin, of course. The block size is limited. The supply is limited. So not everyone in the crypto space is going to be able to convert all of their coins for Bitcoin. Or if they do, they're going to pump the price?

1:05:14John CarvalhoWell, you're making an assumption on why the person's using the alt chain. Like, if they're using it for Tether, then you're just saying, I want to use dollars now. And this is the most convenient method and the cheapest method. If they're wanting to have the exposure to a strong store of value, they might not choose. They might choose a different altcoin. They might say, oh, well, Litecoin has been around for a long time. It seems like it's going to be here for a long time more. And I want to hold this for longer and I can't afford Bitcoin anymore.

1:05:45And so you might see people drop off to other chains just because they can't afford Bitcoin anymore. But that's still a loss to Bitcoin. In other words, now you have less value stored in Bitcoin. Maybe it's an insignificant amount and nobody cares. And they're more worried about pumping their bags and BlackRock owning Bitcoin. But that's just I think that the future that Bitcoiners are willing to accept, where on-chain fees are extremely high and Bitcoin is backing other fiat, this is just not the future I want.

1:06:14Like, I just don't I don't want that. I would rather have hard conversations about on-chain scaling and things like this than then just concede that, like, we solved store of value for rich people. Like, they didn't have that problem, really, for the most part.

1:06:32Vlad CosteaYeah, I agree with this. But how do you reconcile the idea that Paolo Ardoino was part of your team in Synonym? I see that he's no longer listed on the website. I think he was CTO at one point or at least advisor. And how do you discuss with him the topic that Tether has a much larger volume every day than Bitcoin and it seems to be a more popular choice among third world countries than Bitcoin?

1:07:00John CarvalhoI think people would be disappointed with the quantity of conversation that I actually have with Paolo. It's not as spicy as everybody might think. I talk to him about once a month. And as far as, like, his role with Synonym, it is just advisory. It always has been. So, yeah, that's what we talk. We just talk about mostly when I want to spend more money and when I want his insight on something that is a hard decision. And there's not really any feedback back from Tether telling us what to do with our roadmap or what not to do, as far as all that goes.

1:07:40As far as, like, Tether increasing while Bitcoin's not, I mean, I don't think we discuss it because we both are resolved about it. We have nothing to discuss. Like, I know why. He knows why. I don't see it as a problem for Bitcoin. Could be seen as a problem for Lightning, I guess. But I don't know. I don't want to speak for Paolo, and so I won't do that. But I don't think that he would say any of my views on Lightning currently are crazy. I think that he would probably express similar concerns and he would probably point that, oh, look, like, currency is currently being sold by Tether.

1:08:21And so you're going to have to compete with Tether if you want to do that. And do you think Lightning can do that? Can Lightning compete with Tether on shitcoin XYZ for millicents of a fee? No, I mean, it can't. But they're also not providing the same problem solving, you know, like Bitcoin is something very different than dollars and very different than Tether. And I guess that's another reason why I don't like the Liquid stuff, because it just moves back towards that realm. It's just custody and trusted.

1:08:52And for me, trust, the only question that matters is who, not how.

1:08:58Vlad CosteaYeah, but it's also interesting that at the same time you have Bitfinex that invests simultaneously into Synonym and Blockstream. And for this reason, do you ever feel like you're competing with Synonym against Blockstream?

1:09:15John CarvalhoI think technically Bitfinex is invested in Blockstream and Tether is invested in Synonym, but that doesn't change the question. But just to make that clarification, no, I have never thought of it that way. Not with Blockstream at least. I have kind of felt that way when they were things like whether to invest in OmniBOLT or OmniBOLT research versus RGB versus whatever else is coming along. And what I'll just say is Tether, Paolo, Bitfinex, whomever is behind the decisions, I assume the boards of those companies as well.

1:09:55They don't seem too scared to invest in things that overlap. In other words, two companies that are trying to solve similar problems or two projects that are trying to solve similar problems, because I think they see it more as they want that problem solved and they're willing to invest in more than one variation at attempting to solve it. And so as far as Blockstream, no, I don't consider them competition at all. I guess that's strange now that I say it out loud, but it's true. They do also make a wallet, they do also do Lightning things, they have Greenlight, and I guess there definitely are levels where we compete.

1:10:33I just don't look at it that way. I guess I'm not scared is probably why.

1:10:41I don't know if that answers your question, but feel free to add nuance.

1:10:44Vlad CosteaNow, it was interesting because I thought about this before. I also thought about it at one point when there was Cypherpunk Ventures, which is a VC firm that was investing at the same time in both Wasabi and Samourai. And at that point, you have to ask yourself, since they have the same company that invests in them, are they not going to have some sort of convergence? Because they were still fighting.

1:11:10John CarvalhoWell, again, I think not only in my case, but probably in many cases, people would probably be disappointed with the amount of influence investors have on the companies. It's just not as spicy, usually, as people think. And when it is that way, it kind of emits it. You can kind of tell like, oh, this is a company that is funded by these people, obviously, because they're just doing all these things that these people always do. But you don't see that so much in Bitcoin companies. A lot of Bitcoin investing is just like people have more money than they probably deserve to have, trying to make a name for themselves as VCs or just, you know, seeing if something will stick and hoping that like one in 10 of their investments does something and investing somewhat ignorantly.

1:11:56I don't think it's a very sophisticated investing environment.

1:12:02Vlad CosteaYeah. Let me read another ad and then I'm going to ask you more questions about Synonym today and how people can use the products right now. So this ad is from Hodling.ch. It's a company from Switzerland, and they specialize in helping large holders and exchanges and businesses deal with the complexities of Bitcoin security. They say they provide peace of mind through a secure, private and self-managed environment in the Swiss tradition of precision and security. Their services assist you in setting up, maintaining and operating a self-custodial Bitcoin infrastructure from the selection of multisignature configurations and hardware wallets to ensuring your setup is robust and tailored to your needs.

1:12:51Go to Hodling.ch if you want more details. Anyway, what is Synonym doing these days? And the average listener is going to be interested in downloading some app on their phone and trying the product. Which one do you think is the best fit for this use case?

1:13:11John CarvalhoWell, there's only one formal product app at the moment, which is Bitkit. It's a mobile application that supports Bitcoin, Lightning and Slashtags features again, Slashtags being the thing that's completely getting reworked and renamed, but the features will persist. It's in beta. It's been in beta for a while. The largest reasons are that implementing Lightning is hard and that we chose one of the more difficult ways to do it and that we've just been growing as a team, trying to figure out how to be efficient and scale up the team and get many things done at once is my goal.

1:13:49So, yeah, if you want to try Bitkit, it's Bitkit.to, is the website. And there's Apple and Android. You have to install the Apple app. What's it called? TestFlight, to be able to test the app. But it's an Apple app. Don't get scared of it if you haven't seen it before. It's normal. And there's also an APK available for download if you want to use something like, I don't know, GrapheneOS or these other things that would require it. Yeah, the app is working a lot better every month.

1:14:25We did some pretty major updates last couple of months. There's still some bugs. And so don't put all your savings in there. But we are, like I said earlier, doing the audit and trying to come out of beta in June. And so that should be a milestone for us, assuming we hit that milestone. And then we'll actually begin promoting the app and, you know, trying to get as many users as we can. And then we'll have another product that will release. That's a formal application in October as well.

1:14:57Vlad CosteaI did see that there was this social media effort to redesign the symbol for Bitcoin. What was that all about?

1:15:06John CarvalhoDid you see the outcome?

1:15:09Vlad CosteaYes, I did see it. But I'm trying to let you explain the logic behind that.

1:15:13John CarvalhoYou're giving me an assist. So, yeah, we did a little bit of a troll by saying that we were going to unveil a new design for the sat symbol. And then what we unveiled was the Bitcoin symbol. And just the idea there, it wasn't just a troll. It was it's actually a sincere proposal. And we have implemented it in Bitkit. And there are several other wallets now considering implementing it. So I would say check out satsymbol.org. That's only two S's, not three. And you can get a lot of the rationale there.

1:15:49But basically what it is just removing all decimal points from Bitcoin and just having the only Bitcoin symbol be the B with the lines through it. And just basically sats is the only unit in Bitcoin. And you can call them sats. You can call them Bitcoin. You can call them bits. I don't care. But we're not going to call them anything. We're just calling it Bitcoin with like the symbol and then the quantity of units. And so if you have, say, one whole Bitcoin in your Bitkit app, which I again don't put a whole Bitcoin in there yet, it's still in beta.

1:16:22If you have a whole Bitcoin in there, it would show as one hundred million, with a Bitcoin symbol behind it. Some people have a lot of reservations about this. All the reservations and rationale is addressed in the website and or an interview that our designer did. Maybe our marketing guy was there, too. I forget. Sorry, Matt, if you were there. Yeah, he was there with the Bitcoin Design community, basically addressing their questions and their concerns. And I think overall, we did a pretty good job communicating the message and the rationale behind it.

1:17:01And I do think, as with other things, that this is inevitable and it's less time we have to wait for being inevitable if somebody makes the first step. And so we're just taking the first leap. Maybe we're too early. I don't know. I don't care. It's not going to cause any harm. I don't think there's going to be actual confusion from people using our apps because the units are so far away. Like one Bitcoin in one hundred million is like a very big difference. Nobody's going to make that mistake.

1:17:33Yeah, that's the short of it.

1:17:37Vlad CosteaI think this is one of the most bullish moves. You know, there was that whole Satoshi versus bit debate. I took the bit side just because it makes much more sense to call it a bit as opposed to a Satoshi calling it a Satoshi. Only opens up more questions like why Satoshi? Well, because of the founder of Bitcoin, who's Satoshi? Well, this mysterious guy, blah, blah, blah. We should not have that conversation when we tell people.

1:18:04John CarvalhoI just... And then there's a sats shitcoin now, too.

1:18:08Vlad CosteaThere's always been a sats shitcoin. And now there's a sats shitcoin on Bitcoin. I think that's what you're trying to point out.

1:18:14John CarvalhoThat's right. Why not both? Just the general problem is a problem. Yeah. Yeah. Unit bias is a huge problem, too. I had somebody, a friend of mine that comes to our meetups, like, he was complaining how his younger brother will never be able to stack a whole Bitcoin probably. And I was like, dude, there's no such thing as a whole Bitcoin. It's just these units and it's how many of them you have. Like, don't get distracted by this whole Bitcoin thing. It's just the way that websites price it.

1:18:42That's all it really is. It's just an arbitrary denomination. And this is and as far as the bits thing, I think that probably on a longer timeline, people will eventually call satoshis bits. But what I didn't like about the bits kind of proposal is that they weren't calling satoshis bits. They were calling the third place bits and they wanted two decimals after. And this to me is like super confusing. Now you want two decimal places in Bitcoin. And when Bitcoin doesn't actually have any decimals, it just it just makes no sense to me.

1:19:13I would just say, let's just rip off the Band-Aid and go straight to the base unit, because that's just sensible.

1:19:20Vlad CosteaI'm a big fan of that. I mean, I understand why some people would want to have this exclusive club where you can say you have a whole Bitcoin if you put a lot of work into it or you're rich. But also, for the sake of adoption, it's useful to say, yeah, I have this many Bitcoin units. I have a girlfriend now, and it's pretty big news. But I set her up with a Lightning wallet and she asked me, what's a sat? Well, that's a Bitcoin unit. Why is it called a sat and not Bitcoin?

1:19:53And for some reason, this made me super happy. It's exactly the process that I was describing. And people were saying, no, you're trolling because it's so easy. You have one hundred million sats in a Bitcoin. It's not easy.

1:20:07John CarvalhoI don't think it will ever happen, but I almost think it would make more sense to what we currently call a Bitcoin to call that a Satoshi. It's like, I have one whole Satoshi, like I'm a Satoshi now. Like that to me sounds cooler and more fun than I have a whole Bitcoin. Like having half of a Bitcoin just makes you feel like a loser. Like that doesn't make sense.

1:20:31Vlad CosteaYeah, I don't know what to say, but I do prefer Bitcoin as the unit. How many Bitcoins do you have? These Bitcoin units, doesn't matter. It's pretty cool.

1:20:41John CarvalhoAnd like I said before, there's just so many integers between the Bitcoin and the smaller amount that there's just actually no room for confusion. Like nobody's going to think you're sending them 20,000 Bitcoin when you're sending 20,000 sats. Like it's just not going to happen.

1:20:56Vlad CosteaThat was a very good marketing move. I think a lot of people paid attention to that. And it was a good way to come out of that silence that took a few months. You said you are in the stealth mode. You came out of that with this proposal to change at first the Satoshi symbol. And then it turned out to be just the Bitcoin symbol.

1:21:17John CarvalhoWe have a few more planned. I don't know if we'll be able to do it as cute every time, but I am happy with the way that campaign went. I do hope that it sparks something longer term and we are moving forward with the plan either way. So, yeah, that was nice.

1:21:34Vlad CosteaI feel like this is a bit late into the interview to ask you, but I do want to know, because when you started Synonym, you said you wanted to do a better version of Google to revolutionize not just Bitcoin, but the entire Internet. And you're talking about Web of Trust. Can you give a little bit of a spoiler on what you're up to?

1:21:57John CarvalhoI'll say that's still the plan. I still think it's possible. I would say that killing Google these days doesn't seem like as big an accomplishment when it seems like AI is already doing that work in some ways. But that wasn't necessarily the aspect that we were trying to kill. There's more. And I said this in past interviews that I feel like Web of Trust and a more peer-to-peer based web or particularly a key based web is the way to do that. And it's basically by putting the user in control of their feeds of the data they want to see, the provenance of the data they want to see.

1:22:40It's just like turning it. One of the slogans that we'll say is "You are the algorithm." This is like one of the pitches for the next product that we're doing, maybe even the tagline for it. So that's your spoiler, is "You are the algorithm," rather than Google being the algorithm or you having to trust.

1:23:02Vlad CosteaIs this the first time you say this? Is this exclusive? Yes. Nice. So everyone who listened to this knows that the tagline is going to be "You are the algorithm."

1:23:15John CarvalhoIt might be. We'll certainly say that. I don't know if it will be the only one. But yeah.

1:23:20Vlad CosteaAlso have to ask you about something else. You mentioned that your node does not validate Taproot transactions and basically it operates as if Taproot never happened. And why is that?

1:23:33John CarvalhoBecause I don't need Taproot, and I just want to be able to be that and say that to people so they think about why I might do something like that. I didn't do it to be able to use it as a device to talk to people. I did it naturally. I just don't want to update it. And I want to have that right. I want to have that power. I am told that I don't have that power and that I actually take a risk by not fully validating the current soft fork version of Bitcoin Core.

1:24:06But I run enough different nodes and have things diversified enough that it's not. I doubt that's ever going to affect me. But yeah, I think that soft forking is actually... I have a tweet about this. Maybe you can share it in the links or something if you find it. But I think that soft forks are actually oppressive, trusted, centralized, centrally driven, impossible to actually get consent for and from users at least. And so I just feel like I never agreed to Taproot and I'm not going to pretend that I did.

1:24:43And I'm not going to adopt this like culture of just always running the latest update from Bitcoin Core. Like I'm not an engineer. I can't audit Bitcoin Core. I don't want to have to find people that I trust to do it every time there's an update. I think the pace of change is too high. I think the degree of risk taken in soft forks is too high. And I just don't need it seems like Taproot is doing fine without me. And so I'm not going to support it because I don't need it.

1:25:12It's as simple as that.

1:25:16Vlad CosteaYeah, that's interesting, because the marketing, the brochure for soft forks has always been that they're opt-in. You know, if you don't like the soft fork, you can just not run that on your node. But when you don't do that, they say, well, you're not fully validating. And you're running an old version, which is dangerous because this new version has...

1:25:35John CarvalhoAnd as far as I know, they don't upkeep old versions. It's like Windows has a certain time of life for a version, and they will keep maintaining it until they officially stop maintaining it. Well, Bitcoin should be doing that, like, as far back as possible, right? Like, I should be able to run a pre-SegWit node if I want to safely, you know, but they don't think of it that way. They think of it as like it's engineer driven. So engineers like love of complexity. They love new problems. They love making new problems so they can have new opportunities. They see it as having new features and new possibilities. But I really think it's more that they're just looking for opportunities to express themselves and through expressing themselves, they're incentivized to do so because they get more easily funded grants and things like this.

1:26:25And so the incentives aren't very good for a culture of default installing the latest Bitcoin Core. It's not very smart.

1:26:35Vlad CosteaYeah. Now that I think about it's interesting. The easy reply for me to give you right now and get applause and likes on Twitter and make a moment out of it would be to just tell you if you want it to get built, just fund it. You know, just pay someone to maintain that version of the code and update it so that you can run pre-Taproot and pre-SegWit software without any security issues. But it's not that simple. And I think that soft forks at the end of the day are still forks.

1:27:09And the assumption is that at one point, everyone in the network is going to upgrade to that soft fork and that becomes a hard fork.

1:27:17John CarvalhoYeah, that's the problem is that assumption. And I'm just trying to be on the other side of that Overton window and just be like, no, that is not an assumption. Like, I'm not just going to agree with all this complexity. I'm just not going to do it. And if I lose money because of it, maybe that will be a good example, if anything. I doubt I will, but I don't know. I just I think the culture is very twisted and people are way too confident in their mental model of how Bitcoin works, how soft forks work, how Bitcoin Core works.

1:27:49Everybody is way too optimistic and accepting and way too trusting.

1:27:55Vlad CosteaBut John, my T-shirt says, don't trust verify. And so does my mug and so does my hat. I bought them from the Blockstream Store.

1:28:02John CarvalhoI've grown to hate that phrase, by the way. Like, it doesn't mean anything. Like, don't trust verify. Trust is fucking very useful. And you have to make sure people understand like the qualities of trust and when they should and when they should not and what they should trust certain people with and what they shouldn't trust them with. Like, there's just so much nuance there and just gets lost and don't trust verify. Like, don't trust verify. Well, then what the fuck is Liquid? Like, it doesn't even make sense.

1:28:33Even Bitcoin is trusted. Like, everything is trusted.

1:28:38Vlad CosteaBut they're going to twist that and say that it's about open source code and you don't have to trust it because you can see the code and understand what it does. But you have to trust Greg Maxwell. They're going to say, yes, of course you have to trust Greg Maxwell. What are you going to do? Study computer science for 20 years and hope that you're going to be as smart as he is?

1:28:58John CarvalhoI don't even believe that core devs are qualified to audit all of the kind of permutations of a complex soft fork. Or even if the fork itself might not be complex, but what it enables is new complexity. I think we're already past the point where an engineer can confidently say this is safe. I think we're actually already past that point because when you do something like combine covenants with Taproot leaves and have all these unfurling structures within Taproot and then unfurling covenant, you know, multiple UTXO sharing. You just create all these things that you don't know how to measure or assess.

1:29:45And every time you add another one, it gets worse. It becomes like this unsolvable mess. And that's not what I use Bitcoin for. I just want to be able to make transactions where I don't have to deal with censorship. It's not... I don't want the rest of the stuff.

1:30:05Vlad CosteaI understand your point. And that's very interesting. I contemplated on this issue a lot lately with the whole covenants discussion because it seems like there's some political power that Blockstream has over the soft forks that we agree to activate, and it seems like the ones that get endorsed by Adam Back and Andrew Poelstra and then Greg Maxwell on the mailing list. All of these have to be agreed on by them in order to be accepted. It seems like CTV, according to a lot of people I've asked, is more conservative than OP_CAT, but for the reason that CTV was not built by Blockstream, it seems like they try as hard as they can to marginalize Jeremy.

1:30:54And I do know that you have a different opinion of Jeremy and maybe you don't like him, but they're trying to basically portray him as a crazy guy so that the community loses trust in anything that he may create or may have created. And then they push OP_CAT and then they say, yeah, but this one was written by Satoshi and we have rewritten this entirely to neuter the cat to make it less potent. But you can do pretty much the same that CTV can do. But this is by us and that one is by Jeremy.

1:31:27So which one are you going to choose? I've had Andrew Poelstra on the show on the same season and he was very bullish on OP_CAT. He was saying, oh, it's just 15 lines of code. It's no big deal. We're gonna get that through.

1:31:43John CarvalhoWell, I have not witnessed this behavior from Blockstream, so I can't really comment confidently on it. I thought I was the only one or at least I thought I was the first one kind of pushing back against Jeremy's behavior specifically. It kind of got picked up by a few other people in the past year or so. But Jeremy also at least temporarily quit his effort for a while in order to let us have the bull market. And as far as Blockstream goes, I don't think they have as much weight as they used to.

1:32:18I think losing Greg Maxwell is part of that. And I think that if that's what Poelstra was portraying to you, I think he was speaking overconfidently. I don't think they have the power they used to. I think it would be much more difficult to get OP_CAT in than they think. And I think that just a huge reason is just like nobody actually cares. Like it's only engineer driven. There aren't users saying that they want this and the ones that are don't know what they're talking about.

1:32:48So it's just like it's just not important. Honestly, it just isn't.

1:32:55Vlad CosteaYeah. On the topic of scaling, you did mention that you would be in favor of a block size increase if it was a soft fork and it didn't make everyone abandon the old chain for the sake of adopting this new one with larger blocks. I think and maybe you're going to disagree with me, but that's fine. I think Litecoin did something interesting with the MimbleWimble extension blocks where they increased the block size. They have that within the Litecoin Core client. And on that extension block, which works just like a sidechain, but without the UX burdens of trying to peg in and peg out from a sidechain, it's just seamlessly integrated.

1:33:35They can send and receive coins from this confidential chain, which is an extension block. You know, it works in parallel at the same time. And it's a pretty cool user experience. It's interesting for me that they were able to do that in the first place. And it's pretty interesting because they have scalable privacy with MimbleWimble. Of course, it's not as good as Monero or whatever, but it's pretty good. And it's also interesting that nobody in Bitcoin talks about this and they ignored it. And so far, I think Litecoin has been sort of a testnet for what can be added to Bitcoin at a later point in time.

1:34:15They were the first ones, not the first ones. I think there was Groestlcoin or whatever that did SegWit. And they were the first ones to do a Lightning transaction from an on-chain channel. So that was interesting.

1:34:31John CarvalhoWell, I don't know enough about the design or the implementation of it in Litecoin to say, but my guess is there was a little while where it did really look like Litecoin was going to be the test bed for things that would be added to Bitcoin later. I remember when the MimbleWimble paper was dropped. My guess is that people at Litecoin got the sense that this was definitely going to end up on Bitcoin if it could. And so they added it with maybe more confidence than they should have, because it obviously has not ended up in Bitcoin.

1:35:04So that doesn't really make it a testnet Bitcoin thing if Bitcoin hasn't added it. And it doesn't even seem to be on the docket of people wanting to add it. So my guess is there's some design reason for that. I don't know enough about the design to say, but I'll infer ignorantly a little bit from what you said, which is there's definitely going to be complexities and risks and tradeoffs to having Bitcoin support an additional asset inherently. And that's what it kind of sounds like. But then again, maybe that's unavoidable as a way to soft fork block size.

1:35:42I don't know. I'm familiar with extension blocks being brought up in the past, elastic blocks. There's probably some way that Luke could invent that we don't know about. And I just would like to know what I think is the best proposal, but I don't because there's just no work being done on it. So if they were active proposals about ways to support more transactions on-chain, I would be interested and I would be researched on them and I would care. But I'm not going to waste my time becoming a MimbleWimble expert, an elastic blocks expert, et cetera, because nobody is actually working on it and I'm not going to work on it.

1:36:20So what's the point? Yeah, I think it's interesting if it's interesting, but I'm not going to I'm not incentivized to find out, you know.

1:36:31Vlad CosteaYeah. So, John, this is nerd talk, you know, maybe it's not necessary today. We just had an all time high for Bitcoin. We're in the middle of a bull market, apparently. We're so back. Everyone is enthusiastic. And we went up almost no, it's more than two X since November of 2023. It's pretty incredible. So, of course, I'm going to ask you this. What's your prediction for this bull market? Any prediction? It doesn't have to be price, just some random event happening.

1:37:08John CarvalhoI'll say I think that I'll be disappointed if the top is only $150K. I would like to see a much higher top than that, but I think that $150K within the next year, roughly, maybe a little more. I think it's pretty likely. And that's how I'm looking at things. Other predictions. I don't know, man. Next bear market, I think that, you know, we'll see the vast or drastic decrease in interest in Ordinals or at least the NFT aspects of them. Maybe it'll evolve to something else like shitcoins do.

1:37:55I don't know. But I do think it's a trend. I don't really know what other predictions I would have. I'm just trying to be able to ship our stuff before it ends so we can try to get a little increased exposure for the next bear market before the next bear market. And that's really what I care about most. I'd also like to sell enough Bitcoin near the top to be able to have a down payment on a house so I can stop renting. But I don't really have predictions other than some guesses on price.

1:38:31There will be no soft fork.

1:38:34Vlad CosteaYou are so blasphemous there. You're going to sell your Bitcoin at the top. Oh, my God, you're not a real Bitcoiner. You're supposed to die with your Bitcoin, as Michael Saylor says.

1:38:44John CarvalhoYeah, you never sell your Bitcoin. I know. I tweeted a whole rant about it. People attack the shit out of me. Yeah, I was like I said something like I quoted that tweet, you never sell your Bitcoin. He said this like a week or two ago. And I said, this is not a good look from someone that owns billions of dollars in Bitcoin. And people just didn't get it. They didn't understand why somebody should be hesitant to trust someone that tells you not to sell your Bitcoin when it is like the hugest bet of their life.

1:39:17Like people are just dumb. I don't know what to say.

1:39:21Vlad CosteaYeah. And they're not listening to this show, fortunately.

1:39:24John CarvalhoYeah, I think I said this when we were off air, so I'll say it again. You sell your Bitcoin wherever the hell you want, man. Like it's your Bitcoin. That's why you that's what's cool about it is you can do whatever the hell you want with it whenever you want. But just as far as financial advice, just try to have your base requirement be not to own more Bitcoin than you need to sell in the next bull market. You know what I mean? You have to be able to weather two to four years at least because you might buy the wrong time.

1:39:52Your timing might be bad and you don't want to have to sell the bottom. That's all. But you know what? If you go through enough of these cycles, the bottom is already the top for you. You know what I mean? Like if you paid $600 for your Bitcoin and you sell at $15K, yeah, your timing wasn't so great, but you still did great. And so you have to spend money, especially if all you own is Bitcoin. All you ever do is sell Bitcoin. And so it's just a nonsense thing to tell people to hold forever.

1:40:26It's a nonsense thing to have your idols telling you to never sell. Oh, here's a spicy prediction: MicroStrategy will sell some Bitcoin in some way, whether, you know, indirectly or directly, within the next year and a half.

1:40:46Vlad CosteaWow. Let me tweet this out. MicroStrategy will sell some of its Bitcoin within the next year and a half. That's going to be such a letdown. You know, all this cult that was built around Michael Saylor. Oh, this guy never sells. This guy is such a bull. There's even a song about that.

1:41:10John CarvalhoMaybe they'll be thanking me for mentally preparing them, because this is this is an inevitability. Like, the company has a duty to its shareholders. Companies are not supposed to be hoarding resources. They're supposed to be deploying them. Companies are not supposed to act as proxy investments for, you know, commodities like this. This can't sustain. Eventually, he's going to have to answer to his board. Like, if it goes from like 250K to 100K, that's going to be the second time they watch them leave major profits on the table. That's not acceptable.

1:41:44You know, like they have to at least try to realize some gains and deploy those gains, not just profit.

1:41:55Vlad CosteaYeah, it's funny. It's going to be super interesting when the narrative breaks and people are going to turn on Michael Saylor or not, because he built a cult.

1:42:05John CarvalhoHe already sells MSTR shares. He already sells them. He sold them like two days before he made that tweet. Like, it's nonsense.

1:42:13Vlad CosteaAnd then this was not on my bingo card, but Bitcoiners are buying MicroStrategy shares and they're flexing it, saying, yeah, look at these gains. Like, why are you even here, man?

1:42:24John CarvalhoLike, yeah, I have a tweet that says this too. It's like tweeting about your MSTR gains is not the flex you think it is or something like this. Yeah, I agree.

1:42:33Vlad CosteaI don't call it Master. I think Master sounds too nice. MicroStrategy.

1:42:38John CarvalhoWell, the ticker is MSTR. That's why.

1:42:41Vlad CosteaYeah, I wouldn't call it Master because they're not worthy of it. But yeah, I'm going to say something very blasphemous right now. I would rather see people post about shitcoins and I have more respect for shitcoiners than I have for people investing in stock market and ETF funds. Okay, kill me now.

1:43:00John CarvalhoI could rationalize. I could say I have more respect for people that are sincere, whether it be through ignorance or rationale. Yeah, I would agree on that level. I just think a lot of people that do that are actually doing it through ignorance and greed and the same reasons that Saylor is probably doing it. So I don't know. I want to respect Saylor because he is obviously maneuvering the market and doing well in his maneuver. And I don't want to pretend that's not true. But I also think that people need to just be really careful with idolizing people.

1:43:34It's just not a good idea.

1:43:38Vlad CosteaYep. It's going to be super interesting when the narrative breaks. I'm waiting for that. Oh, I have my...

1:43:46John CarvalhoHe'll have a counter-narrative, man. He'll be like, we sold blah, blah, blah Bitcoin and we have started a new Bitcoin research company. Like he'll find some way. But the fact is not fact, but the inevitability is he has to realize gains and he has to deploy gains if he's running a company. Like the company is meant to grow. And if he can't grow the company, he should be dispersing the gains as dividends. And eventually that's going to catch up with him. Maybe not in the next year and a half.

1:44:19But I just my prediction there is just mostly based on his board and his shareholders already had to watch him leave money on the table before. I don't think they're going to tolerate it again.

1:44:32Vlad CosteaYeah. And I got to tell you, John, something which I respect a lot in this space is consistency over the years. I've told Andreas Antonopoulos when I met him last year in Prague that I have a lot of respect for him. I don't care that he wrote the book about Ethereum because he was never the hardcore Bitcoin maximalist as the culture evolved. He was always constant about his views. He was talking about Litecoin in 2013. He can still talk about Litecoin today. He's the technologist from this point of view.

1:45:08So it's hard for me to crucify him for doing something which is consistent to his views. He was always like this. It's just that people expected him to evolve in a certain way towards a certain direction, and he hasn't. So that's why I think some Bitcoiners canceled him. And I also respect Eric Voorhees because his objective was always to subvert the state and he comes from this libertarian background. He doesn't care if he uses Bitcoin or he uses something else. As long as he avoids taxes or whatever and he finds a libertarian justification for it, he's going to do it.

1:45:45I think I respect that much more than having, I guess, layers for shitcoinery where LBTC, Bitcoin on Liquid, is fine, but WBTC is not fine. I don't know. There are steps in here which are more dogmatic than they are technical. And I also have respect for you because you're consistent in... So I remember when you did the interview with Roger Ver in 2017. You mentioned how you made some efforts to upgrade your nodes and you're always a few versions behind the latest release of Bitcoin Core. You actually said this, and today you're doing the same with Taproot.

1:46:25So you're maintaining your philosophy on how to approach Bitcoin. And I don't feel like you sold out, even though you are in a much better financial position right now. And I guess you have more freedom. You're not silencing yourself because there are people in the space who make a lot of money and then they go quiet. And they never criticize anything else. They try to be friends with everyone. I get the feeling that you're the same John that I interviewed five years ago for the first time.

1:46:57It was my second ever Bitcoin Takeover podcast episode. And you're all out. You're punching left and right. You're not afraid to take stances and express opinions and I like that.

1:47:10John CarvalhoWell, thank you. I appreciate that. And I'll tell you what I tell other people who take the time to say things like that to me. Which is the amount of people that say those kind of things to me is probably one in 20. And the rest of them are that say things to me about what I do. The rest of them are trying to drag me down and get me to stop being this way. And the truth is, I just can't help it. It's not an intentional thing.

1:47:38I just, I am who I am and I do my best to be real. I'm not perfect at it. Nobody is. And when people say things like that to me, what it does is it helps me stay sane. Because I'm just like, okay, that's a reminder. You're not as crazy as everybody's trying to make you feel all the time. And the truth is, I really do feel crazy a lot of the time. Because people are always trying to like, gaslight what just seems totally rational. And when something just makes a lot of sense to you and people are gaslighting you, it's very difficult.

1:48:10It's really difficult. So yeah, I appreciate what you're saying. I'll add, I wouldn't agree with you on the other examples as much. Maybe this sounds arrogant. That's not my intention. So much as when I think about those people, I would have to use a healthy amount of nuance to get to the judgments that you did. The positive judgments. Like, I just can't speak that way about Eric Voorhees. I understand what you're trying to say. And I understand that he does try to portray that. I just don't agree with your assessment there.

1:48:46And then with Antonopoulos, I think there's a whole other aspect to him that's not being mentioned, which is why he ended up ostracized. And it's not just that he did Ethereum stuff. It's that one, some of that stuff was actually contradictory to some of his Bitcoin arguments. And so there was some logical inconsistency. And two, he was very, I don't know what the word is, like intolerant of people actually trying to disagree with him, whether they did it nicely or not, but rationally. And so he's definitely a blocker.

1:49:22He'll just block you for just disagreeing at all. You can't really help him because he's already better than you. And that's something I don't really appreciate. So maybe I can look that way to people too. I don't know. But I do try to be reasonable, even if I don't seem that way.

1:49:42Vlad CosteaYeah, I guess I don't know these two people as well as you do. You have been around for longer.

1:49:47John CarvalhoI don't either, man. My knowledge of them is many years old. They might be better or worse now. I don't know. But as far as I know, Eric Voorhees is still getting in trouble with the authorities for doing things he knew were illegal and knew would get caught by the authorities. So I don't know that he's learning any lessons. I think he's just trying to make money shitcoining.

1:50:08Vlad CosteaOh, my understanding is that he is at least being consistent as opposed to these moving goalposts. For example, I'm going to rant here, but in the case of Lightning, it started from we're all going to be our own servers. And this is Web3. This is whatever. We're going to have our own Lightning channel.

1:50:28John CarvalhoI forgot about the Web3 on Lightning. Jesus.

1:50:29Vlad CosteaYeah, yeah. That was a big deal at the time. And we're going to run everything on Raspberry Pi just to flex, you know, because it's an affordable, low powered hardware. And then it moved to, yeah, this doesn't work. How about we use Wallet of Satoshi sometimes because this one has better routing rates. It doesn't fail payments. It's fine with small amounts, you know, and then it moved into how about we don't run any nodes at all. And we let professionals do this. And then we fall back on LSPs.

1:51:05And I was not even aware of the term LSP until like two years ago, Lightning service provider. And then we got services like Phoenix, which has been doing this for the longest time. But I wasn't aware of it. There was Breeze and there's also Blixt. And I'm not sure if Synonym has something similar. You did say that you have something similar, but you limited the capacity of channels. And there's also something by Bitrefill, which is called Tor or something.

1:51:36John CarvalhoT-H-O-R. That doesn't exist anymore.

1:51:39Vlad CosteaOh, no. Anyway,

1:51:40John CarvalhoThey were the first LSP and I was at Bitrefill when we were trying to make that a thing. But since I've left, I think all the services for that closed.

1:51:50Vlad CosteaAnyway, we went from running our own hardware and software and becoming sovereign to falling back to Uncle Jim. And now the Uncle Jim narrative is very powerful. To the point where we have ecash mints where you can't verify the supply and you're receiving some amount and you don't know if it's real or not. But you have the benefit of privacy. I don't know. It's very strange for me to recognize the culture anymore.

1:52:16John CarvalhoYeah, I think that some of it is driven by investment and some of it is driven again by engineers liking new things, the shiny thing. And when people see companies raising millions of dollars to do ecash projects, they think, oh, well, that's where it's at, whether it's subconscious or conscious. And it becomes part of the culture for a while. I do think it's a trend. Yeah. What are you going to do? It's a valid observation. But, you know, it's better to be evolving than to not be, you know, at least everybody's trying new things.

1:52:55If I want to be positive, at least we're not trying to do the same old narratives, at least. But a lot of it is just narratives.

1:53:05Vlad CosteaYou've got a quick reply on Twitter, and I think it's worth reading just for the laughs. So he said his name is Vox Popoli. P-O-P-O-L-I. And he said, but John, he is the board. He owns majority of ownership stake. He is no longer CEO, just chairman of board. He can tolerate himself. This comes from this guy who talks about your previous Michael Saylor argument.

1:53:30John CarvalhoHe still has shareholders. I don't know. Yeah, I'm not going to pretend to be totally savvy on the dynamics of the company so much as if I were him, I would do that, too. That's that's what I'm trying to say is if I were him, I would sell some within the next year and a half. And I just I would have no qualms about it.

1:53:53Vlad CosteaYeah, it's going to be fun. There's so much hopium floating around and people are going to be so disappointed, but it's fine. It's part of the learning curve.

1:54:04John CarvalhoDon't sound too evil, that, like, "It's going to be so fun. People will be so disappointed." Like, I don't know.

1:54:10Vlad CosteaThis is how you learn. I'm sorry. This is how I learned. I got wrecked. I had to get wrecked. I had to have some...

1:54:18John CarvalhoI like to believe, though, I like to believe that we can learn from other people's mistakes. I have to believe that. I don't know why, off the top of my head, but I do have to believe that.

1:54:27Vlad CosteaAren't you at a point where every cycle looks exactly the same and just as dumb? You also mentioned that you want to sell at the top of the market and you expect the next bear market and people already talk about the super cycle again. And they're like, yeah, of course, Wall Street, ETFs, they're going to sell. They're going to have billions of dollars in every day.

1:54:49John CarvalhoI would love to be wrong about a super cycle. Like, I'm not going to cry about that. I'll just I didn't say I'm going to sell all my Bitcoin. I just I specifically said, look, I have a savings. And when you save something, it's because you have a goal, right? You want to do something with your savings. It can be pay for your future kids' college or whatever it is. You have a goal. All right. My goal is I want to own a house again. I've had one in the past. I don't have one now.

1:55:17I've been renting for a long time. I think it was the right financial decision to be able to hold more Bitcoin. But now I feel like, okay, like I want to figure out what a down payment would cost on a house that I want. And I want to borrow money, borrow fiat. So the fiat becomes my debt becomes lower over time. Like this is all very rational stuff. Like I just think I want to deploy some of my savings to achieve a goal like it shouldn't be crazy.

1:55:43It should be how everybody thinks. I don't know. And yes, I think selling the top is a little bit of a nonsense comment because obviously picking the top is nearly impossible. But I can DCA out instead of DCA. You know what I mean? I can be like, okay, for Q4 to Q1, you know, 24 and 25, I'm going to sell this much every week. And until I have enough to buy a house like or down payment on a house, that's that's a plan. And I challenge anybody to tell me I'm stupid for that because I don't think there's any argument.

1:56:19Vlad CosteaHouses are shitcoin. That's the argument. Anyway, you destroyed my follow up question. I was going to ask you, what's your top signal? But you said you're going to DCA out.

1:56:31John CarvalhoWell, so the top signal, you know, I called it I did call the last top and I called it in person with witnesses because it was just so obvious at the time. The signal to look for is just elation and it will just be everywhere. It'll be like, everybody's getting a Lambo, NFTs...

1:56:50Vlad CosteaNot a Lambo. Supra.

1:56:52John CarvalhoEverybody's getting a Supra, a souped-up Supra. You know, it just, you can just see it all around you. Everybody's telling their family about Bitcoin and how much money they made. Like you're telling loved ones. Telling loved ones is a great sign. I call it the wife indicator. I probably said this in the past episode. But the wife indicator is just like when you're telling a loved one who's not involved in Bitcoin about how happy you are about your Bitcoin investment. It's probably a top signal or at least a local top.

1:57:20And yeah, I just think that you will see elation. You will see people saying the dumbest things. You will see people that you didn't expect to say dumb things saying dumb things. You will see people that are just basically probably going to be poor for the rest of their life. Think that they're not going to be because of this. What's coming next? Like you just you just can see it everywhere. Just idiocy, elation. Yeah, that's that's it. It'll just smack you in the face if you're looking for it.

1:57:48Vlad CosteaDo you know about the Supra cycle, John? The Supra cycle? Supra cycle. Yes. No, I don't know. Oh, no. Oh, no. I have to send that to you. Are you on Telegram right now? I have to show you this. You have to see it. It's incredible. It's Supra cycle on steroids.

1:58:10This is the Supra cycle.

1:58:12John CarvalhoSo everybody gets a Supra and the girlfriend gets a Supra, and let's see. Okay. "Bullshit narratives that failed: S2F, super cycle. Have some fun staying poor. This is where institutions dumped on you." Okay. "GR Supra phase: one Bitcoin equals one Supra." How much is a Supra going for?

1:58:32Vlad Costea65,000 in Romania. It's like 50 in the US. I don't get why, but whatever.

1:58:39John CarvalhoProbably because taxes and shipping costs, but yeah. August 22. "Supra MK4 phase." I didn't even know there were all these Supras. So what's a Supra RZ worth?

1:58:56Vlad CosteaIt's more than 100K right now. And you know why? Because of that movie, The Fast and the Furious.

1:59:06John CarvalhoAny Supra equals one girlfriend. So do two Supras equal two girlfriends?

1:59:13Vlad CosteaThat's up to you to figure out. You only have one other seat in your Supra. You can't have two girlfriends at the same time.

1:59:20John CarvalhoOkay. Okay. I understand.

1:59:22Vlad CosteaBut of course, there is that story that if you already have a girlfriend, she gets a girlfriend. And you have to deal with that.

1:59:30John CarvalhoOkay. Okay. I don't think there's going to be any Supras in my future, but I will definitely let you know if it happens.

1:59:37Vlad CosteaI mean, the rationale behind the Supra is that it's the plebs Lambo. And I know you disagree with the plebs stuff. Maybe you should mention that. But basically, most of us will never afford a Lambo. And anyway, if we had the money for a Lambo, why would you buy a Lambo in the first place? It's stupid. It breaks down easily. You want something that gives you the same feeling of speed at about 10 percent of the price. And that's the Supra that gives you 90 percent of the experience of a Lambo.

2:00:07But it's a Toyota. It doesn't break so easy.

2:00:09John CarvalhoI don't like owning cars, like you noticed. I said I was going to buy a house. I don't own a car. And I didn't say I'm going to buy a car at the top. Like I could buy a car instead or get a loan for a car. But I hate owning cars. And the last thing I want is a high maintenance car. I'd rather have I'd rather have a driver than a car. Let's put it that way.

2:00:29Vlad CosteaYeah, I think that makes sense for you. And I guess you already have apps for that. You don't have to pay a full-time driver. You just pay something when you use it. Yeah, you don't have to pay taxes for parking and maintenance or whatever.

2:00:46John CarvalhoAnd I think it's just gonna get worse for car owners too because they're gonna try to like force things like electric vehicles and that'll come with more regulations and more fees. And then now you're competing with all the people buying vehicles for Uber and things like this and every regulations that are gonna come. With that it's just gonna get more and more annoying until I don't know what. But hopefully I'll still have the freedom to take a car wherever I want and that won't go away before I die.

2:01:10Vlad CosteaYeah, but by the year 2030 you're gonna own nothing and you'll be happy, right? That's the WEF World Economic Forum agenda, which by the way right now praises Bitcoin mining. Did you see that coming?

2:01:24John CarvalhoI saw that. I did, I did. That's interesting. I don't know what's going on there. I guess now that BlackRock is in, it's pumped the bags. I look very much forward to watching. You think the disappointment of Saylor selling will be bad. Wait till we start having market manipulation from Wall Street. They're not going to be any different. Like the problem used to be like China banning Bitcoin. It'll just be like the US banning exchanges or something. Like it'll just be the same shit recycled every cycle.

2:01:52And they're gonna dump their bags on us and people are gonna cry and everybody that leveraged is gonna get wiped out and unfortunately, I don't know how long it will take people to learn the lesson, but there's still a lot of learning to do.

2:02:09Vlad CosteaIt's still the early days, right?

2:02:12John CarvalhoYeah, you're still early.

2:02:17Vlad CosteaI think I tweeted this back. I consider everyone who bought Bitcoin before the ETF an OG, and whatever happens after the ETF is the mainstream financial phase of Bitcoin. And I don't think anyone is OG past this point.

2:02:33John CarvalhoI like that even though it discounts the degree of OG that me or people even longer than me are, I think I'm okay with that because it's a nice little snapshot moment. Like it's like, okay, like if you didn't buy till the ETF, like, you definitely weren't. You're a whole other section, a whole other class, you know.

2:02:53Vlad CosteaYou did tell me at one point that you disagree with the whole pleb label and the fact that people call themselves plebs and they act as plebs and I think that's what you don't like. Can you tell me again?

2:03:06John CarvalhoI also don't like black people calling themselves the n-word. It's for the same reasons. I think that it puts a cloud over your head and it's not, basically it's not aspirational. You can try to take the word back or you can try to redefine the word to mean something proud, but in the end the word is the word and you can't remove what the word actually represents and what it's originally intended to represent. And you always kind of are including that and it's poisoning any good intention you have.

2:03:42And so I just don't think you should, I don't think calling yourself a pleb is cool. I think it's defeatist. I think it's pessimistic. I think it's just not aspirational. People that aspire would never call themselves a pleb. I understand that there's rationale for doing it to be humble and things like this, but we have other words. Like you don't have to use ones that mean that. Like you can just say stay humble and stack sats. Like you don't have to be a pleb. I just don't like it.

2:04:13I like people always trying to reach their Übermensch, you know.

2:04:20Vlad CosteaYeah, I agree with that. But then you have people who create this class system and they say I'm gonna build a Bitcoin citadel. And if you have more than 10 bitcoins, you're gonna be like a king. If you have more than one bitcoin, you're gonna be a nobleman. And if you have anything below that, you're gonna be a humble servant.

2:04:39John CarvalhoI mean, you don't have to say those things for them to be true. Like, yes, there is a ladder and people are on different rungs of the ladder. But I don't like the idea that that has to mean that there's actually a second class, you know what I mean? Like I think it should be a spectrum and yes, I think it's competitive and I love competition. I think it's important. But this, I don't know. I just, people need to think more clearly and be more critical and I don't know, not such idiots and it's not so lazy.

2:05:14So scared.

2:05:16Vlad CosteaYeah, the distinction that I make is that in sociology, you have two big schools of thought. You actually have three, but I'm not going to mention the third one. You have the Marxist one, which is always about money and capital and it's materialistic. And it says that the world is ran by money and it's the capital that controls the world. And as long as you have the money, you can do whatever you want. And then there's the Max Weber school of thought. Max Weber was this German.

2:05:44Actually, they were all German. They invented this. I wouldn't call it science. It's just field of study. But they invented this and Max Weber said that it's all about the ideas and in his thesis, he presented the case of China, which for the longest time has been the most developed nation in the world and more civilized and more technologically advanced than the West. But somehow you had the industrial revolution that happened in England as opposed to China. So he tried to explain to himself why. And he came up with this theory that it was the Protestant work ethic that lifted people and made them work more and become more productive.

2:06:25But ultimately it comes down to ideas and coming up with an idea and having the work ethic to build it. And if you think about it, maybe you have Bitcoin whales today. It doesn't mean that they will always be Bitcoin whales. It doesn't mean that whoever will inherit these Bitcoin is going to be just as frugal with their holdings. There's always this in finance and money systems. There's always this change that happens and it's natural. It's part of capitalism. Where the former rich lose their wealth and there's the new class of rich.

2:07:06And I think it's going to happen pretty fast in Bitcoin as new ideas come along and maybe OGs, the way that people like yourself are defining them, are going to be investing their Bitcoin in other ideas and companies and maybe some are going to be super successful and others are going to fail. I think this is going to be an important factor, but ultimately if you're coming up with a brilliant idea, I think you can get to 100 Bitcoin or 1000 Bitcoin in no time. For example, the mempool.space people, I'm pretty sure they got pretty rich by now.

2:07:44And they're going to keep on getting rich as long as they add features that people want and they're ahead of the curve.

2:07:51John CarvalhoNo Bitcoin startup is getting rich unless they're an exchange. And even those, like the ones that only sell Bitcoin, most of those aren't getting rich either as far as startups go. So don't assume, I mean, I don't know their finances, but I would never be assuming that mempool is getting rich. Their ability to make money is very difficult as far as I understand their business models. It doesn't mean they have no business models, but I don't think that these guys are laughing their way to the bank with hundreds of Bitcoin because of this endeavor.

2:08:24That doesn't mean you're wrong. That example requires some maybe pushback. I do think, yeah, you can make a lot of money. You can gather a lot of resources if you solve problems at scale, right? And so if you provide a product or service to people at some kind of scale, you can make lots of money and that will probably always be true unless AI really does cause dystopia people are scared of, which I doubt as well. Yeah, I don't know about all those philosophies that you're mentioning with Max Weber and how these things are, whether they're capitalism or what they are.

2:09:04I'll mention that I feel like both of those seem to lack an acknowledgement of how violence plays a role in structuring society. That's one thing that I think about a lot when I try to think about what Bitcoin actually fixes and what it doesn't and what is wrong with society and how it might be addressed and I always kind of hit a really big wall when you just realize that most of the time two men can outnumber one man and that just the physical dynamics of having a tribe that's willing to commit violence with you, that's just always going to be true, I think.

2:09:41So what do you do about that and how do you structure society when that's true? I have a feeling the best guess is what you're looking at. Like, we have evolved society over thousands of years and this is what worked, you know, and maybe it won't be what always works, but I think it will always be a echo of what we have today. And so I don't think Bitcoin fixes government or fixes violence and these kinds of things. Anyway, I have to get going soon. Do you have...

2:10:14Vlad CosteaYeah, this was beautiful for two reasons. Let me tell you why and then you can go. First of all, you reiterated the argument that DeRose was making when he was debating Saifedean like six or seven years ago, and that was fun. It was like a deja vu for me. And secondly, I tried to make it aspirational. Maybe they don't have hundreds of Bitcoins. Maybe I'm wrong, but just the idea that you can come up with something better and you can still make a lot of Bitcoin. That's what I was trying to say.

2:10:43And then you took it down, you know. You basically brought it to the ground. You made it rational and you said, no, it's not like that because their business model is like this. That's so you. So thank you for doing this.

2:10:57John CarvalhoOh, thanks for having me, man. It was more fun than I thought it would be. I don't mean that as an insult. I mean that as a compliment. And I appreciated it and we should do this more than every four years.

2:11:08Vlad CosteaYes, sir. Have a nice evening. Enjoy the all-time high.

2:11:13John CarvalhoI will, you too.