S5 E9: Matthew Haywood on the Liquid Sidechain & His Work at Blockstream

0:47Vlad CosteaThis is season 5, episode 9 of the Bitcoin Takeover Podcast. As always, I am Vlad, and my guest today is Matthew Haywood, who is the product manager. Did I get that right? Or the security product manager or something like that for the Liquid sidechain. So he works for Blockstream and he has been a coder for 20-plus years, has been in the Bitcoin space for a long time. And also, this is the first podcast ever that he does, which is outrageous, man. I can't believe that nobody has ever invited you to a podcast.

1:24Matthew HaywoodThanks for that, Vlad. I'm the product manager for Liquid Securities. I like the way that you said he's been working for a long time, because you know how old I actually am.

1:40Vlad CosteaI said it just to nag you about your age.

1:42Matthew HaywoodYeah, that was it. Cheers for that. Thanks a lot. It'll happen to you, too. You'll get grey hair, Vlad.

1:49Vlad CosteaI know. I may go bald, too, but I don't want to paint that far ahead.

1:54Matthew HaywoodYeah, those gorgeous dark curly locks, you know, you'll never have them forever.

2:01Vlad CosteaJust look at Billy Corgan. He used to have the same hair as I do right now.

2:06Matthew HaywoodThat's something to aim for, then, isn't it? Yeah, well, thank you very much for asking me on anyway, Vlad. I appreciate that. We've met before, of course, and chatted before in, I think, Latvia. Is it Latvia?

2:16Vlad CosteaIt was in Riga that we actually sat at the same table, and it was by coincidence.

2:22Matthew HaywoodIt was. It was the combination of fate and bad table layout. But it was a pleasant, pleasant evening.

2:30Vlad CosteaI don't think I can think of a better outcome, because I did not belong at the same table with, you know, Saifedean and Jimmy Song and all of these celebrities that were across the table, chatting and laughing. I felt like I did not belong there.

2:46Matthew HaywoodBut you got to sit at the special table with me, Vlad, and I watched you get progressively drunk and I stole all the steak. Nice. It was a double good outcome.

2:58Vlad CosteaI remember the steak was actually good.

3:00Matthew HaywoodIt was very good. Yeah, it was nice.

3:04Vlad CosteaYeah. So you are the product manager of securities, not of security?

3:10Matthew HaywoodNo, yeah, Liquid Securities. So Liquid Securities is a product that sits sort of on top of Liquid, and it makes use of the Green, the Blockstream Green wallet as well. So it sort of allows people to issue securities on Liquid, but it also uses Green to ensure that they can limit who receives their asset, you know, so it's all to do with regulations and what have you. Yeah, so that's a product which is pretty new. I started on that as a developer, and I'm the product manager for it now, working alongside some very competent developers who are doing a far better job at that side of things than I did.

3:50So, yeah, that's going well. Before that, at Blockstream, I did technical documentation, things like that, elementsproject.org. I really enjoyed doing the tutorials on there, the command line tutorials for using Elements, and that's where I learned most of my stuff about Liquid from, doing those kind of things. I've worked in there since the peak in 2017. I think me joining them caused the price to crash, actually. It was peaking around December 2017, wasn't it? And that's the month I started working as a contractor for them initially, and then I joined and the price promptly collapsed.

4:35Maybe the market got word, "Matthew Haywood's just joined Blockstream. This is bad news."

4:40Vlad CosteaOh, yeah. Let's hold up our Bitcoin side of the market.

4:43Matthew HaywoodExactly. No, not really. Yeah, so that's what I'm doing at the moment, and previous to that, I'd worked with nopara73, Adam Ficsor, on what was a precursor to Wasabi Wallet, which was HiddenWallet and ZeroLink at the time. I worked on that for a few months with Adam before, unfortunately, I abandoned him and started working at Blockstream, but I really enjoyed working on it, actually. I was really flattered when he asked me to help him out on it, and it was just the two of us working on it initially, and he's been on your podcast recently as well, I heard.

5:24Vlad CosteaOh, yes, you are part of the same season, which is really cool.

5:28Matthew HaywoodAnd there we go.

5:31Vlad CosteaAnd I actually enjoyed the fact that nopara was, you know, nice enough to mention your contribution to Wasabi, even though you didn't stick around for long enough to actually see the final project.

5:45Matthew HaywoodYeah, I know. It was a combination of things, mostly financial needs that I had, but yeah, I really enjoyed working on it, actually. I like to think that I'd contributed to something, helped push it in the right direction. It's like pushing a boat off from shore and then letting him do all the rowing, but it's doing really well at the minute, so it's obviously come well for him. Yeah, and we also see each other sometimes at conferences and things, or we went to that pay-to-endpoint, or whatever you want to call it, it has lots of different names, went to a workshop on that.

6:19Oh, that would have been a while ago now, a couple of years ago, maybe. Not very good with dates. Yeah, in London. It was nice to catch up there.

6:30Vlad CosteaRight, so before you worked on these projects, were you also involved with Brave New Coin?

6:37Matthew HaywoodThat's right, yeah. So I'll go back a few steps before that, then. So I'd been a developer for about 20-odd years, as you've seen from my grey hair, and then I had a piece of software that I developed, a very boring corporate piece of software that I won't bore you with the details of, but it was me and two other guys selling it. I wrote it and they sold it, and that went on for several years, maybe, I was working on that. I was starting to get a bit tired of that near the end, although it sounds cool to have your own software and what have you, and be able to live off that.

7:11It was getting a bit lacking interest near the end. So I'd become increasingly interested in Bitcoin by then, through my previous obsession with gold, and then, yeah, somebody asked me if I wanted to... I'd written some articles about the user-accepted soft fork, so the whole user-accepted soft fork and SegWit2x and all that. I think that was really the defining moment in Bitcoin's history, certainly was for me, what that set out, and I really got into it, started writing some articles on it, and Brave New Coin asked me if I wanted to do some, and I was also doing some of the stuff on the side, and I started working with Adam. So I had various bits and bobs, and I thought, okay, I'm going to quit my day job, as it were, and try and work in Bitcoin full-time, because it's something I was really interested in, and I was getting paid in Bitcoin, which was super interesting, and whatever. It felt, you know, really real then.

8:14Yeah, that was back in, oh man, come on, well, that was 2017. And then during that I'd also been contacted by Blockstream about articles I'd written, and did I want to do some technical writing, because I think they knew I'd done some development before. And yeah, I joined them, and I've absolutely loved working there, and I've had various different things to work on over the time that I've been there, and worked with some great people, and some very talented people, and I'm still there now, and unless they know different, I will be in the coming weeks, but I am really enjoying it.

8:56Vlad CosteaSo this was back in the day when they actually reached out to you to ask you to do a job, as opposed to posting, you know, job listings and waiting for resumes and all of that bureaucratic stuff.

9:09Matthew HaywoodWell, it was really weird, because previous to that, when I'd had jobs in companies and things like that, it had been very much, you know, write your CV, send it out, you know, job agencies and all this kind of thing. And then it suddenly felt like I'd been fast-forwarded into the future, where all of a sudden the last three job offers I'd had, or, you know, offers to do work, had all come through Twitter. So that felt really weird, and for a couple of them, I was being paid in Bitcoin as well, so it felt like I'd gone from, you know, 2017 into 2027 in the snap of some fingers. It was really cool, but it's really interesting to...

9:51You know, to look at how things like that have changed over the years since I've been working, which, yes, as is your point, now has been quite a while. But it just changes in terms of, I really like the idea nowadays that somebody can learn software development, or they can write like you do, or do something, put it out there, and then that attracts people, rather than, you know, people putting out an offer and people rushing to fill it. Also the fact that everything's global as well, you know, that you can work for companies all around the world.

10:22Yeah, because people can just do so much remotely. Yes, times are changing. Times are changing, Vlad, even for, you know, even for an old guy like me.

10:32Vlad CosteaThe future is here, old man.

10:35Matthew HaywoodI know. Hey, man. Yeah, you know, I feel pretty part of it. Cheeky, cheeky young lad. Yeah. Basically, I tell my son that he doesn't have to worry about things like, in the future, moving to somewhere where the jobs are, whatever, that he could, you know... I'm trying to get him to learn Python at the moment. And in the future, well, not even in the future now, if he started becoming a competent Python developer, he could, you know, go under a pseudonym and he could get paid in Bitcoin, could be earning himself some money, which he'd probably then waste immediately on Xbox Live vouchers or something like that.

11:08But yeah, so it's all different. Hopefully Bitcoin is part of the, you know, part of the future of that.

11:16Vlad CosteaI mean, it's not like we don't waste our money on video games anyway, so.

11:22Matthew HaywoodThat's true. Although I must say, I have stolen my son's Switch during lockdown. I hadn't played video games for ages because I didn't have a lot of free time, but I've been making an hour a night, and I must say I've been using quite a bit of that. But I tend to play games that are quite cheap and that don't take long to finish. And I always put it on easy mode as well.

11:42Vlad CosteaIf you take it out of context and say that you like to pay for stuff that is cheap and doesn't take long to finish, I mean, that can be very easy to interpret differently.

11:56Matthew HaywoodBut don't comment on that.

11:58Vlad CosteaYeah. So what is your take on the Liquid Network? Or more specifically, I should begin with: what is Liquid and why does Bitcoin need it? [00:12:10] Matthew Haywood: Okay. So yeah, Liquid's a sidechain to Bitcoin. I guess, why does it need it? It takes transactions off chain. So in my eyes, anything, Lightning or Liquid, that can take transactions that don't really need to be stored in eternity on people's nodes all around the world, anything's good. So Liquid is primarily targeted at large traders or exchange users to rapidly move Bitcoin that's been pegged into the Liquid Network between exchanges. And it does that by, well, all these sort of scaling solutions will do that by making some trade-offs.

12:51So Liquid makes a trade-off with its security model compared to Bitcoin. So you take a bit less security, and it's not decentralized, it's a federated model. But you can increase the speed of transaction confirmation so that it's regular, you know, once a minute kind of thing. It enables traders to, well, two things. It enables them to quickly move funds between exchanges, but it also means that they don't have to leave funds on exchanges. And so if you take the model where, I think it's probably more now, so my apologies if this is outdated, but when there were like 15 members of the federation, let's say 15 exchanges or financial institutions, it would take two-thirds of those to be compromised, or two-thirds plus one, so it would have taken 11 to be compromised or to act maliciously in coordination in order to sort of steal funds.

13:46And some people have said, you know, Liquid is nowhere near as secure as Bitcoin because it relies on this group of exchanges. But when you compare it to the model that, you know, a trader might normally use, which is leaving funds on an exchange, their funds are in the hands of just one exchange, which is surely a far greater risk than having to have, you know, two-thirds of that group of functionaries go rogue, as it were, in order to steal their funds. It also means that they don't have to leave funds on an exchange.

14:15They can withdraw them, hold them in a hardware wallet or pull them back to Green or something that supports Liquid assets. So they can hold the keys themselves and only need to send it to an exchange to take an arbitrage opportunity when needed. Yeah, so that's Liquid's sort of primary function, but there's also things like issued assets, confidential transactions, so you get confidential transfers in Liquid. So if you move money to an exchange, you've probably seen these Whale Alert Twitter feeds or what have you, and then somebody chucks up and moves some money to a known exchange wallet and everybody panics and starts selling, and that person's just lost the opportunity that they were trying to take advantage of.

15:02Because it takes them, you know, however many minutes or hours to get their funds deposited. So yeah, Liquid enables people to take chances at things like that, but it also, you can issue your own assets on Liquid. So you end up with, you know, you yourself, Vlad, could issue Vladcoin should you want to on the Liquid Network, and those tokens, assets, are native to the Liquid blockchain. So that's something that we're using in Liquid Securities, taking those assets and adding some extra properties on top of them, like the ability to control the transfer of them by using the Blockstream Green.

15:43So it's quite nice. As soon as I started at Blockstream, I noticed all the products are starting to tie together quite nicely. And yeah, this is something that's good, because Liquid Securities allows Liquid and Green to work together to sort of deliver a new product for people who want to issue securities. And all these things are part of a, you know, I hate to sound like an old man again here, but they're all part of a new financial future, that it's not just about transferring money. There are other financial assets that will need to be represented in the future on these kind of technologies.

16:16And yeah, issued assets on Liquid is a pretty important part of that, I think. And then, yeah, compared to, well, I don't like comparing it to Lightning, because I think the two are quite different use cases. I did note, Vlad, actually, your last article was "Liquid and Lightning: Which Is Right for You?" or something like that. And it should have been "which is right for you at this particular moment in time when you're making the decision," because each person has, you know, different requirements. I use Liquid and Lightning weekly.

16:48Lightning for purchasing hats and anything online that takes a Lightning payment, like conference tickets and things. I also pay my son his pocket money over Lightning, but I also use Liquid as well. So it just depends what the use case is. And with all these, with either scaling technology, I don't think that there's direct competition between them. If they both offer slightly different models, then that's better for Bitcoin, because it's taking things off the main chain that don't really need to be on the main chain. So I don't really want to host my node here...

17:26I don't really want the transactions of traders as they move Bitcoin between exchanges forever stored on the hard drive of my node. And neither do I really want the transactions of people buying hats or clothing online or paying somebody something that didn't need censorship resistance, as it were. So, yeah, either one of them suits different needs. And if they can both take transactions off the main chain and enable slightly different use cases, then go for it, I think. And hopefully we'll see more things like that in the future, not just the two main ones that we've got at the moment.

18:08So who knows?

18:09So I guess it would be unwise to ask you where you buy your hats from and who makes them, especially if you're using the Lightning Network, because it's kind of obvious. But in regards to not bloating the blockchain with your unnecessary transactions, you know, with a record that's going to be stored by every node forever, let me ask you a question that will probably pop in the heads of people from r/btc who might be listening to this. What should get stored on the blockchain?

18:45Matthew HaywoodI think Bitcoin's fundamental value propositions are things like censorship resistance and a decentralized, majority-controlled monetary policy. And if you start storing every single transaction for things that simply don't need it, like if I paid my son his pocket money every week and was sending him however much Bitcoin each week, that doesn't really need to go there every week. Nobody's going to be stopping me from making that transaction otherwise. So the more you put stuff on there, the less likely it means that people are going to run a node.

19:23Because it does take up a lot of room, it takes a long time to initially sync, and it's not a particularly easy job for some people to set up and manage. And if that becomes harder and harder, less people run a node. And just refer back to the user-accepted soft fork and SegWit2x attempt and what have you, that very much made it clear to me that it does matter that people run nodes. It does matter that people validate that what they're receiving is Bitcoin. And if they can't do that, then...

19:57If it's all lost, there's no going back, really. So, yeah, it's interesting, the user-accepted soft fork and the rejection of the...

20:08Vlad CosteaYou mean user-activated soft fork?

20:11Matthew HaywoodOr UASF? Yeah, sorry. The UASF and the rejection of the 2x part of SegWit2x was pretty important, I think. The first bit was people saying that there's a feature that we'd like, SegWit, but you're not activating it. It's been quite a while. And if you don't activate it, we're going to start rejecting any blocks that don't signal for it to get activated. So it was kind of like a, you know, it can be seen as contentious, but it was almost like, you know, miners as a service provider, they were given a heads up that there's a feature we want, you've been delaying it and delaying it for various political reasons.

20:48Well, if you don't shape up and present it soon, we're going to be putting our money on a different table, as it were, a different fork of the chain. And then with rejecting SegWit2x, the 2x part, it was miners then trying to force a feature on people that, you know, as a service provider, you can't really do that. And people said, no, thanks, we don't want that, you can go ahead and offer it, but we're not going to be accepting it as Bitcoin. Yeah, it was a real good double whammy, really, that one was: give us something that we want, and the users got it.

21:22And then it was like, stop trying to force us to do something we don't want to, and they rejected it. So that was a clear demonstration to me that nodes are very important and, you know, financially active nodes. And if you can't run nodes... I know that people have this image of like 1,000 Bitcoin miners and then next to it, a little Raspberry Pi. And it's like, what's the Raspberry Pi going to do against those? Well, it could reject every one of the blocks that they create.

21:50They're going to spend hundreds of thousands of pounds of electricity, dollars of electricity, creating random strings of numbers that nobody's going to place any value on. So collectively, everybody's nodes around the world saying what they think Bitcoin is or is not is, you know, what defines the value in it, really. So, yeah, I can't remember what the question was, Vlad. I went off on one then, with rose-tinted glasses, thinking back to the good old days of the UASF.

22:18Vlad CosteaYeah, don't worry about it. I remember what I'm asking. So what transactions should be stored permanently on the public blockchain?

22:28Matthew HaywoodWell, it's any that somebody's paid a transaction fee for, really. It's not for me to say, but, you know, I personally don't want to bloat the blockchain with things that don't really need it. If people are sending transactions back and forward, you know, people require privacy, people require censorship resistance. And it would be quite bad if they couldn't afford to pay the fee to get in a block because other people were shipping around huge amounts of money between exchanges. And they're not going to bother if they pay $50, $100 fees.

23:02That's nothing to them. Similarly, if it's being filled up with people, you know, buying the infamous cups of coffee online and what have you, that doesn't need censorship resistance either. So I'm not saying it should all be only payments that require censorship resistance or a degree of privacy. But yeah, it's good not to increase the amount that the UTXO set's increasing by, and the size of the blockchain, just for things that could be done elsewhere. I mean, I used to pay, you know, some online payments on a sort of recurring basis in Bitcoin.

23:42It just seemed pointless. I can do that over Lightning. I opened one channel. I'm using the Breez wallet, actually, for Lightning. And that's brilliant, because that immediately gives you inbound capacity. When I first started, I started using Lightning when it was, I used C-Lightning from the command line back in the #reckless days. And it was a bit of a pain getting inbound capacity. But luckily, it was quite exciting to make payments over Lightning, so I was doing quite a lot of spending, so I actually had inbound capacity.

24:16But if somebody's just powering one up from the start, it's hard to receive payments. But then things like Breez wallet, I'm sure there are others, it's just I haven't used them, come along and they automatically open up inbound capacity for you. When I started using that app, I went on there, I think there was a guy called Roy on there. I only remember his name because I did pester him quite a lot, asking questions about how do I now set up inbound channel capacity? And he just said, you don't have to, it's already done.

24:44And how do I do this? How do I connect to a node? It's like, you don't have to, it's already done. And because I'd come at it from quite a low level early on, I was asking all these questions, and it was just all done nowadays. So the whole rhetoric about the Lightning Network doesn't work, and this, that, and the other, I think it's all based on people's experience from a long time ago. If you power up something, a wallet like the one I mentioned, nowadays it's really easy to start making payments.

25:10My son doesn't run a Bitcoin node, he doesn't have a Bitcoin wallet, he only uses a Lightning wallet, basically. And he's immediately able to receive payments to it. And that was the kind of thing that, you know, back in the day when Lightning was just coming out and people were running it live on mainnet, that kind of thing seemed quite a while away. But it's just slowly crept on as people have been, you know, adding new features to the protocol and what have you, and then developers have been stacking those up in their apps and things.

25:40Again, I can't remember what you asked me, but... [00:25:43] Vlad Costea: It was about the transactions that should be stored into blocks, because the security of Bitcoin relies on collecting fees.

25:52Oh, yes.

25:53Vlad CosteaAnd as the miner subsidy gets reduced every four years, we have to think of ways in which the blocks still get filled. So there's going to be some sort of transactions going on the base layer, and the less important ones, depending on our own appreciation of what is important and what isn't, should be moved to second layers or sidechains.

26:18Matthew HaywoodYeah, sure. And look, if I end up paying, I don't know, $10 in the future to open up a Lightning channel or something like that, but then I end up doing, you know, countless transactions back and forth through it and, you know, don't close it for a year or something like that, I've got pretty good value for money out of that fee. And by then, hopefully there'll be a lot more people using Bitcoin and there'll be more of those, you know, less frequent on-chain fees paid, but enough that it subsidizes the model as it goes forward.

26:49And also people will be prepared to pay more for, you know, that. I mean, whenever I make an on-chain payment now, I pay like, what was it, one satoshi per vbyte. So I just put it really the lowest I can, and it always ends up confirming, and they're not hyper-urgent payments, but I'm getting an awful lot of security and an awful lot of censorship resistance for a tiny amount of fee payments, which I won't mind paying more for in the future, you know, to do things like deposit in a sidechain or, you know, peg into a sidechain or open up a Lightning channel or something like that.

27:25And then there'll be the kind of payments that you want to make on-chain where you don't mind paying a bit more, because maybe you're transacting, you know, you're sending a larger amount and you want that security. You want, you know, that assuredness of transaction finality and censorship resistance and what have you. I mean, I live in the UK, so I haven't experienced my payments ever being censored, but I'm sure in some parts of the world, you know, that's a pretty sought-after property.

27:56So yeah, and as time goes on... I don't know, the whole financial world has seemed pretty mental to me for a number of years, but at the moment it particularly does. So I try to keep, yeah, I don't like to keep a lot in the banking system, and I can see in the future that I'm going to become more reliant on using other payment systems like Bitcoin. And hopefully more people do as they sort of wake up to the fact that it's the underlying money in these systems that's part of the problem, but also the censorship that will occur as well.

28:29People getting more and more cancelled on Twitter or social media and what have you, for always less and less valid reasons. And yeah, this could be a good time for Bitcoin to shine in those areas.

28:46Vlad CosteaYeah, I agree with you that Bitcoin as free speech money is going to get adopted much more than Bitcoin as digital gold, because not many people seem to care about their purchasing power. But they do seem to care about not being censored.

29:01Matthew HaywoodYeah, that's a very good point. And privacy as well. I think there's been a lot of good privacy improvements through people like Adam with Wasabi Wallet and things like that. So people hopefully pay more attention to that. I sometimes worry that people don't. Maybe Bitcoiners do more than most people, but a lot of the people I know who use Facebook, I know Facebook is really popular, but people who use Facebook and things like that don't really have much of a concern at all about privacy. But I think at some point it will become more of a pressing issue as people start to realise that they can't get money out of here or they can't send it to there.

29:43As you say, Bitcoin then becomes a lot more valuable from that point of view. Vlad, there's so many different properties that make Bitcoin brilliant. Somebody should make a podcast about it.

29:55Vlad CosteaOh yeah, I mean... It's not like there are lots of podcasts out there already.

30:00Matthew HaywoodRight, exactly. Yeah. Maybe you should take this recording and you could turn this into a podcast. Call it like, I don't know, Bitcoin Taken Over or Bitcoin Takeover Podcast or something like that.

30:11Vlad CosteaThat's such a stupid name.

30:13Matthew HaywoodOh yeah, that is a bad name, actually. All right, then. Well, whatever you come up with, we'll go halves on the profit, okay?

30:18Vlad CosteaYeah, I'm gonna call it something like Vlad Talks About Bitcoin.

30:22Matthew HaywoodYeah, that's good. That's better, actually, yeah.

30:23Vlad CosteaThat's the best name ever. Put my name on it, because that's what successful people do. They put their names all over their work.

30:31Matthew HaywoodThere we go. Yeah, but you've got to have a catchier name, sorry, Vlad.

30:36Vlad CosteaYeah, of course I do. But I like the British accent that you have, and I've discovered that people who speak in a British accent tend to get a lot more attention.

30:48Matthew HaywoodRight. The funny thing is, in this country, people would probably view my accent as like a little bit, what we'd call, not like a farmer, but like a little bit country bumpkin, I don't know if you're familiar with that phrase. Whereas when people from other countries hear me, they think I sound like whoever that dude is off Sherlock. I've forgotten his name now, the actor off Sherlock, tall guy.

31:15Vlad CosteaI have no idea. I don't watch that.

31:17Matthew HaywoodOkay, are you going to pretend you don't watch TV and you only read Dostoevsky? You just read books.

31:24Vlad CosteaNo, I read Arthur Conan Doyle for Sherlock.

31:27Matthew HaywoodYeah, but there we go, there we go. I can't remember the guy's name, right, tall English guy with a very nice accent. Yeah, to other people I sound like that, but in this country I don't, if that makes sense.

31:39Vlad CosteaIt's like you can't hear it. I mean, I would be making 20k a month, you know, a Bitcoin a month or two bitcoins a month, if I had the British accent to deliver credibility.

31:52Matthew HaywoodRight, all right, then we can come up with a deal, Vlad, where you just do the talking and I have a headset on and I just voice over immediately what you've just said.

31:59Vlad CosteaOr I can just type and you just read.

32:04Matthew HaywoodIt might work. You talk at a steady pace as well, so I might be able to keep up.

32:12Vlad CosteaYeah, I've been told that I talk too slowly, so people listen to the podcast at 2x speed.

32:17Matthew HaywoodYeah, that was me. I think a while ago I'd made the comment that when I listen to a podcast... I went through a phase of listening to Matt Odell, I think it was Matt Odell who suggested on his podcast that he listened to them on 1.5 or 2x speed. And I started doing that for a while, and it was like gap skipping and 2x speed and what have you. I think I listened to one of yours and I cheekily said to you on Twitter that it just sounded like you were talking normally but your guest was speeded up.

32:49But then you told me the reason why, and I felt really guilty. It was something to do with some school teacher who wasn't very nice to you, and then I really regretted what I'd said, and now I really regret bringing it up again.

33:00Vlad CosteaAh, don't worry about it. It's not like I'm that kind of person who believes he is a perpetual victim because there was some school bullying.

33:07Matthew HaywoodGood.

33:08Vlad CosteaPart of growing up.

33:10Matthew HaywoodThere we are.

33:11Vlad CosteaI'm over it. Yeah. But yeah, we should get back to talking about the Liquid sidechain, because that's such a hot topic nowadays. If you spend too much time on Twitter, you're going to believe that we're at war and we are back to some sort of scaling wars. And I know it's not the case, but even if it were, it's kind of the best scaling war that we can possibly have.

33:36Because it's not about centralizing Bitcoin anymore. It's about choosing the second layer or the sidechain or whatever off-chain scaling solution is best for Bitcoin.

33:50Matthew HaywoodYeah, and the point I was trying to make earlier was that it doesn't have to be one or the other. I think it has been pitched a little bit like that, you know, Liquid or Lightning. The two are just complementary and they have different use cases, you know: big, large amounts, no channel capacity required, you could use Liquid; for small instant payments, perhaps, you know, and being able to run that, you know, on-ramp and off-ramp, being your own node, Lightning. So I just see the two as complementary, really.

34:25I would like to think that if you could take Bitcoin as it is now, and let's imagine it was a big box, and there was a dial on there for security and there was a dial on there for block speed and a dial on there for privacy. And if you could sort of tweak all those dials in different ways and press a button, then it would produce this other thing at the side, which might be a sidechain or it might be a second layer or something.

34:52So you might turn down the security slightly, but you might turn the speed up slightly, and you might turn capacity up, and it would come out with Liquid. Or you might do the same and, you know, turn speed right up to maximum but leave security, or the ability to, you know, open and close channels on your own, and that might come out with Lightning. And all these things would have slight downsides. I think part of the problem is that some people are trying to compare Liquid with Bitcoin and Lightning with Bitcoin, and then Liquid and Lightning with each other, where, you know, there are going to be trade-offs. If you're going to increase the block speed, you know, the transaction confirmation time in Liquid, you're going to have to compromise some of the security.

35:45But when you then take that in the context of, yeah, but the people who are using this, their other option is to leave all their funds on an exchange, it's a really good, you know, it's a really good compromise for them, and it's kind of a no-brainer in that sense. Whereas with Lightning, it's slightly harder, you're having to be a bit more reactive about the security model, you're having to be online when you're making and receiving payments. But you get this instant back and forth of these, you know, amended, unconfirmed Bitcoin transactions.

36:19So I'm pretty sure that we'll see other ones come out in the future, either other layers or sidechains that tweak the dials in slightly different ways. So kind of comparing them as Liquid and Lightning is a bit like saying, yeah, you know, which is better, a spoon or a fork? It depends what you're... you know, trying to eat soup with a fork... But it depends what the situation is, really. I think some people are making out as if there's a battle between Liquid or Lightning, when I think the developers of both systems are being fairly open about the limitations, and the limitations are there because you can't have something that's quicker than Bitcoin but more secure than Bitcoin.

37:01And also this, that and the other, better than Bitcoin, otherwise you've just invented something that's better than Bitcoin and more decentralized than Bitcoin. And I don't think that anybody's going to do that anytime soon, if at all. So, yeah, they're all just trade-offs, really. And anything that gives people the option... None of these things are mandatory either. It's as if people are implying that you have to use one or the other, and of course you don't have to, they're just options that are there.

37:30They've been presented, they're open-sourced, you can go out and work on these things yourself, or you can choose to use them or not use them if you don't want to. [00:37:43] Vlad Costea: Let's talk about the really, really, really geeky stuff. And I've done my homework in this regard, and I know that you can run the Lightning Network on the Liquid sidechain. So basically, instead of, you know... I should explain how Liquid works, right? Because you have a peg-in, and you lock a certain amount of bitcoins into a contract, and then it gets issued on the Liquid sidechain, and you need a certain amount of confirmations for that. And then you have the peg-out, which is basically a settlement that you do with the exchange or the federation itself.

38:20And I suppose for that one, you need to authenticate and provide some personal data, like KYC, depending on the policy of each exchange.

38:27It depends on the exchange policy, really, yeah. I mean, so technically, yeah, like you said, so if you downloaded Elements, an Elements node now, so Elements is a fork of the Bitcoin codebase. Yeah, Elements is a fork of the Bitcoin codebase in which new features like confidential transactions and issued assets have been added onto. If you run an Elements node, go to elementsproject.org, and that links to the GitHub site and what have you. If you download that and just run it with the defaults, it will connect to the live Liquid Network, because a Liquid node is basically an Elements node, an open source Elements node.

39:05But there are some, yeah, and using that, you can connect it to Bitcoin as well. So you can peg in. So peg-in basically is when you send your Bitcoin to a particular address. You sort of, I don't know what the best way to phrase it is, you kind of hide the fact that it's a peg-in address. And then you reveal on the other side, when you want to access them in Elements, you kind of reveal to the functionaries that, look, I sent this to one of your addresses, and they release the corresponding amount of Bitcoin.

39:37So imagine, yeah, bolting up and locking your Bitcoin in a particular address, and then somebody saying, okay, yeah, I've got the right to let go of that, as it were, so I'm going to give you these to move around on the Liquid Network. You can then move around the L-BTC, one-minute block confirmation times, and if you acquire more of it or you sell some or what have you. Then when you come... It takes 102 blocks for that confirmation before you're allowed to sort of claim them on the Liquid side, the reason being to avoid deep reorgs.

40:11So I think that's pretty conservative. I know most exchanges, when you deposit with them, are waiting like, what, six, or it might have gone up or down, I'm not sure, confirmations for that Bitcoin before they allow you to trade it. But just to avoid any reorg disasters, I think it's 102 confirmations for your peg into the Liquid Network. Then when that's in there, you can move it around, and you have a group of functionaries, so they're people that run nodes that have the right to sign off on blocks. So these would be the exchanges and financial institutions and what have you.

40:44So they can create a block every minute, and they all sort of do it in a round-robin style, and they signal that they sort of pre-commit to signing it, and then everybody checks the transactions and they all sign off and it becomes a block. So that means that instead of it being sort of a random process like it is on Bitcoin, you get blocks every minute on Liquid, so an exchange after a couple of minutes can be sure that that's not going to get rolled back.

41:09So they allow transactions between exchanges, and then somebody goes to take their Liquid Bitcoin out. What basically happens is that you sign a transaction that will destroy that amount of Liquid, it will burn those Liquid Bitcoin, and the federation will see that transaction and they'll check that what you're taking out is being destroyed, and they'll release that amount of Bitcoin on the other side. And for that to go wrong, I think it requires, like I said, more than a two-thirds majority of these exchanges to collude.

41:44So although the security model, some people might think, is, well, that's not as safe as Bitcoin or what have you, what if these two-thirds do collude or what have you... I mean, they're all jurisdictionally and geographically dispersed. I mean, it is possible, but it seems highly unlikely. And also you've got to compare it to the fact that people are at the moment leaving their Bitcoin on a single exchange, which is far more likely to get hacked, or for that exchange to go rogue, as it were, and take the Bitcoin out.

42:22So that's essentially how Liquid works, and you can download a node and connect to the network. Now, you can do a peg-in yourself, so you can send your Bitcoin into there if you want to, but to get it out, yes, you have to get out through one of the functionaries, one of the watchmen who sign off on the Bitcoin being released back on the main chain. So another compromise, then, is I guess the on and off ramps to these things. It takes a while to get into Liquid, but when it's in there it moves around rapidly, and then getting out has to come out through these certain channels. But that's not really any different than withdrawing your money from an exchange anyway, and while it's in the system it's safer than if it was on a single exchange anyway.

43:06And I guess on Lightning, yeah, if you open a channel on Lightning, you've got to make sure that the channel's got adequate capacity, and when you're closing the channel you need to cover the fee. So I vaguely remember in the past, this is going back in the day, channels closing because the fee rate went up. It always made sure, I was using C-Lightning at the time, it made sure that you had enough funds to close the channel, so if the fee started going up, it would close the channel. But you've got more control over it in that sense.

43:40There are other means to get things in and out of Liquid as well. You could go to an exchange and you could buy Liquid Bitcoin, L-BTC. I think if you hold Bitcoin on some exchanges, you can just choose to convert it to Liquid Bitcoin, and they just do that exchange for you. And then there are other services like... I think Changelly and ShapeShift. Yeah, ShapeShift, and there's Liquidity as well, and I've used those when I've been testing the Liquid Network to get Bitcoin in quickly. They charge a fee. One of them doesn't, I can't remember which one, it might be Liquidity, but they normally charge a fee, but then you get in and out quickly.

44:21I mean, in the future there are always ways to improve on these things. Like I was saying with Lightning earlier, that I used to struggle getting channel capacity, but that seems to have been handled quite gracefully by a lot of Lightning service providers now. Similar things I can see with Liquid, where you can do swaps. You might swap Bitcoin for Liquid, you might pay a slight premium to not have to wait that 102 blocks or what have you, but all these things will speed up and improve, and people come up with new solutions all the time for these things. So the initial set of compromises that have to be made in moving your Bitcoin onto Liquid or Lightning, I think over time they don't seem as noticeable, really.

45:10And hopefully in the future... I mean, I don't know if my son's ever closed his Lightning channel, for example. I'm giving him money each week, and then he's giving it to me when he wants to then buy something like an Xbox game or something like that. So I'm not sure how long he's had it open for now, but he could be up for a world record of open channel on that soon. And similarly, before that, I'd also used the Blockstream Green wallet to actually send him L-BTC, because there's no need for a channel then. And at the time I couldn't set him up with a channel because he didn't have any Bitcoin to start off with, so he downloaded Green and I used to send him L-BTC, which is fine. But in order to peg out, in that sense, he just used to send his L-BTC back to my Liquid wallet and I just used to give him the corresponding amount of cash. So it was kind of like my own little local exchange there for Bitcoin, Lightning and Liquid.

46:11Vlad CosteaThat sounds like a nice arrangement for a 12-year-old or 13-year-old.

46:17Matthew HaywoodYeah, exactly.

46:19Vlad CosteaI was like that when I was younger.

46:22Matthew HaywoodAnd the other thing about always having to be online and what have you with Lightning was, again, this is Breez, but I'm sure other people might do similar, they have like a payments... I can't remember the actual name of it now. I'll have a look on my phone, but it's like a payments request, and you can send somebody a link, and when they click on the link, it then pings the person at the other end saying, oh look, this person is trying to pay you now, so open your Breez wallet and complete the payment. I can't remember what it's called now.

46:55I can't remember the name of it, sorry. Connect to Pay, that's it. So if I wanted to pay him, I'd send him this Connect to Pay thing, I'd just paste in the link. He might get it during the day when he's in school, supposed to be doing his work or whatever, and click on the link, and then it pings me to say, okay, the person is ready to receive now. So there are ways to get around all the problems of, like, you know, always having to be online and things like that. People come up with smart solutions. [00:47:25] Vlad Costea: And also I read, I think it was on blockstream.com, on the blog section, and it was last fall, that you can now do atomic swaps between L-BTC and BTC. So you don't actually have to do any peg-ins. You onboard the Lightning Network, which is chain agnostic, and from there you can actually set up a decentralized exchange kind of situation, and you're going to trade between assets permissionlessly and instantly. And from there you just move the BTC to your channel, and you're going to close the channel and you get BTC on the main chain.

48:06Yeah, and that's what I was saying about earlier, that the swaps and things like that mean that people can pay a little bit more, you know, there's a slight exchange rate because you're missing that 102-block wait and things like that. And then on Liquid itself, of course, which is something that isn't on Lightning, is the ability to have your own assets, and you can swap between the two. So you could do a swap for USDT, so US dollar Tether, to L-BTC. And there's a swap tool that's on one of the Blockstream GitHub pages where you can actually send your own, and it takes a little bit of to and fro. But I actually did it on Twitter with, I don't remember who it was now, but they said they wanted to swap something, and you paste that, basically, hex back and forward with the swap tool, signing each stage, and then you end up broadcasting it and the swap's completed. So you can issue your own assets to represent whatever you like and perform these swaps between them, which does open up a lot of interesting use cases for, you know, more open exchanges, or the ability to say, yeah, I've got this Bitcoin, I'll swap it for this much USDT, and you and I could go through with that exchange without any one of us, like, fleecing the other one. Fleecing meaning stealing or robbing. I don't know if that's a common term or if it's just an English thing.

49:34Vlad CosteaNo, it's not a common term.

49:36Matthew HaywoodOkay, then I'd mean like scamming them.

49:39Vlad CosteaYeah, that's more American.

49:41Matthew HaywoodOkay. "Scammer." That was my American accent.

49:46Vlad CosteaYou should try to speak in it much more often.

49:49Matthew Haywood"Hey, why are you scammer?" I don't know even what regional dialect that is. I think you can't tell the regional dialect of other countries very well, can you?

50:00Vlad CosteaIt depends. If it's very obvious, I can tell an Irish accent from a Scottish one. The Irish tend to be much more sweet. That's an interesting accent.

50:15Matthew HaywoodThat's good, Vlad.

50:17Vlad CosteaBut the Scottish, I mean, it's very hard to speak.

50:21Matthew HaywoodYeah.

50:22Vlad CosteaIt's very hard to understand. I don't know how these people communicate.

50:27Matthew HaywoodI'm sure they understand each other, at least. And of course in Wales, where I actually live, we've got Welsh. I don't speak Welsh, actually, but yeah, our own language as well. I only know the Welsh for things like motorway service station and coffee and things like that. It's pretty bad.

50:50Vlad CosteaI visited Cardiff, I think I told you when we were... I went to a Rolling Stones concert in 2017, I think, or 2018, and the people were just unexpectedly nice. They were just buying me drinks and saying, oh my God, you're this guy and you came all the way from Romania just to see the Rolling Stones here in Cardiff. And they were feeling obliged to be nice to me.

51:15Matthew HaywoodI'm just laughing because you said unexpectedly nice, as if you had a preconception that all Welsh people were just horrible.

51:22Vlad CosteaNo, it's not about Welsh people. It's just that I was coming from London, and there you don't see anyone being nice.

51:28Matthew HaywoodYeah, no, that's fair. Maybe it's not such a big city, maybe. Yeah, I find everyone's been really nice. And people talk about the Bitcoin community and things like that, but in all the conferences I've been to and things like that, everyone's been really friendly and chatty. And yes, that's a good community. That's like a virtual community, though, isn't it?

51:54Vlad CosteaPossibly, but you know, on Twitter they're going to be a lot meaner than they are in person.

52:00Matthew HaywoodYeah, that's true.

52:01Vlad CosteaI don't know what it is about this application where you can only type 200 characters or something that makes you so cranky.

52:10Matthew HaywoodYeah, I try to be fairly friendly on Twitter, but I do see people getting into some spats sometimes. Actually, I recently commented on a spat that you had with another well-known podcaster, because I've met both of you and you both seemed really friendly people, but it seemed quite funny that, yeah, on Twitter it seems to be different rules sometimes. There we go.

52:34Vlad CosteaI have no idea what you're talking about. I'm not acknowledging anything.

52:37Matthew HaywoodOkay, good. Well, yeah, but it's funny, because I know people in the area where I live, but then I also know the same people when I go to conferences, or that I've, like, gone of my own volition to various Bitcoin conferences, Paris and Lisbon and places like that, and I often see the same people pop up there. And that's like a little community that just meets up at random places around the globe, and you see the same people, even though I don't know who some of them are. Yeah, it was nice, the last one I went to. I'd been sitting behind, without knowing it, is it Kalle Rosenbaum? I might be saying his name wrong there, who wrote the... Oh, man, I've now forgotten his book name as well. It's a black and white book about Bitcoin with a rabbit on the front. Oh, that's going to annoy me now. We're going to find that in a minute, Vlad. Something about the rabbit hole? No. It's brilliant.

53:35Vlad Costea21 Lessons by Dergigi?

53:38Matthew HaywoodNo. Kalle.

53:43Vlad CosteaWhy is the rabbit such a popular character in Bitcoin books?

53:46Matthew HaywoodBecause you all go down the rabbit hole, don't you? Grokking Bitcoin. There it goes. Grokking Bitcoin, a book by Kalle Rosenbaum. But I hadn't realized I'd been sat behind him at conferences for a couple of years, because I recognized his, I hope he wouldn't mind me saying, his distinctive hairstyle. And then the book came out and I saw that he was tweeting about it, and I thought, oh, actually, I recognize that guy, I've been sat behind him. So all the conference-going around is really nice, and I find people very friendly in the space.

54:18Vlad CosteaYes. I must wonder how many of us are actually real, you know? You see people having thousands of followers, but then at conferences you see the same faces. And I can understand that not everyone goes to conferences, and possibly not everyone should go to conferences, because unless you're interested in new stuff that's coming out and presentations that are actually boring, I guess you get most of the information just by reading the Twitter feed every day. And actually, I was underwhelmed a few times when I realized that people go to conferences and they do panels and they make presentations about the same stuff that they write on Twitter.

55:04Matthew HaywoodYeah, they probably do, really, don't they? Yeah. So yeah, if you follow them on Twitter, you probably know quite a bit about the work that they've been doing, I guess, but it's a chance to chat with people as well. I should probably make more effort to go to Bitcoin meetups and things like that, local ones. I've only ever been to ones in other countries, bizarrely. But yeah, I should probably make more of an effort to do things like that locally, just to chat with the Bitcoin industry, so I don't have to bore my family talking about it.

55:32Vlad CosteaNow, that's a word that I like: bizarrely.

55:35Matthew HaywoodBizarrely?

55:36Vlad CosteaBizarrely. It sounds so much nicer when you say it.

55:41Matthew HaywoodBizarrely. Gubbins is another word that I use quite a lot as well, which just means stuff, you know. Gubbins. Gubbins, yes. Gubbins. I get picked up on this, and if we have Blockstream team calls and things, I sometimes come up with some strange phrases that need explaining.

56:01Vlad CosteaWhat was the other one? Magitastic or what?

56:03Matthew HaywoodNo, automagically. Automagically. Yeah, it might be familiar to other developers, where somebody asks, like, and then we want this to happen, and then we want this to come out the other end. And you're like, well, how do you expect that to happen automatically? Yeah, it's normally when somebody's asked for just unrealistic things that couldn't actually happen to be automated: automagically. I'll try and use it in a sentence in the week, Vlad, and I'll see if you spot it on Twitter.

56:33Vlad CosteaI will pay attention now.

56:35Matthew HaywoodYou'll pay attention to my tweets from now on. It's very, very rude that you ignore them.

56:40Vlad CosteaYes. I have no prior knowledge of the existence of automagically before you said it.

56:47Matthew HaywoodThere we are. I'm pretty sure that it's a real, it's a commonly known word, and I didn't make it up. If I did...

56:55Vlad CosteaI suppose if you look it up on Urban Dictionary, you're going to find it.

56:58Matthew HaywoodYeah, it does already exist. For a brief moment there I thought I'd achieved something in my life and I'd actually made a word up, but no.

57:09Vlad CosteaYou can make up another one.

57:11Matthew HaywoodOkay, I think I'll think of a Bitcoin-related one during the week now. See how that does for you.

57:16Vlad CosteaYou don't have to think about it. That's how words are made up, because, you know, have you seen Donald Trump tweet? He tweeted "covfefe".

57:26Matthew HaywoodYes, that's right.

57:27Vlad CosteaIt doesn't mean anything. No, it doesn't. But now it has its own Urban Dictionary entry. I suppose you have to become president of the United States before making up words.

57:37Matthew HaywoodYeah. It's funny, I keep up to date more on foreign politics through some of the people that I follow on Twitter than sometimes I do in my own country, which is quite bizarre, because I only ever normally tweet out about Bitcoin. But some people that I follow mostly tweet about Bitcoin, but occasionally verge into the odd politics every now and again. So it's like, Trump, election, it sometimes becomes like election Twitter, then back to Bitcoin Twitter, and then COVID Twitter, and then back to Bitcoin, and then protest Twitter, and then back to Bitcoin, hopefully. And yeah.

58:18Vlad CosteaThere's a little-known fact about this podcast. It was supposed to be called Bitcoin in Politics, because the abbreviation of that is BIP.

58:27Matthew HaywoodOh, very good. Yeah. Well, the abbreviation works, but Bitcoin in Politics doesn't make much sense. Is that why you ditched it?

58:34Vlad CosteaNo, somebody suggested to me Bitcoin Takeover, and unlike what I said like 20 minutes ago, when I assumed it was a bad name, I said to myself, you know, that's actually brilliant. And I looked up the domain name, I could take it, so I bought bitcoin-takeover.com, because bitcointakeover was taken, but it's not being used for anything, so maybe someday I can pick it up. And from then on it just became natural, because there's so much to talk about when it's Bitcoin Takeover, and there's only a few topics that you can approach when your show is named Bitcoin in Politics.

59:15Matthew HaywoodYes, that's true. Yeah, you might limit your scope somewhat.

59:20Vlad CosteaBut I did my university studies in political science, so I'm kind of a political geek. So I was happy when I got to talk to people like your former colleague Zack Voell, who also graduated in political science and economics, and also Francis Pouliot, who also graduated in political science.

59:42Matthew HaywoodRight. Maybe there's something about that that draws you into Bitcoin, is there?

59:47Vlad CosteaI think Bitcoin in itself started with a political message. There's that message written in the genesis block which says "Chancellor on brink".

59:59Matthew HaywoodYeah. I don't know, was that political? Yeah, it was a monetary message, wasn't it? And that's what got me interested in Bitcoin. Originally, I don't know why, I just went from one obsession to the other over my life. Each one lasted between like a couple of weeks up to like six months. I don't know, might be some bit of popular science or physics, or it might be something even like, I was obsessed with poker for a while. And then for one of my birthdays I got about five or six books on the financial system and all these books about money collapse and this, that and the other, and the global financial system, and then I ended up getting into gold. And then eventually I just couldn't believe that my entire life I'd spent, you know, in education, heading towards getting a job the whole time. I guess they guide you down that path: you're going to get a job, you get money. But never once in that... I just couldn't believe that never once in that time had anybody actually explained how this thing that we were all supposed to spend our lives chasing after actually worked, or who controlled it, or how it came into circulation. Just absolutely crazy.

1:01:08And then when I suddenly started reading these books, I just couldn't believe it, and I just felt outraged, and I just thought, well, this doesn't make sense. Surely this global financial system is just going to collapse, like, tomorrow. Do you ever get that, where you find out about something and then you think that this is so ridiculous that it can't last much longer? So I then went into a panic of like, okay, what else, what other option is there? And I could only at the time think gold, and then it was through that that I then found out about Bitcoin. But I still just, I don't know, I mean, years ago I would read things like ZeroHedge, and you'd think that the next economic meltdown was, you know, just happening tomorrow kind of thing. But they seem to be eking it out for quite a long amount of time, no matter how many trillion dollars they pump into the system. But surely it can't just go on indefinitely.

1:01:58You know, I look at it like, in the 2008 financial crisis, which is what got me interested in the whole thing, it's as if they were inflating a balloon that then started to have a small hole in it, and instead of letting it deflate and putting a little patch on it and then slowly beginning inflating again, they just connected the balloon up to some high-pressure jet hose and just started, whack, you know, pushing more and more and more air into it. And I didn't think that would last very long, but from 2008 onwards, the solution was just pumping more money into everything, and they seem to just keep doing it. But at some point, surely, something's going to go wrong. I don't know what your thoughts on that are, Vlad. [01:02:38] Vlad Costea: I mean, I think about it quite often, but it seems to work out, and people seem to accept that it works out. And I suppose our, you know, our own obedience and our own acceptance of the system and our belief that it works is very functional and has a lot of power. Because as long as we believe in our politicians and we believe in party politics and we think that voting for the other side is going to make a huge difference, I mean, the system gets perpetuated. And it's not in anyone's interest to make us think too much about how stuff works. We'd rather be, you know, just like lab rats chasing our basic needs and our pleasures and stuff like that.

1:03:23Yeah, and I think sometimes, when I see things on TV or social media or something, I think some of it's just designed to make you just think about that and just don't look at what might be happening elsewhere. But if everybody had the chance to actually just turn off from all that for a while, you know, people who weren't aware might start to think about the effects of inflation, or what was happening, or why they were paying taxes and what have you. I mean, inflation itself is mental. And I think, like, my grandparents could buy a house outright for like 300 pounds or something like that, and nowadays the average house price of that is like a thousand times that in Britain. And people just don't realize, because it happens slowly over time. It's like, what is it, that frog that boils in water, you know, slowly rising temperature of water, and the frog doesn't realize and jump out and ends up boiling. It's a bit like that, really. It's just slowly leaking money out all the time.

1:04:20And this, especially at the moment, with all the, you know, airdrops that have gone on to help people out, you know, governments just printing money and sending it out, it does kind of make... I think I've at least seen people that I know who don't normally question the monetary policy of governments, or, you know, how banks work and things, saying, well, if they can just do that, then why are we still paying taxes on things, when they can just magic money out of thin air? Because they have kind of said we can just magic money out of thin air. Maybe not in so many words, but I don't think it was too different from that. So yeah, I don't know. I would hope that during this, the current thing we're going through, I don't want to say COVID because I'll get banned in about a minute, but off the back of that, people would think a little bit more about, like, well, how could all this be happening, you know, in terms of just hitting the money printer to go brrr and all that. Surely it will make some people who aren't thinking about it stop and have to think about it. I hope so.

1:05:19Vlad CosteaI don't know. Thinking is dangerous, for everyone's sake and for our own sake. I guess some people have figured out that it's easier to just make us learn the facts and...

1:05:35Matthew HaywoodYeah.

1:05:36Vlad CosteaYou know, it's science, we're not supposed to question it.

1:05:39Matthew HaywoodNo, you're supposed to just read a headline, get scared, get angry, spend all day on Twitter and Facebook saying how angry you are about different things, and hating the people who live next door to you. Or, I don't literally mean next door to you, in case my neighbour's listening. But, like, you know, the people who are probably in a similar situation to you are, and just raging about it online. I think that's, you know, that doesn't allow people to actually have a look at things on a wider scale, does it?

1:06:09Vlad CosteaYeah, I guess this goes back to the initial purpose of Bitcoin in Politics. But the fact that we are basically divided and educated to hate each other based on the way that we cast our votes and other meaningless criteria only makes the system stronger. Because if we were to agree on topics and say, you know, we're not each other's enemy, it's actually the government that's screwing us, it's this international system that's rigged, we should do something about it to change it, then that's dangerous for them. So they would rather divide us on issues such as gender and race and all of this stuff that, I suppose, is inherited by virtue of birth, so there's nothing you can do about it. So they're going to say, oh, so you are of this skin color and you're of this nationality, so you should have these beliefs that you learn at a very young age, and you're going to perpetuate them and disagree and start fights with anyone who happens to be different from you. And we're going to fuel this fight that makes no sense whatsoever, because we're all human beings, and at the end of the day all of these differences don't matter at all. It's all about how we use our time, our limited time in this world, and how competent we are. But they're going to say that competence is a bigger discrimination than, you know, anything else, and they're going to naturalize this idea that it's much more important to have gender quotas than to have competent people in your team. And I guess they're just putting gas on this fire. What's the term for it? There is a David Bowie song about it.

1:08:00Matthew HaywoodFuel on the fire, no?

1:08:02Vlad CosteaYeah, fuel on the fire. "Cat People", that's...

1:08:06Matthew HaywoodYeah, yeah. I think if everybody's out there arguing with each other over petty things and not realizing the similarity of situation that everybody's in, then, yeah, you're not looking at the main target, in terms of you're not looking at what the government's up to or what have you. I mean, it's incredible how people's attentions can flip from one thing... I mean, in this country, you know, it was just Brexit, continuously, continuously, and, you know, pitting people against each other based on which way you voted on that. And then COVID, and now, you know, the protests at the moment, although they're not as, you know, prominent here as they are, like, in the US or something like that. But yeah, it does make you wonder whether somebody's quite glad that all that's happening, because it's drawing attention away from what's going on. I mean, the amount of coverage I've seen of actual political decisions being made on matters that actually regulate, you know, how people or the country or the economy or something like that... there's not a huge amount of them, because everyone's just focused on reporting the latest statistics on COVID, or whatever's next. Whatever is next, who will see, who will know?

1:09:21But I do try to avoid that. I didn't read or listen to the news for a very long time, for a while, because it was just so negative all the time. And it turns out that if you just ignore it for a while, it has no negative consequences on your life. But my friends, when I started ignoring the news, were quite shocked that I was doing it, I think, in that I'd be out of touch, or that things would change massively in the country and I would be unaware of them. But nothing changes at all, apart from the fact that I wasn't getting depressed just listening to the news all the time. And I did say I still was listening to the news and reading the news, it's just that I was very selective about the news topics that I read. It wasn't what was getting shoved out on the TV or what have you. Well, at the time it was probably mostly Bitcoin news, actually, but I thought that was more beneficial to me long term than reading about, I don't know, whatever the panic was at the time.

1:10:13Vlad CosteaAbsolutely. And we only have so much time and energy in one day, so if we don't spend it wisely and we focus on problems that we cannot change, it's going to consume us and drain us all the time and we're not going to be productive. So what good are you if you can't even fix your own problems?

1:10:37Matthew HaywoodYeah, exactly.

1:10:38Vlad CosteaThat's usually a question that I ask myself. Yeah. I mean, it's easy to get lost and get distracted with problems that don't concern you and think that, you know, your life is going to change if these problems get fixed. But it's easier to focus on other problems after your own problems are fixed.

1:11:01And one issue that I think about quite often lately is that of career politicians. I regard politics as something that you do at some point after you have lived in a country for a number of years, and you identify some issue, and you tell your neighbors and everyone around you, you know, you should vote for me so that I fix this problem that we have had for years, and you're going to pay me basically to sit in an office and talk to people and negotiate and try to make the best decision so that we fix this issue. And instead of focusing on their initial goals... You know, because everyone gets into politics for a reason, but most of the times it's all the wrong ones, like being narcissistic, craving for attention, or being unable to do anything else except for public service. And it's not even service, you know, it's kind of just getting to public resources and exploiting them for your own benefit. But these people would not be any good in the private sector, that's what I'm trying to say. If you just cut them off and don't allow them to run for multiple terms and just encourage new people to come out each time and try to solve some of their own problems, you're not going to have the same kind of systemic classism, you know? Politicians tend to think that they're on top of the world, they are the highest-ranked people in a society. But they are the ones who make the rules, and everyone else listens to them and follows them, so they have a platform for attention by default.

1:12:42Matthew HaywoodAnd I don't know, because, despite you thinking that I was, I wasn't young many, many, many years ago. But I think, like, back to my grandparents' time, I imagine that the politicians, when I see videos of the politicians, or I read something that some of them said back then, they seem to have championed something that they really, really believed in. Whereas it feels a little bit different now, that they basically jump on any bandwagon that's going, just as you said, because it's their career. They've just chosen a career path, and I think they could flip between one thing and the other from one day to the next, whatever sort of suits them best. So yeah, I don't know, I've become disillusioned with the idea of politics over the years, I think, which is why I think Bitcoin's good, because it sort of allows you to... I don't know, I think I could probably do more to change the future for my children by working with and reading about and contributing to Bitcoin than I could by voting for somebody in the next election or something.

1:13:42And it does worry me that lots and lots of people seem to just defer every decision to, like, a higher authority. And one of the things I try, I don't know, in vain, I think, they'd probably get bored of it, is to tell my children to sort of, well, I'm wearing the t-shirt now, "Don't trust, verify". But I think that applies to so much more than just Bitcoin, or the headline. Well, I like to, on a weekly basis, bore my son by finding a headline and then digging into it with him and finding out that actually it's based on something that's not really true, or that it's just highly misleading. So I haven't tried to persuade him one way or the other with my thoughts on anything, other than he just has to go out and check stuff for himself, because you can nowadays. And people seem to be so easily led, and also almost willingly just go along with being led. I mean, when we had the lockdown here, there were quite a few people jumping up and down, sort of saying, you know, my children shouldn't be going to school, you should lock down the schools. Well, I just thought, if I didn't want my children to go, I wouldn't put them in, I wouldn't keep them there for another week, if it was, you know, something I felt really strongly about.

1:14:52I don't know, it's strange. I feel, I mean, probably people always feel this as they get older, that maybe the younger generations are a bit different. But I feel that there's people losing the ability to take responsibility for their own actions. And that's what I do worry with things like... One concern I'd have with Bitcoin, if it went, you know, the fabled, what is it, Bitcoin hyperbitcoinization, get that word right, is that there are a lot of people out there that would, I don't know, instantly hand it off to a custodian, or, you know, they'd take like a Facebook approach to managing their Bitcoin. So I think it will be important for people in the space to carry on emphasizing exactly, you know, that we can't go back on these things. So people talk about, you know, toxic Bitcoin maximalists and things like that. That's people who are very much trying to, you know, enforce and make sure that people understand how important some of these things are, I guess. And you need one extreme to counter the other, really. If everybody just thought you could play along nicely and trust some other people somewhere to do it, we'd all end up with the New York Agreement again, and yeah, things would be quite different. [01:16:11] Vlad Costea: That's why I think that there's quite a lot of politics in Bitcoin, and there are politicians who make up stories about what it means to be a Bitcoiner and what you have to do to be a first-class citizen of Bitcoin. I suppose Satoshi started this by saying, I think it was in 2010 or something, he said that people who don't validate their own transactions are pretty much second-class citizens. And as the space grew and lots of new products have come out, we can see that, for example, hardware wallet companies say that, oh, you're not a first-class citizen unless you store your bitcoins or your private keys on one of our devices. And then you have node companies that come out and say, oh, you don't have to learn how to download Bitcoin Core on your computer and install it, because that's very complicated. Obviously, it's not like you have ever used a computer for anything.

1:17:12Those kind of things are good, though, I think, because I think that the majority of people out there, you know, who maybe aren't into Bitcoin now but may use it in the future, they're not going to be overly bothered about learning about these kind of things. They're not going to sit down with the same kind of passion and learn about and understand and look back on certain events in Bitcoin's history and understand it. So if you can get this box, a node in a box or whatever, I think things like that are a great idea, if you can just get one of those and connect your hardware wallet to it or something. Oh yeah, I look forward to the day when one of those things just sits, you know, sits next to my broadband router or something like that. I mean, at the moment I've got like a little Raspberry Pi set up. I wouldn't want anybody else in the household to attempt to do it. But I think they're all good things, because as long as you can make it quick and easy... The more and more people that join that aren't bothered about running a node, because they think somebody else is looking after their Bitcoin for them or something, it does put more risk on Bitcoin in the future. It opens it up to attacks and things in the future. Anything?

1:18:18Vlad CosteaI think that this creates the kind of anxiety about doing stuff yourself that's convenient for marketing and for selling products, and ultimately leads to custodians, because some people are going to say, this is way too complicated. Why the hell do I have to spend $200 on a node? Actually, it's not $200, it's $300. So why do I have to spend $300 on a node and $100 on a hardware wallet, and then I have to learn how to use Electrum and how to use Wasabi and whatever? And why should I do this when I can just be on Coinbase, and Coinbase has never lost any funds? And that's a very real claim.

1:19:00Matthew HaywoodThat is a good question, though, isn't it? Why should I do these things and not just leave it on Coinbase? I'm sure you could come up with reasons why, if everybody left all their Bitcoin on Coinbase... Well, I'm sure things would be different than they are now. You know, if people hadn't been running nodes, we'd probably have had a group of companies take over Bitcoin back in the New York Agreement or what have you, and I'm pretty sure they would have just turned it into a business product, basically, to suit their needs, which wouldn't align with those of their customers.

1:19:36So yeah, I think it is complicated, those things, but if you can make it easier... I mean, they're going to get cheaper over time, things like that, aren't they? But why do you think people should not bother about things like that? Or do you... So you're taking the other side of saying that people should... I know that people should take more time and effort to pay attention to these things, but I think that part of the reality is that some people just don't, because they're the same people, the same billion, whatever, people that use Facebook and don't care about their privacy because they can message their friends or something like that. They're the same people that probably won't care about running a Bitcoin node. So you've got to make that pretty easy.

1:20:12Vlad CosteaI guess the best example is not Bitcoin, but the ones who type in their credit card information on any website. They don't look for that encrypted lock on the URL. They just type in their credit card information and think it's all in good faith. And if something goes wrong, they can always make a call to the bank and explain that something went wrong and they want the chargeback or something. So I guess this is convenient. But my problem is that we're not really taught to be responsible. And there's this anxiety that develops and is nourished into Bitcoiners, newcomers, that they should use a custodian.

1:20:57For example, you look at Casa, which started out as a node company and now focuses much more on custody, being the custodian of different people who don't want to run their own node, they don't want to hold their own bitcoins. They just hand them part of the multisig setup, like a key or two or whatever, depending on how complex the setup is. And then they trust them with some sort of inheritance program, that's what they call it, so that if you happen to die, they're going to be the ones who can access the funds.

1:21:32Matthew HaywoodWell, there are processes in place with multi-signature. I don't know much about it, but it's a multi-signature setup, isn't it? So they never have sole custody of it?

1:21:41Vlad CosteaNo, they don't have sole custody. But it's still trusting a third party with a service. You have no idea for how long the company is going to exist, and you're projecting that the company will outlive you?

1:21:57Matthew HaywoodYeah, I'm not sure. But there's another key, though, isn't there, that you'd leave? Yeah, okay, fair enough, again with another third party. But I guess if you're using multiple third parties... But these things are fine, in terms of there's got to be a balance somewhere. I mean, I'd prefer it if everybody sat down and learnt how to use a full node, but I just don't think that's realistic. Actually, you know, when we're talking about Bitcoin, hyperbitcoinize, hyperbitcoinization, I get... It's my age and the lateness of the evening, Vlad. One of my fears is that it suddenly does go global, and that suddenly there'll be everybody saying, oh, I own Bitcoin.

1:22:43And they'll be holding it on their phone wallet, or they'll just have it written down on a piece of paper somewhere, or, yeah, they'll just be holding it with a third party. Not that there's anything wrong with writing it down on paper, but I mean, they'll be holding it with a third party or something. And I don't know, just from going through things in the past, like shell shock, I guess, after things like the New York Agreement and things. I think that's a concern, that people will have less knowledge and less inclination.

1:23:14And Bitcoin will become more popular when people are using, you know, like, Cash App, and when people can buy it through things like that and hold it on there. But then it's, you know, I don't know how many of those people withdraw it, you know, so that it's just under something that they control, and everybody's going to nick their phone, or, I don't know how the actual app works. But yeah, it might place a lot of power in the hands of companies rather than users. And of course, behind every company there's a figurehead, isn't there?

1:23:46So when people are like... If you take the New York example, you say, like, I don't know how many it was, but let's say 12 companies signed the agreement. That basically boils down to 12 companies that represent however many users and with this many employees. It basically boils down to 12 people that had the decision and had the authority within the company. So it was actually a group of individuals who had authority to say that, who tried to take control, as it were, or to say, we're going to do this and it's going to go ahead because we said it is.

1:24:15Yeah, and in the future, who knows, it might gravitate around other companies who are custodians of the Bitcoin or something like that. So I would, yeah, anything that can help people run nodes, even if it costs a couple hundred quid, you know, for how much people might be holding in there in Bitcoin, and for how much people spend on other stuff as well. You know, a couple hundred quid on, I don't know, Sky subscriptions, that's like a video service here, and things like that. I know.

1:24:43Yeah, I don't know. Yeah, I'm not sure. We'll see.

1:24:50Vlad CosteaIt's definitely interesting to see how the space evolves, and how you see all of these early adopters from 2010 and 2011 were using no such products. They were not on hardware wallets. They were just backing up their wallet files on hard drives, and that was it. That was their only way of using Bitcoin and creating a backup. They had no seed phrase.

1:25:20Matthew HaywoodNo, but I think it didn't have as much value then, and it was more like security through obscurity, that nobody was attacking the network with, you know, billions of dollars' worth of resources or something, which may happen, because it wasn't that large a target at the time. And as it became a larger target, and by target I mean takeover attacks and things, not just theft, people place more focus on owning the nodes. And I guess a lot of people have been through things like Mt. Gox or lost coins somewhere.

1:25:49I mean, I've never lost coins through my own incompetence or through, you know, an exchange hack or anything like that. I can imagine that's a pretty shell-shocked sort of moment when that happens.

1:26:03Vlad CosteaI haven't heard this word in a long time. But it makes me think about the Teenage Mutant Ninja Turtles.

1:26:11Matthew HaywoodOkay, fair enough. That's probably a good place to wrap it up then, is it, Vlad?

1:26:15Vlad CosteaYes.

1:26:15Matthew HaywoodVlad, go off and look at the Teenage Mutant Ninja Turtles. Do you know that they were called the... This is the last little bit of British information for you. "Ninja" was deemed too aggressive a term, and they were called the Hero Turtles in this country, yeah. Oh dear.

1:26:32Vlad CosteaI wasn't sure if it's just Germany, because they are the ones who get most offended over stuff. They were the ones that had the Wolfenstein version without the swastikas and stuff like that. Castlevania without the blood.

1:26:49Matthew HaywoodIt's funny to look back on things now. I rewatched Terminator last weekend. I remember at the time, I'm sure that was an 18 when it came out, but I've got it on Blu-ray now or whatever and it's a 15 now. I'm sure at the time that was like, oh my God, that's so violent, or whatever. If it got re-released nowadays, it would be like a PG or something. So people get desensitized to stuff over time. Like, using the word ninja was seen as too offensive or too violent or something.

1:27:21I guess we all just get desensitized over time. Anyway, Vlad, I'll let you get back to watching Teenage Mutant Ninja Turtles.

1:27:28Vlad CosteaYeah, I actually have one last question before closing up. So from your experience working with Blockstream for like three years now, do you think they're evil? And have you ever walked past their help support desk, and did you see any reptile people?

1:27:46Matthew HaywoodOh, hang on, somebody's just come in the room carrying a gun. They're holding a sign up. I've got to read it. "Blockstream are very good people and they're not evil. And the guy holding it isn't a lizard." No, from the moment I joined, they're very welcoming people. Far more intelligent people than I am working there, but everyone spends a lot of time explaining things to me over the years. And I haven't seen any lizards. But I do own a lot of hats. I do own a lot of hats.

1:28:20They're actually very generous with merchandise, actually. I've got to say, I'm mostly staying with them for the merch. I get a lot of good merch.

1:28:29Vlad CosteaSo you get paid in merch?

1:28:31Matthew HaywoodI just get paid in merch, yeah. I've got so many Samson-designed hats, yeah. I've got so many... When I jokingly said hats and stickers earlier with Lightning, I think that I have spent quite... The majority of my Bitcoin spends have been on stickers and hats and things like that. But I do get a lot of good merch. So if anybody is thinking of applying for a job at Blockstream, the merch benefits, well, they're out of this world.

1:29:03Vlad CosteaRight, plus you get all of these nice stickers which say "I got on the Lightning Network and all I got was this sticker".

1:29:09Matthew HaywoodThis sticker, exactly. But also security-focused ones as well, like the Blockstream Steel, which, you know... Because I don't want to sit here hammering my seed phrase into plates of steel myself. It would have resulted in injury.

1:29:29Vlad CosteaThat's also a nice one. And the Toxic Maximalist hat and the Blockstream Spy hat and the t-shirts and all that good stuff.

1:29:38Matthew HaywoodExactly.

1:29:38Vlad CosteaI suppose you could set up a merchandise store in your house.

1:29:41Matthew HaywoodI could, yeah. I'd sell it out. Well, I don't want to, because it would be a breach of my privacy to be walking around selling Bitcoin merch. I could say, actually, that I've given up on Bitcoin now, so I'm getting rid of all my old merch, couldn't I? I could sell it out the door, yeah. That's a good idea. I'll do that, Vlad. If I run on hard times, I could always sell my merch online, or at the front door, yeah.

1:30:03Vlad CosteaSounds good to me. Let me know when you do.

1:30:05Matthew HaywoodOkay, I will. I'll send you a freebie.

1:30:07Vlad CosteaOh, you don't have to. I'm supposed to pay for it, right?

1:30:12Matthew HaywoodNice. I wasn't trying to get anything out of you, Vlad.

1:30:16Vlad CosteaObviously, but if you're in a hard situation and you want to make some money and you have to sell that merch?

1:30:22Matthew HaywoodI'll tell you what I have got, actually. You can hit me up on Twitter if you want it. When The Times... was it BitMEX? BitMEX? BitMEX did the 10-year anniversary of Satoshi taking the Times headline for the genesis block. I did buy a stash of those, the 10-year ones. I think it was BitMEX, I'm very sorry if I've got the name wrong. They did an advert in there and did an article spread over a few pages, and I did buy some of those. I stashed those away.

1:30:57And I was going to give them to people at conferences, to people I like. You'll notice I didn't give one to you, Vlad. I'm only joking. I never took them. I didn't have enough room in my luggage. So yeah, I was planning on doing a giveaway for them at some point. I've got a couple of those knocking around. They've probably got a value of upwards of about, I'd say, about $2, probably. I didn't buy them for the future monetary value. I just thought it would be nice to give away at some point in some kind of thing, quiz, I don't know.

1:31:27Vlad CosteaI'll just pretend I haven't heard that part about not thinking that I'm one of the cool kids who deserves one of them.

1:31:34Matthew HaywoodI didn't. I've hardly given any away, Vlad. Don't feel bad.

1:31:38Vlad CosteaSince I'm so good at pretending, I will just say that this episode is over now.

1:31:43Matthew HaywoodRight, okay. I'll immediately send you one. I'll go and get it from upstairs. I'll immediately send it to you, Vlad. And I'll include a sticker as well. How's that? I'll annoyingly stick the sticker over the front of the newspaper. I'll stick it on there so that if you try to peel it off, you'll tear it and you'll immediately render it completely worthless. How's that?

1:32:04Vlad CosteaTen more minutes. What? No, I just extended the length of the podcast episode by ten minutes because you said that.

1:32:14Matthew HaywoodRight. I have to go about my business now.

1:32:18Vlad CosteaYeah, we all have to. It's like 11 p.m. here anyway.

1:32:22Matthew HaywoodIs it? Oh, it's late. I know, but you work late and get up early. I do the opposite. No, hang on. You work late and get up late. I get up early, unfortunately.

1:32:35Vlad CosteaYeah, you enjoy the sunrise, which is nice.

1:32:41Matthew HaywoodNo, actually, the sunrise is too early. It's incredibly early in the morning now, the sunrise here. It's about five o'clock or something, or half four, something crazy. I'm not up that early. I'm up about half six. That's early enough. That'll do.

1:32:57Vlad CosteaOkay, Matthew, is there any closing phrase or anything that you want to say? How can people follow you?

1:33:04Matthew HaywoodOh, I am wintercooled, @wintercooled on Twitter. That's a daft name, I wish I'd chosen... now. Yeah, that's probably the best place. And yeah, I'd like to say thanks for having me on, Vlad. I've enjoyed chatting to you, I always do. And yeah, take it easy. Enjoy your Teenage Mutant Ninja Heroes. Turtles. Ninja Hero Turtles.

1:33:33Vlad CosteaActually, Raphael is my favorite, so I'm gonna enjoy it.

1:33:38Matthew HaywoodAll right, then. Take it easy, mate. Bye.

1:33:41Vlad CosteaBye then, bye.