Bitcoin's 2024 Revolution: L2s & Beyond | Eric Wall

I mean what what we ultimately need for Bitcoin is we we don't I actually I I'm not that convinced that we need to

take you know all everything that Ethereum has done and put it onto Bitcoin. Like we don't need all of the Ethereum stuff to exist on Bitcoin. I don't think so. But I what I do know that we do need

we we we just need a way

for me to be able to send Bitcoin to you

in a in a scalable and private fashion, just so that Bitcoin as a currency works.

Welcome to Bankless, where today we explore the frontier of Bitcoin layer twos. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. The big question can Bitcoin scale through layer twos the way Ethereum has? I think that's the most important question that Bitcoin builders are facing today. And it's hard. There's a lot of noise out there. We've got to find out what's real, what's narrative, what's a scam, what the future actually looks like for Bitcoin. That's why we're having this episode today with Eric Wall. He's on today, and he's got the most thorough take that uh Dave and I have heard on this subject. He's the perfect guest for this because not only does Eric tell it like it is, he also understands both Ethereum and Bitcoin. So a few topics we get into in the episode. Number one, the ordinals and runes awakening, why that is upon us and what effect it's had. Number two, why lightning failed. Number three, the state of Bitcoin layer twos. Where are they today? Number four, we talk about Bit VM and the fatal flaw it might have. Number five, we talk about the answer, the solution, the cat opcode. You'll have to hear Eric talk about that and evangelize for it. Number six, Eric's message to us be extremely cautious when you hear the words Bitcoin layer two and why he says that. And number seven, why Eric is optimistic about Bitcoin's future and the building that is going on today.

The progress of what you can do on Bitcoin, uh, the evolution of Bitcoin, I think it actually runs in parallel to the story of Eric Wall himself, early Bitcoiner who like self-described as becoming an outcast out of Bitcoin because the laser-eyed monetary maximalists decided that don't put any sort of ZK magic on Bitcoin. That's not what it's for. Uh, and then entered the Bitcoin uh dark ages where Eric Wall was forced to look elsewhere for scaling solutions. And that's where he found the layer two space outside of Bitcoin, but still had like his first love. These are all his words that I think he used to describe his own arc when we did our first episode with him. Eric Wall comes back and kind of gives us an arc of the Bitcoin Renaissance, how it started, where it's gone, and and what the current frontier is, the current limitations, too, of uh the Bitcoin layer two space, uh, and what might be next steps for the actual technical evolution of the Bitcoin protocol. So uh just a really a masterclass in Bitcoin, I would say, uh, along with just like the current issues, current events of the time. So let's go ahead and get right into that conversation with Eric Wall. But first, a moment to talk about some of these fantastic sponsors. Bankless Nation, Eric Wall is a crypto OG, first enamored by Bitcoin and the many irreplaceable properties that Bitcoin has, and then later also by many of the technical research breakthroughs in the Ethereum ecosystem. Eric now finds himself straddling many different universes, but all with strong cryptography and trust assurances underpinning what Eric finds interesting and pays attention to. Eric also recently shaved his head because the ETH BTC ratio broke below a certain level that he said that it wouldn't, even though no one really asked him to do that. Eric, welcome back to Bangkok. We're happy he did, though.

Well, there are some people that insist that Eric uh doesn't just lose a bet like that. So they think that the reason that I uh shaved my head was because I was camouflaging uh a hair transplant.

So that uh I lost a bet in order to get a hair transplant without anyone noticing. And I'm fine with either of those theories. Uh I'm happy either way.

Wait, but like

Or maybe both.

what was the real reason? So wait, did you did you shave it in solidarity with Ethereum or in solidarity with Bitcoin? Or j like what was the I I'm not familiar with the whole whole story. Just David showed up one week to me and he was like, Yo, Eric shaved his head

There's multiple reasons. Uh uh we could say I shaved it in in uh solidarity with the fragmentation issues of Ethereum.

Thank you.

Or you could say that it was um there was this guy who kept uh haggling me over a prediction that I made that we were all we had already reached the uh low for the year for the ETHBTC ratio.

And so I kind of bundled all those together and just shaved my head. And I think I think I was kind of done with the man bun anyway. I think the man bun had lived its life, so I think this is for the better.

Are you ready to make another prediction on the show today about the ETH Bitcoin ratio? Have we now can we call hello? And what will you do publicly? I want you to what will you do

if you're wrong about that?

Yeah. I think uh I think we've reached low for the year. Uh I don't know which parts of my body I've left to shave.

It doesn't have to be a shame. It could be like tattoo.

Do a tattoo.

You could fight David. People are doing that in the world.

One at a time. Everyone get in line.

I'm I'm happy fighting David if I get to join the ring with Nick. I think me and Nick together stands a chance against Nick. Oh my god.

Actually the first time I ever met Eric Wall in real life, I think I was immediately put into a pretty aggressive headlock.

That's true. That is that's one of the reasons that I uh I fear for Nick because you were kinda like I don't know how if I could have gotten you down. Like you're kinda you know

Resistant. Well, okay. Since we're going into the story, like this was at ETH CC right after COVID. So this was the first time I was meeting basically everyone I had been talking to online for the last like three years. And I'm in line at some party for I think like the bar or something. Uh and I get put in a headlock. And I'm like, oh, okay, somebody uh somebody who I know is putting me in a headlock and a friendly headlock. Uh and they're gonna let go, and I'm gonna turn around and realize who this is. Except then, like, the being let go never really happened. It was just the headlock just got more and more intense over time. Dude, it's a Bitcoiner headlock. We're not dabbling with an Ethereum headlock here.

I I think I think my I think my main gripe was that uh you guys in the Ethereum world have started to call Ethereum clients that just uh sync the Ethereum state rather than executing every single transaction. You call those full nodes, whereas in Bitcoin, we have to validate every single transaction. So I was like, there's David, I'm gonna I'm gonna punish him for this. Diluting the term of what a full note actually means, uh coming up with new terminology and shit.

And I guess that's what we're gonna talk about a little bit today. Uh what's the definition of an L2? And there's also been like a degradation of that term, which you guys have also played a little smart part. I have too. Like we all we're all guilty of uh degrading what it means to be an L2. Yeah.

Um

I love when Eric Wall comes on an episode because I know we're gonna bring back the purity of decentralization and why we're here.

Untrust.

We should get into it then.

Let's let's set the landscape a little bit. Um, Eric, uh almost two years ago, November of 2022, you and I did an episode discussing the technical potential of ZK layer twos on Bitcoin. Uh this was like it was only 18-ish months ago, but still super early. Like ordinals weren't a thing, runes weren't a thing, everything was completely theoretical. Uh, and now not only do we have both tokens and NFTs on Bitcoin, but now there's this emerging class of layer twos on Bitcoin. Um, how would you like explain or characterize the arc of what Bitcoin was back then? I'll call that like 2022, 2021, Bitcoin Dark Ages. Maybe you you agree or don't agree. Uh, but like characterize the arc of Bitcoin technological progress uh since then. Like, what do you think about the current direction of Bitcoin?

If I recall correctly, I think the origin of that episode was that the Human Rights Foundation, together with a uh a grant from Starkware and CMS Holdings,

uh assigned a research paper to be written about what are the potential scalability benefits of putting a ZK rollup on Bitcoin

within the uh block size constraints of Bitcoin. Like if you just use the full four megabyte block that Bitcoin has.

How far can we get with the ZK rollup in like ideal circumstances?

And John Light was the person that wrote that. I I was the person the at Human Rights Foundation that sort of selected the person to write the paper, and I selected John Light because I think he's uh

uh what I liked about him was that he was actually sort of anti

ZK rollups before writing the paper, but I know that he's a neutral guy and he's gonna stick to like what the research says.

And the results that he came to were pretty interesting. Like we could be looking at

Uh a 40x, 50x scalability improvement on Bitcoin if we had a ZK verifier and a covenants opcode on Bitcoin.

So that was like, I think back then what we were excited about was that well, if we actually had um ZK rollups on Bitcoin, the uh uh not only would the scalability improve uh significantly, but we would also be able to tap into the full expressiveness that ZK rollups give.

And uh that could also lead to privacy uh enhancements because if you have uh you know zero zero knowledge uh proof, you can embed any type of virtual machine, private or non-private, into that as well. So

ZK rollups suddenly like came back to the scene as this is like a real uh this has a real potential to improve

Bitcoin on all the uh on all the uh sort of facets that that uh we could think of. So I think we were just trying to bring back ZK rollups back into the this into the discussion of what should what should the next soft fork in Bitcoin be? And there were some people at that time that were thinking that.

You know, a ZKP verifier opcode is maybe not impossible to get into Bitcoin, so maybe we should look more into that.

But to sort of describe the overall arc of what has been happening since then is that

I mean this will still like ZKP verifiers in Bitcoin

were still,

you know,

there's still a lot of people that need convincing, and it's not only the people that need convincing, it's also

Which type of ZKP verifier do we

do we uh put into Bitcoin? Because it's not like in Ethereum where

like you have a roll up and you can just upgrade the rollup to use uh you know, we we we usually have like admin keys that with a delayed function can upgrade the roll up to use some type of new circuit if you find a new one.

But in Bitcoin we really have like one soft fork, and then we have one uh one serial knowledge proof system, one proving system. And that now maybe has to be the serial knowledge proof way that we verify things in Bitcoin for, I don't know, five years, ten years.

Right.

So we only have like one.

Right the first time.