FFS078 - Giacomo Zucco

[00:00:00]

Intro

Giacomo: the problem with ordinals is that you are, creating an arbitrary game.

Which not only interfere, but also conflicts with the previous conventional, but not arbitrary and very consequential game that you were already playing on the same information. So we're already playing a game that was a game of money, a game of property with some enforceability due to Unknowable private keys, or unpredictable block numbers, or proof of work thermodynamical characteristics.

So there was already a game, it was a very cool game, not an arbitrary game, just half assed. It was a very intelligent game, and now your nothing burger, On top of conflicting with another game.

Luke: Welcome back to the Freedom Footprint show, the Bitcoin philosophy show with Knut Svanholm and me, Luke the Pseudo Finn. And we're here today with our good friend, Giacomo Zucco, who's going to tell us a little bit more about what's going on with ocean mining, everything to do with ordinals, and maybe a few other interesting things such as his recent trip to El Salvador.

We figured this was [00:01:00] timely because this is all going down around Christmas time. We're recording this on December. 27th, aiming to get this out within a couple of days, I think, and so we're in the Christmas spirit and we have our good friend Giacomo, so Giacomo, welcome back to the show.

Giacomo: Thank you for having me back. Yes, it's a very good time, so I will be less toxic because I'm still a little bit infused with Christmas spirit, so I will be, I will be very kind to everybody.

Knut: Yeah, how, how was the Christmas spirit in El Salvador?

Giacomo: Uh, I was still not you as an Italian from north of Italy and now live in Switzerland where everything is cold in December. I was not used to do the typical, you know, Christmas with palms stuff. So I didn't really feel the, the, the Christmas, uh, there were some lights, I have to say, but, uh, but I'm still not ready to spend the actual Christmas day in a tropical land.

Still too weird for me.

Knut: Yeah, I love, uh, uh, like when they decorate palm trees with, uh, with Christmas lights. It's, it looks like [00:02:00] something else.

Giacomo: Yeah, but yeah, but also it's weird because I mean, uh, in Italy, we have all the, um, uh, the nativity scenes everywhere and, uh, for, uh, nativity scenes, it happened, even if it was December, it was, uh, it was basically Bethlehem, so it was Middle East, it was kind of hot, and, but to me, to see that without the snow and without the, the pine trees is weird, so we, we, it's like a global European Mandela effect.

We know that Jesus was born in the Uh, in the cold situation, and we cannot accept that there were palms and not pine trees in the actual scenes. It's very weird.

Knut: at least Isaac Newton was born in the cold and, uh, we actually know his birth date. So that's, uh, that's, uh, yeah, I'm trying to promote, uh, the option, optionality when it comes to Christmas, uh, so, so the, so that you can celebrate it whenever, whenever you want, really, like, why are we all celebrating at the same time?

Giacomo: Newton was fine, but you know, I'm more [00:03:00] like a Leibniz guy.

Knut: Yeah. Yeah. All right. Well, we, we did an episode like, uh, um, about a month back about, uh, you know, um, the fees being high and it was my best attempt at, um, uh, explaining why. Uh, and why it's, uh, regarded, uh, but, uh, uh, I thought we'll bring you in to, to explain a bit more about this and, uh, why, um, why things are the way they are.

Why Ordinals are Highly Retarded

Knut: So first, first of all, why are ordinals retarded?

Giacomo: So, ordinals, just to clarify, are not directly connected with the fee situation. So we will dive in into all the distinctions and details. Ordinals are, um, the new name for a scheme proposed in 2012. Uh, you can still find it on, uh, Bitcoin to, I will send you the link. You can put it in the description. And, uh, in 2012, somebody said In Bitcoin there is not an notion of a single Satoshi that doesn't exist.

You [00:04:00] have a UT xo, you spend the UT XO entirely, and then you create other UT xo. So the Satoshi amount is just a natural number that describes the size of the ut so. But you cannot distinguish the single atoms of the UTXO, you just know the size. Then you kill it and a new one is born. But somebody said in 2012, what if we assign arbitrarily one single number for each Satoshi, uh, so we can track it even after we spend it.

For example, we can do, you can do that arbitrarily, you can do something like a first in first out logic. So you say, okay, let's, let's say that the UTXO I'm spending Uh, as the first Satoshi, which is somehow connected with the first Satoshi of the first, uh, output of the same transaction when it comes out.

So we do first in, first out logic, and, uh, we, we can, we, we, we delete the fees, we adjust, and we can track Satoshis arbitrarily. This is, is important to, [00:05:00] to say that this is completely arbitrary, not just in the sense that any software is arbitrary. As you teach me, Knut, every software is just agreement, so we can have a meta agreement on top of that.

But it's a different level of arbitrarity in the sense that, uh, there is no specific, uh, clear reason to choose this, uh, versus any other kind of correlation. It's just like, it's not even a software decision. It's just an arbitrary, um, order, ordering decision, but it's equivalent from a functionality point of view from a First in, last out, or just speak it in between.

Let's, let's give a metaphor to these, uh, assuming that Bitcoin is like gold. Let's see that, uh, we don't, we cannot track single gold atoms, uh, inside the gold bars and gold bullions. We can't. So, uh, gold is fungible, but we don't like that because for some reason we want to track gold atoms. And so, uh, we, we took the satellite images [00:06:00] of gold trucks going into big foundries and coming out.

And so we say, okay, from now on, every atom of every truck coming in is the first atom of the first truck coming out. So we know that something can happen within the foundry where we don't see from the satellite. So we know that it can be switched. They can be moved, they can be sold, they can be both, but we just say that we decide this is a thing.

Uh, so it's, it's a, it's a very weak kind of a meta protocol. It's a meta protocol that will miss a lot of valuable information about what happens in between. So people reacted to this idea in 2012 in very different ways. I was not there in Bitcoin yet until the next year, and then I started to read all the discussion in 2013, and there were many, and I had some physical discussion with, I remember back then I was discussing with Peter Todd, Alex Mizraki, Loris Naum, a few other people about this, [00:07:00] the French guy that created CoinPrism, and he said, you But anyway, there was like CoinPrism, CoinSpark, um, um, ChromaWay, a lot of colored, uh, colored names to do this colored coin thing.

The main objections were, one, uh, Satoshis are fungible and they should remain fungible if you create a logic on infungibility and you actually manage it. So if this scheme is successful. We do lose social fungibility, basically. So people, something is fungible because people consider it fungible. If people stop considering it fungible, you are breaking fungibility of an object.

The counter objection was, yes, but this is just opt in, so you can do it or not. Yeah, but if you do it, you reduce the fungibility of everything else. If this scheme becomes very successful, in every transaction, you have a lot of Satoshis that are not fungible anymore. And so all the other Satoshis, they will lose, uh, uh, [00:08:00] fungibility set, basically.

And then you will also damage privacy because people that applies, uh, chain analysis heuristic, they will be able to add a new heuristic. Like now, I assume. That this is the change. This is the payment. I assume that all the inputs are from the same person, but I also assume that people will try to preserve the first Satoshi with the first Satoshi and the second with the second.

So I can easily undo a CoinJoin because now there is no CoinJoin anymore. Like this output here must be this because this is a Satoshi that people doesn't want to lose in exchange for another Satoshi. So for example, you cannot have CoinJoin anymore. You cannot have Lightning Routing anymore. Because if you, in Lightning, you put Satoshi's into UTXO, assuming this, uh, this meta protocol, and then Satoshi stays there from a non chain perspective, but actually they get exchanged from the point of view of routing, and the ordinal theory cannot track this.

So you lose this information completely. [00:09:00] So, uh, these, uh, These collored coin schemes, they were problematic for privacy. Also, they were problematic for the divisibility, because if you want to represent money, uh, 2. 1 quadrillion of unity seems like And now for at least the next couple of thousands of years, but if you want to represent literally everything like it was the theory, you can represent, uh, stocks, uh, bonds, uh, bonus points, uh, uh, higher for higher, uh, higher miles.

Our time of cell phones, if you want to represent everything that is represented in a, in, in Google spreadsheet or Microsoft Excel right now using, uh, unfungible Satoshis, now 2. 1 quadrillion runs out pretty, pretty quick, even just assuming the, uh, discount, uh, operation of the major supermarket in Europe.

So there was a problem of divisibility. Then people started to [00:10:00] say, instead of doing the single Satoshi tracking, which is unsustainable, we can just do something else, like in every transaction, we write something in a transaction, we encode some information, just like imagine that we are sending bank wires and we use the Swift.

protocol to play, uh, to play, um, basically some chess game. So I put, uh, uh, like Bishop in C3 in the Zwift protocol and we play a game. This is inefficient, but I mean, uh, as long as, as long as SEPA wires are free. Why not to do that? We can do that. This has some advantages for privacy, for example, uh, compared to, to the Colorect coin idea, and it's more divisible because now you can, in single UTXO with, let's say, 3 million of satoshis, can actually contain 3 billions of these arbitrary units.

So stuff evolved from that 2012 idea very far from there. And the latest evolution [00:11:00] in, not just chronologically, but also in my opinion, from a point of view of maturity of the idea, is what I called RGB in 2018, which is basically Let's just use a Bitcoin transaction that can send Bitcoin to other people for other purposes.

Let's just use them for what they do very well, which is avoiding double spending. So following the theory that Peter Todd called the single use seal. So the Bitcoin transaction is just a. untradeable spending, uh, kind of seal that you close around something and then all the relevant data, you put them completely off of chain and off band and you pass it in a peer to peer network that is not Bitcoin.

So the, the, what are ordinals actually and why they are retarded? Basically a couple of years ago, Somebody, coming from the shitcoin wars, rediscovered the same idea of 2012, instead of making a, a, a, like a prior art research and just saying this old idea was cool, I fixed it somehow, [00:12:00] the problems that made it fail in 2012, they just completely ignored the story, and even more, the people Uh, following this idea, they were completely unaware of the Bitcoin story, completely unaware of the trade offs, of the problems, of the reasons that people didn't like the idea originally, uh, of the consequences on the up return wars, uh, back in 2000, 2013, 2014.

So there were a lot of, uh, uh, there was a big chunk of Bitcoin history. Completely deleted, uh, for the typical eternal September, uh, effect. So these people are coming now. They are coming from usually shit coins. They're coming from other kind of stuff. They don't know Bitcoin history. We are not very well organized and equipped to transmit it probably because, uh, uh, there is, I mean, there is a BitMEX research that they has, they have a great Uh, article about the OpReturn, uh, war, uh, you can find, uh, uh, uh, Bitcoin talk is still indexed on [00:13:00] Google.

You can search it so you can find stuff. That's true, but there is not an easy way to say, okay, I have this idea. Let's see, uh, organically if it was already discussed. And you know, there is the law in Bitcoin that everything that seems new. Was already discussed in between Turkey 2013 and usually proposed first by Gregory Maxwell and usually, usually also killed first by Gregory Maxwell.

So, uh, the rule is, is um, is, well this is a, an exception because the proposal was not Gregory, but one of the people killing it was actually Gregory. And, uh, so the, I use them, uh, in Prague in my speech. I use the words, uh, the word, uh, retarded, not just to trigger political correctness, but also to, uh, sin signify that this is.

Just coming late, all this debate was already had, and all the objections that we can make, and we will make them, they were already being made. So, in my opinion, the hype of ordinals, they were [00:14:00] not just a problem. Because of the issues of this scheme for privacy, for divisibility, and for everything else.

They were a problem because they were a symptom of a very strong eternal September effect. So the fact that you think, so I started to read articles about Ordinance being the only innovation in Bitcoin. So an idea already proposed, implemented, and rejected by the community to several degrees in 2012, and an idea that was already used as a stepping stone to, to actually move away from that idea in completely different research lines.

That is innovation. So just go going back, reproducing the same thing, ignoring completely the history. So for me, ordinals were not just a problem in themselves because I don't think they, uh, I think that eventually it's true that if a ordinal theory gets widespread, widespread, you lose privacy, but it's also true, it's also true that if you need privacy.

That need will [00:15:00] destroy Ordinal Theory because people will need Lightning Network, they will need CoinJoin, and so they cannot track Satoshi because they need fungibility to his money. So it's the other way around. I think that the need for privacy and divisibility will make it fail again and again like it was in 2012.

Scams on Bitcoin

Giacomo: But what really triggered me was not The, the proposal, it was the complete, uh, misunderstanding of the, of the history of Bitcoin that, that, uh, uh, portrays these proposal as something new, as a novelty, as innovation, when it's actually going back, uh, to ignore all the steps that we had done in the last years.

So for me, the retardedness was not just a cognitive, uh, point, but it was also a chronological point. We're just, we're just coming. This is, this debate is coming too late. We already solved it. And there are no new elements. The only new elements are, uh, I mean, there are new elements. That, that would be unfair.

The new elements are basically the fact that there was a, um, uh, an idea [00:16:00] that was already, um, uh, used in Bitcoin with counterparty, rally papers, that this idea of digital collectibles. This idea was a niche in the back in 2012, 2013, and now during the cycle of 2021, it became the new mainstream buzzword.

So if ICOs were the buzzword in 2017. Uh, NFTs were the buzzword in 2021. So that's the only new, uh, thing, uh, at the social layer. Uh, there was an interest by noobs into an idea that was already broken. This idea had his new primetime, then it died again, basically, in shitcoins. So NFTs became the thing. And that you remember, like, um, the metaverse, I mean, Jack Dorsey selling the tweet and everything was like.

Incredibly big. And then everything basically disappeared. So this idea of I do that on Bitcoin was also, was from a sociological point of view, was [00:17:00] a way to keep alive a hive that was dying because NFTs on shitcoins are dying. So we need a new narrative to keep our NFT alive. And a new narrative was, what if we do the same, but on Bitcoin?

That's very, very new, except that exactly how it started back in the days.

Knut: Yeah, and, uh, doing it on Bitcoin, like, sort of goes against their own previous narratives because it sort of validates Bitcoin as the, the thing. Uh, so if, if you're gonna scam me, scam me on Bitcoin because that's, uh, uh, at least I know that the Satoshi is worth something in the future.

Giacomo: It does. And this is also one of the reasons that I think this is a problematic point though, because from one point of view, it does validate what we always say. So basically you, you, you add a narrative that shit coins were new and Bitcoin was old dinosaur tech. That was your narrative. And now your narrative is, is [00:18:00] wait, we're not dead yet.

We can do the same, but on Bitcoin. So this is the novelty. So first Bitcoin was the old tech, and now it's the novelty. So it's clearly a capitalization on the narrative point of view, but that's also one reason why people in the Bitcoin camp, people passionate about Bitcoin and caring about Bitcoin felt not, uh, trigger like me about something retarded going on, but actually flatter it.

Like if is they're recognizing. That Bitcoin is actually the cool thing, uh, even if they're recognizing that for a very misguided reason, they're still saying that I'm cool. So these people, these shitcoiners, they were saying that we were dinosaur tech, and now they're calling this old 2012 idea novelty and innovation.

I mean, I'm flattered. I mean, I love you guys, come back and yeah, call me new, call me innovative, please. So there was this, this thirst to be recognized. So this, I don't know, something like, uh, if you have, uh, [00:19:00] your enemy calling you a good name for the wrong reason, uh, uh, you, you, you feel flattered and you accept it and you enable the wrong reason because now you feel flattered.

So many Bitcoiners lower their bullshit detector. Um, settings, because, uh, these, what you're describing is true. There was a narrative capitulation in favor of Bitcoin, and that basically made everybody way less skeptical, not just of bullshit, but also of possible. Intentional attacks, which is a conspiracy theory, Pandora's box that we can open eventually in the discussion.

Knut: The metaphor I'm thinking of here is that like, uh, most people don't know that more time passed between this, the, the extension of extinction of thete ofor and the T-Rex than between the T-Rex and humanity like . So they're getting the recordation wrong. So, so . I tried to like, [00:20:00] you're obviously way more knowledgeable about the technical stuff than me, but I tried to make a tweet about this and try to, I've been trying to find like a way to condense this, why this is, uh, why there are a scam and the thing I came up with it and I want you to like, uh, devil's advocate this thing and, uh, and, uh, try to like point out where I'm wrong here, but as, As I see it, Satoshi, as you say, Satoshis don't exist, they do exist in our heads, like, it's, but it's not just data, it's something else, it's connected to the human being, so, because, like, you need a private key to unlock them, so the Satoshi is really just a measurement to which extent you're allowed to change the network structure by, uh, You, you know, spending, uh, Bitcoin.

and the, like, the, uh, the, the arbitrary [00:21:00] data is in the op return thing, right? So it's not connected to the Satoshi, but to the, to the Coinbase transaction, right? And so, so when you move those Satoshis, like what, what happens really? Because you can't move the arbitrary data. You can only move the Satoshis, which don't exist, uh,

How Ordinal Theory Works

Knut: So. So how does this work? These Ordinal's people, do they, do they take all this data and, and like, how do they move it to the next, uh, next place in the blockchain? Like, or time chain? How, uh, how does this work? They just copy paste it? Like, like everything else?

Giacomo: That's that. So now I will play David's advocate against your issue, but it's important to clarify that now we are introducing a new buzzword. So ordinates were just a new name for the old way to track satoshis. Or, or pretend that you're tracking and make pretend. to track satoshis, [00:22:00] uh, with some problems.

Now, on top of that, um, the idea was the idea of inscriptions. So, uh, why should they track some satoshi? Nobody cares. Well, one reason could be that this satoshi is connected to some transaction, which is important. For example, let's say that we're tracking satoshi from the first half Finney, Transaction from, uh, from, uh, Satoshi himself, or we are tracking the first Satoshi from a new difficulty era or from a new halving.

So there are like, uh, uh, some kind of different, uh, uh, tiers of rarity, which are depending on the system itself from, uh, they are depending, uh, directly from the blockchain, uh, time chain. Uh, kind of, uh, intrinsic characteristic. What if we can make some of this satoshi connected to psychologically connected to something else, for example, with inscriptions.

So we use a technique that was already existed and unrelated to ordinals and unrelated to colored coins. It was used, for [00:23:00] example, in eternity wall. Was a cool website created by my friend Ricardo Kata in 2016 and 17.

Knut: Oh yeah, I remember that.

Giacomo: remember it was cool. It was Twitter on chain. So you pay your transaction to write something on a return, then you can answer, you go to answer.

And then there is a link in which the first output will basically pay the previous, uh, the previous output. And so basically you will create on chain a graph. Of answers. And you can also put like, and if you put, like, you will spend a few Satoshis to like a tweet. So the, the, it was there were, the, the main point of eternity wall was this tweet will never be deleted, so they remain forever.

So they, they were especially love letters. Or hate letters was the two strongest sentiments that you want to last forever or to pretend they will last forever. And, um, so alternative world was cool, uh, but it was unrelated to ordinance. There was no ordinal theory. It was just this, the only [00:24:00] meta protocol was this answer idea in which we interpret the sum of return.

Uh, in the same transaction, paying to some outputs as a graph of trading in Twitter when you answer to something. So that was an unrelated kind of thing. And inscriptions are the idea of bringing these together. So instead of just saying that this Satoshi is more rare because of something, uh, like the difficulty period or the, or the halving period.

We say that it's scarce because it's connected to the encoding that I put in the op return. So I write hello in the op return, and now when I use the original theory on top of the encoding, I will move my hello to somebody. So this doesn't make any sense, but the argument would be that, yes, but that was not making any sense already.

So if we are already pretending that something which is not Technically distinguishable or distinct like [00:25:00] Satoshi is moving from this address to this address, which is not the case. So basically if we are pretending that Bitcoin is account based where you can move some asset in some different account, then what's the, what's the problem in to pretending on top of that, that now you are moving some kind of moral ownership of the sentence or an image.

So I say a sentence like, Merry Christmas to everybody. Now, there is no. technical way to own this sentence because the sentence is information and it's replicated in everybody's head when they read it. There is no concept of ownership which can be defined. But if we are already able to make up concepts that are not technically consistent, Why, why stop to one?

Why, why do we have to stop to transfer the Satoshi? Let's also transfer the ownership of the Merry Christmas. It doesn't make any sense. And, uh, so that's a good philosophical distinction. So why can we, when you say that Bitcoin is an [00:26:00] agreement, that's very interesting because, uh, Everything basically that we do is an agreement, everything is some kind of convention, but there is a subtle line between conventional and arbitrary.

Conventional is like, we have to agree on something to make it real, we have to act upon a certain agreement, upon a certain convention to make it real, but it's not arbitrary in the sense that If there are reasons, the convention is made like this and not in a completely different way. When people talk about money, for example, there is this meme that money is a shared delusion.

Uh, this is a Somehow deep, somehow dumb mean is deep because it takes in the conventional side of money, but it's dumb because it makes money arbitrary, like a money with a different kind of scarcity, different kind of disability, a different kind of recognizability that didn't matter. So gold was money, but sushi could have been money as well.

No, that's not true because the [00:27:00] objective external characteristics of Sushi were making the arbitrary choice of using Sushi as money, uh, objectively worse than the other, uh, choice, conventional choice of using gold. So, the point is that if people think that Bitcoin is not just an agreement. But it's an arbitrary agreement that it is like that, but it could be just like that.

Then they can add other arbitrary agreements of top. One is, let's assume that Satoshis are trackable with this arbitrary convention. This is arbitrary and not just conventional because it's technically inconsistent. So you, you will lose information. You will break information. You will break how the system works.

So it's not just. Arbitrary, but it's wrong in a kind of objective way. It will break down the system in a, in a way that is not functional. And what you're describing just one small step of imagination more. Let's also move around Merry Christmas, the sentence, you can't. [00:28:00] But if, if everybody pretend that they can, so it's like, uh, you know, uh, there were, so you are not religious, uh, or in a conventional way, but you have to know that somebody in, in, in eBay, in, uh, it was, uh, I think it was,

Belief in Bitcoin's Existence

Knut: Well, I, I, I act as if Bitcoin exists, to paraphrase Peterson. So that's, that's the extent of my religiousness.

Giacomo: But in a traditional sense, you may be skeptical about Deville, the Deville buying souls for Deville contracts, right? But you have to know that in PayPal, there was a moment, I think it was around 2002, I don't remember, but with my friends in high school, we were watching that, and people started to sell souls on eBay.

So there were people saying, I sell my soul and just for the lulz, somebody else was buying those like 3 for a soul. And PayPal had to actually, I don't remember the details. I have to research this, but I remember PayPal basically stopping some of the trades, [00:29:00] like if you, if you cannot donate organs or something like that.

So this is another example. So there is no way we can meaningfully sell your soul. On, um, on Paypal. Oh, sorry, on eBay. Uh, there is no trivial way to do it, but, uh

Knut: Satoshis, please.

Giacomo: Exactly. So we can make a convention that I'm selling my soul to you that will not have any impact or on anything which is consistent to anything.

So it's totally arbitrary. You can say, uh, after a while, you can say, no, I changed my mind and now I exit the agreement and there will be no way to enforce the agreement on you, uh, socially or technically or economically. So it's just. A game, just a LARP, uh, so Satoshi transfers is the same and, um, and transferring an image or transferring a, sorry, transferring the ownership on a public image or the ownership [00:30:00] on a public sentence is just, um, it is just a dream.

It's just an imagination. Interestingly enough. Somebody could say, wait, but that's patent as well. If you are like copyright on a song, I, I go around, I whistle the song, right? I whistle the song. And now this song will, you will listen to it and it will change something in your brain, which is your property.

So now you can reproduce the song arbitrarily, but somehow that's the fact that your brain is changed. is now my property. So I own that piece of your brain that can reproduce the song. So now you have to pay me every time you used it. You didn't enter an agreement with me when you listened to the song.

You just turned on the radio without entering any agreement. The radio changed your brain. Now I own that part of your brain without your consent. So this is corporate. It doesn't make any sense. But, uh, in this case, we can make it affect reality with guns. So when a mafia with guns Take some arbitrary, [00:31:00] uh, meaningless, inconsistent, uh, agreement, uh, and they enforce it with guns, you can make it exist for some time.

It's not a good existence, it will ruin a lot of things economically, it will be a negative some game. But it will exist in reality. The problem, but also the beautiful thing in Bitcoin, is that people cannot come to you and shoot you if you, if you reuse the Merry Christmas sentence that you read on the opera turn.

Or if you, if you right click a frog image from, uh, encoded in an opera turn. So, in that sense, it's completely stupid, because, luckily, there is nobody with guns that can prevent you from right clicking.

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Buying Stars

Knut: This, this reminds me of a birthday gift we gave to my grandmother like 30 years ago. She's long since passed, but we gave her a star, because there was this website where you could buy the, uh, the, um, property rights. Or the copyright or whatever. You could name a star and buy a certificate that said you owned the star.

And to me, this is exactly what these things are. Like, uh, the reason that I describe Bitcoin as an agreement, like, it's not only that, it's an agreement. The only reason that we agree on these rules Is because [00:34:00] these rules make it, uh, more expensive to try to cheat the system than to play by the rules.

That's, that's the reason we agree on these rules. So anything outside of those rules aren't really Bitcoin. It's, it's something else. And . And so, so owning one of these JPEGs is, or owning, quote unquote. It's just like that star registry thing, uh, it's, it's, it's there, it, I mean, the star is, um, a bit trickier and a bit more ownable because you need, uh, a telescope to see it because all the stars you can see have already been named.

So, so this was a star that was far away, but, uh, But, uh, and it's there, and it's there for everyone to see, and your property rights to it don't really do anything, because you can't do anything with a star. and it's the same with a JPEG. Like, it's even, even easier for everyone to see that, because it's an open public ledger.

Everyone can see everything in it, so any [00:35:00] arbitrary data on it is just not ownable. Like, the only thing, and you could argue that a Satoshi is not Ownable either. I mean, it's not even real or a private key. Like it's just a number that the only thing that you attach, the reason you attach value to it is that, you know, how hard it is to like, just guess the number it'll take you millions of years.

So that's why you find it valuable. But these things. I mean, it's, it's a great big nothing burger or nada burgessa, we would say here in Spain.

Giacomo: I think your analogy is perfect. I just want to make it a little bit worse because stars are not really used for everything else, anything else. So when you name some invisible star after your grandmother, okay, that does not, that doesn't change reality. It's not enforceable. And I can, so it's double spendable because you can give the star to your grandmother and I can give the same star.

to my grandmother and nothing will ever happen because there is no way to tell the difference [00:36:00] but unless there is like a centralized enforcement but let's now assume that we create another website Then instead of assigning stars, it does assign other websites. So now we say, if you pay me, I will tell you that you now own coca cola.

com. And this is the same level. So you cannot change the coca cola. com website because you don't have SSH access or FTP access to the domain. So the domain from the HTTP protocol point of view is in the hands of the Coca Cola corporate company. But in my website If you pay me, I tell you that you do own coca cola.

com. So now this is not just equally meaningless. It's not just a nothing burger. This is a stupid burger because now you think you own Coca Cola, but actually Coca Cola people do own that in the sense that they can change it. So there is like an, um, uh, the, the problem with the colored coins or, or ordinals is that [00:37:00] you are, uh, creating an arbitrary game.

Which not only interfere, but also conflicts with the previous conventional, but not arbitrary and very consequential game that you were already playing on the same information. So we're already playing a game that was a game of money, a game of property with some enforceability due to Unknowable private keys, or unpredictable block numbers, or proof of work thermodynamical characteristics.

So there was already a game, it was a very cool game, not an arbitrary game, just half assed. It was a very intelligent game, and now you're putting your nothing burger, just name a star. On top of conflicting with another game. For example, now we have Bitcoin with Lightning and we say that we create the channel and we move money from this channel without any on chain transaction.

And these name a star convention, which is ordinance, they, it will [00:38:00] conflict. With the, with the routing movement, because for us, we moved the money and for them outside, nothing happened on chain. So there is no way to tell where the Satoshi went. So it's, uh, it's, it's, it's even worse than that, but now we introduced, so we started the conversation with fees and now we have to get back to fees because once you only have, uh, since you only had these, uh, name star nothing burger or stupid burger, uh, moving Satoshis around.

You at least didn't write a lot of stuff on the blockchain. You didn't create a lot of problems, but when you, well, some maybe, because maybe you're making some transactions that you were not going to make otherwise, but I mean, they are transactions, but when you can write arbitrary data. On the time chain and, and pretend to own this arbitrary data, you now create a serious spam problem.

So let's go back a second to, um, to Eternity Wall. I would, I did use Eternity Wall and, uh, Luke Daschle was [00:39:00] angry at Ricardo and me because, uh, because he said this is spam. And me and Ricardo were answering. This was, I think, 2015. Or 2016. And we said, well, why spam? We are paying the fee to write. And Luke said, oh, yes, you're paying the fee to one miner, not to my node.

And I still have to download it and to, and to validate it and to store it if I want a full node, a full archival node. So you are using my resources for a way that I didn't agree with when I joined Bitcoin. Because I joined Bitcoin knowing that I had to, unfortunately, keep track of all the UTXO set, but that was a sacrifice that I did because that was functional to the, so it was useful to me.

When you download all the chain, and you build your UTXO set, you do that for a selfish reason. Because even if You're, you're keeping somebody else's transaction. These transactions are needed to you to be able to receive that money eventually. So you're, you're building the UTXO set for you, for yourself.[00:40:00]

If you don't do it, you will not be able to distinguish which money has been spent or not. So in the future, every transaction that you actually validate, in your node is a transaction that could be eventually spent to you in the future. So you do this for selfish reasons. While, while Luke was downloading my Eternity Wall messages and valid and wasting bandwidth, wasting time and when wasting hard this space, it was not for his future benefit because this big up return.

with my joking love hate messages or curse words, they were not, they were not useful for him. So he said, this is spam. And we had a discussion about that. Uh, and, and, and I, this is another case of retardedness because many of the discussion I'm having today about inscriptions. I had it about eternity wall, and my point was, if I'm paying, that's, uh, my first point was, if it's a valid transaction, cannot be spam, to which Luke said, [00:41:00] wait, uh, email spam is always a valid email.

The definition of validity has nothing to do with spam. The point of spam is that this is unwanted information for you that is consuming your scarce resources, but it's not that it's violating the protocol. And then the second point was, but we are paying. And Luke said, yeah, but you're not paying me. If you receive spam phone calls, the, the, the, the spammer, he's paying the network.

The problem is that he's not paying you and your time to receive this stuff that you don't want. So they're disrupting you, but they're not paying you otherwise, it will not be spam. They're paying somebody else. So let's say that I, uh, let's, let's take away the telephone network. Even if I don't, if I have free calls, I still pay my energy that I put plug in my, in my cell phone.

I pay these to the electrical company. So in order to call you and to, and to ruin your day with bullshit, uh, and to make you pranks all day, I have to pay somebody because I need the energy, but that doesn't mean it's not, it's not spam because [00:42:00] I'm paying somebody else. I'm not paying you. So there was a discussion, discussion about spam.

I think that Luke was right. From the philosophical point of view, but I also, we, me and Riccardo, we also felt it was a little bit like inconsequential because since there is a cost and the cost is going to go up eventually in, uh, in, uh, in time, the fees will go very up in Bitcoin. And we know that. So eventually this is a self mitigating problem.

Yes, we are free riding your node, but this is going to become so expensive. Then we will eventually stop, uh, because the incentive for me to write stuff on the time chain is just Goliardic, romantic kind of, uh, I mean, there's no real point to do that. There's not real need. It's just like a, it's a full leisure.

Full leisure, full, uh, full Goliardic, uh, romantic leisure. So we will stop it eventually. When you put the ordinal theory on top of this, uh, [00:43:00] encoding on the time chain, now you have the problem. Because, uh, when I did write on Eternity Wall, I was spending some money, not as much as today it would be, but I was spending some money, and I was getting in return just some fun.

When you do the same, but people believe that you can resell this message to somebody else, now I spend some money, maybe I have some fun, or maybe not even, but now I resell this stuff in this make believe market, I can resell it to other guys that have an expectation. of it to become even higher in price.

So you introduce a speculation gambling, uh, policy expectations inside the data writing. This changes the dynamic because before people were writing stuff on the time chain that was considered spam by Luke. Luke was very angry about that. I was not, because I, I, yes, it is spam, you're right, but it's not so much and people will just get tired, but when you introduce the Ponzi [00:44:00] expectation of a greater full theory inside the spam, so now you, you, you spend money for the spam, But you, if you can manage to sell the spam, you will make more money than you spent.

So now you created basically a game, a bad game, a negative sum game, but you can create a game that is self sustainable for a while and that will basically create incentive for people to write Spam on the time chain because now they can resell like the stars is like, let's, let's try to make it, uh, to, as always, to abuse our metaphors to the extreme.

So we have, we have the star registers and, uh, and now, uh, the market for star registers become, uh, goes in bubble. And so now you can name a star and then if you transfer it to somebody else, somebody else will pay you. Million times more than when you paid an initial naming. So now there will be basically an incentive to, uh, to send a lot of hydrogen in some place and to keep [00:45:00] it together in order to create a giant star.

And that can be destructive for the gravitational equilibrium of the world, but you have a strong incentive to do it. Now, that's not very practical, but spamming the time chain is more practical. And that's what's happening. So, let's imagine two different things. One thing is Creating an arbitrary idea like a star register that you can track something that you cannot meaningfully track because it's not scarce, it's infinitely reproducible.

Now, uh, you create, you have the idea that you can write on the time chain whatever you want and people will be forced to download it and validate it and store it if they don't prune forever. Now you put these ideas together. And this is, this is where the problem happens because only writing on the chain, it's, it's, it is spam, it is problematic, but, uh, it's, it's eventually not sustainable.

You will get tired, uh, moving around Satoshis [00:46:00] as they are, um, uh, more valuable, it's a problem for fungibility, privacy, but at least it's not a problem for technical, uh, scarce resources of Bitcoin. It doesn't spam very much the network. If you put them together. Now you have a serious spam attack. Now it could be completely, uh, it could be completely, uh, physiologic, like, uh, it could be completely, let's say, spontaneous, or it could be also a smart form of attack against Bitcoin.

This is the conspiracy theory part. So we all know since 2000, since the first discussion in 2014, 15, what are the main mining related attacks on Bitcoin. The first obvious, so let's assume that the government. can pay for hash rate, if a government can pay for hash rate, what they can do is basically, they can, they can pay miners to stop mining.

This is the first kind of attack. Just don't mine anymore. I pay you if you keep your ASIC shut. If you do that, that's [00:47:00] not very effective because the difficulty, the difficulty will go down and now other miners will outcompete the private miners. So that's not very effective. The second could be, let's do empty blocks.

So keep mining. But only with the coinbase to pay yourself and stop including other people's transactions. So now you have the same effect of no blocks at all for the other bitcoiners, but now you do keep the difficulty at the same level. This is a bad attack, especially if you don't, if you not only mine empty blocks, but you also orphan non empty blocks.

So every time you see a non empty blocks, you do orphan it to attach to the previous empty blocks, and you create an empty chain. Which is keeping the difficulty up, but at least this is bad, but at least the full nodes during the time of inactivity of Bitcoin, they will not be required to increase their, bandwidth or CPU or data because there's nothing coming basically.

So it's bad because Bitcoin is frozen, but [00:48:00] also your data in your disks and your bandwidth is frozen. The third kind of attack, which is even more nasty, is we pay the miners to do blocks. And not empty, but just not including any meaningful, economical activity, they're just, uh, they're just full of shit.

If we do this, this is a perfect attack, because now, difficulty will stay up, uh, the, transaction will not happen on the base layer. But also your, scarce resources to run a node will become higher and higher as if there was full economic activity. So you get the, the, all the problems of full florent economic activities, which is increasing your ETXO set, in your time chain, in your mempool.

Plus all the problem of having a frozen, uh, a frozen activity. This is a, I'm not saying that this is happening for sure, but what is also triggering for me from the sociological level is that the self appointed skeptical, uh, [00:49:00] adversary thinkers of Bitcoin are completely ruling out the possibility that if not this time, another time, spam could be used as a very effective way.

Uh, attack against Bitcoin on the layer one. we already defined that spam is not, uh, defined by the value for the spammer. Uh, there is some people that say spam is subjective. Uh, what is spam for you is not spam for me. Yes, that's true, but the problem is that the definition, the only definition that makes sense for spam is from the point of view of the receiver, because for the sender, spam always by definition makes sense economically, otherwise they will not do it.

From a Misesian point of view, if you don't find value in spamming somebody else, you will not spam. So the, uh, spam is always. Valuable from the point of view of the sender of the spam. Sometimes spa spam is also valuable from the point of view of the network of the [00:50:00] intermediate intermediaries or the guys selling me electricity to spam you with my phone calls or sending me the minutes of the network.

So it's valuable for me because I'm the spammer and I find value in spamming is valuable for the network and for the electricity because I'm paying them to spam you. It's just the problem that they're only, the only meaningful definition is that it's not available for you. That's, that's the old definition of spam.

So, spam attack can be a very smart kind of attack, uh, on Bitcoin. And, uh, and this is the, uh, the, the other problem. So. There is a problem that I see of not knowing history, a problem that I see of not thinking clearly about the definition of what can be considered spam, and then there is a problem of not even thinking that it could be, if not this time, maybe the next.

Uh, but it could be the prototype of a organized, well funded, structured attack on Bitcoin's layer one.

Knut: Wow. That's a lot to take in. yeah, [00:51:00] these, when the fees go up, when people buy these stars, I mean, they, as we've established, they can't really own a star. It's just someone else owning Uranus, but, uh, uh, it's

Giacomo:

this? Knots.

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Fees and the Future of Bitcoin

Knut: they are a glimpse into the future. Like, fees, the fee proportion of the, of the miner's reward in, like, in relationship to, in relation to the subsidy will go up over time.

So we will have higher and higher fees. Uh, like, imagine, like, the, um, the spam attack you're talking about, like, if you have a money printer, if you're the Federal Reserve, you could, you could do this kind of attack for quite a while, like, and, and, what, so, the question, a question here would be, like, how would, uh, the, um, uh, your average node running bitcoiner your pleb, uh, um, what, what, what can a single pleb do to prevent this from happening?

And why, like, why was op return there in the first place? Like, uh, is it even necessary to have the [00:54:00] op return? Like, why, why are we, are we entering another fork worth at some point? Will we fork it away? Or, uh, do we just do the Luke thing and, and, uh, run, um, uh, what's this? Uh. What's his version called? Knots.

Yeah, yeah, it's a very nice name. Uh, so, uh, So, so what happens there? What do you foresee? In the near term and long term future?

Giacomo: So this is another, uh, I told you that one of the reasons why the Bitcoin community is not very effectively, uh, answering to this problem. And it's very confused and there is a lot of debate and a lot of, uh, Uh, of drama, that one of the reasons is that there is the flattering thing that, okay, now shitcoiners, they are saying that bitcoin is better, so I'm flattered.

That's one, but the other one is that there is, I admit that in my opinion, and I disagree with Luke about this, there is not an obvious solution to this attack. There are, there are mitigations, but they are not obvious. [00:55:00] They are not perfect. They are not silver bullets. They are kind of hard. And now I will discuss some of them.

So, uh, the problem is that many people, Uh, started to, to say, if I don't have a solution, then I want to say, this is not a problem. So, you know, like there is a, there is a, there is a word hunger or cancer. Uh, I cannot stop it. So it's fine. I mean, it's fine. I don't, I don't want to call it a problem anymore because I don't, because I'm used to say that, I'm used to think that if there is a problem in Bitcoin, there is an obvious way to fix it.

If I can't find the obvious way to fix it, then I have to deny it's a problem. I think that's, that's another issue that we are facing right now. So what we can do? We can do an escalation of things. Um, but first, let me answer to your, your second, uh, question. Why there is even an operator there? Well, the point is that encoding spam into any kind of cryptographic system, it's almost, almost [00:56:00] look, look, Dasher made a few example, uh, that makes it very, very hard, but it's all almost impossible to prevent.

For example, in Bitcoin, people that wanted to encode stuff, they didn't start to do it in Operator. They started to do it with fake Multisig. So they were sending Bitcoin to an address, to a script that was composed of, let's say, these five public keys we'll have to sign in order to move this UTXO in the future.

And the five public keys, they were not real public keys, in the sense that nobody knew. the correspondent private key. Uh, but, but you cannot tell that technically because every number of that format could be a valid public key as far as you know. It is not, but the reason it is not is that nobody knows the correspondent private key and the public key is just an encoding.

of some message or some image or some fart noise or, or whatever. So the, the public key is encoding other, is not functioning as a [00:57:00] public key, but from a technical perspective, you cannot know easily. So the, what, and the, the problem of creating. New unspendable outputs is that you don't only, uh, uh, spam the time chain, you also spam the so called UTXO set, which is basically the collection of the unspent coins that you may receive in the future.

This collection is very delicate in Bitcoin, even more than the time chain, because the time chain You have to download it all if you want to run a node, but then you can delete it. You can prune it after you validated it all. While the UTXO set, you have to keep it all. You cannot delete it. The time chain has a, um, uh, block space limit to its growth.

So for now, after segwit, We have four megabytes maximum of growth. So in the worst case scenario, the attacker can feed us four megabytes of spam every 10 minutes, which is a lot, but I mean, that's, that's it. In the UTXO set, [00:58:00] uh, there is no, there is no limit to the growth. It could, it could, there is a maximum limit, which is.

If you only put UTXO set information in all the blocks in the future, then you get to the same limit, but it's a terrible limit to have. Like, nobody will run a node when there are 4 megabytes of UTXO set every 10 minutes. Because it's not prunable. You cannot prune it. You have to keep that forever. Uh, or at least it's not printable in a very obvious way.

So the idea of operator return. Operator return is, um, the name operator return is actually a return operator in, in computer science. It says when you arrive here and you, and you see this o code, your transaction, just your output, just, uh. fails. So you can basically not spend it. So if you, if you write a transaction that has an OP return in the output, the transaction is fine.

But if you try to spend this output, when the script engine will meet the OP return, it will fail immediately because this is return. Stop it. So you can [00:59:00] never spend it. If you cannot, if you have the guarantee that you cannot spend it, your node can become smart and can say, let's prune away all the OP returns.

So all the output, That by, by definition of, of the script language of Bitcoin are not spendable, you will delete it from the UTXO set. So the, the, the, the idea of the Bitcoin developers to enable up return was to give a venting venue for spammers. So if you want to spam, at least spam in a way that will make for us easy.

To prune the UTXO set and to, and to don't keep this pen forever. So, op return was a venting mechanism. That's also why Knots, the Luke Dasheer version of Fork of Bitcoin Core, they do have an op return. Luke said, okay, you may want to use Bitcoin to start to store stuff. I, I, I believe that you storing gigabytes of movie would be unacceptable for me because it would be Too [01:00:00] demanding for my node without paying me.

So I, I don't accept that. But if you want me to store forever and for you a hush of a document, that's a very, I mean, that's probably, that's still spam from a philosophical point of view, but that's like acceptable. So, um, hash is 30 something bytes of, uh, the, of, uh, usually to 256, um, uh, Shah, uh, plus some identifier.

Okay, I can store that. So Luke and Bitcoin Core, they said, let's give everybody for every transaction, 40 bytes of arbitrary data, not because it's good, but because if you have these, at least you will not put it in a way that it's even worse. So there was a, there was a, like a real politic. Uh, pragmatic conception, uh, to the idea that if you really want to spam, at least spam in a way that doesn't hurt the users as much as before.

So they created [01:01:00] for the 40 bytes, then Bitcoin Core increased it eventually in, um, back in 2015 or something, increased it to 80 bytes, while Knut's Kept the original, uh, the original size because Luke said, no, well, uh, I mean, what was the limit? This is an interesting point, and then I will go to the answer about what to do, what, what, what a pleb can do.

But I want to also make another distinction, which is very, very important, and people tend to misunderstand Bitcoin. There is a difference from validity rules and standardness rules. Validity rules are those rules that if violated, you will reject a block. Uh, so you will just reject the block, even if there is a lot of proof of work, if there is a transaction that is inflating beyond the schedule, or is still in Bitcoin without the proper signature, this transaction will make the entire block invalid, and so the block goes away.

It's invalid. Your node will censor this transaction systematically because it's not valid. But there is [01:02:00] something more subtle, which is standardness. If you receive a transaction that is valid, but not standard, Your node will cancel it from the mempool and will not rebroadcast it because it's considered non standard.

So it's probably spam or something fishy going on. So you reject it, but if you find it in a block, then you say, okay, now at this point I accept it. So there are transactions that are standard and valid and some transactions that are non standard but valid. And some transactions that are non valid and so obviously also non standard.

This one example is a DAST transaction. So I make a transaction that moves one Satoshi. The problem is that the economic cost for every node to download, validate, and rebroadcast the transaction is currently higher than one Satoshi. So this is clearly not a good deal for everybody. So if you find a transaction that spends only one Satoshi in the block, You will [01:03:00] accept it, but if you find it in your mempool, your mempool spam filter will immediately delete it.

Another example is op return. If you create an op return with 100 bytes and you put it in a block, Bitcoin Core and also Bitcoin Knots will accept it as valid. So Luke's node will accept your giant op return in a block if it finds it, but it will not accept it in the mempool. So like you have two Two defense mechanisms.

One is the timeless wise, like this looks like suspicious. I don't want it. I will not broadcast it. And the second is, yeah, but now there's proof of work on this. So I will have to be a little bit more considerate. So Bitcoin Core always used both. For example, any transaction that has a long up return is valid potentially, right?

But non-standard, if it goes beyond, beyond 80 in core or beyond 40 in crowns, uh, every transaction that has two up returns. So you can have transaction with two up returns and two opt options. [01:04:00] This is valid, but it's non-standard. Your Bitcoin core will reject any transaction with two up returns in the outputs.

And there are other examples like this. And, uh, and so now the point is what we do. So at the end of my presentation in Prague, I made, um. A classification of stuff from the most obvious stuff to do to the more, most unlikely stuff to do. I think that most obvious stuff is waiting, wait it out. I, I, many people are, I think are, are, say, I'm criticizing this as doing nothing, but I think that there is some value in just waiting.

So I will not, I will, I will tell people you don't have to be passive, but you don't have to be rushing into something that could be worse than the, problem. So be calm, understand. Think, breathe, and don't do something stupid immediately. So,

Knut: HODLing is using,

Giacomo: yeah,

exactly.

Knut: an active act.

Giacomo: and waiting and resisting is reacting in some way, even if you just passively wait.

History and Possible Solutions

Giacomo: The second point [01:05:00] would be, basically study history. So, uh, be, study logic. Be able to, to say, so you cannot do technical stuff like a fork, like a mempool filter, if you don't are, if you're not even able to name correctly the problem and to describe the problem correctly in a consistent way. So, before you apply any patch, before you apply any fork, before you create a mining farm, At least think clearly about what is spam and what is not spam, what is censorship and what is not censorship, what is, uh, uh, validity and what is standardness, and I think we are very stuck at point two right now.

Uh, we, The problem can be analyzed and, can be mitigated better if more users understand at least the terms of the problem, and I think we are severely lacking about this, so my, effort right now is not, On the other points of the list that I will tell you some other people are thinking about that, but I'm [01:06:00] stuck.

I'm stuck here. Like, first, we have to make things clear, which is also a problem that we had in the blocksize wars because the blocksize wars were not just a problem of creating lightning, solving malleability or enlarging the block. It was a problem of clear thinking about the trade offs in Bitcoin and the, and the goals in Bitcoin.

So we are still stuck at the, at the like thinking problem, like understanding even what the terms of the problem are. The third point could be the, um, update of the filters in Bitcoin Core at the level of mempool or moving to Knots. So if you are an odd runner, Right now, your Bitcoin Core will reject, uh, any, uh, so there is, there is a field in your configuration file, which is called data carrier size.

So any, any time that some transaction will include this suspicious, um, data that is probably spam, your mempool will reject it. [01:07:00] Unless that is found within a Taproot, uh, Tapscript spend, because when Taproot was introduced, Bitcoin Core didn't find consensus about updating the same logic of filters that were in there before, also to Taproot, so there was just a lacking update.

Luke in Knots updated the filter. But Bitcoin Core did not. You can do it manually. You can do it manually if you are able, or you can, uh, install a patch which is called disrespector patch, in order to disrespect the ordinance, uh, or you can, uh, install Knots and run Knots. So what is this third option doing?

This is doing something like, your node, We'll save some resources, so you're, you will save some bandwidth resources for your node, some, um, some, uh, CPU resources for your node and some disk resources for your node. The nodes connected to you will not receive the spam from you, which is, they will receive it anyway, because every node is [01:08:00] very well connected.

So if the spam is out, they will eventually receive it, but not from you. So you're doing like, you know, like the gif, I'm doing my part. You do the little part. Not to spam your friend notes, which is appreciated, I think, and you're saving some resources on your note. Now, if you do that alone, that's it. You have the moral ground of feeling you're not spamming your friends and you can, you're saving a little bit of resources in your note, but when the spam will enter a block, you will acquire it anyway and you will validate it because it is valid, even if it's not standard.

So there is no validity problem, just a standardness problem. So now, uh, the, uh, the, if it's only you, it's basically it, you're not gaining more, more, more. But if everybody does it, then propagation of spam becomes harder. And so spam will have a very hard time to get into blocks because propagation is affected.

Uh, this is actually happening right now in Bitcoin Core. If you create a long up [01:09:00] return of 90 bytes and you pay a lot of fees, very, very high fees, and you send it in the network, this will probably not be mined because even if fees are very high, the every bitcoin core node will just cut it, so we'll never get to the miners.

The objection to this, and it's a serious objection, I'm not downplaying it, is that this is an incentive for people really motivated to spam people. to call the mining pool directly and to send them off band. This is actually not even just theoretical, that happened the first All four megabyte blocks in the history of Bitcoin was full spam, zero fee.

It didn't pay any fee to the worker. So people working on the Luxor four megabyte, uh, Taproot Wizard, they got zero fees, uh, for, for that spam. It was a block full of only spam. And why did Luxor? Spent, uh, they, their, with their workers' money on that because they were paid off. Uh, we don't know the, the amount.

It's, it's impossible to verify, but [01:10:00] there is a claim that they was paid directly by the, by the spams. So, uh, basically you have this problem of, uh. Incentivizing people sending directly, uh, this type of band. So there is a debate to be have, to be had here that I respect. I don't respect much the debate that is like, there is no spam.

Spam is in your heart and nobody can define spam. No, you can define spam very well. There is no, I don't respect calling censorship. What Knots does, but not what Core does. That doesn't make any sense. If, if Knots is censorship, then Core is a censorship machine. So that doesn't make any sense. But, and so, and censorship becomes good in that case, and Bitcoin is not censorship resistant, nor it should be, if we define censorship like that.

But at this, at this level, there is something to be said. So look, for example, now the sides of the debate are, Luke is saying, Bitcoin Core always mitigated spam with membo filters. [01:11:00] To some degree, it did work and it did not push people off band so much. So you're, you're saying that this, this solution, which is certain is to be ruled out completely.

I disagree. We did it for core until now. Let's keep it doing it after taproot and let's keep updating the filters. And, um, and the other party like Peter Todd on Band Karma, they are saying there are even more, there are two extremes like. They are looked at the same. Let's keep doing that and update the filters in the mempool.

And there is Ben Carman and Peter Todd saying. You know what? Even the, even the old filters in Bitcoin Core, they are wrong. There is no reason we should filter out stuff if they pay a lot of fees. Because temporarily, you are, you are putting them out of the mempool. But if they pay high fees, eventually somebody will include them.

So when you see something with high fees, even if the obvious spam Just include it because eventually somebody will, so you're just fighting against the, you're, you're fighting against [01:12:00] the, the economic incentives and in between there are people that are like politically disoriented that say, I don't want to update the filters, but I also don't want to delete the filters that I have, so they are in this inconsistent, so core right now is an inconsistent position between two consistent extremes that are keep doing filtering, Or like look, or stop doing filtering for high fee transactions in general, even the old filters.

And core is just, I don't know, I'll do nothing, don't get me into this. So this is the third option about mempool filtering. Then there would be a fourth option that would be creating some anti spam mechanism, also at the level of consensus validity. So forking spam away. So when you find some transaction which is spam, even if it's in the block, You reject it.

This is not something that most people, including Luke, are considering seriously because the definition of spam, dust, [01:13:00] while kind of objective, it's very dynamic. For example, one satoshi is dust right now because one satoshi is a fraction of dollars. One satoshi, when one satoshi would be one dollar, may not be spam at all.

It will make a very, a very reasonable transaction to do. So the idea of, uh, Or even like, Operator, we may change signatures in a way that witnesses will be very large, very short, we may have mimbo wimbo kind of complications. So, fix in the consensus, this kind of filters, is a bad idea. So, uh, the initial design of Satoshi was twofolds.

With consensus, we are kind of liberal. We allow for strange stuff, because we don't know why you may use it. With mempool policies, Default, we are strict because here when there is obvious bullshit, we will delete it. So almost nobody is proposing to fork the consensus in order to delete, um, [01:14:00] spam from, uh, blogs.

Most of the people are, I mean, I'm stuck, I'm stuck here, which is at least let's define spam correctly. And most of the people are fighting here like, do we update the mempool filters on Bitcoin Core or do we use Knots? Or not. Then there is, uh, uh, there is this, this, this block situation, which is something that almost nobody is discussing.

There are two variants here. Uh, about the mempool, one variant is, uh, what if your node is not just your node, you're not a pleb, but you are, you are a pleb with ASICs. You are a pleb that can crunch hashes. Now, that's very different. That's completely different because now, if you do apply filters and you are a pleb with ASICs, For example, you are Ocean, a mining pool, or you are crazy solo miners with some ASICs.

Now, it changes completely because not only you are avoiding to transmit the spam to other peers, and you are sparing your resources from the event pool spam. for a [01:15:00] while, but now you are producing blocks eventually that are spam free. These blocks are not blocks with less, fewer transactions. They are blocks with more economic transaction because the transaction that were stuck out because of the spam, they can finally enter your block.

So for example, Luke Dasher point about Ocean is, look, even if we lose the fight against spam, Ocean block is a block that gives reliefs to all the transactions that are priced out by the spam. So it's not true that the sum is zero. It's not true that what we are doing is useless. Even if spam keeps existing and keeps entering the blocks, at least in my block, as long as I can find some, there is no spam and there is more space for actual Bitcoin transactions, which is, which is something.

Uh, interesting to discuss. Of course, there is another discussion here, which is, yes, but then you make make, uh, you will make less money, so you will go out of business [01:16:00] compared to people that are actually including spam, but which is a, which is an interesting argument. But it's not 100% sure for the simple se, for, for the reason that right now, uh, all the entities that are accepting spam, they're also, uh, for the same reason of of profit maximizing.

They're also accepting out ofAnd payments of very, uh, different, different, uh, style. For example, Luxer, they accept that spa. But they created lots of blocks with zero fees for the miners and only off chain, off band payment of spam. So these blocks was very, uh, it was, it was, uh, profitable for the pool, but not profitable for the miners because they didn't see anything of that.

And pool For various reasons, maybe including also all the covert, Isaac Booth, we don't know, but for many reasons, they create a lot of empty blocks. So, Npool leaves a lot of, of my, of fees on the table. So, Ocean [01:17:00] doesn't create empty blocks and doesn't create spam blocks paying off band. It cannot be paid off band.

Uh, it doesn't do the, uh, the typical casino share payments. The idea is that we don't really know. I'm not convinced that a mining pool doing, um, or a, or a miner doing filtering of spam will be necessarily less profitable. Uh, it's, it's an argument, but even there, there is a philosophical argument by not pimping this.

I don't remember but it's probably, uh, it's a Bitcoiner that's saying this every time, by not pimping out my wife. I'm losing profit comparably, to other friends that do. That's true. That's objective. Still, sometimes in life, there is a reason to be less, relatively less profitable because sometimes you don't want to do something which is profitable because it's wrong or bad or has other consequences that you don't want.

So maxima, profit is a great [01:18:00] proxy measure. Profit is a great number. To tell you that, to test if what you're doing is sustainable, but profit is not, uh, this is like, this is like a, caricature of capitalism to, uh, to depict capitalists as somebody that are only maximizing short term um, Margins.

That's not the way people work People. Uh, it is not like you are a great, you are a great astrophysicist, and then you realize that opening a pizzeria would be slightly more profitable, and so you just switch to a pizzeria. That's not it. You are, you are sticky because you have objectives, goals, patience preferences, priorities, moral, uh, your morals.

There are other things in play, even in Bitcoin. The fact that mining is very competitive. And very fast and very low margins makes the competition a little bit more harsh, but it doesn't mean that the competition is only on the [01:19:00] short term margin. There are other factors in play. I will, I personally, I, if I do have a few ASICS I will willingly and forever, prefer to point them to a pool, which is better for Bitcoin, making less money. That's part of my personal, trade off assessment. And I'm not the only one. I, may be in a minority. So the, there is this idea of, of the money, of the mining node. There is another, then I close because I'm not, I'm not, I'm, I'm talking too much.

But, uh, you know, sugars during the Christmas party. So too much sugar and then go on. Too much. But the, the consensus change, there is one idea that maybe we don't want to price out, we don't want to filter spam out of consensus, because that would be, uh, likely stupid, because it's consensus, because it's a dynamic problem that we cannot change in the future.

But maybe, uh, a proposal would be It will never pass, [01:20:00] but I would like it, it would be to remove the Whitney discount that was introduced with Segwit. Why? Because the Whitney discount says that you can get up to 4 megabytes in theory, if, uh, of, of Segwit, uh, of, uh, of witness data. No real transaction can get to that point.

You will never have a non spam block of 4 megabytes. That's impossible because every bitcoin transaction We'll have some not with witness data, by definition, you need the outputs. So the only kind of transaction that can actually harvest the full segwit discount is only spam. There is no way a real transaction could harvest that bonus.

So the segwit discount is basically. A dis a a, an incentive for spam. Uh, and there is an argument that it could be removed by consensus. Uh, it will not delete spam. Some of the current spam is not even in [01:21:00] the witness. They are, they're so bold right now that they're also spamming the non witness. They ignoring the discount.

So the spam attack right now is suitable. That is also ignoring the discount, but at least eliminating a discount that proved, uh, very attractive. To spam may be part of the discussion.

Knut: Yeah, so, so It all boils down to time preference, doesn't it? Like, the time preference of the, uh, the miners. So if they, if, if they intend to sell the bitcoins instantly, uh, when they've mined them, then, of course, they're gonna mine the, uh, the, uh, the ones that pay. The most, but if they intend to huddle the Bitcoin and use the Bitcoin at some points later on in the future, then the incentive is to not include the spam because you want the functionality of Bitcoin to be optimized in the long run, right?

Giacomo: Indeed, many things that are depicted as a conflict between profit and [01:22:00] morals are not, are just a conflict between profits now and more profits in the future. Most of the moral behavior is just low term preference behavior. It's just, I'm reducing. My game right now, because I want to make it sustainable in the future by not hurting other people and other kinds of things.

So you're right. One of the optimistic lines of thinking is that miners are always have, by definition, some low temp preference in the sense that even if they sell all the Bitcoin, they have the hazards that are not very liquid. And if Bitcoin goes down, the ASICs are just bricks. So there's, there's some vested interest in Bitcoin.

This is a weak argument though, if you think about really sophisticated attacks, because first of all, the government, the central bank can pay you more than your ASICs to damage Bitcoin. And so you just maximize your profit by, by breaking Bitcoin. And now you break your ASICs, but whatever, your, your loot was more.

Second, you can use financial instruments to compensate. [01:23:00] So you attack Bitcoin, you short Bitcoin. Now your ASICs have died, but now you're making money with the short. So it's not that, it's not bulletproof. It is a good thing that you have a vested interest in ASICs. It's a good thing of ASICs, but it's not bulletproof.

It's not that no miners will ever do it.

Giacomo's Education Platform

Knut: Oh, this is, this has been so great. I like the, there's a couple of other things I want to go into before we wrap this thing up. Uh, so when you talk about these points and that you're stuck on number two, which basically, basically I could, uh, uh, boil that point down to, uh, you trying to make Bitcoiners less retarded.

It's like, which ties in nicely to your education effort that is coming. You want to completely rug everyone and centralize Bitcoin education. That's the plan, right? So can you tell us a bit more about that? I would love to be a part of that in some sense, like we had this [01:24:00] idea a couple of years back of, um, like the, now we will do the praxeology course some other way, but the plan is still to make the praxeology book I wrote last year into a course of some kind.

And the idea back then was to have this praxeology course as a part of a master's degree in self sovereignty. Which I think, still think it's a fantastic idea, like, uh, that you get this, uh, it's the only education you need, really, and then you can fuck off and do whatever you want. Like, it's the perfect actual education in my mind.

So, so, anything we can do there, like, um, yeah. Enough about that, like, tell us about the education effort, what is that?

Giacomo: So education effort is something that I was already trying to do but alone and my fixation since many years is to take people that are doing the same thing and centralize them in a single point of failure because, uh, by jokes apart, I think that decentralization is always anti-fragile [01:25:00] but very inefficient with a lot of redundancies, a lot of waste.

Centralization is very efficient until it's not because it dies and it fails. But if we do open source Uh, efforts that produce something that people can reuse, then we eliminate the single, single point of failure or we mitigate it because now I will centralize all the organization of, education efforts by many entities that are doing everything, uh, yet again.

Now we create one single entity that will do all that. It will be more efficient. It will cut redundancies. It will, uh, it will rationalize resources. And when it fails, because eventually we will become. We will get corrupted or tired or lazy or complacent. Now we produced a body of open source knowledge that everybody else can reuse.

Not just the content, but even the platform. So what is the mission? To create a single internet platform called PlanB Network that will put together all the most [01:26:00] relevant educational resources. The initiative is taking over the Plan B summer school that I was part of in Lugano. And the CUBO+ program in El Salvador and the Summer of Bitcoin program for developers by Yadi and a few other things, including especially the Sovereign University, which is very close to what you were discussing.

Roxy is a French guy that was creating a Sovereign University. So I merged all these initiatives together with my personal, BHB network education initiative that I was already running in one single. Now, we are running a little bit late because, uh, you see, if you don't have resources to do stuff, then you just do that in your, in your free time.

But if you do have relevant resources, now you have to organize the resources in a way that nobody will fight. And so now we are still creating, so we created a non profit foundation in Switzerland. Uh, now we create the for profit company that will manage the site that will receive a mandate. [01:27:00] And now we are creating the team.

So the website is there. If you go to PlanB.Network there is already the net, the website, but it's right now mostly free education. Which is, which is cool, which is the objective, but we also want to do paid education. So in this website, in hopefully in one month or two months top, you will find dates in which you can subscribe to a paid course and pay money To do a course of praxeology with notes or nu or we can do a course of something with, uh, with somebody.

So the idea is to intermediate good Bitcoin teachers. Uh, so you don't have to do your own registration. You don't have to to search. Basically, it's a typical network, network deal. You don't have to find your demand. We aggregate the demand. And, when the demand is there, they don't have to go around searching for the supply.

We aggregate and select and curate a good anthology of supply. So that's it. [01:28:00] It's a very simple concept. It's just a, uh, network concept on education. There's also another side to this story, which is separated, which is a network of physical places. Because one of the things I learned over the years is that, uh, Online is cool.

Like we can do this. We could not, we could not do this without the, the, uh, without these technical means, but, uh, when you want to create a good educational effort, you need some kind of physical coexistence of people that the bandwidth that we have when we are in the same room is never the same, or maybe we will be eventually, but right now it's not.

So, uh, Plummy Network will also be a network of physical buildings. Where you can actually have a subscription and then you go to the office in Madera, to the office in Lugano, to the office in San Salvador. So this is not a new idea either. You remember the old idea of Bitcoin embassies? This is the same thing we tried over and over again.

We tried again to do a, a network of physical [01:29:00] places so we can, you can have one single membership to go to stay in a Bitcoin, Airbnb, uh, in, uh, in Tokyo, or to to work in an office in Madera. Or to learn in a classroom in Lugano or to put your developer in a talent pool in San Salvador. So this is the idea.

It's two things, open source education and physical places networked together. That's the initiative.

Reaching Adjacent Thinkers

Knut: Yeah, because it's very needed. Like, um, I watched two or three pods yesterday. I had a lot of spare time yesterday. Uh, so my wife and daughter went to Sweden. So I'm here with my, my son only. And that means I have more time on my hands. So I managed to listen to three pods yesterday and two of them was, one was Jordan Peterson and Sam Harris.

They did something new. And the other was, uh, Jordan Peterson and Michael Malice. Uh, and what's so, what's so Striking to me is these [01:30:00] obvious, uh, holes in, in their, uh, all three of these people have holes in their knowledge because like with, with the conversation with Jordan and Sam, they're missing, they're, they're like circling around.

Praxeology and Misesian ideas, but they never get to them because it's like they never read Mises. So, uh, and the, uh, and the other thing with Michael Mallis, the thing was like, well, you're talking about Bitcoin all the time here, but, but you're not saying it because you're not aware of it. And like, Jordan should be aware at this point, and Michael as well, but still, there's a lot of people in this.

Uh, what used to be called the intellectual dark web, that seem to have these obvious holes in their knowledge about what's actually available today and what tools are there and what, so is there a question here, like how do we as bitcoiners reach these people and make like bitcoin more in the awareness, [01:31:00] like make mainstream be more aware of what this thing actually is,

Giacomo: One of, one of the possible traits could be this, uh, it's not, it's not a perfect solution, but it's, it could be a mitigation, again, uh, which is, uh, as you said, we want, Plan B network will not be Bitcoin only, not in the sense that it will be shitcoins, but in the sense that it starts with a Plan B for money.

Which is Bitcoin. Then the idea is to expand to other Plan B. So right, just like Bitcoin is the new Plan B sovereign, decentralized alternative to central banking, then we can do Plan B for energy and discuss about off the grid solutions. We can do Plan B for communication and discuss Nostr, holepunch, and peer to peer mesh networks.

Uh, what you can do Plan B for, and eventually The idea is to have plan B for medicine with bro science and stuff like that. So we can expand. [01:32:00] So if we expand, we can get other people that are part of what you call, what was called the Intellectual Dark Web, which is basically the plan B for global culture.

And we can have part of those people involved. Uh, the only thing is that I think it will not be happen soon because otherwise the impression would be off. Uh, lack, lack of focus. So if you enter TTO now, and there are three good courses about Bitcoin and one psychology with Jordan Peterson, or, or, or, or, that's, that's a little bit like a sense of, I, I don't like it.

I prefer that we go, we, we create something incredible about Bitcoin, then we tackle the things that are obviously directly connected, like Pology, Austin Economics, cybersecurity game theory. So the parts that are very, very strictly connected. And then after my plan B is that after maybe one year of this, we can do something which is really unrelated.

We can do, we can do stuff, which is still a plan B, [01:33:00] but it's not Bitcoin contiguous in a significant way. Just the philosophy of. Sovereign alternative to the mainstream is the only unifying picture. So Plan B will be extended to that. Uh, the problem is that I want to start focused on Bitcoin and only when we are perfect in Bitcoin, we start to branch out.

Knut: Yeah, sounds like a good starting point. Uh, Luke, do you have a question for Giacomo? We haven't let you in yet.

Final Thoughts

Luke: All good. You know what, Giacomo, I'm not, we basically asked you one question and then you talked for beyond the hour we were going to, we were going to do with you, so I'm not going to hold you any longer here. This has been fantastic. Can't think of a better person to have on to talk about this whole ordinals thing.

The explanation was fantastic. So I'll just ask, any final thoughts, anything you'd like to leave with us for this session?

Giacomo: Uh, I like why, uh, I like how you say it in a very kind way that you are afraid of asking me one question because [01:34:00] last time you did this, I spent one hour and a

Knut: Well, what you're doing, Giacomo, is you're spamming the Freedom Footprint show, aren't you?

Giacomo: Right, right.

Knut: Luke is just censoring you in a polite way here.

Giacomo: No, I don't, uh, I, I had the plan B to shield, but I already did. Um, so let's, let's, uh, I would say an appeal to everybody would be think more and let's, uh, before we fix the consensus that maybe we will never fix them before we fix the mempool filters. Then maybe we fear we will fix or not, we have to fix the bug at the social layer of people being retarded.

So, or at least mitigate that. So, let's patch our retardedness together by studying and thinking and applying clear thinking about Words and meanings and stuff. This is my appeal to everybody. If you are a miner or a usher, if you have ASICs, my appeal would be, I mean, do whatever you want. Of course, that's the point, that you can.

Ocean.XYZ

Giacomo: But [01:35:00] you can also point your ASICs to OceanXYZ. And while there, you will have three templates. Because the whole point of Ocean in the long term The goal is to make miners build their own templates, including bad templates that people in Ocean don't like, because still it's better if people can decentralize bad choices instead of centralizing bad choices.

So you will find three templates. One template will be the template that we really like with a lot of spam filtering, so they can include a lot of financial transactions. And the other is, the other two are basically Bitcoin Core with a patch. Uh, which limits the spam a little bit and Bitcoin Core as is, which only limits the spam in the, in the, in the, in the traditional sense, but not the new spam.

Um, I, I personally, I was a minority within the company. I suggested a new option, which is the crazy no filter version. So if you really want to test the Todd [01:36:00] Karman idea. Just go there without any kind of spam and just create shitty blogs, which we advise against, but you can, but eventually people will be able to do that with Stratum V2 anyway, so, uh, but anyway, if you are a usher, uh, uh, consider that, I think it's good for Bitcoin, you can even spam the network using Ocean, at least you're helping me.

Other people to include spam free blogs, if you want, um, if you are not a minor or a normal player, but you are an educator, uh, and you want to sell courses and you don't feel like organizing alone. Reach out, uh, me or Roxy with Plan B and we will get you set up in the platform as soon as possible. And, uh, if you are an owner of a Bitcoin dedicated building somewhere around the world, like an office or a house or a hacker, hackerspace or anything, reach out.

We may put you in the network.

Knut: Excellent. Just, just a [01:37:00] point about the back to Ocean here. So I think Ocean has around one pound, 1% of the hash rate at the moment, right? That

Giacomo: Oh, no, you wish, no, it's

Knut: uh, it's, it's, no, no, it's more even, it's not even

Giacomo: Ah, not even, yeah, yeah, no, no, not even close.

Knut: Uh, not even close. So, but, but do you think that, that that ocean will, the, the, the existence of Ocean will put pressure on the other mining poles to be more transparent?

Giacomo: Already did. Another, after, uh, transparency was a point of allegiance until 2017. It was the only one. Allegiance disappeared in 2017. Now, when it came, and there was no transparency for, for, for, for six years. Once Eligius came back, there was another pool immediately doing the transparent, uh, pre existent template view for the user.

So you mine on something that you know beforehand instead of after. That will happen like two days after Ocean already. We are to, this is a very small mining pool, even [01:38:00] smaller than Ocean, but it's already working that way. And, uh, all this debate, even if it was a lot of drama, it created a lot of thinking about, uh, Uh, off band payments, uh, like some people, people were mining with Luxor, not even thinking they were mining with Luxor.

Now there's this block of four megabytes where, where, where the spammers pay Luxor directly. They were not even thinking, how do we How is it possible that we gain from this? How is it possible that we gain from this? How they are redistributing this payment? And nobody was thinking about this stuff. Now, or even just consider like, uh, all the drama that was, uh, about Ocean was because the Ocean template was public.

So people were able to look at the template and say, oh, there are like, there are few descriptions here. So, ah, censorship, debate, let's discuss, but that was not possible before with all the other legacy pools, because even if they were excluding transactions, because Core is excluding transactions, [01:39:00] or for other reasons, including, uh, F2Pool doing the OFAC lease and stuff like that, nobody was able to even discuss that because it was always exposed.

So that effect is already happening. And frankly speaking, I'm a very small investor of Ocean, so if Ocean doesn't make money, I will lose some money. I'm super happy to donate some money just to create this effect. So even if Ocean will not be able to reach a great share of the hash rate, but we will force other people to, to do this in the discussion.

That's a win for Bitcoin. So it's a win for me. So it's, it's money well spent.

Knut's 2 Rules for Life

Knut: Fantastic. Yeah, uh, final point, do you know, um, that I have, I've had for years now, two rules for my kids, like this is how I do, how I raise kids, and I've been having the two same rules for like, five years now, or even more, like, well, since they were Three or something. And it's very simple. The first rule is don't be retarded.

And, and , the [01:40:00] second rule is sort of baked into the first rule already, but the second rule is shut the fuck up. And if they follow these two rules, everything is fine. So they, they like, uh, so whenever they do something, I don't like, I, I, I, I tell them that you, you broke rule number one again. So like, and yeah,

Giacomo: flexible rule.

Knut: Yeah, and I

Giacomo: a very flexible rule.

Knut: this is, this is in effect what you're doing to the Bitcoin community, like you're trying to force them to not, or force them, you're telling them not to break these two rules. My kids are going to thank you one day.

Wrapping Up

Knut: All right, Giacomo, looking forward a lot to seeing you in person next time, hopefully sometime soon, and we'll, we'll continue the discussions. Uh, about retardedness, uh, over a steak or something. So, yeah, thanks so, so much. Yeah, you [01:41:00] too. And we hope to, hope to be spamming, spamming the Freedom Footprint show with more Giacomo whenever we can.

Giacomo: Looking forward.

Knut: always welcome back.

Luke: Thanks again, Giacomo. This has been the Freedom Footprint Show. Thanks for listening.