Tim is the author of popular books such as:
- Great Chain of Numbers: A Guide to Smart Contracts, Smart Property and Trustless Asset Management
- Great Wall of Numbers: Business Opportunities & Challenges in China
Here are some more info if you would like to go deeper into this subject matter:
- Blockchain 2.0 – Let A Thousand Chains Blossom – By Tim Swanson on Let’s Talk Bitcoin
- Episode 99 – Sidechain Innovation – By Let’s Talk Bitcoin
- Episode 77 – The Adam Back Interview – By Let’s Talk Bitcoin
- Paraphrased notes from Back and Hill interview
- Bitcoin Subreddit
What Is Blockchain 2.0?
Tai Zen: We have Tim Swanson joining us. Hello Tim.
Tim Swanson: Hi Guys. It’s great to be here. Thanks for the invitation and to David and Bas.
Tai Zen: Tim is here to talk about the Blockchain 2.0 and I want to turn it over to David and I’ll just turn it over to him with some questions because David is the one who actually told me about the Blockchain 2.0, so you want to start David?
David S.: Yeah. Basically I just got a lot of questions regarding it. Because of the technicalities is a bit too complicated for me to grasp the entire picture of it. So it would be great if you could present the idea of the Blockchain 2.0 and how it would affect Bitcoin.
Tim Swanson: Sure. Okay. So again Blockchain 2.0 is just a filler name, they haven’t announce the actual name yet. To give you guys a background if you haven’t seen it, Austin Hillary of UC, who works in the space about 15-20 years ago with the original sector hacker guys and he’s working with Adam Back who invented hash-cash as well as a few other developers.
I don’t know any specific names involved besides those two but what they’ve done is they figured out a way to use what’s called the 2-8 pegging system to allow basically, to back up the site.
They’re actually… they’re working with large mining. This technique litecoin uses of atomic transactions to move between these merge mine-chain, so calling them sidechains.
What Are Sidechains?
This sidechain is actually not new.
Actually all the stuff that they’re talking about in this announcement have been discussed openly for basically six months it’s putting it all together in a company is the new part and the announcement was like I said yesterday and it’s going to…
I think it’ll impact a lot of the 2.0’s cryptocurrency space especially like Ethereum.
It’s what they want to do with the Sidechains… they want to enable smart contracting and using liquidated assets, HFT a more robust scripting language.
I’m not sure if it’s necessary going to truly compete.
So you have these competing Sidechains but it’s all unified using the Bitcoin name as a kind of transactional currency. I don’t know too many specific details other than they’re going to use it’s two-way pegging system and I don’t know the actual specifics on how that technically works.
There’s a thread I’ll link to in an article I wrote.
It was Gregory Maxwell explaining it and apparently this method has been signed off by several other core devs.
I don’t know exactly how it will impact NXT per se.
It it’s just more competition for you guys in an organized manner. I mean these guys have funding, they have shipped products before.
So it’s not like another you know, no offense to Bitshares but it’s not like Bitshares.
Yeah, I know. I hope everyone survived.
It’s just you know if there’s so much talk in the space, not enough shipped code and these guys at least have a proven track record of actually shipping production code.
So any questions?
David S.: Okay, let’s have a question from Tai first.
Tai Zen: So what makes this so exciting and such a big thing in the crypto-world right now Tim, other than the fact that it’s coming from a group of guys that has been proven to produce code and products before?
Tim Swanson: Sure yeah I think that the biggest issue is they’re actually, the fact that they’re continue using ASICS and that you going to have these shareholders of Bitcoin are going to want to promote this. What was happened is in the last year you seen, you know about eight projects spring up or you know last eighteen months, eight projects and its move mineshare away.
You know you guys are taking mineshare away to a different system and as result those who hold Bitcoin are torn, right, like oh I like this new idea of NXT but I have these assets and I want the assets to appreciate in value by creating new utility with the actual system itself in currently. It’s actually going to be easier for them to evangelize.
Basically this created a whole file of evangelist for their new product and once people especially the anti-alt-coin crowd learn about how the system works they’ll be all about promoting it and so I’m not saying that this exactly will happen tomorrow but there’s a built-in incentives for those who hold Bitcoin to promote this product.
Because it benefits them a hundred percent by bringing more utility, more developers back into the space around the existing ASIC framed infrastructure.
Tai Zen: So basically it’s easier for people to promote it because they already have a stake in the Bitcoin?
Tim Swanson: Yeah I think there’s no downside to it but like people telling, so this is a 2.0 system we can believe in because it benefits us. I am not saying that’s going to be the selling point but as a Bitcoin holder in a few holding this is a great way to increase the potential utility of your own system and therefore the price appreciation of your token.
Because in order to use these Sidechains you’ll necessarily need to use Bitcoin tokens so initially to move between, so therefore it creates more demand for the underlying asset.
Tai Zen: So just to make sure I understand correctly. You’re saying that the side blockchains are able to connect into the Bitcoin blockchain and so that the Bitcoin tokens (currency) can flow between these different blockchains?
Tim Swanson: Essentially yes, they don’t actually moved to the other chain there in Adam Back’s term there’s a firewalled off and it’s done through an atomic transactions.
So if guys are not familiar with atomic transactions, the easiest example would be, if you’re trying to register for a flight, when you click your seat you either get the seat, the time or you don’t.
There’s no like you get half and half. So you just transfer all the way and it’s known property within the crypto ledger space and that’s what they’re going to trying to do to move between these chains.
Tai Zen: Alright. The name Blockchain 2.0… could you clarify that so that the viewers know exactly that the difference between that in the crypto currencies 2.0 like NXT.
So that there’s no confusion there because the term 2.0 makes that sound like it’s an alt-coin and from your article on Let’s Talk Bitcoin it does not appear that this is an alt-coin, that is a part of Bitcoin.
Tim Swanson: Absolutely yeah, so that was their own term, they call it Blockchain 2.0. I think want to say that, “hey we’re going to have these features in 2.0 that these alts have but we’re not an alt.”
They’re not creating in their words, they’re not creating another scarcity chase or scarcity war because no new Bitcoins are created.
You’re just going to create these sidechains and these sidechains will create this extensibility. Like I said via smart contracts or via created assets.
So, yes they aren’t technically alt they are just an extension to the existing code base and this is where it’s interesting because you know they had, since they hired Core Devs and the Core Devs work in Bitcoin main, you know it’s been I think it’s a easier way for them to actually get what they want to have done.
It’s actually smart, you’ll have people I know complaining about you know that’s not fair blah, blah, blah, you know it’s the way the system is.
Tai Zen: When you say that people will complain that it’s not fair? What exactly is not fair about it?
Tim Swanson: Sure, I’m not sure if you saw the Counter Party fight about two weeks ago between a couple of core developers for Counter Party.
There was a feature, non-feature called “upper turn” which was announced in October by Gavin Andressen and he said “hey we had this 80 byte hash and you can do extra self with this hash like distributed contract.”
Right before 0.9 a Bitcoin D was released. They actually reduce it to 40 bytes and you know there’s no actual technical, I mean they give the technical reasons like this is not what it’s supposed to be used for, it’s supposed to be used for ECDSA, right?
But in the long the short there’s really no big difference between holding forty-bytes to eighty-bytes. So based on the emails I’ve gotten in the last couple days, you know I’ve had some people, someone contacted different groups like said this was not fair, that was a conflict of interest, the reason they reduced it is because they’re working on another competing project.
So that’s the only reason I’m saying that people might complain.
It could be seen as a conflict, I’m not saying there is, again I try to be as diplomatic as possible. I think it’s cool to have more competition in the space but that’s the comment I was referring to.
Tai Zen: Okay. You have another question, David?
David S.: I’m just so wondering you have any opinion on how it’ll affect Mastercoin, different material problem, Counter Party and NXT?
Tim Swanson: Sure, so there’s a difference between what they have on paper and what they’ve announced as well as what they’ll actually execute on. So again there’s no ship code. You just have some really, really clever smart guys who understand this stuff.
Immediately, I don’t see it necessarily impacting anybody, it’s just going to make everyone want to work faster because you see this competitive force coming right at you.
Long term, if they execute on this obviously it will move mindshare back to square one which was the Bitcoin community. So, I could be wrong but you know I think this could affect Mastercoin and Counter Party in the long run but you know this is assuming that they execute what they’ve mentioned.
Bas Wisselink: I’ve been reading the article during your talk, the one that was link to the sidebar and as far as I seem what one of, they’re trying to do the same thing as a lot of 2.0s, yes and at the same time keep the net worth that’s already there. They’re try to take that, they try to get that in from the start instead of the other like us and the other 2.0s who are building. Is that basically what’s happening here?
Tim Swanson: Yeah in a way that one of this takes these cool ideas everyone else has been working on. Creative method to “hey but we already have all this couple of rate of A6.” We all agree A6 is almost dead weight like this is over there’s no there’s no uses after your 50 percent in the hash rate has this special protection. So how can we bring back utility to do actual other things with this net worth either than extra solve heavy you still have overhead but it does solve the fact that Bitcoin only you know tracks one particular asset you know for one particular thing.
So that they can integrate all these other different features in an experimental fashion where it doesn’t affect Bitcoin name and it’s really a brilliant idea. I’m not necessarily endorsing it, it’s just you know really cool looking at how they actually trying to approach this.
Bas Wisselink: Well that’s not an idea I’m always interested in these things. The first knee-jerk reaction of all these things is too share it took a way it’s competition but one of the things that I find in all these projects is that competition works. As you say it gives everyone an incentive to see where they are and what their deadlines are at the moment.
Tim Swanson: Yeah, I totally agree.
Tai Zen: I think that based on what you’re saying, Tim when they have the core developers involved from Bitcoin, I think that means a lot credibility to their project and the fact that you claim that they have produced results before that gives further claim to their project over the other crypto-currency 2.0s.
Tim Swanson: Yeah again I’m not necessarily endorsing them but they went with the right approach. I just finished writing a paper on this like explaining how you have this unused asset, these volunteers who are really smart and really skilled, that’s not I mean. No offense to you guys in here but there’s not many people who can actually build a blockchain like I was going to put you in a room and say” hey, build a blockchain”. And you can’t use anybody else so you have this scarce labor that is not being rewarded.
So you know you have, if you have that ability, you want to create, you want to be rewarded for that so you’ve created 2.0. Well this is a way, you know, I see these valuable people, I’m going to hire you and since you already have this inside knowledge this is get you to work on the system as it is. So I think it’s a brilliant crew you know, give them an advertise for thinking of it.
Tai Zen: Would you say that will likely draws drain talent away from there the crypto-currencies 2.0s like you know like max or ethereum or any of the other 2.0 currencies?
Tim Swanson: I’m not sure if you’ll see necessarily like Daniel Aleromar or leave, bitshares or Erbitulic leave Ethereum but I think people who may have gone to work with them and in either involuntary capacity or actual in a business capacity that they might may consider that and you know begin to work on this other project. So that’s my assumption going forward I don’t know if that will be the case.
Tai Zen: Any input Grabatton?
David S: No.
Tai Zen: Okay.
David S.: I guess so. I just got a quick question. Our transaction’s going to be confirmed factor than Bitcoin?
Tim Swanson: Yeah, great question. So each sidechain will it looks like it will be, what have any actual new blocks it’ll be fee-bays. So basically, I’m not sure how the times work but there was a question that Adam Levine ask these guys and this say, “hey lookup”. Initially it’s going to be kind of like the name coin merging but they want to basically create HFT capabilities where they can do tens of thousands, hundreds thousands of transactions per second so faster block faster timings. I don’t know exactly how they’ll do that with a merge mining process.
I’ve read the different forms post, the longs the want to recommend people I’ve read through this Hilary Storm about seven months ago on Bitcoin talk to a staunch actually Alex missed it, leave it up to colored coins and he posts you know how merge mining works and you could do different types of cool things with it. To answer your question you know technically, apparently there’s a way it’s actually do faster confirmation times, faster respect transactions per second.
Tai Zen: What happens if some crypto-currency 2.0 like NXT comes out and not able to see these transactions speeds us everyone is dreaming of.
Tim Swanson: Well I think VISA will call you up and hire you all. So what are the hardest problems and this is not to a knock on the community which in a decentralized system you going to have some overhead because you have all these different systems going at the same time. In a centralized system, typically is easier to do these confirmation times because you know exactly which nodes you going to go at. I think NXT is actually has a smart idea in fact in you guys RNG to a specific forger right, that’s how you guys do this.
So it’s pretty clever if you guys could somehow speed up the block timings. It’s a significantly you might be able to compete at some point but you know if you just look at the amount of volume and how much it cost for the transaction. The actual transaction costs for VISA so are like .0005 cents something. It is itty-bitty per transaction you know all this there’s a lot of other middle players take different pieces of it but the idea that you could actually compete with these might end up having just to create a facility like VISA that kind of defeats the purpose is being de-centralized right?
Tai Zen: Yeah.
Tim Swanson: If you’ve seen that already that’s on the new issue. So I wish you guys’ good luck by the way, if you guys could do timings like them and that’d be really cool.
Tai Zen: Yeah and that’s what they’re currently working on. So we’ll see how it goes you know it’s one thing to what say it but it’s another thing to actually produce code that produces those results. So what keeps on a blockchain like that the next blockchain from merging with the Bitcoin blockchain with this Blockchain 2.0. Is that even possible? Is that something that so farfetched that you know we shouldn’t even talk about it?
Tim Swanson: Sure, the most important thing people should be aware of this merge mining is you have to get the minor mining pools on board because you know again consensus is reached through the mining network and they’re going to reject code that’s not possible to them. So we have to do and this is what Austin Hill said in his interviews it contacted mining pool to get them on board. I don’t know how they did that I’m not sure how many mining pools are on porch. If you don’t have them onboard you’ll have a problem with 51 percent attack.
So like this will happen, there’s in two years ago coiled coins attempting to do emerge lining without getting these guys on board and it’ll legits which look juniors pool they did a 51 percent attack. So you know that you really have to get these guys in is you have to give them the incentives to actually cycle through your code in a sense and you know as a proof of state there’s no mining really involved although I just saw some pointed mining system, NXT, mining, I don’t know what to think of it, that the has nothing to do with this right now.
Tai Zen: Yeah, okay that’s all the questions I have for now unless if you guys have any other questions for Tim.
Bas Wisselink: Well that’s one of the things that’s not the technical plot but it’s one of those things that I was asking earlier about basically you’re also added this 2.0s also profiting from the fact that there’s already a big community behind it. One of the things that all the new 2.0s, the problem with this building community and getting to some form of critical mass, you’re already saying this also with the 50 percent of problem. If you don’t have critical mass you die. That’s probably what happens in this in the whole.
What’s your view on that and this is also about to do team of all these projects together if free for about four or five. What’s the way to go in this, is this the best way working together, sharing things etcetera, no idea.
Tim Swanson: Sure, yeah, again I don’t have to the best idea for you had one idea that you did couldn’t possibly look at. So you saw what happened to Oculus you people donated $250,000 worth the money to any go-go and the newer bought didn’t receive any kind of equity. If it hadn’t been for $250,000 it wouldn’t been able to succeed it to get to that point, right, and so one way to get around that in the future is due to crowd equity.
Basically any good, the Oculus could issue some shares and if they could done this in crypto-graph manner. There’s two projects that I’m aware that they are trying to do this join mine FEO which is through animals and he’s one of the guys in the colored-coins team. Basically the issue at least dividends of shares and through that Bitcoin eco-system used that colored-coin wall to track it so something like that.
Another one that I’ve been actually trying to help out of a little bit is let’s top-tip Bitcoin, it’s LTDcoin.com and basically they would do the same thing for content like Huffington Post this and pay their bloggers and yet they you know they benefit from the traffic from it. So one way to do this is it’s a “hey, if you post content or you post a comment we will give you a token, right, so it creates this desire to actually improve us some. It’s obviously a game it’s like that but what some of this 2.0 project can due including those you know NXT, you guys are still relatively young maybe it’s in addition to down knees you say “hey if you’re producing this stuff, here’s a percent of equity.
It’s harder to do since you already launched but so if you’re in this is something I’ve been trying to tell them about like dude, you guys they have by the way like 60 founder, like “founders shares” now like it is up to 60 people who are receiving the same and that eventually could cause conflicts because what if you done just as much as you’re number 61 it somehow lost hour right, so you want to create, you want to create a spy and you want to create an incentive to get people to actually want it. Continue reinforcing this so doing some kind of crowd equity might be awaits it to get people on board.
I don’t know how you do after you charge you know begun shipping like you guys have that’s something we talk about that later if you like but these are good questions from Bas.
Bas Wisselink: Thank you.
Tai Zen: I’m still, Blockchain 2.0, is there, can people invest into that or is it ot they going to have like IPO, like ethereum or is this something that’s going to be a set of token that’s going to be issued when they come out or is this all in house? So how does this work I mean like from an investor’s perspective right? Is there anything I can do to get involved in that other than home Bitcoins?
Tim Swanson: Yes. What was your question?
Tai Zen: What if because I’m not a technical person. All I need know is hey basically what’s in it for me you know, dive and invest into it done and look into it, I preach about it, what is it that they’re offering besides their products and services?
Tim Swanson: Sure so again this is just based on what I’ve known from people whom I’ve talked to. It’s public information at this point is that there’s one company which is funded by Austin Hill again, Austin Hill is busy, you guys could look him up, he’s really active on Twitter and he’s you know, I don’t know how the investment model works with his company. I’m not sure if you could email and say “hey I’m an angel I want to put some you know certain amount into it. I don’t know how that crypt- specific investment works.
I don’t think if they will do a public IPO like Ethereum or our master coin or some kind of burning like counter party did. I think it will this be a company and the way that they will monetize I’m not quite sure. Maybe they’ll license it to enterprise it because ultimately they see themselves as a blockchain company not as a Bitcoin company. They want to figure a way to do you know utilize this technology to bring it to enterprises and institutions and help out asset managers and so on.
More to the point I don’t think that there will be a necessarily any additional tokens you could buy on these sidechains like I initially starting off like Adam Beck says he doesn’t want to have another scarcity race. So I don’t know if maybe if you create three or four different sidechains, if you move, want to move Bitcoin to one of these chains, there’s got to be like a value like one to one thousand. I don’t know that breakdown or how that works. I’ll let you know as soon as I do though.
Tai Zen: Okay and let us know if he’s interested in using Nexus the token.
Tim Swanson: Sure, if I figure anything about that yeah
Tai Zen: If you want to use Nexus to pay all of his developers.
Tim Swanson: Yeah I’ll let, I will put that down, I’ll ask him.
Tai Zen: Okay, Tim thanks for joining us. Do you type in the chat your blog or where people can reach out to you or subscribe to some of your material or some of your content?
Tim Swanson: Sure here’s my email address, here is my Twitter, and here’s my website. Just a little disclosure I actually work in a completely different area. I do, I worked in China for a while and most of my clients they’re still in China. I do market research for Chinese companies basically. So I do, the crypto stuff is a really cool it racked my brain, I have to think of new things and if everyone is really brilliant and really friendly to me and they teach me. They’re all smarter than me. I’m actually helping teachers.
==================================================After our interview, Tim sent me an email with the following message to clarify a few points:
“By the way I can now clarify the two-way exchange peg from that video. Adam posted some clarifications, it will be 1:1 on the public chains but can be higher on private chains:http://www.reddit.com/r/
So I should go back in time solely to restate it won’t necessarily be 1:1000 unless it is on a private chain.
So to answer your question they will fork any NXT code they find of interest, dump your team, dump POS and that’s it.”
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