Ordinals Will Spark Bitcoin's Application Era | Muneeb Ali

Transcript

look back in history as like hey that's one thing that really changed Bitcoin and the reason is actually pretty pretty simple right like it's the first use case on bitcoin L1 that has actually captured attention from the radar alright everyone welcome back to another episode of Empire we are uh really lucky to be joined today by munib Ali who munu I think you were the first guest ever on Empire so it is a long time coming uh nice little reunion yeah I think I think I remember I was the first guest and your podcast has come a long way since then so congrats on all the success thanks for Nev it's really coming a long way since I joined Empire so I appreciate it really appreciate it I already like you already

I'll promise someone I ask all the hard questions [Laughter] like the show's really improved I don't know what happened so many usually we don't do this but actually I thought it'd be helpful a lot of our audiences maybe a little more deep into the eighth game so I'm gonna give a little background on what you guys have been building and I'd love for you to just like I think you're just as a helpful primer and then correct me if I'm wrong obviously and then we can jump into all things ordinals on chain activity on bitcoin and stuff but my understanding is that uh Stacks so there's like you've um a couple different like entities I'd call it or like open source projects that you're working on Stacks my understanding is an open source project started by a bunch of Bitcoin Builders and the devs behind Stacks been working

on bitcoin for a really long time in 2017 I remember you guys raised from uh Union Square Ventures the the block size wars were going on and it had become super clear to people that the only way to scale transactions or like new use cases on bitcoin was through layer twos and actually before all these L2 talks about coinbase is L2 and arbitrum and optimism um it was really stacks and lightning which were like l2s on bitcoin and so Stacks the way that I think about it is just uh is just a Bitcoin L2 and the lightning network is like if people know lightning it's like an L2 on bitcoin but peer-to-peer transactions uh Stacks is more like smart contracts on bitcoin and um I think your guys's vision for a

while now has been like whatever you can build on ethereum or Solana or another smart Contracting layer you can build on Stacks is that how did I do there no I think I think I think you did a great job but one thing I want to point out is that um l2s especially in ethereum have a very precise definition and according to that definition Stacks is actually not an L2 but without getting into the technical details I think high level most people think they go in it as a L2 so I'm not surprised that uh you are as well but it generally speaking I think spot on uh it's a bunch of Bitcoin Builders like you know who work you're getting me like we're working on literally the L1 like Bitcoin L1 Bitcoin scripping language tried building

interesting things with that and as you can imagine it's fairly limited both in in terms of what you could program but also in terms of scalability and the only 17 has been you know lightning started the stacks layer started and uh just I would say it last year is when we're seeing this like Revival of Bitcoin Builders culture which I'm I'm just like so so excited I think that Cornwell is actually a big role in it can you give us context and background as to why this like remergence Resurgence of developer activity because it felt for a while like there was like the obvious question for this episode is why is this why is this time any different because it's been chat about like you know Bitcoin doing this precisely over the years but it hasn't really amounted to

much yeah I think I think some background context may be helpful there right so uh what I observed in the Bitcoin Community I would say between 2013 and until the block size or started in 2017 is that there was always like this healthy community of developers or intellectually curious want to do interesting things and a bunch of experiments would happen on bitcoin like counterparties are great nfcs started literally on on bitcoin and one same with uh colored coins which are like early icos people actually like raised ICU money on bitcoin L1 music using colored clients uh we I built the uh decentralized domain system so in terms of like you know being uh free something

so it predates ens it was a Bitcoin out one in 2015 still still runs actually uh I I want those names which are probably like historic uh at some point and people are going to ReDiscover them uh and and I think that that culture really drastically changed obviously I'm simplifying the story a little bit uh during the block size Wars two things were happening one ethereum started taking off like I think it had its like crypto kitties moment a lot of the intellectually curious people people who wanted to you know play around with things Factory ethereum was the better easier way to do it you have a full execution environment but more importantly the culture is very very welcome whatever experiment you want to run you can come in and you can do that

on the Bitcoin side when the when the Civil War was happening the people who ended up winning the war and I was actually on the smaller blocks I during during that time they were sort of like one of their arguments was we don't need any of these use cases so why would you ever want to increase the block size Bitcoin should just speed money and I think if that is your winning party it actually sends a message to the rest of the community because I do think the culture changed a lot like the the folks who gained like more voice share and became more powerful influential and I think that's like really uh what maybe each you guys if you're more active and eat you've interacted more with you know what we call the Bitcoin maximize and

they're sort of like sitting on the sidelines uh cheering for every experiment that fails uh not understanding that this is how Silicon Valley works like a few things do well and they do really really well and the long tail of startups basically fails so if you are cheering like every failed experiment you're actually not innovating you're not not sort of like doing anything I think we went through like those years after the block size Wars and and people had options like you know frankly if you get yelled at as a developer in one ecosystem and you're welcome and embraced in another it's a pretty obvious choice where where you would want to go uh and a small group of people including myself bunch of others who are really interested in Bitcoin their tool those are separate caps right people who are

interested in Bitcoin the ecology the tool they want to build they want to actually use it and Bitcoin the idea or the religion and I think we've heard a lot more from the religious crowd and not as much from the Builder I think that that is sort of like changing now and I can I get into why yeah okay so that that makes a lot of sense to me when you I think one question that I would have is why right why not just separate Bitcoin and eth Bitcoin has product Market fit it is digital gold why not just build apps on ethereum where like we have this great smart Contracting layer already why do why why are you trying to almost like force this smart Contracting layer onto Bitcoin it feels like a little bit

yeah so I think I think it's a great question um so I would just look at the market reality that even after the last um cycle of the bull market uh we still have like 500 billion dollars of BTC Capital mostly just saying right details is like I don't know 200 250 billion or something and I think that's sort of like a like a blue ocean opportunity where there's so much Capital it's very much like sort of like sitting passively and if you're a developer you can almost like come in and try to make it productive I I do think like people are trying to build Bridges to other ecosystems so we have uh you know wbdc going to ethereum there's some bridge

going going to Avalanche but if you're focused on bringing the functionality to bitcoin that's sort of like the opposite right instead of trying to take DTC do a chain that has contracts you're doing the reverse of it you're saying I'm going to bring all of the functionality where the capital is sort of like on a resetting yeah it it feels like such an obvious thing it may be one of these things where like in five years time if this actually works it'll be like two what you just said but I'm curious like if you could go into the tech of like how hard is it to actually build like programming like smart Contracting language like l2s in ethereum have been discussed since the Inception of ethereum scalability was on the roadmap and there's a number of teams that have been

you know focused on this arbitrary for instance since the early days of ethereum was working on this and Princeton of which I believe you also went to uh I may be wrong here but anyways I'm I'm really curious if you could go into the tech and the where kind of you guys are and like what's a roadmap look like um I I think that's a great question uh yeah I did my PhD at Princeton I know I have Charlton uh from there and it's already team and I would say that um you really need to understand you need to spend time in the Bitcoin ecosystem and that understand the challenges and I typically categorize them into a handful of things uh one thing is that uh Bitcoin is lagging in terms of developer tools and basic

infrastructure like I'll I'll give you an example like because of the ordinals uh interest people were actually trying to find wallets that were compatible with tap and the they couldn't find a wallet they couldn't you know find basic like Dev tooling libraries that they could use to actually even make their wallets compatible with them okay simple basic stuff that's just not there and then that's why having a builder's Community actually helps because right now like within weeks some of the top wallets that actually integrated ordinals or Taproom or make it easy for people to do these things on Bitcoin now one are actually Builders from the stacks layer of ecosystem like the experts wallet or Hero wall and so on so one thing is like people people don't

realize how bad the dev tooling and infrastructure situation in Bitcoin is so theoretically all these things are possible practically you actually need to raise a bunch of capital which is harder in them in the Bitcoin space right like because investors have sort of like uh or at least before the recent uh interest they're thinking of Bitcoin as like a digital goal they're not thinking of that as a app Flex on or something that where people are coming in and building and the last thing is the culture right like if you're if your culture is sort of like rejecting Builders inside of embracing it I think it it becomes a we have the hard thing so those those are high level things are the deeper technical level I do think

the Bitcoin being very very simple so if you look at you know uh let's say the scalability limitations of Bitcoin it's the flip side of Bitcoin being more decentralized so on one side that's a benefit that here is very decentralized you could run it on a Raspberry Pi you can't say the same thing for a Solana node or something else right but then it's very hard to scale okay then it's the flip side of the same thing and and then you could say Bitcoin is very simple and it's very durable but the flip side is that you can't program it much because it's so limited at the base there so in terms of l2s specifically uh you know you need certain support from Bitcoin L1 to be able to build the type of Roll-Ups and fraud runes like

arbitrum on on bitcoin and that and Bitcoin historically it's not easy to change it so I can't be a team that raised a bunch of capital and said oh I'm going to propose like these changes to bitcoin and I know in the next six months or a year they're going to get ruled now not gonna happen but it's going to take a very very long time so what people are doing and what literally the stocks project did is that we had a design principle that you could never ask for a change uh from the album so do the best you can like has a layer and then maybe in some years if you need some support from L1 uh it might happen so I think like because of those reasons it this is why like in some ways there's a market opportunity especially for developers you you have almost like a

situation where there's ton of passive Bitcoin Capital actually less competition not a lot of people are trying to build there at least it's changing now but but still I think relatively much less competition but then there are the challenges that aren't you willing to work with you know pretty bad they have tooling improve it are you willing to get yelled at like on Twitter and you know these are you can you you can see like you know what the what the Jude offs are yeah when you I want to get into order ordinals so for people who haven't been following ordinals of the Bitcoin uh ecosystem this this year this really interesting thing happened uh in Bitcoin which is uh the Creator uh uh there's a person who've kind of found this unintended

feature from uh the Bitcoin Tap Root upgrade uh and and they launched an nft collection that essentially stored data and and nfts in satoshi's and I think we've had I think we're like 200 000 now this year already or somewhere around 200 000 uh ordinals and I think we were kind of paying attention to it saying like this is pretty interesting like it felt like this was one of the more interesting things to happen in Bitcoin recently the Bitcoin kind of Maxi crowd I would say was like pretty upset about this saying look the Bitcoin blockchain should not be used for this stuff then there's this whole other cohort of people who are saying no no no this is amazing like people are building on bitcoin for the first time and it sparked like I just got a pitch for a Bitcoin nft Marketplace which

looked pretty cool and there was actually this Chris bernitski tweet Who I Really respect uh Chris's thoughts he said we'll look back at ordinals as a moment that changed Bitcoin forever and I'd like to get your maybe holistic view on unordinals and and how you're feeling about that that right now yeah I I I agree with Chris I think it's one of those things where um we would look back in history as like hey that's one thing that really changed Bitcoin and the reason is actually pretty pretty simple right like it's the first use case on bitcoinl1 that has actually captured attention from the rate audience like I'm not saying it has gone mainstream at all it's still very very early but it's getting the attention from all the rate parties like the

builders are paying attention there's a little bit of a gold rush happening where startups are competing or worshiping features for ordinals uh new artists are coming in like other yoga Labs just announced like two days ago that they'll be doing it and people sort of like Get why Bitcoin nfts especially on L1 where the image is literally in the Bitcoin chain is is valuable it's like they they can see that if this thing cannot be destroyed as long as BTC has any value so the same reason why my Bitcoin is valuable uh this nft is also valuable because it's literally on the L1 chain and I think that's clicking so the the spark sort of happened and the rest of the ecosystem building uh activities that happen that you know

Builders rush in capital starts chasing that you can see it happen and when it's happening every everyone's like wait a minute if this really happens there is a ton of BTC Capital there is a ton of like potential uh activity that can happen and I think people are kind of like seeing uh what that could be because before I think as Asante was probably saying earlier that people have heard this story so many times like oh Bitcoin D5 is coming or X is happening why is it happening and when you dig deeper I think a lot of them were false promises like for example even even this uh even this upgrade Taproot like Bitcoin has basically had two major upgrades since the the Civil War in 2017 one was segwit a segment effectively

just compresses your transactions a little bit and you pay less fees because your transactions are now smaller and Taproot is a similar thing right like it it gives you a little bit more compression and it gives you some privacy benefits because a bunch of the data is not normal chain until you review it so you can write slightly more advanced scripts and it was marketed by the by the Bitcoin Maximus Community as smart contracts are coming to bitcoin you know Bitcoin default is coming every other trade is going to die that that is not even close to the reality because it's not even a fully fully execution environment it's not an evm it's not like uh what developers are used to it is a slightly more advanced pretty

limited script adapter launched it for a year basically nothing happened right like the utilization if you look at the charts it was like less than one percent utilization on the Bitcoin Network and the Bitcoin Network itself doesn't get a lot of utilization blocks were you know empty like a lot of times and then art knows that and I think ordinals is very interesting in a couple of Dimensions the the first one is it actually hits a valid criticism that Bitcoin gets but how are you going to pay for your security buzzer 10 years it's not a problem in the next 10 years but it can be a problem after 10 to 15 years and ordinance is saying look Bitcoin is the should be the most valued block space on the planet and and we've already seen like a 10x uh increase in in fees at a

pretty sustainable level and I think fees might do another 10x or 100x4 here so you have a clear clear sort of like story for no people value Bitcoins block space that's one the second thing is uh that it has actually changed the culture of it because a lot of people were sort of like you know they they got introduced to crypto maybe through Bitcoin but are not spending time in ethereum or Solana somewhere else they're coming back and saying I've been on so many Twitter's business chats where people are like oh I had nothing to do with my Bitcoin for the last four years now for the first time I can actually do something I can I can try to do amend I can participate I can try to do a trade or something and people are excited it's almost like a uh coming home and if you go to those uh

spaces or those conversations they're actually drawing much bigger audiences than the Bitcoin Maximus crowds I think that's a very important shift because now a lot of the builders like they wouldn't even get invited to speak at a Bitcoin like a Bitcoin Maximus podcast or a Twitter space and the conversations were about the same rules like hey Bitcoin only has a 21 million Supply Never Gonna Change how many times can you talk about that like there's it's actually like fresh content uh real energy from Builders and they're now getting airtime and they're sort of like it's like a fork in the community right it's a different community on and I think that's very very healthy uh for for Bitcoin concern the last thing is like actual Builders raising Capital uh

running like true startups right not like uh a lot of projects in Bitcoin or if you dig deeper it's like one or two people who have an open source project on the side and their ideas and they've been talking about it for five years right versus a startup can do Insane amount of damage like within four weeks of actual hacking and I think you're seeing more of those type of people come in and a lot are actually coming coming from the stacks of our ecosystem because I think for one reason or the other that ecosystem attracted real capital from sophisticated investors and real Builders like who know what they're doing I think now it's sort of like their time to shine even on the Bitcoin level inside so from a deployment standpoint like do you anticipate these this being as

contentious as some of the other crises that sort of like contentious moments of the Bitcoin network has had in you know getting people on board on certain upgrades yeah so I think I think that's the interesting part Taproot had already gone live right so when people were were sort of like saying hey this is Spam it shouldn't happen uh the reply was like it's a valid Bitcoin transaction totally accepted by Bitcoin rules your node now has a picture of my monkey right and it will be stored there and you there's nothing you can do about it right so in some ways and then people were like maybe miners would try to censor that and then the minor miners came out like we're actually making more money like we actually love Cardinals

because we make more Revenue our walks were not full now for the first time our blog search are like running at capacity so very quickly it became like a thing where people very people sort of like realize that the Maximus proud that is allowed on Twitter and on podcast they actually don't control the network right like the Bitcoin network is open and anyone can do what they want want with it and I think that's a really interesting uh realization the big difference was that otherwise the proposals that got shot down uh are typically proposals to change Bitcoin this is just using Bitcoin as it is today and you can just like run with it like then you don't need you need any

information do you think there's any validity to folks who are saying like we should censor these transactions because this is not the right way to use the Bitcoin blockchain I think there there are some concerns uh so I'll bring the top two ones one is that people are saying that look some sort of like you know well-off people um in a developed country are storing you know Bucky pictures while in developing regions where people really need access to hard money they won't be able to pay the fees and the answer to that is they would never be able to pay the fees on bitcoin L1 uh because they should be doing those transactions on the lightning Network and the lightning Network settlements should always be imported big and important enough then

you can pay the fee to settle the thing on uh on dl1 so so lightning is appropriately like uh separate from that the only impact on lightning is that maybe your settlements now are a little bit more expensive but they were always assumed to be expensive because you're doing like thousands and thousands of transactions and settling them in one one sort of like a channel so that's that's one argument that I think it sort of like appeals to people uh oh maybe you know we should leave the blog space open for these use cases and the answer is no there is the lightning Network which is cheap but everyone should certainly use that and the second thing is when people start uh talking about illegal content and what what if somebody puts an image off on my node

that is illegal in my jurisdiction and there's a very simple answer uh the way these things are inscribed you could actually prune your node which is like you can actually clean clean things out you can say that hey my attention for running the Bitcoin node is because I want to run a full node and you can you can just prune out that data uh to be to be complied in the in the jurisdiction that you're living in do you think it's safe to say that ordinals I know you're going to disagree with this I was going to say that ordinal saved Bitcoin in the sense that and and and I know you're gonna say no but there's money there's money Bitcoin there's sound money and uh sound money Bitcoin and then there's like Innovation Bitcoin and when I hear you say this like I think sound money

Bitcoin is like going just as planned actually I think it's going great but Innovation Bitcoin was like really dying but with with uh ordinals it's kind of renewed Bitcoin is this chain for like Innovation and new use cases and just like enthusiasm around Bitcoin Builder so I'd be curious to get your ticket on that I'll I'll tweak that a little bit right so what I tweet is that there's the money Bitcoin and the builders actually believe in that right so I one of the biggest reasons I've been attracted to bitcoin is I really like the fact that it's simple at the base there and the money guarantees so I'm part of money Bitcoin I think the cats are a little bit different they're both are believers and like money Bitcoin but one cap is the Bitcoin the tool like people who actually like use it like

literally just even use it and treat it as a technology and a open source project or try to do interesting things with call it the Bitcoin Builders camp and the other Camp is people who like the idea of Bitcoin it's almost like a religious thing right they don't even care about the tool like they don't even want to use it like they they like to talk about it and I think there's a huge difference between the two one communities actually not that technical there are a handful of people who are who are technical in the community most people like don't understand things that are technical things that are deeper novel and and the other community the Bitcoin as a tool Community those people are not as as uh radical uh as as the other one and I do think that over time

in the last three four years the the Maximus community at least try to dominating Twitter and podcasts and conferences and and that it is and what does ordinals has done is that is a sort of like switch the attention the spotlight from one Community to the other which I think is a very very healthy updating uh for Bitcoin obviously D5 was a clear use case for ethereum for so long it was just an Ico kind of kind of raising machine in some capacity Bitcoin serve that as well but D5 really like launched a whole wave of innovation and probably to this day it transfers the value are you know the killer use case of ethereum and so I'm curious how you envisioned the defy landscape opening up

in in Bitcoin with Stacks as an L2 I believe there's like over 250 million locked into staking contract there was some yield opportunity I mean your Tweet sort of referenced so we're 2200 BTC have gone out and rewards curious to understand how that comes from like where the yield comes from where the rewards are coming from and more broadly kind of how the D5 ecosystem evolves and shapes up in the Bitcoin so I think uh sex I think you mentioned at the at the beginning that it's a very decentralized ecosystem uh we that the project did a uh SEC qualified offering back in 2019 and the flip side of that is that because you've done such a compliant offering you have to be very serious about decentralization as well

so before the midnight launch it's a little bit like the original copy behind it was dismantled in a way even though on paper it exists but uh the original team just went off and did did different things and now they're like 30 plus entities in the ecosystem and uh the current version of stacks I would say if you try using it basically has two very big limitations right now one is around speed uh it runs at Bitcoin speed so you can imagine if you're a ethereum user or Avalon Solana uh if you have to wait 10 minutes or 30 minutes for a transaction like you will deploy and you'll be okay what what is this and it's a security thing because stats actually benefits from the security of Bitcoin but the

next upgrade uh you will be able to do much faster transaction in the in the order of seconds and so many many blogs between two Bitcoin blocks so that's one thing I think it's a big limitation uh for existing developers and users of stacks and the second even bigger limitation link by far the biggest one is that the decentralized way of moving your BDC from the L1 into the stacks layer and back is not not likely so the different sort of like ways that exist right now if you look at liquid which is a federation if you look at rsk uh you sort of do something else merge mining but there the way the move BDC is a Fed version so in this day and age I don't think you can expect people to

trust like random entities but here we are running a federation give me your BDC and we will disarmony Maxi I think in a generation yeah that's okay exactly right so so so those are federations at Stacks a lot of like um you know focus is on how do we enable a decentralized pack and that's where some of the criticism for the L2 definition comes in that if Bitcoin had op codes at the L1 level it might in the future where you could just force the withdrawal of your BDC out of stacks on the alpha I think that's the level of security that roll ups or you know fraud proofs like arbitrary the next best thing you could do is that there's a decentralized group of signers a little bit like people who validated hearing

blocks and they have Capital logs right and they need to sign on the BC page uh and so that's the design that the system is called sbdc and obviously I'm biased I'm contributing to sbdc uh and and I think sbdc could be the spark for actual Bitcoin D5 not the type of claims you've seen before uh like how Cardinals is to nfts because I think it will be a real uh actual decentralized system where people can just you know move their capital I can do a layer which is fully programmable and then bring it back in a decent plus way and I think I think uh one other thing I want to quickly touch upon is that then people ask okay then how is Stacks secured by Bitcoin so the

way it's secured is that especially with the after the next upgrade the the security to reorder the chain like if you you know let's say I did a transaction uh and someone wants to reorg it say it never happened that is secured uh after the next upgrade my 100 of bitcoin's hash power so if someone wants to basically come and reorder transactions do a debris or basically tries to mess with the chain they'll have to go and reorg Bitcoin which I think is a great security property uh that you're sort of like better you're not benefiting from just the 500 billion dollars of capital city there by unlocking it you're also benefiting by all the security of the the L1 and and and then uh as I said like there could be all codes introduced uh actually just

one and that can enable the decentralized way of taking uh not be stabilizers just the L1 way of taking your BTC out of stacks here hey everyone quick break from Empire to tell you about another blockworks Channel that I know you're gonna love I've been in crypto full-time for five years and have always struggled with one thing which is keeping up with the next big Trend as soon as I wrap my head around Mev we're on to app change as soon as I wrap my head around aptrans we're on to liquid staking derivatives I'm sure you've been there blockworks research has solved that problem for me our team puts research data governance proposal updates models and more into one really easy to use platform so I can always

stay ahead of the curve if I don't understand something for example I just built the platform I can search for an L1 I can search for protocol pull up the platform at blockworksresearch.com I searched the term there's always an amazing amount of insight in a really consumable way right now you can subscribe to the platform it's 2500 bucks a year or 900 bucks a quarter hopefully you can uh make more than 208 dollars a month by using the platform and you can you're probably in the wrong business but if you're not ready to subscribe to the platform today you can subscribe to the research team's free newsletter you can follow their Twitter handles today links in the show notes trust me once you do that you're going to want to subscribe to the platform if you are ready to subscribe right now I got you guys with a little hookup Empire

listeners get a 10 discount for the first 50 people who use the code empire10 got your back check out the links in the in the description to find out more now let's get back to the show so just uh I know we're kind of bumping up until we have like 10 minutes on and on unfortunately we can't go into that much detail sptc but from a from a like technical standpoint like what are some of the key things that need to be resolved that haven't been resolved yet like in the next six to 12 months like what are things that you're focused on to make this a reality because it sounds like it's still kind of very much work in progress yeah so I think my my companies are um uh offer decentralization of the of the ecosystem I actually raise Capital into

a new company and Trust machines last year we raised 150 million around and we are actually looking to build applications we are looking to build D fire and other types of applications on bitcoin and obviously it's going to happen through Bitcoin bears and and we also discovered that the spdc work is very critical so we don't contribute downloads to other Stacks infrastructure as a company but we have a business interest in making sbdc happen because it's literally required you can't launch a D5 application without having sbtc live so there has been a ton of products right so the technical designs are basically done um the technical papers came out in December and it's like a working group that that worked on it we participated

that and now some of the early code is even on you know like it's it's public so I think there's there's enough progress happening uh I don't think it will launch in H1 of grade 33 this year but I do think it can launch in the in the second half of this year which which again it these are open source systems and we'll see how what happens that's my read of just looking at the product screen well I was just going to ask like what's a contingent on like obviously there's a thorough review process and and test Nets and you know there's a methodical way of doing this but anything else that yeah I think the more I would say most of the technical things are behind us right so there is a clear

the technical stuff has been translated into actual engineering requirements of like hey this is the code people are writing the code it's the typical things of like whenever there's a big consensus level of grip a bunch of testing needs to happen we the devs do expect like hundreds of millions or maybe billions of dollars of capital being kept on that code so I think with security Audits and the level of screwing there is going to be pretty high uh but but this team has also done this in the past right they have been consensus level upgrades of those taxes or so one one interesting thing about sbdc it's an asset that's secured literally by the consensus at the consensus level of stacks so statues are the same a big big change that might

happen is I think the unit of economy uh on the apps running on Stacks will actually become BTC which would be sort of like welcoming by a lot of the Bitcoin Community as well because what people you're really unlocking BDC Capital here um Stacks are sort of the thing you use to lock up your capital and become like a signer as incentives really for minors insiders uh but but but the thing people are going to use is that is likely going to be SBC in some capacity this reminds me a little bit of um keep I don't know if you remember this or you remember the Project mad and the team there he came I think from a Bitcoin background from an architectural standpoint what you just said reminds me a little bit of

that this like signers of is it fair comparison or not I think I think it's fair there's there are differences but I can actually give you an example like this would never happen in ethereum but imagine what what's happening here it's sort of like if you took sheep like the work that they've done you integrated it into ethereum's consensus right so it's secure app ethereum's consensus level and you're and you said instead of instead of ethereum we're going to start using Bitcoin as our unit of economy and Bitcoin is the asset that we're trying to secure so so people are still locking up Ethan consensus and and and and and they were earning somehow they were

earning BTC rewards right so this is how stocks works the the rewards that people are getting is they're on BTC right uh uh by four-party spending census it's a massive change like a theory would never do this but imagine that like positive why not I think like there is such a large community now who believe in e-taz money so that's really what what it's about that on the stacks layer side we believe in Bitcoin right so at the at the core consensus level we feel comfortable making sbtc a first class asset and just even designing the consensus algorithm to optimize for the security of the sbdc transfers in in the Ethereal World keep

is like one out of many projects just working at the application there they're not going to get support like from core each consensus believe I know we have to wrap this in a second um what is some you are probably the deepest person in the space in terms of like building on bitcoin what is something that feels like abundantly obvious to you about what Bitcoin is going to look like 12 months from you uh now that is like probably not obvious to most people right now yeah I think I think it's basically um I I try to tell people to visualize this that right now when you go to metamask or some other wallet um people are like hey I have eaten I could swap it to stablecoin I can buy an

nft I can lock my heat start earning a yield on it it's like Pretty Natural Bitcoin right now is you know there are these clunky wallets and you can basically just hold it in cold story that's what most people do and I think it's so obvious to me there are already these wallets you should try on the experts or hero wallet where your BTC is in a web wallet you don't care about which layer uh is helping do this in the background but you'll be able to swap into stable coins you'll be able to deploy your BDC start earning a yield like basically the type of stuff you can do with eth you can do with BTC right the writing is on the wall the wallets are there the the technology is coming but I think it's

going to be such a big shift where people will go like that's the thesis that I have the ethereum is going to scale eventually in layer twos it's all about the roll ups it's all about you know scalability is l2s then why wouldn't this Network that has 500 billion dollars of capital why can't it also scale in l2s right when the users won't be able to tell the difference anyway right like it's it's about putting each in a wallet or putting BTC in a wallet and then using it yeah I'm gonna uh I think we could go for another hour here I know we we all have hard stops I just looked at the calendar the first ever episode of empire was with you and it was March 4th of 2021 and this episode goes live March 3rd 2023 so nearly exactly two years later

it's super cool to see what you've been building then it's uh really impressive and just yeah big congrats on everything and I think uh Santi I think we have our homework uh cut out for us I think we need to do a little another plan so let's definitely have you on uh uh at a later time to really go deep into this if you're willing to do it maybe awesome as a last question were you thinking about all of this when we first recorded this episode like when you first came on Empire like was this in the works I think I think um a bunch of this was in the works uh the exact spdc design was not and I think the second lesson that we learned so I think March is basically when the main night went live maybe what month or two uh have asked the second thing that

really hit the ecosystem was we optimized with decentralization so much that the slow speeds and you know the transaction wrong yeah like there was really like people were trying to use this thing uh and they couldn't and I think a lot of the work in the last year has been okay we really need to scale this there is enough demand people people want to use these things but you need to give them an experience like that they are already having on an Avalanche or ethereum and so on you can't get give them such a bad experience we're absolutely we're just like yeah it was incredibly exciting thanks for coming entrepreneurs would love to unpack a lot of the architectural technical side of things and uh yeah congrats I mean this has been a long time in the making um you know and I think it's going to be

fairly obvious given the the amount of capital that's sitting idly there so really uh thanks so much for the insights and yeah hopefully we can have you on uh relatively soon to talk about this in more detail what flips onto I just watched it happen 30 37 minutes it's funny like like I was when like we were early in defy and you know this Taproot change and like this ordinal things like in crypto I think you'll learn to appreciate this kind of like chaos theory like very small subtle changes can have a really big impact and shift the momentum and I'd be remiss not to like appreciate that and I think you know obviously a lot of people are going to be skeptical because we've been hearing this narrative over and over but I think this episode really just went through I

wanted to understand the developer mindset and look at the end of the day you're right as soon as people start making money and you solve the security issue of Bitcoin is that the thing that I've been most concerned about and the fact that it hasn't been talked about enough and people don't want to talk about it they're like oh we'll punt it in the next 40 years but the reality is like you discount back to today and you're like holy is this gonna work fees need to come to this network and I think usability drives value and hopefully this is a big shift that I'm not 100 sold on yet but at least I'm appreciating the background and manip I mean you're closest to it so it's great yeah I think I think deeper that I would help because here's the thing right like the way I think about

it that if you go deep and you're having an intelligent discussion about it the people can see it right like and I I do think that the false promises and in many ways like over marketing that has happened from a lot of the Maximus circles like you need to explain that to people as well but look these are different communities like if this it's not like all of us are together we actually like fight for each other a lot right and so actually uh uh I'll wrap up on a funny enough I was on a podcast with Imran uh from your defire lines they had a pretty funny video discussing those and they're like this guy the amount of kind of like shitty takes like bullets from the

Bitcoin crowd and from the other right it's just insane and I think it's like I I tell my team members that you're on to something if like people hate it that much like you might be actually building something yeah that's really interesting we will uh we'll see you again soon my friend and congrats on everything and we'll talk to you soon thank you [Music]