Adam Back at Paris Blockchain Week 26: @LiquidNetwork, Post-Quantum BTC, & Institutional Adoption

Added: 2026-05-05

[00:00:00]So, I'm going to talk about Bitcoin layer two.

[00:00:03]So, Blockstream has you know been around since 2014. We were very early in developing lightning, the most well-known Bitcoin layer two.

[00:00:13]But, we also developed something called liquid starting in 2015.

[00:00:18]The network went live in 2018.

[00:00:22]It is more similar to Bitcoin. So, it's basically a branch of Bitcoin with some additional features.

[00:00:31]That being confidential transactions. So, not not exactly privacy, but the transactions are such that you can look at them in a block explorer.

[00:00:41]If you're not party to the transaction, you can't see what asset type it is, if it's a stable coin, if it's a Bitcoin, and you can't see the value, the amount of the transaction, the amount of the change.

[00:00:53]And so, it gives you an interesting form of privacy, which is confidentiality for the amounts and for the asset types.

[00:00:59]Um this chain, liquid, has native asset support. So, you can issue and the network can actually natively understand the type of the asset. So, it's not like a colored coin scheme or like RGB.

[00:01:14]And So, you have the native understanding of the assets.

[00:01:20]And you can do very simple types of atomic swaps. So, that's used for kind of D 5 like things so that you can you know place a limit order, sign a transaction, have a central order book, match that without custody, and there are wallets doing that kind of thing.

[00:01:38]So, with Blockstream, we you know we're in the Bitcoin layer one space with hardware wallets, software wallets, HSMs for you know general Bitcoin users for cold storage.

[00:01:50]We have a lightning, liquid, and Bitcoin hybrid wallet that gives you the advantages of lightning and the ability to do storage on liquid and on Bitcoin and to move between those layers.

[00:02:05]Um And we have also enterprise wallets. So, for businesses and ultimately for custodians. So, HSM based wallets for custodians.

[00:02:18]So, I think people tend to think about Bitcoin as just the asset class, but actually Bitcoin was the obviously the first blockchain, the one with the longest track record, the best Lindy effect, but also came with smart contracts, and liquid extends that a little bit. So, firstly, it's had covenants since the beginning.

[00:02:39]It had Schnorr signatures before Bitcoin. It had the timelock op code before Bitcoin. Recently, we added Shrinks, which is one of the post-quantum signatures. So, that's also live on liquid. And it has a soft extensibility mechanism, which is simplicity. So, a lower level smart contracting system. You can think about it like microcode to implement op codes or something like that if you're into programming.

[00:03:07]Um So, between lightning and liquid and Bitcoin, you have you know a great deal of interoperability. I think the other thing that's evolved in the Bitcoin layer two is that lightning has become the interoperability layer.

[00:03:21]So, people are moving lightning you know making channels, doing atomic swaps with liquid Bitcoin with lightning to rebalance channels. So, they're able to get in and out of liquid layer two using lightning. They're able to move balances into Arc and other new Bitcoin layer twos using lightning. So, lightning has become evolved to be the kind of interop mechanism, the go-to interop mechanism.

[00:03:49]So, I think you know liquid is a critical part of this.

[00:03:54]You've got the confidentiality, native asset issuance, and rapid settlement.

[00:03:58]So, the analogy for mining on liquid is actually signatures, block signing by a network of validators who are generally Bitcoin ecosystem companies. There are about 80 members in this network now.

[00:04:15]The size of the network and the membership of the network, the people with the HSMs that sign the blocks has a way to evolve. It's currently 15 with a kind of quorum signing.

[00:04:26]And those blocks come out every minute.

[00:04:28]The blocks are actually the same size and weight as Bitcoin blocks, but they're 10 times more frequently cuz it's 1 minute instead of 10 minutes on average. So, you get similar kind of capacity there because the confidential transactions are bigger. There's a size overhead for that. There's about 5 billion of different kinds of assets on liquid between stable coins, tokenized shares, MicroStrategy, Metaplanet, recently Capital Bee, which is based here in France, and H100, um a couple of billion worth of promissory notes, so small business loans in a kind of digital bond format, and various other assets, some corporate bonds, some hash rate contracts.

[00:05:16]So, I think you know this that liquid has a lot of the benefits of predictability, Bitcoin's security history cuz we make very targeted and careful changes on top of the Bitcoin code base and so benefit from Bitcoin's security track record and you know security focus. We we aim to retain that in liquid.

[00:05:43]The Blockstream development team also is you know very big in the development and maintenance of libsecp256k1 library, which is the library that the Bitcoin network uses.

[00:05:54]And we have extended version of that that adds confidential transactions and some of the more new privacy and confidentiality based cryptography for example for the Schnorr signatures and bullet proofs and things like that.

[00:06:18]So, we began with a simple idea.

[00:06:23]The vision of Bitcoin was beyond a store of value.

[00:06:27]And so, as the space matures, we you know we see different types of entity entering the space. Companies, you know with the evolution of the phenomenon of companies using Bitcoin as a treasury asset. Blockstream itself was kind of a very early treasury company in that it with our seed round in 2014, we negotiated with the initial investors to put some of the capital into Bitcoin.

[00:06:54]And so, we had some of our cash reserves at all times in Bitcoin over the years.

[00:07:00]And but now we see you know all kinds of entities, pension funds, some US states, some governments doing mining, some sovereign wealth funds investing in Bitcoin and infrastructure building around it as the traditional finance companies are starting to want to hold Bitcoin or work with custodians, and some of the custodian banks now want to become digital custodians or partner with existing digital custodians.

[00:07:32]So, we think that Bitcoin is you the uh best the actually the only investable crypto asset in my view.

[00:07:41]Very people's opinions may vary, but also the most dependable and security focused chain that's been around the longest. And so, we think it's the conservative choice ultimately to use Bitcoin and Bitcoin layer two. It's also a neutral choice because Bitcoin is a decentralized asset class where there is no company in control of it. And so, I think that's another useful aspect of Bitcoin that you know sometimes companies don't like to use the competitors' products, right? So, if one exchange has a stable coin, the competing exchange won't want to use that stable coin. Or one exchange has a a layer two, you know or or a blockchain that's their blockchain, then the other exchange won't want to use it. So, I think Bitcoin benefits from being a neutral platform for all parties.

[00:08:30]So, thank you.

[00:08:34]>> [applause] >> Everybody, appreciate the talk, Adam. And I'm really excited for this portion as we dig into a few more questions around the Blockstream enterprise side.

[00:09:00]Also talking about liquid, and eventually if you stick around, we're going to be talking about some interesting things on quantum, which we were chatting about backstage. So, you know with that, Adam, when we look at kind of the earliest days of Bitcoin, how are these conversations you're having now with institutions in contrast to the world of Bitcoin 5 10 years ago?

[00:09:25]Well, I mean I think you got a gradual introduction of different types of entities getting involved with Bitcoin. And you know if people were around early on, they you know I mean originally there was nothing but users.

[00:09:38]And then some very small sort of scrappy startups.

[00:09:42]And then exchanges of various grades of maturity, a number of hacks or like security accidents, I guess along the way, and a great deal of regulatory uncertainty and risk. Much of which has actually resolved and improved over the years, which is good. And so, you know, I think when Blockstream started in 2014, we were actually quite uncertain, you know, what would happen with regulations. And there was a there was a long period where banks didn't really want to hear about Bitcoin.

[00:10:16]And they were interested in the blockchain.

[00:10:19]But now that's kind of turned around and most of the major banks are, you know, in market adding Bitcoin exposure, putting out model portfolio recommendations, and, you know, trying to bring to market their own ETF or partner with ETF providers. So, it's really a a different world and you know, I think the other thing that people quite often ask is is there a risk to Bitcoin's ethos along the way? And I don't really think so because, you know, Bitcoin is not a neutral technology exactly.

[00:10:51]When people get interested in it, they have this, you know, fall down the rabbit hole phenomenon and they get philosophically interested and it starts to change the way they see the world and money. And so, that's still there. And of course, a key part of Bitcoin is the bearer unseizable asset. So, I think, you know, whichever path people come at it, you know, whatever it's via retail payments, a coffee shop, a Bitcoin like debit card, they they always end up learning the rest of the story and getting fascinated by it. So, I think that's still there.

[00:11:20]And so, as long as, you know, you have the option and the capability to cold store your Bitcoin, to control your own keys, we're good. And the ETFs and these financial products are just um a kind of usability feature. So, they enable they make Bitcoin more accessible to wider range of people, which is ultimately good.

[00:11:40]I really like that point you brought up around um with the institutions and enterprises coming into Bitcoin, does that make Bitcoin different than what it used to be or did it change Bitcoin? And I like to say, I mean, Bitcoin's code has barely changed. You know, there's of course been a bunch of different upgrades and improvements, but the core ethos of Bitcoin is in its code and that code hasn't changed that much. And you know, we're not seeing Bitcoin change on behalf of BlackRock, we're not seeing Bitcoin change on behalf of Goldman.

[00:12:08]They're bending the knee to Bitcoin.

[00:12:10]Right. I mean, it's actually it's almost amusing for for us because we lived through the kind of government governance war where a number of corporations tried to influence Bitcoin's protocol.

[00:12:23]And there there was a similar event in internet protocols 20 years before, like, you know, I think the mid-80s, slightly before the time I was paying attention to internet protocols, but that led to the design of this rough consensus and running code phenomenon in internet protocols where the users won. And coincidentally or not, Bitcoin's kind of technology evolution in the protocols is using that very same process. And it's so it's a battle-tested process for you know, basically what you end up with and how it works is that you end up with a great deal of inertia. And if people can't agree, then nothing happens.

[00:13:04]And so, you know, it's very hard to change it. And so, you know, to what Dan was just saying there, that, you know, uh not only is Bitcoin, you know, largely the same, but a great deal of people with, you know, arguably a lot of influence and power tried to change Bitcoin and basically failed.

[00:13:24]And um so, I think it's it's more that Bitcoin changes you than you change Bitcoin. Um yeah.

[00:13:31]And, you know, with Blockstream over the years, you guys have focused on quite a few different things. I mean, I I remember when you guys were first created, all the way back, you know, in 2014.

[00:13:40]It's uh it's been a long journey for both of us in the space. And, you know, for Blockstream today, when you all looking at these enterprises and institutions, and I know you were just on stage talking about you that you're talking to governments, um you know, corporations, etc. What's probably like the number one asked for service or product?

[00:14:00]Um I mean, people are interested in different things for different purposes.

[00:14:04]So, you know, there's quite a bit of interest in stablecoins, in uh reliable reliability and dependability in sort of layer two and smart contracts because, you know, there was a period where all the banks were, you know, they started their blockchain R&D lab. And, you know, at some point they came back to us and said, "Well, we've done the proof of concept, but we don't think that stuff is safe for production use." So, then they became more interested in the kind of Bitcoin layer two because it's more of um sort of conservative, simple, and safe, robust approach rather than, you know, full-featured, easy to change uh scripting environment. So, conservatism and security matter. So, that's one of the interesting things about some of the institutional users, they are um you know, more systematic about understanding risk. So, even a tail risk, they'll want to understand it. And that's because they feel an obligation to their, you know, to downstream, to the investors in their products and things.

[00:15:10]And when they're looking at, you know, Bitcoin, for example, if they want to do DeFi or if they want to enter that world, and they're exploring, you know, you mentioned this before, they're looking for something super robust, secure, you know, if they're looking at Liquid versus other Bitcoin L2s or other blockchains, what is their calculus between those three? You already mentioned security.

[00:15:31]What are some other properties that they look for?

[00:15:34]Yeah, so I think one, you know, the other innovation that we brought to market with Liquid was confidential transactions. And actually, that was the impetus for starting Blockstream in the first place, which is, you know, when I got actively involved with Bitcoin in 2013, you know, one of the things you could see is that Bitcoin is decentralized and robust and survived and, you know, had had bootstrapped, I would say, financially, right? In 2013, the price crossed over a dollar and then a hundred dollars and there were half the coins mined, so that was a billion-dollar market cap. So, I mean, of course, today it's like over a trillion, but at the time that seemed like a pretty big milestone. And so, the thing that some people were concerned about is that it didn't it didn't have much privacy.

[00:16:21]And um the old old electronic cash systems dating back to like the 1990s had extremely strong privacy, but unfortunately, they're completely centralized, so they failed, right? And so, so I was and I I had some experience implementing some of these protocols, so I knew how they worked. And so, I set about trying to uh improve Bitcoin's privacy. And what I came up with was confidential transactions. So, I talked to the developers and I said, you know, "Do you think Bitcoin would uh integrate this?" And it became apparent that it's difficult for Bitcoin. You know, we were just talking about the consensus process. It's very difficult to get consensus for a large change with, you know, complex new features in it. So, I kind of pivoted to, well, I guess what Bitcoin needs is a modular layer two.

[00:17:09]So, that that became Liquid. And then, of course, we put the confidential transactions in there cuz the point of modularity is you get to deploy exciting tech like this and prove it out it with real value. And then, you know, there's a bit of a track record in Liquid where we implemented some things that later came to Bitcoin or came to Bitcoin with improved versions that learned from, you know, minor things that could have been improved about what we did.

[00:17:33]So, kind of summarize, you know, with Bitcoin, we want to keep it secure and we want to be very careful about changes that we make. And it's also very hard to make changes in the base layer.

[00:17:42]But on layer twos, we can have this world, this this garden of all sorts of different types of new transaction types for privacy, smart contracts, kind of a little bit more liberal uh playground.

[00:17:55]Is it is that accurate? Yeah. Yeah, I mean, so it's, you know, largely the same code. So, we try to and and we maintain, you know, we keep up with Bitcoin upgrades, so we get the benefit of Bitcoin's security track record and evolving improvements in the security domain. And and then we add on, you know, these other features like the confidentiality, the native asset support, covenants. So, Liquid had covenants. And simplicity, which is pretty exciting. So, you know, that was introduced much more recently.

[00:18:26]It's been long long in the works and it's um a kind of lower-level soft extensibility mechanism, which was, you know, originally proposed for Bitcoin before Blockstream. And then we, you know, picked up the challenge, hired the main proponent, uh PhD uh researcher, Russell O'Connor, uh built a team, and, you know, spent quite a few years building that. And so, that's live on Liquid now. And, you know, it is one of the candidate ways that Bitcoin could could resolve this kind of dilemma about long discussion about which op code to add and which variant, which is you don't need to do that if you have some lower-level simple extensibility because then you can build other op codes later. And so, paradoxically, that kind of generality is maybe easier to get consensus for.

[00:19:15]But, you know, I think that if it comes to Bitcoin, would be a slow thing that would take some years.

[00:19:21]And earlier, we brought up that institutions and enterprises are very security-conscious in terms of looking at all the sort of risks that they have when interacting with Bitcoin and trying to get those mitigated. One of those, which I think is a pretty hot topic currently, is the quantum risk. So, with a quantum computer, there's theoretical uh risks where it could uh hurt Bitcoin.

[00:19:46]And so, I want to delve into this a bit.

[00:19:48]Would you kind of summarize the the overall sort of worry that folks have?

[00:19:54]Yeah, I mean so the the prospect of quantum computers I think that was, you know, first raised probably in the 1990s. I went to some university courses in the early 2000s when I lived in Montreal. So that's what they some of the universities there had some of the top global researchers in quantum computing and the mathematics of it and the algorithm design using that hardware if it could be built, right? And so kind of because of that exposure to it I was loosely tracking you know, what's the progress on the hardware and it's been slow going, you know, it's been 25 years and it was, you know, gradually improving a few qubits per year and you know, the the physics research has moved a long way, but it still feels like lab experiment stage, you know, it's um but I think if they, you know, if they get the funding and they keep doing the research eventually it may overtake current computers, but for today it's less powerful than, you know, a $5 calculator and that's, you know, that's the just the current state of the art.

[00:21:00]So it's not threatening to anything today.

[00:21:03]Um but uh you know, in the further future once they get to a scalable architecture cuz people are thinking about the the origins of the silicon based CPU, right? And so the first CPU I think had a few thousand gates and it was on a very large lithography but once they got that to work they they were able to optimize it and optimize it in iterations and you've got the famous Moore's law effect, right? So people are thinking that's coming for quantum computing, but they don't have that cuz they haven't figured out what the silicon is. So they're still doing experiments with different physics architectures, but once they do you know, solve some of these technical challenges and have a repeatable architecture then maybe it will start to make faster progress. So that's that's the question mark. Um and it and it's not, you know, it's not even clear if it will if it will necessarily work because it's it's different, right? There are some error correction issues, lot lots of complicated issues which make it worse as you scale it and end up not being controllable or undo the benefit or use too much power or too much classical compute to do the error correction. So lots of open questions, but you know, there's a nugget of some potential enormous advantage in there if it can be realized.

[00:22:22]And and to hop in just to quantify this risk, the risk is around cracking private keys, right? And this is yeah.

[00:22:28]So this is a pretty serious issue if this were to come into effect and quantum computers are very good at that hypothetically.

[00:22:35]Yeah, so they are good uh um you know, so they're not going to be better at everything even if they're fully realized.

[00:22:43]Uh however, they are good at sort of parallelizing some kinds of search problems and that kind of algorithm can potentially undermine the security of digital signatures that Bitcoin relies on, but it doesn't have much effect on the mining and hashing and some other things. So it's localized to this one specific thing.

[00:23:03]And so of course Bitcoin critically depends on digital signatures. Now, you know, the question is well what could you do about that? And well, indeed there are solutions which are there are digital signature methods that are using hashing for example. So they are not much affected by quantum computing.

[00:23:20]And so there was an initiative by NIST, National Institute of Standards Technology in the US with international you know, collaboration to uh reach a standards proposal for post-quantum signatures and that, you know, that ran for some years. Many of the candidate algorithms got broken before they, you know, so not only did they not meet the security criteria, but they were outright broken. So if you'd have rapidly used them you might have now lost your coins.

[00:23:49]So it shows that it's it's good to be cautious and wait till, you know, there's been a lot of peer review on things and ultimately the signature scheme they're using is actually a 1979 scheme called Lamport signatures with a lot of optimizations. And Leslie Lamport is a very prolific old school computer science guy who is also the author of the Byzantine Generals uh problem paper and the implementer of the LaTeX typesetting system. So he's just a a busy computer science guy an old guy now, but uh so that signature scheme is what NIST standardized on and however, the signatures are quite big and so Blockstream research and others in the Bitcoin kind of R&D space that focus on cryptography have been trying to optimize that in a Bitcoin specific way because the way it's optimized is quite general and so you can do better for Bitcoin's use case and so Jonas Nick and the team proposed um the original system was called SPHINCS and so we proposed SHRINKS and SHRIMPS which were sort of Bitcoin specific optimized versions that takes it down from multiple kilobytes which is a bit hard to accommodate to 324 bytes with SHRINKS and we actually implemented that in Liquid so people can try it out.

[00:25:06]And you know, so that you know, what we're covering here is that there are some solutions to the quantum computing problem if and when it becomes an issue, which is a big if and when.

[00:25:16]Um you know, you and Nick Carter have had some back and forth on Twitter about this. I think one of the kind of core crux of his argument I think is that some of these improvements may come in a non-linear fashion.

[00:25:29]How do you feel about that kind of like uh his thought process behind that?

[00:25:33]Yeah, I mean I think, you know, because of the experimental lab stage of the hardware it can be tempting to get stuck in a debate of well, is it going to be 5 years or 10 years or 20 years, right?

[00:25:49]And that's hard to predict. So so far it's looking like 20 years but the optimists and the people who are you know, close to those things and maybe have a vested interest in them would say it's faster, right?

[00:26:06]And so but I think ultimately we don't need to, you know, we don't need an answer to that because for safety reasons it's important for Bitcoin to have a long time to prepare. And so the way we're looking at it is well, let's, you know, figure out a post-quantum signature proposal and try to find consensus for integrating that into Bitcoin as a new op code sooner, you know, like in the next few years and then people will have a decade to migrate and they can be ready for quantum computers without paying the cost of it today which I think is the other important thing. So because with Taproot it's kind of a technical point, but it introduced Schnorr signatures and a way to have a hidden additional way to spend.

[00:26:56]So, you know, today you can spend with Schnorr signatures which are very compact, same efficiency as all of the existing Bitcoin transactions but once you're in this quantum ready format if and when the quantum signatures happen, you can stop using that and switch to you know, this 324 byte or some something new that's developed. So that's good um and if it turns out that it's faster, well, we've done, you know, we've been prudent and people have started to upgrade so they can hurry up basically at that point.

[00:27:27]So even if we solve the technical side though, it opens up two political sort of issues. Uh one is typically these quant post-quantum secure transaction or signature types they're typically very large currently.

[00:27:43]Um so we have and you can choose which one you want to answer first, but we have larger signatures which could open up the debate for a larger block size.

[00:27:52]We also have the issue of if if private keys can be cracked you know, Satoshi's coins and other old coins could be those coins could be hacked by the first quantum computer. So whichever one you want to start on, how how should we solve those more political social problems rather than technical ones?

[00:28:09]Yeah, I mean I think um the these optimized schemes now cuz the NIST scheme if you take it as standard is pretty big and that that is actually a problem because it's hundreds of times bigger signatures.

[00:28:23]So, you know, you're going to go from 4,000 transactions per block to like 80 or something which is pretty disappointing. So so then you know, do you need bigger blocks and then is it does it become expensive to run a node and we get back into that block size debate. And of course networks are a bit faster, computers are a bit faster, disks are a bit cheaper, but still not something you would ideally want to have to contend with. So I think the SHRINKS protocol which keeps the conservative hash based signature security assumption, but gets you down to 324 bytes versus 64 so it's bigger, but not horribly bigger and, you know, maybe there's some debate to be had about you know, increasing the witness discount. So in other words like slightly bigger block because it wouldn't have to be that much bigger where the NIST you know, 100 times bigger that's going to be difficult, right? So so that debate can be had. Um but then you raise the other interesting point which is, you know, let's say this gets added as an op code, people start migrating, you can get visibility of how many of the coins have migrated and eventually it becomes more pressing, you know, the quantum computer starts to be able to do simple calculations and then you've got the debate about oh, what about the people who lost their coins who couldn't migrate?

[00:29:38]What happens? And so I think you can already see people because it's the kind of hypothetical debate at this point, people love those debates. So, it's already getting heated before it's relevant. And so, some people are typifying it at each approach is theft, right? So, if you just leave them, then some people with access to quantum hardware and a kind of gray zone ethical outlook will say, "Well, we will steal them and we'll use it to pay for our quantum computer."

[00:30:07]Or we'll steal them and we'll try and figure out who they belong to and charge a fee to give them their coins back or something. Well, you know, if they could prove that they were the their coins or they still had the keys, they would have they would have taken the coins. I mean, you never know who has who owns coins unless they have the keys. So, that's kind of a non-starter.

[00:30:23]But, it's pretty much guaranteed that some won't move because the keys will have been lost. I mean, for certain. So, I think we can have this debate maybe in 10 years after we've seen, you know, 90% of the coins migrate. It becomes a much easier conversation then cuz it's concrete.

[00:30:41]There's a real threat, you know, presumably if that's the case.

[00:30:45]And we're informed by how many coins have migrated.

[00:30:50]And that might give us a hint that, you know, probably those are lost coins.

[00:30:54]So, you're not really depriving of anybody of anything if you deprecate uh now insecure signature scheme. And my argument is also that there's a long history of this, right? In internet protocols. So, SSL, the protocol that secures web uh security, it it had some algorithms that became insecure just to encrypt of mathematicians finding flaws in things and they just phased them out.

[00:31:19]They deprecated them, right? And so, that that is the approach. And the same was true for, you know, prior signature schemes and hashing algorithms. This has happened before. So, if you use that approach, what would happen is you would just, you know, you've got a long time to migrate and then you can't rely on that in the future.

[00:31:35]And so, generally they get deprecated, which in Bitcoin terms would mean, you know, there's a soft fork and it doesn't work anymore, right? But, if that's after a decade, and you're reasonably confident that people lost their coins. But, you know, ultimately it's the ecosystem decision.

[00:31:50]So, it might get heated and people have non-crazy arguments for either case. So, we'll see how that transpires. But, I think it'd be a lot easier and more informed debate when it's concrete and you've got the data than today when it's a nice bike-shedding argument.

[00:32:06]Yeah, I mean, if people have 10 years to move the coins, to migrate to post-quantum cryptography signatures, then it's sort of like you didn't move it in 10 years and we're doing our best job as custodians of the network, which means every club running a node, every company working in the space, you know, we're all trying to upgrade it to survive this moment.

[00:32:25]Um I have a kind of a fun question around Satoshi's coins because that that becomes a big question of like, "Well, what do we do with Satoshi's coins?

[00:32:33]Why Why didn't Satoshi send his Bitcoin to an unspendable output? As in an unspendable output means he could burn his coins.

[00:32:43]You know, why just hold on to them and never move them? Why not provably burn them instead? Do you have uh kind of a hypothesis as to why he did that?

[00:32:52]Uh no. I mean, I think actually Satoshi's coins are I mean, one of the debates is they are in the original format, which was a bare public key.

[00:33:02]And you know, after the HD wallets were introduced, I think that was in 2015, almost all wallets moved to this new format because they had a much safer backup. You got the seed backup, right?

[00:33:13]Which was completely missing before. And those address formats are hashed. So, you have a If you don't reuse addresses, you have some initial protection against quantum computers. But, old keys don't have that. And you know, it looks like most of them haven't moved, right? I mean, in in the first year, for context, uh there were 2.5 million coins roughly mined in the first year. That was the rate, you know, 50 Bitcoin per block for a year. And um it's it's uh estimated the Patoshi thing that Satoshi might have mined 500,000 to a million coins. So, you can see that at maximum 40% of the coins in that that year would have been his, maybe less. Uh I don't know how far forward the Patoshi pattern stretches. Maybe it's longer than 1 year.

[00:34:01]It's um So, you know, there's lots of other people there. And so, a lot of those era coins didn't move. So, I don't know why that is either. You know, maybe some of those old miners just want the privacy of just keeping the UTXOs. But, we'll get to an occasionally they move, right? Um So, I think, you know, this migration to post-quantum ready address formats maybe will tell us how many of those coins still have, you know, whether the original mining owner still has the keys, right?

[00:34:34]I do think people overestimate how hard it is to manage your private keys for 15-plus years.

[00:34:41]It's It's a struggle. I mean, before BIP 39, which is your 12-to-24-word backup, you know, you used to have to print off your private key and then clear your printer cache just uh just in case there was an exploit there. Yeah. I mean, I think the Bitcoin QT client from back in that period, you know, before the HD wallet stuff, it was generating 100 private keys, one for each address.

[00:35:07]And you had to back up that that file.

[00:35:09]And so, if you used it a lot and you ended up creating more than 100, you had to back it up again. And people didn't necessarily know this, right? So, if you, you know, if you if you used 200 addresses and you only backed up once at the beginning, you could also lose money that way. So, there was there was some rough edges on the backup. And so, the HD wallets was really a clever innovation, I would say. Made it much safer and reliable to back up, easier to work with.

[00:35:34]I mean, I guess we could maybe say Occam's razor here. What if What if Satoshi lost his private key? That would be quite hilarious. I mean, it might happen. Who knows? Yeah. He is a human after all. So, could could have happened.

[00:35:47]Um and yeah, and to your point, you know, we don't actually know if those are Satoshi's coins.

[00:35:51]The Patoshi sort of fingerprint We we hypothesize those are his coins, but it could have been another early miner. We don't know.

[00:35:59]>> Yeah, I mean, it's it's also for people's context. So, Sergio Demian Lerner Lerner was the first person to observe this. And I think Jameson Lopp and a few other people have kind of repeated some of the analysis. But, basically, in the mining, there is a like a high-resolution counter, like, you know, the microsecond hand on your stopwatch.

[00:36:16]And then there's a low-resolution timer, which is just count It's a counter. It's going up slowly.

[00:36:21]And the software committed a coding error, which is it doesn't, you know, randomize or reset that counter. So, if you see this counter just like it's gradually going up, so people draw a plot and you see these kind of straight lines where, you know, before the counter wraps around, that it looks like it came from one miner. But, there are lots of miners of different sizes. So, over time, there are more and more miners and it and it gets more and more noisy. And so, you got false positives and negatives, like, that looks like it Did that belong to that chain or was that separate one?

[00:36:51]It starts to become blurry. So, when people say that, you know, Satoshi had a million coins, it might have been 500,000. We don't really exactly know. And did he spend any of the coins? People say he never spent any of the coins. And it's it's generally true that not many of the 2009 coins have been spent, but only 40% maximum were his. And you know, it gets more blurry at the later end. So, maybe he spent some more recent coins. We wouldn't necessarily know. Those would be the most private cuz there's most ambiguity in this pattern.

[00:37:19]But, if you look up Patoshi, you'll find some of these articles by Sergio and Jameson Lopp and others.

[00:37:26]Yeah, I remember reading Jameson's piece on this, which is quite good.

[00:37:29]Um we're out time, but I do want to ask one more question. Um you know, looking forward, you know, what are your some of your predictions for institutional adoption for Bitcoin over the next year or two?

[00:37:39]>> [clears throat] >> Yeah, I mean, it's quite interesting because, you know, the the Bitcoin market has gone sideways at this point.

[00:37:45]Um you know, it's starting to show some strength again. But, the I think what happened potentially is that people heard institutional adoption and they saw the news flow and they expected the the, you know, the buying behind it to hit immediately.

[00:38:03]And institutions are more systematic and process-oriented than that. So, I think it hasn't happened yet, largely. So, you know, in effect, you'll hear from uh you know, one big investment bank with a lot of wealth management clients or mutual funds and managed funds that, you know, they are putting out a model portfolio or they're going to offer it to the wealth clients.

[00:38:25]But, then they'll have a 6-month process to like write some guidelines for the for the the sales teams.

[00:38:31]They'll do the training.

[00:38:33]They'll talk to compliance and legal.

[00:38:35]They'll select a custodian. And all these things take time. So, you know, there are some early, you know, indicators that they've been doing it. I think you could see from the BlackRock filings that about 30% of the coins were institutionally held.

[00:38:50]But, I think, you know, the other 70% are just um individuals who manage their savings via a broker or a financial advisor who, you know, called up their advisor and asked to get some Bitcoin exposure or something like that. So, it gave access to people that wouldn't necessarily buy Bitcoin on a Bitcoin exchange. But, I think the actual allocation to the managed funds and see, the other context is most people in the world are not making manual investment decisions. They're not They don't have a self-directed stock portfolio. They don't have a stock portfolio at all.

[00:39:24]Their savings are in the form of like a life insurance policy or an employment, you know, managed fund. So, it's all managed by professional money managers. And that that's probably most of the money in the world that's in that format, right? And so, those professional money managers have got to go through this process. And ultimately, I think that is good because, you know, as Bitcoin, as we always want you know, benefits of Bitcoin to be available to everybody. And so, because a lot of people don't do their own management investment decisions, the only way they're going to get the exposure is via these institutional money managers that are managing pension funds and life insurance products and things like that.

[00:40:03]So, I think it's still to come. And, you know, it's it's a sort of later wave that will kick in, you know, presumably over the next few years.

[00:40:11]Appreciate that final word, Adam. And thanks for everyone for attending.

[00:40:15]So, we'll see you all later.

[00:40:22]>> [applause]