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What You’re Saying is Deeply Concerning 

Is what Dani said to John Carvalho during this Hearbit interview.

Watch it now

This is a good interview to listen to if you want an overview of current technical dynamics in the Bitcoin world. I tried to be technical but speak in terms most people could understand, how did I do? ~John Carvalho

https://x.com/BitcoinErrorLog/status/1795419932915609814

In this riveting conversation, John Carvalho, the CEO of Synonym, shares his journey in Bitcoin and discusses the products offered by Synonym. https://synonym.to/

He talks about how he first discovered Bitcoin through the Silk Road and his early involvement in the Bitcoin community.

John explains that Synonym aims to create an ecosystem of products and services that represent a self-sovereign Bitcoin economy.

He provides an overview of their three products: Bitkit (a mobile wallet app), Block Tank (a lightning connectivity service), and Slash Tags (a platform for self-sovereign accounts and data).

John also discusses the importance of user-friendly terminology and the misconceptions around Bitcoin’s divisibility.

He discusses the challenges and trade-offs of scaling Bitcoin and the role of trust in the ecosystem.

He explores the options for scaling, including on-chain scaling, layer 2 solutions like Lightning Network, and the potential use of shitcoins.

Carvalho also touches on the concept of UTXO scarcity and its implications for the future of Bitcoin.

He emphasizes the need for open conversations about controversial topics in Bitcoin and the importance of digitizing trust.

Mentioned in the interview are Start 9 sovereign servers which you can get with the coupon code LOVEISBITCOIN for 5% off https://start9.com and Peach Bitcoin app that you can download here https://loveisbitcoin.com/peach
John mentions BTCPrague, which you can visit with the coupon code LOVEISBITCOIN for 10% off https://loveisbitcoin.com/btcpragueticket

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Looking for Bitcoin wallets, gadgets, and merch? Find them all on our coupons page https://loveisbitcoin.com/coupons

 

Transcript

dani go (00:00.907)
Welcome to Heartbit, where we huddle around our Mempool campfire. Today, I have the pleasure of being joined by John Carvalho, the CEO of Synonym. Hello, John, how are you?

John Carvalho (00:12.333)
I’m great, how are you doing?

dani go (00:14.123)
Good, excited to learn more about you and your journey in Bitcoin and what you’re doing at the moment. Why don’t we start? Because like not everybody knows you, so why don’t I think that a great way for people to start getting to know the person who’s interviewed is to tell them how they first came across Bitcoin.

John Carvalho (00:35.148)
So I’ve told this story a lot of times, but I first discovered Bitcoin in late 2012. And it was exactly because of the Silk Road. And so my first experience was buying some Bitcoin and buying some weed on Silk Road. And I did that maybe two or three times at most, and I got too scared and stopped doing it. But from the moment I first bought the Bitcoin, aside from experimenting with Silk Road,

dani go (00:50.187)
Hahaha!

dani go (00:58.539)
Yeah.

John Carvalho (01:03.403)
I was hooked immediately and I’ve been, albeit in the first few years informally, I’ve pretty much been full -time Bitcoin since the very beginning just because I fell into the rabbit hole immediately and back then it was different. You know, everybody was hanging out in Bitcoin talk forums and IRC and things like this. But yeah, I’ve seen a lot through the years. In more recent years, I started kind of my Bitcoin career first doing my own

website project and then working at BitRefill and now CEO at Synonym.

dani go (01:40.523)
I’ve always been curious like how we migrated from being in the IRC forums to being like Bitcoin Twitter

John Carvalho (01:49.834)
It wasn’t right away because I think I didn’t even make a Twitter account about you know in the context of Bitcoin at least till 2015 or so maybe 2014 I don’t remember how far back but it wasn’t very popular in Bitcoin in the earlier years. Yeah I think it was just it was much more of a niche hobbyist thing and it was like cypherpunks and just internet dwellers.

dani go (01:57.067)
Thank you.

John Carvalho (02:17.641)
And just me happening to find a community of pretty much the first Bitcoin maximalists, which was this community called Bitcoin assets. That was just luck, you know, stumbling into them and finding people that said things that spoke to me, you know.

dani go (02:36.139)
And did you like come across Bitcoin on your own on the internet or did someone tell you about it?

John Carvalho (02:42.249)
I think it was because of one of the articles that were published around the time that promoted Silk Road. I don’t know if it was slash dot one of those other things, but they got a slip road got it in Bitcoin got a few headlines in 2012 and that’s what kind of brought me in.

dani go (02:56.747)
Cool, because a lot of people have been brought in by friends and family. So I’m always curious. Like you’re the first person I interview who kind of discovered it on their own. And so I think that’s really interesting. So do you want to tell us a little bit about what you do at your company and the three different products you have? The Bitkit wallet and Block Tank and Slash Tag, like what each product does and how it works?

John Carvalho (03:26.501)
Sure, the overarching kind of vision for Synonym is just trying to create an entire ecosystem of products and services that would represent the kind of minimum Bitcoin economy. And what I mean by Bitcoin economy is just one that doesn’t require the legacy system to exist. So kind of outside the system, its own system. And so we’re really into kind of any type of self -sovereign technology, whether it be for money or for…

like peer -to -peer web, peer -to -peer identity, things like this. So our first products kind of represent the first stage of that plan, which as you mentioned, there’s Bitkit, which is the mobile wallet app. So we think at minimum, you’ll need some kind of toolkit for managing your keys. And that’s what Bitkit represents. And we’re coming out of beta with that next month at BTC Prague, June 13th, I think.

And yeah, that wallet has Bitcoin, a self -custodial lightning node inside of the wallet powered by LDK. And it also has some pay to contact features and kind of public profile features that are kind of early stage stuff that we were doing with Slash Tags. As you mentioned, Block Tank is the LSP, which kind of powers the lightning connectivity behind Bitkit. Originally, we were going to do Block Tank as a more wide business model, but…

because we saw the problems with regulations pretty early on. And so we’ve never served the US with services so that there was no exit from us in recent weeks like other people, because we never did business there. This partly derives from, sorry for going on a tangent, but this partly derives from the fact that we are actually a Tether company. So we’re owned by Tether. We don’t do anything with altcoins or even stablecoins at this point.

dani go (04:56.107)
Thank you.

dani go (05:11.915)
John Carvalho (05:17.057)
but we are kind of like a Bitcoin company at Tether. And so, as I mentioned, that led to also to us wanting to stay away and be more risk averse when it came to regulations. But we do maintain Blocktank LSP as a way to provide connectivity to BitKit alone. And so this makes it kind of a little bit better user experience to have a well -connected node that is by default that you can connect to when you’re using Lightning in our BitKit wallet. And so that’s what Blocktank is. It’s just an LSP.

We also, through those projects, work on what’s called the LSP specs, which is an industry -wide spec group for establishing standards for interoperability for block for LSPs. And so this way our wallet could not necessarily have to use Lightning from our LSP. It could use it from any LSP in an interoperable way. That’s not in place yet, but that’s kind of another thing that we’re doing with the industry related to Block Tank and Bitkit.

And then finally with slash tags, this is sort of our protocol or protocol isn’t the best word, but our platform or kind of series of standards for using keys and ways outside of Bitcoin. So using them to establish like self sovereign accounts, self sovereign data, you know, just things similar to blue sky, Nostr, TBD, you know, various projects that you’re seeing in those realms, but.

kind of doing it in our own ways. We are more interested in leveraging DHTs as a method for routing and having self -sovereign routing. And so that’s one big difference between ours and the others. And with slash tags, what’s actually happening is we had some problems when we were registering the trademarks for it. So we had to rename it and we’re actually, we’ve kind of totally gutted the first version and made something new. So in October,

What we’re going to do is basically kill slash tags and launch our new thing that is kind of replacing it as well as a new product app that will go with the protocol. And so that we’ll have more news about that in October at the Lugano conference called Plan B.

dani go (07:31.499)
Awesome. Yeah, maybe we’ll get a chance to meet in Prague this June. I look forward to… Are you announcing it in one of the stages or how are you doing it?

John Carvalho (07:42.556)
We actually have a booth there. We’ll have several of our team members there as well, promoting the product. We’ll have a bunch of merch and things like that. I’ll be on several panels and I will be doing a presentation on the second stage and my panels will be on the main stage.

dani go (08:00.459)
Very nice, very nice. So we kind of flew over some of the subjects that I want to get a little bit deeper into. I was researching Block Tank and I wasn’t totally clear on whether this can be run on your own node or is this working with a node that you guys are providing.

John Carvalho (08:21.338)
So, Blocktank is our node, but Bitkit has its own node for the user. And so what an LSP is and what Blocktank is, is basically, it’s just another node on the network, but it has a direct relationship with our application. So when users need to have a channel to connect to the Lightning network, they have a direct source to get a channel from every single time. So when somebody’s trying to pay you and say you’re not on Lightning yet, it will automatically create the channel for you through that payment.

If you want to kind of customize the size of your lighting channels or buy incidental channels, you can do that through Block Tank. But you still hold all the keys and the node is still inside of your application. So we don’t use a cloud node or a custodial, a trusted node or anything like that. It’s just, we are well connected and we try to run our LSP node to be kind of taking away some of the concerns a routing node might have because…

in a Bitkit wallet and similar apps like ours that have a custodial, a self -custodial node inside, they’re not routing nodes, they’re kind of endpoint nodes. So you need kind of a well -connected node to be on the other side of your channels so you can make sure you have successful payments to the rest of the network. I don’t know if that totally answers your question.

dani go (09:40.979)
So does BigKit Wallet, like can you have this node running on a mobile device or is it more for like a desktop or hard drive application?

John Carvalho (09:52.185)
a mobile app, and so the node is in the mobile app. Granted, like I said, it’s not a routing node, so it’s not on all the time, residually routing payments for other people. It’s just your node, and you use it to send and receive payments that involve you. So it is a full lightning node inside of.

dani go (10:11.627)
okay, okay, okay. It’s a full lightning node. But this lightning node has to be connected to a Bitcoin node, doesn’t it?

John Carvalho (10:18.585)
Yeah, so the way that mobile wallets work is they usually connect to Electrum. And so Electrum is basically a way of getting block data from a server. Now in our node, sorry, in Bitkit, it will default connect to our Electrum node, but you could connect it to any Electrum node you wanted to.

dani go (10:36.299)
Awesome, awesome, that’s great. Yeah, because a lot of people talk about self -custodial or custodial, but the conversation about where your wallet is connected to kind of goes a little bit under the radar sometimes. So I’m glad that you guys offer that option as well.

John Carvalho (10:53.209)
It’s nuanced. Like in the end, to do anything on mobile without holding it yourself, you have to make some trade -offs. This mostly comes from that mobile devices tend to have less power, less specs behind them. And because the operating systems don’t let you keep apps on all the time because of battery power and cell phone connections and things like this. So they naturally just go to sleep as soon as you move to a different app. And that limits the capability. So you need support services to supplement.

those weaknesses.

dani go (11:24.875)
Definitely. I do have to say I’m looking forward to a time where people are willing to connect their wallets to their own nodes at home.

John Carvalho (11:34.681)
it. I hope they do. But like, for example, like Umbrel is a great example. Like you could put, you know, your own node in Umbrel, full Bitcoin node, full lightning routing node. These Umbrel, I think start nine has one. And there are several projects like this that try to make it easy and isolate the hardware just for, you know, your own self -serving. But most people only do that as a hobby or because they are very technical.

dani go (11:51.883)
Yeah.

John Carvalho (12:03.769)
And so for that to be widespread, I would love to see that. But unfortunately, most people, the idea is that pretty much everyone on the planet at least has a cell phone at, you know, at the very least if you’re talking about any kind of technology. And so I think it’s important to cover that as a base to give people the best wallet possible for a cell phone.

dani go (12:24.363)
Yes, yes, I agree. Do you think that that’s a threat to Bitcoin or to people’s privacy and autonomy and censorship resistance? Or do you think that the communication between the wallets and the backend node is sufficiently secure that people are going to be safe in the long term?

John Carvalho (12:49.529)
I think it’s a consideration, but I haven’t ever heard of any attack or government requests or anything significant, or even data collection. I haven’t heard of anybody like reusing data collection of Electrum nodes. So like the, the value of that data is very, very dubious. like I don’t even know that we probably don’t even save, save logs for connecting to Electrum. And so there’s just not a lot of interest there.

I suppose if you had something say, you know, I don’t want to start a controversy or I don’t want to pretend I know more than I do about it. But like, for example, when you have samurai wallet that had aspects that weren’t totally open source or, you know, people weren’t sure what, you know, what they were installing and where they’re sending all of this data to coordinate privacy and create privacy, so to speak. Yeah, there could be a lot of danger there. And obviously that came true with.

dani go (13:33.227)
and then.

John Carvalho (13:47.545)
now that they’re shut down, we don’t know what they were logging. We don’t know whether before they were shut down, they were kind of held captive for a time and forced to log. So now that could be like a honey pot for people. So you do have to think about these things. So yeah, running everything yourself. I guess to make it simple, the way that I think people should think about privacy is, is privacy is basically managing your witnesses.

And no matter what you do on a network, there are always witnesses. And so the best you can do is to minimize the amount of witnesses necessary to accomplish the goal you’re trying to accomplish. Anything more than that, like there’s no such thing as adding privacy. You’re just adding more witnesses when you coin join, for example. And so that coin join can be demixed potentially. There could be other people that merge transactions. I know I’m going off on a tangent here, but privacy is a very nuanced topic. And so it’s…

dani go (14:39.883)
No, no, no.

John Carvalho (14:44.313)
It’s something I think that most people worry, the people that care about it a lot care too much and the people that don’t care about it or not don’t care enough. It’s like there’s never the right amount of care for privacy and it’s just usually that you don’t know that you need to be doing it until it’s too late and if you do it too early it’s kind of like larping. So it’s a nuanced topic I guess.

dani go (15:09.643)
Yeah, I mean, I have two questions that are kind of related that I want to dive into. Like, in your opinion, what’s the best way for people to get Know Your Client -less Bitcoin?

John Carvalho (15:22.617)
Know your customer, KYC less Bitcoin, is that what you mean?

dani go (15:25.803)
KYC Less Bitcoin.

John Carvalho (15:28.793)
I don’t know the best way because this is not I don’t have this concern. You know what I mean? Like I get paid I get paid in Bitcoin. I have exchanges that haven’t kicked me off and I can buy Bitcoin. I can sell Bitcoin. I haven’t had these problems. I am not an oppressed person. I am not a dissident. I am not a criminal as far as I know. And so I don’t I don’t not an enthusiast of these things. So as far as what’s the best way I’m not qualified to tell you.

dani go (15:34.443)
Okay.

John Carvalho (15:57.561)
But I will say it’s going to be something based off of like what I said, minimizing witnesses. And so for example, if you think that an exchange could be a honeypot, especially a highly compliant exchange following many regulations collecting your KYC data, then that’s not minimizing witnesses. And you should probably try something like a peer -to -peer app, like HODL HODL or VEXL or BISQ. These could be good ways, or PEACH is another one. These could be good ways to buy your Bitcoin.

But there’s also like theories where people are worried that it might be hard to sell what might be considered black market Bitcoin someday. And how much money could you actually end up spending in the black market if that’s the only place you can spend Bitcoin. So there’s just like constant considerations, you know.

dani go (16:45.259)
I don’t know if this is something private and too personal, but when you get paid in Bitcoin, is that know your client Bitcoin or is that private Bitcoin?

John Carvalho (16:54.777)
Well, it’s from my employer, you know, so obviously there is KYC there. They know everything about who I am. I’m the CEO of the company. Like, there’s nothing that I can hide at this point. I’m a public person. I’m a public figure, arguably to some degree, at least in Bitcoin. And I’m a CEO of a Bitcoin company. Like, I can’t pretend that people don’t know that I do things with Bitcoin, you know.

dani go (16:59.595)
This day is coming to an end.

dani go (17:18.955)
Well, I mean it more in the sense that if we want, like the purpose of Bitcoin is to be censorship resistant and for the government to not be able to collect all kinds of details about our financial activity. And so I’m more so in…

John Carvalho (17:33.497)
That second part’s not true. The first part’s true. It’s meant to be censorship resistant and it’s very well designed for that. But what’s censorship resistant is not your ability to acquire Bitcoin. What’s censorship resistant is your ability to make payments of Bitcoin once you have it. That’s the censorship resistant part. Otherwise, obtaining Bitcoin is an entirely permissioned exercise. You have to find somebody else willing to give you some unless you mine. This is the only permissionless way to obtain Bitcoin. This is why people

freely call it permissionless. But if you’re not a miner, it’s not permissionless. You have to get somebody else to give it to you. There’s your first witness, at least one witness at minimum. So you’re already in a permissioned censorship possible situation. Now, the censorship resistance I still think is strong with payments, but you know, Bitcoin doesn’t come with the promise of avoiding government surveillance. That’s not one of the promises. It’s an entirely public ledger. They can see everything.

They can demix, you know, coin joins to some degree as well. So everything is public. The only way that you can maintain that kind of privacy with Bitcoin is to never create a connection between your real world identity and your key and your public keys. Now, some people feel they can do that and they and there are methods that people feel that they have done that. But whether they have done so successfully, you only find out when you.

when you’re not successful. You don’t find out when you are, you know what I mean? Like if you get caught, then you know you weren’t private enough. But I don’t know. I just, I try to not do things that are illegal. I try, so like I try to be an ethical person. So I naturally stay away from being looked at as a criminal, but also even when it comes to Bitcoin stuff, like as a business, we’re risk averse. So I try to not do things like do business in the USA and you know,

do sell lightning channels that are high enough amounts to require a license and be treated as a VASP. I just try to stay away from anything that requires me feeling like I actually work for the government.

dani go (19:38.987)
Thank you.

dani go (19:47.019)
So I’m curious, where are you located? Because I get the sense that you’re here in the US, but not, where are you located then? If that’s…

John Carvalho (19:56.288)
I mean, I am an American, but I’m also a Portuguese citizen. And so currently I live in Lisbon.

dani go (20:00.779)
Got you, got you, got you. Okay, so you really think that one of the, like, properties or qualities that Bitcoin has is not to help secure your financial data from being mined. That’s not, you don’t think that’s really something that we should strive for.

John Carvalho (20:27.327)
I didn’t say that. I said that that’s not something Bitcoin can provide you with. Do I think it’s something you should you should strive for? Sure, but it’s not something Bitcoin can provide you with.

dani go (20:31.659)
Yeah.

dani go (20:36.363)
Got you, got you. So, okay, let’s move on from that question then. What is your opinion on the mainstream Bitcoin language and how many concepts that we use in Bitcoin for mainstream are not truly how Bitcoin works in terms of wallets, in terms of holding the money and all that stuff. Do you think that that con, like,

benefits Bitcoin or that in the long run it hurts Bitcoin because then the users are not fully aware of how to use the tool in a private way.

John Carvalho (21:18.941)
Can you give me an example? Like, I’m not sure, do you mean like the memes that we have and the culture and the kind of promises that we say? Or do you mean like actual specific terms like calling it a wallet instead of a key chain or something like this?

dani go (21:33.707)
I mean in the sense of like calling it a wallet instead of like a key manager and a transaction builder and unlike instead of like empowering people to understand like what UTXOs are, we just have the wallets to everything for the people or like if people are really gonna understand why they need to use new addresses if we are not explaining like the underlying reasons.

John Carvalho (21:58.556)
Well…

I think it’s good for people to want to learn as much as possible about the software they use, the technology they’re exposed to, the trade -offs, privacy trade -offs, risks, security risks. Yes, everybody ideally would know everything about everything, but that’s obviously not practical. And so you have to start somewhere. And, you know, we try to use terminology that is basically speaking, we call it speaking in user terms. And so the user has problems they want to solve.

And you need to make it clear to them which tools are available to solve those problems and connect them with as least as low friction as possible when they’re using your applications, for example. And this counts for either something that’s a client level app like ours or even Bitcoin Core or any software. As far as like, I don’t think it’s disempowering them to make it easy for them to enter this realm. Like, for example, in our app, you can choose

you know how UTXOs are managed, you can select your UTXOs when you’re spending, but not by default. By default, it’s automatically handled and you have to turn on the feature to manage it yourself because you know, only a Bitcoin enthusiast even knows that’s a thing. And if you throw it in somebody’s face and they don’t know what it is, you’re saying, well, you have to learn everything about this technology before you can use our application. And that’s not practical. It’s too much friction. And so,

dani go (23:04.779)
Cool.

John Carvalho (23:26.808)
you need some amount of user friendliness and you need to let people kind of unfold more detail as they go deeper into the rabbit hole and that matches their interest. So I would say always give the user some ability to have the features, but don’t necessarily bang them over the head with it and then complain when they go away. You know, like there’s nuance there as well, I think. Yeah. But yeah, I don’t think the terms, I don’t think most of the terms harm anything.

dani go (23:49.259)
Mm -hmm.

John Carvalho (23:56.471)
Like to think of something as a wallet, even though it’s, you know, a key signer or a key chain or whatever, like it’s still practically where your money is. And if you lose, you know, the privacy of this or the security of this, you may lose money. Just like if you lost your password for your bank account, similarly, if you lose your keys to your wallet, like you still have the same conceptual problem that you’re solving for the user. Yeah. I would think it would be cool if the convention was calling these.

dani go (24:22.283)
Yeah.

John Carvalho (24:24.951)
key chains or key signers. Like, yeah, that would be great, but you can’t force the market to use terminology, you know.

dani go (24:32.811)
I think that their approach of using the user’s language is a fair argument, but I do like that this is complemented by the fact that you’re giving the users the option to pick their UTXOs if they are knowledgeable enough to do so. Because that is empowering the users that are more savvy about the technology. So I’m glad you guys offer those options.

John Carvalho (24:58.101)
Yeah, and then we even have additional cool features around that feature. Like for example, you can tag a UTXO so you know, like for example, where it came from or whether it’s you can tag a UK so as KYC, KYC, and then you know, it came from an exchange. You could tag another UTXO as, you know, P2P and you know, it came from a peer to peer exchange and you can choose when to spend which bitcoins and you can have some kind of self management of this. Also, if you don’t turn on UTXO management, there’s three automatic.

settings. So like we can have it to like set to automatically consolidate, automatically use the fewest UTXOs. So you can, there are automatic settings as well. So we do give as all the features we think the user could want, you know, obviously there’s endless features you can add, but we do try to make sure that, you know, there’s at least a chance that a normie could kind of have some hope of navigating this application.

dani go (25:36.331)
Mm -hmm.

dani go (25:54.571)
We call them pre -coiners now.

John Carvalho (25:57.043)
Yeah. If you want to know terms that I think harm things, I think the term of 100 million sats being a Bitcoin is harmful. I think that people having this arbitrary denomination for something that doesn’t actually have decimal places in the protocol causes misinformation and misunderstanding about how Bitcoin works. It causes people to think we can add more decimal places easily.

dani go (26:13.739)
John Carvalho (26:24.785)
They think Milasats are real, they’re not actually real, they’re just fake credit inside of Lightning Network. There’s all kinds of misconceptions that come from just the idea of a whole Bitcoin, sorry, unit bias, where people think they can’t afford a whole one. If we had just called the base unit Bitcoin, we would have solved beforehand many of these kinds of problems. So I think some terms can harm things, yeah.

dani go (26:40.331)
Yes.

dani go (26:51.019)
I’m glad you brought that up because that was one of the questions that I had for you. And you just now you said something that struck me because people do say Bitcoin is infinitely divisible, but you just said no. So can we talk more about this at a technical level?

John Carvalho (27:09.743)
Sure, it’s just that Bitcoin doesn’t use decimal places, it uses integers. So there’s no floating point concept in Bitcoin. And so what Bitcoin actually enforces when people say there can only be 21 million, well, it’s actually that there can only be 2 .1 quadrillion total units. And so there are actually 2 .1 quadrillion Bitcoin or base units. And there are no, there are zero Bitcoins. There’s just 100 million base units.

dani go (27:18.667)
Yeah.

dani go (27:27.947)
Yes.

John Carvalho (27:39.342)
And so if you wanted to name every denomination something fun, okay. But we have naming conventions for 10 base things that we use normally and you don’t actually have to do that. So for some reason we just thought we needed to be cute and pay homage to Satoshi and now we have a whole Bitcoin and a Satoshi and this actually ends up being kind of confusing to new people. It’s like, I thought I was buying Bitcoin. What are Satoshi’s? Do I have to buy those too?

Yeah, our Satoshi is the same thing. It’s it’s it just gets weird but at the technical protocol level there are no bitcoins the own the closest thing to a mention of a Bitcoin is there’s a calculation in the block reward that could be recalculated that is called coin and it’s kind of it converts the base unit into an amount of Bitcoin for the block reward and that’s it. That’s the only place there is any concept even remotely close to a Bitcoin and it’s totally just a

dani go (28:09.739)
Yeah.

John Carvalho (28:37.1)
superfluous equation that doesn’t need to be there. So yeah, if you wanted to actually have more zeros, now remember what I said, it’s an integer, there are no decimal places. Technically you have to actually multiply the quantity of units in order to have more zeros. And so this is like a misconception I think people have, is that no, there aren’t infinite, it’s not infinitely divisible, it’s not divisible at all, at least currently.

dani go (29:06.283)
Mm -hmm.

John Carvalho (29:06.443)
People say that there are ways that you could do this. I’ve never seen any type of actual proposal and technical proposal for how you could do this that didn’t amount to something like creating an extra asset on Bitcoin that we pretended was decimal places and converting that asset back and forth to Bitcoin. That’s what any of the proposals are. And they all would require either a hard fork or some sort of soft fork nobody’s invented yet. So yeah, that’s so technically.

You cannot divide Bitcoin, you can only multiply it. And sure, it might be okay if you multiply it because it would be proportional, kind of like a stock split. So it doesn’t necessarily affect people’s proportion of Bitcoin holdings if you were to do it. But there are other effects to consider. Like, for example, you could, depending on how the scheme was for multiplying the quantity, you would have to decide what you were doing about.

dani go (29:47.563)
Yeah.

John Carvalho (30:01.578)
extra block rewards that would create further into the future. Right. So now if there’s more units, the block reward technically could extend further into the future, which actually would be in a form of inflation of monetary inflation, because now you have some units that haven’t been distributed yet that will only go to certain people. Of course, it’s like a hundred years from now. So people probably don’t care that much, but it’s still true there. It’s not as simple as just splitting everybody’s bitcoins into more. It’s it’s.

dani go (30:13.931)
Yeah.

John Carvalho (30:29.77)
there are other considerations. For example, another one would be there is a somewhat scarcity to the quantity of UTXOs that you can have with Bitcoin in them due to things like the dust limit, how much Bitcoin is actually floating out there in the liquid supply. And so if creating more units within the liquid supply could have inflationary effects on the price potentially. And these are just these are very nuanced things that people don’t think about because they think

Bitcoin is actually divisible, but it’s not. It’s just an integer.

dani go (31:04.267)
Yeah, I mean for the less technical people out there what I want to say is that what he’s saying is when you put in your app that you want to send 6 .2 Bitcoin what the app actually does is that it multiplies by a million. So that we can get a…

John Carvalho (31:18.63)
No, what the app actually does is it, yeah, well you could say it multiplies, but it doesn’t even do that. What it does is it converts the data that you type into the app, it converts it into an actual amount of units of Bitcoin, which we call Satoshis. The protocol doesn’t speak in anything but Satoshis.

dani go (31:38.027)
Well, what we’re calling satoshis now, but that you would argue it would be better to call them Bitcoin. And honestly, as the currency becomes more valuable, your point of view becomes more relevant because now it’s like, I’m going to send you 0 .00008 Bitcoin, and it’s just so confusing. And over time, it’s gonna become less relevant to have those decimal places and more confusing. And I do kind of sense where you’re coming from. I do kind of agree.

John Carvalho (32:03.781)
Yeah, when people are only speaking in Satoshi’s, they’re going to start wondering why they only talk about Satoshi’s and never talk about Bitcoin. You know what I mean? It’s going to be weird when the only thing people can afford to spend is actual Sats. And then nobody’s calling it Bitcoin anymore. They’re going to be like, well, what’s, we don’t, why don’t we call our money Bitcoin? Why are we calling it this? actually in our app, we don’t use the term Satoshi’s or the term or the denomination Bitcoin. So when you want to look at your,

the amount of units you have, it just shows a Bitcoin symbol and the base amount. So if you have a whole Bitcoin, you would have a Bitcoin symbol and it would say 100 million because you have like 100 million units of Bitcoin.

dani go (32:43.907)
Yeah, I said a million, but it’s a hundred million. Because that’s, yeah, that gives us the correct number of zeros. I did have a question about something that you said earlier and is why are you, like, you talked about multiplying, but I couldn’t understand, like, what would be the benefit of that or why would anybody, like, be interested or strive for that?

John Carvalho (33:08.162)
you could argue a few reasons. They’re all, I don’t know that they’re all acceptable reasons. that’s, I leave that to the listener. but like I mentioned earlier, if there were a UTXO scarcity or the cost of UTXO was just too high, there could be a potential that having more units, more, you know, more divisibility in the abstract, would.

Potentially allow for the people that currently have UTXOs and can afford them to split them and create more basically by you know Splitting the money and distributing it more This is I’m not sure about this reasoning, but I would imagine there there could be an argument made for just The amount of Bitcoin that we can fit and you take so there’s none nobody’s selling enough Bitcoin. There’s only rich people that do it and

the minimum amount of, you know, the average amount of the smallest amount of Bitcoin and UTXO, well, we’d like that to be 10 times more. And so this way there could be people like, say, for example, like right now, the dust limit is, I think, 576 sats or so and 300 something in other situations. Well, if people can only afford someday to hold 200 sats, they can’t even make a UTXO, right? Because they can’t hit the dust limit. Now, the dust limit can change, but…

I’m just using this as a device to explain where you could have situations where if you had more units, you could have more UTXOs. So that’s one arguable potential. What would another one be? Just the price. If the price was too high per unit. If it got to be where one SAT was worth, now I don’t think this will actually ever happen. I don’t think one SAT will ever be worth a dollar. I think it’ll be.

dani go (34:51.499)
Before you move on.

John Carvalho (35:04.829)
I think it’s more likely that a sat will be worth infinity dollars than it will ever be worth one dollar. Because I think once you get to the point where you have a dollar parity, the dollar just doesn’t use as a unit of account anymore. So nobody’s going to be pricing sats in dollars if they’re equal price. It’s just, I just don’t think that’s feasible. But yeah, that’s a possible, that’s one thing that people bring up is what if it’s one sat is worth a whole house and I want to split it more. That would be another reason to multiply the units.

dani go (35:14.315)
-huh.

John Carvalho (35:34.396)
is to have more divisibility, you know?

dani go (35:37.483)
However, like if we get to a place like that, the fees to transact on chain are probably gonna be so high that it’s gonna be only, it’s gonna be an exclusive service for certain situations and most people are gonna be transactioning in second layer solutions where you could have like what you were saying, enlightening where they have lower denominations, but they’re actually just like in a spreadsheet, not actual.

you’re not actually cutting big satoshis in half, it’s just on the light in the network. But.

John Carvalho (36:11.61)
Well, there’s a tricky thing in there, another nuance for you is you can’t really use a layer in a self -sovereign way if you can’t afford your own UTXO. So some of the ideas you mentioned are not actually compatible. If you can’t afford an on -chain transaction, you can’t actually afford to enforce whatever security model you have in your layer. For example, in Lightning,

dani go (36:15.787)
Thanks, Minister, all the noisies.

dani go (36:28.235)
dani go (36:38.571)
Yeah.

John Carvalho (36:40.953)
you have to make a UTXO with someone else to create the channel. And then to close the channel, someone has to pay the on -chain fee. If you do this in a non -cooperative way, you have to pay the fee. And so that means that, for example, in Lightning, the way that the model is enforced is if the other person tries to steal from you in the channel, you can prove that they tried to steal from you, and thus you can steal from them. And that’s the security model.

But if you can’t afford to make that on -chain enforcement, that judgment transaction, then it’s all just faking. It’s all just totally trusted and the person could steal from you anytime they want to and there’s nothing you could do about it because you can’t afford to enforce. Every layer has a construction like that. Every layer involves some sort of base layer, you know, enforcement that is a fallback. So you have to be able to afford at least one on -chain transaction at any unforeseen moment.

to be able to use a layer safely.

dani go (37:39.243)
What you’re saying concerns me deeply because…

John Carvalho (37:42.809)
Welcome to my world!

dani go (37:47.915)
But wait, before I tell you why it concerns me, can you explain to us what UTXO scarcity means?

John Carvalho (37:54.871)
Well, it’s just a it’s just an incidentally made -up term in talking to you. It’s not some sort of broad concept to learn so much as just saying if if you can’t afford a UTXO and there aren’t a lot of people enough people creating Bitcoin liquidity at the level in other words What if Bitcoin becomes only used by banks for settlement and the least amount of Bitcoin ever? Transacted is a whole Bitcoin right and that’s worth, you know a billion dollars or something. Well, what are you gonna do?

dani go (38:09.515)
boy.

John Carvalho (38:24.694)
How are you going to get on a layer? How are you going to get off of a layer? How are you going to enforce a layer when you can’t even send the minimum amount that anybody can afford to send? So now it becomes an issue of, well, if we can split it more, maybe just hypothetically, I don’t even know if it’s true. Maybe you could create more, free up more liquidity and thus have smaller UTXOs if you had more units. But this is totally speculative. I wouldn’t change the amount of units in Bitcoin. I don’t think we ever need to.

dani go (38:41.259)
Yeah.

dani go (38:55.211)
Well, what you said is kind of correlates to why I felt really concerned by what you were saying because Bitcoin security relies on the transaction fees and we’re talking about as the block reward comes to an end, the security of Bitcoin relying on the transaction fees. But at the same time, these fees cannot be so high that then people cannot operate on the second layer.

Otherwise, it’s going to become like custodial or where like a company settles for a whole group of people because people individually can’t afford to settle on their own. That’s deeply concerning, to be honest.

John Carvalho (39:35.567)
Yeah. Well, I’m speaking clinically here, so don’t take this as any sort of political alignment. Just if I’m going to sit here and tell you what your options are as a Bitcoiner, this is what they are. They are one, you know, trust. So you can do things like trust a bank, trust a custodian, you know, have a very permissioned kind of censorable access to Bitcoin like an ETF, et cetera. That’s one option is trust. Another one is…

dani go (39:47.019)
I’m sorry.

dani go (39:55.339)
Mm -hmm.

John Carvalho (40:04.083)
Increasing the block size. Well increasing the block size can get you somewhat cheaper blocks block space for a time and you can increase the capacity But you have a really low Low limit on how much you can actually increase the block size without going too far And so you in order to have in order to use increase of the block size as a method you one have to figure out how to do it effectively as a Soft work and to have to figure out how to do it

dani go (40:14.475)
Mm -hmm.

dani go (40:21.771)
-huh.

John Carvalho (40:32.243)
how to coordinate it periodically in tandem with increases or say decreases in cost of hardware and transmission. So as you know storage costs and internet or connectivity costs become commoditized, you can increase the block size more safely over time. If we figure out some kind of fancy like bio nanotechnology for storing data and you know there’s a satellite in everybody’s home or whatever some kind of crazy connectivity thing.

where everything is just ubiquitous and cheap. Well, yeah, we can have much bigger blocks and much faster ability, but we’re always going to be limited by the speed of light. And so you can only increase the block so large before they become so large that you can’t propagate them in the network fast enough across the globe. And so that’s one solution, but it’s only like, it’s like a knob you can turn every period, maybe every four years, every 10 years. I don’t know what it is.

and it’s a hard knob to coordinate because it’s a sensitive topic for a lot of people. That’s another option you have. So you have trust, you have on -chain scaling. It’s sensitive, but there is a lot of rationality to it. In other words, if you stay within the window of safety, then you’re okay. But if you are too speculative and make the blocks too big before its time, then it’s not okay. And no matter what, it’s not a silver bullet even if you do it…

dani go (41:35.275)
Very sensitive.

John Carvalho (41:57.679)
know, in a calculated way periodically because you have overhead limit of the size of earth and the speed of light. So you eventually just hit an eventual wall that you can’t go past no matter how great you, how cheap you make hard drives and how fast you make networks. Then your next option is shitcoins. So if you don’t want to believe in on -chain scaling and you don’t want to believe in trust, you can believe in shittier versions of Bitcoin. So basically,

I can’t afford to use Bitcoin because it’s so secure and so expensive. And so now I have to look at something similar that is maybe a little less secure, but as close as possible. And so that’s another thing that you’re already seeing this play out in the market, right? Where there are some shitcoins that have persisted for many years for most of Bitcoin’s lifespan. Some of them are still exist. Now they are nowhere near as successful. And a lot of them kind of pump and dump and never come back. But.

dani go (42:45.067)
No.

John Carvalho (42:54.923)
If we don’t solve the problem through other means or mitigate the problem at least, you know, responsibly through other means, you will see a release valve of where shitcoins are basically for poor people. And then that spectrum will fill out where if the poor can’t afford Bitcoin, they’ll use shitcoins. If the middle class can’t afford Bitcoin, they’ll use shitcoins. And it’ll just keep going up the ladder until you’re using shitcoins. And that’s another possible future for you that you could consider. Now, I know it’s scary, but…

All of them are, all the options are scary. And so you can’t really, you can’t pretend none of them exist. And then finally, your last option is to just believe in engineers and trust them wholly with solutions that are probably not actually solutions. For example, a lot of engineers believe in UTXO sharing as a way to scale Bitcoin and make Bitcoin more affordable for people. But the question is,

Do you like waiting in line for bread? Because that’s what it’s going to be like. It’s going to be a permissioned kind of coordinated system, if it’s going to be you good user experience at least. But you’re going to have to coordinate batches of UTXO creations somehow so that way people can split the cost of sharing a UTXO on chain. And the problem with these solutions of many party UTXO sharing, so like…

dani go (44:13.835)
my god.

John Carvalho (44:20.904)
Lightning is a UTXO sharing solution, but it’s just two parties and that’s what makes it manageable is that you can always be the one enforcing against the counterparty and it so there’s a balance there but now people want to make UTXOs would say 30 people or even channels with 30 people and you have all kinds of kind of game theory and you know attack vectors that can happen with people colluding and so you have a different security model for UTXO sharing, but that’s that’s currently

with engineers and protocol developers, this is a popular topic right now. It’s why people talk about covenants and things like this, because they think that when people can’t afford Bitcoin transactions, what they will do is coordinate together to split the cost. The problem with this solution is, it’s sort of like the layers problem. You still need to be able to afford your own on -chain UTXO if you want to do unilateral enforcement. If you want to like…

leave the group without permission if the group misbehaves or whatever it may be whatever situation might be if you can’t afford your own UTXO alone you’re not going to be able to get the most convenient most secure experience from UTXO sharing so personally I think that UTXO sharing will help Bitcoin even less than lightning has granted I think we it’s okay to have all of the options but these are all your this is your spectrum of realistic

futures for Bitcoin and you need some mix or you either need some mix of all of these options or you need to really go hard on one or two of the options and maybe you have a chance of scaling Bitcoin over time.

dani go (46:01.067)
I am really glad that we’re having this really open conversation because in Bitcoin sometimes the subjects that are controversial are kind of not discussed but like the technology should stand to question like to questioning and it should be an like these obstacles are real things and I’m really glad that we’re having a really open conversation about it.

John Carvalho (46:27.587)
I’ll just claim a lot of people will disagree with some of the things I’m saying. So get, you know, get a spectrum of opinions from everybody. But I haven’t found anybody with like necessarily that could rationally refute the way I just portrayed it as far as these being your main options.

dani go (46:31.435)
Yeah, yeah, for sure.

dani go (46:44.651)
Yeah, I think a lot of people will be triggered by many of the things we’ve said, but that’s what I like.

Because one of the other things I was gonna say is one of the conversations that is not had a lot is that one way of increasing the block size is not by increasing the block size at all, but by changing the time between, like the interval between blocks. Right now, because there’s the block rewards, that wouldn’t be such a good idea because you have the emission rate would change. But once all the Bitcoin is in circulation,

What do you think is the justification between keeping the interval the way it is?

John Carvalho (47:30.624)
I mean, honestly, I don’t care about theorizing about things that will happen when I’m dead, quite honestly. The truth is the odds are by the time that year comes and then you can actually realistically assess that situation, Bitcoin probably won’t look anything like it does right now. You’re talking about, I think it’s roughly 100 years, give or take 20. So it’s really, really far away. That doesn’t mean we shouldn’t plan for the future necessarily, just that I think that…

dani go (47:35.819)
Hahaha.

dani go (47:45.067)
Mm -hmm.

John Carvalho (47:59.743)
We should wait, you know, till I’m dead. Then you can worry about it. But I’ll add this Bitcoin is a whole it is like, you know, this is I’m not trying to say it’s a pizza. I actually think that the whole pizza and the pizza meme on both sides is stupid. As you as you saw when I was talking earlier about how the units actually work. But it is a whole. And so what I mean by that is.

dani go (48:03.627)
I’m sorry.

dani go (48:16.619)
Bye!

John Carvalho (48:28.799)
If you scale any part of Bitcoin, you affect the current user base negatively. Some portion of it will be affected negatively until you fully realize that scale. So what I mean by that is, for example, if you raise the block size, but we don’t actually need bigger blocks yet, what will happen is people will fill that block space with junk. And they’ll, you know, because the transactions are, the transaction fees are just so low because of the big blocks.

that people will still fill them anyway. And so you don’t want to raise the blocks. So you can basically inflate Bitcoin if you make a change that increases resources, but doesn’t actually utilize them with new activity and new users. If it just sits there, it becomes like a tragedy of the common sort of thing where now all the current user base has to pay for this, you know, expanded thing that nobody’s using. Now, if expanding the block size actually brings more transactions,

dani go (49:13.099)
Interesting.

John Carvalho (49:26.684)
of similar transaction fees and thus more, either more activity or more users, then you’ve done a great job, everybody’s happy, and the new people are kind of carrying the weight of that new expansion. Well, that expansion can apply to block size, it can apply to block frequency, it can comply, can be for the dust limit. Anytime you expand or contract some magic number of Bitcoin or some limit that you currently have that is status quo,

you have this potential of a negative effect. So there is just always trade -offs. There’s never just a win -win situation. There’s always, well, if we turn this knob, this other knob is going to turn the other way.

dani go (50:08.715)
No, I’m glad you brought that up. That’s a great way to put it because in Bitcoin, like people, when they first arrive, we all want to fix Bitcoin. And as we learn, we become more aware of the trade -offs and our great fixes become more like we’re more capable of questioning our own ideas. I had another question for you. Let me find it. I remember.

What second layer solution, do you see other second layer solutions in the horizon or do you think we’re gonna be living with lightning for a while?

John Carvalho (50:48.347)
Do I think others will be invented? Yes. Do I think any of the current proposals are notable? No. I think lightning is the best we have for the moment. I am actually very skeptical, not skeptical, but very critical of lightning itself despite that we use it in our products. It’s still the best that we have. In other words, if there’s a chance of anything working that I’ve heard of on top of Bitcoin, it’s lightning.

dani go (51:09.195)
huh.

John Carvalho (51:18.391)
That said, there’s tons of complexity, fragility, tons of interoperability issues, liquidity issues, economic issues, network issues, censorship issues, there’s tons of pitfalls that lightning has to deal with that we might only get to 80 % and never get to 100 % and 80 % might not be good enough for everybody. But I think it’s worth getting to that 80 % and seeing if we can squeeze our way to 100 some day because we have no better option.

So that would include, you know, actual layer per solutions like Arc and other things that are more similar to Lightning. I don’t think those are going to do anything more significant than Lightning at least. And that includes things that are like fake layers that aren’t actually layers like Liquid and things like this. I think they all have worse trade -offs or more risks than Lightning has. And all of them certainly have more trade -offs and risks than Base Layer.

dani go (52:20.907)
a curious question. Does a lot of money go missing in the Lightning Network? Like people, do they lose a lot of funds or is this not one of the issues that like new users experience on the Lightning Network?

John Carvalho (52:34.198)
I mean, I couldn’t tell you for sure because the, while the network is maybe small compared to some other really successful money networks, it’s still very diverse and that diversity, I don’t even know what the current known node count is, but you know, between public routing nodes and then private nodes that are in apps like ours, it’s still a relatively small network, but not one that you have a lot of view into. You can’t see what everybody else is doing.

We can barely see what our users are doing. And so your ability to know whether this is happening is limited. And then our app has been in beta for a long time, and we’re only just coming out of beta now. So we don’t have tens of thousands of users as an example. Hopefully we will after we release and as we grow. But right now, I don’t have a lot of evidence for you to say yes or no.

dani go (53:17.803)
Mm -hmm.

John Carvalho (53:26.739)
I’ll say that, you know, I just put a poll up on my Twitter today that was, have you ever lost a private key? And I’m interested, I haven’t looked at the results so far, but I’m sure the number will be high. It should be very high. Most people have lost some kind of private key of some, you know, whether it be Bitcoin, PGP, Nostra, whatever, I’m sure people have lost private keys, at least most people. So I would guess that yes, people lose money in lightning. People have lost money like,

trying to make money from routing as a pleb net kind of thing. People lose money that way just speculating on whether they can make money with Lightning. That usually doesn’t work well for most people. But losing money just by losing keys or corrupting your channel state, all of these things happen in testing. They happen for real users while apps are still coming out of beta. Like I mentioned, we have interoperability issues. Like sometimes…

dani go (53:57.931)
Mm -hmm.

John Carvalho (54:22.002)
the L &D implementation just will act finicky when it’s talking to the LDK implementation. And when it sees something it doesn’t like, it just immediately panics and it force closes. Well, force closes cost money too, right? Because now you have to reopen the channel again, more on -chain transactions. Like there’s definitely slippage here in the amount of money, the amount of Bitcoin that people, people are often ending up with less Bitcoin than they thought they would.

dani go (54:28.587)
Well.

John Carvalho (54:50.29)
you know, by when they’re experimenting with lightning. But it is still, you know, we’re not at that, even at the 80 % level yet, as far as like the quality of all the apps and the implementations and the products.

dani go (55:03.947)
Yeah, I saw that this morning. I had an idea about something that I thought might be helpful for people, but I don’t really know if it really is helpful, which was what if wallets automatically, when they receive funds, created a transaction to a different wallet? Like let’s say I have a backup wallet, but then you have to secure, like, it’s kind of complex because if you just secure your key correctly, it wouldn’t really be necessary.

but that you had like the backup account and if you lost your keys, there would be like a time, time lock transactions that would move all your funds to this new wallet. But the reason why this would be.

John Carvalho (55:46.637)
You would be very interested in the product Liana. I don’t know if you’ve ever… Get in contact with Kevin Loak. I’m sure he’d be happy to come on your show. He’ll explain Liana to you and how he uses Timelock in a creative way to do things exactly like what you’re talking about. I would say what you’re talking about is possible in different variations and different use cases, both what you’re saying and more.

dani go (55:50.475)
We had…

John Carvalho (56:13.101)
And time locks are really interesting and you don’t need covenants for them. You don’t need a soft fork for them That’s things people are doing with Bitcoin today. The risks are you need special descriptors in how you manage these UTXOs and most wallets don’t speak those things and so you have to be careful with how you restore and manage and back up your wallets and you have to make sure you also for basically you’d probably want to back up the version of the software as well so that way if like

dani go (56:21.003)
Mm -hmm.

John Carvalho (56:43.117)
five years later, you’re trying to restore things, you have the same environment until more standards emerge because I think there are three or four different kind of multi -sig time -lock projects and none of them use the same spec. So there’s no interoperability in that arena yet. It’s an area we’re also interested in too, but this is like next year or the year after that we would start implementing these kinds of things because I do think it’s a little bit too early.

But yeah, people like Kevin are paving the way for doing things like you’re talking.

dani go (57:15.723)
Interesting, it sounds that it is kind of useful despite like how convoluted it kind of is. Cool, the other question that I had for you is, I saw your, well I saw that somebody transacted stable coins on the Lightning network and I saw your posting about eCash and I wanted to see if you could teach us a little bit about that. Like what is eCash, why is it better, tell us about it.

John Carvalho (57:42.121)
John Carvalho (57:46.217)
Well, there’s probably, there are different areas of what you’re talking about. And some of them I know about more than others. Like, for example, stable coins are centrally issued credit units, typically on top of a blockchain. And so Tether, being the kind of premier example, Tether used to exist on Bitcoin. It might still on the Omni Network, but I don’t think anybody uses it.

dani go (57:52.907)
and move.

John Carvalho (58:15.561)
Tether exists on Liquid, which is purportedly a sidechain, but in my opinion, it’s just another altcoin. And Tether exists on Tron and Ethereum and any blockchain that is popularly used, you’ll find Tether on there. But Tether is a product. It’s something issued by a company and you have to trust that company and you have to be willing to use whatever blockchain that company has issued it on. And so it’s a trusted credit issued kind of sort of product. Ecash has…

dani go (58:42.251)
Okay.

John Carvalho (58:44.553)
Multiple realms in it, but it’s not the same thing as tether is not a token on top of a blockchain E cash there are kind of there’s probably even more than two realms within it But I’ll focus on two which are the people doing things with Chaumian E cash and like things like Fedimint and things like this where they are They’re they’re having you deposit Bitcoin and then they’re centrally managed the Bitcoin in a trusted way

dani go (59:03.467)
Yeah.

John Carvalho (59:11.525)
with the user experience that’s very similar to Bitcoin. In other words, you have a key and there are some schemes in there for how you can achieve arguably maybe not some extra privacy when you’re using the Fedimint or a system like this. But it’s Bitcoin backed Bitcoin credit. And what they do is they bridge because no Fedimint is interoperable because they’re all separate issuances of money.

and separate trust situations. And so what they do to interoperate is these people also run the effectively like an LSP, which they run it more like a payment processor. So when you want to pay someone across Bitcoin, you actually ask the person who runs your mint to do it for you, and then they deduct it from your account. So there’s a little bit of regulatory risk there and obviously trust risk because somebody else is holding the Bitcoin for you.

dani go (59:43.211)
Cool.

John Carvalho (01:00:09.668)
but you still have to do similar user experience to Bitcoin where you have to hold a key and sign things and have a wallet and this kind of thing. And then you have kind of the more hardcore ecashers that are just trying to figure out ways to issue trusted credit with or without a blockchain, with or without Chompy and Ecash. And there’s some interesting things going on there as well. I am most interested in credit.

solutions that do not involve a blockchain. So I think that Bitcoin is the last thing you should be trusting people with. It was literally invented to not have to trust people to hold it. And so, but I do think that trust is very useful and that credit is very useful and you need solutions for that. Right now, I think it’s obvious that the simplest solution is something like Tether. But if you don’t want to have to trust one central entity and want to kind of customize who you trust,

then you could look at some of the other solutions. But I think that in some years, something even better will emerge. I have some ideas about other ways to approach the problem that are kind of from left field that we might research in the future. But for now, we’re just kind of watching. The experiment we did with moving tether on lightning was a few years ago now, two or three years ago. And that was part of showing that how…

If you use something like Omni, which also is a real layer on Bitcoin, to encode token data into blockchain transactions, you could actually make channels out of those as well. And so what we demonstrated was moving Tether on Omni through a Lightning channel. I actually think that’s the best Lightning token design. In other words, I think it’s a lot more practical and achievable design than what’s happening with Taproot assets. But I don’t think either one.

sustainable. I don’t think either one is something to like bet on for the long -term future.

dani go (01:02:06.475)
Thank you.

dani go (01:02:11.563)
Got you. Well, we’ve talked about most of the things that I had thought about that you could enlighten us about. Is there anything else that maybe I haven’t touched on that you’d like to share?

John Carvalho (01:02:24.655)
I don’t know. I could rant about pretty much anything even remotely related to Bitcoin. So it’s up to you. Maybe I’ll harp a little bit on trust. We have a meme in Bitcoin that’s, you know, don’t trust, verify. I don’t think that actually means anything to anybody. It’s not actionable. Nobody can be like, OK, I’m not supposed to trust. I’m supposed to verify right now. That’s what I’m going to do. No, it’s just like you either run a node or you don’t. You either have transactions to verify or you don’t. But.

dani go (01:02:33.643)
Go for it.

John Carvalho (01:02:52.543)
I do wish Bitcoiners were much more open -minded about just how trust is a dynamic within society. Like, society is trust. Like, everything is trusted. And you always have to find ways to manage trust. And so when we release our new protocol that is going to replace slash tags in the product that we’re associating with that, a big part of what we’re trying to do is give people tools to digitize trust and apply it to the web. So…

dani go (01:03:01.355)
Okay.

John Carvalho (01:03:20.187)
just empower people to do the things that they do very poorly now, but in a much more intentional way. As an example, I’ll give you like, right now, one way people measure and create reputation is just like, how many Twitter followers you have, or how rich you appear to be in your Instagram photos. Like this is how people subconsciously like assess trust and measure reputation. You know, whether you are the president, you know.

Some people will just automatically assign a lot of trust to that some people will try and a lot of distrust of that well these are all very crude methods and I think that you know like how we kind of digitized money with Bitcoin I think we can digitize trust and we can put the individual in control of things like the Google algorithm and choosing which mint to be in and choosing which LSP to use and

Choosing which people to follow and which posts to even look at. I think all of these things can be done over a vector of trust and they can be something interactive and actively that you participate in and control and have power over. And so that’s a big area I would like to see Bitcoin has become open to is just you’re seeing a little bit with the eCash stuff. Like this is people embracing trust, right? I just don’t think that embracing trust for holding Bitcoin is the path that we should be.

learning about trust on. We should be learning about it and how we interact, how we form networks, how we form marketplaces, how we choose who to trust. Because a big misconception in Bitcoin is they think that with trust, what matters is the technology. They think, if I have to trust, I would much rather use Chami and eCash than a bank. Why? In the end, you ultimately, the only thing that matters, or at least the primary thing that matters, is who.

you’re trusting. Like a bank also has 10 different people that hold the keys and so does a Fedimint or you know you can have a variable amount but banks aren’t just one person. They are there is some decentralization within the bank. They have to follow some regulations like there’s some security model in that that is comparable to Chami and Ecash or other trusted things. So I’m more interested in getting Bitcoiners to realize when it comes to trust what matters is who not how.

John Carvalho (01:05:44.182)
That’s my rant.

dani go (01:05:46.155)
Yeah, and ultimately if you have your funds somewhere where they can be confiscated, whether it’s a bank or a cryptocurrency company, you’re still at risk. Like if you’re not in cold storage, you’re at risk.

John Carvalho (01:06:02.902)
Yeah. Another dimension here is I’m also interested in the context. Like it matters who you trust, but who you trust with what? You’re not going to trust your banker to give you advice on, you know, treating cancer. You’re not going to, you know, you’re not going to ask your doctor to give you advice on your finances. And so there is a context to trust as well.

dani go (01:06:22.859)
Yes, well before we we are coming to a close so before we go would you like to tell the listeners how they can support you the projects where they can find you and and we’ll make sure to put the links in the description.

John Carvalho (01:06:37.718)
Sure. So once again, my name is John Carvalho, CEO at Synonym. You can find me on Twitter under the handle BitcoinErrorLog. And for Synonym, we also have Twitter accounts and other accounts on Discord, et cetera. But you can find all those links at synonym .to, synonym .to. And all of our products have websites with similar domains. So we have bitkit .to, blocktank .to, slash tags .to. And so you could learn about any of our things there.

If you’re a developer and you want to look at some of our code, we open source everything eventually. Some stuff we haven’t fully open sourced yet, but anything that we release as a product is always fully open sourced. Anything that’s research and development, sometimes we release it early, sometimes not early. But Synonym Dev is our account, our organization in GitHub if you want to check out our code.

dani go (01:07:30.507)
Do you guys also have accounts on Noster or not really?

John Carvalho (01:07:35.186)
Nope, we’re not NOSTER users. I’m not a believer.

dani go (01:07:37.099)
Got you. Well, we’ll leave the white for another meeting. But your comment didn’t remind me that I had one more question that I skipped, which was for developers, where do you think is the best starting place to become a Bitcoin developer or become or like join the ecosystem?

John Carvalho (01:07:44.626)
Sure, sure.

John Carvalho (01:08:00.946)
I don’t know. I’m not a developer, so I’m not the best person to ask. Probably other developers that have been through this. You’re welcome to come in our channels and ask our team and ask some of our devs what their advice would be. But off the top of my head, I would say, yeah, first ask some developers that you think are interesting in respect. Otherwise, just finding projects that you can contribute to. So first finding a project you like, getting that code running, and then start contributing to it as a…

dani go (01:08:11.755)
Yeah.

John Carvalho (01:08:30.098)
open source, there are most Bitcoin companies have some aspect, if not all aspects, open source of their stuff. So you could either approach this, you know, you first have to decide whether you’re interested in protocol work or product work. If you’re interested in protocol work, you have to make friends with core devs and get on the mailing list and get in the chat rooms and, you know, attend the dev specific conferences and these kinds of things. But devs tend to be pretty welcoming to devs, at least in the early stages.

In later stages, it gets very competitive, but this is the way it is. But yeah, if you’re interested in protocol, go there. If you’re interested in products, yeah, find some products that you like and start trying to make some pull requests to help them either fix their app, bugs that are bothering you in their app, or adding features to their app, adding integrations with their app with other things you like. Yeah, I would say, get your hands dirty because if you’re looking for…

grants, you’ve got to have a portfolio of protocol work to show them and maybe even some education like something like Chaincode Labs. And if you’re looking for a job and you want to get paid, you need a portfolio of relevant experience. And so that’s basically what you have to do is, you know, develop experience and get your hands dirty.

dani go (01:09:48.555)
Well, I think that for not being a developer, I really enjoyed and I grew from our technical conversation. I think I really appreciated the openness which you talked about, the controversial subjects in Bitcoin. So I really appreciate you having come here on the show and shared your point of view with us. Thank you so much.

John Carvalho (01:10:14.226)
Thank you so much for having me. I’ll come back anytime.

dani go (01:10:16.535)
Thank you. To our viewers, don’t forget to share, subscribe, like, and leave us a comment if you have any questions and we look forward to seeing you in the next episode.

 

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