Episode Transcript
[00:00:00] Out of Cycle Update.
[00:00:03] So much fun with our fictitious company from before. We should probably do it again. CryptoTalk FM. My name is Leister. I am your host, A101. Let's take a moment to try to help people because it was clear from our fictitious company example, I think it helped some people. It helped some people wrap their head around a very challenging concept. But unfortunately, it surfaced another challenging concept. There are still some people trapped in the bubble in their mind. And to be fair, there are some very cowardly people out there that are spreading false narratives and it's causing confusion. But I think we've done a passable job convincing some people doing nothing more than sharing basic information they can see for themselves to be the truth and seeing that the truth has set them free. Because unfortunately, the coward narrative is starting to fail. Some of those people that were taking victory laps are now backtracking and taking Ls, as I like to say, the consensus now, it didn't surprise me because obviously you just have to let people fuck up, right?
[00:01:21] It's one of those. You just let people fuck up and that's how.
[00:01:25] That's how you stand out. That's how you are the one who stands on top.
[00:01:32] I said in our fictitious company that you've got things happening and you need to observe and be smart about what it is that you see.
[00:01:44] But it, you know, I missed the piece. There was a piece I meant to cover and I did not have time. I was trying to keep the episode slim and I missed a piece. That is what we're talking about today.
[00:01:56] I met. I forgot to mention our fictitious company.
[00:02:01] It had a. It had a history behind it.
[00:02:04] The history is that it started this fictitious company. It's fictitious, totally fake, no connection to any real world, anything.
[00:02:12] This fictitious company, it started with an idea to be very similar to bitcoin. What would that mean? What does that take? Well, glad you asked. In order to be similar to bitcoin, we have to understand some of the fine points of what makes bitcoin work.
[00:02:37] I give you one term and I encourage you to do your own search and learn about this stuff. I will warn you, it's a little bit difficult to follow because you have to consider the nerds that wrote this stuff don't like to write things to where regular people can understand it. Because if regular people can understand it, it makes it harder for them to rip you off. Right?
[00:03:01] Bitcoin uses the model that's referred to as UT xo.
[00:03:10] It's not important to understand the nuances of it beyond what I'm going to tell you, but it refers to an unspent transaction.
[00:03:20] To simplify it even further, in a world of cash, which I know some of you ran away from, but in a world of cash, you have a dollar bill, you have a $5 bill, you have a $10 bill, you have a $20 bill, $50 bill, $100 bill.
[00:03:39] These are referred to as denominations.
[00:03:42] A denomination is all it can be.
[00:03:46] In the past it was referred to as a promissory note.
[00:03:50] When it was decoupled from gold, it no longer became a promissory note. It is all you get.
[00:03:56] Which is why the government can print and print and print out of control.
[00:04:00] Let's take the $20 bill to kind of wrap your head around the way UTXOs work and the connection to fiat paper currency in terms of how they behave.
[00:04:16] Let's assume that you want to buy something and that Something is cost $15. Okay? All you got is a 20.
[00:04:26] Now you know what's going to happen. You're going to get $5 and change.
[00:04:32] That change might be a single five dollar bill, might be five ones, might be two two dollar bills and one one.
[00:04:43] The point is you're going to end up with something back.
[00:04:48] And these are all separate bills.
[00:04:51] Whether it's one bill or four, you're going to get bills back.
[00:04:57] When you have the bills, you go now, so you have $5 worth of bills. Let's say you have, I don't know, five ones.
[00:05:10] Say you go somewhere else and you want to get something to drink.
[00:05:16] There's something to drink is going to cost you $2.50.
[00:05:21] Now I know some of the younger people out there will struggle at this point.
[00:05:26] But the bottom line is if you have five ones and you buy something for $2.50, you will end up with almost invariably two $1 bills and two quarters might be five dimes. But you get the point.
[00:05:43] The point is that now you have different bills. Okay, you've kept two, right? Because they gave back and change kept two.
[00:05:56] And now you have these quarters, different denomination now it's a different world now. But let's say in a world where something is going to cost you 10 cents, well, you wouldn't give the dollar. It doesn't make any sense to do that.
[00:06:13] You'd give a quarter. Well, if you gave a quarter, you're going to get a dime and a nickelback.
[00:06:19] My point is that in fiat cash you are always going to get change as long as the transaction is less than the denomination.
[00:06:31] That's how UTXOs work.
[00:06:33] UTXO issues you. It's essentially a form of denomination.
[00:06:40] You're not actually holding the bitcoin.
[00:06:44] You're holding something that allows you to spend Bitcoin.
[00:06:48] It allows you to do a transaction, but it's got one thing nobody sees or understands. There are certain wallets that do, but the layman doesn't understand when you do a transaction. So now we have to talk about smaller numbers.
[00:07:06] Let's say you're trying to transact 0.01 bitcoin.
[00:07:13] The problem is that under the hood of that transaction, depending on how many times you've done a transaction with Bitcoin, you might have a single utxo, you might have two, three, four, and each one of them will have a different denomination.
[00:07:31] And it just gets worse and worse and worse over time. So long as you're using the same wallet.
[00:07:37] And the only way to really get away from it would be to move to another wallet. You have to do a complete transition to a new wallet, or you have to do certain tools that let you combine the UTXO into a new UTXO. Why does that matter?
[00:07:54] The more UTXOs that you have that you have to use for the transaction, each one of them has a separate fee.
[00:08:04] So the fee in order to do the basic trade or a basic swap or basic purchase is higher the more UTXOs it takes to do the transaction.
[00:08:16] This is a natural thing.
[00:08:19] Well, let's look at the other side. The other side is referred to as EVM account.
[00:08:26] You'll hear it interchangeably referred. But Ethereum in 2015 came up with the idea of just an account.
[00:08:35] Now, you already know account. It's your bank, right, Your bank. You have a balance, you spend, the balance goes down, you get a deposit, the balance goes up. There isn't any complexity behind it. If you swipe your debit card for that same $2.50, your account gets dropped. $2.50. There's no complexity to it. In and out, in and out, in and out.
[00:09:01] Because it's so simplified, it's flawed. It can be exploited easier than the UTXO model, but the fees can be cheaper because of it's a simple basic transaction.
[00:09:14] Our fictitious company chose at one point to try to be like Bitcoin because it tried to build a UTXO as its model.
[00:09:25] At some point, our fictitious company decided they would move to EVM and get rid of UTXO entirely and simplify it to a basic account balance. Well, what does that do how does that benefit you?
[00:09:38] What it means is that it's easier to build.
[00:09:41] EVM chains are easy to build. Interop, as it's referred to with Ethereum, makes everything easier for you.
[00:09:51] We're no longer dealing with the crazy complexity.
[00:09:55] If you think of something like Tron, Tron is difficult without a central exchange to actually work with it because of the nature of what it's doing.
[00:10:04] When you're straight EVM transactions and the interoperability with Ethereum as a layer over top of it, it makes it significantly easier to work with other tokens, bridge other tokens, deploy wallets, do swaps, etc. Now the downside of course, is that Ethereum is proof of stake.
[00:10:26] Now suppose our fictitious company said, well, let's move away from the complexity of UTXO for now.
[00:10:33] Let's focus on EVM proof of stake, basic layer one.
[00:10:40] Let's focus on something that's easy to get out the door, something that's easy to generate money, and then later put some work in to build a chain that actually is using utxo. But now we got the time to do it because we're generating money from this other chain that we just deployed.
[00:10:59] Some might wonder, well, our fictitious company, they took years to launch anything.
[00:11:06] Consider that it might have taken years for our fictitious company to launch something because they were so focused on building UTXO and it's crazy complexity. Keep in mind how many years it took to build Bitcoin. So was it reasonable to have something with Bitcoin? Let's say that took arguably the Greater part of 10 years to get to maturity, that somebody else would come along and be able to do essentially the same thing in less than two years.
[00:11:37] It wasn't reality, but that was the narrative of our fictitious company.
[00:11:42] So now that it's decided to go Ethereum and EVM and accounts and balances, all of a sudden our fictitious company is starting to have a faster momentum, faster velocity, faster delivery. Does it mean that our fictitious company is going to be successful? Not necessarily.
[00:12:01] However, it does simplify what it is that they must do to simply get the job done and get a chain out.
[00:12:08] Remember, Shibarium is essentially a basic EVM chain, it's a fork of polygon, but you get what I'm saying.
[00:12:16] Shibarium launched, it's out there, it was delayed sorts of issues, clone, sent a book, etc, but it launched, it's out there and nobody uses it, but it's out there and it is what it is. Now of course, that started with just tokens on the Ethereum chain. And then later they launched a blockchain. And that blockchain, by and large, nobody uses it.
[00:12:38] I'm not suggesting that Shibarium is in any way equivalent to our fictitious company. Can't be, obviously.
[00:12:46] My point is, consider what UTXO did for cryptocurrency and then consider what evm, an account balance approach, did for cryptocurrency.
[00:12:58] The UTXO approach is very difficult to replicate in a real world scenario. It's very difficult to do what Bitcoin does the way that it does, which is what makes Bitcoin unique. That's largely the reason the government's left it alone all this time. Whereas with EVM and accounts, these are subject to scrutiny at the highest levels.
[00:13:20] Hopefully everything stated has been at least of some basic benefit to just wrapping your head around the difference between these technologies and with our fictitious company, the changes that they did, why those changes might have been made, why those changes might have been important, why those changes might reach some level of success with no guarantee.
[00:13:45] But it lowers the barrier. It makes it somewhat easier to get over the hurdles and push something across the front finish line, even if it's not necessarily what they started with. You can have all the lofty visions in the world. I can go down the list of projects that gave lofty visions of what they said they were going to do and they were biting off too much more than they could chew, as opposed to simply launching something fundamental.
[00:14:09] Just take look at freaking Saitama, okay? Side of chain, where they essentially were claiming they were going to take over the world with everything they were doing and accomplish none of it.
[00:14:20] Because when you try to accomplish too much, you end up accomplishing nothing. We've seen it time and again, especially in cryptocurrency. Now we have to watch. And of course it's a fictitious company, so we can't see this. But I'm saying if we could watch this fictitious company, we should sit back and watch what they do, because that's. Nothing's changed with the fictitious. Nothing's changed.
[00:14:44] You have to watch and see if it turns from a fictitious company into something that is no longer fiction.
