Bitcoin Tech Talk #298

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What I've been working on

1. Fiat Morality - I make the argument that morality given to us by the elites has a purpose and is generally less trustworthy than Natural Law. The cause, as usual is fiat money, which gives so many rent-seeking jobs. Virtue signaling is really a way to lobby for rent-seeking jobs.

2. Learn HD Wallets - I taught this at Bitcoin++ to a bunch of students and I will be updating this for bconf.de. This is very much in the style of my book and my seminar for learning HD wallets. The material is a bit raw since I’ve only taught it once, but if you’re interested in learning BIP32/BIP44/BIP39, this is a repository that can teach you step by step.

3. ChattBitcoin - Video isn’t out yet, but I had a great time in Chattanooga hanging out with folks. The town is lovely and the barbecue is pretty good, though I’m still partial to Texas BBQ. The Bitcoin scene here is growing and the town is probably what Austin looked like 20 years ago. In other words, a good place if you’re looking for a growth city.

What I'm up to

1. El Salvador Scholarships - If you are a developer in Central America, please, please, please apply for this scholarship. I would love to teach you in San Salvador July 18-19. Applications are due July 1 and there is assistance available for those that need to travel.

2. GLG Roundtable - If you are part of the GLG network, I have a group call coming up on Thursday. Ask me whatever questions you might have given the current market!

3. Europe - I’m planning to spend a good chunk of time in Europe starting in August. Among other conferences, Baltic Honeybadger and bconf.de are two that I’m planning to speak at. If you have other conferences that you think I should consider, please email me.

Tweet of the Week

What I’m Shilling

• Books

  • Bitcoin and the American Dream

  • Thank God for Bitcoin

  • The Little Bitcoin Book

  • Programming Bitcoin

• Unchained Capital is a sponsor of this newsletter. I am an advisor and proud to be a part of a company that’s enhancing security for Bitcoin holders. If you need multisig, collaborative custody or bitcoin native financial services, learn more here

Bitcoin

1. Taproot Demo - BitMex has a very helpful blog post on how Taproot spends work. They spend from the same address two different ways, one using the keypath spend and the other using a Schnorr signature tapscript. The post is illustrative for the power that Taproot allows. Unfortunately, it’s a bit complicated and the tooling for making these more ubiquitous isn’t really there yet. The possibilities of using this tech for developers will hopefully be communicated in a post like this.

2. Bitcoin Overlay Network Model - A recent paper looks at the bitcoin network and models the growth. The paper’s conclusion is really interesting in that they can model changing the difficulty to minimize forking risk. This is not a hard fork Bitcoin would ever consider, but the network latency given its size does give some consideration to when forking will occur.

3. Chaincode Summer Seminars - Chaincode is offering their very comprehensive and effective seminars. You can learn about protocol and lightning development and attend seminars in cohorts of 10-25 to really dive in. For the self-motivated, they offer a self-paced seminar. Developers interested in any of this stuff that want to get together with other smart developers should strongly consider this course.

Lightning

1. Kraken LN Report - Kraken’s report is meant for the lay person, with a thorough history and how the network developed. The most interesting parts of the report are the adoption numbers. It turns out that channel capacity has stabilized at around $5000 on average even as nodes and total capacity increase. This is either some optimimum or just the average which gets skewed a bit by the big players. Whatever way you slice it, Lightning is growing by leaps and bounds.

2. Blockstream 2nd Layer Report - The newsletter covers a lot of things, including ROAST and the NFC Bolt card, but the most interesting thing for me was the comparison between Liquid and Lightning. Lightning surpassed Liquid in the Bitcoins locked metric just in the last year. I didn’t realize that so much BTC was locked in Liquid. Liquid has different use cases and is growing slower, but there’s definitely competition for Lightning.

3. LN more than Payments - The presentation slides here summarize why Lightning is more than just payments. It’s something I’ve been saying for a while, that it’s a layer for network communication that has native payments built in. Some things the slides point out is that there’s no Web dependency (just a TCP port), lower latency through LN socket, and no TOR or VPN needed, which are often blocked by ISPs.

Economics, Engineering, Etc.

1. Liquidation Dip - A whole lot happened to get Bitcoin to dip below $18000, mostly around forced liquidations. It turns out that there were a whole lot of leveraging going on from organizations like 3AC, BlockFi and Celsius. BlockFi is getting bailed out by FTX, Celsius is hiring lawyers for bankruptcy proceedings and Goldman Sachs is waiting bankruptcy proceedings to grab some of the assets. I don’t think it would surprise anyone to see even more liquidations going forward.

2. USD CBDC - Jim Himes, Democrat from Connecticut is the one pushing for it in Congress. No doubt that Brad Sherman and others will be pushing for it as well. The strange thing about CBDCs at least in the US is that it will push out the banks, who currently sit in the middle and take a bunch of profits. Unless there’s some legislation that brings a lot of these banks into the fold in the same way that Obamacare brought in the health insurance companies, this has no chance.

3. UK KYC requirements - This is a small privacy win in the UK where customer requirements for Bitcoin exchanges has been relaxed a bit. ATMs still apparently require ID information to prevent money laundering, which is unfortunate, but there’s a path to some of these becoming less stringent. What these regulations point out is how regulators really don’t understand how these transactions work and play with the one regulatory hammer they have, which is to deputize central entities for data collection.

Quick Hits

• Solana Takes Over Whale - Afraid a whale will dump into a thin, illiquid market, Solana decided to just take over the account and make them sell OTC. This is what not having self-sovereignty looks like. Of course, facing a possible lawsuit, they reverted it.

• Paypal Censors Independent Media Outlets - What happened to Wikileaks in 2010 is happening to other outlets now. If they’re not looking at Bitcoin now, I’d be really shocked.

• Harmony Bridge Loses $100M - Another insecure platform shows its insecurity, this time to the tune of $100M.

• Inflation 9.1% - UK inflation is at 9.1%, which we all know is manipulated, so it’s probably well into the double-digits.

Fiat delenda est.