[00:03:43] NVK: Everything is working as designed. It’s just that we have a lot of demand, right? So that means Bitcoin is winning, right? Yes. Demand is a good thing. Through the years, since Bitcoin sort of started to become a little bit more mainstream, whenever we have a all time high or some new technical sort of change or, or a new project that came in and sort of use Bitcoin slightly differently, the fee cost for, for mining your transaction has spiked because there were more demand for those blocks.

[00:04:16] NVK: This is historically true. A great example of this way, way, way back in the day was Satoshi Dice. They were using the transactions as part of how they did their proof of fair dice and how their whole sort of system worked. Right. So they clogged, you know, the system a little bit and funny enough, they were filtered out, but we’ll get-

[00:04:38] Preston Pysh: We’re going to get to that. Yeah.

[00:04:41] NVK: But what’s important to understand is this, like, you can close your eyes, close your ears, go on a vacation, nothing’s happening. Okay. Like everybody always has opinions. And, you know, there’s a lot of inertia on the network towards not changing anything, right? We call that ossification in Bitcoin, just so people understand software is always updated.

[00:05:03] NVK: It’s forever going to have to be updated because computers change and you have to update things. Bitcoin still has to change the Unix time concern, right? We still have quite a bit of time for that. But anyways, but my point is there’s people who in good faith want new features added to Bitcoin so that we can do more things, right?

[00:05:25] NVK: Or can optimize things. Some of these changes are a consensus base. That means they require soft forks or hard forks. And some of them are standardness. they call it standardness. And these are just changes that they’re just sort of like they’re suggested changes, let’s put it this way, because they don’t have to do them like to, in order to maintain consensus with the network.

[00:05:50] NVK: Right. So, you know, the size of the mempool which kind of transaction you want to accept in your mempool and things like that, right? Like what kind of flags are the default? And, or for example, how Bitcoin core client talks to other clients right now, we have encrypted traffic. It’s a huge new feature for privacy and security.

[00:06:08] NVK: It’s great, but these things are not necessary, right? You can still run client version 0. 1. 3 and it will run, you know, you might need to tweak for your computer, but just sort of setting those distinctions between what are the types of changes that Bitcoin has and does versus what people want and where the drama is I think is important.

[00:06:31] Preston Pysh: I love the highlight. And I think that that is so important to kind of start with, because as we start talking about some of this stuff and you start getting way more myopic into it, it can be like, oh my God, everything’s going to fall apart. So just rewind, listen to NVKC say that first part. It’s important.

[00:06:48] Preston Pysh: Okay, let me just throw out a couple terms here, and then you tell me which one you want to start with. Covenants, CTV, OpReturn, Self Custody on Layer 2 Lightning, Scaling, Data Carry Size, what are these, what, which one of these do piques your interest? Which one of these piques your interest?

[00:07:10] NVK: Okay. So do we have a, between 10 to 20 hours to talk?

[00:07:16] Preston Pysh: Which one do you think is important for people to understand or kind of talk about?

[00:07:20] NVK: Covenants? Ignore it.

[00:07:22] Preston Pysh: Okay.

[00:07:23] NVK: Okay. Like unless you’re a technical person who’s interested in, in debating new features to Bitcoin that may or may not come. It’s super cool. I like it. I want some of those features in Bitcoin.

[00:07:36] NVK: I wanted them to happen very slowly. We don’t break anything. CTV is one of those, check template verify is one of those. You may hear those words.

[00:07:46] Preston Pysh: That’s an enabler to covenants.

[00:07:49] NVK: That’s correct. It’s one type of doing one way of doing some kinds of covenants on Bitcoin. I’ll be very helpful. It can alleviate some of the network traffic as well.

[00:07:59] NVK: It enables a myriad of things. And like anything that enables a mirror, the things you want to like go very slow on your decisions on how to implement, if you implement, then how do you deploy it? In my opinion, it’s still going to take years. So you can remove from your risk assessment of Bitcoin.

[00:08:18] Preston Pysh: Just because the devs are never going to come to an agreement for a soft fork on that anytime soon, there just needs to be tons of testing.

[00:08:27] NVK: And in all honesty, like when it comes to things like that, the amount of people who actually understand the technical nuances of this, how this could do that, or. you know, how this is even, you know, activated. It’s small. The majority of the people screaming about it on Twitter do not have a full comprehension of the concern.

[00:08:46] NVK: Yeah.

[00:08:46] Preston Pysh: They just want to work on it and build it without really even thinking about technical risk. Okay.

[00:08:51] NVK: That’s right. Okay. Well, how about, you know, why don’t you just throw the term? Well, okay. I’ll try to address it.

[00:09:01] Preston Pysh: Let’s talk about the mempool blowing out. Okay. Most of the chatter is this is all brick BRC 20 token issuance through taproot.

[00:09:11] Preston Pysh: Give people just a really and I have a full episode with Ryan Gentry from Lightning Labs talking about this taro protocol that’s rolled out that has enabled all of this. So if people want to listen to that much more detailed conversation, we’ll have a link to that conversation in the show notes for you to get it.

[00:09:29] Preston Pysh: But from your point of view. Is this something that is actually being used with the intent to create value these assets, are these people acting in a way that you think is financially interested to, that’s value accretive to somebody, or is this, you know, some people in the space are calling it an attack?

[00:09:52] Preston Pysh: Where would you fit on that spectrum?

[00:09:55] NVK: It doesn’t matter what we fit on.

[00:09:57] Preston Pysh: I like that answer.

[00:09:59] NVK: It really doesn’t, this is Bitcoin. They don’t need permission, right? They’re paying fees. Therefore their transaction gets valid, validated, right? Like it really is that simple. People personally, I think it’s a scam.

[00:10:13] NVK: You know, it’s actually, if I remember like the majority of that’s actually coming from China, the demand for that token, right? They’re trying to corner the market, but it doesn’t matter. These are valid transactions, just like the, the JPEGs right on chain, very similar mechanisms. And there is absolutely nothing we can do about it, right?

[00:10:32] NVK: Like there’s people out there that want to filter transactions and try to get them to not come in. But realistically speaking, that’s not possible. They can pay miners off the mempool to mine their transactions and they’ll pay a lot for that because it’s asymmetric, right? So your transaction is trying to transact the value you have on that transaction.

[00:10:52] NVK: Their transaction is trying to Mine be proof for, you know, a million tokens. So it’s going to be very hard for you to compete for that fee on their unit of bite. And you know, they have a lot of victims to go after to sell their token to. Thankfully, because Bitcoin’s economic principles were not designed for that.

[00:11:18] NVK: It’s very likely that they will eventually run out of money, right? Because our transactions are much smaller in size for the economic value that they’re trying to transmit. The density helps you and I to make a real Bitcoin transaction as opposed to, you know, a scam proof.

[00:11:34] Preston Pysh: Is this the, when you’re saying the density, you’re talking about the weighted unit?

[00:11:39] Preston Pysh: Which there’s 4 million weighted units per block. Bitcoin transactions only data wise use one weighted unit and all of the data. And I think you’re nodding your head because you get into the op return debate, but then non SegWit data that’s in the block is weighted as four weighted units for each quarter.

[00:12:01] Preston Pysh: A quarter. Okay. Is that the correct conversation to have to kind of like make this make sense for people when you say something like the Bitcoin?

[00:12:09] NVK: No, no. So it doesn’t really matter because like most transactions are also taking advantage of the witness discount. So if you’re using segregated witness for your transactions, which most people are, you don’t have to understand that both are getting advantages of the discount.

[00:12:23] NVK: Right. And there is a discount because this data can be pruned off your node. You don’t have to store this data if you don’t want to. That’s why there is a discount. Okay. But no what I meant is say, for example, you know, your transaction size is five kilobytes or 10 kilobytes and your 10 kilobytes transaction is transporting 1 billion worth of Bitcoin.

[00:12:43] NVK: So a couple outputs, one for change, one for the destination and, you know, one for, for the miners, right? The fee. Now that only takes 10 kilobytes. Let’s say now when you’re transacting your DGN like massive BRC, BRC20 sort of distribution of that token ownership, you might be transacting say like a hundred, two hundred, five hundred kilobytes, a megabyte, right?

[00:13:11] NVK: So what should really be compared, both are taking advantages of the discount. So what we’re really comparing here is it’s 1 billion worth of Bitcoin. in 10 kilobytes versus maybe, I dunno, like a million dollars worth of 500 kilobytes. Economically speaking, you’re a lot denser on that Bitcoin transaction.

[00:13:33] NVK: And that means you’re going to win in the, in the, in the longterm. Because of that network. For that block space.

[00:13:41] Preston Pysh: It’s a network effect of market cap premium that people trust that you have to overcome and like it is so far down the track compared to anything that’s trying to compete with it. Yeah, what a great point.

[00:13:57] Preston Pysh: Let’s talk about lightning for a second. There’s very technical people coming out and saying lightning cannot scale, there’s issues with being able to self custody lightning. What are your thoughts on all of this?

[00:14:12] NVK: I have a complicated history with this one.

[00:14:15] Preston Pysh: Let’s hear it.

[00:14:17] NVK: I am a bit of a lightning disrespecter.

[00:14:20] NVK: But at the same time, I love lightning, like all things being equal. It kind of does work, right? I mean, I use it all the time. Unleash. chat uses for each deposit. And the issue is like lightning is still bound by Bitcoin dynamics, a little bit too intertwined. And in the early days, there were about 50 papers for what’s called payment channels, payment channels is what lightning is.

[00:14:46] NVK: I was hoping back then that we would have maybe five competing things that were not even maybe interconnected because we can use Bitcoin as the interconnection. The issue that I found is that like the current Lightning that we have tries to do too many things and appease too many different people and too many different standards, right?

[00:15:06] NVK: So we always fall into this issue where it takes too long to deploy new sort of Lightning features and, and, and it’s hard. Lightning is very complicated technology. And when you have a lot of complexity, there’s more, more issues. It takes longer to get to a very sort of efficient place in lightning really suffers on high fee environments because you have to open and close channels, but, but it does work.

[00:15:31] NVK: It is good technology. It’s like anything that’s trying to do like a big thing. It’s not a simple answer. So, no, it’s not like the answer to everything. And yes, it’s a good thing.

[00:15:45] Preston Pysh: Yeah. While you were talking, I pulled out my phone. I’ve been doing this a lot on shows, just checking, like, how simple this is.

[00:15:52] Preston Pysh: Like, I typed in NVK on your Primal, or on Nostr and just, you know, sent you a hundred sats there while you were talking. This one’s taking longer. There it is. Yeah. There you go.

[00:16:05] NVK: So it’s killing you.

[00:16:06] Preston Pysh: Yeah. And so, so I guess whenever I’m looking at that. We, looking at this from an engineering lens, right, are saying this is good, this is good, this is amazing, like to be able to do that without asking for an address or anything is somewhat absurd, like crazy, but we’re saying that that’s still not good enough because it wasn’t done, because I’m not using a self custodial wallet here, I’m using somebody else that’s managing those keys for me to be able to do this in a seamless kind of way, I don’t have to worry about channel management, I don’t have to worry about But, I sent you a hundred SATs, you received a hundred SATs, because the fee was so de minimis for these people that are, that are managing this on our behalf, and I guess the question I got for you is, is that good enough, or should engineers continue to kind of have the opinion that you have, that it’s not good enough, and that we do need to get to some type of, I guess the question is this, From a technical standpoint, is there a way to make that turn key and a person’s managing their keys?

[00:17:14] NVK: There’s a lot to unpack there. First, you have to think of like, we don’t use cash for a million dollar transactions. At least most people don’t, right? You use a bank wire for that, right? You don’t even use your credit card for that. Do you use a wire for a 1, 000 transaction? Eh, unlikely, right? You normally end up using your credit card.

[00:17:35] NVK: Do you use cash for a 1, 000 transaction? Most of the time, no, right? You use cash for, you know, 5 transaction. If you start to divide, you know, like different kinds of interactions into different ways of using money, it’s still all U. S. denominated, right, in this example. But, and it’s still all being settled at the bank level for most of these transactions.

[00:17:58] NVK: Right? So think of Bitcoin as like the final settlement. And then Lightning enables some of these uses in some use cases. Now, if you’re sending just like a few, a hundred sats, right? A hundred sats is like, what, like a thousandth of a dollar right now. I can’t like, I’d probably get the math wrong, but you know, it’s very small.

[00:18:19] NVK: You can’t even send dollars like that, but you can do Bitcoin using Lightning. And those Economic ratio dynamics there, right? Of that being sub dollar by a lot, make it very conducive to be able to do that very well in hub and spoke. So you have a custodian that’s running the lightning node, very nice, large one with a lot of liquidity, a lot of, a lot of channels going on there.

[00:18:44] NVK: He can achieve these kinds of like magical transactions because it’s magic, right? Zaps on monsters, just like poof, gone. And you don’t need anything. It just happens, right? It’s like a light. Very well. Now, if the receiver on the other end have a self custodial wallet, he’s not going to be as well connected, as well a setup with liquidity of all sizes, and it could not work as well.

[00:19:09] NVK: Now, you know, maybe for this kinds of transactions, you know, like the hub and spoke or custodial model works great. But for example, you know, I use Phoenix wallet on my phone for self custodial lightning with some trade offs on how they do some liquidity and things so that you can find liquidity better.

[00:19:27] NVK: It costs more in fees, but it works great when I go to Bitcoin Park and I want to just buy, you know, beer. It works amazingly, never really fails. So the trade off there is fees, you know, now. Trying to use Lightning for like larger payments. For example, we, we’ve tried to add Lightning to our web store and most of the invoices when people go by Coldcard are like between say 300 and a thousand dollars, right?

[00:19:50] NVK: That’s sort of like the, the average spread there. And It’s a lot harder to do inbound liquidity, self sovereign for that kind of invoice, right? Cause we receive only. Is Lightning great for that? I think it will be, but it’s not quite there. Maybe, maybe somebody else comes, comes up with something else. I think it’s, it’s important to put into perspective these things because when you hear people shouting on the internet about Lightning good, Lightning bad, there is no context.

[00:20:19] NVK: What are you actually trying to do? And I really think that Bitcoiners need to snap out of this sort of monopoly of idea of solution for everything, right? It’s like we need an ecosystem of a lot of things that do different things and solve different problems in different ways. That’s the only way we scale 21 million supply to 8 billion people trying to buy, you know, a coffee at the same time.

[00:20:44] Preston Pysh: Okay. So two things on that response. So with respect to the, the liquidity to do call it a thousand dollars worth of buying power on lightning. Is this a function of how early we are and if we warp ourselves 5, 10 years into the future that you pretty much have liquidity in channels to be able to just easily do a 1, 000 transaction to anybody that’s relying on some other service providing these channels?

[00:21:10] Preston Pysh: Is that something that you think kind of just-

[00:21:13] NVK: We can do that today. You know, if I hit up Alex and we go to River, right, and we have River handle our store liquidity. He could do it like no problem. The issue is we’re a Bitcoin company. We like owning our stack, right? Because to receive Bitcoin, we don’t need anybody.

[00:21:31] NVK: Unlike our credit card partners that we need them. I don’t want to have two things that I need other people. You know, I wouldn’t need no one. And this is just how we run our, our business. And to me right now, I would have to, can we do it? Yes, but I’d have to have a team dedicated to just receiving payments to be able to accept in a self sovereign way, thousand dollar invoices, thousand times a day.

[00:21:56] NVK: Like we’re just not there yet.

[00:21:59] Preston Pysh: When we talk about layer two specifically, is that the point that you can do it if you want to do it? Is that good enough?

[00:22:08] NVK: Yeah, you can do it. I mean, it’s –

[00:22:10] Preston Pysh: No, no, no, I got that. So, okay. So it seems like there’s a mantra that is very valid and very true for layer one, which is every single person.

[00:22:21] Preston Pysh: It has to be easy for them to be able to take self custody and for them to receive any amount of Bitcoin without asking anybody’s permission from anywhere in the world. Right. And people are taking that mantra. Yeah. and saying, that’s how it has to be in layer two for Bitcoin to be successful. And I don’t think that that’s necessarily the case.

[00:22:42] Preston Pysh: I’m curious if you would agree with that.

[00:22:45] NVK: That’s a very good point. It’s not the case. Like, each layer is going to have different kinds of trade offs. If you want uncensorable, And no permission. Bitcoin payments. That’s layer one. Layer one. I don’t even need to ask permission to send you money. If I know your address, I can send you, you know, a billion dollars right now.

[00:23:05] NVK: And you’re going to receive it winning or not. You know, that, that is the brilliancy of the layer one, but the trade offs are, it’s like there’s fees and, You know, it’s slower and there’s other things that happen when you do this kinds of transactions. Now, Lightning is going to have other trade offs, right?

[00:23:23] NVK: So it’s like, it’s fast, but you need to manage liquidity or you need to ask permission or you have issues with statefulness, right? You have to be online. So now you have to have very secure systems. that are holding liquidity online, right? It’s not like your Coldcard that’s cold, right? You have to put enough liquidity on the internet.

[00:23:43] NVK: You know, you need professionals to be able to do that with a lot of money, but it’s not lost. There is very cool things being built, right? There’s the Breeze SDK.

[00:23:52] Preston Pysh: Talk to us about that. Talk to us about the Breeze SDK.

[00:23:56] NVK: So they’re creating this packages that, that have a lot of, that are doing a lot of the heavy lifting on channel management and helping with liquidity and integrating with liquidity providers that may be decentralized.

[00:24:13] NVK: It gets into like essentially a jargon soup fast, but the point is. People are working on this problem and it’s getting a lot better. The fact that I can have a few thousand dollars on Phoenix self custody on the phone and make those payments. You know, without any concern, aside from a higher fee, it’s pretty impressive.

[00:24:34] Preston Pysh: Zeus wallet is, is doing something similar, correct? Yes. So for people that are trying to understand and correct me if I’m, if I’m explaining this wrong NVK bit effectively you’re running your own node on your phone. You’re opening your own channels, layer two lightning Bitcoin, and you’re able to have that, have that sovereignty, but it’s a little slower.

[00:24:59] Preston Pysh: Then running a like what I did earlier with, through primals sell them custodying the, the Bitcoin, but you’re the one kind of controlling, you can get into as much technical detail as you want, but it’s much more turnkey if you’re using one of those wallets for a person who doesn’t have that technical competence.

[00:25:18] NVK: It’s okay. Like, you know, the majority of the people are not going to want to be self sovereign anyways. Right? Bitcoin’s mission is to replace central bank, in my opinion. Yes. Right. So we get out there, you know, and we remove the central bankers. Like that’s already a kind of a small win for humanity, right?

[00:25:38] NVK: Like just tiny, just small, even, even if we don’t find a way of feeding chicken across the internet instantly with like cents. Have you seen, remember the feeding chicken website? No, I have no idea what you’re talking about. You could feed chickens.

[00:25:55] Preston Pysh: Oh, yes, yes, I do remember seeing this. Yeah, yeah.

[00:25:58] NVK: So even if we don’t get to the chicken, we already win.

[00:26:01] Preston Pysh: This is, this is hilarious. Explain this to people.

[00:26:03] NVK: So there was this website, maybe it still probably exists. I can’t remember the URL, but like, essentially, one way they were showing how you prove that Lightning works was like, you could go to this website and send, like, very small amounts of sats across the globe to feed chickens.

[00:26:18] NVK: You would like enable a little machine that opens up and it drops some food for the chickens.

[00:26:22] Preston Pysh: You’re watching the live video feed of the chickens in the coop.

[00:26:26] NVK: It was pretty hilarious. But, but the point is like, we can have a more complicated, more nuanced kinds of view, you know, as Bitcoiners, right? Even though we’re ooga booga, it’s on money.

[00:26:36] NVK: It’s like, yes, like we can replace the central bankers. It’s already a massive win for humanity. And then Bitcoin does enable all these other uses that we can do, right? Like we can still buy the Lattice with self sovereign cash by Lightning. That, that works for that use case is already there. We don’t like Lightning as is already works for that self sovereign.

[00:26:57] Preston Pysh: Why do you think that this is lost on so many devs or just people operating in the space? Is it, would you say that at the core, they don’t really fully understand what this value prop really is, which your description was it replaces central banks? I would just add a little bit on top of that, which is it’s a true peg.

[00:27:16] Preston Pysh: Gold is a, is a perception of a peg that continues to fail over and over again throughout human history. This is actually a peg that provides the technical solution that, that can peg fiat and global central banks. In my opinion, that’s what Bitcoin is solving for. Everything else is just gravy on top of that is with respect to payments.

[00:27:41] Preston Pysh: Like, and I think this is a highly controversial statement. I’m curious if you would agree with this. If Bitcoin pegs fiat currency and everything layer two and payment related fails, I think we still have a massive change in the incentive structures of humanity if we just are able to peg fiat currency with layer one.

[00:28:03] NVK: My view on this is kind of simple. I say that, everything in Bitcoin serves at the pleasure of store of value that it really is that simple, right? Like store of value is king. Everything else is there for a store of value. Do you get a lot of other features? Absolutely. I mean, like it’s endless and we haven’t even scratched the surface of all the stuff we can do, but why do you have censorship resistance transactions is because you need that for a store of value.

[00:28:32] NVK: Because if you say no to that is no longer salable, therefore is no longer a good store of value. You need to be salable for that. Is it divisible? Right? You need the visibility to be a good store of value. And all these things work in sort of like from this principle. If you start from this principle, like we’re on the same page.

[00:28:53] NVK: The problem is like some people start from, you know, the, the latte conversation principle. Yes. Right. And if you start from the premise, I mean, like, you know, we’re not going to find a path where we. It’s a whole different thing. Now we’re trying to use the store of value as means of exchange for daily stuff, right?

[00:29:11] NVK: Bitcoin can only offer so much. So like there will come trade offs and the way we handle those trade offs is by adding these other layers. And there is more coming, right? I mean, there is the e cash stuff that’s very old. I mean, e cash-

[00:29:26] Preston Pysh: I want to get into that, but keep, keep going with your point and then we’ll go there.

[00:29:30] NVK: I mean, my point is done really. It really is this, this idea that you have this store of value. This is Bitcoin’s promise that you don’t get debased. And, you know, it comes with all these other benefits to support that case, like the censorship, you know, the ownership and the self validation. I mean, this is not something you can do with gold.

[00:29:49] NVK: You can’t self validate the gold. You can’t check the tungsten inside the gold bar with like home tools unless you drill the bar, but then are you drilling everywhere? What about dissolved parts? You know, it’s all silly, right? When you compare it to Bitcoin.

[00:30:04] Preston Pysh: Yes, because even with all those, even with all those things, you still got to trust the people that are performing this audit on whosoever behalf is telling the truth after they give you the results.

[00:30:13] NVK: And on top of all that, because Bitcoin is so soluble and so fungible, you can send it over the internet. to somebody on the other side of the speed of light. And it’s redeemable and verifiable by the receiving party, right? That’s why Bitcoin, because of this feature that Bitcoin has to support the store of value, you get for free the medium of exchange.

[00:30:36] Preston Pysh: All right. So when we talk about running your own node and channel management and self custody on layer two. One of the solutions that are being proposed is FETI, e cash, this idea that let’s say you have a group of family members and you want to help them, you would self custody on their behalf and then they’re able to participate in this Fediment, and they are able to spend just as quickly or pretty close to as good as somebody else that’s managing all of these channels because you’re pulling all of these resources together.

[00:31:16] Preston Pysh: So you’re making it more turnkey and you’re putting the trust in somebody that you actually know as opposed to some third party that you don’t know from Adam. Talk to us about your opinions around all of this. Is this, is this a real solution moving forward?

[00:31:32] NVK: You know, I made a tweet that was a little controversial a little while back, which is, there is not enough Satoshis for everybody in the planet.

[00:31:39] NVK: And, you know, if you divide, I don’t know how many, there’s like a quadrillion Satoshis.

[00:31:43] Preston Pysh: Just clickbait, man. You just putting out the clickbait.

[00:31:47] NVK: But here’s the thing. Let’s hear it. Wealth is never evenly distributed. 50 percent of the world’s wealth is owned by, you know, 0. 001 percent kind of thing of the population, right?

[00:31:58] NVK: Realistically speaking, even if we make Bitcoin 10x better distribution, which is already an amazing sort of like thing for the world, let’s make it a hundred, a hundred times better distribution of wealth in the world, right? You still don’t have enough Satoshis for everybody in the planet, because this now, you know, from a basis point to 1 percent of the population is going to have, say, 90, 80 percent of all the money.

[00:32:21] NVK: There is not enough sats now for everybody to play. One of the cool things of Covenants as a quick tangent is that you can have co ownership of a, of a Satoshi, but I’m not going to go there. What’s cool is that like, so, so how do we make it so that there is enough funds available for 4 billion people in the world who are not the owners of 80 percent of the wealth, right?

[00:32:42] NVK: Like these people need to share enough Satoshis to have enough velocity for transactions and also for their savings to be stored. Okay. So how do we do? We can’t, right? Mathematically, we don’t have enough sats in Bitcoin for them. What I love about e cash is that we can offer them, and that’s true also for partially liquid, you can offer them these other tokens that are Bitcoin redeemable, right?

[00:33:09] NVK: They’re, they’re Bitcoin pagged as well, and they’re essentially like smaller units. of a claim on Bitcoin and because of the way the cryptography work, you can offer better promises than a bank does. So in a way, it’s kind of like a mix between free banking and sort of like crypto anarchism, right? But you know, these are just fancy words to say, hey, listen, you know what?

[00:33:32] NVK: I can make you a promise, a cryptographic promise that I’m not diluting the supply of this token that has a claim on, on sats I can make a claim that I don’t have full control over the mint and over the, the transaction verification. And with that, I mean, and that would, that comes amazing privacy, right?

[00:33:54] NVK: Because you don’t know who owns each token and you know, the whole eCash, Charmin Cash, amazingness. And it’s also stateless. So you can go and do this offline. So I can have, you know, a bunch of people in a village, the quintessential example of the startup. I’m going to save the world kind of like thing where, you know, there is a village of poor people somewhere, the global South.

[00:34:16] NVK: And realistically, they can’t have Bitcoin Satoshis in any reasonable distribution. Right now, at least they can have a much better thing that they had before. They’re not being debased by a note created by an African central bank that is printed by the French government anymore. They have a cryptographic proof of something that is a million times better and they cannot be rubbed because it is backed by Bitcoin.

[00:34:41] Preston Pysh: So a person who’s hearing your statement there, they’re going to say, well, and what is it, 210 quadrillion Satoshis in that represent the 21 million Bitcoin. So 210 quadrillion units, how is there not enough for the 7 billion people on the planet? I don’t, I don’t understand.

[00:35:02] NVK: That’s possible units. When you have your, your whole Bitcoin, a single UTXO, you already took a hundred millionth of the supply off the table, 18 million Bitcoin, almost 19 million Bitcoin, almost, almost there is already owned by somebody.

[00:35:20] NVK: And maybe there’s what, 20 million people in the world that own Bitcoin?

[00:35:23] Preston Pysh: Yeah, but one of the things that I don’t think that you’re accounting for is for people like me, after the world starts moving to this Bitcoin standard and equity and everything else starts getting repriced in Bitcoin, people that are sitting on billions of Satoshis.

[00:35:35] Preston Pysh: They’re going to be more than happy to get rid of those in exchange for cash. I think so. Yeah.

[00:35:42] NVK: I don’t know. Manhattan still owned by very few people.

[00:35:44] Preston Pysh: You know what whenever you start looking at equity, that’s, that’s cash accretive, like, hey, if you’re denominating your business, right. Looking at your business that you have NVK and it’s priced at.

[00:35:56] Preston Pysh: Two times earnings, annual earnings. Yeah. I think I might actually, and I think that there’s a competitive moat. Yeah. I will give up Bitcoin to own that, that business. And if that person is a person of the legacy world that’s been denominating everything in fiat, I think they’re going to want that Bitcoin and they might have to sell it at two times earnings to get it.

[00:36:12] NVK: I don’t disagree with you, but the math is much crazier when you’re talking about a 21 million supply.

[00:36:18] Preston Pysh: I think the, I think the Fiat person gets more desperate to own it, collapsing the price premium of 35X PEs to these numbers so that they can get their hands on it, which resets and spreads Satoshis all over the planet, right?

[00:36:38] Preston Pysh: Like, I think so many are missing that, that part of the quote unquote, and I’m using the WEF term, the great reset, like they’re missing that part of the reset.

[00:36:48] NVK: Yeah. You know, I don’t see how, because, you know, there’s also the cost of making those transactions, right? Maybe those are claims. Because let’s just put it with today’s state of the network, a hundred sats is the dust limit.

[00:37:02] NVK: So, you know, I really divide your quadrillion by a hundred. And then there is the cost of making those mili sat. Let’s just call them sats, the actual sat. So there is a cost to transacting those sats that will super, it will be larger than the sat itself, right? So you still need to put out a fee. So you cannot transact a single sat unless it’s a donation to a miner.

[00:37:24] NVK: So you’re going to need two sats. So divide that number by two. Okay. So you divide it by two because you still need to pay one set. So now you’re paying 50 percent fee. Are these assumptions? Fees are Bitcoin denominated. They’re not dollar denominated. Even if it’s like 10 sets, you still have to give up.

[00:37:46] NVK: 10 percent if it was one SAT fee, which is not going to be, and then you’re competing now with Michael Saylor doing a UTXO consolidation, right on that block for, you know, a hundred billion dollars worth. And it’s just, but here’s why I think this is like get crazy.

[00:38:05] Preston Pysh: So I think people hearing this might be hearing this and saying, well, this is a concern.

[00:38:09] Preston Pysh: This is an issue. But I don’t think that it is because you can add more units to the right of the decimal point. And Bitcoin’s just as scarce as it was before. You’re just adding more additional monetary units. Well, you know, you’re not adding more units. You’re adding more placeholders to the right, which still has 21 million Bitcoin.

[00:38:28] NVK: In Bitcoin, I can’t remember now that there is a, there is a limit on like how the, how the integer system works on Bitcoin. Yeah. Like there is a limit to how much divisibility we can have in this current design of the system because of data. But here’s the cool thing because of, okay. It’s actually like computer math as opposed to human math.

[00:38:46] NVK: Human math, you can do whatever you want. Yeah. That’s why the economy is that. It is. Yeah. Like they can keep on printing and divided doing whatever. But here’s the cool thing though. For example, in Lightning, you get another hundred million division because Lightning is a claim. So there are enough units.

[00:39:03] NVK: So, yeah, so, so there are, as long as they are not fully yours, let’s put it this way. Oh, interesting. Yeah. Because they’re still in suspense. They’re not, they are non vested in Bitcoin. They’re non claimed in Bitcoin. Once you claim that in Bitcoin, you have to exist in the Bitcoin’s physical universe. The Bitcoin physical universe is the 200 quadrillion Satoshis.

[00:39:31] NVK: Outside of that, you can do many things, right? So Lightning offers an extra hundred million divisibility, right? And if you’re using custodial Lightning or even self sovereign Lightning, if it’s designed right, you can, you can have those units, transact those units, but you’re not getting the same promise that is Bitcoin’s promise.

[00:39:49] Preston Pysh: So if this person falls asleep for two years and they wake up, is this what they’re looking at?

[00:39:53] NVK: The lightning wallet could be gone. But it’s okay. This is where like, it drives me insane with Bitcoiners conversing about this, is that like, We’re still making the world a million times better, not 10 times better, not a hundred times, but a million times better. And we’re going to come up with more solutions as we go along. Like, look how much Bitcoin came already.

[00:40:16] NVK: It was not even multi sig when we started. There is a lot of clever people with the correct incentives trying to fix these problems, right? And we are, I mean, like the e cash based on Bitcoin is. And it’s not lightning. It could use lightning, but it’s just a different solution, right? There is the liquid solution and there’s going to be more.

[00:40:35] NVK: It’s all a matter of time. And things tend to come not when we want them, but when we really need them. And it’s a really late, a little late and over, over demanded.

[00:40:46] Preston Pysh: I know that earlier we said that the CTV and Covenants was something that is much more of a technical conversation, not something that’s probably going to happen anytime soon.

[00:40:56] Preston Pysh: But I think it’s something that people are continuing to hear about, so I just want to kind of cover it with you as to what this brings, yeah, and just your general thoughts on how much complexity or risk that it introduces.

[00:41:10] NVK: It’s funny enough. It’s surprisingly simple. It’s a very simple change. It’s an extra opcode.

[00:41:16] NVK: And all it does is it checks the template verification. Essentially, what you can do now is your Bitcoin when, so let me put it this way. Let’s see if I can explain this simply, but get the point across. So in Bitcoin right now, the way the script works is on the input. That’s why your multisig, your money is going into your multisig.

[00:41:39] NVK: And then when you want to sign it out, you have to use the keys to sign it out. With the template verification. Right. It could be in the output. That means when the money’s signing out, it has rules and those rules, we already have two things that kind of have rules like that. It’s not quite, but just for sake of being practical and explanation, the time locks, the money doesn’t, is not spendable by the network until he hits the time lock.

[00:42:04] NVK: We already have that. with CTV, it’s the same, but you, you get to write a script or like a template for that money span. So the UTXO can say, for example, you’re not allowed to spend unless you hit this time and you hit like this amount of signatures and it does this, and it can only go to this address.

[00:42:24] NVK: It’s a covenants, right? Like it’s the same as a deed on a, on a house or very similar to all our covenants on a trust. All you’re saying is that when the money is spent, here are the rules set. Some of the fear mongering is because, you know, people are like, you know, it’s scary to send money that’s going to have rules.

[00:42:41] NVK: What if it’s broken? Well, I mean, if it’s broken, you just didn’t write it right. That is true already of multisig. If you don’t do a correct multisig script, money gone, right? Thanks for the donation. Thanks for the donation. Right. Essentially what Covenants does is like, at least the CTV does is this is how it works, right?

[00:42:58] NVK: There’s a few other proposals that are not quite as mature. Covenants came out quite a while, Jeremy Rubin. It’s, it really is like a super clever way of doing this. It’s been studied to death in my opinion. It’s fairly safe, but you know, you have to get the whole network to come along. So it’s going to take time.

[00:43:17] Preston Pysh: Have there been other, I know for a long time, some of the stuff that was ultimately being implemented on Bitcoin was done on Litecoin or one of these other blockchains. Has, has CTV been done on another blockchain to date?

[00:43:32] NVK: Not that I know of, maybe it’s not impossible, but I think it was a different time.

[00:43:37] NVK: I was having this conversation with people about activation, right? Like the, the side that’s like wanted yesterday and decided doesn’t want it ever. I did an episode of Bitcoin that review about that. And you can’t expect people to sort of move their money, their bags. you know, their life savings into something that is new right away.

[00:43:56] NVK: Right. So you really need, you need to get people to understand and CTV is a feature. It’s not critical. When we did the UASF for SegWit, right? Way back it was a critical thing, right? I mean, Bitcoin was splitting and people were going to kill each other. Right. So, It was a different time. And so we, we had to deal with that, right?

[00:44:22] NVK: It was not optional. We had to go somewhere. And the compromise was actually snuck in there. The block size got double.

[00:44:29] Preston Pysh: Jeff Garzik.

[00:44:30] NVK: Yeah, and then I’m not even going to go there. But there were people that wanted to quadruple and then there were people that wanted to make it unlimited. And, and those projects essentially dead, right?

[00:44:40] NVK: Like it was proven the obvious that it was idiotic. So we did do a compromise on Bitcoin and we created the clever way. I did a whole episode on SegWit and explaining it truly technically speaking about it. And we got the discount because it’s pruneable, very clever cryptography, like extremely clever cryptography, but now we’re at a point where like the system works and it’s great.

[00:45:04] NVK: Do we activate stuff now? No, because it’s going to sort of fracture the consensus and the social layer of Bitcoin, right? Take your time, get the people on board, and who knows, maybe the fee environment remains so awful that people start looking at CTV as a way to just improve that right? Because you can do this shared custody offsets.

[00:45:24] Preston Pysh: I think that’s generated a lot of the conversation is the fee backdrop.

[00:45:27] NVK: Yeah. I mean, listen, it’s sales. You got to find an angle to, you know, an honest angle because it’s going to get scrutinized and maybe that’s how you get it through.

[00:45:37] Preston Pysh: Is the fee environment that we’ve seen since September, October been conducive to building in layer two from your point of view?

[00:45:44] NVK: Oh, absolutely. The problem is lightning really suffers on high fee environments. So it’s good because you get to transact. If you already have the channels, you get to just transact between them. It’s great. I feel like low fee environments, they make people lazy. And people come up with lazy solutions that don’t scale.

[00:46:03] NVK: So it’s nice to have this, to put a fire on their people. So they actually go out there and build efficient, good solutions. And they’re going to come out. I mean, people find a way, right? Because there is demand.

[00:46:16] Preston Pysh: You’re tinkering with AI right now.

[00:46:19] NVK: Yes.

[00:46:20] Preston Pysh: What’s your broad you know, you’re sculpting something here.

[00:46:25] Preston Pysh: What are the big chunks that you’re knocking off to help people understand your perspective on AI?

[00:46:30] NVK: The way I approach sort of things I want to understand is by building a project and hopefully a company out of them, right? Yeah. And that’s how the whole Unleashed.chat started.

[00:46:40] Preston Pysh: Is that the address people can go to if they want to check it out?

[00:46:43] NVK: Yes, Unleashed.chat. Yeah. Okay. And I was, you know, all these things were sort of like magic, right? I was paying attention to Bitcoin, building on Bitcoin only and, and like, and this thing sort of took me off left field, right? Like, whoa, you know, how come we’re like, so ahead of this thing, right? And then I started digging and sort of trying to run my own and sort of like figuring out the stuff and, and it became very clear that.

[00:47:09] Preston Pysh: When you say running your own, you’re running your own transformer, like your own GPT, is that what you’re saying?

[00:47:14] NVK: Yeah, you know, running your own, like, LLMs locally and sort of trying to play with it, train it, or whatever. And it’s amazing how it was not like as good as the sort of like the open AI kind of thing.

[00:47:26] NVK: Right. Because, and I couldn’t like understand why, right. I mean, like, you know, this is a good model. This is their last model. If I go on their both last models, why doesn’t it like work the same way? Right. And then I started dug in and it’s like, it became clear that like, there is a lot of mechanical turkey that go behind AI solutions, like AI as a service.

[00:47:45] NVK: And you know, it’s all packages, just like magic, right? That you just type the thing, it just magically knows everything, right? And so I started like, you know, I got like some of my resources like to, to go and sort of build on this. And, and we started sort of like putting together, like, how can we get closer to like the answers there?

[00:48:02] NVK: And essentially like you have to build a lot of custom code that helps the AI do the things that you want it to do. Essentially like you’re building AI tools for the AI to go and do the things or tools for the AI to go and think about the things. These are machines, right? All that they do is predict the next word because they’re so good at that, that it feels like intelligence, right?

[00:48:24] NVK: I think we’ve starting to hit some walls like that. The large players are starting to hit some walls and that’s why they’re so desperate to hire new people and things, because this way of doing it, there’s a lot of improvements that can be done on the mechanical Turk side, but we need still a few more breakthroughs on the intelligence side.

[00:48:44] NVK: But the thing is like, they already are amazing. I mean like the things you can do in, you know, like you could already probably replace half of a future 500 company analyst desk. Again, like half the staff, like gone, right? Today, it’s totally possible. It’s just that the glue is not quite there yet. So you don’t have a way for, you know, the CEO wakes up in the morning.

[00:49:07] NVK: He’s like, you know, I want to know, you know, this very complicated questions about my business. So can you give me a report on how many Coldcards of blue collar I sewed on the last third day of every June, the last three years. And you know, but please correlate that with the moon phase, you know, seriously, like, you know, maybe there is a good correlation there.

[00:49:31] NVK: Maybe you shouldn’t have like blue Coldcards outside of that moon phase, right? Like you can improve your sales and be more efficient on how you do inventory, but the tools are not quite there yet on those sort of like how the person asked those questions, right? And how you input all the data. And then there’s the concern about privacy on the data.

[00:49:49] NVK: We’re building some of that stuff ourselves because we want it for ourselves. We made it available to people and I wanted to search Nostr with the same way you do Grok on Twitter. Long story short, these things are like super advanced, they, in terms of being able to help you be productive, but they’re not quite there yet to make you feel like you’re a superhero.

[00:50:08] NVK: A great example of this is when you go try to generate images, you can never get the image just right, and it starts to mess up as you ask. So I was trying to make a meme, right? Like, make me three green capybaras and one red capybara, so I could do that meme. Yeah, yeah. But I want, I want four in a row, three that are green, and then one that’s red.

[00:50:31] NVK: I don’t always either add an extra capybara, or it would like Make them the wrong color or, but, and if you go there and say, Hey, make me a great image of Bitcoin’s flight to safety, make me a beautiful woman on a private jet, you know, looking out the clouds in the sunset, right? It made me beautiful image, but I cannot make it repeat it.

[00:50:51] NVK: And I cannot make it like do it exactly as I wanted. If I start adding little parameters. So that’s where we are now.

[00:50:58] Preston Pysh: But you think it within years where this thing’s this trajectory of this is getting crazy, correct?

[00:51:03] NVK: It’s an arms race kind of environment right now, right? There is so many resources, so many smart people working on this that it could be years, but it could also be tomorrow that we have like crazy breakthroughs.

[00:51:17] NVK: So that’s why it’s so important that like, if you run a business, right, or if you have investments or whatever, like, you know, you have some strategy around like how, how you take advantage of some of this stuff and you’re like plugged in into what’s happening. It’s kind of like Bitcoin in a way, like it’s a multiplier of your capacity, right?

[00:51:34] NVK: Bitcoin is a multiplier because you’re being debased. So it’s essentially an inverse multiplier. You’re being inversely debased and you’re getting self sovereignty. And if you start early, you start accruing that advantage. With AI as a business is the same, right? Like you have to start building that, that know how and start building tools that are good for you that help you get that multiplication on, on your capacity.

[00:51:58] NVK: Right. And ultimately, I mean, like that, that’s almost like Booth’s sort of like, yeah, it is mantra, right? But again, it’s, it’s one of those things that you have to be there, you have to be in the field playing with it, or, or you’re going to probably miss out and you’re going to be outcompeted and you’re not going to understand why maybe it’s just that he, you know, your competitors can just do better inventory, but like 10 X better inventory.

[00:52:20] NVK: So they find more margins and they find more efficiencies, right? And your product gets better and you don’t understand why. So that’s sort of like a, an interesting way to look at this.

[00:52:30] Preston Pysh: It’s hard to believe we’ve been talking for an hour already. I could just chat with you all day. I just want to highlight to people listening to this, that maybe are not familiar with NVK.

[00:52:40] Preston Pysh: I can tell you, if you talk to anybody that’s been in this space for a long time, they, and you ask them what hardware wallet they would recommend, the one that they’re going to say, and we have no relationship advertising wise or anything. I’m just telling you, what they’re going to tell you is it’s cold cart and it’s NVK’s product that he’s made best on the market.

[00:53:01] Preston Pysh: You guys got to check it out. If you have never looked at it before. We’ll have a link to it in the show notes. I, I do have an ad with River, but I personally use River and I love them. So if you’re buying your Bitcoin and you want to take self custody, there’s, there’s the combo. NVK, I can’t thank you enough for making time, not just for today’s show, but when I do text you and ask you questions that are for me, difficult from a tech standpoint, you’re always so kind to help out and just really kind of just thankful for you and your education for not just myself, but everybody in the space you are a force to be reckoned with when it comes to tech.

[00:53:38] Preston Pysh: So thanks for making time and coming on the show. Any other highlights that you want to point people towards?

[00:53:43] NVK: No, listen thank you so much for the kind words, regardless of like which hardware you choose, use a hardware wallet, you know, like get your funds off the exchange, you know, like River is a great, it really is a great company, buy your Bitcoin, get it out, take self custody.

[00:53:59] NVK: It’s kind of the whole point of Bitcoin. And try to review your security practices, having the Bitcoin, the most important thing after getting a Bitcoin is keeping it. So everybody wants your Bitcoin, the bad guys, the tax man, the people coming, you know, there’s a tsunami coming. So please like take this seriously, take the responsibility and, and, and jump two feet into self custody.

[00:54:25] NVK: You know, hopefully you like my product. And but get out and do it. The time is ticking. You’re only going to get less Bitcoin from now on. That’s true. It’s brutal. It’s brutal. Like our store receives Bitcoin, right? And through the years for every invoice, we only get less Bitcoin. You know, the dollar value of those invoices keeps on increasing, but like, it’s insane to watch that trend.

[00:54:49] Preston Pysh: No amount of productivity can keep up with it, right?

[00:54:53] NVK: That’s right.

[00:54:55] Preston Pysh: All right. Well, Hey, this was a blast and we’ll have links to all that in the show notes. NVK, thank you so much for coming on today.

[00:55:02] NVK: Thank you.

[00:55:03] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm.

[00:55:28] Preston Pysh: So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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