FFS 108 - Simon Mempool

[00:00:00]

Introducing Simon from Mempool

Luke: Simon, welcome to the Freedom Footprint show. Thanks so much for joining us.

Simon: Thank you for having me.

Knut: Yeah, Simon, um, the first time I met you was at Baltic Honey Badger in Riga back in 2019. You remember that?

Simon: Right. I do remember.

Knut: Yeah, fascinating time. And since then you've become a titan in the, uh, blockchain studying department, I guess, or the time chain studies department of the Academy of Bitcoin. And since you sort of invented mempool space, or at least co invented it, I guess. What's, um, can you give our listeners the TLDR on you so I don't misrepresent you too much here?

Simon: Sure. So the TLDR is that, uh, I started, uh, dig deep into Bitcoin in 2017, right in the bull run block size war and all that. [00:01:00] And, uh, I was also traveling everywhere, just living, living a nomadic lifestyle. So that's why I had the opportunity to go to like all these conferences, like. Honey Badger in 2019 and, uh, I went to a bunch of other ones, like building on Bitcoin in, uh, in Lisbon and, uh, it was in late 2018 that I created, uh, mempool.

space, the first version. And, uh, I think 2020, uh, me and Wiz, like made it into a company and we hired like a team of great developers that together we've been building it out. To what, what it is today, which is like a, a fully featured, like block explorer with tons of feature. We had lightning explorer and like an audit system.

I mean, there's so much stuff we've been able to do. Uh, the past few years, so I guess that's the TLDR.

Knut: It's become the industry [00:02:00] standard, uh, for fee estimation and a lot of other things. And for like most wallets, when you click open in external explorer kind button, and then, uh, they redirect you to mempool. space because it's the most trustworthy one, I guess.

Simon: Yeah. Yeah. It's quite, uh, incredible. I wouldn't have imagined when I, when I made the website, because it's, for me, it was just a small tool to, to track transactions, like to see where your transaction are in the mempool. That was like the original idea. Like, which block are you in? Are you in the next block or the next, next block?

So, I mean, that's the core of the website, right? So,

Knut: Such a, uh, it's sort of emerged like Bitcoin emerged, uh, it emerged out of a simple set of simpler things. Um, So yeah, there are three things I really want to talk to you about today. And one is, uh, uh, the fees. And I know you're a proponent of higher fees, or maybe that's a bit [00:03:00] misrepresentation as well.

So, so let's go into, to that whole category. And of course, the spam and what to do about it and how to categorize it and what's good and what's bad and straighten up a couple of things around that. And about how the mempool works in general, and what data you can extract out of mempool. space. I'm realizing that this is more than three things.

And then the final thing is that you read, Bitcoin Jew does his book, book, so we don't have to. And that was, uh, yes, you took one for the team there, having to endure that, I guess. Uh, and, uh, we can go into that and point out why that, uh, whole thing is wrong. Uh, yeah.

Bitcoin Spam and High Fees

Knut: So where do you want to start?

Simon: you can start with, uh, your, the fee market stuff.

Knut: what is going on? The fees are right now estimated in the next block to be around 180 [00:04:00] sats per vbyte. Why is that?

Simon: looks like, I mean, if you go to mempolispace, we have a new filter on the main page. Like the dashboard, you can see the next block and you can filter by coin join and consolidation transactions and data. So if you click the data, you'll see that right now, the majority of the transactions seems to be like data stuff.

Which is mostly like JPEGs and tokens and token transfers. So I think that's the cause of the many of the fee spikes like the past year, I'd say. Because if you, if you discount for all the data fee spikes, there hasn't been that much. activity in the main pool so far, uh, this year, at least.

Knut: and this, I think this data tab used to be a fecal matter icon, uh, when you

Simon: was like for one day and then we changed to a more [00:05:00] general purpose data. So, so the data includes various kinds of data inclusion. So it's both the inscription type when you, when you add data in the witness data in transactions, and it also includes the op return data, which is a field in transaction output where you can embed a certain amount of data.

And there's also a third category, which is fake pub keys, which is used by a legacy way of doing multisig before we had paged script hash. So that's also a way that people found to include data on the blockchain. So, so those bound together forms the data category we have, so you can see what's data and then you can call it data.

You can call it spam. Depends on, uh, your kind of use. It's a big, hot debate right now, and it's been going on for, I mean, years. From when the whole [00:06:00] ordinal stuff started.

Knut: Yeah, and I guess you, um, you may or may not be under pressure from certain groups to remove the fecal matter icon, I guess. I mean, I don't know what you can say about your opinions on this stuff, but what's the difference between the different types of data? Is there a reason that you removed the emoji?

Is some data less, less important?

Simon: Yeah, I think it's, I mean, we have a, we have some kind of guidelines and visions when we do decisions on what we add on the website and, uh, like, are we going to add JPEGs and you can be a JPEG or are you, are we going to add this or that? I mean, we have some guidelines, right? And like one guideline is no cheat coin, for example.

So we want to add any support for the tokens or stuff like that. but we also have a very neutral view to, to the blockchain. Like, we don't want to take any too much of a opinion [00:07:00] on what this is. So like the shitcoin emoji that we had for, I think, one day before we removed it to change the data is just because that's reason it just became too much drama very quickly because people start arguing about it very quickly, but change the data and everyone is pleased because everyone can decide what this is.

It is embedded data. Like the more, I mean, the more objective, if you know what, if you get what I mean, so we, we're not trying to, to, to, um, decide for, for the users, what, what this is, um, We let the user decide. We just want to show what's on the blockchain, what's in the main pool, and, uh, and just be a tool for, I mean, a general tool that show unbiased data,

Knut: Yeah, that's a noble stance, indeed, to keep it apolitical. I like that. And just step aside, remove yourself from the drama of Bitcoin Twitter. I mean, we [00:08:00] here on the show, we've definitely taken a stance on this. And like, in my view, and in Luke's as well, I think we view the Satoshi as something very special and these other, any other arbitrary data you can put to, to the Satoshi or rather to the transaction is by definition less special than the Satoshi itself.

So, so already there, there, we find a problem with like attaching, data to transactions.

Simon: Yeah, I think I have, I have one very like personal opinion, what my opinion is, and then I have my professional opinion, like what I'm putting into practice in the website. And, uh, I'm in my personal stance is that. I treat the block space as something very scarce, very unique, and I always, for all these years, I've been extremely cautious when I'm doing like UTXO management.

I don't want to make too many transactions. Because I know that all these [00:09:00] extra transactions are going to be stored on the blockchain forever on everyone's node. So I'm not going to do like, Oh, let's do some test transactions to see if it works. No, I'm not going to do that. I'm going to make one transaction to, to reduce, uh, like spam on, on, on a blockchain.

So, and then suddenly I see people just spamming hundreds, thousands of transactions that seem to me just meaningless and just data. I'm It's a little bit sad. I don't think they really understand what they're doing. They don't really, I think these kinds of people that do like the JPEGs and the tokens and stuff, they're only, don't really care about Bitcoin as a decentralized money.

They just see it as some kind of a place you can gamble tokens and stuff like the degen things. So, So that's basically my opinion. I don't, I don't like it, but I also see it as inevitable. Like it was inevitable that all this stuff, like when they were, you know, before they tried to create new blockchains and new fork of Bitcoin and try to scam people, then it stopped [00:10:00] working.

Then it started creating like new, new words. It started creating ICO stuff, DeFi stuff. Scam people, then they ran out of people to scam and they created the NFT stuff on Ethereum and then people stopped buying the NFTs. So now they found like a new way and the new way is to move everything on Bitcoin and call this, I'm building on Bitcoin, buy my shit coin, right?

And it's, uh, it's, there's also a lot of new L layer twos popping up recently. That's like, oh, we are related to on Bitcoin. I mean, you can do token trading and stuff. Uh, this, there's a lot of, uh, this, um, stuff that a lot of Bitcoiners that are only into the sound money aspect don't like seeing. But again, I think it was inevitable because Bitcoin is like this one chain rule the whole world stuff.

So eventually, like, even according to the Bitcoin maximalists. Ideology, uh, how to pronounce that, but everything will be on Bitcoin, like eventually, right? [00:11:00] So I've seen Bitcoin maximalists even claim that the Ordinals people and JPEG people, they're also, they're also Bitcoiners because they're building on Bitcoin.

So why aren't they Bitcoiners as well? So

Knut: Yeah, it's a delicate thing and, uh, I, like, when they were shitcoining on their own chains, at least they weren't clogging other people's nodes with, with bullshit. So they, they are, they are using a, a flaw of the protocol to, to, uh, use people's storage space for their own interests. So they are risking sacrificing the golden goose for a kinder egg, basically.

That's the way I view it nowadays. So it's bad behavior. I don't know how to, exactly how to fight it though, except for initiatives like ocean mining. I really like that and we'll see how it works. I know there was another one, another similar, I don't remember the name of that, but I heard of it from that conference [00:12:00] in Dubai, that there's another mining pool doing transparent mining.

Simon: okay.

Knut: What are your thoughts on that?

Simon: I don't, yeah, I don't really see like how the way Ocean is doing it is actually doing any help because the only thing happening is that another mining pool are going to mine the transactions. And we've seen recently that the more filters we put on the mempool, the more sideways people are finding to inject these weird transactions directly to the miners, like bypassing the mempool.

So, so we had, there was one mining pool who. I've implemented like a whole, product for this to, to inject and it was all, coming from the Ordinal's ecosystem, like the demand for being able to inject, uh, special transactions straight in the, into the block templates. And sidelining the mempool policy.

So even if you have a strict mempool policy, I think one of the Luke Dashtuners ideas is just a strict policy, but I think people will find a way [00:13:00] around it. And also like the op return stuff that the new token protocol that's going to be released soon called runes. It's a way of storing So that's something that's been in Bitcoin for a very long time, and I don't think it will change.

So, I mean, I don't see any viable way of filtering that, for example. So I think it's inevitable. So that's why my conclusion to all this is that high fees fixes this because they have to be priced out somehow, because if you start, if you're doing a business of minting thousands of tokens every day. It's going to hurt when it costs like 10 per token, but, uh, but if you have like a layer two network or some side chain or some other network, you can do all this stuff on, I think it's inevitable that it will move to that network in the end.

I don't know, it can take a while, but I think that's inevitable because there's no reason why you should pay so much money. You're [00:14:00] seeing the, like, I saw a website, you can see how much Bitcoin has been burned on just doing all this. Ordinal stuff. And it's like hundreds of Bitcoin that's been burned, I would say burned, but by the people minting them.

So I think I'm not too worried about the future of this, actually. I think it's just going to be, the fees are going to go up. They're going to be priced out and the hype is also going to go away. It's like two, two things there. I think the hype is a short, more short lived than people think. It could be like this bull cycle or something.

It's After the next bear cycle, I think people are going to be fed up with buying these tokens, because they're going to be worthless again, and then they're going to find something new.

Knut: Yeah. At the end, at the end of the day, you have to find new people to fool all the time. Right? That, that's, that's why they, they're able to do them in the first place because you can't fool them with coins anymore.

Simon: Yeah, there's something like that. I think I've already seen a big drop in [00:15:00] NFTs on Bitcoin and the BRC20 token trading. It was huge last year, the BRC20 tokens. But it seems that it has gone down massively already. So I, some people are worried that this is here forever now and it's going to stay, but I'm not so sure.

I think it's going to go away.

Knut: A self solving problem. So, so when, when I, when I look at the latest block here on Mapple Dust Space, I know this is just a, a snapshot, but, but, uh, about half the transactions are these data things. Uh, if I just look at it, uh, maybe a little less than half the, there's a great big one. Uh. Whoa.

Simon: There's been a increase the past weeks with all this stuff.

Knut: And, uh, like I remember the first time these came around and, and everyone was, uh, uh, had their panties in an uproar and it turned out that the problem went away within like less than two weeks, sort of, but the, the dangerous thing is like the, um, the stamps and all of this, that, that are [00:16:00] deliberately trying to destroy as much as possible, like, and, and also the, the We have experienced the base, like the lower band level sats per vbyte, like it never goes below a certain threshold now.

Uh, it seems, uh, it has been above, like, 10, so, for a month or something. And usually, like, the mempool clears every now and then, but we never have any, like, we can never be sure that we'll ever clear totally again, alright?

Simon: It's a possibility we never will clear again. And it looked like when the fees started to go down and when it suddenly started to go down to five, then all the JPEG people saw an opportunity to create a lot of images and stuff. So. So I think they take use of the low fees, so that's why low fees aren't that great.

High Fees and Adoption

Luke: So, what do you think the higher fees go, what that will do for adoption, though? Because my [00:17:00] view on this is that the high fees caused by all of this spam, it has got to be hurting, right now, new people entering into the space, because everything just costs more to do on Bitcoin now. And if high fees are the antidote to this, isn't that pricing out new adoption?

What's your thought on that?

Simon: Yeah. Good question. I mean, I think we all, we've seen fee spikes all the time in the past five, seven years. And uh, what usually happens is that, uh, some use cases of Bitcoin is being priced out. So stuff that you could, you do before is no longer being done or it's being shut down for some reason, like payments, some, like some companies that accept the Bitcoin for payments.

I think in 2017, they stopped doing that. What's the on chain fees that were too high, but they also see, uh, I mean, there's like so many, I think it's like 1000 folds [00:18:00] more people using Bitcoin today than, uh, five to seven years ago, but the fees are still like quite low. So I think what's, what's, and the reason for that is that.

The block space has been optimized so much like the way people are using Bitcoin has been optimized. So, so when the fees are going up and while we're having high fees, it's causing all the services that are using Bitcoin to, um, to optimize. I don't know if you remember, there was something called bit mixo clock, once a week at the certain, uh, clock.

BitMax it all there. I don't know, withdrawals or something. And the mempool will just be clogged like crazy for, for, for a whole day. But that doesn't happen anymore because they are doing it in a much more efficient way now. They're spreading it out or they are doing it in another way. And it was also very common.

A lot of people have forgot this, but in before 2018, most exchanges, when you did a [00:19:00] withdrawal, they did one transaction per withdrawal. So it was a big thing in 2018 and 19 when exchanges like Coinbase, Binance announced that we're doing batch withdrawals now. So we're doing like hundreds of withdrawals in one transaction, which is obviously much more efficient.

So you've seen this like changes and I'm probably going to mention this later, but this is the reason why BigBlox is like extremely stupid because it just. Uh, makes people, uh,

Knut: Lazy.

Simon: lazy and extremely wasteful. You're, you, you want, you're promoting wastefulness basically, but, uh, with the fees and the looming fees, everyone knows that the fees will go up and can go up, it causes all the infrastructure to adapt more I'd say, but, uh, to go back to your question, there's certainly.

A lot of when, if we're going to have like a period, like let's say we have a bull run this year and the fees are going to [00:20:00] be, uh, 100 per transaction for like six months, it's going to be very tough for new people to like set up a lightning wallet. For example, like, even if you use a simple Lightning wallet, uh, non custodial like Phoenix, you still have to make an on chain transaction.

You maybe want to make one test transaction, you may want to transfer to a hardware wallet or something. It's going to cost a lot of money. So that it might be a problem, uh, for adoption. And uh, I really hope that Uh, it causes people to start looking into alternative methods. Like for example, if, if the fees really go to like a hundred dollars per transaction this year or next year, uh, I think more people would start considering using like liquid side chain, for example, for certain stuff.

And I saw that, uh, you know, people using HODL, HODL, the peer to peer exchange that they might switch to using liquid as well for, for, for [00:21:00] trades. So instead of doing multiple on chain transactions, every time you trade, You can do it. You can do one, one, you, you move some Bitcoin to liquid that you plan on using for trading, and then you buy and sell on the liquid network, for example.

So I think the high fees is going to push this kind of change, uh, definitely, I mean, Bitcoin fees are going to go up because the block space is scarce and you're probably going to compete with a lot of, uh, token trading, JPEG. stuff as well. That's going to push the fees even higher. But this is like the, one of the biggest issues of Bitcoin and that's causing all this debate and the forks and the split is that Bitcoin can't really scale.

Everyone can't just use Bitcoin on chain because they have a limit of, I think it's like 14 transactions per second. Like if you averaged it out. So how would you make everyone use the on chain Bitcoin? You can't. So [00:22:00] if you get a sustainable, if Bitcoin doesn't change at all from, from, from its current form, uh, the fee is going to go very high if that option is very high and you're mostly going to use Bitcoin on on chain transfers for larger transactions, uh, uh, when it makes sense, but, uh, you're going to use small transactions, maybe in a custodial lightning wallet or sidechains like Liquid or re invent New technologies.

And this is the reason why I'm actually pro the Covenant software, because it seems to open up for more alternative Layer 2s, alternative scaling solutions. I don't think that Lightning is solved like a silver bullet will solve everything. I think it's just one piece of the puzzle, but we need many. We need a plethora of stuff that can be used for various reasons, like you can use a lightning wallet for doing small payments, your coffee payment, you can use liquid for your trading, and you can use some other, I don't know, [00:23:00] some layer 2 network that doesn't exist anymore.

For other stuff and keep on chain for like large value or cold storage or something. Just

Knut: love this perspective. I absolutely love it because like it, it hammers in the point that Bitcoin doesn't care about your opinions about it. It is here for you to study more than anything else. It is trying to teach you something about how it works. And that's always true. And the more you zoom out, the more, the more you grasp of what it is doing.

So, so like this narrative that dollar cost averaging was the best thing to do in the world, that that is also sort of dying since that requires a transaction every time you do it. And if you do a daily dollar cost averaging, it's probably not a good idea in a high fee environment. Right. Uh, so, so correct me if I'm wrong.

If I, if I, Try to remember 2017. You say that Bitcoin, on chain Bitcoin, has around 10 times more users today than it did [00:24:00] back then, right? It's your estimate, I

Simon: a rough estimate. I think so because the adoption has skyrocketed. So many more people know about Bitcoin today than before. So, so I'm seeing like, it feels like the user base has 10x. But, uh, the fees is still like the same,

Knut: Well, well, denominated in dollars, yes. But, but I think if I, because if I backtrack, Uh, like back in 2017, people weren't even using, like, fee estimators, like, like, Mempool's one. Like, uh, so it was vastly not under efficient, vastly under efficient,

Simon: It was extremely inefficient, everything, the fee estimations.

Knut: Yeah, so, so, so I think the, uh, the, the whole thing that Mr.

Veer was so upset about was, like, 20 fees, uh, For a short amount of times, but that must have been lower in terms or way higher in terms of sats per V byte, right? Since Bitcoin's [00:25:00] purchasing power was

Simon: If you, if you go back to check a block, you'll see that the sats per vbyte is much more higher as I think. so in Satoshis, it's, uh, lower today, but in the dollar terms, it's about the same.

Knut: Yeah. So, so it is teaching us something and that is how to use the time chain more efficiently and the, the, that time space is limited. yeah. Fascinating stuff. So wait and see then is the answer, I guess.

Simon: Yeah. To the question of, uh, Onboarding and scalability, I think that,

Knut: that's, that's the way to do it. Like, uh, but Bitcoin doesn't need to scale to every person in the world. It just needs to scale to every dollar in the world, which is a different thing.

Simon: yeah, that could be,

[00:26:00]

[00:27:00]

Knut: Anyway, uh,

Roger Ver and the Blocksize Wars

Knut: so what arguments are Mr. Veer making in its fantastic book? So, so for those of you who don't know, There was a guy back in 2017 who let his ego get the better of him, and he wanted to increase the block size to a gazillion bytes per block, and he thought that would fix everything. And so, yeah, give us the TLDR on Roger Verne's book, please, Simon.

Simon: oh, where to start? I, I mean, I can, like, after reading this book, there's almost nothing new for people that have been in Bitcoin for, for, you know, Uh, since 17, uh, and listen to at least one time what Roger Ver is saying in his debates and stuff, it's the same, it's the same stuff all over again. And, uh, it's basically, he's part of like a small faction.

I'm not sure if small is the right word, but [00:28:00] there's a faction in Bitcoin that was very, that caused the whole community to split. Um, that was super convinced that the way to scale Bitcoin was to just increase the block size. And if the fees go over, like, I even say he was shocked when the fees went to 1 per transaction.

He thinks that's unacceptable. It has to be much, much cheaper than PayPal. So, uh, we should just increase the block size every time the fees go up. And we should just increase, increase, increase, because it doesn't matter. and it could, it could be potentially several gigabytes per block instead of like today's, uh, like two megabytes.

So that is the idea that this big blocker movement, uh, has been pushing. And, uh, but you said Rajvir tried to change the block size, right? But it's deeper than this. It's about who is controlling Bitcoin, who has the power, who should dictate the [00:29:00] rules of Bitcoin. This is what it's all about. It's only about control and power, right?

And, uh, Roger Ver, uh, if you look at his bio, he, uh, he invested and bought Bitcoin. com. Blockchain. com is an investor in BitPay. And other, all these kind of companies, and uh, all these companies had the agenda to increase the block size. And let the miners control the block size. So it's, but then you have the, the small blockers, which, uh, I think, uh, they have a more like grassroots idea of who's going to control Bitcoin.

It's not going to come from the corporations or the miners. It's going to come from the, the grassroots users. It's you and me who run a BTC pay server. For example, we have running our own node and we are dictating the rules of Bitcoin by running the nodes and the miners. To us, they [00:30:00] are just service providers.

They just mine the blocks and they serve it to us, and we say accept or deny if it's following the rules or not, right? So that is like the core ideas of like the Bitcoin movement today and how Bitcoin Core was. But the big bloggers and Roderveer, they have a completely different idea about this. They think that the We don't need nodes, basically, um, because we only, we only need miners and the miners should just, they can go together and they can discuss and sign some agreements that we're going to, now we're going to increase the block size and the users don't have to care because you're just going to get this software update and suddenly there's a new block size and they don't know because, and they can't have any say in this. So that's like the big difference. And it's very obvious to me that, of course. Bitcoin should be controlled by the people and us, the people who run nodes, and that's why Bitcoin has to stay decentralized. [00:31:00] That's why everyone should be able to run a node if they can. And that's why the block size hasn't increased.

There hasn't been any consensus within the Bitcoin core sphere that we should increase the block size to like the crazy amounts that the big blockers are saying.

Knut: Yeah. Just to add to that, my, my conviction had like, uh, I, I became really convinced about Bitcoin's decentralization, that it was actually not just empty words, but a real thing back in 2017 where this seg two x hard fork was denied by the community because the community wanted seg, but we didn't want the two x and all the big players, like above 95% of them, I think that got together in some.

You know, evil conglomerate meeting in, in, uh, in New York. And they, they decided that, okay, we will, uh, we will push segwit through and then we will increase the block size. And the users just stopped it by signaling that we won't fall for this. And this [00:32:00] is like, some people claim that that is, uh, I mean, that, that showed me that.

That generation of Bitcoin users were, uh, you know, vigilant enough to fight this, but, uh, but, uh, it doesn't mean that we're safe forever. We need to stay this way in order to secure Bitcoin. Like if, if we become complacent, then we lose the whole thing because Bitcoin is not backed by energy. It's backed by us and like what we choose to do.

Simon: absolutely. I mean, many people call the USF soft fork. Uh, like the Bitcoin liberation day or something like the independence day, because that's where, that's when we fought this massive attack. Like you said, 2X was like an agreement of between all the Bitcoin companies, like the big businesses, like the Roger Ver companies and the miners.

That's all we're going to do this, and yet Bitcoin was able to resist this. And the, I mean, the most ridiculous part of the book is that [00:33:00] Roger's seeing this all backwards. He's seeing that this was consensus, that the industry had reached the consensus, but the Bitcoin core has been hijacked by these forces.

And he's using like absurd conspiracy theories to draw this conclusion. That it got hijacked by bankers and the Bilderberg to control Bitcoin, to kill Bitcoin. And so that's why the future of Bitcoin now lives within Bitcoin Cash. So that's why he's promoting, still promoting Bitcoin Cash instead as the true Bitcoin.

And I mean, it's, uh, I mean, at one point it's like ridiculous and hilarious to read the, this perspective, but then on the other hand, you have to remind that it was like the biggest attack against Bitcoin that we ever had. So it, we shouldn't forgive that guy. Invite him to podcast and stuff to, to, to promote his agenda because he hasn't changed his mind a single bit.

He just continues to [00:34:00] promote his. Bitcoin Cash and all that stuff.

Knut: That's so weird, though. He must have lost a lot of money, uh, doing this thing or,

Simon: yes. Oh yes. Oh yeah. He talks about how many millions he invested in, in Bitcoin Cash development and stuff, because he sees this as a true Bitcoin. So actually I think he's not deliberately trying to scam. He's just. Uh, he truly believes his, uh, idea that he is part of the Bitcoin consensus and, uh, Bitcoin Cash is like the real Bitcoin and Bitcoin, the Bitcoin that we think is Bitcoin has been hijacked.

Knut: Yeah,

Simon: So, so yeah, I don't know what to say.

Knut: he doesn't believe in free markets then, uh, apparently,

Simon: Well, it's very funny. He says that because Bitcoin, I mean, he's even citing Austrian economics in the book and claiming that Bitcoin cannot have a value because it doesn't have a use case anymore when the fees are so high. That's why Bitcoin Cash is definitely going to pass Bitcoin as soon as people realize [00:35:00] that Bitcoin Cash is store of value and utility with low fee.

Then, if he only spread this message, then people will wake up and realize, oh yes, now I know, Bitcoin is high fee and has no utility, so I have to switch to Bitcoin Cash, basically. That's, I think that's the whole sum of the book. That's why he's shilling the book now and trying to wake people up again.

Knut: so he doesn't understand

Simon: think the funny thing is that, No, no people today, like no new people joining the space today. They have no idea what Bitcoin cash is. It's like a long forgotten, failed fork of Bitcoin. One of many. So

Knut: Yeah, but that's why he might be able to fool a whole new batch of

Simon: Yeah. I'm not so sure about that because I mean, if you read this book as a newcomer, I think the people that giving this book a high review are already like Roger Ver fans and big blockers, because if you read this book as a, just coming out, I'm trying to imagine reading this book and it's, it's, [00:36:00] It seems very ridiculous.

A lot of the stuff,

Knut: Do you think he has a chance of, of re onboarding the BSV people? I mean, uh, yeah. So the, the Bitcoin cash itself had a, a hard fork where , the, the fake Toshi fans went to Bitcoin, Satoshi's V Vision,

Simon: I mean, according to ve, Bitcoin got got hijacked at least three times, so they forked three times in total. First they had to fork from Bitcoin core to to bitcoin cash because, uh, bitcoin core got got hijacked, and then it got hijacked by Craig Wright. So they had to to fork. Yeah. Again, and then it got hijacked by the Bitcoin cash lead developer that tried to add a dev tax to himself.

So they had to fork again into two different versions that were called Bitcoin ABC and Bitcoin Node. So today, Bitcoin Cash is like the third or fourth or something like that. Which is just, when you read this, it just seems like absurd. You realize that [00:37:00] This is not how Bitcoin is supposed to work, just splitting all the time as soon as you have, uh, some, some change of ideas.

Knut: No, it's, it's, it's Rodger coin, through and through, right? If it doesn't fit with Rodger's point of view, then he forks it off and makes a new one. So,

Simon: yeah, I don't understand how they're thinking. I mean, the whole point of, uh, I saw someone made a good point to my tweet thread is that one of the biggest feature of Bitcoin is that it's resistant to change. That's like huge, that if someone, a huge power, even like this New York agreement with 50 companies signing and all the mining pools, they want this change, but Bitcoin is resistant to change, so they couldn't change it. if the grassroots users of Bitcoin wants to change, then it actually is possible. But, uh, like you said, then like we are the Bitcoin consensus [00:38:00] rules. It's all the users. You have to convince, that this change is, uh, worth it. So, and it takes a lot of time, uh, as a lot of people get frustrated by, but it takes years and years to get a change into Bitcoin.

And it has to be, have most upsides to like, Decentralization, privacy, and all this stuff and no downs and barely any downsides than it maybe can get merged into Bitcoin after like five years. So it's very hard and it seems to get harder and harder each year to get changes into Bitcoin, which is only good because I think everyone wants to protect Bitcoin from change because we don't want it to get actually hijacked or changed for the worse with by some ideas from someone in our next generation that.

Things, inflation is good or something like it could, could happen, right? So it has, so that's why it's, I think it's good at Bitcoin getting slowly towards [00:39:00] solidifying and in the end, it might not be able to change. We could just shut down the Bitcoin core repo or something. And then everything that will be built on, on just side, side layers is that, I think that would be better because then you keep the 21 million limits and the decentralized network.

Knut: So, so would you call yourself an ossification maximalist then?

Simon: not really. Uh, I don't want to also find, I still think there's a lot of changes to be done in, in, into the consensus rules. I mean, there are even bugs right now in Bitcoin that was make the chain stop working in like 150 years or something. So, uh, I don't quite remember exactly which year, but it's like a, Um, integer overflow bug with a date or something.

So, so it's not yet patched. I mean, there's stuff like this that has to be patched. And also, as I mentioned before, I still think we need the covenants, um, uh, forked into, uh, soft forked into [00:40:00] Bitcoin. Um, and I also want, uh, more, more use of, uh, Schnorr signatures. We can use like the cross input. Uh, like join multiple input signatures into one to optimize the block space even more and make, uh, make it cheaper to do, uh, coin joins, private transactions.

And, uh, I think, uh, the Human Rights Foundation was just now like a week ago. They wanted to fund the development of cross signature input aggregation development to make this possible, make this happen into Bitcoin. So yeah, there's still stuff being worked on that definitely would need, but, uh, I mean, it was, when did we have Taproot?

I think it was 2021. So it was three years since we activated the last soft fork and we still haven't, we still don't have any plan for the next one yet. So you see how, how slow we are moving.

Knut: if we [00:41:00] rewind the clock back to 2017, again, there was something called ASIC boost, um, that was a, uh, patented, if I remember correctly, a patented way of using Bitcoin miners that made them like 10 percent more efficient than the competing miners, right? And there was like, I don't know if this patent was ever used, actually used, or if it was just threatened to be used, and if like, this is why the miners were so against SegWit, because SegWit would deny them to use this thing.

What do you remember

Simon: mean, Bitmain has been for a long time being the biggest miners because they are the, the manufacturer of miners in China. And, uh, they are also basically using their best miners for themself to mine. And then they're selling like the, the, the, the, the generation before to, to everyone all around the world.

So they're keeping like the best one for themself. And, uh, I don't know the [00:42:00] details on, on, uh, how ASIC Boost worked or if it actually was in use. But, uh, there was a big talk about how Bitmain is using this ASIC boost to have a huge advantage, uh, with hashing power. And, uh, the SegWit software was actually, uh, fixed that somehow.

I don't know how, but for some reason, uh, ASIC boost would stop working with SegWit. So, yeah, so that was speculated as one of the reasons why they were against SegWit. But again, they signed the agreement to fork Bitcoin into SegWit two X, which means activate SegWit and then do a block size increase. So I, I don't know

Knut: there's a lot for historians to dive into.

Simon: if, if you want to read about this, there's a good book called, uh, the Block Size War.

Knut: yeah, that, I, I think that, that, it slightly skewed that book, like the, the perspective is not entirely, like it's from a guy that's, [00:43:00] it's seemingly still, you know, indecisive of what the, uh, what he wanted in terms of large or small

Simon: I think it, I think it tried to make an outside perspective, like a guy just following the events and trying to make it as objective as possible. But I think it shines through that the big blockers argument didn't hold, hold water. So I think it, it, I think my, I felt that it was more leaning towards the small blocker side.

Knut: Yeah, I, I think he could have been harsher, uh,

Simon: Well, I think it was a, it's a good book to see like the both sides and the argument. And I think I, for me, it was obvious when I'm reading this, that the small blockers were right in, in the debate,

[00:44:00] [00:45:00]

Mempool's Plans

Luke: So, so maybe to return back to the present a little bit, uh, what is it that, uh, Mepo is, is working on these days? Uh,

Simon: We have been working, um, a lot towards our, uh, like the, the, the business model of the Mempool Space Company, which is, the, the accelerator service. So a lot of the stuff that we've been developing has been like, um, towards that end. And you can see even now, if you go to the website, if you go to an unconfirmed transactions, there's a button called accelerate, and you can click there and you can see the fee breakdown, but the service is still not launched.

So you can only sign up on the waitlist. and then we built, uh, have we, we have improved a lot. Uh, like when it comes to. Viewing the mempool like with the filters, uh, like I explained before, like the, you can see what's data, what's the coin join and [00:46:00] consolidation, and you can, uh, like filter for a lot of stuff.

And, uh, it's all tied down to, to seeing, uh, what transactions has been accelerated, uh, as well as stuff like that.

Knut: like an educational video somewhere? Um, uh, like, like, uh, uh, uh, um, mempool. space for dummies where you, where you show all the features and like,

Simon: Uh, not, not an official one. There are people that have been doing guide, guided videos on, uh. On YouTube and stuff, but, uh, I mean, we, we keep adding a lot of tiny features like everywhere now and then. And I think most of the advanced users that are using the websites every day, they, they notice, but most people are probably never gonna need to use those features, but it's very, it's like, you can do a detailed, dive into the main pool and filter by various stuff.

We just added that you can filter by age, for example. So. Then you see different transactions in different, uh, [00:47:00] fading, depending on their age.

Knut: I mean, I love it. I learned something new. I wouldn't say like, maybe not every time I use the site, but, but like, uh, it's a, it's a very, you can learn a lot from just exploring this site and like clicking on

Simon: I know, and I've seen, and I've seen from so many people how they discovered a lot of features of Bitcoin by just browsing around on the website, because we are visualizing and showing all these features that, uh, didn't exist before. like for example, one, one thing we have is that if you go to block zero, the Genesis block or one of the first few blocks, you see that, uh, the, when the coins were mined, addresses didn't exist.

And this is something that we, we, we show correctly on Mempool space, but most of most other block explorers. Show it wrongly, they show, like, they show the addresses, but the addresses didn't exist back in 2010 and 2009 when, [00:48:00] when, uh, Bitcoin was launched. So it was only paid to public keys that you have to connect to someone's node by IP, and you can make a transaction. So, I mean, it's a bit, uh, just one, one example of stuff that. You can notice when you click around because people ask us sometimes like, why, why does it look like this? And like, yeah, it's because this and this, so, so you can learn a lot of stuff.

Luke: Yeah, I mean, the whole feature set is interesting here. And I mean, like, I run, I run a self hosted mempool on my node. And, and, and so the mempool. space is sort of the official version, right? Like, it's, it's, it's Wiz's mempool, officially, something like that. At least I've heard it referred to as that, right?

Simon: Yeah, it's, I mean, it's our mempool, it's from our data centers. but yes, it's, uh, Yeah, I'm glad you're running your own [00:49:00] mempool the transaction yourself. And I think that's part of the, like the new kind of Bitcoin culture and the new Bitcoin companies from, uh, since 2017 that you have people like, you know, before you have BitPay, for example, I want to take over Bitcoin, but now you have BTC Pay server instead where you run your own node and you can accept payments yourself without a third party.

And with mempool, you can run your own explorers. You don't have to go to blockchain. com or something to check your transaction and trust them. Then you can run it yourself because we are an open source product. And uh, I think that's, it's the whole ethos of Bitcoin, right? That you, You can self host everything yourself.

So I really like this, uh, new direction Bitcoin took after the, after the war of 17, 200,

Knut: Absolutely. That, like, that's the direction we need to go in.

Luke: Yeah, I mean, I guess the way, the way I use it is that my node never is exactly the same thing as [00:50:00] the mempool. space node. Uh, just, just from, I don't know, not exactly seeing the same, the same mix of transactions or, or even, even now when there are so many transactions in the mempool, because that, that's an issue, right?

Like with the, with the current amount of transactions currently in the mempool, Well over a hundred thousand. Yeah, exactly. Like, uh, I mean, that's, that's a lot to be able to, to keep up, right? Most nodes aren't, aren't keeping

Simon: Yeah, but we are using basically unlimited nodes so we can keep all the transactions and we don't, we also disabled the timeout. So, so we keep all transactions until they get confirmed for now. We'll see what we do in the future. Maybe I have to start deleting old stuff. But, uh, But most home node runners are going to have the default, which is like 300 megabyte limit, I think.

So when you run mempool locally, you're going to have much less transactions. It will basically filter out the lowest fees. So I think [00:51:00] all the 1 sat per rebuy transactions that have been laying around there Taking hundreds of megabytes, they don't show up on your local node.

Luke: Yeah, does this theoretically mean that since mempool is keeping basically everything around that, uh, nothing is going to really age out of the, the system at this point? Like, even, even if it's someone's got a one sap per vbyte transaction that hasn't confirmed in well over six months. It's still kicking around there on mempool, therefore it's going to be

Simon: because we don't want people to look up their transaction and it says not found. We want to have all the transactions.

Knut: so if I get this right, like the thing you talked about before by boosting, um, it's like, uh, child pay that pays for parent or something like that, right? Uh, that, uh, are replaced by fee or what is it? Or is it just off band?

Simon: It's completely off band.

Knut: Okay,

Simon: we are sitting between the users and the mining pools, basically. So that is the idea. [00:52:00] And this is something that's been very Uh, popular recent years, like a lot of mining pools, they have own accelerator pages now. I think at least three mining pools have their own accelerator services. That, um, are a bit, um, so, so if you look at certain blocks, you can see there's always like a bunch of, like 10% of the block is like these offAnd accelerated transactions or fee bomb transactions. Um, but uh, we are going to, uh, what we built is a offAnd service that is fully public and full, fully auditable.

So you can see on Manpo space which transactions that are being fee bumped. And, uh, in the blocks you can see, uh, yeah, you can, you can go to a node block and you can see which have been fee banned, but you can see how much extra fee they paid off band. The basic idea is that you open a transaction that's [00:53:00] unconfirmed and the fee is too low to be confirmed in recent times. You want to pay for getting it accelerated off band. So you click the accelerate button and then you get the fee breakdown that you can see right now. That is how far you can go right now because you can't use the service just yet.

We're just running like in beta, some beta testing right now.

Is Mempool Attacking Bitcoin?

Knut: Okay. So the real question in here that I wanted to ask is like, is this, is this a

Simon: we attacking Bitcoin? Bitcoin.

Knut: Are you attacking Bitcoin? Exactly. Like, and of course you're going to say no,

Simon: It's very controversial.

Knut: can you still man your arguments, please?

Simon: Yeah, I know, I know. It's very controversial and I've been like finding myself if this is really a good thing. But, um, I think are a lot of legit, legitimate use cases where people's transactions are stuck. And there's no way to RBF, there's no way to [00:54:00] CPFP, and they reach out to us and say please can you help me confirm my transaction, and there's no way, because the protocol, how it works right now is that you can't accelerate all kinds of transactions.

A very common one are lightning force closures by Sea lightning or something like that. So it's like the force close the transaction with two sa for V bite and it's stuck in the man pole and the node is just locking up all this capital. And, um, so if you could just click a button and do this offAnd, uh, that would actually provide a help for service for this people.

So, so that, uh, makes me feel that it's a, it's a good service. And then the, the, the second thing is that. It's already happening and it's already been happening for a long time, but it's all opaque behind closed doors and people are sending emails and they're writing on Twitter with the mining pools, like, you know, like the, I don't know if you remember the 4 megabytes, [00:55:00] block that the UDI mined or something.

He just DM'd on Twitter some mining pool and he sent this transaction and he paid like some fee and you don't, you didn't, you don't know what he, what he paid and you can't, you didn't see it in a mempool. It just showed up, right? So there's a lot of this kind of stuff that's happening right now that is, uh, you don't know what's going on.

So it's called, we call it dark mempools. So this is a growing phenomenon, which is a bit scary. It's basically these dark mempools where people are doing the, the, the, the trading of Bitcoin transactions. And it's also pushed a lot by the ordinals, the people who wants to do off band transaction stuff. And, uh, so what we are doing is trying to compete and, uh, we doing like a 10x much better service that is open and transparent and everyone can validate.

And we even make it possible that even if you host your own node. You can, uh, you can audit and see the, uh, what, what transaction has been [00:56:00] accelerated. So, basically, it's not great that we have to resort to this off band system, but it's inevitable, as Bitcoin Core, Uh, as it works today, it's not going to change so that you can just fee bump any transaction because it doesn't work. Like if you have a stock transaction, that, uh, already paid all its, uh, uh, all, all its inputs in, in, in the outputs, there's no way of bumping the fee and there's no way to like, maybe you're sending from one exchange to another. There's no way of bumping the fee because you can't use RBF because you can't, don't control the private keys. So there's like all these cases where, where you have stuck transactions and you can only resort to off band right now. So that's why we providing a solution. So that is, and for us, it's a good business model that can fund the company and the project, the open source project that build out all these. Uh, all the, I mean, all [00:57:00] the great features, we just sitting encoding great features and publish it all open source all day long.

But, uh, we're also, we also have some funding from, uh, Bitcoin investors that in the future want to have some, uh, revenue. And I think the transactional exploration, uh, system is, uh, one such a good service that we can use because we don't want banner ads. We don't sell data. It's very hard to monetize. In many ways,

Knut: And do you see, uh, uh, competitors to, to yourselves in the future? I mean, your competitors now are the pools themselves, right? And their own, uh, their own systems, but do you think there will be, uh, a competitor in the transparency thing?

Simon: it might be, but I mean, uh, the benefit we have is that we have a lot of, uh, people, I mean, we had a lot of users that are coming to the site because they want to track a transaction or see why it's stuck. So we have, we have a lot of the demand right now. So people have, uh. [00:58:00] They go to the website from a wallet, for example, when they check, why isn't my transaction confirmed in one day, and they go to the website, and if they see an accelerate button, and they can pay a lightning invoice, they click pay 10, and then it gets accelerated and confirmed in the next block.

That is how we can catch more users than competitors, I think.

Knut: yeah. So, um, okay. Let's do a specific example here. If you have, uh, uh, say a coin joined with 200 participants and it's stuck. Then it becomes a bit more tricky, right? Because that's a, that's a lot more fees.

Simon: Yeah. Oh yeah. It's probably, it's not going to be viable to accelerate. It might cost a thousand dollars in a fiat value to excel it because it's so huge. If it's like a big transaction in the mental, because you, you have to pay to, ask you, you, you would increase the fee of the transaction.

Knut: So, so what could you do about that? I guess nothing, just wait and hope for the best and [00:59:00] hope for people to,

Simon: Yeah. Maybe someone in the coin joint made a huge million dollar, uh, coin join, uh, watch and he feels it's a necessary, it's. Economically viable to, to accelerate. A coinjoin. I don't know.

Knut: all right. Yeah. At least, at least these payments, because you only accept Bitcoin, I presume, uh, for these, uh, or you plan to because you haven't launched the thing yet, but

Simon: Yeah, we care mostly about Bitcoin, yeah. We want to have Bitcoin, that's the goal.

Knut: all right.

Simon: if I can decide, we will accept Bitcoin, Lightning, or Liquid, and all kinds of ways you can pay privately on Bitcoin.

Knut: Okay. But, but the pools may take like a briefcase full of dollars or something. Uh, I guess, your competitors, that is, like Udi's transaction for instance, he might have just given a briefcase full of dollars to some [01:00:00] important person, or showed him pictures of him having sex with someone he shouldn't have had sex with or something.

I mean, there are many ways of paying for stuff.

Simon: Yeah, but we want to have the most affordable way, so

Knut: And transparent.

Simon: yeah, that's the, that's the idea.

Knut: Alright, great. Luke, what comes to your mind here?

Wrapping Up

Luke: Well, I think this has been a good chat. We've had a bit of history, a bit of current state. So I'll just throw it right back at you, Simon. Is there anything else you wanted to bring up? Or if there isn't anything else on your mind, where can our listeners, uh, where would you like to direct our listeners to?

Simon: Um, I mean, you can, um, yeah. You can follow, I mean, you can go to mempool. space uh, you can, uh, if you have a, uh, building a home node, like umbrella or something, you should install mempools, uh, the mempool app, the open source [01:01:00] app and self host yourself. So when you're looking up, when you look up transactions, uh, it's, it's going to be all private data straight from your node.

So, I encourage everyone to do that, and you can follow me on Twitter, at SoftSimon. And you should also follow at Mononautical, Mononaut is our mempool rockstar developer. He tweets almost every day about all the shenanigans. Going on in the mempool in a very technical manner. And, uh, so that's, I recommend,

Knut: That account is fantastic. We were just talking about that the other day, and like, how much of Mononaut's fanboys we are. Simon, thank you very much for this conversation. This has been great, educational, and, uh, fantastic in general.

And, um, yes, uh, don't listen to Roger Ver or any of his lackeys for that matter. And, uh, don't [01:02:00] trust them when they say they're very sorry that they promoted the, uh, the fake Toshie for

Simon: not sorry. I

Knut: not sorry at all, they're just trying to fool you again, so don't give them the benefit of the doubt.

Uh, listen to, uh, uh, real stupidity beats artificial intelligence every time, and, uh, keep on rocking. Great to have you here.

Simon: Thank you.

Luke: Yep. Thanks a lot, Simon. This has been the Freedom Footprint Show. Thanks for listening.