Citadel Dispatch

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EPISODE: 0.3.0

BLOCK: 690746

PRICE: 3047 sats per dollar

TOPICS: bitcoin privacy, danger of KYC, whirlpool, joinmarket, wasabi, paynyms, lightning, custodial exchanges, fee market, medium of exchange vs store of value

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[00:00:00] Unknown:

Being whipsawed by what China is doing there on the crypto front in terms of Bitcoin mining.   Do you do we need to see that threat abate in order for for Bitcoin to   emerge from what some people are already calling its next winter?  

[00:00:16] Unknown:

Oh, yeah. Listen. Big it's been very volatile, but just let's just go back and look at it 30,000   feet. It was roughly 8,000 last July.   It's in the mid thirties today. If we didn't have that blow off top, I think people would have been very happy   with Bitcoin's trajectory.   But I think the point that you're making is that, yes, China put a hurt on Bitcoin,   but long term, I think that's very positive. Because remember, everybody's worried about Bitcoin's effect on the environment. We just learned from the Bitcoin Mining Council   that Bitcoin mining is now 56%   renewable   with China out of the picture and all those coal fired electric   plants in in China, Melissa, out of the picture,   that ratio is gonna continue to increase. And when you see things like what's going on in El Salvador and the continued expansion of Wall Street   firms adopting   Bitcoin and other funds, like Ethereum we just launched an Ethereum fund as an example   July 1st. I'm long term positive   on what China is doing. China getting out of the way, I think, will be a long term positive for Bitcoin.  



[00:01:58] Unknown:

Happy Bitcoin Monday, freaks.   1st Bitcoin Monday ever. Usually, we do join you on Tuesdays.   I I appreciate all of you who are joining us today instead.   We had to move some scheduling around to make this very important conversation happen. It's a conversation that I'm looking forward to.   This is CIL dispatch episode 30, the interactive live show about Bitcoin distributed systems privacy and open source software.   I just wanna do a quick shout out as I always do to the rider dive freaks who join us,   every week in the chat, in the live chat, and make this show what it is.   It's a very special experience having such an active   audience that it that are just always participating   and helping   move this, you know, Bitcoin education forward. This show would not be the same without you guys.  

I also want to thank all of the Freak's   who constantly support this show,   with their stats.   I wanna keep this show   completely audience supported,   with no ads and no sponsors. I think it aligns incentives the best,   and I can't do that without your support, so I do appreciate that. The easiest way you can support the show   is via podcasting 2 point o.   You can look up different podcast apps that support that. That's new podcast apps.com,   and you can stream sats directly to the show as you're listening. It's pretty cool. As I I see the day after I post it, I just see sats start coming into my wallet, just streaming in as people are listening.   It's really fucking powerful.  

You can also support the show   if you're watching the video stream through the l n URL   QR code on the bottom left hand screen bottom left of your screen,   or going to sidle dispatch.com,   you can support via tippin.me,   if you prefer lightning, or you can support with the samurai pay name.   My pay name is young poetry 985. I'm pretty proud of that randomly generated,   pay name. It's like 1 of 6 I have, and this is the one I like the best.   So with all that said, I do appreciate all you freaks.   We have a very important conversation today.   We have Samir at Wallet joining us,   someone who I've been trying to have a conversation with publicly for a while. We were kind of waiting   for him and his cofounder,   T Dev to to rip 1 in person.  

And we're still gonna do that, but, it's such an important conversation that I I I think,   it needn't wait. So we're so we're here to have it, and I'm I'm very appreciative to have him here. How's it going, Samirai?  

[00:04:28] Unknown:

Yeah. Thank you very much for having me, Matt. It's been a long time coming.  

[00:04:33] Unknown:

As his name,   makes it obvious, he is the cofounder of Samura Wallet,   the the best Bitcoin privacy wallet that exists today,   in my opinion. Thank you. Thank you for all the love, Matt. We also have I'm a user,   and I I love your wallet.   We also have Open Arms joining us. Open Arms is a constant return guest.   Very big in the Bitcoin privacy scene. He's someone I respect a ton,   very close friend.   So I'm very happy to have him here for this conversation.   How's it going, Open Arms?  

[00:05:08] Unknown:

Hello, both. I'm very happy to be here. Hello, for all the freaks.   Yeah. I'm I'm myself, as you can see my profile picture in there I am a pain in   from the beginning. I've been joining Bitcoin Twitter, you know,   and I'm a user of some of my words. I do share the opinion that it is absolutely the best on mobile,   and it is,   you know, absolutely   best for the use case for the and the UX for CoinJoin is just, you know, you cannot really   do better at the moment.  

[00:05:46] Unknown:

So, yeah, let's dive into it. So, yeah, we're gonna dive into everything. Thank you both, I just have to say. That's real nice of you to say, and thank you, Matt, for all the coverage that you've given us on, on this podcast and on the rabbit hole recap as well.  

[00:06:01] Unknown:

Samurai, for whatever it's worth, you know, this show is a live show, and I am realizing that I'm hearing a little bit of extra sound coming from your microphone. So I guess, the easy fix is just to keep yourself muted,   when you're not speaking.   I think you realize that on your own, but just double checking.   The   so this is kind of a follow-up conversation to, well, first of all, the first 29 dispatches, because even though we do hit different nuance topics,   every dispatch,   Bitcoin privacy has obviously been a major theme of Citadel dispatch to begin with. It's one of the reasons I started the show in the first place. It's a it's a topic that doesn't really get that much   it just doesn't get that much open discussion. I think a lot of people are afraid to talk about it. I think a lot of people's incentives,   are set up in ways that they don't want to talk about it.  

So I've taken it on myself and the rider to freaks who join us in the audience every week,   have take we've taken on ourselves to to just talk about this more openly. I think the most important thing as Bitcoiners for us to realize is that we want to have,   open, transparent discussions about these important topics. As soon as you stop talking about things,   openly,   you just you just regress.   But it's also specifically a follow-up   to Citadel dispatch 15,   which was with Wasabi cofounder.   No Power and Open Arms joined me, and Citadel Dispatch 16, where I had the 2 lead maintainers of JoinMarket on,   Waxwing and Chris Belcher.  

So those are the 3 main,   Bitcoin privacy tools   that exist today.   And fortunately   for us,   we've had   we're gonna this is this is the trifecta. We have the trifecta here on Citi dispatch. As always,   you can you can,   listen to these episodes,   through your favorite podcast app, or you can go to citildispatch.com,   where you can have links to bitcoin tv.com,   which has full video archives, which you can download. You can torrent. You can share, all for free,   because that's the way that's the way I think it should be done.   So I think, there's a lot of places we can start in this conversation.  

I think,   I I think the first topic we should start with is KYC and the dangers of KYC.   I think, you know, a lot of public Bitcoiners,   have ties to KYC services, regulated services. KYC is is know your customer.   It's when they when a service a regulated service   asks you for your selfie   and maybe your passport or your license and your address, your mailing address, and your name, and does all these different checks on you.   And, usually, that does get combined with all your Bitcoin information that they hold, whether that's withdrawal addresses or deposit addresses, the amount you bought.   You know, these these companies,   these regulated companies are the most profitable businesses in the space,   and they have long reaches, and and a lot of public Bitcoiners are tied into them, so they don't want to talk about it or talk against it.  

So, Samara, I mean, you've been very outspoken about the danger of KYC. You wanna start us off here?  

[00:09:19] Unknown:

Yeah. Sure. So we've been   outspoken about KYC, like you said, since pretty much we we started in 2015.   And our our primary kind of cry is that KYC is a, it's a creeping disease.   Meaning we didn't get it didn't start with us having to take photos of our, you know, selfies with our photo IDs and having to provide all this information.   It's gradually   worsened to this point, and it's gonna continue to get worse. So by tolerating it a little bit now, you're setting yourself up for failure in the future. You're setting yourself up for much worse protocols in the future.   Obviously, that's like a battle cry that is doomed to fail ultimately,   obviously. But,   it's still an important battle cry to to be had and for users to hear because   we're at a point now where KYC is so normalized in our in our culture that   the concept of non k y c acquisition of Bitcoin is to some to some new coiners is is completely alien, completely foreign. They hadn't even thought of it. It never even occurred to them. So continuing to spread the message about the importance of that,   it, you know, is important.  

Yeah. The the the risk, Asar, just just my final point. The the major risk, as Matt, you alluded to,   in in the context of practical privacy,   concerns is that it's it's it's not possible. It's definite that the exchange that you're using, if it's a regulated entity, is sharing that information   with,   a chain surveillance firm. That's chain analysis or something else.   And so a profile is being made of you and your transaction is based on that KYC  

[00:11:01] Unknown:

history. Yeah. I mean, I think you made a very important point there,   that it especially,   you know, more Bitcoiners that have been in the space for a longer time might not realize,   or, like, a nuance that they don't realize is   is for a while, Bitcoin was, like, the exception to the rule. KYC is everywhere from the day of our birth.   You know, just constant surveillance and tagging. I was you know, even stuff like license plates. Like, you drive around and you just you you just got your little KYC plate on the front.   So a lot of these new users, it's just what they expect. Like, if you sign up to Venmo,   you're gonna have KYC when you sign up to Venmo. So so it's it's something that they're used to.  

But as Bitcoiners that have been around,   we've seen it creep into the system. It was like Bitcoin was, like, one of the last bastions of   of no KYC.   And just over the last 2 years, even 3 years, it's just literally crept into everything. Even like the renegade exchanges and stuff, I've all basically bent the knee,   to KYC.  

[00:12:04] Unknown:

And Well, the the worst part is not even bending the knee. It's it's willingly going to the regulator and willingly over complying   to, you know, to curry favor or perceived favor with the regulator in their country.   We've seen a lot of that going on as well.  

[00:12:21] Unknown:

100%. And, I mean, one of the things that you mentioned is   that pretty much all of these services   are sharing that information with these chain surveillance companies that are are providing them some kind of regulatory compliance and quotations.   The but what also people should realize is even if you did, like even if you're coming from the angle that you trust,   the exchange you're using or the the custodian the regulated custodian you're using, if it's a custodial wallet that requires KYC, and even if for some reason you trust the chain surveillance company,   all this information   is gonna get leaked eventually. Like, we've seen that as information gets stored online,   it eventually gets leaked. I mean, I saw a headline come out that, like, Guess Clothing,   today announced that in, like, February, they leaked a bunch of Social Security numbers and stuff because they got hacked.  

So,   you know, it doesn't really matter where your personal information is. The one the one,   key trend we see is that this personal information, once it's on the Internet, once it's stored and logged and one of the things with KYC information is that by regular by regulatory standards, they're expected to hold it for many years.   So it's sitting there for a very long time,   is that it will get leaked eventually.   And one of the elements of Bitcoin   is that   people who are bullish on Bitcoin, myself included, I believe that this chain will be around forever. I think this chain is going to outlive me.   So when you have records that tie yourself to your Bitcoin,   at any point in the future, if that information gets out,   there's a whole trail that they can follow if you're not if you're not practicing Bitcoin best   Bitcoin best practices in terms of privacy.  



[00:14:08] Unknown:

Absolutely. And and one of the things I think a lot of people also forget and look over is that   Bitcoin privacy,   it works pretty well when you're talking about,   a system that's synonymous,   right? And that's the system that Satoshi designed   When you start attaching a real life record, a real life KYC record   to the chain,   it starts to become not not good enough at all and a privacy nightmare.   So, you know, the dangers of KYC can't be   overstated.   And I think everyone has a duty to try to start to think about how they can acquire their their stack,   through other methods. And for a lot of people,   they're productive people. They can produce things, and they have services and and goods that they can create to offer. And they should do those things and offer those things, for Bitcoin. Earning Bitcoin is one of the most liberating things, you know, feelings in the world, I feel.  

And it it really puts this whole conversation,   you know, into a hold in a different perspective, once you're an earner of Bitcoin.  

[00:15:12] Unknown:

Yeah. I think one of the things here, right, is that,   as a as a Bitcoin circular economy develops, kind of   what you just mentioned, where people instead of buy Bitcoin, they earn Bitcoin, and instead of selling Bitcoin, they spend Bitcoin,   it distributes.   You you end up not having all these centralized,   platforms that are the gatekeepers. Right? And and as a result,   it'd be way more difficult to enforce KYC AML laws on all those individual actors. Like, if you're gonna, you know, enforce it on some random ass bodega,   in downtown New York City, it's a lot different   than trying to do that versus doing it to Binance, which is a massive multinational   corporation now.  

But in the short term,   it it presents a major threat to most Bitcoiners. I think, like I mean, I'm just,   you know, speculating here, but I would say over 90% of of new new corners that come in, new Bitcoin users that come in are coming in fully KYC'd. Right?  

[00:16:13] Unknown:

I mean, yeah, I would I would, assume it's a large percentage of the new coins that are coming in. Because like we said, it it's just a regularized,   occurrence,   and, you know, it's it's, like, it's a similar onboarding process to to Venmo   and and PayPal and those those types of things.   It's familiar to them.  

[00:16:33] Unknown:

Open arms. Do you think we've missed any nuance here in terms of KYC? What are your thoughts?  

[00:16:38] Unknown:

I've completely agree what you have said. I mean, Bitcoin is an immutable public open measure. It does it never meant to   be paired with any kind of personal information.   It should be   cheap and easy to   generate a new identity for for you or for anyone else anytime.   And it is the   if we do it in the the other way and we keep databases of every metadata   we can metadata we can imagine,   then it's it it will grow to be a surveillance tool   we cannot   imagine.   So that's kind of even in a Bitcoin future, there is   dark future,   which is the k y c   one.  

And indeed the the circular economy or the, you know, the normalization of the privacy tools   is is   the road towards the brighter future.   So I completely agree there.   Regarding, like, KVAC practices,   I would like to kind of,   point out a couple of things, which I don't know what you think about these. And,   maybe you don't have the have it in the US that easy, but, there is this   phenomenon which is I called KYC light,   where you basically   still send   a bank transfer under your name,   and you probably need to provide, like, an email address or   even in case of basically, if you are doing an online transfer, you actually,   exposing your name, uncovering your name and bank accounts,   or your companies,   to the seller. But this happens   to,   like, loads of, little services which are nowadays   moved to   Switzerland instead of, like, being based   in other places. I don't want to do, like, advertisement, but, the point is there that they are not keeping any data, but they would be able to get the data from the bank   through their bank relationships because the the   the Swiss laws are that you need to kind of sign a message with your the private key of your address currently,   which you are withdrawing to. So they have a proof that   they are sending Bitcoin   to a person who has actually initiated the bank transfer so they can have their   data from their bank, but there is at least not an extra database which could leak. And, I mean, obviously, in case of a, like, a or some kind of   similar situation,   it could be still,   you know, it's still a centralized thing which could be leaked, but it's it's it's a bit better than, like, registering on on a big   exchange where you just need to give everything and it just sits there and sending you out marketing emails in Punch and stuff.  



[00:19:33] Unknown:

We should,   yeah. Yeah. The a lot of the, DCA,   smaller companies use this this type of technique that Open Noms describes.   We we should be careful of celebrating anything like this though,   because it's just the progression   of KYC becoming more usable and more,   yeah, user friendly   just shows how much further it has   become ingrained in society.   The reason that they allow this to happen is because they can get every detail they need   from the bank, as you mentioned,   in in the possibility that they may need they may need it.   And the the issue is the,   spectrum for   why governments may think they they need access to this information   is very fluid.  

And   the EU,   proclaims to have strong privacy laws,   and this is where SIPA,   you know, is used for this this type of transaction that you described,   which is   an EU based   settlement and transfer system for for traditional banks in the EU.   Yeah. So, you know,   it's not a celebration. I I think that it's positive that you're you know, that there's not an additional database   that is being   maintained,   but the underlying issue isn't that is a data storage and data hygiene issue. Then the underlying issue is it's a fundamental fundamental undermining of our freedoms   and our freedom to transact.  



[00:21:08] Unknown:

I mean, so there's a couple interesting points here.   The first point I think that I try and highlight a lot, but it it gets glossed over, is that, obviously, this is a Bitcoin show.   So I focus on,   Bitcoin privacy concerns specifically.   But our traditional payment rails are fully KYC'd   to the hills.   This is not a as an issue that is,   isolated to Bitcoin.   In a lot of ways, you know, traditional banking,   is worse.   And Bitcoin provides especially if you, you know, if you use Bitcoin with privacy best practices,   provides a way for you to opt out of that system.  

Another aspect   is, Open Arms mentioned,   Switzerland.   Part of that is because Switzerland's not part of the EU. The EU is, like, one of the worst places right now, I think, to to operate a Bitcoin business.   They just keep adding more and more   regulatory overhead. It's even worse than America, it seems now. They kinda leapfrogged us.  

[00:22:10] Unknown:

The UK is also part of the EU, but they but they're part of the EU. You know, it's like one of those types of things.   And and and they will have to implement   a a version of AML,   5th money laundering directive AML 5 d.  

[00:22:25] Unknown:

Yeah. So that their limits are going down. Like, you know, you could do, like I I don't know the exact numbers, but you could do in a month, like, €10,000,   you know, last year. Now you can only do, like, 2,000.   And, you know, it will be going to   go being squeezed down and, yes, this they are part of the European   economic area, so the, like, the AMLD 5 and things are are apply just as well as it applies to the UK, but the UK   rather puts some more on top. Indeed.  

[00:22:55] Unknown:

And to add on top of that,   you know, part of my concern and part of the reason why I think it's, you know, extra important for us to get ahead of this,   trend in Bitcoin   is because the usage of cash is decreasing.   It's decreasing   mostly because   our peers,   in our age group and the younger individuals,   prefer not to use it out of convenience. They prefer to use the digital alternatives.   But it's also decreasing because governments are trying to   reduce its usage. So in a lot of countries,   already we're seeing the usage of cash just being seen as suspicious even if it's completely allowed.   Why would you use cash instead of this more convenient system where, you know, you might get points back or some bullshit like that?  

So as cash usage decreases, this becomes more and more of an issue for Bitcoiners, I think,   because you kind of eliminate that whole cash for Bitcoin trade system,   on the cash side. You know? A lot of the issues there,   you know, originate from the fiat side of the equation.   I'd also add that we have anarchyoc   on Twitter   who wanted to mention, he makes a very good point here, is that   these KYC laws, you know, they end up with a lot of people in the traditional system being excluded. They can't have bank accounts. They can't have digital payment apps.   And as a result,   if we don't have a   robust circular economy where people can earn Bitcoin,   those people also get excluded from the freedom benefits that Bitcoin provides. Right?  



[00:24:33] Unknown:

Yeah. Definitely. I mean, I I was gonna say, like, to to be positive about some stuff, but I don't wanna be, like, seen as as negative.   The positive thing is KYC doesn't exist on chain, like on the blockchain itself. There's no   it exists only on the onramps.   Right.   Or most of the onramps.   So if you're able to bypass   the onramps, the regulated onramps, you're able to interact with Bitcoin in a way that is is liberating. And it has to you know, that's why we've been hammering home for a really long time, years years,   for users to to figure out ways to acquire Bitcoin   outside of that system, outside of that KYC system,   because it opens up   it opens Bitcoin up to its full potential, and that's a censorship,   free payment network. Right? That's a censorship free   form of value and and,   who that's what, I mean, that's what I got involved for.  

So, you know   Another It's become more it's become a lot more difficult as you mentioned though. Anyone who's been involved in a for a while has seen the the dramatic shift, in the cash,   for the cash trade,   ecosystem.  

[00:25:48] Unknown:

Another aspect here,   that's important to mention, I think, is that   mining remains one of the best ways to,   obtain KYC free Bitcoin.   Next week, I will have, diverter,   Econa Alchemist on again. They'll both be return guests. They weren't on the same episode last time. And also Ronan Miner, who just, I just noticed Neil joined us in the live chat.   They will all be joining us for a special civil dispatch next week to discuss No KYC Mining,   and that will be also at a nonstandard time. That'll be on Tuesday,   at noon EST. So   that's, 1600   UTC. So just,   pay attention, freaks, for that episode coming up next. I'm also really looking forward to that conversation.  



[00:26:36] Unknown:

Matt, can I jump in, based on a chat comment  

[00:26:39] Unknown:

here? Yes. Read the comment first.  

[00:26:41] Unknown:

It just it just came out went off my screen, but it's from, I think Winston Hecht. The second comment he made, and it's the gist of it is equating   wanting to avoid the KYC system to wanting to evade taxes.   And   I would just like to point out to this gentleman,   that the KYC system was put into place   has nothing to do with tax evasion or taxes. It was put into place be after   the, 2001,   terrorist attack as a way to make sure that money laundering couldn't be used to finance another terrorist operation. So nothing to do with taxes.   And to equate the two things is just really status thinking.  

The the point of avoiding the KYC system is because we have a fundamental right to transact freely and you cannot transact freely   through the KYC system. And Bitcoin was created in a way where you can opt out of that system.   And we   all we're doing is preaching people that if they're looking for a way to opt out of that system, there exists a solution, and that's Bitcoin.  

[00:27:44] Unknown:

So So what I really like about dispatch   is   that, you know, we have a lot of very dedicated Bitcoiners that believe in the mission,   and they tend to   just consume as much Bitcoin content as possible, use as many tools as possible,   constantly educate themselves, constantly continue their learning. And as a result, what they do is,   I've learned from   operating the Bitcoin education space for such a long time that the easiest way for us to scale this thing   and increase,   you know,   usage of of Bitcoin privacy best practices   is to have a group of ride or dies that go out and then help their, you know, 10 or 15 people,   that look at them as the Bitcoin guy or girl,   to to to provide,   you know, a solid base to those people that look to them for advice.  

But   so so I would say that there's not a lot I I I would hope that there's not a lot of this audience who who doesn't know,   who doesn't think privacy is important.   I'd be surprised that they're still listening 30 episodes in. But I'm curious, samurai, to to the majority of Bitcoiners, I would say, like, 90% of Bitcoiners,   who are not currently   trying to use the tools,   Their main   issue or the the main roadblock is that they don't see the value in privacy to begin with. So just to pull this conversation back a little bit, I'm curious if you could say to them, you know, why they should care in the first place, why privacy matters in general, not just in Bitcoin land.   I'd be really interested on on how you would phrase that.  



[00:29:26] Unknown:

Well, yeah. I mean, they may they may not think that they that they value privacy, but, of course, of course, they value privacy.   You know, they they have curtains on their windows. They have,   they have doors. They had they put their well, they probably don't send letters, but if they did, they put them in an envelope so no   one but the intended party could read it.   People have a natural desire for privacy.   And   what the Bitcoin tools   that are,   available today, the   the ones, especially that you mentioned in your intro,   what they all attempt to do is just replicate the the same type of privacy that has existed in the cache system,   for for, you know,   1000 of years.  

And I don't think that's that's revolutionary or radical.   And   if they don't value, you know, privacy besides that, I don't try to convince them. I just think, think, you know, maybe they're just kind of they haven't had that moment yet where,   you know,   something happens in their life that they start to value their privacy, or maybe they're just too too far gone, and they're not the people that we need to be talking to.  

[00:30:43] Unknown:

I tend to think   for most people, they won't really get it until they get burned. Would you would you agree, like, till that moment happens where they touch the stove and they realize, fuck.  

[00:30:54] Unknown:

You know, this shit is acting a lot of people. Yeah. I think a lot of people are like that.  

[00:30:59] Unknown:

And I I think as we we enter this more digital world where more and more of our life goes online,   we're gonna see more breaches, privacy breaches, and data breaches,   that expose us,   publicly,   to the world, our intimate secrets and our intimate   lifestyle choices,   and just all matters of things that we do in our day to day lives. So the   my my it's it's kind of sounds   bearish short term in terms of of privacy, but I think my my bullish take   on on people, the world caring about privacy is that so many people are gonna get burned over the next 10 years, not just in Bitcoin land,   that they're gonna be forced into realizing the need for it, and then they'll seek out the tools. Would you agree with that?  



[00:31:50] Unknown:

Yeah. I I I agree with that. I think you have for a lot of people or majority of people that they're gonna need to to have some sort of event happen to them. Right? They're gonna need to get burnt in some way.   But, I mean, for others, I think that,   you know, the the events of of 20,   2020   and and 2021 with with COVID and with the   the the really strong government response pretty much everywhere,   has really kind of opened up a lot of people who maybe weren't thinking about this,   previously. So thinking that maybe this time they started taking their their privacy seriously because   things things can change very quickly,   and laws can can be reworked very quickly.  

So,   you know,   maybe more of those types of events will bring more and more people who are who care about that type of thing.  

[00:32:46] Unknown:

Yeah. I I agree wholeheartedly with that.  

[00:32:49] Unknown:

I mean, 20 one other point to that is, I mean, if if governments start to get or crackdown and get more repressive, especially around,   transaction free transactional freedom, so I. E.   Cutting off funding   to groups that are, you know, or or even just individual content creators,   through the platform and on YouTube who are, you know, spreading the wrong message.   Those types of events, if this continue to happen, create a whole class of of user that   that, you know, hopefully, would be able to use Bitcoin to route around   that type of event, like, in the way that WikiLeaks first famously used Bitcoin as the first major   economic participant,   when they got their,   you know, Visa and Mastercard donations,   canceled.  

So you wanna have the privacy tech and you wanna have the tools available for for that, you know, potential or, you know, inevitability.  

[00:33:48] Unknown:

Yeah. I mean, I think the plan should be to have the tools ready,   have the education ready, have the resources ready,   and when the masses realize the need,   they'll be there for them. Right?   Yeah.   Open arms.   Yeah. Any thoughts here before we dive in deeper?  

[00:34:11] Unknown:

I mean, it it's it's never enough to talk about this. We always do on on on dispatch, and I I love that.   I think   people   yeah. I I agree that you either have something happened to you or you come from an environment which is like, you know, has been exposed   to problems   connected with, like, autoriturism   or surveillance or or, like, just   extortions   and,   taking property away, which was, you know, belonging to people without any way to to kind of   save it. I, myself, from, you know, the eastern part of Europe and and then moved to the to the very kind of comfortable   western   society where where people are really just like the boiling frogs, you know, who who are now about to kind of   you know, it would be time to jump out, but they won't.  

And   that's   yeah. It's just   need to need to open eyes   to to to these things.   But I think there will be the the real adoption. I mean, not in terms of how many 1,000,000 of dollars come in, but in terms of how many users come in will happen on the places which need   Bitcoin   and these technologies   as well.   And then,   you know,   now we are at the at at this at the level where people have some we will have tools to   have for them available   if they   are ready to   just search for it. You don't even need to learn much. Right? You don't need to you don't need to program anymore   to to construct   a coin join. Right? And,   that that is a good thing, and we need to continue to improve   and make it   more easy and more accessible   for for these people to   to be available. And then, you know, everyone else who who doesn't want to boil   could jump out of the water.  



[00:36:19] Unknown:

Yeah. I agree.  

[00:36:22] Unknown:

So with all that said,   you know, the show is focused   on actionable Bitcoin discussion, things that Bitcoiners today can can do to better themselves.   So we have we we so far, we've said,   earning Bitcoin, mining Bitcoin.   I guess mining is earning. It kinda falls into the same subset,   circular economy,   just realizing the need in general.   But then we also have what you guys have been working on over at Samurai Wallet,   which is it's it's gonna be funny, this whole conversation, I think, because your NIM is both Samura1 Wallet and the project is also Samura1 Wallet. But,   let's dive into,   you know, what your strategy is over at Samurais   and how you guys are approaching this, for everyday Bitcoiners.  



[00:37:18] Unknown:

So,   can you can you repeat the question there, Matt? I kinda lost you for a bit.  

[00:37:26] Unknown:

Basically, like, what is your strategy over at Samura Wallet? Like, how are you guys approaching this issue? How are you, you know, trying to provide,   a a toolset that is useful for Bitcoiners today?  

[00:37:37] Unknown:

Right. Right. So so I guess one of the most important points about what a user can do, other than   avoid the KYC system because as as you said, most are gonna be either they didn't hear this message early enough or there's just no other way for them,   and they, you know, can't produce or earn for whatever reason.   The tools that that we've we've created,   one of the the benefits of those tools for KYC,   UTXOs   is that the forward looking activity of those UTXOs   once they go through the tools that we create,   specifically Whirlpool,   can't be   connected to the KYC UTXOs   in, of the past. So it's a way of breaking the KYC record   on chain anyway   for them for for users who have those UTXOs. Now the KYC record will still remain, of course, with the entity where you acquired the t, the coins from,   but the link with your   KYC information   to your on chain UTXO information will be severed. And I think that's,   that's the fundamental,   tool that we provide in Whirlpool. And every other tool that we provide   is is essentially building on that idea.  

And we can get into the weeds if you want, but that that's the that's the gist of of our tool and and and generally all all privacy tools tools and all all the CoinJoin   tools, specifically.   The,   you know, the point of CoinJoin is is what? To turn   deterministic   links into probabilistic   links.   So, you know, that's that's exactly what what we do.  

[00:39:25] Unknown:

So you made an interesting point there, and I've kind of been, you know, thrown over the coals over it sometimes.   You know,   privacy   focused people,   have a lot of passion, and that's one of the reasons I love operating in the space.   But you would agree that,   if you are going to KYC,   going into CoinJoin   afterwards, using Whirlpool afterwards,   is is strictly   the best option to do if if you are KYC ed.  

[00:39:57] Unknown:

Yeah. Yeah. And I I mean, I would extend it to all all UTXOs, whether they're KYC ed or not. I think they should go through a round of equal output coin   joint.   Every and it should be done, you know, relatively frequently.   So,   yeah, I agree completely. If if you've gone through that process of KYC,   you need to sever the on chain footprint between your KYC record, which links real life   with the blockchain.   You know, the KYC record will still exist. Your tax record will still exist. The exchange will still have all the information that they had prior to   the the whirlpool,   but on chain,   which is where we're concerned,   we'll be we'll be good.  



[00:40:42] Unknown:

Yeah. That's also an interest that's an interesting point that you mentioned there because a lot of people that, like, come in through Bisk or something,   say, like, I don't see why I have the need,   for using, these CoinJoin tools if I'm buying without KYC to begin with. But even if you're a vendor and you're receiving Bitcoin from a customer,   you're receiving Bitcoin from someone. Someone knows   that you're the one who got it,   and you wanna break that link regardless. Right?  

[00:41:11] Unknown:

Exactly.  

[00:41:13] Unknown:

Can can I just,   say say that, when we are focusing on on on the importance   of   avoiding KYC first of all, and then once you get into it, you know, try to get rid of the rid of the trail so not to have your payments tied to your identity.   But then privacy is,   you know, is much bigger than that. Even if you are not   we would not have this kind of, you know, we wouldn't need to show our passports anywhere.   Then you would still   because of the,   qualities of the Bitcoin block blockchain   having every address to and from   and the amount public, you need to   be able to hide   from   the if you buy something, you don't want the seller to know what your stash is, you know, what what what is the all your money is because, you know, it was   next time at least, it was ask for a higher price then. Or you don't want,   someone to know what is your month monthly wage if you are being paid in Bitcoin. That is, if I understood correctly,   that is   the backwards looking privacy   which can be,   provided by Cogent. And then the 4 forward looking one   is that your employer I mean, you don't want your employer to know exactly   when and what and how much did you buy.  

And   either the employer or wherever you have your Bitcoin from, that could be the the person you bought from. Also, you know, you shouldn't know about what he's   doing. I mean, this is very basic. If it would be the case in the in the normal banking system,   then, you know, we we cannot imagine that. But people are not   really aware of   the the thing of the case that   this is the default in Bitcoin if you are not using CoinJoin   or Lightning or swaps or, you know, other other kind of tools   that,   you know, everyone knows everything. They just need to look, and it's there for eternity.  

[00:43:14] Unknown:

Yeah. You don't want your boss to know your spending habits. That's ridiculous.  

[00:43:21] Unknown:

Yeah. Exactly. And you don't want to have the corner shop know your earning  

[00:43:25] Unknown:

either.   Exactly.   Very well said. I   so let's let's, you know, let's dive into I'm I'm trying to think where we should go next.   So so one of the things you mentioned there, samurai,   is is this idea that, like, the baseline   should be these coin joints.   You know, like, almost like we should just   I've kind of come to the conclusion that almost   everything we do in Bitcoin is is a post mix activity.  

[00:44:04] Unknown:

Definitely. I've come to the same conclusion.  

[00:44:07] Unknown:

So what we really wanna see   is   all major Bitcoin wallets   standardize that activity and basically   not only make every spend a coin join, but also   make every spend a post mix out of a,   like, a proper nondeterministic   coinjoin rounds. Right?  

[00:44:29] Unknown:

Yeah. Yeah. Definitely. I I I I think that,   you know, if you don't wanna go as far as to say that's that there needs to be standardization   between the protocols,   Right?   Then you should we can at least say that there needs to be certain attributes of the protocols   that are demanded by by users of the protocols,   which are no deterministic links. Right? Each mixed transaction has to be all probabilistic,   not deterministic in any way,   and various other qualities.   And I think that if if those standards could be could be met on the actual mixing protocol side, then you, you know, that would be phenomenal for users.   And then on the post mix side,   as you as you suggest, Matt, is is it's almost as important because if you combine your post mix   with any other UTXOs   associated to other,   activity, you will be linking their histories together,   and you don't wanna do that. So it's really important for the the wallet to,   implement a post mix strategy   properly. Now   the attempts at standardization   were made,   you know, way back in in 2016,   I believe,   with,   no bar from what would become Wasabi.  

And,   TDEVD   was involved and various other contributors,   some from the Open Bitcoin privacy project.   They would,   create the   0   link spec.   And 0 link spec specifies all of these conditions of post mix, account segregation,   the segregate, you know, the structured liquidity.   All of these are defined in the zero link specification,   and we believe that to be a good specification.   And that's what Whirlpool is is built on. And we think it ticks all the boxes and, you know,   it's been turning away now for for a few years.   And,   every transaction has had a 100% entropy,   no deterministic links, and   a solid foundation to build on.  



[00:46:48] Unknown:

Sorry. I thought, Open Arms was about to jump in there. I,   so, I mean, one of the things when we talk about,   Bitcoin privacy is is when you track Bitcoin, right, it's a it's a probability game.   Basically,   external actors are looking at the chain. Maybe they're combining KYC info, other information they have. A lot of times, we suspect that these chain surveillance companies are also running nodes,   to do active surveillance. They're mixing it with KYC information.   But there's also   certain spending   methods.   A perfect example is if you spend,   people like sending   round amounts.  

So if you if you send, you know, 25,000,000 sats, you send 0.25 Bitcoin, and then there's a random amount,   that's, you know,   8 digits long,   as the other output,   you can you can pretty much assume that the round amount is the actual send and the other one is the change.   Another heuristic that a lot of people see is,   if if if you if you spend the full the full UTXO,   without change. So if you spend the full UTXO without change, a lot of times, it'll be assumed,   but, of course, it's it's probability, but it'll be assumed   that you're sending to yourself because in what situation   in very rare situations,   your the amount you wanna spend is exactly the same amount as your UTXO.  

Another common heuristic is a common input ownership heuristic, which is that,   all inputs belong to the same sender,   same person. So it it links those transactions on   chain. So when we're talking about Bitcoin privacy on chain, we're talking about   reducing,   the probabilities   of being able to basically,   guess or estimate, you know, when when Bitcoin changes hands and and how those transactions are happening, looking at those transactions on chain.   So one of the main aspects of that   is that it becomes a it becomes very much a numbers game. Right? You know, you need we're you're only high your your your privacy is only as good as the crowd that you're among.   So not only do we need to get,   you know, private Bitcoin usage up so that there's more people that are actively doing it in the ecosystem,   because, you know, you could be the   you could be super focused on Bitcoin proxy, but if someone pays you with a KYC transaction,   then you don't even you might not even realize that they paid you with a a KYC at UTXO.  

So so not only do we wanna get usage up, but, also, we have this aspect that because we have these multiple tools,   you have separate distinct,   basically, liquidity pools among the different implementations. Right? So there's there's always been a push   or at least a hope that we could have, you know, at least some kind of standard. So at least, you know, whatever the subset of Bitcoin users are that are trying to practice Bitcoin best practices in terms of privacy,   are together in that. Right?  

[00:50:02] Unknown:

Yeah. Definitely.   I think, you know, it's   it's important to   to have a variety of tools that are specialized for the situations that you find yourselves in.   Whether   it's a post mix spend or or it's getting into a equal output point join,   or if it's doing a swap or whatever the whatever the case may be.   But it   as you as you mentioned, Matt, just,   a few moments ago,   I think that it all has to stem   from the post mix account. So you have to go from, you know, a   unmixed account, a deposit account, an account 0, however you call it,   to a   post mix account, segregated and separate.  

And that Postmates account may have different rules,   spending rules that are in in place there.   And then from there, all these other options,   open up that work cohesively together,   and and actually are solving   problems that users are facing.   Whether that be just a general undermining of a heuristic that you mentioned,   or actually evading a   a,   you know,   overzealous   exchange, for example, who is known to blacklist   UTXOs.  

[00:51:28] Unknown:

So, I mean, I think let's let's let's jump in deep into how   you guys have set up,   Whirlpool from the entry into Whirlpool to the post mix tools.   How does that all come together into to 1,   a package that is becoming more and more cohesive every day with your new updates?  

[00:51:52] Unknown:

Yeah. Sure. So, I mean, I guess the best way to start is to just reiterate that   Whirlpool isn't a isn't an external service.   It's a part of your wallet. It's an area of your wallet.   And it's   a protocol that allows for communication between,   various   collaborators of transactions,   using a centralized coordinator that we run.   The centralized coordinator is blinded.   However,   so it can't really it can't read the message it's passing, but it is passing messages.   So   the   the start a user would go through is what a process called the TX 0.   This is where they take their   their,   unmixed   source coins that they want to mix. They they wanna end up with mixed coins. They take these source coins from their   external account,   and they send them to an address,   and they're automatically   split into   like amount types based on the pool you choose. And there's various denomination pools ranging from 5 BTC   to 001   BTC.  

So it creates these these,   like,   amount denominations. This is why it's called equal output coin join because all the outputs are equal in the transaction,   and queues them for what's what what we call a mixing cycle or a cycle.   Each cycle has certain or each cycle has certain rules to it, and this is this is what we term as structured liquidity, meaning that you're gonna be each one of these UTXOs that you have that, let's say, are 0 point   5 BTC,   are gonna be mixed individually   with other participants. They're not gonna be mixed together in the same transaction.   Likewise,   no other participant in that transaction   is gonna be   have been seen together in a previous transaction as well. So every transaction every UTXO that in there is fresh and never seen together before.  

This is an important aspect of Whirlpool,   that is not shared by, I don't think, any of the other implementations, and it's an important aspect to to creating,   the highest entropy   Bitcoin transactions that you can that you can create.   I mean, from there, once the mix has been occur has been achieved,   I will actually, I let me rewind a bit. The the downside of structured liquidity, I might I should bring in, is that it could be slower   because of the strict rules   that,   stop mixes from triggering if these conditions haven't been met. You need constant fresh liquidity coming into the mixing pools,   and that can produce ebb and flow type patterns where some,   sometimes it's, you know, very inactive. There's not a lot of liquidity coming in, and sometimes there's a huge amount coming.  

But we feel it's worthwhile for the privacy benefits.  

[00:54:56] Unknown:

So let me just jump in real quick before we continue.   With with CoinJoin tools, the the main threat to a CoinJoin user is,   something called a Sybil attack. And it's when a   external attacker is coming in,   and they're flooding the CoinJoin rounds,   with their own transactions. And then through process of elimination, they're able to have a higher probability of tracking your transactions. Right?   So   one of the main aspects that all of these implementations   seek to target is civil resistance. This idea that if you have an honest actor,   it'll cost less for that honest actor than it will for a civil attacker. An actual,   a monetary cost to try and attack the rounds,   as basically a spam prevention mechanism, the same idea that Bitcoin transaction fees in general   operate under.  

The   so so the goal of Whirlpool,   as currently laid out,   is to try and reduce that's create create a situation where it becomes   onerously expensive for a civil attacker to attack.   The downside I've   I'm the the downside is   that because it's a centralized coordinator   and the main civil resistance is   the transaction   the not the well, right now, transaction fees are nothing,   basically nothing. The main civil resistance is the actual coin joint fee, the Whirlpool fee that is paid, to you guys at Samurais.   So as a result,   it doesn't provide civil resistance against you guys,   but it does provide civil resistance against an external attacker,   with the caveat that if fees ever rise and I actually do kinda wanna have a conversation about fees, but we'll have that later, transaction fees on the network,   then that would also provide some level of civil resistance against you guys as well because you would still have to pay on chain transaction fees. Did I get that correct?  



[00:56:56] Unknown:

Yeah. From what I heard, that was entirely correct.  

[00:57:00] Unknown:

Awesome. Okay. Let's continue.  

[00:57:02] Unknown:

One one thing that,   I can add on to that,   We I mean, all all of our revenue that we generate in Samurai   is   is on chain, so it can be viewed and tracked   by anyone who wants to look.   And   we tend to   not immediately put it we do put it through Whirlpool eventually, but we don't do it immediately. It's usually 3 months, 4 months, 5 months. So if anyone wanted to, they could actually watch our, you know, addresses   move into Whirlpool,   so they would know exactly when samurai is entering the,   the pool.  

[00:57:48] Unknown:

That makes sense. Open Arms, anything you wanna add on before we continue here?  

[00:57:54] Unknown:

Well, I   I really cannot tell, you know, more about Verpo than, like, some of my wallet does. Right?   What what I would be interested to go in is is, like, the specifics of join market, which is, you know, another   is it is it is   it, correct or it's not a zero link implementation,   but it is a coin joint implementation   quite long existing before started before the actual zeroing specification.   And,   and there are a couple of things that she does differently, differently, and I'm not saying it's overall better or worse. It's just   has use cases that it's more useful.  

And   most of the time, it is more difficult to use   and gives you more freedom,   which means   there is more possibility to shoot your yourself on the feet, but also,   can do things which you cannot do with, like, fixed bills   and the way   the accounts are separated in in summary.   Like,   just just short example. I don't want to, like, you know, go into   every little thing. But the account separation, I think, that is the most important thing you need to do, which is you are not   merging your transactions.   You're not merging   the outputs which are coming from a coin join with the change   from your inputs. So, basically, you're not mixing the unmixed   not merging the unmixed change with the coin join outputs. And that is that is   very strictly done in samurai wallet. You have the deposit wallet and then you have the post mix wallet, and you can't   cannot   achieve it in the in the GUI to   spend them together. And same same is   done in join markets by having   5   accounts, which are not specifically named to be deposits,   postmates,   bad bank,   but   they are   fulfilling all the roles in a in   a rolling manner. But the separation happens during coin joints   that when   a coin join happens, the coin join output goes to a separate account and the unmix change stays back in the same.  

And then through the 5 mix steps,   this is happening in circular ways. So once some funds goes through 5 coin joints they get get back to the first one and,   I mean, obviously there are 5   to minimize the possibility that there would be this kind of appealing chain where they would get back to   to the same change they were they were starting from. But, I mean, that doesn't really make sense because it's all already been through 5 coin jobs. So   and that that kind of structure,   but it's not liquidity   structure,   but the   the the coin joint kind of,   like, tumbling through. That's why we call the   script which is doing this in one go   through 9, 10 coin joints, a tumbler because the the fines the fines kind of tumbles through the mixups. It's like a waterfall of coin joints then.  

And, you know, the very important other difference is that you don't need to   there are no fixed tours,   which means no fixed amounts. So you can   coinjoin any amount,   which means you have a possibility to not create change in in in in transactions. When you are depositing your funds, you can just go and join the whole thing minus the fees. And that's what   you have coming out of it. There will   be no exchange   at all. Right? And this is true for, like,   slightly   I mean, the 100 k kind of pool is kind   of, you know, is a   realistic lower level where it would work to kind of put anything in,   or or break UTXs up,   to that kind of small small size.  

And   so the communication   happens all over. Thor   as as with somewhere well, with as well.   And there was a point I I was I was trying to get to,   whichever I'm sure I will I will make later. But the thing these these things are just   kind of   you can you can use both, right, and that and that's what I'm doing as well because I I oftentimes   I like to   use   something which creates me a range of different kind of UTXOs especially   for, like, you know, running lightning.   And   also, the possibility to pay with CoinJoin means that I I'm not only able to when I'm doing a pay peer to peer transaction,   I can do that with summarize as well, but that would be a 2 participant coin join. With joymarketer, I can do, you know, 7 to 9 15 participant coin join   to the destination address, or that could   be a code storage address as well, which would   make it look like it never   got out of that kind of coin joint liquidity pool, so it could be just,   you know,   go on again. But it's not that   the the drawback is that it's not that,   kind of homogenic   as   the Somerai Virpura UTXs are that the same kind of size in, same size of out, and it's just just going I mean, after a couple of runs there is not really a big difference   if you mix I mean, to to my view if you mix 5 times, 10 times, or a 100 times   you basically have a quite I mean, that's   that is,   that broke the chain, right, in in in verbal.  

But, obviously, if you if you're not doing that with this kind of same in same out fashion,   then   you might need a bit more   more rounds to kind of,   reliably   break these chains, and you   won't be ease won't be that easy to prove it either.   So there is,   you know, you can go go deep into comparing these, but, yeah, useful tools.   And, yeah, please continue. I don't want to kind of, you know, hijack all this.  

[01:04:26] Unknown:

No. I think that was a great comparison.   That that was perfectly put, and,   I think, you know,   Joy Market,   is is the OG. It's been around for what correct me if I'm wrong, but 2015,   I wanna say. 15. Yes. Correct. Yeah. 2015.   And, you know, when we first started Samurai, which was, I I believe, just a few months before enjoy before joint market got announced,   It definitely served as something of the inspiration to try to replicate and figure out a way. I think, actually, our first,   designs were how to be a mobile join market interface, but back then it was so primitive that it was nearly impossible to do. It was still so early.   But but in any case, yeah, you know, join market is,   has a great design choices in the, account segregation   as you mentioned,   announced. And, you know, that's   true. It was true in 2015, and it's true today. That's the   probably the one of the most important aspects of the coin joint is maintaining that that separation.  

So it really should be in every,   coin joint implementation. It should be mandatory   for the, client to do that.   You know, if I was to if I was to disagree with anything,   nothing when in what you said, but if I was to disagree with the protocol, I would say in since 2015, we've learned,   a lot of things about on chain analysis. We've learned   how how chain,   chain analysis companies are,   processing the blockchain, how they're reading the blockchain,   and we we understand   that it's about the flows of UTXOs.   And   it's my personal opinion that in in 2020,   you need to be going with equal output coin joins,   not,   coin join spends,   because it doesn't reliably break the, transaction grab.  

And you you mentioned this with saying that you you need to do more rounds, many more rounds,   and that, you know, that that's true. The the rounds can help you, but they can also hurt you,   as well because of the presence of on mixed change within the mixed transactions.   So I mean, if I was if I was joined market, I would change one thing, and that would be getting rid of the unmixed change that follows along the mixed transactions, and that'd be a huge   huge win for that protocol. And,   I completely agree, use both. There's absolutely no reason why you shouldn't use use both, both tools to check them out.  

[01:07:01] Unknown:

So so in in in you mean getting clear of the omnichannel   change in terms of   the   5 accounts wouldn't be cyclical.   So it never gets back to a previous change because, I mean, it it gets rid of it in in the terms of   it always separated   to another account.   But then yes.  

[01:07:24] Unknown:

But they'll be in a mixed transaction,   a a follow along mixed transaction possibly?  

[01:07:31] Unknown:

Yes. They I mean, yes. They could they could enter the same mix that once the ARM exchange has been in another coin join. It could,   enter through that coin join, it could enter to to the same mix that it's.  

[01:07:45] Unknown:

Right. And and we know that you can and we know that you can   combine,   both accounts in the client, in the joint market client.   That's as we said, they segregate the unmixed change from the   the mixed,   the mixed outputs.   So we know that the mixed outputs in   a joint market transaction   can't be the same entity that owns the unmixed change that are a part of that transaction.   Right? So so all my all my point is and I and I don't wanna make this a versus thing or anything like that because that's not what what we came here to do,   is that this was and it still is a good solution.  

But, you know, our our feeling is that the strongest,   the strongest coin joints have no deterministic links, and these unmixed chains that follow along   in the transaction   are on do create certain deterministic links within the coin joint transaction. Now there's plenty of probabilistic links. The Enjoy Market does work. It breaks up,   and adds probability to the ownership of inputs to outputs.   But there's certain transactions that are UTXOs that are linked   mathematically,   and   getting rid of all of those actual linked mathematically UTXOs from the actual mix transaction itself is in our opinion,   you know, needs to be the de facto or should be the de facto.  

Anything after that, like go go oh, sorry. Go ahead.  

[01:09:06] Unknown:

No. I I, I agree, and I completely, you know, do respect it. What   how this kind of structure is being built in and how clean or kind of, you know, straightforward it is, how how kind of the TX 0 creates these   equal amounts. And then, basically, once they entered   the virtual mix, once they have been through the first one, then they their amount is just does it just doesn't change completely. So it's not even just equal output as in the joint market, but also a single equal input within within the pool. So that that makes it it makes it just completely kind of formogenic as as as I would see it. It's as you usually,   when people talk about like chain analysis chain surveillance companies looking at to the airport and, you know, some if they say funds enter into that, they just forget it. There is no probabilities to look for. Whereas   probably like in your market let's just say there could be some things to try   and,   I mean, yes, probabilities  

[01:10:09] Unknown:

very low or yes. Could could be there. Yeah. Like metadata, you know, and, you know, you would still have to work to put these things together.   It's not like it's out there on a dish for you,   but but it's still there. And and that's again, I'm not, like, I'm not shitting on joint market at all   because we have to remember, joint market's from 2015. The fundamental   working on joint market in terms of how it breaks the chain   hasn't changed since then. It's pretty much the same   protocol,   in terms of the chain breaking.   You know, so I I I think that we have we've learned things since then. And we we certainly have built on the shoulders of giants, you know, in terms of what we've learned,   as a community and and and and the privacy community.  



[01:10:55] Unknown:

Yes. Sure. So it's yes. The the recommendation from and some protocol changes has has has changed since, like, 2015,   including the,   you know, that kind of hugely interesting kind of analysis,   which was the analysis of transactions from 2015,   regarding this Grinchin case, which, the the kind of samurai   research,   or is it is it OTX  

[01:11:22] Unknown:

Research? Oh, yeah. Yeah. OTX. Yeah. The grid chain. Yes.  

[01:11:26] Unknown:

So, yeah, that was interesting, and then it was, like, a a very good response to and discussion following that as well, like, waxing and, you know, there was a bit of back and forth,   I think to the to the positive.   And   what what did they change since? What jaw market has changed that there is more I mean, in the tumbler,   So in this waterfall kind of type   of coin join   script, which does,   which is the most efficient   way of doing it is it does include   transactions from the start, the first transaction and then a couple more which does not create this exchange at all   but uses   uses all UTXOs. So it kind of kind of tries to kind of prevent this this problem. And then that is the same   kind of recommendation   when someone uses join market which is obviously, you know, you cannot check people to do this. But to be to act as like a a taker, the initiator of the coin joint transaction, you can do the sweep transactions. When you   are using the ability to coin joint any amount, you're just going to join all the amount available in that account, and then you are not,   creating any any exchange.  

And and, again, this is not, like, built into the protocol. This is something which has I mean, not not in the kind of non Tumblr   protocol, but,   it's something which any user could do and, you know, it's recommended   to do, especially during, like, you know, times where you have, like,   one one set to buy transactions   and, like, plenty of plenty of liquidity,   available as well. And, just one other thing I I would I would want I wanted   to touch on that, you have this so   so obviously this is this is this is the issue. Right? I mean,   I'm I'm certain we will we will speak about this that,   Verpool   basically   tries to solve this omniscient problem by just just separating and basically disposing those funds,   putting them in a in a not to use kind of wallet.  

Not to use part of the wallet,   which which would be the arm exchange and the which would be tied to all the inputs which have entered entered the in the t x zero.   And,   and that's those are the things   I I really would like to,   kind of go into and hear hear from you what what we'll do about this.   But that's another thing which show markets gives you a bit more flexibility   that you have, like, 5 of these mixed debts by default. I mean, you can even increase them, but,   this is kind of a   a good trade off number.   And   funds from different sources, you can also just,   deposit into the into the different accounts freely, like, different new addresses in in different accounts. And that what it means that   they won't, like, enter into a t x zero just by themselves or just, like, merged when they are entering the t x zero because, obviously, the incentive with   with Verpool is that the bigger   amount   you   throw in there,   proportion less fees you are you are,   paying, which is which is great great   incentive, but   people will tend to merge their funds from different sources, I would think,   unless, you know, obviously being known and then you have, like, you   being warned about this and the you have   the idea of this multipart, GTX zeros, and things which are coming. I'm sure that's that's the thing as well. But churn market gives   this option to kind of, from the start,   separate. So inside one wallet, you have 5 accounts   and just separate your different sources to different accounts.  

And that's that's just another unique thing which   which it can do.   And, yeah,   please I mean, please go on, you know, on the comments and, you know, what what what what are you If I could just jump in If I could just jump in real quick here.  

[01:15:33] Unknown:

I mean, everything has trade offs. Right? And, JoinMarket and Whirlpool have a lot of similarities, but they're also very different.   And they've selected very different, trade off balances.   The main one being that joint market doesn't rely on a centralized coordinator,   while Samurai Whirlpool does.   So you do have that issue where you don't have,   civil resistance against the coordinator itself.   You also have the issue   that,   I think when join market was was initially conceived,   was this idea that,   maybe, like, no company could actually,   in the upcoming regulatory environment, run a known coordinator, you know, run a centralized coordinator.  

Fortunately, that hasn't been the case yet, but it could be in the future.   And then you have we as as we were talking earlier, is is the main   the main threat vector that these implementations should be solving for is this idea of civil resistance against an external attacker.   And JoinMarket accomplishes this,   by it has a maker taker system,   where people post liquidity,   as makers, and they receive a fee for providing that maker liquidity.   And the taker constructs the transaction. So the taker's basically the coordinator in the transaction.   And so so the   the the way that   civil resistance is   is is attempted to be achieved there is by going through multiple makers because   the worry has always been that a maker could be chain surveillance companies, that chain surveillance companies could be running many makers.  

And   the other thing that has has been added recently or is about to be added is this idea of fidelity bonds, right, where Yep. The makers have to if you're an honest maker,   it'll cost you less than if you're a civil attacker maker where you you have to run basically multiple makers. So you're gonna end up paying you're gonna end up locking up more Bitcoin. Right?  

[01:17:36] Unknown:

Basically. Yeah. Basically, you create a wallet where you where you, like, could provably,   time lock some funds, let it be, you know,   a month or even up to a couple of years, and exponentially   to the   deposited   the amount of deposited front funds time to times to time, you will have a higher chance   to be chosen   by the takers because the takers would have an incentive, and that will be in the in the kind of protocol   change as well that, the takers will have the incentive to choose people who have deposited more and more funds. And, you know, that you have if you deposit   if you   time lock, not just deposit because that's outside of what you're offering for coin joining.  

If   if you dip deposit,   5 times more   funds, then you will have 25 times more   chance to get   to get to be chosen.   And, you know, this will make it kind of exponentially,   more expensive to kind of just run multiple accounts, but it would burst burst it much more to just run one account with your with your funds. So this kind of sibling   would would be,   you know, would need to,   lock a lot more funds to   to   be a a significant part of the order book.   So that and that's the idea. It's it's coming with the next release. It's being heavily tested now, and they just about to kind of, being merged and and coming with the next major release,   the. So it's every anyone wants to have a look or test, it this is a very good time to do it because there is, like, a live discussion and, and and still kind of influx, but almost ready.  



[01:19:26] Unknown:

Right. And then so on on the Whirlpool side, the central coordinator centralized coordinator   allows for,   first of all,   you know, a a chain surveillance company is gonna have to pay their Whirlpool fees if they want to try and civil the mixes. They're able to to add this   this additional sybil resistance that you can't do in a noncentralized fashion.   It allows for a structured liquidity pool,   where you have these equal output coin joins that are designed to   to be as nondeterministic   as possible.   And and you have a I I I feel like nondeterministic.  

[01:20:06] Unknown:

They are nondeterministic.  

[01:20:07] Unknown:

Well, I mean,   yeah, I guess. They're nondeterministic   without any external data.   Correct. They're on chain. But there's external data everywhere. But, yeah, I agree on that.   Thank you for the correction. And then the   the the also, the advantage, I would say, of a centralized coordinator, which is kind of a nuanced advantage,   is that you end up with   a a a better user experience.   I feel like it's   it it not only does it reward   the service provider that's providing the centralized   coordination with fees, which goes towards improving the project.   But it provides a   the, like, the communication mechanism,   because you're going to a centralized server,   via Tor, but you're going to a centralized server is a a smoother communication system rather than going through, like, the modified IRC   communication   that join market uses.  



[01:21:09] Unknown:

Oh, yeah. Yeah. Of course. It's like, I mean, it's like any any service. Right? A centralized service is generally gonna be   is offer a better experience than a noncentralized service.   The the difference with Whirlpool is there's nothing mission critical critical about what the centralized service is doing. So it's not taking custody. It's not taking private keys. It's not reading reading messages. It's just a message passer. It's it's essentially   the same coordination that   join market or Saba or anything uses.   It's just   a join market is non custodial. I'm sorry. It's it's   it's a decentralized because it routes via the modified IRC,   which is itself a   a decentralized network.  



[01:21:54] Unknown:

Yep. But it also comes to rate limiting, which is a lot of That that has its own trade offs.  

[01:22:00] Unknown:

And and this is but, honestly it's amazing how how far the joint market has progressed over the years using IRC to coordinate. It's it's very cool.   It was it was a cool idea and its deployment is very nice to see.   I we actually think that join market could could make very good use of Soroban for coordination,   especially in a federated type of model that we're we're kind of considering, but that's that's besides the point.   And one one clarification I think needs to be made, Matt, and that is that   it's not our primary objective to to stop civil attacks. That's that's a you know, it's kind of a fundamental to given.   The coordinator needs to make sure that they're not being civil attacks because the fundamental objective is to make sure the user is obtaining the best possible mix they can they can achieve.  

And   preventing civil attacks falls under   that umbrella.   But the way you described it is correct. Yes.   They would have to pay   the coordinator fee to us,   and that is a method of civil resistance. The second   second issue is the, concept of structured liquidity,   meaning that a chain analysis,   UTXO   will only be able to poison,   one mix at a time.   And that's that's,   you know, counter to their objectives there.   And   any any kind of modified clients or any kind of   notice that a UTXO might be connected to another UTXO that's coming in   to the pool as a on a, on a different client, the coordinator will will keep note of that, will keep an eye out on that and automatically blacklist, those UTXOs.  

So, you know, we take our our job as coordinator very, very seriously   in creating a creating an environment   that is,   gonna create the best possible mixes for our users because, fundamentally, what matters the end of the day is the tracks you leave behind on chain.   And, you know, we need our chain our our mixes on chain to be as strong as possible.  

[01:24:13] Unknown:

Yeah. So you can say the civil   civil resistance is like the question of, preventing the the real time ongoing surveillance.   Right?   But what remains   forever is is the   track on the chain,   which can be looked back at any time   Absolutely. Even 5 years later to   try to, yeah, track back some events.  

[01:24:45] Unknown:

It's it's the difference between an active attacker versus a passive attacker that might come in in 2 years or 3 years or something like that.  

[01:24:55] Unknown:

Yeah. Well, real I mean, real real time real time trying to kind of, cheat the system is is much more expensive and much more kind of   much more energy,   requirement is needed for that much more work than just, you know, spinning up an algorithm later on, which they are getting better and better, and they will be able to go deeper and deeper into the connections.   And then, you know, they might find us even more than what they do now   later on on the chain.   So, yeah, the mix quality is obviously is a is a   hugely important aspect and, you know, that it's   something you might pay you might consider paying   more as  

[01:25:44] Unknown:

well. Yeah. Just to just to roll back just a few,   conversation point ago, open up, I forgot to get to respond to you.   I'm happy to hear that the OXT report on the grid chain was useful, for the community, and those changes were made. I wasn't I wasn't aware that those changes had been made.   And I think that's, you know, a perfect example   of,   how, you know, those research reports are supposed to be used, you know, to improve the privacy,   prospect for the users,   you know, for the developers of the protocol. You know, not to take it with blind faith, but to explore the findings for themselves and see what they, you know, what they find and if if they need to create a   a change or a fix or whatever.  



[01:26:31] Unknown:

So I'm I'm happy to hear that, and, I'm happy to hear that OXC research was useful on that. Oh, I mean, the discussion was was hugely useful, and and, you know, it was it a stick. I think it it pointed out,   this toxic recall attack was you know, it's pointed out something which which, you know, people wouldn't have before, so it was kind of a concept which was not known. But just to be clear, the changes   within the Tumblr protocol and,   yeah, exactly that was introduced, like, in 2016. So it was shortly after the transactions which have been   like, you know, it was introduced after the transaction which have been analyzed I understand. Okay. In in in the research. But then,   there is on Webexchange blog, there is, like, a   good couple of pages response, not as detailed as the research, but, you know, trying to make Indian points. And there is, like, a good recommendation of usage, which includes   the recommendation to do this kind of thing, which,   is to   alternate the taker and the maker roles. So initiate some coin joints and, and avoid the exchange in   with, with sweeping   UTXs and and mix ups occasionally.  

Got it.  

[01:27:48] Unknown:

So, I mean, I guess, like, we found ourselves,   talking CoinJoin implementations here,   and the trade offs of the different CoinJoin implementations.   I mean, I guess it it would only make sense   to jump into Wasabi for a little bit,   since it is probably   partially because of my doing as a major Wasabi promoter,   that has since retracted my endorsement,   of the tool. I, you know, I I personally think it's a a waste of money and   is dangerous to users.   Should we should we jump into the concerns about using Wasabi and and what, I mean, what joint market and and Whirlpool,   you know, how how they differ from Wasabi in that regard?  



[01:28:36] Unknown:

Yeah. Sure. I mean,   in the same way that we published a OXC report on,   on joint market and the grid chain case, we published   about 3 OST reports   on, Wasabi   and   in in great detail.   And, you know, the the conclusion that we've come to is the same,   as you, that it's it's not safe for users to use to obtain any reasonable amount of privacy.   They're fundamentally   and architecturally flawed,   and I think they know it, though they won't admit it.   And they're hoping to to fix the issues in their second version,   to be determined when that is released.   You know, as to what the flaws are in particular, you know, I'm not gonna go into great great detail because everything is,   is freely available. We made everything,   and published everything   reproducibly   so users can can check it out for themselves. But,   the the major issues again,   fundamentally are well, I guess you have to start at the most basic level is that there's there's rampant   address fees on both, on a systemic level   within the Wasabi client, not a modified client, the Wasabi client.  

It still to this day occurs. We don't they don't explain why,   You get address for use on both sides of the same mixed transaction. You'll see one address on the input side and the same exact address on the output side. That's absolutely not normal for any,   anything, but let alone a coin joint transaction.   To to bigger issues like, again,   unmixed change following you around creating this peeling chain. Again, not a serious issue by itself as we were discussing earlier, but   a a piece of metadata   that is   used,   to further undermine   the quality of these mixes with all the other issues,   you know, at play in in the Wasabi client.  

Gosh. Where where where else?  

[01:30:43] Unknown:

If I could just jump in here, real quick.   First of all, one of the you know, not only is does it end up in a in a poor quality mix if you,   have reused addresses with Wasabi, but it also means that the user is paying more because the Wasabi fee structure,   whilst the the Wasabi implementation   the the most similar aspect it has to Whirlpool is that it relies on a centrally centralized coordinator that's blinded,   that runs through Tor.   The fee structure is completely different. So with the fee structure of Wasabi,   you're literally paying for the amount of   perceived other users that are in your mix,   the the amount of other UTXOs that are in your mix with you, and it scales based on that. So if you have users that are reusing addresses,   you're not getting any benefit from them participating   in   the in the mix, but you are paying Wasabi for them being part of it.  

And one of the main benefits of a centralized coordinator   is that you do get benefit of them enforcing structural liquidity.   So the you know, one of the reasons why you'd want to use, a centralized coordinator over something like join market is that they prevent something like that from happening. It it is even though it's blinded, it can completely stop reused addresses from happening,   but they haven't implemented anything in that regard.   And it's curious because they do get paid more in that result.   I think an interesting case for us to talk about, and I have,   I have a screenshot of it on the screen for anyone watching the video,   was, the the Twitter, hacker,   which everyone, you know, news these days. It just goes in one ear or out the other everyone forgets about the Twitter hacker when,   they got access to the god mode at Twitter   and was compromising all the different major accounts. I think he even tweeted from Biden's account, before Biden was president.  

So he used Wasabi,   and what's interesting here is a lot of a lot of talk devolves into user error with Wasabi, this idea that you shouldn't   you you shouldn't   obviously combine,   your unmixed change   with   with your mixed,   UTXOs   after they go through,   the mixing process. But in the case of the Wasabi   hack I mean, the case of the Twitter hacker used Wasabi, he didn't actually combine,   he didn't combine his unmixed change   with his post mix.   What he did was because he didn't remix, and correct me if I'm wrong, and that's what this shows here on the screen, is because he didn't remix and   the unmixed change went through   as a as a as a peeling chain and went through with the mix,   you could do you could do basic math with the unmixed change and his consolidated   post mix. He only what he did was he consolidated his post mix transactions,   but he didn't consolidate it with the unmixed change. But if you just did the math, you saw his input go in, and you did the math, and with high probability, those consolidated mix outputs are hits. Right?  



[01:34:03] Unknown:

Mhmm. Yeah. I think this I think I did this graphic if I if I remember correctly,   and your explanation is, spot on.   This is this is like I said, this is the metadata, right, that follows along the transaction. So that unmixed change,   2.159   shouldn't be there. It shouldn't be in a mixed transaction. So this has nothing to do with the user.   This isn't user error.   And, you know, in in Whirlpool, we don't allow,   for more than one UTXO to be in a single mix. So this guy had 3 UTXOs   here at least,   in this in this mix.   That wouldn't happen with Whirlpool. Right? He would have one UTXO in each individual   mix spend, you know, there's a risk that you could, you know,   analyze that post mix spend and,   have some degree of certainty that maybe it came from this initial deposit,   but not as much as you have here.  

So, you know, that that's it a little bit does come down to the user and their post mix activity, but in the case that we're looking at right here, the user couldn't have done anything different. They just used the protocol as it was designed.  

[01:35:15] Unknown:

Yeah. And and from my usage of wasabi, it does warn you if you consol if you try and,   mix the unmixed chain if you try and combine the unmixed change with your post mix,   but it doesn't warn you if you consolidate post mix together, I believe.  

[01:35:35] Unknown:

Just Yeah. And and and a level of consolidation   needs to be assumed that, you know, users, you know, is at some point gonna have to consolidate some UTXOs and post mix together to make a spend. Now in a good mix, that shouldn't necessarily matter too much. Right? If you if you're only   doing a small amount, a subset of your total amount that you've put in, there's not gonna be an amount of correlation analysis   done there.   If you're if you're putting in, like, you know, 500 BTC and taking out 500 BTC a couple days later,   you know, an analyst is gonna look at that and go, well, I can't say for certain, but I'm pretty sure that's the guy. Right? And they're gonna keep an eye on it and wait for more clues.  

You know, so if you're   but,   you know, a small amount of consolidation   shouldn't harm you if the mix quality is is good.  

[01:36:31] Unknown:

So so, I mean, part of this comes into play,   with the Whirlpool implementation is this idea that, first of all,   something we talk about a lot, in this space is incentives.   And Whirlpool incentivizes remixing   because   you only pay when you enter the liquidity pool. You don't pay for subsequent mixes.   With Wasabi, you pay for every remix. So and the default is just one   one mix, basically. The default is an an onset of 50. So if you do one round of 50 or more UTXOs,   it's just gonna default to a single round.   So   you have a couple things there. You have defaults.  

You have incentives.   And then the third thing is this idea of post mix tools. And and by default with Whirlpool,   which I think is really cool,   is that when you make a transaction out of   the post mix,   you know, especially a consolidation transaction,   it will default to something you guys call Stonewall, which is a,   an imitation,   2 or more person coin join. This this idea that on chain, it looks like a 2 person coin join, and that is   that only works because   that only works as a deception   because in the wallet, you also have the option of doing something you call Stonewall 2 x   as opposed to just regular Stonewall, and that's when you actually do   a person to person,   coin join,   as a spend,   and and that is done without the centralized coordinator. So   correct me if I'm wrong. Part of the idea is this main trade off that we have with a centralized coordinator,   where there's no there there's no real civil resistance against the centralized coordinator   is is   is mitigated   because this idea that after you do the post mix, you're able to then do a coin join easily,   without the coordinator. And even if you do don't do a coin join, the coordinator doesn't know if you did a coin join or not because it looks on chain like it was a coin join. Right?  



[01:38:44] Unknown:

Yep. Yeah. You you explained it perfectly.   It's identical to so you have Stonewall, you have a Stonewall x 2,   or times 2.   And that's exactly what it means. It's a Stonewall with an additional participant,   that looks exactly like Stonewall, and you can't distinguish it on chain or not. And   it's the a broader concept of   that once once mixing has been achieved and the the user isn't, you know, it's never finished. The user is in a constant state of remixing for as long as those UTXOs are in the samurai wallet.   Those UTXOs are available for remixing.  

When it comes time for the inevitable event where the user needs to spend, whether that's to a merchant or to cold storage or to whatever,   our our our theory is that there needs to be a variety of different tools,   which we call post mix spend tools.   And these tools   will solve different problems.   One one problem being consolidating too many UTXOs,   to make a   a send to, you know, an external third party,   not yourself.   And that's what Stonewall,   Stonewall X2 aims to aims to help. There's still a level of consolidation   happening, but there's there's,   what we what's termed as entropy   associated with that transaction, meaning the number of combinations   of inputs to outputs   are are are dramatically more than a normal,   quote, unquote, simple Bitcoin transaction.  

But that's just one of the tools we have. The other tool we have, of course, is stowaway, and this is useful when you're sending   to   someone of 1 who has samurai, so it's a limited pool already. But, 2, when you wanna send to that person and you want that person to be involved   as a participant in the transaction.   The the the biggest benefit of this is it looks like a simple transaction on the blockchain,   and,   the amount that's been transacted   isn't visible on the blockchain.   And, of course, join market users will be familiar with this functionality because I believe it's in the joint market,   wallet as as, PayJoin.  

Yep. PayJoin. P to p to p. Yeah. It's an Pay to endpoint. So it's it's a different implementation, but it's it's very, very similar,   functionality.  

[01:41:08] Unknown:

Yep. Yes. On the yes. I mean, in in your market, it is like it it it so it has multiple implementations, compatible implementations, including BTCPay, which is, like, the biggest kind   of   thing where the which the actual merchants   use.   And, obviously, donations and, you know, lots of lots of sites can use   b d c pay which supports point   PayJoin.   Obviously, it needs to run a hot wallet on a server, so there is a bit of a disincent disincentive   there. And I think there are some mobile wallets which have implemented it, like,   I yeah. There is, like, a table on Bitcoin Wiki, which is, I think, blue wallet and and maybe the green wallet does it as well, but or or they're just planning.  

But,   yeah, that's yes. I mean, Postmates tools are like are are just like the tools you you so is like, in joint market, there's no strict separation between,   CoinJoin tools and Postmates tools. It's a page on a visit that is only when you're sending to someone. But,   the fact that you are able to   to, pay with the coin join,   finding peers in that, you know, encrypted IRC   chat,   with with your bot   is is gives you the ability to to kind of   go down go go after go after cold storage. And that that's something I'd like to   what I'd like to ask you about would like to, like, hear more about it. What's your kind of,   you know, long   term vision of   of you know, how how do you imagine that people will   if   it picks up I mean, if if the privacy kind of tools usage would pick up and then, you know, we would really   see every transaction as a coin join.  

Do you think it's do you think that is really possible? Or do you think it is,   or are you working for the current kind kind of environment   serving your users   you   have at the moment and, you know, making the best out of the circumstances, and it might be very much different in, like, 5 years.  

[01:43:26] Unknown:

That's a that's a good question. I I think that when I say make every spend of coins when I'm talking to our users and I'm talking to the people who   who   want to use Bitcoin and wanna use it privately for whatever reason. There's a multitude of reasons.   I'm not necessarily   talking to the mass market.   You know, I even if I believe that even if I believe that all, you know,   spends should be a coin join, then we have the tools to make, you know, quote, unquote all, you know, spends a coin join. I know that it's not you know, it's not gonna be the case.   But I also know that a lot of transactions are Whirlpool transactions currently   on on chain. So I think that,   you know, there is a demand from users, and our users are you know, they grow   all the time,   month over month in terms of user base. And   it costs them   BTC   to do this. Right? Like, that's a that's a very clear indicator that   something we're doing something right there, and   they want what we're providing there.  

So we're we're we're bullish on in that regard. We're definitely bullish in that regard,   because that that really is, you know,   paying like, showing like, voting with your wallet. Right?   Yeah. So, you know, I no. Not everyone, but whoever needs to hear it, that's basically who.  

[01:44:56] Unknown:

Right.   What   I   so   what I love the most about,   about using, you know, multiple   tools   is that,   I mean, one thing is the selection of different size of c t x's. I mean, you know, having multiple ports is already a great start. I mean, you know, just point one Bitcoin is is not good. I mean, that's just   it it it is good, like, when the price was, like, you know,   3,000   or, like, even   even, like, in between that. But but now   what's point 1 bitcoins? Like, $3,000?   I mean, you know, what do I do with that?   It's not useful for too much to to to many kind of applications. So,   like, having   multiple   100,000,   1,000,000, 5,000,000,000,   and 50,000,000 is is is very useful,   but   I love to have, like, a selection of these. And then also   what I really   because   my kind of view of how spending   would be and,   you know, at the same time we are looking at this manpower chart which is like com it's like it's it's it's it is a ghost that way, you know, there are like multiple   multiple non full blocks coming up in the in the previous   previous blocks. So in this case, you know, I would like to have every every every spend as a coin join but,   and every transaction as a coin join but not when,   you know, the fees are in the multiple 100 sets per byte. And then   then   the activity does visibly   fall down as well as well as in Whirlpool as well as in Joy Market.  

It's   perceivable that you don't have that many transactions today.   So then   it comes   the time of these scaling tools which is like the main is lightning.   And also you can do swaps into lightning which do break the chain to,   to to a good extent as well.   And   what my vision is, how I like to feel it most most efficient to   use Bitcoin   is have this private UTXOs and   just   fund a lightning channel with them and then basically that is the best transaction from which I can fairly   comfortably   can spend.   Because it is it is   spending with lightning is is quite private. I mean, it has this aspect of the ongoing surveillance. It can be it can be   done, but,   quite unlikely.  

And   it's even less than, you know, the problem with CBR and C coagens and things. So especially if you have, like, just one channel, there is no no way of probing that,   if if if there are no, like, payments payments are going through the node.   So what you're doing when you're opening a a lightning channel is basically batching all those transactions that you have done on lightning to those 2 transactions, which is opening and closing.   And then you can make those   those the UTXO basically completely   disappear   on this second layer when you spend   all of it   on on lightning   or   and when you close the channel, there is no change. If there is change, then, you know, change   would belong into CoinJoin again and not,   you know,   should not be merged together with, like, especially transactions on that node or with, you know, other kinds of funds.  

So   that's what I see. And I and I   to to be the best the best way, and I'm not expecting   kind of, similar wallet to be able to   or not to be able to to work on, you know, implementing lightning because just crazy. Like, you know, let's see what what, like, Alex and Waller did. You know?   They worked on it for, like, a year or more   and, compared to disregarding any other thing. And they got an implementation, which is I mean,   I'm sure it's very exciting as a programmer and a developer, but I don't know anyone who actually uses, like, lightning in Electrum. Right? Because it's nowhere near as good as as the dedicated lightning implementation. So it's   not best to kind of,   suddenly change   change your mind and just   divide all the all the resources you have to to to to move to   work on something else even if you would know you you would think it's it's useful, but I know your position might be a bit different. But what I like to do   is to have the freedom to be able to kind of   sign   transactions, which then got to be, like, in channels.  

So,   at the moment, it's somewhere around what you can you can do sign, like, a little transactions, which can be,   like, it's a couple   going through a couple of hoops can be generated bits like, you know, Electrum or or like   even even inspected or, like, involving   involving sentinel   and things like that a bit in a in a clunky way. But do you are you planning to, like, fully support the kind of PSBT formats which can be   then, you know, make it more flexible, and you don't need to support lightning to be able to,   you know, send the post next to   straight to a lightning channel.  



[01:50:35] Unknown:

Oh, yeah. Yeah. Definitely.   The SPT support is largely implemented in Samura. It's just not hooked up to any of the, to any UI or anything like that currently.   But, yeah, we have we have clients for full PSVT support. We we supported it,   when it was first proposed and started implementing it then.   We're just a little delayed because it needs it needs to be implemented,   on the Sentinel side of things as well, And they a proper UI needs to be created because as you stated, it's there's quite a few hoops and it's a little clunky right now.   But yes. So you a user will definitely be able   to to process and and create the SPTs.  



[01:51:16] Unknown:

That's great. I mean, I I think if I could jump in here real quick,   I mean, I think we'd all agree that Lightning is a post mix tool just to go back to our earlier conversation. Yeah. 100%.   Like everything else, it should it's a post mix tool.   The   the Open Arms in the beginning also made an interesting point about   he didn't say it specifically, but he was referring to the fact that Wasabi has this single equal output pool size, which is 0.1 Bitcoin, 10,000,000 sats, which is $35100.   So, basically,   you're saying to users, you know, you have to   have $35100   in order to use this privacy tool,   which to me is, like, a incredible nonstarter if you're trying to increase usage.  

And and with these equal output coin joins, whether it's   Wasabi or Whirlpool,   you have this issue where you have this equal output, and anything,   that's left over is this idea of toxic change. Right?   And Whirlpool has accomplished,   Whirlpool has attempted to mitigate this fact   by adding multiple pool sizes.   So what we see with a lot of users is they might go into the largest pool size. They go into the 50,000,000 sat pool size,   and then they take their change, and then they go into the the next pool size, the the the 5,000,000 sat pool size. And then they go into the 1,000,000 sat pool size. And then they take the remaining change, and they go into the 100000   sat pool size.  

And they're left over   with UTXOs, a bunch of UTXOs,   that are under a 100000 sets.   You know, so so   one of the things that I was really bullish on was this idea of,   and and the problem is so you could theoretically, in Samura Wallet,   then take those   that toxic change that is that that has,   that that is   is is linked to whatever source that it originated from, and you can combine that with your other toxic change to go into a larger pool size. But that's obviously,   bad practice because,   you you link those transactions together on chain. It's the common input ownership heuristic all over again.   The,   so  

[01:53:45] Unknown:

one of one of the So rule rule of thumb is just don't do that. But, you know, unless you know what you're doing and you're combining from the same source and all this stuff. The rule of thumb is don't do that.  

[01:53:56] Unknown:

Right. It's it's more than rule of thumb. In the wallet itself, when you do it, it says, do you wanna mark this unspendable as toxic change? And, basically,   the default is to just leave it there. Now you had this there there was this concept being floated around, and I haven't heard much about it since, but this idea of multiparty transaction zeros, where you you go in with a, like, a couple trusted buddies because they can obviously see your transactions that you add,   and you all go into a new round together   so that common input ownership heuristic is broken. So no one knows   if it's if it's 4 people going into a transaction 0 together with their toxic change or if it's one person that's combining toxic change and going into a transaction 0. Is that still something that is on the samurai road map, or has that been discarded as a concept?  



[01:54:46] Unknown:

No. No. That's certainly on the road map, but I believe it's been coded, and I believe it's in the testing process. So  

[01:54:55] Unknown:

Well, that's awesome.   Another aspect of the multiple pools is that and I I brought it up earlier to the people watching the video stream, and I'll bring it up one more time.   Freak Typerboli,   created this tracking website.   It's bitcoinkpis.com/privacy,   And he's tracking, the different,   activity among the different pool sizes. And one of the aspects   here is that   they're they're distinct liquidity pools. So as you add more pool sizes,   you're really you're breaking up the liquidity   of the user base. And so you're breaking up the total and onset that the user can achieve in any given pool.   So I'm curious, like, how much thought is given into   when you add additional pools? You know, what what size you know, like, what what is your thinking in regard to,   you know, adding more pool sizes or removing pool sizes, stuff like that?  



[01:55:55] Unknown:

Yeah. It's a great question. No. We're very conservative when it comes to adding,   pools. You theoretically could remove a pool, but it's kinda like one of those things, like, it'd be really a real pain to do it.   So, you know, I'll we like to take that once a pool's there. It's always there.   So we wanna be careful,   when   when issuing or or launching in pool because it's very easy to do, but we don't wanna fracture liquidity.   So one of the bare minimum things that we do is make sure   that   the   the the pools that are closest in proximity to the denomination   are,   stable   and are, you know, flowing freely, so to speak. So the when we added the the the newest pool we have is the   0.001   pool,   and   that was added   once we once we were comfortable   with the 0.01   pool in terms of   how many mixes it it was getting a day, the average kind of waiting time a premixer,   could expect.  

And you you you always worry a little bit that it's gonna cannibalize the other pools, but so far we don't see we don't see that because it certainly doesn't harm the non sense because for the most part, users are staying in the pool that they they initially went into with the UTXOs and engaging in free remixing because that's what the incentives kind of align towards.   So it's about it's about taking away new liquidity liquidity that would have gone to   the the pool, but now there's another option.   And that was the that was the primary worry, but so far it hasn't been a, it hasn't been realized. The the zero zero one pool has been very popular and it brings it bring with with brand new users   who are just totally priced out of Whirlpool to begin with. You know? So it really just opened the doors to to a brand new, user base who   which is what our goal was with that pool.  

Not that that and that's the same exact reason why we won't open a larger pool yet, which we get we get requests all the time for, like, a 1 Bitcoin pool or even larger.   But we don't feel that the 0.5 pool has reached that level of of maturity. You know, it's still it's still too unpredictable.  

[01:58:25] Unknown:

Appreciate that answer. We so we   last week, we had,   Craig Ron   of Sparrow Wallet, and we had,   Kita Miner on. And one of the discussions was this idea of integrating Whirlpool into,   Sparrow Wallet.   And, I I feel like it's a   it's it's an under discussed aspect of your aspirations with Whirlpool, this idea that you can easily   implement Whirlpool into other wallets and provide an incentive for those wallet devs in terms of,   they get a they get a portion of their users',   Whirlpool fees.   You wanted like,   is is this this this is some is this something that you're actively   you would like to see, that you you would like to see other wallets implement Whirlpool as well so that they're part of the same liquidity pool as as Samura users?  



[01:59:23] Unknown:

Oh, absolutely. Yeah. The I mean, it was it was designed   like that from the get go.   It was designed to be to be able to be,   used by multiple clients, multiple,   diverse clients,   if we could get other people to use it. So we're we're very happy to,   talk with any wallets who wanna implement it.   It's a great way to bring 1, you know, fantastic privacy to their users,   to to monetize their wallets.   Because as you said, the the coordinator fee can be shared between the 2 wallet developers.   And and   it's a it's it's a great way   to diversify   the liquidity pool of of the Whirlpool for all users. It's, you know, so it's essentially   like adding a bunch of new dojo only users   to the Whirlpool coordinator. Right? You can kinda think of it like that because   the samurai wallet server for non Dojo users   knows the XPubs   of those users. The the Whirlpool server doesn't. But since, you know, we operate both servers though they're independent,   some users are concerned about that. So the mitigation, of course, is to run Dojo. But if you don't run Dojo,   you, you know, samurai server has your XPub.  

The mitigation in this sense of other wallets implementing Whirlpool is there's a whole new,   entrance of liquidity   from   a and the samurai wallet server has no knowledge of those those those wallets, their balances, their UTXOs, their addresses, or anything about them.   And the Whirlpool coordinator, of course, doesn't need to know any of that stuff.   Right? It doesn't need to know wallet history or anything.   So it's it's it's a really solid benefit for us as coordinator   to get a divide a a more diverse liquidity pool. There's nice incentive for the external wallet developers,   and it's an overall win for users. And and even if the wallet developers wanted to like, we're hypercompetitive   with each other, like, you know, let's say,   we, know, we were competing for the exact same user and we were we were on desktop as well and, you know, we had a contentious relationship or something like that. They could still build it in,   and the market could could determine based on the quality of post mix tools, based on all these different aspects of the wallet, but at the core fundamental   mixing, the user is getting the best in class mixing in both. You know? You you kinda know what I mean there.  

So we're super, you know, interested in anyone reaching out to us, but but, specifically, Frank because it's both it's a Java,   implementation, and he has a Java wallet. You know, it's kind of a match made in heaven. It'd be a very I think it'd be a very easy implementation.  

[02:02:11] Unknown:

Right. Even if even I mean, in in Sparrow, it's different because he doesn't run his own servers.   By default, it chooses,   Electrum servers, and I he has a recommended list of, public Electrum Servers that he thinks,   have good reputations in terms of privacy.   And you obviously can also use your own node.   And with with the   I've repeated this many times on the show, but if you don't use your own node, you're trusting someone else's node,   with your with your transactions, and and there's a privacy concern.   If even even if there was a wallet like,   like Ledger Live, where it's default lite client wallet,   it helps mitigate that risk   of   of of basically a lot of a lot of Samura Lite client users   all being in a in the pools together because you'd also have   Ledger Live like client users or you'd have, you know, BlueWallet like client users or whatever.  



[02:03:11] Unknown:

Exactly. Yeah. It just creates a very diverse,   diverse pool. So it's it's great. So, again, that that's the thing about Whirlpool. It's agnostic to how,   you know, the client derives   you know, you know, Sparrow can do it one way, and then all these other wallets, maybe one's an SPV wallet. It does it that way. The other wallet, you know, has another type of thing.   Doesn't matter. They can all tie into Whirlpool. And   for from the user perspective, their liquidity pool has grown, and it's it they're all from different,   services.  



[02:03:49] Unknown:

Right? And all all the different providers would have to basically collude to reduce the onset,   behind these things.  

[02:03:56] Unknown:

Yeah. Just to to I would like to see that more. Yeah. It it's just it's it's a perfect I think it's perfectly aligned incentives for wallet developers to implement it.   We think that the the proof is in is in the pudding with in terms of Whirlpool transactions. We think they're proven,   they're effective,   they're high entropy.   We we'll eventually be at the point, we're not there yet, where we can start to increase the number of inputs and outputs. So instead, maybe we'll see a a 7 input, 7 out turn a Whirlpool transaction soon, maybe a 10 in, 10 out. That just increases the number of combinations,   amount of entropy that are in the transactions. So   I think it's a bright future and especially as   more wallet developers   realize that that this is a solid way to   to grow their wallet, get support for their wallet, and and provide their users a valuable tool.  

So they can contact us anytime. We'll we'll definitely talk about about implementations.  

[02:04:51] Unknown:

Awesome.   Another another thing we discussed   on, last week's show was this idea of,   the BIP 47 payment codes. You call them Pay NIMs.   They are it's this idea that   in a in a relatively private way, you can have,   a static text string that allows you to to send transactions,   repeatedly,   whether that's a friend or a business partner or if it's donations. I think a big one is donations. I I mean, obviously,   this show runs on donations,   so that that is one reason why I'm focused on it, but it's also because I've I've been doing a lot of work in   activist circles, and they don't wanna run a BTC pay server.  

They don't wanna they don't wanna run something so heavy in order to have some kind of private,   donations received to them. You know? They they and and they operate in in situations that have,   in a lot of ways, way way,   more dangerous threat models because they have, you know, authoritarian regimes or whatnot that they're working against, and they're they're doing active surveillance against them.   So I one of the things that Keydominer said, and I had never really considered this,   is in the the the way the spec works   is it provide there's a there's way more node overhead,   on a user's node or even worse, a public node,   if if you have many,   if you have many, you know, peers that you're using PayNIMs with, because you have to track the addresses of each individual peer as well to make sure that you received the payment or not.  

I'm curious   if if this is something that, you know,   you guys have struggled with,   you know, in terms of   paying them usage? Because, I mean, that is you know, you're the only wallet that supports it right now.  

[02:06:49] Unknown:

I wouldn't say we've struggled with it. I I know I wouldn't say that it   that it increases overhead,   so to speak. I mean,   maybe in a way it does, but, I mean, any user's Dojo is already handling   this this,   this, and they're doing it's doing it, fine.   The in Dojo language, we use the term loose address. So what the Dojo knows about or the samurai server knows about is,   what your wallet the the address that your wallet has derived that is unique between your payment code and your counterpart's payment code.   And that doesn't gets it's because this this address is outside of your XPub space. This isn't associated with an XPub at all. It's completely   different, model.  

So this would be stored by the Dojo. And when the wallet makes the call to retrieve   balances and transactions and UTXOs   from from your Dojo,   it would ask for your xPubs,   but also include these loose addresses.   So the overhead isn't that much.   It's just some more addresses to keep track of.   So Dojo is fine and can handle it fine. I think we're serving something like,   well,   400,000   payments right now,   you know, of varying usage.   You know, currently,   I will say that there are   there are usability challenges within Samurais Wallet for for, traditional payments,   that we're aware of.  

We we've implemented payment right from the start, so we have version 1 of the spec and we're working on,   implementing version 3 of the spec, which which,   takes care a lot of, of a lot of the usability   challenges   associated with payments today.   But, overall,   no. It's not a it's not a huge challenge to overcome.  

[02:08:46] Unknown:

You don't hear from, like, Dojo users saying that their node is struggling from from BIP 47 usage?  

[02:08:53] Unknown:

No. No. Not not at all. I mean, the most we'll see is something like my my Dojo   missed that transaction.   Right? So they need to rescan and so it can find it again. And It's more of a UX issue. Yeah. Exactly. Or or or something is timed out perhaps in one of the requests from the wallet to the Dojo, and that can just be due to Tor being kind of flaky. It can be it can be a bug in our code that we haven't found yet where that killed the connection. So, you know, it could that could be a number of things. But but as as far as far as string, no. I mean, if you're running like a Ronin node, for example, you have   pretty phenomenal uptime,   on pretty pretty modest hardware, You know? So I I think most people with normal pain and activity are are not having any issues at all with with that particular aspect of it. Well, that's great. I mean, for me, the main issue I have,  

[02:09:43] Unknown:

with with,   Pay NIMs is that it's samurai only.   Obviously, that means that someone who's donating needs to be,   an Android user that's using samurai wallet.   In your opinion, why do you think that we haven't seen,   more BIP 47 adoption? Like, why don't we have PayNIMs in other wallets right now?  

[02:10:04] Unknown:

Yeah. I think it it's kind of a tough bit to implement,   or and it has been that has been true for a long time. There was never any   complete library support in any of the major languages.   There there was   attempts to start and then, you know, the project kind of fizzled out because it was just, like, a lone contributor, but they did they made good progress and hopefully someone pick it up, that kind of thing.   TDEV   wrote the early,   test vectors for the bit,   replicated the the   the test vectors.   So there has been working code, but you would have to go through, you know, the the repo,   parse the Java, and then convert it to whatever language you're working with.  

So I I think that's there's been,   you know, a a challenge on the implementation side of things. And and the fact that it it's not a it's, like, again, a straightforward implementation. There's a lot of crypto that's involved,   you know, so low level crypto,   especially with version 1 and the notification address and exchanging,   signatures and all this sort of thing.   I think that the   discouragement by the core development,   or developers of of around the time that the proposal was first introduced.   Also, kinda, just dampened the enthusiasm   around it,   for the exception of us and a few other wallets who went ahead with implementing it, but unfortunately, it's no longer around. They they folded few, you know, couple years after.  

So we're the only wallet that has it currently,   and, you know, it's just one of the one of those things that hopefully other wallets will realize that their users   can be really well served by this type of this type of functionality. And it is a perfect use case for donations,   And it's a perfect use case for Bitcoin businesses who wanna pay their their staff salary on or their payrolls,   or or or any other, kind of payments like that. So there's a lot of potential. It can be used as an identity system. It can be used in in all sorts of ways,   and we've only scratched the surface of bit, bit 47.  

So we're looking forward to exploring that further.  

[02:12:22] Unknown:

So, I mean, you mentioned,   the discouragement of usage,   by,   Bitcoin core developers at the time.   If I recall correctly, the main   concern was,   chain space usage, that it was inefficient in terms of chain space usage. And if fees go up,   it would get prohibitively expensive.   Is that correct?  

[02:12:47] Unknown:

That was one of the   the arguments. It was specifically that there was an opportune transaction required,   for what is termed in the BIP as the notification transaction.   This is the on chain transaction that exists   that allows both both clients to retrieve the payment state or payment data,   from a monomonic restore. Right? So without the use of a central third party server, they can use a blockchain to restore   and and get their pain and connection,   that way.   I'm not opposed to the blockchain,   or opportune transaction. I'm opposed to it because it's a UX nightmare. You know, the user first has to initiate this this transaction,   before then before like, kind of set up their channel, quote, unquote, to send to this person later.  

It's it's a, you know,   it's it inhibits the use of the feature. So   I don't think that's a reason to   discourage use of stealth addresses in Bitcoin. I think that both by and large stealth addresses with the trade also   are a win either way, and that's what Pay and M's provide.   But luckily in version 3,   that whole concept of the notification transaction is dramatically altered and it's gotten away. It's taken away,   and I I believe Craig went into this already on the last episode, but it's it's a, bare multisig transaction that's replaced and that can be a part of any transaction that the wallet is creating. It can kinda just hop along,   and and be completely,   you know, scalable in that sense and not cost the user anything   other than the just the small amount of added weight to the transaction.  

So, you know, these things solve themselves over time,   but that was one of the reasons for discouragement was the off return transaction.   And that was primarily,   Luke   junior, I believe. And then,   Gregory Maxwell had   a objection to it, but there was a fundamental misunderstanding   in his objection   because he conflated   paynim.is,   which is a centralized name server that we run where we take a payment code that the wallet on client side generates   and apply a algorithm to provide a SHA 256 representation in the form of an image,   There the the robot images  

[02:15:14] Unknown:

of that payment code. That's all I can the image it's put the image and the, like, the user readable name. Right? Like, young creature 985 or whatever instead of the long ass string that's the payment the real payment code.  

[02:15:26] Unknown:

Right. So but his his criticism   conflated   panin.is, which is a centralized database,   with the requirement   of the user to use that centralized database,   to restore and get the the the state of the UTXOs,   which is ironic because that was the exact thing that Luke Junior was against in the form of the notification transaction, which provides that   blockchain based   state.  

[02:15:52] Unknown:

So You can restore it from seed, and you can still get everything because it's on it's because it's on it's on the chain.  

[02:15:58] Unknown:

Correct. Right. That was the that was the whole idea of this notification transaction. So it was a what was looked at as a necessary evil that would hopefully   be   taken care of later on. Right? And lo and behold, later on has occurred, and it has been taken care of. So that's no longer an issue.   Users for the last few years have had to put up with   the burden of creating this opportune transaction,   and paying a little bit more,   to get stealth addresses. But they still got stealth addresses, and we've never had a complaint from users. They all the the only complaint we've had is that it was a cumbersome process that is it's hard to onboard new users too, and we completely agree.   So, hopefully, it will be get better soon. Yeah.  



[02:16:43] Unknown:

I think I think there is there was just another kind   of criticism   I I am aware of, which is   the practical   kind of usage or implementation of it that it's it doesn't really matter   much that we are doing all this computation   overhead. I mean, there will be, like, some added scanning to the chain and, you know, needing to kind of filter all blocks,   or or transactions through looking for these kind   of,   hidden message messages,   which wouldn't be in the, like, the block header, so that would be a a deeper kind of parsing of the blocks.   But on the end, if the user   takes and just merges   all the   outputs which have been received through these payments,   then, you know, the whole sales and the thing would lose its, kind of main   purpose. Right? I mean, obviously, this can be discouraged   and education, etcetera, but that's I think that was another thing which was   kind of came up   in the discussion.  



[02:17:59] Unknown:

Yeah. Yeah. I I mean, that and and it's all these are valid points of discussion and and exactly what the bid process is for to discuss these things in the open.   But I think what the what what what hampered the development of bit 47 or at least the excitement amongst wallet developers   wasn't any of those reasons. It was the label   that the bit maintainer applied   that was, quote unquote, unanimously   discouraged for implementation.   And I think that   that was enough to kinda just well, actually, you have to rewind a bit to the era, and this was in the the height or the start of the block size wars and the b cash wars.   And the author of the bit   was a big blocker, so he already had that going against him. So there was already prejudice against him for that. And it may sound silly to viewers now, but that's the reality at the time that that he was looked at suspiciously.  

And   despite the fact that he had a valid proposal,   it was it was moved to the state.   Another bit that was unanimously discouraged for implementation, of course, was BIP 39.   Now luckily, that hasn't had the   same response. The wallet developers implemented it anyway because it's a fundamentally   better   better structure for for   implementing these manomic,   words. It's a standardized   speed backups. The secret Sorry. Yeah. So this is manomic words specifically.  

[02:19:28] Unknown:

Your secret word phrase, freaks.  

[02:19:31] Unknown:

Yeah. So so that's also by the same, you know, by the same most of the same developers   applied the label,   unanimously discouraged for implementation.   Now I'm you know, I I think that to an extent, the the core developers   who and the people who reply on these bit threads to form a consensus need to be able to have   opinions that are that are contrary   and critical.   You have to be able to fight it out in the in the comments and get your ideas out there, and ultimately, the market will decide.   We you know, and that's what was our thinking. Well, we're not gonna wait for an approval from anyone. We're gonna do it because we see the potential there. Now it's just hopefully with version 3, it's more it's gonna be easier to implement for wallet developers. I think maybe there's gonna be more libraries available,   which just make it 10 times easier for developers to implement.  

And we'll see we'll see other wallets implementing it, and I think that would be fantastic. And and another thing that, you know, we welcome   anyone to use the pay them dot is,   database directory if they want to supply payment codes and get back a,   a bot image and name for their users.   Those aren't wallet Samari Wallet specific or they have to be.  

[02:20:49] Unknown:

That's great. I I mean, I think this is all very insightful.   To me, personally,   my biggest concern has been on chain fees, and it's also been my concern with CoinJoin,   as well because   if on chain fees go up,   both become prohibitively expensive,   which is why for, like, the last 6 months,   I've been more focused on   basically that are trying to accomplish a similar case but use lightning,   you know, such as l l or q send.   I   am not a perfect person, and I'm I'm my understanding of Bitcoin continues every day.   I one of the reasons I love this show is because I learn alongside the freaks, and we all learn together.   And I have admitted that I have pie on my face right now because as you can see, if you're watching the video stream,   1 sat per byte is confirming in the next transaction.  

So   I'm curious on what your viewpoint   is because,   OpenOps mentioned it earlier as well, talking about using Lightning as a post mix tool, right, which is idea that even, you know, you use Whirlpool,   you have, like, a nice 5000000 sat UTXO,   you put it in a node, and you you use that for spending, and then, you know, after a certain amount of time, you burn it and do a new node,   to to try and use Lightning as a as a post mix tool that has,   reduced fee burden.   I'm curious on your opinion here.   Do you think that fees will rise over time? Do you think we'll have a sustained high fee environment, or do you think,   you know, in 2 years, 3 years,   there'll be periods where you're gonna be able to,   you know, get one step per byte into the next lock.  



[02:22:37] Unknown:

Well,   fees better rise over time because, I don't know how else the network is gonna be secured once the subsidy runs out.   The block reward runs out. So, you know, the idea has always been that a fee market, quote, unquote, would be developing or developed by this point.   We don't we don't see that necessarily now,   as you as you mentioned.   But, you know, we didn't expect it. We I think you've you've mentioned that we predicted the kind of a low fee environment for a little while still.   And that's because   I think part of it's because   the de facto layer 2 has become the custodial   providers like Cash App and Robinhood and   Grayscale and and and whatnot. These are the   the true layer 2 of Bitcoin.  

And you're getting a lot of your number your number go up crowd,   onboarding via these   these methods,   and  

[02:23:39] Unknown:

that's taking pressure off the main chain. Yeah. I agree a 100% on that. I I think and and that's what's funny about dispatch is we get all into the weeds. Right? But the first step is, like, we need people to fucking take their coins off of these custodial platforms.   But so so so you agree with me that you you think at least a a healthy Bitcoin is 1 in it that's gonna end up in a sustained   a sustained high fee environment.  

[02:24:06] Unknown:

Well, my understanding of Bitcoin is that it has to ultimately end up in that state.   You you there has to be a fee environment.   So miners are incentivized to continue mining when they don't have a a block reward.  

[02:24:18] Unknown:

So I, a 100%, agree. So so   what are your thoughts on,   you know, CoinJoin usage? Private private Bitcoin usage in general is going to have a higher on chain burden,   you know, whether that's a pay join or whether that's a Stonewall transaction or whether that's a a Whirlpool transaction   or whether that's a PayNim transaction. So I'm curious   Where do you where do you see,   you know, we're struggling to get to get users? I mean, it's it's   it's been good to see,   usage go up,   of these tools, but   in a high fee environment, are you concerned at all about   usage,   getting limited because it gets just so cost prohibitive? And and if if that's the case, you know, what do you have a strategy, or is the idea just,   you know, it's it's it's still a little bit off, and and we'll cross that bridge when we cross it?  



[02:25:15] Unknown:

Well, I think it's a little bit of both. I mean, you have we've we've sustained pretty high fee environments for for quite a few,   quite a long time. You know, we were we were around during the Roger Ver block size wars   where he potentially spanned the network or someone spanned the network for   a good year and a half,   if not longer, and created,   you know, really just awful awful conditions as a pretext for, you know, needing bigger blocks, basically, was the idea behind that.   And, you know, that's that that was a strain on not only our infrastructure,   but on users,   usage, but really not to a huge degree. We expected it to be a bigger drain on usage.  

It was more of a drain on infrastructure. So we've shored up infrastructure. We know we can handle   sustained periods of of   blocks in terms of having chains of unconfirmed transactions and,   transactions dropping from the mempool. Like, we you know, we're experiencing all of these,   events at this point.   In terms of becoming too cost prohibitive,   I, you know, I don't see it happening in the near   immediate future or the the medium to long term future. I think it's actually a it's gonna become a real problem for Bitcoin,   that we need to that, you know, as a community, we need to need to look at and discuss,   as, you know, the layer twos continue to strengthen   the custodial layer twos that I'm talking about, the PayPal's and whatnot.  

This is gonna be   exacerbated.   But,   you know, second or third to all that,   we are focused on chain, and that's been our mission statement from day 1. So if if it means that our users are gonna have to,   you know, at that point in the future, become a different type of user who's more comfortable spending a different amount to be able to interact with the Bitcoin   main chain,   I think that will be a success for Bitcoin. That'll be a good as to be in. We'll see if our users are are are willing to do that or if we're willing to,   attract users who are willing to do that because I think there will always be a market for on chain transactions.  

And,   yeah, and, you know, that's where our our our primary interest is.  

[02:27:44] Unknown:

Yeah. Can I can I just say that I'm and here is, I'm just looking at the the Clark Moses dashboard and it it says that average fee average fees per block is point   08   sorry? Point   38 BTC. So, like, 1 third BTC, and   average fees   versus reward is, like, 5.6%.   So even with this kind of, you know, empty blocks coming,   you have still, like, 5%   of the   block reward is is is coming from the fees.   So I'm just thinking that, yes,   I expect more pressure   on the blocks   as well, but I can also see that if for like a real fee market, you might   have periods when you would need smaller blocks. Right?  

But the most important thing is I I don't think that we would change either   direction.   They would just, you know, block size just   just stays as it is. But the purchasing value of Bitcoin   does   go up as we know. And if we are talking about, like, you know, halving epochs   of 4, 8, 12 years,   then for example, in 12 years, the purchasing value will be likely   to   cover   a quite similar   block reward in purchasing value as it is now   of which   now there is only 5%   fees are. But we have a 5th you know, 20   times increase in the purchasing value, then then, you know, how much do you want to spend on security? Like, you know, hardware gets more efficient,   etcetera.  

It might not be   that necessary. Right? I mean, we don't know if it if it happened, and we don't know if it is a problem if it isn't,   right?   So that means that the on chain privacy tools   will just remain   to be used and, you know, they might take up the majority of the of the on chain usage   at some point because then, you know, you go for layer   2 for convenience   as well as   well, I mean, if   we've mentioned the   also need to improve and improving   privacy   aspects of lightning, but you also people also use lightning because it's this fast instant settlement and, you know, which you don't have on chain.  

[02:30:23] Unknown:

So,   you know Yeah.  

[02:30:26] Unknown:

Go ahead, Matt. Sorry.  

[02:30:28] Unknown:

So I'm I mean, Sam, right, we have you here.   You know, I   I I tend to agree with OpenOM's premise.   I have gotten a lot of of shit from the samurai crew for not not the official samurai crew, but,   the many group chats that I participated in with you guys,   for my vocalization of my expectation   that Bitcoin purchasing power will increase with adoption,   which is the expectation that Open Arms just,   mentioned. And   do do you think that is an that is an expectation   we should not be operating under? Or  

[02:31:14] Unknown:

No. I mean, I think on your views. We've seen it in action now for a number of years that it it's it's it's waves. You know?   So we have adoption waves that correspond to,   number go up or ramp up in price.   You'll, of course, lose some of the people that that came on for the ride, but you're all you're always left with a larger group of people.   That's how it's played out   so far.   I don't think I I I think there's a lot of there's a lot of UTXOs out there, from Bitcoin services that do operate on chain, and there's lots of them, you know, that are not publicly   vocal. They're on Twitter. They're, you know, you don't know about them, but they're out there doing their thing.  

They collect fees. They do however they monetize.   There's a lot of UTXOs that many would consider close to dust or or   or, you know, pushing it there and and certainly   will become a lot more, worth a lot more as the   the value of Bitcoin increases in terms of,   US dollar.   And there's gonna be an incentive to to,   you know, be able to efficiently move those transactions whether that be to a second layer,   or not.   They they need to be moved to that second layer. So it has to be an on chain transaction.   So I don't I I think that there's still incentive to to   and there's still,   innovative things that haven't even occurred yet or even been thought of yet,   that can occur on the main chain on the base layer.  

And, personally, I mean, I'm not as you know, I'm not very bullish on lightning.   You know, I think that as it was described by OpenNoms was accurate,   but I don't necessarily see it as a privacy tool. I see I see it as a bank ready tool,   and   I see the majority of usage being via custodial methods.   And I think that that's only going to increase and grow over time,   And I don't necessarily necessarily think that   that should have been the the quote, unquote, blessed scaling solution. I think it was available   at a time in Bitcoin's history where a scaling solution was drastically needed,   to counter a narrative.  

I don't necessarily think a scaling well, we can see look at the mempool. A scaling solution wasn't drastically needed.   But   Bitcoin the Bitcoin committee took that bait and said, hey. Well, we have lightning in it. This wasn't ready, and no one had really examined the   the,   consequences of a system like this, building a system in this way, and the potential for regulatory capture. So I'm I'm just not very bullish on lightning.   If it succeeds   and it's primarily done in a noncustodial   way, I I'll I'll chalk it up as a win for Bitcoin.   But I I do   look I do wonder about the potentials that were missed out on in terms of other projects or other layer 2,   ideas that maybe   had we had the benefit of time and not being rushed into something   could have emerged.  

But, you know or, you know, that could always merge in the future still. So, you know, nothing's written and stolen here.   But I, yeah, I I don't see lightning as that escape route off the,   from the main chain.   You know, I see it as a just another   gonna another swift in the making,   really.  

[02:34:53] Unknown:

Yeah. I mean, I I think me and Open Arms share similar concerns.   I mean, I don't wanna speak for OpenOMS, but that's one of the reasons why I've been pushing for more sovereign Lightning usage,   because it it is quite obvious   that, a significant amount of the usage is either custodial   or even worse,   like, regulated custodian.  

[02:35:16] Unknown:

Exactly. So that that's really bad on Lightning.  

[02:35:22] Unknown:

And so so so far, it is completely permissionless   and keeps growing in terms of sovereignty. And people just,   people not even using it from need,   but it keeps growing   even without   the need because how I sell Lightning to people, I mean, you know, why do I run the news? You know? I mean,   why why should someone   go on and use lightning is   basically   the availability   of the instant settlement, which is not   possible in a   there are only more trusted ways which is possible   and   and also the saving on fees. I mean even okay I mean   if you want to send you know 100 sets around   you still won't be able to to do it. If you if you if you see if you send, like, you know, 10,000 sets around, you still won't be able to do it on chain efficiently.  

So, again, coming down coming back to, like, the,   original   or the where our conversation started that, you know, what kind of communities people would adopt,   Bitcoin   faster   and earlier,   it is quite likely that we'll be the ones who are who who who won't be the whales, you know, who won't have the that much fiat money available   that,   you know,   they will care about that even the 100 even the 100 satoshis or the 200 500 satoshis they need send on a need to spend on a on an on chain transaction when they are,   you know,   sending those minuscule kind of values around.  

So I think it's incredibly important in that sense, and and it and it's   not everyone can   and not   so even we have, like, what, 8,000,000,000 people, even if, like, you know, couple of 1,000,000,000 adopts Bitcoin,   they won't just get the u t one UTXO   per, you know, a   person. They would have a need to be like a family or a village controlling,   like, a UTXO and how else could it be   other than other than a layer 2 solution?  

[02:37:42] Unknown:

I I agree.   Open up to that. I I I I've always said that it's we've known from the start that, you know, for Bitcoin to scale to any sort of mass   mass number of people, there has to be layer 2 or even layer 3 technologies.   My my point of contention is that I don't necessarily think that lightning,   you know,   is that   the best solution for the job.   But to reiterate your first point, first thing you said, it's a not, you know, it's a permissionless system and   absolutely a 100% agree. And I respect anyone who's working on it in that way.   A 100%.  

We just we just don't see a future with it in in Samurai. But, you know, we don't we don't wish to discourage anyone from working on it or using it. In fact, many of our users use Lightning, and they incorporate Lightning into their post next strategy. So, you know,   it's it's nothing like like that. The the only thing I'll take issue with what you said,   and and this is a broader kind of point is but I've made,   you know, I've made 100 of thousands of transactions,   like peer to peers transactions to a merchant, you know, for for goods and or services.   And   I can't honestly say that I've ever had a single time where I was wishing for the finality of that transaction to be instant.  

You know, I don't really ever remember   an issue waiting for a few confirmations or 6 confirmations or 12 confirmations.   If it's an online transaction, even more so. And if it's an in person low value transaction, I've never had a bar or cafe   ask me to wait around for the transaction to confirm. Just just as just in practice when I've when I've spent,   over the years since since, 2012.   So I don't think that that aspect is necessarily important to users.   I think the aspect of saving on fees is what's important to users.   But even during the high fee environment that we experienced   in the earlier parts of the year and and last year,   we did not really see a large   increase in lightning transactions,   you know, inbound into lightning.  

You would've we would've and I expected to see a larger increase.   So there there's another disconnect there. So we know that users want to save on fees,   but users on a large scale   either don't know about Lightning or have determined that Lightning doesn't work for them even if on chain fees are in the 1 to 300 satabyte,   per byte region.   So that's a little you know, that requires   deeper   introspection,  

[02:40:25] Unknown:

I suppose. It's yeah. I I think it has a lagging effect. The the high the   high fee environment, which we have seen a couple of months ago or, like, in in in for a couple of months, a couple of weeks ago, or   so,   so that's not a good time to deploy liquidity to Lightning. Right? So, you know, it didn't grow then because it was   obviously needing an needing, you know, multiple   transactions to to kind of, like, build up a node   to serve others and, you know, things like that would be significant spending then. But now   after this event, you know, even then the   the overall interest in, like, Bitcoin is not   looking to be very high at the moment,   but the growth   of the network   has picked up to a level it wasn't,   you know, seen before. Like, you know, the the capacity is, like, what, like, 8 18   100 BTC just now. I'm I'm looking at it with, like, 23%   growth in the week.  

That is   that is not, like, you know, the usual number. So it it seems like that now that people have this time to   they have experienced   that they had high fees, and now there is a period. Now they can deploy,   and, you know, open those channels and get ready for the next wave of of,   you know, peaking usage and   on of of the on chain,   space.  

[02:41:57] Unknown:

So yeah. I think that's true. I think that's true, but only to a small extent. I think I mean, I think it's a wider I think it's a wider problem that   I mean, it's it's maybe it's a problem. It depends on your perspective. But I think that Bitcoin users in 2021,   and it's been true for a long time, just aren't spending on stuff. They don't buy things with Bitcoin and transact in Bitcoin.   They primarily are buying Bitcoin,   sending it   the the best case is sending it to themselves in a cold storage, but   a lot of them are just buying a lot of them are just buying Bitcoin and storing it on the   exchange. But there's not a lot of transactional activity occurring,   I think. And,   you know, that that that comes from, you know, the the huddle mentality.  

That comes from the   the   number go up kind of mentality. But, ultimately, it just comes from the point where that users just don't need to to spend it. Right? They don't see the value in spending it when   when they can appreciate in value by letting it sit there. Whereas there's there's a whole class of users and a lot of them are samurai users and I would consider myself one of them that require it. We need to spend it because   we earn it primarily.   We don't have another method, so spending is is essential. And and we've been doing that for for all these years, and I just think the the available pool of users who wanna interact with Bitcoin in that way,   has has been has shrink you know, shrunk since all of the new,   entrants.  



[02:43:31] Unknown:

Like, shrunk in in,   versus   the overall  

[02:43:36] Unknown:

users or the overall Yeah. Yeah. Yeah. Exactly. With with people who have that as their core kind of, you know,   proposition. Their their their reason for being here, right, is they maybe they're opting out of the system.   Maybe they require,   transactional privacy for a transaction that is taboo in their country. Whatever the, you know, whatever the the reasons are. They're they're they're, you know, they're still around, but there's more people who are using it as an investment asset versus   a transactional asset when   as far like, in my head, it's both. You know? And I need my my investment asset in the short term just as much as I need it in the long term, So I spend more.  

And I think it's it's kinda based on when you got into Bitcoin, I think,   that can kinda predict how often you transact with Bitcoin. Like, true transactions. Maybe it's buying web hosting. Maybe it's domain names. What whatever. You know?  

[02:44:37] Unknown:

Yes. But, yeah, the same way, I think, the the usage in as a medium of exchange   would   make   lightning usage higher as well   as, you know, as well as the on chain. So it it it it goes kind of parallel.   And you do it and as, like,   watch the comments, like, about the center you said, you know, it's it's not   it's not efficient to have, like, a high lightning capacity. There is is is you cannot really compare it to,   for example,   the the amount of liquidity which is sitting in in in,   or, like, even offered in joint market, you know, or or what people are,   you know, holding in their in in their in their,   cost storage wallets because it's just a very kind of specific use case which you need and it can serve, you know, an unlimited amount of transactions in a in a quite big mesh network already.  

So,   I hope to see I I hope to see more   more lightning usage, but it won't necessarily   will be obvious from   from looking at the kind of capacity growing. But it will be just obvious from the services and the things you will be able to do with with lightning and on lightning. And even now speaking, you know, with, like, the from, like, DRCs to, like, you know, clear and site filtering on on   with, like, RGB and, you know, all all these kind of things which are which are made possible with the with the technology with the payment channel channel technology.   But, that doesn't, you know,   obviously, that doesn't invalidate the   the the on chain usage and the and the way that you can be the most private   with, you know, the coin joints and the posting tools and things like that that you you need to always fall back to that, and that's the foundation to build on. And, you know, I I very much like to see, like, you know, somewhere at wallet continue to con concentrate on it. And, you know, we'll be using on it because it's the right tool for the job.  



[02:46:39] Unknown:

Just to jump in here real quick. I mean, I think a lot of this is growing pains on both sides.   I think it's you know, I'm not saying,   and I will never say that Lightning is a sure thing and maybe it's the wrong tool.   But,   you know, I I think first of all, I think Bitcoin's use as a medium exchange will only go up. It's it's had some bad years recently,   but I think, like, as as users, as people start realizing, especially with the the decline of cash, start realizing   the need for censorship resistant payments,   more people will spend Bitcoin as they realize that need, and they have no other option. You know? Bitcoin is is meant for those payments.  

Unless you earn a 100% Bitcoin, it's meant for those payments you can't make otherwise.   So I expect that to increase. Also, you know, with Lightning, it's still very early, you know, so I think it'll take some time.   I think on the privacy side, just one, you know,   you know, Bitcoin, Lightning has a lot of difficulties in terms of receiving privately,   which concern me. But on the sending side,   especially if you're a more technical user and you realize,   the trade offs that are being made, which is part of the UX hurdle of Lightning as it currently stands,   and you take certain precautions in terms of, you know, not holding a long standing balance or a long standing node, and you use it basically as a batch spend for post mix.  

My single favorite part about spending via Lightning   is that there's no change output.   And because that change output is, like,   from a UX from a UX side, I mean, we didn't we're so far into here now. I mean, we didn't even talk about, like, coin control or labeling,   which most wallets don't have. But, like, you spend to   a a merchant or, even worse, you deposit into a a regulated exchange, and you have that change output. That change output's just sitting there waiting to,   fuck you privacy wise, but you don't have that with Lightning.  

[02:48:41] Unknown:

Yeah. Yeah. The change output is, you know, it's a subject or it's a product of the UTXO architecture, and it's a challenge to be overcome.   Luckily,   if if it's, you know, above 0 0 1 BTC, then,   throw it into Whirlpool.  

[02:48:56] Unknown:

Yeah. I mean, samurai samurai is unique in that regard because you have, you know, very good advanced coin control, and you have labeling,  

[02:49:04] Unknown:

but most wallets do not. Yeah. No. It's a serious issue. I mean, it's a serious privacy issue with Bitcoin,   currently. And it's something that, you know, ultimately could be solved in the protocol,   layer with confidential transactions.   But let's be honest, that's not gonna happen. There's various reasons for that. So we have to deal with it on the application side. And,   you know, that's what Samurai does. That's what, Joyn,   Joyn Market does.   And   which is all we can do is continue to make those tools. I, you know, I I don't know that the   the this this awakening is gonna happen,   and they're all gonna go on to, like, the layer 2, like lightning.  

I think that lightning is designed for a mass market, and I just I think the reality is the mass market   rather use something that's easier like Venmo.   You know? And I I just think it's gonna be it's gonna have the uphill battle unless it finds, like, a real niche and and great use case and that that hasn't been discovered again. Like you said, it's still early, so it still can be discovered.   That that makes it, like, really, really compelling. I just I don't know. I don't see it growing,   past a certain, you know, plat plateau.   And as Opendom said, the only way we can really tell is with the numbers that get released by services,   like Bitrefill and and others who have implemented Lightning for many years now, and they tend to do that yearly. So I know I mean, last year, it was something like, you know, Dash had more transaction volume in Bitrefill than than Lightning did. You know?  

We'll see if the 2021   numbers are any different at the end of the year.   I would expect it goes up a little bit, but nothing dramatic because I don't think the use case is there for Bitcoin.   And if so if there is that awakening, you better you better hope that all of these tools that we, you know, that we're and   and join market and the others are prepared, you know, and have done enough,   in the time that we have had   because it's gonna they're gonna need the tools and they're not gonna be sophisticated. They're not gonna know about the coin control like you said. They're not gonna know about these things. They're just gonna be looking for solutions to problems.  

[02:51:14] Unknown:

Yeah. A 100%. I mean, we have Anthony in the comments. You know, Anthony Ronning, he was also on the show, and he's mentioning that you still have issues with the actual   open close on chain with lightning. There's a lot of privacy gotchas,  

[02:51:30] Unknown:

and we do talk about them a lot on dispatch, and I and I don't wanna diminish that. All things in Bitcoin. Yeah. That's everything in Bitcoin. Privacy gotchas everywhere.  

[02:51:38] Unknown:

Exactly. Guys, so, I mean, we're nearing 3 hours. I think this has been a fantastic conversation.   I really appreciate both of you. I hope the freaks appreciated this conversation. I think they will.   Do you you guys have anything you want to discuss before we wrap this up?  

[02:51:58] Unknown:

I have nothing, nothing to announce or anything like that, but it's been a a great discussion. I was happy to to be here and and great to to   to chat with you open dogs.   And, with that, you, Matt, for the first time.  

[02:52:15] Unknown:

Yes. Same same with me. It was a it was a really good, really good discussion, and we, you know, covered a lot of things.   And,   yes. Thank you.  

[02:52:25] Unknown:

It's been an absolute pleasure, guys. I appreciate you.   Just one more shout out for our guests. That's at samurai wallet on Twitter and at openoms on Twitter.   To the freaks, I hope you found this conversation useful.   Privacy is extremely important.   We expect Bitcoin to be around for a long fucking time. We expect the chain to be around for a long fucking time. Please   care about your privacy.   Please start seeking out resources and trying to learn how to use the tools before you absolutely need them because when you need them, it might be too late.   With this discussion,   all 3 major coin join implementations have been discussed on   ciddle dispatch.  

You can go back Wasabi at ciddle dispatch   15, do your own research,   look into all this stuff, and just try and advance yourself.   Thank you, guys. Appreciate you all.  

[02:53:24] Unknown:

Thank you.   Hope to be back again soon.  

[02:53:28] Unknown:

Yeah. We're gonna make that happen.  

[02:53:31] Unknown:

Cheers, guys. Looking forward.  

[02:53:36] Unknown:

You like to sing?   It's all right. I can't hear you.   Is our latest record?   Or our latest electronic noise depending on whose side you're on.   Anyhow, we'd like to carry on with it. It's the last number. We'd like to thank you all for being so wonderful.   And it's called Help.   1, 2, 3, 4. Help.   Not just anybody.   You know, I need  

[02:56:35] Unknown:

Cheers, freaks. I hope you enjoyed that conversation. Love you all. See you on rabbit hole recap on Thursday.   Stay on bone  

[02:56:44] Unknown:

stack.