Bitcoin Tech Talk #291
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What I've been working on
Covenants and Property Rights - My column this week is about how property rights get muddled with covenants. I like the technology around all the covenant proposals, such as BIP119/OP_CTV, but the bigger question that we haven’t really resolved is whether covenants undermine property rights. This is a more important economic question that I believe trumps the technical benefits.
Christian Bitcoin Conversation - For Christians, this is my argument in podcast form for Bitcoin. I talked about how many churches slowly became subject to the state and how Bitcoin has changed me as a Christian. I think Christians are very ripe for orange pilling and they just need a little nudge. Ultimately, if they understand that the money is broken, then they’ll look for a solution, which is Bitcoin.
Subverting Health Insurance - I talked to Andy Schoonover about his new company, which is something like a health-care coop. This is an alternative to health insurance, which, as Andy points out, is a giant rent-seeking machine. His service will take out the middle man, make health care much more community driven and bring rationality to health care costs. If you’re on a healthcare.gov program, I would highly encourage you to listen to this episode and look at how you can have a health care account that uses Bitcoin as savings.
What I'm up to
More Podcasts - I recorded with London Real and Faith Driven Investor this week. They’re pretty different audiences, but surprisingly, I talked a lot about the same things. They should be coming out in the next week or so. If you’re a fan of either or both, please spread the word.
Oslo Freedom Forum - I will be speaking at this human rights event. If you are in Europe, I would highly encourage you to go to see how Bitcoin affects human rights! There will be a lot of speakers this year, given the many conflicts going on in the world and there will be a ton to talk about. This is one of my favorite events as it really highlights the need for Bitcoin from a global perspective.
Bitcoin++ - I’ll be at this Bitcoin event in Austin before Consensus 2022. I’m aiming to have a workshop on BIP32/BIP44/BIP39 HD wallets. It’ll be two hours and be similar to the Programming Blockchain class in that there will be lots of unit tests, some lecture and Jupyter notebook to do the exercises. Stay tuned if you’re interested.
Tweet of the Week
Bitcoin
Timelock derivation for BIP39 Seeds - Chris Belcher has a BIP for timelocked scripts. The idea is to have a definitive derivation path for a given locktime, which are granular to the month. The way the BIP is designed, there are 960 possible timelocks for a given derivation, each representing a month between Jan 2020 and Dec 2099, inclusive. The derivation path is m/84’/0’/0’/2/index where index indicates the Year/Month that the money will be available. This is a clever way to not have to store the script and the usage will be for Fidelity Bonds. Given that there are only 960 possible derivations, it will be possible to search given an xpub.
Change Output Privacy - Josie writes about improvements to change outputs by keeping the script type the same as the payment output. This is a clever way to hide the fact that a segwit wallet is paying someone who doesn’t receive using segwit addresses. I hadn’t thought about the additional insight that even mixing inputs is not a good idea from a privacy perspective. As usual, be careful and when possible, use Submarine Swaps.
Bitcoin, Explained - Core developer Sjors Provoost has put together a book explaining a lot of technical concepts in easy-to-understand language. The book is available in the github repository, but also available at your favorite bookstore. I got a bit of the preview and it’s an excellent explainer of some rather hard technical concepts. I would recommend it to new developers in the Bitcoin space, especially, as he explains in terms that a coder can understand.
BIP119.com - The website has all the articles and videos that explain and argue for/against BIP119. The idea is that users can get informed about what BIP119 is, what the reasons for its adoption might be and decide for themselves.
Lightning
Dual-Funded Channel Agreements - Dual-funded channels are a reality on the Lightning Network, making the channels funded from both directions. This seems like the logical setup for most routing nodes as they connect to each other as liquidity is not free and the ability to swap liquidity on a sat-for-sat basis is intuitively fair. The rather cumbersome setup currently of having to open separate channels for liquidity swaps should be reduced with a dual-funded channel setup.
Voltage Podcastindex Case Study - Voltage released a case study on how Podcastindex managed to scale using Lightning as their backbone. The interesting part of this article was how Adam Curry and his team didn’t know that much about Lightning, but were able to create this service without much trouble using the Voltage API. Yes, it’s a bit self-serving, but the fact that this service was built out so quickly and scales so effortlessly is worth looking into for new business models on Lightning.
Lightning and Web - Roy Scheinfeld of Breez talks about the ways in which Lightning and Web really need better integration. LNURLs for example, allow you to get around the restrictions of Lightning invoices. There’s also LNURL-Auth, which is a different way to do logins than passwords. The article has a lot more “bridge” technologies between the two, but the one that’s most interesting to me is WebLN. The idea is that LN payments can be native within a web browser. Someone, please fork Chrome/Firefox to make it WebLN native!
Reacher - This is a Lightning app built using the Strike API to pay you to read a message. They’re essentially doing what earn.com used to do, but on Strike. Crazy that Coinbase spent so much on Earn and here’s a competitor that’s more scalable just using Strike’s API.
Economics, Engineering, Etc.
Bitcoin is the Currency of Last Resort - Alex Gladstein writes about what Bitcoin is enabling in Ukraine and Russia as the ravages of war affect nearly everybody. The piece documents a lot, including the histories of both countries, the people on the ground and why Bitcoin has become such an important part of the relief that many Ukrainians are getting. For anyone doubting the utility of Bitcoin as a payment network, point them to this article.
Bitcoin Mining Council Rebuttal - The somewhat beleaguered Bitcoin Mining Council released a rebuttal to the EPA charges that it was using too much energy. Michael Saylor, Nic Carter and Darin Feinstein do a great job of refuting every point from the EPA statement and it’s a great way to reframe the energy argument in terms of regulatory and policy decisions. This should be required reading for any ESG idiot making claims about Bitcoin’s environmental impact, like the next story.
Wikipedia nixes BTC donations - The online encyclopedia probably got a huge donation from Ripple to offset the obvious benefits of Bitcoin donations, but this is how political games are played. It’s sad to see them display such high time-preference behavior, but in a sense, it’s to be expected, as the community there has been hostile to Bitcoin for some time. The nice thing is that since the site is open-source, it’s only a matter of time before the whole thing is available without all the controversy in a decentralized form on Lightning.
SEC crypto arm - They’re aiming to make all these coins come into compliance. I’ve said this for years, but altcoins are very vulnerable to regulatory action and this is only the beginning. In particular, DeFi and stablecoins look like the juicy first targets for them and it’s bound to be very contentious. The government takes its time, but when enforcement actions come, it’s not going to be pretty.
Quick Hits
NFTs have peaked - Even the WSJ is noticing.
SEC getting ready - They’ve doubled their staff for “crypto,” which suggests some enforcement actions are coming.
IMF warns CAR - Quelle surprise! IMF doesn’t like what the Central African Republic is doing.
New York and mining - New York may join China in banning mining.
Arsonist Apes - $180M in fees were burned as a result of the botched NFT sale on ETH.
What I’m Shilling
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Fiat delenda est.