 We are live I think well Jimmy. I just want to thank you for coming on the show I'm gonna do a little bit quick bio so everybody knows who you are you told me you've been in the space since 2013 you are a Bitcoin developer and you're currently working for it bit if people don't know what it bit is What is it bit? Well it bit is a is an exchange and they they do large sizes with like an OTC trading desk and stuff It's it's one of the larger exchanges in the United States. They're based in New York I'm personally in Austin, but I work for them But yeah, there's also another branch of the company called Paxos. That's the part that I'm more involved in but yeah We're selling, you know being blockchain solutions to businesses. Cool. Awesome Well, the reason I got you on the show is I've been following your articles for a while and they're fantastic by the way Thank you so much for writing them. Thank you Especially the last one which we'll get to later on in the show But for people who aren't privy to what's gonna happen and happening currently Can you kind of give us a recap of what's been currently going on in the Bitcoin ecosystem? Sure, sure. So for about the last three years, I'd say since about 2014 scaling has been sort of at the forefront of the Bitcoin sort of community debate if you will scaling in the sense that there's two sort of Different ways to scale there's sort of increasing the block size which would require a hard fork I'll explain that in a minute and and something called Segwit That would be done via software and those are two sort of different ways to increase transaction capacity right now in Bitcoin if you did more than like three or four transactions per second You would completely clog the network. The mempool would grow very quickly and you know The network just isn't designed to handle that much Increasing block size will you know proportionately make that bigger Segwit is sort of another way to scale but it also fixes a lot of other technical problems But basically it's you know, they're they're two different ways and Segwit is a soft work Larger blocks is a hard fork and the difference between the two gets a little bit technical but suffice it to say that soft work is generally seen as being a little bit safer than a hard fork and And that's that's sort of the big debate here, but a hard fork can be a little bit Easier to sort of test I guess because it's less change in code basically So you mentioned two things a soft fork and a hard fork. So what's the biggest? What's the big problem right now that one's talking about that's approaching within August? Okay? Yeah, so so this this thing has been going on for a few years like I said and there's been sort of no resolution And there's something called set bit 141 which is an implementation of Segwit That started signaling November of last year and what's been happening is the bit 141 Uses a trigger mechanism that which requires 95% of the miners to signal that they're ready for a bit 148 Unfortunately a lot of miners don't like the idea of Segwit. They like they prefer sort of a hard fork to a bigger block So they've not been signaling that they're ready for Segwit Which obviously has a lot of the developers mad because they've been they put a lot of time and effort into Segwit So what's happened is that there's sort of like a user movement? That's been sort of spearheaded by a bunch of people that are for Segwit and that's called UASF Which stands for user activated soft fork and it's based on another bit bit by the way stands for bit Bitcoin improvement proposal and that's how you're supposed to get in new features into Bitcoin is by Making Bitcoin improvement proposals. So Segwit is bit 141 You know that this user activated soft work is bit 148. Anyway bit 148 Basically is is telling miners hey if you don't signal for Segwit, then we're going to reject your block and What that does is it splits the Network into two you're going to have two coins essentially you you have sort of the minor coin which they can mine non Segwit signaling blocks and You have the user fork which where you're forced to signal for Segwit and the idea behind that is that Because there's a 95 percent threshold if you force every block to have Segwit signaling Then you're going to have 100 percent of your blocks signaling for Segwit So that will that the idea is that that will trigger Segwit And they decided that it's going to be a flag day activation, which means that on August 1st The code's already sort of out there. So if you're running the same software as as the people that created the UASF bit 148 client then you will not you will reject any blocks that That are not signaling for Segwit so you will only accept blocks that signals that way and that's going to cause sort of a you know a Fork and you know obviously bit main made a response. Yeah last night or so. So yeah You had you had an article I think two articles before you were talking the game theory So what are some possible outcomes or statistically in your mind? What do you think are more probable to happen? Yeah, so that's a hard question to answer as far as the probability But here's some things that can happen So if if it forks right on August 1st some miners Decide not to signal for Segwit and build on that chain other miners decide to signal Segwit and go on the User chain what can happen? What's sort of expected to happen because the miners control so much hash rate is that? The minor fork will grow much longer faster But what happens because this is a soft fork? The user fork once it gets long enough longer than the miner chain It will just sort of wipe out the miner chain once it's longer The miners have to accept the user user fork because it's longer. That's sort of the rules of The client that they're running So that that's sort of one possibility and that's sort of them I would say like the second most hope for possibility among UASF advocates is that their chain would slow They grow long gain more hash rate and eventually overtake the other fork and wipe it out The the best scenario for them is obviously if if all the miners just decide to signal for Segwit In which case they would just stay on that one chain They would get set with and everything would be okay, which sounds like it might happen There's something that happened today with Segwit 2x some other possibilities include the miners sort of hard forking So that they don't have this wipeout risk Which would be very bad for them in the sense that like all the transactions that were in those blocks Would suddenly be nullified and they could get that double spent against so that that's kind of a big deal Because you know if I send you 500 bitcoins on the miner chain and then it gets wiped out I had the 500 back which which is which is a terrible Terrible thing right like that that transaction might may or may not be valid I could just send it to another in one of my addresses and You never get the 500 bitcoins. Sorry to interject though. Some people might be getting confused What's the main principality behind the two ideology or thoughts? Is it will Segwit increase lower? Profits for the miners like what's the main reasons for these two camps arguing from point eight point B? Yeah, that's a great question that We're not entirely sure And that's that's because in a sense Segwit kind of gets more throughput and larger blocks and things like that but you know Like, you know bigger blocks It's it's kind of become and I put out this hypothesis in the article before last Which is that both parties kind of want more control over Bitcoin Bitcoin is getting really valuable. Yeah, it's like It's a 40-something billion dollars. That's a lot of money and it's only growing. So You know if you have more influence over the direction of Bitcoin, that's going to make more of a difference So my my theory is that it's really more about control and not necessarily the technical argument Because I don't think either sides that into it I mean it like people talk like it is but like you talk to the core developers like I have and you know A lot of them are like, you know, you know, we would like it, but you know status quo is fine It's it's okay. Um, and there's a lot of people with that sort of attitude. So I yeah, I mean You you've asked sort of the question that everyone's been asking which is why are they fighting right? Like this is a 40 like everyone can win if this thing is resolved and But yeah, it's a really good question. I don't have a good answer. Unfortunately So there's a couple of some key dates, right? I think one of them is in July for everyone that can start signaling early Like what are the key dates that are happening? Yeah, so you couldn't you can signal for us F BIP 148 right now I think a slush pool has a mining Option where you can just sort of signal for BIP 48 I believe it's right now around zero point two five percent of the network and at that rate That's like two or three days per block, which is not very quick. That's that's extremely slow So yeah, imagine like people complain about waiting 30 minutes for a blog imagine waiting three days All right, like that's like worse than like the normal financial system So yeah that the main date is August 1st, but it's there's other dates Especially we go with regard to Segwit 2x, which is a sort of like a compromise that Barry Silver came up with with a bunch of industry leaders They Segwit 2x has sort of like released dates Like from now clarify you got Segwit and Segwit 2x so Segwit 2x is two megabyte blocks, right? it's it's sort of an like a compromise of both it's saying Segwit plus two blocks and And that has sort of a release schedule in July They're trying as hard as they can as far as I can tell to get it out before August 1st Because that that's sort of like a drop dead date at this point because the network will fork if there's enough mining power on the On the user side, which I'm not sure if that's going to happen But that that certainly seems like a possibility. So Yeah, that that's a major date Yeah, there are other dates I think October 15th is a date that not not a lot of people know about and that's a Bitcoin unlimited sort of forking date and Bitcoin unlimited is sort of You know, they're they're with the miners, right? They're they're for bigger blocks and they're they're even if you avoid August 1st Even if you somehow get them to stand down, you have October 15th, which says hey we're going to release big blocks as a hard fork and a Bunch of miners may go that way. So that that might be another fork in the road There's multiple dates here that have some Some danger around it Now, okay for for Segwit Segwit can be kind of like a precursor for the future for the Lightning Network If we're if we're future proofing ourselves and looking into the future do any of these protocols in the next couple of years Eliminate the actual usage of a six Not as far as I can tell I mean you would have to change the proof of work function And yeah, that would be a major hard fork and I've actually argued that if the UASF 148 doesn't have that much caching power and if they get attacked It's entirely possible that they change their proof of work function in which case a six wouldn't work on their branch and You know they would have to use CPUs or GPUs or something like that But of course like that reduces security enormously because you don't have the hashing power that the miners haven't You know a state actor for example can attack this chain But yeah, I there that that's definitely a possibility it's very hard to get rid of at a six in total just because pretty much any Algorithm or process that you can think of you can sort of design into a circuit and it just takes time That's the only thing and you know ASIC design is very expensive. I wrote another article a while ago It's Anywhere from like 10 to 20 million dollars to just get to the point where you can produce it Then you have to pay a chip that to go and you know make the chips for you And that's that's a lot. It's a it's a very huge capital cost and It takes a lot of money to get going and this this is why bit main has such a strong position in the mining game Is because they figured out the entire supply chain all the design all the same on the vertical. Yeah, they do I there are competitors bit fury and Canaan IO being two of them But like, you know, you look at the prices and the hashing power and it does look like bit main has an advantage there Which is why you know a lot of mining miners buy their equipment from them and they they seem sort of Inextricably linked in an economic fashion to them. Well, that's a good segue segue into two things a bit mains article that they release and I want to talk about your response to it Okay. Yeah. Yeah, so I mean my my response is really more just sort of like a an examination of what the hell they're saying because Okay, I mean, I don't know if you could tell but their press releases is clearly written by a non-English speaker And it's sometimes hard to parse it and you know, honestly a lot of this conflict I think you asked this question earlier about, you know, why are they fighting a lot of it? I think it's honestly a little bit cultural right like a lot of the miners are in China And you know, they do all the manufacturing and stuff. They don't contribute that much to development a lot of the developers and the Core contributors and even the people on Twitter and things there. They're mostly in the Western Hemisphere, right? Like US and Europe. So, you know, there's definitely sort of like a culture clash and I and there was a Hong Kong agreement that was there like two or three years ago that sort of broke apart and I think you know from sort of like a An East Asian point of view, that's sort of like very dishonorable and they you know, they have a hard time trusting sort of people that broke broken agreement and that that's been a major sort of theme throughout this whole conflict But anyway, they they they made this press release in part as a way to Respond to sort of the August 1st UASF date and I argued before in the scenarios article that if There is a if UASF has any sort of traction Then it's going to be in the interest of the miners to do some sort of hard work to prevent the wipeout protection that I was talking about There's also something else called replay protection, which is endemic to both chains, which is that If I send you 500 bitcoins from one chain the miner chain I you may some third party may be able to replay that and also give you the 500 coins on the user chain And that that's kind of that that may not matter that much between you and me if I'm paying you like some amount You can like pay me back or give me a refund or something But from an exchange's point of view that could be problematic because they if I withdraw some money from the exchange Say the miner coin like and you know It's 500 minor a minor coin that I need to receive and they give it to me But I replay that transaction and also get 500 user coin Then the exchange is out a lot of money And this is exactly what happened with Ethereum when Ethereum split to Ethereum and Ethereum classic coin base lost a bunch of money They were sending out Ethereum, but also and you know people replaying them and getting also Ethereum classic which Which you know they had to make you know, they did to just sort of take that loss and that that that can be kind of a big problem and the and so, you know what bin means press release essentially says is If UASF bit 148 if if the user chain becomes popular What we're going to do is we're going to add replay protection. We're going to add wipeout protection and we're going to You know release that like three days later I think that's just to see to make sure that their software runs well and that you know The the the user's User fork is is sufficiently popular for them to be forced to do it But that that's essentially the idea there they're going to make it a permanent fork And at that point there's no going back. It's always going to be two points two coins from that on and you know I put a cartoon of sort of like Kennedy and Khrushchev at the Cuban Missile crisis there because that's kind of what this is It's it's total brinksmanship. It's sort of like bringing everybody to the edge and saying, okay We're threatening this we're threatening this we're gonna have two bitcoins that's going to be terrible for the price and You know, it's it would be because you're you're like, I don't know about your listeners but at least for me Bitcoin is largely a store of value and one of the biggest Properties that you need to know about store of values that you it's not gonna change right like this is why gold's been so valuable over the years Is because it doesn't change right? It's gold is always gold and you know, it doesn't rust it doesn't tarnish it doesn't and you know It's it's and in that way Bitcoin is great But if you break it and make it into two different coins now You've sort of broken immutability and that that can be devastating for the price of sabotage themselves if they do that Yeah, I mean you would think so I I mean, but you know, this is brinksmanship, right? Like both sides want more control and both both sides want something to happen And you know, I mean think about the Cuban Missile crisis, right? It like it was about like putting a nuke on Cuba Really, it wasn't worth having a world war over right and it's kind of the same here It's we're talking about scaling which is really more of a medium of exchange function, right? Like just sort of trading if you're using it as a sort of value You don't really care that much about it like, you know, like you don't you don't buy houses to go trade them Right like you keep it to live in and to like appreciate in price That's how I think most Bitcoiners are using it So I don't think this is necessarily that big a deal to most people But you know, we're sort of at this point where there are two factions that are sort of threatening each other and that that's kind of where we are So what's your advice then for Approaching August 1st and this whole like August to October agenda for people I know you mentioned before that on August 1st for maybe a couple of days Maybe even a week that the whole network's gonna be bogged down. So do you recommend people just Taking their coins off or wherever and just keeping them on like a private wallet. Yeah. Yeah I think yeah, it's it's very important to sort of control your own keys in the first place Right, you shouldn't keep money on exchanges if you totally agree on that 100% Yeah, if you've been in Bitcoin for a while like I have you've seen a lot of exchanges fail a lot of exchanges get robbed and And you should just keep it off on it in any case But if you do have some money on exchanges unless you're willing to lose it I would get it off before August 1st because there's so many ways in which an exchange can screw this up And it's possible that they have completely confident people, but you just never know right like you screw up something There's a replay attack on the other chain and you might get you you might be out a bunch of money or You know the exchange might be out a bunch of money And they might socialize the losses among all their users or something like that There's so many ways in which you can you as a user can get screwed to get it off the exchange sort of keep it And be very very careful about transacting after August 1st In fact, I personally am not planning to do any transactions after August 1st for at least like a week Until like the situation resolves and there are many ways it can resolve But as long as the two chains are on the same proof of work function, right if they're both using shot 256 Then it's it's very very dangerous. And that's that's because If one if one side has much more hash power than the other say one has five percent on the other 95 The 95 can attack the five with like seven percent of the hash power and they can cause that chain to wipe out In which case your transaction might just Be invalidated in which or or any payments that you receive might be You know double spent or something like that So you have to be extremely careful about what it is that Where it is that you're sending money I just wouldn't transact at all because there's just so much risk on either side And you know just you know, yeah, if you if you keep it as a store value Yeah, just Just don't touch it. All right, and you'll be okay as long as you control your own private keys You'll be okay So do you predict any major price fluctuation besides what we see in the correction right now market today? Or do you think it's already kind of built into it currently? Yeah, it's that's a that's a really good question too because um, I I don't know how it's Bitcoin doesn't trade on necessarily like fundamentals of certain things, right? It's sort of like Decoupled from any sort of economic indicator I mean there may be some things but it's it's not really correlated correlated to anything So it's hard to know when something's priced there Um, I will say though that uh, it could it's possible like this was an argument made to me by tone bays friend of mine You know the price may go up a lot Right before august 1st and the reason he's saying is well if if you're you know If you have any brain cells at all you're gonna take take off the money off the exchanges But that's going to reduce the supply of coins on the exchanges, which will That's a good point with That may cause a price rise I can also see it as sort of like a price decline as people say, you know what? I don't want to deal with bitcoin. I'll just buy back in when everything's over So that that's that's the other sort of possibility as well So it it's hard to tell I I don't I I don't pretend to know how the market works and you know like Uh, I I divested at least a little bit just to you know, just in case something crazy happens So, um, you know that that may or may not be something you want to do. Um, but then again, it might go up like crazy. So it's One of these like weird situations. Yeah, that's the other thing too. There is a possibility of sort sort of like, uh You know like standing down or something like that, right? Like, uh, you know, everyone's sort of getting You know coming off the edge and you know not not deciding to fight or whatever And that would be a very good that would be very good news for bitcoin, obviously and that that could possibly cause a huge price rise, um So there there's a lot of things to consider and I I mean, I think I would be more comfortable making predictions like closer to the August 1st state, especially since uh segua 2x is sort of like a dark horse there I've been at can you can you uh expand on that a little bit? Uh, so segua 2x was an agreement, uh, that uh, barry silvert sort of coordinated, uh, right before consensus 2017, which was a couple weeks ago And basically he he brought a lot of industry leaders together and said, okay How if I can I get you to agree to something? And he got something like 80 of all hashing power, uh, in the world Um, all these exchanges all these wallets to sign an agreement. Um, and the agreement basically says We're going to activate segua and we're going to go to 2 megabyte blocks And we're uh, and we're going to release the code to do it. Um, and uh, that was lauded by people A lot of developers didn't like it because they weren't consulted and it seems like a little bit hurried and stuff like that But who knows, you know, that it's possible that That that may come through and people will run it and it won't have bugs and everything will be fine And uh, in which case, you know, uh, the the thing about the usf 5148 Is that if segua is locked in or activated before august 1st, then it won't do anything like it doesn't matter So, uh, so like that's sort of like a way to diffuse that particular bomb is by Uh, is by activating segua beforehand and segua 2x may do that which, uh, which which may be a good sign And um, they they just recently did like a pull request. I think today Where it would be compatible with the current signaling. So it'd be much easier for a minor to sort of just You know switch on something rather than run all their software and it would it would be okay Cool, so i'm gonna summarize this for everybody There's a lot of there's a there's a lot of different based on your game theory article Which i'll make sure i'll leave a link below this video afterwards uh to summarize there's Probabilities of different scenarios Are high so they can go many different ways. Yeah Price can go up price can go down depending on what happens. There's different protocols You have you know bit 1 40 a you have segway you have segway 2 megabyte blocks you have key dates as we mentioned you can signal now august 1st is no matter what there's going to be A new implementation then you mentioned august 15th for the bitcoin unlimited and then you did touch base on the fact that To keep your coins safe or bitcoin safe control your private keys if it's on the exchange take that off Put on a hard wall at people all about own the keys yourself And just sit back and relax and hopefully people don't go crazy on this Would you say that's a good summary? I'd say so. Yeah, I mean there's been bigger crises in bitcoin before and uh, and you know, we've lived through If you've been in crypto for a while Man, there's been a lot of ups and downs. We just had a three year bear market. We've like More than doubled the price since the beginning of the year, which is Fantastic And that that's something that you shouldn't forget, right? Like there's there's times when it goes up like crazy There's times when it goes down. There's a lot of volatility Volatility tends to follow a lot of a big price rises as we've seen in this space So, um, you know, I mean don't be surprised But you know if you if you treat it as a store of value just block it away and don't worry about it Right, like that that works for a lot of people that works that certainly work for pretty much everybody since the beginning of my investment strategy It's like warm buffet and just It's it. Yeah, just set it and forget it and that that may be a very good strategy here Cool. Well, jim. I want to thank you so much for coming on and educating Everybody out there if people want to find more information about you. What is the best resource? um, let's see I have a twitter medium and uh and github account all with the same name jimmy song Cool. I'll make sure I put that below the video jimmy. Thank you so much Thank you