Episode Transcript
[00:00:00] This combination of systems is what makes the ecosystem powerful.
[00:00:05] Lightning excels at private fast peer to peer payments while Ark provides shared capacity and simplicity.
[00:00:13] Together they make Bitcoin more flexible. Lightning handles the quick shipments and Ark keeps the train running smoothly. Behind the scenes, the best in Bitcoin made Audible.
[00:00:27] I am Guy Swan and this is Bitcoin Audible.
[00:00:47] What is up guys? Welcome back to Bitcoin. Audible. I am Guy Swan, the guy who has read more about Bitcoin than, than anybody else. You know, we've got a great little show today. This is gonna be a short read and followed by a kind of long rant.
[00:01:02] But I love a good analogy and Paco, Paco vm.
[00:01:08] I hope I'm saying that by right the right way. I hope it's like not like a full name and it's like PACOMB or Pacovum, but my luck is probably some German spelling of something that I'm just an idiot. And I think it's like a tech, like it's like oh, pacoctv. Clearly it's an acronym for virtual machine. So I future apologize for that if I've already screwed that up for the whole show. But this was a really great analogy on just kind of visualizing what ARK is because I think ARC is really hard to wrap your head around. It is a very nuanced system.
[00:01:43] And the beauty of it though is that you don't have any of this onboarding. You're, you're basically trusting the, or the, the ARK provider. The ARK operator, so to speak is offering up, is putting the liquidity at risk ahead of time and everybody is batching liquidity from the outset. So you don't have to open up a channel. You can just start receiving payments immediately inside the ark and the provider or the ASP will bridge you in and out of Lightning. And it makes all of this interop together, basically all of it work together and speak the same language. And so I think there's a massive amount of benefit that comes from a system like this. And I say in the the take afterward that I think this is really kind of the quote unquote batch channel or the channel factory system that has been talked about for quite some time. I think this is kind of an interesting way to pull off essentially the same concept or the same use case, I guess the serve the same role. And so Paco does a fantastic job of just like, okay, let's, let's put an analogy on this so that there's a mental image to start applying the specifics to and you know, an analogy only goes so far. That's one thing everybody is always like, all analogies should never be used. It's like, well, no, analogies are used because they work excruciatingly well to paint a picture for where to put the details. Like you have to start with the analogies so that people have a picture in their, in their mind. And then when you learn the more specifics or the, the deeper details of the system, you, you now have a relationship to edit or a relationship in your mind to make changes to, to start building some other picture and begin to have a mental model for it by itself as its thing. But the analogy is like an introduction.
[00:03:42] It isn't supposed to be. And it's never the whole picture. It's just about understanding relationships in ways that are actually relatable. So I don't understand the hate for analogies just because some people.
[00:03:55] I guess the frustration is that some people will understand the analogy and then they'll just apply the analogy and they'll never learn it any deeper. And it's like, well that doesn't, that's a universal problem. You're just saying that you hate ignorance.
[00:04:08] But a decent analogy could even make ignorant people at least fall in the right place. Like you know, 80% of the time. Anyway, analogies are great. That's my point and this is a good one. If you've been confused about Ark shout out to Leden IO for their bitcoin backed loans and for supporting the show. If you need access to your bitcoin but you don't want to sell it, this is a great tool to have for an investment or for short term need for capital or selling at the wrong time could be bad for taxes or just bad for your situation or cost you a lot more bitcoin than it otherwise would need. To check them out. I got a link and special discount for you right down in the notes. Also check out Pub key they have an entire stack. PKDNS unstoppable way to actually find and locate a server or a person. Picar They've literally created tools to re decentralize the web and just showing some of the things you can do with it. With pubkey Ring and pubkey app P u B K Y app Check it out to get a window into what they're building and get some nightshades from Chroma. This is Getchroma Co. You can get a 10% discount and you need to wear them every night at like 7 or 8 o' clock just put them on. These are blue light blocking glasses that actually leave a band of purple that is not effect, that does not affect your hormones or your circadian rhythm, but it lets you see more color depth than the red block or the blue light blocking glasses that usually just red wash everything. They're really cool and I'm a big fan of them and I got a discount for you. Lastly, the HRF and their Financial Freedom Report. Also they have the ASO Freedom Forum which is coming up next year. Links and details are down in the show notes follow them and a shout out as always for their amazing work and for supporting Bitcoin Audible all right, with that, let's get into today's article and it's titled ARK and the Train A Guide to Understanding Bitcoin's Railway System by Paco VM Understanding ARK has proven surprisingly difficult. Even after two and a half years since its introduction, it's still very clear that many people, even within the industry, struggle to form an accurate mental model of how it actually works.
[00:06:26] The protocol has gone through many changes during that time, though none that alter its fundamental design.
[00:06:32] This article assumes the reader already understands key Bitcoin concepts like the UTXO model and multisig, as they're essential to grasping ark. It isn't meant to dive deep into every technical aspect of ark as with more nuance, the analogy starts to fall short, but rather to help you build a clearer mental picture of what ARK is, how it works, what and how it fits into the Bitcoin scalability puzzle.
[00:06:57] To make sense of ark, it helps to start from the foundation Bitcoin itself and reimagine it through a more tangible lens.
[00:07:06] Think of Bitcoin as a global logistics network, the ultimate registry where every shipment must eventually be recorded. It's extremely reliable and consistent. Every package that gets registered transactions in a block is guaranteed to have arrived and cannot be lost or changed.
[00:07:26] The system has become extremely successful, and as more people start sending shipments than the network can fit it ones, the queue grows. It's not that the system slows down. Packages continue to arrive at their usual pace, but some deliveries have to wait their turn.
[00:07:42] Anyone can pay a higher fee to jump ahead, but that makes shipping more expensive for everyone else who wants to join the line.
[00:07:50] The growing line is actually a sign of success, but it also highlights the need for more advanced transportation methods to handle everyday deliveries efficiently.
[00:08:01] That's where Layer two systems come in. They are specialized transport networks that handle most of the day to day movement while still relying on Bitcoin for recording and final accountability.
[00:08:14] For years the lightning network has been the main express courier service.
[00:08:19] It's fast, lightweight and perfect for quick direct deliveries between two parties. But there's a catch. You need to run your own courier route, a lightning node which takes coordination and liquidity. And you can only receive a package if someone has already set up a path to send one your way.
[00:08:37] Most self custodial lightning wallets today open a route for you automatically. If you don't have the economic capacity or know how to run your own courier or pay for a route to yourself, you your only option is to send your packages to someone else's courier, a custodian, and trust that it won't mismanage them.
[00:08:56] Enter ark, a complementary system that acts more like a public railway. A massive train carrying countless shipments at once. The train's capacity is virtually infinite. So instead of needing your own delivery route, you can simply hop on board and start trading with everyone else already on the train.
[00:09:15] ARK is designed to make Bitcoin payments more accessible, especially for users who don't want to manage complex routing or liquidity setups.
[00:09:25] Here's how it Board the train by sending your Bitcoin to an ARK compatible wallet. This creates a special off chain balance that represents your personal cargo called a VTXO or a virtual transaction output. Your VTXO is like a labeled shipment inside the train. It belongs to you, but it moves along within the train alongside other passengers. Cargo the train itself uses shared containers on the main ledger. Shared UTXOs to hold all the cargo collectively anchoring everyone's shipments to Bitcoin.
[00:10:03] Once on board, you can transact instantly with anyone else on the train, fast, cheap and without waiting for on chain confirmations. The train is operated by a service provider known as an ARC server or ARC operator. They help coordinate all transactions happening inside the train. When you make a payment, both you and the ARC server co sign a small cryptographic contract that proves the transfer happened. You need the operator's help to move your goods, but not their permission. The ARK server doesn't control your cargo in a traditional sense. It merely helps facilitate the paperwork that keeps everything moving smoothly. These off chain transfers are officially known as out of round transactions, AKA R core or simply pre confirmation.
[00:10:56] Every so often, the ARK operator takes an official passenger list of everyone on the train along with the cargo they're carrying and records it on the bitcoin ledger. The resulting record is called a refresh, which is nothing more than a periodic settlement of all balances. You can think of this as moving each passenger's resulting personal cargo, their VTXOs, into a new shared container on the main ledger.
[00:11:20] Once your cargo is in that new container, it can no longer be tampered with, ensuring it becomes a verified entry in Bitcoin's global shipping ledger.
[00:11:31] The terms ARC server and ARK operator are interchangeable, while ARK server is the preferred term. ARK operator is simply easier to understand under certain contexts. For example, this analogy to put it simply, pre confirmed or out of round transactions track trades on the train as shipments change hands, refreshes place the cargo in a new shared container, making balances officially owned and immediately tradable with no risk of reversal by the operator or previous owner.
[00:12:02] Being included in the passenger list costs a small fee, but here's the clever the fee is shared among everyone on the list, making it cheaper the more participants there are. You don't have to appear in the next list. You can wait for a more convenient time in the future if you trust the operator to act honestly, or you can choose to move to a new shared container refresh sooner if you want absolute certainty about your cargo.
[00:12:28] Either way, you always retain the ability to exit the train and reclaim your funds directly on the Bitcoin ledger whenever you want.
[00:12:37] This creates a unique trust model where the ARK operator helps process your transactions but can't spend your coins without your consent. If you ever feel unsure, you can simply get in the next passenger list to anchor your balance publicly on Bitcoin, removing all risk the moment it gets confirmed on Bitcoin's global ledger. Users rely on the operator for convenience, not custody, but it's important to remember that the system allows for recovery of funds in incredibly nit cases by coordinating with the operator. For example, this could happen if you send your goods to a container within the train that has a faulty door that only opens one way, like an invalid address or a faulty smart contract, more commonly known as provably unexpendable outputs. This recovery is possible because the cargo isn't truly finalized until it's anchored in the global shipping ledger. It's worth emphasizing that this represents the worst case scenario and is expected to almost never occur at any moment. You can also unload your cargo from the train and return directly to the Bitcoin ledger. This is what we call unilateral exit. Or you can transfer your balance through the lightning network, using it like an express courier to reach another ARC train somewhere else or anyone else in the network, whether or not they're using an ARC train. This combination of systems is what makes the ecosystem powerful Lightning excels at fast private peer to peer payments, while Ark provides shared capacity and simplicity. Together they make Bitcoin more flexible.
[00:14:15] Lightning handles the quick shipments and Ark keeps the trains running smoothly behind the scenes.
[00:14:22] Ultimately, it's not about replacing one system with another. It's about building an interconnected logistics network. A mix of express couriers and public railways, all anchored on the same trusted, reliable registry.
[00:14:39] Bitcoin.
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[00:15:44] All right, you know me, I love a good analogy and I think this is a really, really great way to frame what ARK does and the fact that it's complementary. I have seen so many people talk about that ARK is not better than Lightning. And like there's just, there's supposedly this contest between ARK and Lightning and I don't, I don't get that at all. Because the real benefit of ARK is that every.
[00:16:11] You can easily actually set up lightning within it. You know, like if you're using a normal ARK transaction, the normal way that an ARK uses transactions, then basically it behaves like an on chain address. Your, your interaction with it will feel like, kind of like you're using liquid or something. Well, actually it'll feel like you're using Bitcoin except that it will appear to be instant even though it's technically not. Right. You have this, this period until you're quote unquote stamped on chain in which it's Kind of like a pending transaction. It's you can still take it to chain unilaterally and the Ark has put up liquidity like it's a valid bitcoin transaction and you can take it to chain, but it requires the time lock to do so by yourself. And you're trusting that the Ark doesn't collude with a previous owner in the time that it's, you know, between quote unquote stamps on the chain. But as soon as it is stamped on the chain, whatever that balance is, you basically have a quote unquote secure balance that is literally yours. And that transaction is completely valid on chain and it cannot be contested after that point. But the obvious benefit, or the obvious of my thinking in how this is such a great scaling solution and how this ties so well into lightning isn't even that you can just use it in the naive sense where you're, you know, sending and receiving transactions inside the Ark, and then if you want to pay out, the ark will fulfill a lightning invoice for you and you pay the Ark. So the ARK is basically like your lightning service provider as well, but that you can literally open a transaction as a lightning channel, like a balance. If you have a hundred thousand sats in the Ark, you can actually have it open a 100,000 sat channel to anyone else in the Ark and then have that and or as many other routes into and out of the Ark with other people inside the Ark who are running lightning nodes as you want so you don't have to have the ark fulfill your payment because they are bitcoin transactions that could just as easily be lightning channels as they could be a normal bitcoin transaction. And then those transactions in the lightning channel are off chain, or I guess off ark off chain transactions. Now, the headache with that you get into with lightning is that with doing it this way is that you're kind of stacking time locks, so you have to like deal with a bunch of differences in how the time locks unravel and what you're actually doing. And this is exactly why, you know, you would only want to do that with a stamped one where your quote unquote your channel or your balance was stamped so that you can actually take it the chain. Now, I'm sure there are more nuances in like certain scenarios as to how you would actually do like, I don't think you can just, you know, without any headaches or any complications, just take lightning as is and plug it, like just run it on top of Ark because of the differences in those time locks and how the cascading time locks and all the stuff work inside the ark. But in my mind, this basically serves the role of the channel factory that we've talked about for so long. It's just a different architecture because the idea of having channels with everybody and like, it's like a multi sig. Everybody, everybody has a channel and you're splitting it up amongst. Amongst a bunch of different people was just such a coordination effort that it makes more sense to have kind of a central operator that's allowing everyone to open those channels. But regardless whether or not you're using it in the naive sense where it's just normal transactions or you're opening lightning channels, this is a batching system.
[00:20:09] This is, and I love the train analogy because that does show exactly what it is. This is a batch UTXO system, which has always been the point of CTV and csfs is like, okay, how can we create a system where one UTXO can be updated?
[00:20:27] And it basically holds the proof of a hundred different people's bitcoins or a thousand different people's bitcoins? Because that's the only real way we're going to scale this thing. And this is what doesn't. I don't get with some of the people who, like Justin from Shocknet was talking on Noster and talking about how like ARC was a scam and you should just use a zero conf lightning channel and all this stuff. And I was like, well, sure, if you're gonna open a lightning channel for every single thing on chain, but it also, like you could just, you could literally just think about it like batching lightning channels. And if you have a, a batch lightning channel where everybody has a, a connector, which is kind of the, the idea of a CTV that's built into arc, that's not using ctv, it's not using a connection to this next transaction where only this transaction can actually unravel this, but it's doing it in a weird roundabout sense. It's accomplishing the same task. A quote unquote covenant. Basically, if you can do that, what you're doing is you're just making it so that people can onboard to lightning faster.
[00:21:44] And if you're willing to wait for, you know, 0 conf channel, which, which is basically like you open a channel and even though it's not confirmed on chain, you just go ahead and start using it, then what's the difference with having a pending transaction or a out of round transaction inside of an arc?
[00:22:03] It's not they're both, they're both not completely done yet. They're not quote, unquote confirmed. They're not stamped transactions yet, but you can just go ahead and use them. And in the case of the ark, you're just splitting it with, you know, maybe a thousand other people. So if the transaction fee does get up to like $10, well, it still only cost you a penny because you're sharing it with a thousand other people trying to get stamped in this particular period of time. And what's funny is when there aren't that many people using it, if transaction fees are low, then it doesn't really matter. Like, my normal transaction fees on Bitcoin are totally fine right now. I don't even really think much about using Lightning versus Bitcoin on chain at the moment because the difference just isn't that much. I literally just use them interchangeably based on whether or not I want to pay somebody quickly or really if I have the, just the balance available. You know, I, the developers that I work with in Kenya that have been helping with the game built on Paradrive stuff, I pay over Lightning. And it's not hard. It works.
[00:23:14] This to me feels like basically always the way that Lightning was going to really scale because Lightning itself, you can't have everybody have an on chain, you know, UTXO and channel easily. Like, it still takes, I mean, 8 billion people is just a shit ton of transactions, even if every single one of them is a channel. So there was always going to be some sort of a batch channel system.
[00:23:39] And here's the other thing about the scaling problem. You know, I've read a number of people who talk about like, this isn't real scaling because you can't take it to chain if everybody has a problem all at once.
[00:23:50] And the thing is is that, that's not, that is exactly what scaling is though. Like, of course this is true, but there's not a single kind of enforcement or logistics system that can work if your batching systems failed. Like, I mean, just think about it in this, this simple analogy of the shipping containers. Like if, if the trains fail and you have to put everything on a truck because, you know, a train engine blew up or a track got blown up or something.
[00:24:23] It doesn't, it doesn't scale. Like, you can't, you can't take all of those packages and all of those materials and then stick them all on trucks and deliver them in exactly the same pace and for the exact same cost. Like, obviously using the train gets you a different cost and A different time to actually accomplish those things.
[00:24:45] That is literally what makes it a scaling solution. And the assumption is that it's going to work properly more often than it breaks. And that's basically the only assumption that has to be made in the context of scaling for it to actually be a proper scaling solution. Now, the more likely it is to break, the crappier the scaling solution it is. But that's exactly why you must have things like unilateral exit and you have these connectors or why it would be better to have CTV and why you have multisig and all of these things is so that there's no incentive for it to break unless there is literally an accident. So that there's no.
[00:25:25] There's no mechanism or desire for explicit cheating.
[00:25:29] Because cheating is more often than not 90% of the time, 99% of the time going to be resulting in you losing money or losing reputation or losing time or, you know, anything like just that you lose if you try to cheat 99% of the time. And tell me what works 99% of the time, what out there really works 99% of the time. Like if 99% of the time that somebody commits a crime, do they get caught?
[00:25:58] Do the victims get compensated?
[00:26:00] Absolutely fucking not.
[00:26:02] Like maybe.
[00:26:04] Honestly, I bet it's a significant minority of the time. I bet the majority of crimes go unreported. And there is absolutely no way at all that the court system as designed could handle every single transaction, every single crime, every single little conflict or dispute everywhere in the economy if it all broke down at once.
[00:26:28] Of course, of course it would never be able to manage that.
[00:26:32] But if it does a half decent job when things do break down, everyone's incentivized to not let it break down to prevent the conflict, to build in ways to make sure that you never actually get to that point, because we can actually predict what the outcome is going to be. You know, this is actually one of the funny things about quote unquote democracy is that it's like trying to have. It's like having a war without actually having a war.
[00:27:02] And what do I mean by that? And I can't remember what article I mean, excuse me, what book? It was definitely a book that I was reading about this and I thought this was a very interesting way to put it. Is the reason you have quote unquote democracy or quote unquote mob rule and why this would naturally come about is that, okay, let's take this. Let's make the assumption that whatever this disagreement is because it's something that's necessarily collective, where we all have to agree on it at once.
[00:27:31] Let's take it to its logical conclusion. And let's say we fought a war about this and we can just kind of make a rough assumption that the, the group with more people are probably going to win. So if 90% of the people vote one way and 10% of the people vote the other way, we're basically saying that if it was, if there was a war, this, this side is basically going to lose. If this turns into a fight, you have to be extremely confident. Everybody in that 10% has to be extremely confident to be willing to take up arms against the.
[00:28:03] And this is even kind of socially how this is even implemented, this is why it ends up being mob rule, is because it's like, okay, well fight us. And why corrupting that system and making people believe bullshit like just nonsense and lying to them about what the narrative is and controlling the narrative and who they think the good guys and the bad guys are is so powerful because merely sowing confusion, merely making it so that no one knows exactly who to attack means that you don't have a strong enough majority or even a strong enough minority set in one way. Set it with one idea of who it is that needs to be stopped or what it is that needs to be done. And so the default basically just wins. It's like, okay, well who's in power now? Well, then they should just, then we should just let them do whatever the hell it is they're doing. Now the point of this tangent is just to explain that a simple majority essentially creates a simple majority of like how things unfold or how things are enforced or who or what will be the enforcement mechanism or enforcers of a thing can essentially make the system stable. And the idea that Arkansas transactions in an ARK or transactions in lightning channel, even those that aren't economically able to be enforced, like, you know you've got a hundred SAT HTLC going through your channel and one of your channel partners tries to screw you over, well, you're not going to. It'll cost you 5,000 sats to try to prove that that 100 sats is yours. But here's the thing. If they can't steal the 100sats then what the hell is the value? Why would they even care about trying to screw you out of it if it's going to take them 2000 SATs or 5000 SATs to publish it on chain and take it from you?
[00:30:00] And if 99% of the time they fail.
[00:30:04] That is the beauty of bitcoin as a court system.
[00:30:08] When you, when you think about it like a court system, it's an adjudication system and one that cannot adjudicate and will never be able to adjudicate for every single transaction on earth at once and every payment that anybody ever wants at any time. You will never be able to scale that sovereignly for every single person.
[00:30:31] But you don't need to. You need to scale it to the point that it makes crime or an attempt to steal or defraud unprofitable. And unilateral exit could not be more powerful in that context than basically anything else on the table. And here's the example, here's the reason why.
[00:30:54] So let's say you have unilateral exit in an ark and they're basically like your bank account. But it costs a fortune to take things to chain. Let's say it's going to cost me because of where I am in the ark and the tree and the path that I have to unravel. Let's say if I'm the first one to do it, which that doesn't matter conceptually, you don't have to worry about that because it does matter whether or not somebody else is published and then you're publishing from their branch. But regardless, let's just say it's the most that it could be and it's going to cost me a thousand dollars worth of bitcoin or a million sats worth of bitcoin and to take it to chain to prove that the ownership is mine and I have a million sats in my quote unquote account and the bank tries to screw me.
[00:31:43] The bank tries to steal that money and say that, oh, this is all confiscated because of the government or because, you know, you have the wrong political opinion or you didn't get your vaccine or whatever it is. Well, the reason they get away with shit like that is because there's no, there's nobody else has any say. I can't do anything right now. I can't do anything. Your truckers, the trucker convoy, they get their accounts shut down and their money confiscated. They can't do anything. There's nothing. They have no recourse. They're gonna, what, are they gonna send a strongly worded letter to their representative and they're gonna complain and leave a bad review on Yelp for their bank? As if their bank cares. Because nobody likes any banks. They basically should all have a one star rating. But we're we have no alternative. They can't do anything.
[00:32:31] Now imagine you can burn the money, you can't get it back, but you can set theirs on fire.
[00:32:41] Tell me you wouldn't do it. If a thief was able to steal my money and I could set that money on fire from afar, I couldn't get it back, but I could burn it.
[00:32:54] I would 100,000% press that button. Maybe I can't get mine back because the traffic is too heavy right now in Arkansas or because, like, three massive arcs collapsed or failed all at once and everybody's trying to take their shit to chain. I might even spend 1.1 million SATs to make sure they can't screw me out of a million, because at that point, I lost. And I just want to make sure that justice is served. And I think that incentive and that part of the human psyche is not properly taken into account.
[00:33:29] And this is something that a lot of people have. You know, this is. This is exactly what you get when people are super pissed and they put a billion times the amount of energy into something where they got screwed over for $10 or where somebody clearly was totally dishonest or they lied about, you know, this is, oh, this was over in your yard. So I took it. Or my yard, or whatever you were crossed the line. You know, you have these stupid little disputes that literally turn into people, like, killing each other sometimes and just because they feel so wronged and it was less about, oh, was it worth. Because if you just want to make a simple economic assessment, it's like, oh, you lost. You know, somebody cut a tree down that fell into your yard, or, you know, somebody stole your basketball or, you know, broke it or broke your bicycle, you know, whatever it is, some small little thing. But you felt like there was an injustice done, and. And so you're like, you son of a bitch, you are going to get what's coming to you if you do a simple economic assessment of, like, okay, how much time am I spending making sure that that guy gets what he deserves versus, like, how much did I lose? I lost like 50 bucks, you know, or a $15 basketball, or I had to spend $400 to clean up this giant, just half of a tree trunk out of my yard? Well, then, yeah, it wouldn't even make sense to spend, you know, five solid days worth of work on that. But some people will devote years to making sure that person gets their due. Do you have any idea how many people would probably burn that money out of spite just to make sure? And if the ark was actually being dishonest or the bank or the, you know, whatever the system is that we're using, the Lightning Channel brigade, whatever, if that option existed and there was another Lehman Brothers and shareholders and major stakeholders could burn the money and make sure that the counterparties, the clearinghouses couldn't steal it, couldn't just take claim over it with no recourse.
[00:35:31] How many times, how many more times does that happen?
[00:35:34] How many more times do you get somebody to try to confiscate an entire bank's worth of value and investments and everything and screw over the shareholders who are supposed to be the head of the claim list for who actually gets anything out of it?
[00:35:50] That is scaling. Scaling doesn't mean that every single person at every single moment and for every single transaction or UTXO or amount of Bitcoin that they can always get fully sovereign and complete exit. It's that they are the ones who get to decide and what I mean, fully sovereign and complete exit from an economic perspective and for the exact same reason that I can send SATs, tiny little 21 SAT, 210 SAT transactions on Lightning all day long. And it works. It's because you can't steal that amount. Either it's we be honest or we have mutually assured destruction, but every individual has that option that makes bitcoin revolutionary even in that way, and even in this type of scaling to build an incentive structure where you can just know that if you have to go to court, you are going to be the victor. Even if it cost you $10,000 to get into the damn court. Nobody is at least going to be able to benefit from screwing you over. And our adjudicator is perfectly objective, is perfectly decentralized, is perfectly jurisdiction less. And nobody can tell you that you can't take your case before the judge.
[00:37:07] That is an insane shift in the power dynamics and the adjudicate, like how we settle who owns what in finance, in money today. And bitcoin can scale that way. And I think we're going to come up with another hundred ways to scale it and another hundred ways to make it, to extend that benefit and to even have a potential quote, unquote exit for as many people as possible.
[00:37:36] Because we'll find a way to batch the exits. We'll find a way to basically go from, you know, a CTV batch of transact a shared UTXO to a shared utxo. And I have no idea what that system will look like or you know, how it could, how it could operate. Maybe it's like an insurance system. I don't know. But what I'm saying is that like we can figure out a way to shift.
[00:37:58] I think there will be some sort of a scaling method basically in this realm of concept. And I think this is just how things scale, period.
[00:38:07] Conceptually. I think this is just structurally how you can actually make it extend the benefit. It could extend this trustless relationship to as broad a system as possible. And it's just the simple thing is it's the best way to do credit because it's enforceable credit with proof of reserves and a non political and non trusting adjudicator. In other words, it's actually real credit. It's credit of a real thing with a truly enforceable contract that has no ability to be corrupted. The only thing that has is that it has to share the cost of that enforcement with everybody else in the same decentralized and open system, which makes Arkansas an insanely powerful tool because you can batch all of these, you can lock all of this behind a single utxo.
[00:39:02] This is again, this is why I make the argument for covenants. I think it makes sense because the construction and how you would build this could be far more simpler from a conceptual standpoint and less complicated from a implementation standpoint with something like CTB or csfs. And that's why I'm still interested in those primitives, because I think it's a pretty big base primitive that we ought to have on Bitcoin. And it doesn't change Witness discounts data or it doesn't open up. There's no like new data carrier place to like stick JPEGs or anything. It doesn't change anything about the cost of data anywhere. So I don't see it as being like this big spam risk, which is what I hear from most of the people who are opposed to it. It seems that there's a weird ideological difference which. Except for Chris Guida, which he.
[00:39:53] I believe his episode Wednesday Wednesday. So maybe in two days you'll be able to hear this.
[00:39:59] Chris actually agrees with me on ctv. He was very friendly and is supportive of that kind of a concept and having a basic covenant. And we both kind of found it a little bit odd that the ideological lines for support or not support seem to have to do with the same arguments between, you know, knots in Core V30 is that it's falling along this filter line, which I can't tell if is actually based on either or actually having conceptually something to do with each other or it's just like, oh, there's this I'm nervous, this distrusting of changes group. And then this let's change it, let's get all these new features and all these new gadgets group. And so any sort of a change just kind of falls on that dividend. But we talk about it in the next episode, in the next chat, so check that out. And that was a man. That was a great conversation one way or the other. That was a really, really fun episode. And we ended up talking not a ton about filters and stuff, but we did hit a lot of ideas that I think are very relevant to it. And we talked heavily about the culture and the other layers to bitcoin that we both think are too often ignored or put to the sideline as if they're not important, and the recognition of just how important those things are. So check that out and shout out to Paco for this article. I really love this analogy. I thought this was a very simple way to just get a mental picture of what's going on and hopefully all of my subsequent explanations actually help to make it accurate to how ARC actually works. But I could also have some misunderstandings there. So if I I made an error there, just let me know and call me stupid. Still learning a lot about ARK and trying to wrap my head around it. And you know me, I always love a good analogy and a good article.
[00:41:52] So shout out to him. Don't forget to follow Paco link to the article in the show Notes LEDN IO for Bitcoin backed loans Synonym and the Pub key stack for a decentralized web chroma for Your light health 10% discount with Go Bitcoin, Audible and the HRF and their Financial Freedom Report. All amazing supporters of the show and awesome bitcoiners with a lot of great products and tools. You always know where to find it. And you always know where to find me. Subscribe. Don't miss the next episode of Bitcoin, Audible. And until then everybody, that's my two cents.
[00:42:42] There are only two ways to live your life.
[00:42:45] One is as though nothing is a miracle. The other is as though everything is a miracle.
[00:42:52] Albert Einstein.
