Kennerly Clay (00:01.102)
All right, burning crypto question of the day. What is the difference between Bitcoin and let's say Ethereum as if I know all these different types of cryptocurrencies, but I'm trying to understand what the difference is fundamentally. And also do they have a limited amount that you can mine or produce similar to Bitcoin? So let's start there.
Crypto Bullseye (00:24.846)
Great question. Great question. Welcome to the Kirk and Robin show, bringing you crypto OG and newbie conversations and 21 minute chunks. So good to see you today, Robin, chiming in from Orlando, Florida here, as you can see my background and my nice little plant. I'm out on the porch today.
Kennerly Clay (00:42.702)
you
Crypto Bullseye (00:43.784)
And so, yeah, that's actually a great question. That's one of the actually most important things to really understand when it comes to investing. I, you know, it's the overall theme I talk about having conviction and the mindset and all these different types of things. So one of the things to, to, one of the ingredients for long-term success is to really understand what you're investing in. think we touched on that a little bit before, but that's, that's really in anything and for any asset. All right. And so, because otherwise you're just, you know, you're just investing
and hype and you know, you don't really have any basis for why you're putting your funds to work and so on and so forth. That's why I always say it's really important to understand Bitcoin and all the fundamentals of Bitcoin and how it works. really spent a lot of time doing that because that becomes your basis for understanding everything else, right? Because there's a whole new paradigm thing, right? Because now the thing is, is like with the internet,
Kennerly Clay (01:33.303)
Okay, yeah.
Mm-hmm.
Crypto Bullseye (01:39.886)
You know, we've gotten to a point where people don't really care how the internet works and it just works well. you know, people get a lot of value with it and so on and so on. It's an everyday thing that we use. So people don't care about that. like, maybe, I don't know, maybe that's the way it'll be one of these days with Bitcoin. you know, you really got to dive into it, though, and understand these technical things. Because again, it is a technology.
Kennerly Clay (01:45.644)
Yeah, yeah,
Crypto Bullseye (02:06.442)
And it's important to understand it because then you can cross reference it. Bitcoin becomes your stake in the sand. That is the key takeaway. It becomes your stake in the sand and that's your reference point for everything else to say, how is it similar? How's it different? And so on and so on. So the Bitcoin's key, one of the, one of many key value propositions is the fact that it has a fixed and limited supply of 21 million coins, right? That is basically algorithmically
Kennerly Clay (02:33.164)
Yes.
Crypto Bullseye (02:35.746)
programmed into the end of the protocol and you can actually graph it. There's a graph that shows that all of those bitcoins will be mined by approximately the year 2140. So although we're at 19 and a half or so at the current time, we've only got about a million and a half Bitcoin to go. It's a long tail. All right. Because again, another one of the things is that the Bitcoin supply gets cut in half once approximately every four years.
Kennerly Clay (03:05.166)
Okay. This is the, the having or whatever I've heard you talking about. Okay.
Crypto Bullseye (03:05.464)
So again, yes, correct. The happening now, of course, I like to, I call it the happening. That's kind of like crypto speed.
Kennerly Clay (03:13.11)
Sounds like a weird Netflix documentary or something.
Crypto Bullseye (03:17.902)
People, I think people call it the having I'd say it's maybe 50 50 actually probably it's more, maybe more people call it the having than the, than the happening. But to me it's the happening, right? It's kind of like crypto speak. So I I like the happening myself either will do. And there are other, there are other, uh, blockchains that do have havings. You know, some of them are like Zen.
For example, horizon and the send token, that was a fork of Bitcoin at some point. And there's other, there's other proof of work models as well. So again, what speaking to proof of work, that's how Bitcoin works. That's the security model, but not every blockchain uses proof of work. What's proof of work? Proof of work is where
The participants basically show up and we talked about this before, right? Where basically miners will show up voluntarily by computer equipment and just hook it up to the network voluntarily without permission. So the computing power that they supply is what secures the network. And that's what a proof of work model is. Right? Does that make sense? Ish, makes sense? Ish? Okay.
Kennerly Clay (04:27.054)
Ish, yeah.
Crypto Bullseye (04:32.545)
Well, there's several different types of consensus models, but the other one speaking of Ethereum happens to be proof of stake. Okay. And that's probably the majority of blockchains now are proof of stake. Now there's other types of variations in between, but just focusing on those two models as the two different ones right now. That's the easier way to start. So Ethereum actually Ethereum started as proof of work. And then in 2022, it transitioned to proof of stake.
Kennerly Clay (04:51.854)
Okay.
Crypto Bullseye (05:00.738)
called the merge. was the big merge. Okay.
Kennerly Clay (05:02.99)
Pause for just a second. let me make sure, can you just synopsize it one more time, proof of work versus proof of stake, because these are the fundamental differences you're going to be pointing to, correct? And if my mind wanders for just two seconds, I miss the whole thing. So I'm just thinking about other people who might have that problem.
Crypto Bullseye (05:22.07)
Yep, that's how easy you can miss it. Just trying to follow it, trying to visualize it in your own mind. Yeah, you can drift off. It's easy to do it.
Kennerly Clay (05:28.65)
Yeah, so, proof of work versus proof of stake, give it to me one more time and so I can make sure I'm...
Crypto Bullseye (05:32.862)
All right. Well, proof is let's start with proof of stake. So, you know, you hear people talking about skin in the game. You got to have skin in the game. And you talk about like posting a bond, which could be for various reasons. You could post a bond like in construction, you could post a bond, right? So that the stakeholders have a, you know, security and so forth.
Kennerly Clay (05:39.437)
Yup.
Kennerly Clay (05:54.766)
Okay.
Crypto Bullseye (05:56.274)
And of course, you talk about post bonds and you know, when you have criminal proceedings and stuff like that. But basically in this case, you're basically putting up the stake is your crypto assets. in Ethereum, Ethereum's native token is ether. Bitcoin's native token is Bitcoin, but Ethereum's native token is Zika. So you would stake ether, you know, as a validator to secure the network. Right. So it's like a skin in the game type of a thing.
Kennerly Clay (06:20.97)
Is, so it's sorry to interrupt you. So can, and the steak means like, what's at stake in a way, or is it some other usage of the word steak?
Crypto Bullseye (06:33.526)
Yeah, it's kind of like what's at stake because what happens if you don't play by the rules, there's what they would what's called slashing penalties. And that's a pretty universal term that's used among the proof of stake type blockchains where you could be slashed, which means penalized and you could lose some of your stake as a penalty. Right. So, yeah, it's yeah, it's like stake in the game against skin in the game, stake in the game and so on. OK, so that's that's a clear distinction between the two blockchains, specifically Bitcoin and Ethereum.
Kennerly Clay (06:45.144)
Okay.
Kennerly Clay (06:57.454)
Okay, all right.
Crypto Bullseye (07:03.574)
Right. But again, going back to Bitcoin's fixed and limited supply of 21 million, Ethereum actually does not have a supply cap. Okay. Now, right now the supply, the total supply of Ethereum right now is about 120 million tokens. Okay. But they've also, they also have made protocol changes because it's constantly changing all the time.
And there was some adjustments made such that it was actually considered to be deflationary. Now it's kind of heading in the other direction a little bit, but what it just meant was that some tokens would be burned in the process of adding blocks to a blockchain. Right. So basically, basically what it means is the net between the new tokens that are, uh, minted as a reward. Okay. And the ones that are burned.
that the net difference would be, you know, that the supply would go down. Okay. That's deflationary. Okay. So that's the difference right there. now, like I said, in Bitcoin, the reward is cut in half every four years. was what Satoshi designed in the Bitcoin white paper. Why? No reason. Yeah.
Kennerly Clay (08:14.278)
Are you going to, sorry, are you going to talk about proof of work in this next bit that you're, because I'm still like waiting for that distinction.
Crypto Bullseye (08:21.504)
yeah, proof of work. Yeah. So back to proof of work. So proof of work just means that again, this, this, think this is a little bit more challenging to understand the proof of stake because we all kind of relate to the skin in the game scenario. Proof of work means that you supply computing power and the one who, the one who is able to, the miner who's able to actually, let's say solve the puzzle fast enough faster than all the other miners.
Kennerly Clay (08:23.79)
Thank you.
Crypto Bullseye (08:47.35)
Right. Wins a block and then is able to add that block to the blockchain and so on. So the blockchain itself, is actually the, is, the record of all of the pre all of the work that's been done over time, right? The total computational effort that's been done over time, whatever the blockchain is at right now. Right. So as far as the miners piece of the equation, like whatever a particular miner added to the blockchain and the blocks that they mine.
Kennerly Clay (09:08.417)
Okay.
Crypto Bullseye (09:17.132)
Right. That's the proof that they did the work is when they win the block, they supplied the computing power. That's the proof that they did the work. So what else? Maybe it's easier to understand with another example. Okay.
Kennerly Clay (09:26.86)
But well, well, but so it's, it's, it's rather literal in a way then, right? Proof of work, meaning they, they did the work. They can prove that they added to the blockchain. Okay. Yeah. Okay. Okay. Okay. Loosely, loosely, I can imagine all of that. So yeah, carry on.
Crypto Bullseye (09:36.684)
Yeah, exactly. Like I did the work. Look, here it is right here. I did the work. Okay. Think about the auditor.
Yeah. Think about the auditor that does auditing, financial statement auditing, right? All publicly traded companies have to have financial audits. Right? So the audit report, that's proof of work that you did the audit. And an audit report is actually really, for the most part, a standard letter with standard language that's, one or two pages. Like that's it. That's the proof of work. That has a whole bunch of work underneath that.
Kennerly Clay (10:00.15)
Okay, yep.
Kennerly Clay (10:12.472)
Gotcha.
Crypto Bullseye (10:13.42)
The other example is the Great Pyramid. That's proof of work that the pyramid was done because you can see it. It's physical, right? So it actually is a really simple concept. So again, that's a difference right there, right? But again, the fact that you have the having or the having once every four years, right?
Kennerly Clay (10:21.034)
Okay, yeah.
Okay.
Kennerly Clay (10:31.616)
And the having is only for Bitcoin or does that happen with other crypto?
Crypto Bullseye (10:36.042)
Other other blockchains do have happenings. Like I said, Horizon Horizon blockchain is a proof of work blockchain. It's actually a fork of Bitcoin. And it also has the same thing. They just actually had a happening a few months ago. It's not it does not parallel or match, you know, bitcoins, you know, the timeline for Bitcoin. All right. And so
Kennerly Clay (10:42.551)
Okay.
Kennerly Clay (10:57.966)
Mm-hmm.
Crypto Bullseye (11:01.58)
Basically Satoshi you might ask well why every four years well really for no reason at all other than Satoshi made it up Right. This has never been done before. How would you know? How would you have anything to base on with the long-term success of a block of a brand new digital currency, right? peer-to-peer electronic cash system
Kennerly Clay (11:19.214)
Hmm. Hmm.
Crypto Bullseye (11:21.804)
where you don't need to have any trusted or you don't need to rely on any intermediaries, right? Cause they've been removed from the equation. We're trying to invent something. He was trying to invent something new that's never happened before. How would you possibly know whether a four year having was well-designed or not? So I think it was like, I just think it was like a best guess. And it's like, all right, because what we're going to do is we know that over time, theoretically, if the, with the network effect,
that the value of the Bitcoin, the token is going to go up when the supply or the newly minted bitcoins goes down. Right. So, so do you know, do you know what, how many bitcoins were first in the first launch? How many bitcoins per block? So in the beginning days in 2009, it's 50 bitcoins per block. Okay. Then 25, then 12 and a half, then six, six and a quarter. And right now we're
Kennerly Clay (12:02.284)
No idea. No idea.
Kennerly Clay (12:08.11)
Okay.
Crypto Bullseye (12:17.524)
3.125 Bitcoin per block every time a block is mined. Okay, so that's so that's that so
Kennerly Clay (12:21.834)
OK. All right. And then regarding the halvening, I know somebody had recently asked you about is this is halvening similar to, a stock split? Because people financially trying to get their heads around how that works, does it have any similarities? Or it's really not that at all because we're in just a different universe? Yeah.
Crypto Bullseye (12:48.044)
No, it's not that at all. There's no, no, someone still a spot stock split whatsoever. So as a set on that note, basically a stock split, all it does is, is that's just to make up an example. Let's say the, the number of shares will double stock price goes in half.
So after a stock split, it's not like, wow, I got like free shares. know, like, like encrypted, talk about airdrops, like free money falling out of the sky, but like we're coin, you know, basically coins are given away for free as a, as an incentive for people to use, you know, start using networks to jumpstart networks. That's not what a stock is theoretically in a stock split. Yeah. If the stock, if the number of shares doubles, the stock price goes in half, nothing's changed. You still have the same amount of, of, net worth, right?
Kennerly Clay (13:14.702)
Mmm.
Crypto Bullseye (13:36.492)
This is newly created coins. And the reason that they're newly created from the protocol, seems like, it seems like it's just like, you know, magically is produced out of thin air. Well, I mean, it is in a way, but the thing is, is it's a reward for the fact that the miners volunteer now. They don't have to, they don't even fill out an application, right? These are what you do with public blockchains is you just show up and participate or permissionless.
So what's going to incentivize a miner to go invest any fair from, you know, thousands of dollars to millions of dollars, like these big miners do today to go buy all this equipment and hook it up. What's going to incentivize you need to have a reward. So that's what the Bitcoin reward is. The coin Bitcoin is the reward and obviously has value in trades and markets. So you have that, but the four years is basically arbitrary, right? But that's just Bitcoin's blockchain.
Kennerly Clay (14:17.39)
too.
Kennerly Clay (14:26.179)
can.
Kennerly Clay (14:31.362)
Well, how would you know, when, when, whoever started Ethereum, like how, how does anybody just start a new currency? If you will. It's like, okay, we have that one over there. Now we're going to go do this thing. And it's like, well, who says and how, and you know, why, you know, is it like starting a new company or what, what, is it?
Crypto Bullseye (14:57.558)
Well, yeah, see you're getting into another thing now because Bitcoin is not a, Bitcoin the network is not a company. It doesn't have a senior, doesn't have a headquarters, doesn't have employees. The same with Ethereum. Now with other projects, a lot of times what they'll do is they'll create a for-profit company and then there's a foundation that supports the development of the blockchain ecosystem and so on like that, right?
Kennerly Clay (15:00.366)
I don't want to get too far down the rabbit hole, but right, right, right. Understood. Yeah.
Kennerly Clay (15:21.346)
So they're called projects. that what is?
Crypto Bullseye (15:23.81)
Well, mean, they're projects. really networks. They're network, but they're public networks.
Kennerly Clay (15:27.412)
Okay, so public networks and you start a new network.
Crypto Bullseye (15:34.828)
Now the way they could be started is first of all, somebody you could have computer scientists to come together and say, you know what? We've come up with a novel way to create a new blockchain with a new type of consensus algorithm and so on like that. Or you could just say, wow, we like that. There's an open source blockchain protocol and we just want to fork that. And we're going to make some tweaks to it. And that's how we do it. So like Litecoin, for example, is one of the early blockchain projects. And that was a fork of Bitcoin.
And so Litecoin, for example, has 84 million total token supply. And so it looks, it's very similar to Bitcoin in many ways. Right. And then you have new projects that are completely new consensus algorithm altogether, like. Sui or sui blockchain or Solana blockchain and stuff like that. So.
Kennerly Clay (16:22.84)
So who decided that 84 million was the cap? mean, like, how? OK, so that's made up. Just like Satoshi made up X, these guys. Sure. Yeah, right, right, right. OK, yeah. It's not like, it wasn't some kind of like mathematical calculation, something or other. just a.
Crypto Bullseye (16:26.424)
Whoever made it up. It's like, yeah.
Yeah, everything in life is made up. I mean, everything's made up. So that's where it came from.
Crypto Bullseye (16:45.518)
Right. Exactly. That's what I'm saying. Even about the four years, the four year having, I think that was just like, you know what? Yeah. It was just arbitrary. Like I think, you know, like, think that's what I'm going to come up with or we, we, whoever it was Satoshi, right? That was like a best guess that we think this is what's going to sustain the network over the long time, over the long term. Now the other key takeaway here is community because how are these blockchains? How did they evolve over time? Right. So
Kennerly Clay (16:49.63)
This is arbitrary.
Crypto Bullseye (17:14.69)
Basically.
Kennerly Clay (17:14.85)
And how do they gain value too? Like, okay, now we have this new, you know? So speak to that. Like, and you just started to say about the community.
Crypto Bullseye (17:22.818)
Well, first of all value comes from network effect was it, what's an, is an existing concept. Anything like telephones, mobile phones, radio, television, the more people that use it, the more valuable it become. Right. It does become. Right. The network effects it. Anything that, yeah, anything that gains more and more users has a network effect and the more users you add, the more valuable it becomes. Simple as that.
Kennerly Clay (17:28.769)
Okay.
Kennerly Clay (17:36.494)
okay. All right. I like that. I like that. The network effect. Okay.
Kennerly Clay (17:44.352)
Okay, all right. Interesting. Yeah.
Crypto Bullseye (17:47.842)
But the way that these public blockchains would become, the way that they evolve over time is they have the community comes together basically in a decentralized fashion. Right. And then they make choices to make upgrades. Now these things, because of that typically take a long time to, for a community members and which are largely developers and things like that. Like the developers are actually capable of.
you know, deploying these types of changes and know the technical parameters, right? Those are the ones that, but there's other, there's other influence that happens as well. But at the same time, you also, you've got, you know, at this point you got billions and billions, if not trillions of dollars at stake on these networks. So you got to be slow and methodical and careful when you make changes and you launch, you know, upgrades. So.
So basically both Bitcoin and Ethereum, for example, operate, they have communities that come together. So you have Bitcoin improvement proposals, VIPs and Ethereum EIPs, Ethereum improvement proposals. So there's a whole process. Some actually, and anybody, you could make a proposal actually, you could go to the, the GitHub. I think that's where it happens. You would make a proposal on anything and it depends on whether people pick it up and say, Hey,
Yeah, we think this is a good idea. And then you could have some technical people that chime in and there's a, there's stages to it until it actually gets deployed. Now, many of these don't get deployed. Some of them take on a life of their own and change rapidly from the initial proposal onto the final proposal and so on. But here's one key distinction around that is Bitcoin has been Bitcoin moves very slowly and adapts slowly. Okay.
They don't move very fast. don't make really major changes. Whereas Ethereum is moving faster. It makes lots of upgrades. Of course, that has to do with scalability and keeping up with the competition because there's a lot of Ethereum, EVM compatible blockchains, right? Competitors, Ethereum competitors that are faster and cheaper, right? So Ethereum is trying to catch up and make these changes.
Kennerly Clay (19:56.994)
Faster and faster meaning like there's they're creating more blocks on the blockchain. Is that what you mean by that?
Crypto Bullseye (20:03.406)
More transactions in faster time. Your transaction gets settled faster.
Kennerly Clay (20:06.21)
Okay. And transactions being, transactions being defined how in this context?
Crypto Bullseye (20:14.446)
the number of transactions that you can get flow through the system at any one time. Right. But we're in our final minute. So we got to, we got to wrap it up. So the thing is with Bitcoin, you might think that, wow, it doesn't move very slowly, but you know what? That's actually a key value proposition because you can rely on the fact that you know, that changes do not happen quickly.
Kennerly Clay (20:21.422)
We sure do.
Crypto Bullseye (20:35.67)
And not and not many changes take place, especially compared to other blockchains. So there's actually value in that versus another blockchain where it's making changes all the time and so on and so on. see, so
Kennerly Clay (20:44.02)
So just sorry, just to clarify, you said Bitcoin does not move slowly. I think you might've said it doesn't change slowly, but you meant doesn't change quickly. Okay.
Crypto Bullseye (20:50.67)
Yeah, it doesn't move very quickly. So anyway, we could go on and on about this, but that's our 21 minutes. All right, then. Great talking to you today.
Kennerly Clay (20:55.438)
for another time. All right, see ya.
