Bitcoin & Crypto & NFT News
Bitcoin.com chatted with the Chief Scientist of prediction market protocol Hivemind. Paul Sztorc, who also works with the blockchain firm Bloq, gives our readers an update on Hivemind, his work on peer-to-peer sidechains, Blockstream’s Liquid, Segregated Witness and more.
Also read: Hedge Funds Are Buying Mt Gox Bitcoin Claims
‘Sidechains Will Allow People to Work on What They Want’
Bitcoin.com (BC): What’s new with Hivemind?
Paul Sztorc (PS): Hivemind has gone so well that work on it has outstripped the work on its prerequisites. In other words, Hivemind is a sidechain of Bitcoin, but in 2015 my work on Hivemind ended up being more complete than anyone’s work on sidechains.
So I have moved ‘down the stack.’ I paused my work on an individual sidechain to work on “sidechains” in general.
BC: Can you tell our readers how you are working with sidechains?
PS: It became clear in 2015 that no one was actually working on making P2P sidechains. So I gave the problem a few weeks of thought, and published “Drivechain” on my blog in November 2015. Since then, most of my full-time efforts have been on drivechain itself.
BC: You recently retweeted something in regards to “concerns” with Blockstream’s Liquid sidechain. Can you tell us about this?
PS: Firstly, Liquid is not peer-to-peer, it uses a federated model. The federated model is very old – it is effectively a single multisignature wallet – and, in my humble opinion, it is boring. The security model is unlikely to scale, because if ‘X=7’ keys are compromised, then the wallet can be emptied, and divided among the seven conspirators. So it is unlikely to work for more than, say, $70 million.
However, my main problem with Liquid is that I don’t understand how it is useful. Supposedly, it allows exchanges to send BTC payments to each other, quickly. However, this is exactly what payment channels do. My understanding is that Blockstream charges money for Liquid, but payment channels will do the same job for free. In some sense, Liquid is a bet that the engineers who work at Bitcoin exchanges will be too stupid to figure out how to use payment channels. And, once lightning is operational, the exchanges can just open lightning channels with each other.
One individual replied to this concern by claiming that Liquid contains Maxwell’s confidential transactions technology (which blinds transaction amounts). And yet, the LN channels that these exchanges will (eventually) use with each other have even *greater* privacy than CTs, because nothing is shared publicly at all.
BC: What are the benefits of using sidechains over altcoins?
PS: There are many. The big one is that anyone can code up a blockchain project and deploy it, without also facing the near-impossible task of bootstrapping a new unit of money.
BC: What is your opinion of Segregated Witness consensus?
PS: If memory serves, Segwit was, in fact, the compromise that everyone had consensus about. Segwit was itself the terminus of the first two Scaling Conferences. Given that Segwit gives (almost) everyone what they want, ‘Why is it not activating?’
My interpretation is that some miners are using Segwit to punish a separate group of people. Segwit is unlikely to reach the 95% activation threshold until  these miners feel that their enemies have suffered enough,  the activation strategy is changed to circumvent the miner-veto.
BC: How do you feel about the current state of Bitcoin development?
PS: In one sense, development is fantastic. Many smart people, all working hard, on fantastic stuff. We see tremendous specialization of labor and wonderful inventions.
In another sense, it is a disaster. This is a difficult place to work for many people. There is a constant developer shortage. Developers often work 24/7 and don’t have time for peer review or public education.
At the same time, poor work can potentially destroy Bitcoin for everyone. The result is a dev culture that is very paranoid, irritable, and hostile. And with some justification – much of the work is useless or an outright scam, and most of the good ideas are unintentional duplicates.
Part of the problem is that Bitcoin’s tamper-resistant design insists that all upgrades have near-total agreement. Sidechains can fix this by allowing people to work on what they want (i.e., allowing people to make their own mistakes).
We could also improve things if there was some kind of reputable repository of knowledge – like a textbook, an academic journal or an up-to-date wiki. Due to the polarized climate, such a resource would likely be captured by one side, and de-legitimized by the other.
BC: How is your work with Bloq going?
PS: I enjoy it here because I have the freedom to direct my own work. Bloq is not very large, only 15 or so people. But I like being a big fish in a small pond, so the saying goes. I also feel that we have a rare mix of innovativeness and practicality.
What do you think? Let us know in the comments below?
Images courtesy of Paul Sztorc, and Shutterstock.
Do you want to talk about bitcoin in a comfortable (and censorship-free) environment? Check out the Bitcoin.com Forums — all the big players in Bitcoin have posted there, and we welcome all opinions.