S15 E49: Edan Yago on BitcoinOS, Permaware & Scaling Bitcoin

0:46Vlad CosteaHello there and welcome to the Bitcoin Takeover Podcast. This is Season 15, Episode 49. And we are live across all platforms, across X, YouTube, Twitch, Facebook, I think also Nostr. And we are talking about Bitcoin as the financial operating system with Yago, who is a contributor to the Sovryn project. You have already heard him in the first half of the Bitcoin Takeover Podcast Season 15. And when he asked me if he can join the show, I was thinking, didn't you already join not so long ago? It was about nine months ago that we did that interview in Argentina.

1:22But in the meantime, there is so much that he did and so much that happened. And while we were in Nashville, he was able to broadcast the world's first ever transaction that also includes this ZK rollup verifier. And it's super exciting. I want to talk about all of this. And welcome, Yago.

1:43Edan YagoHey, thanks for having me back.

1:46Vlad CosteaIt's really fun that this, I think, is the first interview where the guest is standing. And I guess you'll be using your hands also.

1:55Edan YagoGot to use your hands. It's a very exciting, very important time for Bitcoin. So we got to all got to get up and do our part.

2:03Vlad CosteaOkay, so I noticed in the meantime, since we last spoke, and you're very bullish on Rootstock, and you're saying that you're building the future of DeFi with Sovryn. And then you also co-authored this paper about Bitcoin as the operating system for money. It's called BitcoinOS. On Twitter, the account is BTC underscore OS. And you can check that out to learn more about what this project aims. But how would you present this in a nutshell? What is BitcoinOS?

2:36Edan YagoSo BitcoinOS is the operating system for Bitcoin. It's the tools which turn Bitcoin into a shared computation system, which turn Bitcoin into a smart contract system. And what that means is, if you think about computing, right, computing is the most powerful and simple thing in the world at once. All of computing is just zero and one. And from zero and one, we can build everything. We can build the internet. We can build software. We can build AI. And up until now, we've got Bitcoin. It is a shared computing system. But it is extremely limited in what it can do.

3:19Right now, with Bitcoin, basically, you can use it to transfer mostly BTC from one holder to another. What we can do with BitcoinOS now is everything. We can allow all computation to be executed and to be secured with Bitcoin. And what that means for Bitcoin is, I think it's the most profound possible thing. It means permissionless upgrades. It means developers can now do anything that they want with Bitcoin without having to ask permission from anyone else and without impacting the Bitcoin consensus code or the rest of the network.

3:58And that means scalability. It means rollups. It means smart contracts. It means DeFi. And I know this is of particular interest to you. It means native privacy.

4:11Vlad CosteaI'm happy that you emphasized on privacy. But let's take a step back because you have been working with the Rootstock guys for a while. And as far as I'm aware, the first ZK rollup which you broadcast on the Bitcoin mainnet was using BitVMX. And I've also... Or did it?

4:29Edan YagoNo, no, no, no, no. So you mentioned the paper that I wrote. We published in April a paper called BitSNARK. It's actually its full title is BitSNARK and Grail, Scalable Computing for Bitcoin. And what we described in that paper was two different things, which were one builds the other. So the first thing we described was the ability to verify ZK proofs, so zero-knowledge proofs on Bitcoin using a system called BitSNARK. And the second thing we described was Grail. Grail is the ability to bridge computation, to bridge BTC into different environments like different layer 2s, bridge it back, bridge ordinals, bridge runes, and to do that trustlessly.

5:22But even more important is to actually have computation for Bitcoin occur in any other environment in layer 2, but actually to interact with and execute on layer 1. So it's the ability basically to move BTC into other environments and also allow other environments to impact Bitcoin. So one example of this, just to sort of make that less abstract, one of the things that we've been talking about in the Bitcoin community for a long time now is covenants, right? Like how can we create conditional payments in Bitcoin?

6:05And everyone has been talking about, okay, which do we do, OP_CTV, do we do OP_CAT? And what we did at Nashville on mainnet is we showed how we can actually emulate conditional payments, emulate covenants without any changes to Bitcoin at all. And we did that using BitSNARK.

6:28Vlad CosteaOkay, so you defined BitSNARK and you explained what it does, but my next question is how is BitSNARK different from BitVM and BitVMX? Because I've had both Robin Linus and Sergio Demian Lerner on the show and they both explain these systems. So how would you say that BitSNARK different differentiates itself from the others?

6:51Edan YagoSo all of these systems are built around a similar concept, which is that inside of a tap tree, you can build these tap trees or these potential transactions, these potential transaction outcomes that are built as trees. And you can have a huge number of potential outcomes. And so what BitVM described and what this entire family of developments for Bitcoin does is it takes these potential outcomes, turns them into zeros and ones, and uses that to basically write a whole piece of software, a smart contract, into a Bitcoin transaction.

7:38So if you can write a smart contract into a Bitcoin transaction, now you can start doing very sophisticated compute. And one of the things that we showed is that you can verify ZK with it. The difference between BitSNARK and all of these other systems is mostly around the way that we implemented it. So instead of trying to implement a general purpose compute system, we implemented a system which is a little bit more like an ASIC, right? It's designed instead of to be a general purpose compute, to be a specific software program, and is, as a result, vastly more efficient, over a thousand times more efficient, and much simpler, easier to audit, as a result, easier to keep secure, and perhaps most importantly, was possible to actually develop.

8:32So, you know, Robin has since moved on from BitVM. I think he concluded that BitVM would end up too large, too complex. And so we demonstrated, and so he's moved on to trying something else, which he's now calling BitVM2, and we demonstrated that this original idea actually could work and implemented it on mainnet.

8:57Vlad CosteaI think that's really beautiful because you basically took something that was designed to be general purpose, you made it, you tailored it for something that is basically the creation of covenants that we believe right now that requires a soft fork in Bitcoin, and maybe that the soft fork would improve something, but you were able to work around it and emulate a type of software that is able to generate that sort of conditional Bitcoin transaction. And I think it's beautiful. You also mentioned something about TapScript, which is derived from Taproot, right?

9:38Edan YagoYes, so without Taproot, none of this would have been possible. And I think there's something really interesting and exciting about that. So our view is that Taproot gives us a huge amount of unexplored design space. Taproot was announced, there was this big upgrade to Bitcoin, it happened almost four years ago now. After it was introduced into Bitcoin, there was a very long period of time where it seemed like it was totally useless. No one was using it. And then, about a year and a half ago, Ordinals.

10:16Casey introduced Ordinals. It was the first sort of real new use case that was introduced to Bitcoin, and it didn't need a change to consensus, it didn't need a new soft fork. That was extremely exciting. But I think that was absolutely the simplest thing that we can do with Taproot. There's so much more to explore. And I think that's really important for how we think about Bitcoin, because in my mind, I have two ideas which most people think are contradictory, but I don't. So I'm on the one hand, I'm a Bitcoin accelerationist.

10:52I want to see Bitcoin do much more. I want to see people be able to do much more with Bitcoin. I want to see Bitcoin-backed stablecoins. I want to see people being able to trade, borrow, lend, earn yields, build an entire financial system on Bitcoin, which doesn't require any centralized parties, any intermediaries. But on the other hand, I don't want us to change Bitcoin, because I think that the number one thing that makes Bitcoin special is the fact that it's permaware, the fact that it's unchanging, the fact that people can't change it.

11:25If you think about Ethereum changes all the time. You've got this council of wise philosophers, and they think, all right, which EIP should we add? How do we tweak the monetary system? How do we tweak the code? And as a result, it's become like Windows 95. It's this massive spaghetti code that no single person in the world fully understands, that can't be reliable, and it's not something that you know will be the same in 30 years as it is today. In fact, you know exactly the opposite.

11:59You know that in six months, it'll probably be quite different. That is not a stable system in which you can build global consensus. Bitcoin is, because Bitcoin is something new. It's not software, it's not hardware, it's permaware. One of my fears is that as accelerationists start to become more popular in Bitcoin culture, they're going to start pushing for more changes to Bitcoin, new BIPs. I think that that's a very big risk to the fundamental philosophy and the fundamental attributes that make Bitcoin so powerful and so special.

12:35Vlad CosteaYeah, I understand that. I guess there's also a trade-off, because it's more easy to do this stuff if you do a soft fork as opposed to code around the limitations of Bitcoin. I was going to ask you, how does this work with the limited scalability of Bitcoin? We have these limited block sizes, and it seems like nobody is really interested in extending the capacity when those storage and bandwidth have become more affordable in recent years. So how does it scale?

13:14Edan YagoWell, my view is that there's a huge amount of potential scalability in Bitcoin, but that that scalability is not going to come from increasing the block sizes, and it doesn't require soft forks. The way the scalability needs to work is not by shoving more and more things into layer one. I think that that is an absolute mistake. I think the way we build scalability is by being able to move more and more things off of mainnet and start using mainnet as a settlement layer. One of the powerful things is the fact that we now can verify ZK, we can verify succinct proofs on Bitcoin, means that we can take a huge number of transactions, and we can basically compress them by aggregating them into a single proof and writing that proof to Bitcoin.

14:09And when we write that proof to Bitcoin, these are transactions which theoretically seem to be occurring sort of off-chain, but they're not. Because once they get written to Bitcoin, because the ZK with which they're written to Bitcoin can be verified and can actually execute actual Bitcoin transactions, it can actually net out those transactions and redistribute Bitcoin on that basis. So you can have thousands of transactions and just a single transaction do the final sort of netting out to the redistribution. That turns Bitcoin into what I think a lot of people have thought Bitcoin would eventually become, which is a settlement layer.

14:48And I think that's the way we scale. And an even more powerful way of doing that is with rollups. So rollups are not just taking transactions and aggregating them, but also adding additional compute, additional sort of rule sets to those. So you can have an environment which is like fully compatible with Solana or fully compatible with Ethereum, which is Turing-complete smart contracts. And now you can have those transactions, not just be random transactions from one person to another, but they can be a DEX. They could be a high-frequency trading environment.

15:21They could be borrowing and lending Bitcoin and all of that. The computation can happen off-chain and the end transactions can occur on Bitcoin. And so that adds not just a huge amount of scale, but a huge amount of basically infinite functionality.

15:39Vlad CosteaI think it would be useful for some listeners to also define what ZK proofs and ZK rollups and what ZK stands for altogether. But before that, I got to thank the 260 plus people who have been listening to this live. You guys are really great. And I got to remind you that this show is sponsored by SideShift.ai, which is this website where you go and you can swap coins. Basically, if someone offers to pay you in stablecoins or something that you don't really want to hold on the long term, you can swap that for sound money or whatever you consider to be more valuable with only a few clicks and without registering and without doing anything.

16:19It's very cool. The fees are pretty small, and it's convenient. And I want to thank SideShift.ai for sponsoring this show. Also, check out StarkNet, which is this implementation of ZK proofs, which are called STARKs. They're not ZK-SNARKs. They're ZK-STARKs. I have an episode with Eli Ben-Sasson about that, how he was able to create the cryptography behind Zcash without the trusted setup. And how this can come to Bitcoin. But unlike your stuff, which is emulating the covenant setup, this ZK, I was going to say snark, but it's actually Stark setup requires OP_CAT.

17:01So the message from StarkWare, which is the software implementation, is consider activating OP_CAT on Bitcoin. And you're going to be able to do a lot of stuff with zero knowledge cryptography, including being able to sync a node within seconds on your mobile phone just by verifying the ZK proof. So check out StarkWare, SideShift.ai and think whether or not OP_CAT is useful to you. And now back to you, Yago. How do you describe and how do you define all of these terms?

17:35Edan YagoWell, I mean, it's a very big and complex space. But basically zero-knowledge proofs are a family, a type of cryptography that allows you to prove that you know something without having to provide the inputs for that proof. So one example that people often use to describe it is, imagine you're going to a club, and you want to prove that you're old enough to drink, and you can just scan your ID, and it gives a green light or a red light, and the green light says you're allowed to drink, the red light says you're not allowed to drink, but it doesn't tell anyone your actual age. Right?

18:21So that would be sort of like a metaphor for a zero knowledge proof, right? Instead of just showing you here, I'm 26. I just give you green. Now, why is this important? Because one of the interesting things about ZK as a result is it's succinct. It's very, very compressed. So remember I was talking about zeros and ones? In the example after going to the nightclub, instead of giving you potentially infinite amount of information, my name, where I live, what my exact age is, and in fact, I don't even say my age, it says my birthday, it just gives you red or green, but it's giving you the same amount of relevant information.

19:04So we're actually using ZK right now mostly to compress and prove the validity of a certain transaction so that we can say, look, we were able to present you with the proof that we can send Bitcoin now to these different parties, or we can send an ordinal now to these different parties, or we can mint a new ordinal, which is based on information that was happening outside of Bitcoin. So it basically gives Bitcoin eyes. For the first time, Bitcoin opened up eyes and was able to see things that are happening outside of the chain, but its eyesight isn't amazing, so we need to be able to provide it with highly precise and compressed information.

19:56Vlad CosteaOkay, that's a very nice definition, but do you think stuff like ZK-SNARKs and ZK-STARKs can be created using the BitcoinOS layer that you co-authored?

20:13Edan YagoYes, that was what we did on mainnet, right? So on mainnet, what we did is we showed the ability to use this to create conditional payments. We showed the ability to use it to lock up both BTC and Bitcoin native assets, in this case an ordinal. And then we showed the ability to, without having the instruction in advance of where it would be sent, create an arbitrary address off-chain and then send it to that arbitrary address, prove that there's a right to send it to the arbitrary address. Now, that's really profound, because if you think about it, that's a very, very simple activity but already is doing so many things that Bitcoin without BitSNARK is not able to do.

21:00So, one with, one thing that was created was a UTXO that had no owners. It wasn't a multisig, it was a UTXO that was basically owned by the proof of the ZK-SNARK, and so that created a smart contract that owns the UTXO for the first time instead of a human being. That's one thing that we can't do with Bitcoin. Then another thing that you can't do with Bitcoin is you can't have BTC being sent, based on some condition that's going to happen in the future, to an arbitrary address.

21:33You have to say, look, I'm willing to send Vlad BTC using a DLC, but it can only send it to Vlad. You have to know in advance who you want to send it to. We can send it to an arbitrary address. Then the third thing is this was an activity which occurred based on a proof that actually, a mathematical proof that occurred off chain. It gave Bitcoin for the first time a way to see computation that wasn't even happening on Bitcoin. There's a lot of stuff happening there in a relatively simple demonstration of this power on mainnet.

22:14What this gives us the potential to do, and we will introduce over the next few months, is the ability to use it to take an entire environment, a whole new system, almost like a new chain, although it isn't its own chain. It's like a child of Bitcoin, which will actually have EVM will be compatible with Ethereum, you'll be able to do anything that you can do on Ethereum on this. And that will use Bitcoin instead of, we'll use BTC instead of ETH, we'll use runes and ordinals, and it will be able to transact on Bitcoin.

22:49You'll be able to have DeFi applications or DAOs or whatever, but ultimately, they'll be able to control Bitcoin on layer one. All of this can be done very, very scalably, because you basically only need to prove the state. All of the changes get aggregated once every 10 minutes into a Bitcoin transaction.

23:15Vlad CosteaI think this is very beautiful, because it was built without asking for permission. It exists on Bitcoin, and there are a bunch of people who would not want this sort of stuff to exist on Bitcoin, and they opposed every attempt to soft fork and every new idea. They said it's going to enable some MEV opportunities for miners, which means that it's going to give incentives to miners to pick certain transactions or leave others in the mempool based on criteria about how much money they might be making in the future.

23:49So basically, it messes up the incentives that currently exist in Bitcoin. And I was going to ask you, what is your reply to people who say you're going to create this situation where miners are no longer incentivized to work according to the rules that are currently known? And do you believe that base layer privacy would make the situation any better to make miners not know anything about the transactions?

24:17Edan YagoSo I think that's an excellent question. And I think the answer is actually no. So the reason the answer is no is because it's true that maybe you could see front running, right? Like MEV is sometimes used if there's an exchange and somebody wants to make a trade, then someone who's like a validator can front run that trade and sort of use various kinds of front running attacks, like a sandwich attack, and make money at the expense of that user. But all of that would happen in an environment where people agree to participate in it.

24:57It wouldn't happen on mainnet because on mainnet all that happens is that transactions go through or they don't go through. And the question whether or not they go through or don't go through has always been based on a very, very simple rule, which is who's paying the most? Who's willing to pay the priority fee? None of that will change. The transaction ordering actually on Bitcoin mainnet will stay the same.

25:23But what I do think will happen is that the block space is going to become much more valuable. And so it will become more expensive to transact on mainnet. And in fact, I suspect that in two years we'll be talking about Bitcoin block space because it's only 4 megabytes every 10 minutes. We're going to be talking about that as the single most rare, scarce, valuable digital asset, digital real estate in the world, right? And it's going to become even more easy to explain to people why BTC is valuable because it will be the only currency that you can use to actually buy this extremely scarce computing resource, Bitcoin block space.

26:07Vlad CosteaI mean, that sounds nice for the miners. I'm pretty sure that everyone who is mining and listening to this is getting excited, thinking that the security budget issue might be solved by the fact that we have more expressive Bitcoin transactions, which are able to do much more than just send money from one input to one output immediately as soon as they get added into a block. But you mentioned something interesting and it made me wonder. Basically, there is a Bitcoin block every approximately 10 minutes. And how do you imagine or envision DeFi working in a world where you have to wait 10 minutes for a confirmation?

26:48Edan YagoSo you don't actually wait 10 minutes for confirmation. You wait 10 minutes for settlement, which is a totally different thing. And you can actually explain this quite easily by thinking about the NASDAQ, right? When you trade on NASDAQ, you are trading close to instantaneously. If you trade stocks, you do it close to instantaneously. But in actual fact, the settlement that occurs between the different big brokers and the prime banks of moving the ownership of all of these stocks around, that takes, let's call it, three days, right? Sometimes longer. So with Bitcoin as the settlement layer, instead of it taking three days, it would take, let's say, an hour because you need six blocks.

27:35So there are different designs for this. But the most common design right now for a rollup is that you have something which is, in some ways, is the best of both worlds. You have a very, very big machine. It is centralized. It can be replaced. But right now, it sequences. It orders all of the transactions. And it does so transparently, so it can't really cheat. And it doesn't create consensus, because it needs to then take that sequence and write that to Bitcoin. And so that gives you very, very high speed, very difficult to cheat, and with the right construction, basically impossible to censor transactions, but very high throughput, very high scale, which then gets written to Bitcoin and settled on mainnet.

28:28And so that becomes another scaling mechanism that you're able to then use with Bitcoin. It also means that you can get very, very fast and very, very cheap transactions. And it means that you can do complex transactions like you were describing, like trading.

28:43Vlad CosteaFor the longest time, the proposal to scale Bitcoin and the concept that was making people feel optimistic was the sidechain. And this idea that you're going to have this parallel chain, which maybe has different rules, and that one is going to take the load off and maybe also provide extra features. But it seems like over the last year or two, there's more talk about the rollup, and especially the zero-knowledge rollup. And I was going to ask you, how would you define the difference between them? And why did you choose the rollup as opposed to a sidechain to build this DeFi on Bitcoin?

29:26Edan YagoWell, I think in many ways, rollups make sidechains obsolete. And the reason is that a sidechain is at least all of the sidechains that have actually been constructed, they have their own consensus mechanism. Stacks has staking of the STX token. Rootstock has merge mining with Bitcoin. But they all have a separate consensus system, so they're less secure than Bitcoin. They don't have a tight coupling, so they don't settle transactions to Bitcoin. So they can't actually impact anything that occurs on the Bitcoin chain. And they don't have trustless movement of Bitcoin and Bitcoin assets between the sidechains.

30:12So it's more like a really good friend for Bitcoin, maybe, but it's not really an extension of Bitcoin. And rollups are an actual extension of Bitcoin. In fact, with the right technology and with the right UX, you won't know the difference. You'll just be using Bitcoin. That's why we kind of call it BitcoinOS. The whole thing will feel like one unified platform, not many, many different chains.

30:41Vlad CosteaBut do you believe that if we had better sidechains, like drivechains, you would also have much better, more affordable rollups?

30:52Edan YagoI don't think so. Look, I was a huge supporter of drivechains. I was a big supporter of BIP 300. I really think that Paul is a warrior and have huge respect for the fight that he's had. But in some ways, I feel like that fight should be over now, because what he was asking permission to try and do with drivechains, I think we can now do permissionlessly and even better with rollups and with just general compute in Bitcoin.

31:30Vlad CosteaWell, that's a nice statement, because this podcast is also sponsored by LayerTwo Labs. I'm not joking.

31:37Edan YagoWow, your segues are amazing.

31:42Vlad CosteaSo it's funny because Paul is still fighting this fight and he is still trying to push BIP 300 and much more than this, they have these sidechains that you can already test. They have zSide, they have an Ethereum sidechain, they have an assets sidechain, which is supposedly something like Namecoin, and they also have a prediction market sidechain. So you can download the software, it's available on the Bitcoin signet and give it a try, see if that's something that you would want for the future of Bitcoin.

32:12So I'm not going to shill BIP 300, I'm not going to say it's perfect, but there is already the software for you to test if you are into that. But it does require the permission of pretty much every Bitcoiner out there to activate the soft fork or the miners to do it and then the nodes to just watch.

32:36Edan YagoSo Vlad, it feels like you've brought me on to take a punch at every single one of your sponsors.

32:46Vlad CosteaWell that's not my intention, but at the same time I'm happy that there is real competition and there is a way to accomplish things in a more easy and elegant and most importantly permissionless way. And I'm pretty sure that there are some trade-offs when you emulate as opposed to having this directly on the base layer as a functionality.

33:10Edan YagoYes, there are trade-offs and I think I should mention the big one. But I think it's very, very, so even though this is the big trade-off, I think it's actually quite small and almost irrelevant. So because we're not using an opcode, none of this is actually being verified by Bitcoin miners, at least not directly. The transactions that occur are being verified by Bitcoin miners, but the actual ZK is not verified by Bitcoin miners. The way it is verified is by a system where you have a large number of operators and maybe you could be an operator or anyone can be an operator.

33:56And if one of these operators tries to put in a transaction which is false, any one of the other operators can challenge it. And if they challenge it and the other transaction was false or wrong in some way, the person who's challenging it will always win. They'll always prove that it was a false transaction and they'll get some money as a result.

34:24And the reason I can say it will always happen is because it's cryptographically, it's mathematically guaranteed, but there needs to be someone to challenge. And so there's a new kind of trust assumption that we're introducing to Bitcoin, which is, we call it the honest singleton. So you know the honest majority, so like if you have like a multisig or if you have like a pegged Bitcoin bridge, then you need 11 out of 20, like with liquid, right? Liquid is a sidechain. You need, I think it's 11 out of 20 can make any transaction.

35:04And so long as you manage to keep at least 11 honest, then the system holds. With our system, you need one of n. So if there are a thousand different operators and just one of them is honest, and that could be you, then the whole system cryptographically maintains its integrity. So that's the trade-off. We're adding an additional trust assumption to Bitcoin, which is that within the BitcoinOS operating system, there's at least one person who's using it who is honest.

35:37Vlad CosteaYeah, there was someone on Twitter, his name is Hobart, and he did ask me to address this. He said, can you ask him to clearly differentiate what a ZK verification is? Because it's not an optimistic verification of a proof.

35:51Edan YagoSo we performed, so this is sometimes referred to as a optimistic verification. And the reason it's called optimistic is because if nobody challenges it, because it's probably correct, then it just sails through. It's very fast, it's very cheap. If someone challenges it, then it becomes more expensive and you need to go through this challenge process. And so basically, you're sending out these transactions optimistically because you know they're correct and you know they're not going to be challenged. What we performed, this one of n system, this BitSNARK system from BitcoinOS, this is, in that respect, an optimistic system.

36:38And so I would disagree with him. You can verify things optimistically. The optimistic part is when you don't challenge. And then if you do challenge, then you actually go through the computation of verifying the ZK proof directly. And that is absolutely a verification.

36:59Vlad CosteaNow I got to give a shout out to your assistant because she did a very good job. And I want to get this on record that she was very involved and she even sent me a list of questions which I didn't use. But I think they're interesting and I'm going to use one of them after I finish.

37:15Edan YagoSo just one thing, I don't have an assistant. I'm not that important. Someone who's been working with us to try and help us get the word out by connecting with different protocols.

37:29Vlad CosteaI also want to say hello to my girlfriend who is in the chat on Twitter right now. Can't wait to see you in two days, Ani. And I want to give a shout out to the 460 plus people who have been watching this. If you're going to retweet this, maybe we could get to 1000 by the end of the stream. And while you retweet this, if you do want, of course, I'm going to tell you about the last ad of this episode, which is for Hodling.ch.

37:54Hodling.ch is a company from Switzerland which specializes in giving you the right advice for self-custody. You know the story about not your keys, not your coins. And they're going to tell you, if you go to them, what kind of devices you should be using, what kind of multi-sig you should use for your particular use case. If you're a company that wants to add Bitcoin to the balance sheet, then maybe you should also have some devices like hardware wallets to sign the transactions. And if you don't know how to set this up, they're going to offer the right consultancy for you.

38:28So check out Hodling.ch. Thank you very much, Yago, for sitting through my advertisements. And now let me get into the questions which your assistant suggested. There is something that says the economics of Bitcoin mining will be dramatically changed as miners are now able to earn the fees and all additional activity that is occurring, not just on simple peer-to-peer transactions. So this is a bold statement. Do you believe that this world of DeFi that's going to be brought into Bitcoin is going to be much bigger than what we already have with basic one input to output transactions, which are most common?

39:09Edan YagoMuch, much bigger. And I know this because if you look at Ethereum, which is going to be a much smaller ecosystem than Bitcoin, it generates vastly more transactions and generates vastly more revenue. So Ethereum stakers and the various Ethereum rollups and sequencers together earn probably 2x what Bitcoin miners earn in terms of just dollars. So it's going to mean a massive shift in the economy of mining and the scarcity and value of Bitcoin to us.

39:46Vlad CosteaI mean, we did see this with Ordinal inscriptions, right? That Casey created something that destroyed the multi-billion dollar VC funded industry. Not destroyed, but basically moved it to Bitcoin. And now NFTs haven't recovered on Ethereum or Solana. But my question is, do you believe that in the case of DeFi, it's going to be the same once it becomes possible to do the same thing on Bitcoin? They're going to give up on all the infrastructure that they built and redo everything from scratch. Because to some degree, it's not very realistic because they invested so much money in this, what's it called?

40:24Solidity smart contracting functions. And they paid developers a lot of money to do that. And now they're going to be able to build it on Bitcoin. But is it portable one to one? Can you move the smart contracts from Ethereum to something which uses BitcoinOS?

40:43Edan YagoYes, in just a few weeks. With Sovryn, actually, we're going to, I mean, so this is probably in around three months, we're going to demonstrate the ability to port smart contracts directly from Ethereum to Bitcoin. So absolutely. And it's going to, I mean, think about it. If you're building a dApp on Ethereum, right, and you say, all right, look, the Ethereum ecosystem right now is suffering. There's this big new ocean of opportunity, which is Bitcoin. All I need to do is take my deployment script and run it on Bitcoin.

41:16And I can be there and provide, if I'm Aave borrowing and lending to Bitcoiners, I can let people trade ordinals and runes and BRC-20s and BTC and stablecoins and Bitcoin and new tokens being issued in Bitcoin. And that's where all of the excitement and action is going to be. Everyone's going to do it. The thing about all of the development that has happened on Ethereum thinks of itself as the network, but actually, the real network effects are Solidity, the EVM that allows people to write smart contracts, which has been replicated many, many times.

41:52And now, we bring that back to Bitcoin. I think every single innovative industry has gone through the same two phases. At the beginning, there's massive fragmentation, right? So when cars were invented, you got 110 different car companies. And we're seeing the same thing now with electric cars, right? Just in China, there's probably like 20 different electric car companies. And then after the first 15 years, that consolidated to just GM and Ford. With oil, there were 1,000 different oil companies, and that consolidated into Standard Oil. With the internet, there were thousands of different intranets.

42:34There was AOL, and there was Comcast, and all kinds of things, and that consolidated into just the internet. And we see this time and time again. You go through this first phase where this new category is created, there's massive fragmentation. So we have thousands and thousands of layer ones, hundreds of thousands of tokens, and then that's going to consolidate because we now have the technology to allow it to consolidate, to allow Bitcoin's network effect to truly take hold. So 10 years from now, there's going to be, you know, we're all going to be talking about one chain and that's going to be Bitcoin.

43:13Vlad CosteaThat's interesting because yesterday I posted this very controversial tweet and it started some interesting conversations and debates. Basically, there is this meme that everything is going to get divided by 21 million Bitcoin. And I started thinking more about Eric Voskuil's theory, which says that basically Bitcoin, given its limited capacity, is scaling through the various forks that were created using its code base or its design choices. So basically Monero is just another Bitcoin that adds privacy, and Litecoin is just a faster Bitcoin that also has this extension block for privacy.

43:53And basically, if these networks are going to become valuable and include part of the transactions that are useful for people in the future, we're going to run into a situation where it's not just 21 million that are buying everything around the world, but it's also going to be 84 million Litecoins, maybe 50 million Moneros. And if Ethereum is still around, it's going to be like 100 something million, not Moneros, Ethers. So do you believe that in the future we're only going to have BTC and everything is going to get denominated and priced in it?

44:32Or do you see a situation where there's always going to be a couple of alternatives where you can build stuff for a lower price or you can have features that maybe are not popular to get integrated into Bitcoin?

44:46Edan YagoI think that there will be alternatives. You know, even today, we have meshnets, and we have intranets, and we have private groups, private networks. But ultimately, everything is on the internet. That's like where 99% of the activity is. I think it's good that there continue to be experiments outside of Bitcoin. I think it makes the ecosystem and crypto as a whole much more robust. But the logic of network effects is very, very powerful. And the logic of a monetary network effect and its liquidity effect is even more powerful than a regular network effect.

45:20And so it's true that we had to have Litecoin, and we had to have Monero, and we had to have Ether, because each of those emerged as an answer to the same question. What is something that Bitcoin can't do? And if the answer to that question becomes nothing, if Bitcoin can do all of those things, if you can build Litecoin or Monero onto Bitcoin, then it's just so much more attractive to use it. And I said we would talk about privacy. I think one of the most powerful things about what we are building here is the ability to natively perform private transactions on Bitcoin.

45:57I mean, the number one thing that you can do with ZK technology, the primary reason it was invented, was to create privacy. So you can lock up BTC in this address, which is owned by no one, but has multiple people sort of depositing into it. They can perform all kinds of secret transactions and then redistribute it to all kinds of other addresses. This is something that we can do practically now. I mean, basically, with what we already have demonstrated on mainnet, this is possible. And so this is such a more powerful form of privacy than we can get with mixers or any of the systems that we have now.

46:44It's natively built into Bitcoin. It's totally uncensorable and unstoppable. A big motivation for me is building this. And so while we don't have a sort of commercial application of this, but this already now, all of the pieces for it exist in Bitcoin today. And we're going to be bringing, I guarantee you, we will bring this kind of privacy. And in fact, I'll go a step further. What I would like to develop, and I expect I will be part of developing, and maybe bring it into the world even as soon as within the next year, is the ability for people to create private addresses on Bitcoin, basically on like a Bitcoin rollup, which is designed around privacy, and transact everything from that.

47:36DeFi, transacting. The reason we're building BitcoinOS is we're creating this unified system. So you can have like a rollup which is focused on DeFi and DEX trading. And you can have this other rollup. Let's call it the data security rollup. It's a UTXO system. You keep your Bitcoin in the UTXO. And you can transact on that DEX. And you can transact in a DAO. And you can buy and sell different kinds of tokens. And all of that activity is invisible to anyone except for you.

48:06They can see the activity, but they don't know who's doing it. That is absolutely within reach. And it is something that's going to be built into BitcoinOS. It's one of the most powerful and important things we can do.

48:17Vlad CosteaYou described something interesting, basically recreating the account-based model, where everyone is going to have this one address, which they will be using for all of their transactions. And you say they're also going to have some privacy built in.

48:32Edan YagoYes, although I think we will do it with a UTXO model, not an account-based model. But yes.

48:37Vlad CosteaTo me, that's interesting that you're taking inspiration from Ethereum. But before that, there was Counterparty. And I think that one doesn't get too much credit. Counterparty came to Bitcoin in 2014 in January. It was the first meta-protocol. I think that was the way in which they were referring to it at the time to create assets. They were not even talking about tokens at the time. They were thinking about assets and shares and being able to pay dividends to people. But it was just a standard OP_RETURN transaction, which was a way to embed some small pieces of data to represent the tokens and the transferring of ownership.

49:18And what you're doing right now is more complex with zero-knowledge cryptography. And there's going to be some privacy. There's also going to be some scalability benefits. And I was going to ask you, what do you think the cost of a transaction is going to be within this system? Where on one hand, you're dealing with Bitcoin, which is going to be expensive. But at the same time, you have this data compression that's going to make it more efficient.

49:45Edan YagoSo I'm not entirely sure, but we've been experimenting with this. And we think that we'll be able to substantially reduce the cost. So the cost of transactions within the BitcoinOS environment will be much lower than the cost of transactions on mainnet. But you'll still sometimes use mainnet, maybe you won't, but the system as a whole will use mainnet transactions for settlement. When we perform the settlement type of transactions on Bitcoin, we found that they cost about $150. So maybe that would increase as Bitcoin becomes more expensive to use.

50:19But let's say it goes up 10x. Now they cost $1,500. You would be performing probably thousands of transactions on that $1,500. So what we would expect is for transactions to cost a few cents.

50:42Vlad CosteaOh, sorry. I was responding to someone in the YouTube chat. So you say that it's going to cost a few cents within the BitcoinOS environment. And that's truly admirable. But what I was going to ask you next is how would you compare BitcoinOS with stuff that already exists with Citrea and Alpen Labs, and I think there are a bunch of others?

51:09Edan YagoSo I don't know what you mean by already exists. Citrea, Alpen, and some other projects are trying to build Bitcoin rollups. What we can do with BitcoinOS is provide them with the technology to actually turn whatever it is that they're building into a rollup and make their rollups interoperable with each other. Whether they will use BitcoinOS, we can't force anyone to do anything. But right now, the only way that you can actually prove ZK on Bitcoin and actually build rollups on Bitcoin is utilizing the BitcoinOS system.

51:47Vlad CosteaSo would you tell the people who are currently working on Alpen Labs and Citrea to use BitcoinOS instead?

51:55Edan YagoYes, because I know that developers and entrepreneurs, they want to go and create their own thing and be able to say, I built this and I own this entire ecosystem. But there's a big risk in that. If we do that, we're sort of not coordinating well, and we're going to fragment the Bitcoin ecosystem more than it needs to be. Now, I don't think that that's a long-term problem. I think over time, that too will consolidate, and I think it will consolidate around BitcoinOS because BitcoinOS has sort of a significant network effect.

52:33But yeah, I mean, the easiest, fastest way for them to get to market with what they're trying to do is to build on what we've already built, basically. And I've had conversations with them around this, and some of them, that's their plan.

52:55Vlad CosteaOkay, now let me ask you about something else, because I've had Alexei Zamyatin on the show twice this season, and he spoke about his project Build on Bitcoin, BOB or BOB. And it was two weeks ago when I was in Nashville that he sent me some money. It was like $10 on BOB. He set me up with a wallet. All I had to do was sign up with my email. And basically, I didn't have to write down 12, 24 words, which I thought was interesting. Basically, your private key relies on your access to the email address.

53:29And I was able to buy merchandise from their booth. And basically, that wasn't real Bitcoin. It was wrapped Bitcoin, WBTC, and it was transacted on their chain, which is BOB. It's basically a bridge between Bitcoin and Ethereum. And I was going to ask you, what do you think about this sort of design? And do you believe that you're going to make that obsolete with your design for the BitcoinOS?

53:55Edan YagoWell, I think there's a lot of value in what BOB have done. They've built a system which utilizes BTC as an asset, admittedly in wrapped form, and they've connected it with Ethereum. So they've already started to prove how cheap and fast rollup transactions can be for Bitcoin. And they've also created this amazing gateway to bring the world of Ethereum over to Bitcoin. I think all we need to do is plug that in with BitcoinOS, and we can basically use BOB as this massive magnet, this conduit, to start bringing the Ethereum ecosystem over into Bitcoin. So I think there's a lot of value to what they've built.

54:36Vlad CosteaI'm not sure if you know this, but I'm trying very hard to make you say something controversial. And you're just so nice and cheerful and optimistic about everything.

54:47Edan YagoWell, I already did. You trapped me into saying that I disagreed effectively with two of your sponsors.

54:55Vlad CosteaThat's fine. I'm gonna make Paul listen.

54:59Edan YagoYou ambushed me twice already.

55:01Vlad CosteaMaybe I'll get the two of you to debate.

55:03Edan YagoThat would be awesome. I'd be happy to debate Paul. I have a lot of respect for him. Yeah. I don't know if he has a lot of respect for me. I have a lot of respect for him.

55:14Vlad CosteaSo let me ask you this. You mentioned that you're able to create covenants by emulating the function within BitcoinOS. And my question to you is, if we do get this covenant soft fork, about which a lot of people talk about these days, whether or not it's going to be CTV or OP_CAT, but would any of these make the BitcoinOS more powerful in any way? Or would it make any difference to what you're building?

55:41Edan YagoI think there are ways that OP_CAT could make what we're doing much more efficient. And in fact, I think it would be a much easier way. If we had OP_CAT, a lot of what we're doing, it would be much easier ways of doing it. And yet, I am not convinced that I want OP_CAT, because I'm concerned that while we would get technical benefits out of OP_CAT, I think that with each soft fork, we get a corrosive element to the culture of Bitcoin and to the claim that Bitcoin should have, that it is permaware.

56:16So the number one criteria for me about whether or not we should introduce a new soft fork is, does it bring us closer to the day that we never have to do that again? And I would like to exhaust all the options that we have with the existing Bitcoin system before necessarily jumping into the next soft fork.

56:43Vlad CosteaThat's a very diplomatic answer. So you're saying that OP_CAT could potentially help you?

56:50Edan YagoOP_CAT would definitely make what we're doing much easier. I don't know if it's a diplomatic answer. I think it's an answer from someone who's... I don't think that answers are easy. I think everything is a set of trade-offs. And sometimes I'm concerned when people... Look, I'll give you an example. I think that OP_CAT and the Ordinal, the Quantum Cats and what the Taproot Wizards group have done is super cool and really exciting. And it was such a clever way of explaining a complicated concept. But I also think that the level of conversation there is pretty shallow.

57:40And that if you're not talking about the trade-offs, you're not really having a conversation. You're just taking a position. OP_CAT would be great, but it would have significant trade-offs. Every soft fork has really significant trade-offs. And so I don't know. I'm torn. I would like to see more easier ways to build on Bitcoin. But on the other hand, as someone who holds Bitcoin and has held Bitcoin for a very long time, the number one thing for me, my North Star, is I want Bitcoin to be beyond human control or change or manipulation.

58:24Vlad CosteaOkay, but can you present some counter-arguments for activating OP_CAT, something technical that you can basically do to destroy the chain? Because there's this thought about it since Satoshi turned it off. It was part of the original Bitcoin stack, but Satoshi turned off a bunch of opcodes. OP_CAT was one of them. There were a couple of scientists who rewrote the entire code to remove any concern that it can be used to make this construction that's going to shut off a bunch of nodes because it amasses too much data.

59:00I think that was the concern that was occupying Satoshi's mind at the time. So where am I going with this? Can you just explain how you can use OP_CAT in a destructive way? Because you already have OP_CAT on Liquid and you already have OP_CAT on BCH and a bunch of other chains. So I guess if you can do that…

59:25Edan YagoI don't know what the destructive way you can use OP_CAT is. Maybe there isn't one. I do know that we introduced Taproot. No one thought of the destructive ways that we could use Taproot. And here we are doing all kinds of things that are terrifying people. Ordinals clogging up the blockchain and rollups maybe creating MEV and all kinds of horrific things that people are now concerned about. This is an unintended consequence that I like, that I'm involved in. I'm the one attacking Bitcoin, right? But… Well, what we're building is as amazing as it is, it's an unintended consequence.

1:00:08I think, first of all, I am concerned about unintended consequences, but actually, that's not my main concern. My main concern is I want the culture of Bitcoin to harden, to ossify as much as possible. I know I'm in the minority around that, and certainly in the minority amongst people who are sort of Bitcoin accelerationists instead of Bitcoin maxis, but yes, you know, it wouldn't be me if I didn't have sort of disagree with everyone on everything.

1:00:45Vlad CosteaOkay, that's pretty interesting. So yeah, I don't think I have further questions about this. So how can people construct this ZK transaction today? Like, how can I actually test this if I want to?

1:01:04Edan YagoSo we've released some code that allows you to test it, but we haven't released yet all of the code or the ability to start creating your own ZK proofs. We're in the process of doing that, and I'm not entirely sure when we will do that, but it's probably in the pretty near future.

1:01:19Vlad CosteaDo you believe that by the end of the year, we're going to have a proper software implementation that is user-friendly and enables anyone to tap into this territory of decentralized finance with BitcoinOS?

1:01:38Edan YagoI would say I have an 80% confidence level that the answer is yes, certainly by mid-January. Actually allow people to start really building on the BitcoinOS ecosystem.

1:01:52Vlad CosteaI'm not sure if this is an official announcement or if it's the first time people hear this that it might happen by January of 2025. But it is exciting, and we're living times of change when we see new stuff getting built. And some of it, as you said, is an unintended consequence of something else, which maybe it's an intended consequence because people like Greg Maxwell, they were very much aware that you can do ordinal inscriptions when they activated SegWit and Taproot. It's just that there wasn't a market for this and nobody cared about it.

1:02:31And you could do STAMPs, which is another way to embed arbitrary data into the blockchain. And that one is not prunable and is much less efficient. And you also have the BRC-20 tokens, which are even less efficient. So there are ways to put data in the blockchain. It's just that prior to this NFT mania of 2021, there was no market for this and nobody really cared about doing it, so they didn't. Now that they figured out they can also put ZK verifiers and verify against that, I think we're walking into this uncharted but exciting territory where we have ideas and inventions that previously were thought of for Ethereum to help it scale, because honestly, it's a mess.

1:03:21And as you mentioned, there is not one person who is aware of everything that's being built on it and can audit the entire code. And we have this being built on Bitcoin in a more efficient and elegant and scalable way. And I think it's beautiful. And I want to congratulate you for this. But another question that I think is relevant in the context, what's going to happen to Sovryn, because the last time I interviewed you were super excited about Sovryn and building on this rootstock sidechain. And now it seems like you are pivoting towards the rollup.

1:04:01Edan YagoNot at all. I am more excited about Sovryn than ever before. And the reason is that the full potential of Sovryn has always been limited by the technology on which we can build. There was no way to truly trustlessly. Sovryn is the largest DeFi ecosystem for Bitcoin, but it doesn't actually have any Bitcoin. It's only got wrapped Bitcoin.

1:04:27It's not secured directly by Bitcoin. It's on a rollup. It's on a sidechain. So Sovryn is going to be one of the first use cases, I'm sure, on BitcoinOS. I'm certainly working towards that. There will be a Sovryn rollup. There will be truly decentralized, truly Bitcoin-native DeFi through Sovryn. And people are going to be able to start trading and earning yield and creating Bitcoin-backed stablecoins in the most trust-minimized way with Bitcoin using Sovryn. And that's just a few months away. So I've never been more bullish on Sovryn. This has been sort of the dream for Sovryn from the beginning.

1:05:13Vlad CosteaI think you answered two of the questions from the chat. There is CryptoGeek who said, will SOV migrate to BitcoinOS? SOV, I guess, is the Sovryn token. And there was The Gardener who said, I hope SOV is heavily involved. And there's a question from PacoVM who says, is it better to not change the code so Bitcoin doesn't change, but keeping the possibility it devolves into what many are expecting it to, or to change the code so the properties of Bitcoin that make it revolutionary don't change?

1:05:45Oh, this is pretty philosophical. So change it to make it into something that you want or not change it because you want to preserve the properties?

1:05:56Edan YagoI think that the most important property is that it doesn't change. If you think about sort of if you think to the logical conclusion of what decentralization is for, what censorship resistance is about, right? Decentralization is not a goal. It's a tool. And what is that tool creating for us? It's creating for us a system which isn't controlled by anyone and cannot be censored by anyone. Now, every time you make a change, yes, you get consensus, but there's no real governance system to Bitcoin. So the consensus is a bit touchy feely.

1:06:36It's a bit soft, that consensus. And so every time you create that, you are creating a certain subset of people who are changing Bitcoin, who are able to effectively censor certain types of... You know, like, the old kind of Bitcoin is totally forked off. It's completely censored.

1:06:59So my view is that the more decentralization we have in Bitcoin, and there's obviously the decentralization of the miners and the decentralization of the nodes, but we can go so much further. Right, the decentralization of the number of users, the decentralization of the number of sort of rollups, right? Every single new rollup that works in Bitcoin, that is built in Bitcoin, makes Bitcoin harder to change, harder to manipulate, because you now need to get all of these rollups to sort of soft fork with you, very, very hard to do.

1:07:33You need to get consensus of all of these different layers. The more you can build DeFi around Bitcoin, so you can get rid of centralized players like large exchanges who have large amounts of Bitcoin and can censor your ability to transact, all of these things add more and more cultural and technological decentralization to Bitcoin. And so I think of decentralization in Bitcoin like an onion. It's layers and layers and layers, and we need to add as many layers of decentralization to Bitcoin as possible, not because decentralization is the goal, but because censorship resistance and sort of the creation of permaware is the goal.

1:08:14Vlad CosteaDo you see the Lightning Network playing any role in all of this?

1:08:18Edan YagoProbably yes, but I think it's going to be a small niche role, because I actually think that if you think about what Lightning does, it's very good at certain things, but pretty useless at everything else. It's a good secondary settlement layer between significant nodes that are highly well-connected, have large amounts of funds that they can use to fund channels with each other and have a lot of bi-directional flow. For that, Lightning Network is great, but that is a very small subset of use cases.

1:08:53Vlad CosteaWell, it is interesting because nowadays when someone is promoting covenants, they say we got to have covenants to be able to scale Lightning and self-custody. So you're able to emulate the covenant and you build using ZK rollups, and it's interesting to me that there is no Lightning in all of this story.

1:09:22Edan YagoI might be wrong. Lightning may play a very important role in this story. I, however, am a bit of a Lightning skeptic and have been for almost 10 years now. So I, the first sort of, when Thaddeus Dryja started to work on Lightning, he was working at a company that I was running. And the reason he stopped doing it was because we were doing remittance. We were one of the first remittance companies using Bitcoin to do remittance, and we needed to be able to transfer cheaply lots of Bitcoin.

1:09:58And Tadge came up with this really cool idea of these lightning channels, and he showed it to me. And I told him that I didn't think it would work. I didn't think it would scale because I thought it would be too expensive to pre-fund all of the channels. And here we are 10 years later. That was in 2014, now we're in 2024. 10 years later, and I think he's done a magnificent job, and the Bitcoin ecosystem has done a magnificent job of engineering this system, but I don't think it works for exactly the reason that I didn't think it would work 10 years ago.

1:10:30Vlad CosteaThat's an interesting story. I was not aware that you're part of maybe the first handful of people who heard about lightning back in the day. But it's also refreshing to hear this point of view, because I guess there are two extremes, right? There are the people who reject it in principle, because they are disillusioned with it. And then there are the people who are willing to do anything, and they would willingly change Bitcoin for the sake of saving lightning, because there's a lot of money that went into it.

1:11:03There's a lot of hope that this is going to be the one solution that's going to be used for scaling. And so far, it wasn't so successful. It's the same amount of liquidity that's locked in. Maybe there are new users that are using it custodially, but it sort of defeats the purpose. And today, I saw more news about the launch of something that's called Fedi, and it's going to launch all of these mints. And there's the eCash, Cashu mints, which are also being deployed, and Jack Dorsey is optimistic about that.

1:11:36So there's capital that's flowing into these custodial lightning solutions. But to me, that's very much defeats the purpose, I think.

1:11:44Edan YagoI agree. I really hate that we've been moving more and more in this direction of innovation on Bitcoin, which is custodial. I think I can see why people would want to do it. But I think it goes against everything I believe in, to bring people into Bitcoin and push them into custody. I think the whole point of self-sovereignty in Bitcoin, the whole point of Bitcoin is self-sovereignty, and that is achieved, I believe, through self-custody. And so what I'm working on are those tools which I think can act as a counterbalance to that, to allow the fullness of power to be in the hands of those who are self-custody, gives them privacy, gives them scalability, gives them the ability to do DeFi, gives them the ability to do everything they want without ever having to go through anyone else.

1:12:42Vlad CosteaYeah, I do believe this is a very big cop out. It's people saying, oh, but people already hold their funds on exchanges, so they do trust someone. So they might as well trust this community leader or famous Bitcoiner who's opening his own private bank, because that's basically what it is. And there's going to be some privacy involved. I do understand this argument, but it's basically giving up on the mission, and the mission was always to enable anyone to be their own bank.

1:13:13Edan YagoI think if it was a gateway drug, where you could say, look, we're going to be bringing them into this custodial system, but then they will eventually migrate to a non-custodial system. Then I would be super excited. But I actually see these more as dead ends, or maybe even dragging people away from potential self-custody solutions into custodial solutions. That said, I do think there's a contribution. And I really think that these Chaumian mints, honestly, they could use our technology to create a less custodial system, maybe a non-custodial system.

1:13:54You could utilize smart contracts to create the Fedi federation instead of having a multi-sig.

1:14:03So far, I haven't managed to get them excited about that idea. I think they really want the multi-sig federation. They've invested a lot in it. Hopefully, someone who's listening now will go fork Fedi, make it decentralized, utilizing BitcoinOS, and then we'll get all the scalability of Fedi without big custody.

1:14:28Vlad CosteaI'm very happy that there are projects that don't give up on self-custody. I was going to ask you something else because in the Lightning Network, one big drawback is that you need to be online in order to receive payments. And also, you can't do anything that resembles cold storage, right? You're going to have to keep your funds online all the time in these channels. And I was going to ask you if in BitcoinOS and in wallets that are generated within this ecosystem, you're going to have the capability to do cold storage, to use hardware wallets, or if you need to be online to receive payments?

1:15:13Edan YagoNo, there's no need to be online. It will feel and behave just like Bitcoin.

1:15:21Now, basically, ultimately, what you're doing is you're sort of replicating more and more layers of mainnet. So that's the same. You're just expanding Bitcoin. You're not changing it. You're expanding its scalability and expanding its functionality.

1:15:41Vlad CosteaIs there such a thing as a BitcoinOS node? And if so, can anyone run one?

1:15:47Edan YagoYes, there will be BitcoinOS full nodes. They will be a little bit different. You'll be running a Bitcoin node, but you'll also sort of need to run the node of whichever computation environment rollup that you're using. And each of those will be a full node. And yes, anyone can run.

1:16:06Vlad CosteaThere's a degen question in the chat from someone who says, will BitcoinOS have a token, smiley face.

1:16:14Edan YagoI think it will. And the reason it will, so BitcoinOS, they're sort of like the basic parts of it you'll be able to use without a token. But to provide sort of, if you think about a decentralized system, including Bitcoin, it needs to be able to provide a certain level of uptime. It needs to be able to provide certain guarantees of service and liveness and make sure that there's a highly motivated group of operators who are participating. And so a token is extremely useful and maybe even completely necessary for that.

1:16:54There's actually another reason why I think I'm excited for BitcoinOS to have a token, which is that in my view, one of the most poisonous ideas in Bitcoin is that we should only ever use BTC. BTC only. That kind of maximalism is absurd in my eyes, because you cannot have a reserve currency or any currency at all without an economy built around it. An economy is not a single asset, which is currency. It is the currency which is used to purchase, transact, utilize, and finance all of the other assets.

1:17:31And so what I want to do is I want to create a full economy built on Bitcoin, a Bitcoin native economy. And I think tokenization is an extremely important part of that. And so I want to be part of encouraging that.

1:17:44Vlad CosteaThat's very cool. And maybe that these tokens can also incentivize people to run a node, which is something that's missing from the Bitcoin economy.

1:17:51Edan YagoAbsolutely.

1:17:52Vlad CosteaSo if you're running a node and the Sovryn node, not Sovryn, BitcoinOS node, maybe you can get paid. Maybe it's going to be the Sovryn token. I don't know.

1:18:02Edan YagoVery likely, actually. I think that's exactly how it would work.

1:18:07Vlad CosteaYeah, that's super cool. You're going to make more people. I think Ordinal inscriptions had this hidden benefit, this side effect of making more people run their own full node for the first time. Previously, they had no reason to do it. And all of a sudden they wanted to run the ord client, which only worked on top of Bitcoin Core. And now if you're going to have BitcoinOS and you're going to have a token, maybe that one can be used to pay people for keeping the network reliable, giving it maybe a much better bandwidth. You have more connections across the network. That's valuable. More servers.

1:18:52Edan YagoAbsolutely. And that's sort of how you create a certain… You use those nodes not just to encourage people to run them, but to utilize that to make sure that the system is able to manage all of the capacity, provide liveness, constantly be providing the degree of security you want. It's basically how do you create an SLA, right? Like a service level agreement for a decentralized system. I think you can do that with a token. It's a coordination tool.

1:19:26Vlad CosteaYago, I've been keeping you standing for longer than one hour and I've asked you pretty much every question that I had in my mind. So right now I want to ask you, is there anything that you were expecting me to ask you about and I didn't? Or something that you want to say that was not included in my questions?

1:19:48Edan YagoWell, I'll say this. I think there's a lot of reasons that people are bullish on Bitcoin right now, right? Trump and politics and regulation and ETF and all of that stuff. But I think that the most exciting thing happening in Bitcoin right now is that Bitcoin is getting back its mojo. We now have permissionless innovation in Bitcoin. And in the early days of Bitcoin was the place where all of the excitement, the sense of adventure, all of the innovation and the smartest people were hanging out and figuring out new ways to do things.

1:20:21And I think that's coming back to Bitcoin. And that is, in my mind, the biggest reason to be bullish on Bitcoin that there is. So I'm super excited about what's about to happen. And I think the next 15 years are going to be completely dominated by Bitcoin. The next cycle is going to be completely dominated by Bitcoin. And 2025 is going to be the most exciting year for Bitcoin since 2008.

1:20:43Vlad CosteaDo you have any price prediction for the top of the bull market?

1:20:47Edan YagoI do not. I do not have a price prediction. I bought my first Bitcoin in 2011, and I haven't sold a single Bitcoin since. I'm here for the long haul.

1:21:00Vlad CosteaYeah, you did say something along the lines of basically living off the yield that you earn from lending your Bitcoin on Sovryn.

1:21:09Edan YagoYeah. Yeah, that's a big part of it. I'm here to live on Bitcoin and then not to sell it, but to give it to my children and my grandchildren.

1:21:22Vlad CosteaThat's beautiful. That's the perfect way to end it. So, Yago, how can people follow you and the BitcoinOS project and everything else that you're doing?

1:21:32Edan YagoWell, on Twitter, I'm E-D-A-N-Y-A-G-O, @EdanYago, on Twitter. And then the BitcoinOS project is BTC underscore OS. So at BTC underscore OS, BitcoinOS. And then Sovryn is at S-O-V-R-Y-N, @Sovryn.

1:21:53Vlad CosteaThat's really beautiful. Well, thank you, SilentLamb, for being active in the chat and being the reason why I delayed one of the questions. And thank you to all of the 750 plus people who listen to this on livestream. There's going to be more who are going to discover this in the next couple of days. Thank you, everyone, for listening and make sure you tune into the next one, because on the Bitcoin Takeover podcast, you only get the brightest minds and the people who actually build as opposed to those who regurgitate the same arguments about sound money, what is money, the Bitcoin standard, blah, blah, blah.

1:22:29This is where it's actually happening. So thank you very much, Yago, for being part of this. And best of luck with BitcoinOS, with porting Sovryn to BitcoinOS, with getting Alpen Labs and Citrea and all the others to come to BitcoinOS. And maybe I'll get you in a debate with Paul Sztorc, because that would be so much fun for me.

1:22:51Edan YagoAwesome. Thank you. Thank you very much. And have me back anytime.