Gas Limit Boost, Bitcoin ETF Breakthrough, and Anti-Deepfake Alliances: What Lie...

In this installment of "The Protocol," hosts Brad Keoun, the founding editor of The Protocol Newsletter, and tech journalists Sam Kessler and Margaux Nijkerk, explore the following stories:

Ethereum's gas limit refers to the maximum amount of gas that can be expended in an individual block. A limit increase could improve network capacity and potentially reduce costs for users.

In a milestone for crypto adoption, the SEC today gave the green light to the trading of Bitcoin exchange-traded funds (ETFs). CoinDesk rounded up reactions from across the crypto industry to the news.

"Verify" is an open-source protocol built on Polygon's PoS blockchain, specifically used to establish the origin and history of registered media.

EPISODE LINKS |

Hello and welcome to the Protocol Podcast. I'm Brad Kahn here with my co-hosts, Margo Nykerk and Sam Kessler. First, please don't forget to subscribe to our weekly newsletter, The Protocol on coindesk.com. And now let's dive into it as we say, with the latest news and developments in technology behind crypto and blockchains one block at a time. In our first segment today, we're going to be talking about latest from the guy who leads it the patron saint. Why don't you tell us about this story, Margaux, that you just broke or that you just wrote about.

Yeah, so Vitalik Buterin, the co-founder of Ethereum, was held a Ask Me Anything on Reddit yesterday with the Ethereum Foundation. And during it, he had answered a question about increasing the gas limit on Ethereum and was voice's support of it. And that sort of made its way around the ecosystem. This could be a change that we could probably be seeing for those that don't entirely know right now. So when users transact on Ethereum, they pay a gas fee. It's sort of like a tax for transacting. And there are mechanisms in place where they cap the gas fee at, I think it's 30 million.

It is 30 million like gas units.

Yeah, 30 million. Gas units, OK. So they cap the gas at 30 million. With this proposal, he's suggesting to increase it to 40. And so that allows for more transactions in to be where the suggestion basically allow for more transaction throughput. So there seems to be a lot of support around this in the ecosystem. But I don't know, Sam, maybe we co-wrote this, so maybe you have something to add to that.

Yeah, so maybe to step back a little bit, like the Ethereum gas limit, it applies to blocks that are added to the network. So each like 12-ish seconds, a new block is added to the Ethereum network and a block is just like a bucket of transactions. And like Margo explained, each transaction has a gas price or a gas cost that a user has paid as a sort of fee for their transaction to get executed onto the network.

And that gas, a lot of it just corresponds to the computational load that is carried by that transaction. So like if you're swapping between two tokens on Uniswap, that's a pretty cheap thing to do computationally. It's a simple thing to get done. But if you're doing something more complex, I think in the article I wrote about, like if you're opening up a really complicated borrow or lend position, that is more computationally complex for the network. If you think of the network like a big computer, it just, you know, spins more gears. And so that ends up costing more gas, or part of the gas that users pay that corresponds with this computational complexity. So yeah, if each block is able to hold 40 million, 33% more than the 30 million gas units that it's allowed to hold today, that just means that in aggregate, there's more computational complexity that can be piled into each of these blocks, which is essentially a way to just guarantee more throughput for the network.

But there's some like complicating factors that we can get into around whether this is going to make things cheaper or, you know, add certain kinds of costs for the validators that run them.

You know, we were talking about this, you know, when we were, when you were writing your story. What is the point of the gas limit? You know, why, why is the gas limit exists to begin with? And you know, what, what would be any, who would lose if they raised it?

Yeah, I mean, like the main reason why we have a gas limit today is because if you think of that analogy that I mentioned where Ethereum is like this big decentralized computer, if every 12 seconds, you're trying to do a gazillion different things, which is essentially, you know, passing off the execution of the gazillion different tasks to the decentralized network of validators that run the network. Those validators like quickly get overburdened. That's the main thing is just like If we're trying to do a million things at once, we're very quickly going to tire out the validators that run the network to the point where that computer just can't handle the amount of complexity that's going on its servers. So that's the main reason why we have this. But over time, at a certain point, the Ethereum gas limit not so long ago, I think before the merge, was closer to 10 million gas units.

Now it's 30 million because the merge, the proof of stake thing made it so that we can make things bigger. Now 40 million. It all has to do with like the clients and the software that the validators that run the network run becoming more efficient, as well as other changes to the network's core code, the fact that certain kinds of transactions are being offloaded to layer two networks that scale Ethereum that make it so that we can expand each block in terms of the complexity it can handle.

I wonder as well, you know, like this is, this is, oh, sorry. I wonder as well if, you know, this is sort of happening in tandem with the fact that there's more activity happening on the network. You know, prices are up, means more activities up. And so there's sort of maybe an anticipation happening. Like this is, I mean, as Vitalik had said, that this has been the longest in protocol history that they haven't increased that limit. And so maybe there's, you know, there's been signs, I guess, like we wrote about this, Martin Kopelman had said back in December, like, he had started to advocate for that over Twitter. So, you know, the timing of all this, I think is also important to realize that as, you know, crypto, there's more of a boom now happening around crypto and on Ethereum that there's this need for, you know, this kind of increase.

Yeah, yeah, I mean, like you said, Martin Kopelman, that guy who, you know, started Gnosis Chain, I think we've talked about him on the podcast before. He's, was one of the people that's, you know, sort of started ringing the bell on this last month. And that corresponded with a kind of all time high for Arbitrum, the biggest layer two network on Ethereum, that people, you know, that helps scale Ethereum like a separate box chain that runs alongside it and settles transactions on Ethereum as a way to scale the network.

Arbitrum was seeing kind of record usage and its token was going way up. And so people were talking about it. And so part of this gas limit increase is going to be to cater better to these layer two networks that ultimately settled their transactions on the Ethereum blockchain. It's going to make it easier for them to just, you know, pass down big buckets of transactions to this base, base chain.

Yeah, I mean, it's all we're talking trade offs here, right? So they have to just kind of balance it as they see the growth. But, yeah, I mean, just before we move on, one of the things that confused the heck out of me was when I first started learning that gas, the unit of gas is gas. Like when somebody was like, right, a gas, there's a unit of gas associated with something that's being done.

And so people talk about five gas, right? And what is the gas fee? Well, it's the rate times the amount of gas. And it's like, is it a gallon? Is it like a liter or is it? No, it's just gas.

Yeah, yeah, it's confusing because there's like there's gas and then there's like the fee that you pay like the guay which is like a fraction of an ether. It's complicated but yeah those units correspond like if you look at the Ethereum opcodes it's actually kind of interesting. You can see like a token transfer for instance costs like tens of thousands I think like 20 ether fees. So it's more of like a computation term than it is like a price figure.

Right, right, right. Yeah, it's super interesting. Okay. Well, we're just gonna go to our next topic, which is, you know, maybe some people have been waiting for this. When we were gonna mention the Bitcoin ETF debut, which is, you know, one of those stories that really just kind of broke through, you know, is, you know, we're here covering all this stuff and the rest of the world… Their crypto story today is the bit of this whole week is the Bitcoin ETF story. And we've had some coverage this week. There's somebody paid $2.97 to have SEC chairman on the brink of second Bitcoin ETF approval, a callback to the famous chancellor on the brink, a common that was embedded by Satoshi to the Genesis block. You know, I mean, one just a couple of things that I was thinking about today, you know, there's so much capital that is coming in to crypto now. You know, I mean, people I saw something that was standard chartered. They're talking about 100 billion dollars of investment coming into Bitcoin through these Bitcoin ETFs. I used to talk to Noel Acheson, our former head of research, and you kind of think about crypto like a closed system and money comes in and the question is, what are they buying within that system?

At any rate, one of the other big ideas, and so Bitcoin, is that somehow that money will sort of slosh around and find its way to funding more Bitcoin developers? I think that's a super interesting question, or is that like flow out to all the other tokens and networks and then it funds their developers? I mean, I think big picture is probably good development for crypto developers. I don't know, either of y'all have any.

I will one thing that I will I like I don't have particular thoughts specifically right now on this but one thing from the story that you mentioned about the Bitcoin user that encrypted that message on the on the blockchain I thought that was like kind of quirky and just so crypto that like that they that they did this and that sort of reminded me of when Polygon launched at CKVM Vitalik Buterin encrypted like a message that was also kind of like quirky and stupid, I'll pull it up. It said, he said, It was like a reference to Neil Armstrong's landing on the moon. And I happened to also get an email from someone saying, one small step for Bitcoin, one giant leap for Seify. So here, this is what Vitalik Reader said, a few million constraints for man, unconstrained scalability for mankind. So I don't know. I just thought it was a cute little story that like people are finding ways to sort of mark moments in technology and it was just like another quirk in this crazy world that we cover.

Yeah, I mean, like just at a fundamental level, even though there's obvious ironies to a bunch of crypto people who, you know, some of whom flocked here after the 2008 financial collapsed, getting excited about BlackRock introducing a Bitcoin ETF. Obviously, that's an ironic thing. But one of the advantages, you know, frankly, just practically speaking of something like this is it does effectively lock in a sense, more people into Bitcoin as a currency. And later on, if we see Ether spot ETFs added and other ecosystems, a similar effect will happen where a bunch of people will have Ether, Bitcoin in their tax advantaged accounts and their retirement accounts even in the future, which has an influence, again, we don't talk about markets that much on this pod, but has an influence on in some sense, the price of these assets, you'll at least see, I think, more stability and stamina as far as developers are concerned in terms of people's willingness to drop everything and dedicate substantial chunks of their day's lives to building upon this technology. So even if the development doesn't say anything about the core tech itself, I think it does give some people the security and safety to, to develop on top of it.

You know, I mean, one other concept is people who are buying this Bitcoin ETF, do they really have any clue what they're actually buying? You know, I mean, in other words, they're buying an asset that went up 164 percent last year, you know, and like, you know, like goes up during, you know, the second year of the Bitcoin having cycle, you know, or the you know.

But is it money? Is it commodity? Is it a stake in a decentralized network? And I was just thinking about, I go to the Bitcoin devs meet up here in Austin, and it's like a bunch of really smart developers like sitting in a room and discussing code changes. And like, they're talking about this proposal on GitHub and they debated, they talk about it. And you know, there's, you know, there's, I wrote this week about this proposal by the longtime Bitcoin developer, Luke Dash Jr. who's like super opposed to these data things, you know, like this one we wrote about that was embedded, but you know, all the ordinals inscriptions, like that is like, you know, blowing up Bitcoin traffic wise and driving up fees and there's this discussion on GitHub. It's an open source software platform where people are like debating. And then there's a Bitcoin core maintainer, this woman, Ava Chow, who came in and cut off the debate and just, how does that even work? These retail investors, you're like, by Bitcoin. Like, is that what they're thinking about?

I mean, I think on one hand, so there's the retail investors, but there's also another class that's going to get, you know, that's involved in this ETF story, which is, well, advisors, like people who are managing money on other people's behalf. And those folks who have to get licenses and so on are now incentivized to learn about the technology. And one imagines that some of that knowledge will probably trickle down to their clients and to their clients' children and so on and so forth. So maybe this will kind of spread knowledge of this stuff, but also like in terms of understanding, like if we're being honest, people don't really understand necessarily the stocks that they always buy. Like I knowing that usually just buy like the, you know, market tracking indexes just because I just understand that I have no idea what's really going on in Nvidia or whatever. So a similar thing is going to happen with Bitcoin where it's not going to be that different from buying any other stock where you don't understand what's going on, but now it's going to be way easier, so much easier.

Yeah.

Totally.

Like people already have their brokerages, like they've got their account of Schwab. They can now just buy Bitcoin. So some of that knowledge, like the practical knowledge that you need, um, is going to disappear. Um, again, not a good or a bad thing, um, in terms of the technology itself and whether this is good or bad or, you know, should continue, but like, you know, people don't need to know things now. Um, you don't even need to know what Coinbase is, um, to, to get, to get, um, crypto in the United States to get Bitcoin at least.

Yeah.

You know, just one other topic. And I mean, just, you know, we can move on here, go to the break. But a couple, you know, there's still there's an Ethereum ETF, you know, that is pending. And but at the same time, you know, we were talking on the news meeting today, there's still all these tokens for all of these projects that we're talking that we're writing about, you know, who are employing all these developers and like literally working on building the infrastructure of finance. They have these tokens that have been declared illegal, you know, illegally trading securities by the SEC, like in cases, you know, that are open court cases. And so it's like, you know, okay, Gary Gensler lost this round. It was a big round, but like there's still all this stuff that's unresolved.

Yeah, I mean, regulatory capture is way easier when most people are buying their, I mean, I don't know if it's going to be most, but most people are buying their, their crypto, be it Bitcoin or Ethereum, and maybe none of these other tokens, through brokerages. Like in a way, this is a good thing for the regulators that everybody shakes their fists at in crypto, because now they have much more oversight in the United States, at least over the funnel that people use to, to access this stuff, which is not to say they don't have, you know, some, some you know, hand on Kraken, Coinbase, and those other folks that people have used thus far. But anyway, interesting to watch.

All right, well, yeah, no, we've never seen anything like this. All right, let's take a break. When we come back, we're gonna be talking about Fox News and Polygon's new anti-deepfake tool that Sam actually tried out. We'll be right back.

BREAK

Okay, we are back and this is a super interesting. I mean, Marta, this whole thing just sort of unfold. Was it yesterday? I lost track of time, but no, two days ago, I think, but maybe Tuesday. This story came out and it just, you know, I mean, as we've discussed, like, you know, the Fox PR people had teed up all the mainstream press. So we were the last to find out about this story. But...Anyway, Margaux tell us real quick, what is this story about this blockchain tool and what's it for?

Sure. So Fox has sort of teamed up with Polygon. Well, Fox has come out with a tool that uses blockchain and or blockchain to sort of combat and look for AI, deep fakes and media stories. It's supposed to help them sort of, I guess, you know, in their, it's supposed to help in their fight against sort of disinformation, but also tracking where media stories and where certain images are coming from. And I think there was a lot of buzz around it, because one, it's Fox News. It's a media empire. But two, there's two big buzzwords here, blockchain and AI being used together. And three, of course, Polygon's somehow involved in it, because Polygon's always involved in some kind of mainstream deal, it seems like, these days. So this made a lot of headlines just because of the combination of things. But you know Sam, the tool itself is called Verify. It's an open source protocol. That's what they sort of had launched on Tuesday. It's still in beta, so there's still a lot of, I guess like blips in the system. I would say Sam is maybe our resident Verify expert at this point and our, you know, or our in-house AI tool, like user, I don't know, you always seem to be using chat GPT for some reason, but you know, so I'll let you sort of maybe walk through the piece that you wrote about and why, you know, why there's still a lot of work to be done, I guess, on this.

Yeah, yeah, I love playing around with this stuff. So I was quick to it was cool. They released a version of the Verify tool that you were allowed to play around with. So Brad's urging, I played around with it and it's interesting.

You already were I encourage you to write the story.

So it is interesting. So there's kind of two sides to this, Margot, like you talked about, one side works better than the other. One side of it is detecting whether content is from the putative source that it purports to be from for users. So you can upload it into this tool and see, hey, this Fox News article that I found on Twitter, is it actually from Fox News? Which means uploading it to the tool and checking if it's been registered to the verified database. So that's one side of this. That's the detecting deepfakes side and we'll talk about whether it works. And then the other side of it, which I think could theoretically work really well, is just the context for this is the New York Times is suing Microsoft and OpenAI in this sort of landmark lawsuit, which claims that these AI companies have trained their models using the New York Times as articles and sensibly the New York Times is a stand in for basically everybody. People whose publishers, whose articles have been used to train models without permission. So that lawsuit kind of gets at what this tool is trying to address, which is, okay, fine. If AI companies want to use our content as publishers, Fox will release this database that anybody can, you know, now add their articles to. And then AI companies will have to go through this blockchain based software, this database essentially that Fox has created to access content and to use it in accordance with whatever licenses are attached to it in this database, which might sometimes gate the articles behind a paywall or what have you. I think that idea is smart. I've given it a high level of it there. But anyway, the deepfake detecting idea though doesn't work as well.

Yeah, no, I mean, I guess, you know, I mean, there's the two. It gets back to what we, you know, in our writing, you mentioned WorldCom and your piece, you know, and in terms of like, WorldCoin, WorldCoin. I hope I didn't make that mistake, but if I did, lawyers out there, I retracted. All right, so WorldCoin, you know, they have this idea of proof of humanity, right? Like...

Yeah, WorldCoin. We get confused. The WorldCoin.

Is it an AI or is it a human? And was this story a real story or was this story written by AI? But we also, now here we're also talking about deep fakes. Like we're, people create these deep fakes. And so, I mean, here we are coming up in the 2024 election year. It is gonna be one of the, I'm just guessing, here we are, but it's gonna be one of the ugliest.

if not the ugliest election in the history of this country, you know, I mean, it is going to be a mess. And, you know, we have these technologies that every, you know, deep fakes are so good now, and some of them, you know, and so, I mean, that's like one of the big ideas, right, Sam, is to try to be like, yeah, okay, we've, we're trying to do something to like help, yeah.

But does it work? That's the question that we try to solve. And the answer is no. Like it doesn't really, I mean, so basically just to give you, you can read the article, but like the way that this tool works is you just have to, you can upload either an image or a URL to this website in order to see if it comes, if it's registered into the verify database. Right now it's just Fox, but other people can add to this database later on. But what that means is unless you're using the exact correct like URL from Fox, or you're using in our testing, you're using the exactly correct image. So you can't just screenshot something from Twitter. You need to download the original image at the correct proportions, not modified in any way, not with captions on it or what have you. Then you can see if the source is, not if it's AI generated, because it might be AI generated and from Fox, you will get to see if the source is from Fox. And by the point you've uploaded it into this tool, like you've probably gotten it from fox.com, you need Foxnews.com, you need the exact URL, you need the exact image. So I don't know if it's super useful, but it's a proof of concept. So I don't wanna rag on it entirely.

Yeah.I think it's.

Before Margo, let me just on that one before we go to you Margo. I mean The concern is not you like you can look it up But the concern is like everybody else is too lazy to ever check it, right? I mean anyway, sorry. I just Right, but most people don't check this stuff I go ahead Margo

Me, I'm not gonna use it. Like, I'm not gonna be checking. Yeah.

Yeah, no, I mean, you sort of got at it. Like it sounds like it's not, you know, unless there's more in that database, it's not really useful. It's not like, it's very specific in terms of the requirements. And like you were saying, like people wanna believe what they wanna believe, right? Like anything is sort of, if it's sort of out there and who has the time to like go back into Fox database or the blockchain, I guess, to see if it's true or not, right? Like, I mean, I guess if you're, you know, writing a paper and don't want to be plagiarized, but that gets into a whole bunch of other stuff going on in the news. But anyway, we'll drop that. But you know, like we, I think the idea is there, but like practically speaking, people are human and people don't have time, right, to go and check this. They sort of want it to be there.

Putting the deep fake checking stuff aside, if that's really the goal for this, that might be like the PR end of it. And looking at like the database and the licensing and you know, all of that. I think, you know, there's a blockchain tech podcast, like one of the interesting thing, one of our jobs, probably our biggest job is to look at things and say, hey, did you really need the blockchain there? Anything from a tool like this to like a decentralized finance protocol. Like, do you really need a blockchain to do this? Or are we essentially doing the same thing that a normal brokerage does or, you know, what have you. And in this case, surprisingly to me, you know, given the source and so much else, I do think that the blockchain tie-in actually, dare I say, makes sense. So like, if you're uploading immediate, like, so if you're Fox news and you put your article onto this blockchain service, the benefit of using Verify is that you can see the provenance of the article, you know, in perpetuity throughout history. Like you can see if you're an AI, you know, scraper using this database, and you want to see if you're, you know, if something's been modified, or when something was added, or, you know, so on and so forth, you have the paper trail immutably added to this blockchain. And then perhaps more importantly, if Fox wants other people to jump on board, Verify or fork it into their own thing, they can, because of the blockchain nature of this service, not trust Fox itself as kind of like the arbiter of what's allowed on here, what's true, and so on and so forth. And Fox might, I mean, we get into this in the piece, they got their own issues as that person. But if I'm Disney, I might use this service because it's on the blockchain. It's not on a Fox server. So I don't have to trust Fox with anything. So that part is interesting.

Yeah.

I think also the one thing I will note is that Fox is a mainstream news company, right? Here they are sort of looking outside of their realm into this emerging technology to sort of support what they're supposed to do. So I think this is like another... We were just talking about institutional players using blockchain, using crypto. This is, I guess, another version of an old school media source that is looking to use new technology.

And, you know, maybe this, I mean, here we are saying there are a lot of limits to this tool, but maybe there's a way to, you know, bring Fox readers to read the blockchain, right? If we're trying to be a little bit optimistic, maybe they're able to, they're a way to make sure, you know, check news and check where it's coming from, that it's original.

You know, I mean, just to, I think we should probably wrap it up here, but I mean, you know, like looking at what you did, Sam, and I actually played it around with it too, after you did it, but you know, you put the thing in, it sends back a hash, right? And it's like, Oh my God, there's a hash. You know, it must, it's like real.

You know, and the question is if it's a, you know, it's like a fig leaf, maybe, you know, I mean, it's like such an early version, you know, to your point, Margo, it's, you know, it was reminding me of, you know, some of the proof of reserves and some of them are like early versions and, you know, they're like, hey, look, there's a Merkel tree and there's a hash. And you're like, see, the money's there. And, and as Sam wrote about, you know, sometimes it's, there's more.

You know, it's more nuanced than that. And it's not, you know, what you're seeing is not as real as maybe you'd see when you see like, you know, all these like hexadecimal, you know, letters and numbers. But I mean, Margo, um, with the polygon team specifically, I mean, you're so close to the polygon, you know, your coverage, you know, what did they, what was their perspective on this? You have a sense of kind of like, did they drive this, you know, or.

Like, is this a big deal for them? Is this like an initiative that could expand for them or what, or is it just like marketing or I don't know, anything.

I mean, I don't think the Polygon team would say that this is marketing. I think they're pretty stoked that they're having a, you know, on mainstream media source use another one of their platforms. And like we were sort of alluding to earlier, they live for mainstream partnerships, right? They had Starbucks, they had Metta, they had Nike, I guess, at some point. So this is another big win for them. What I will say though, is that...

that this was first developed in-house at Fox in their tech team. And then they went to Polygon. So I mean, I don't know any specific specifics in terms of the deal that's or the partnership that they've arranged. But it sounds like from the coverage, from the news release, that this is, it's powered by Polygon. I don't know if I can confirm that this is something that Polygon has initiated. But that would be interesting to find out. So maybe, you know, stay tuned.

I mean, kudos to Fox. You know, I mean, I think it's sort of the Holy grail out there in terms of, you know, what is decentralized media look like? And I don't think we're there yet, but I mean, you know, this is kind of maybe, you know, moving in the direction of having some kind of decentralized authentication or I don't know. I mean, it's sort of. But.

Not at all.

Wait until you need an NFT to access the service. Maybe that's next. Yeah. Fox will join Trump and start smelling some NFTs. Yeah.

Trump cards. Trump cards.

Right. You have to be in the club, dude. It's premium. You only get authentications with the premium NFT membership. But OK. All right. Well, any final thoughts before we wrap it? No. All right.

Well, thank you for joining us today. Thank you for our incredible producer, Michele Musso who's back there and keeping us on track every week.

Thank you for listening. If you have any questions or any, about any stories or comments, please reach out to us at podcasts at coin desk.com subject line, the protocol. Also, you can listen to us on Coin Desk podcast network or wherever you get your podcasts and please subscribe to the weekly newsletter, the protocol.