Bitcoin Tech Talk #300
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What I've been working on
Fiat Knowledge - I wrote a piece as an encouragement to everyone in the community to level up and verify. The problems of centralization are worse than ever because so much knowledge is handed down by authorities and not verified. Real decentralization requires real knowledge. Our brains have to be servers as well as clients.
Mimetic Desire - I recorded another episode of my podcast with Johnathan Bi about mimetic desire, with particular focus on Bitcoin. The philosophical world view has captivated my mind the last month or so as I’ve been diving deep into the world of desire and how status and envy play into everything, especially economic decisions. I enjoyed this conversation about why people buy altcoins, the imitation of Vitalik and much more.
Austin Bitcoin Club - I spoke on a panel at Bitcoin Commons for the Austin Bitcoin Club this past week. We talked about freedom and how it’s enabled by Bitcoin. The main insight for me is how responsibility is really the flip side oof freedom and you can’t have one without the other. By saving, we learn responsibility and are ready for more freedom and really demand it. Skip to the 1 hr mark to get to the panel.
What I'm up to
El Salvador - I will be going to the country next week to teach my seminar to some Salvadorans! I don’t think I’ll have much time to do anything other than the teaching, but if you’re in El Salvador, feel free to propose doing something.
CFA Franc - I recorded a podcast with Fode Diop about his experience growing up in Senegal and the injustice of the CFA Franc. Few people know anything about how money is used as a tool of modern day imperialism and Fode shared how the system works to deprive him and his countrymen of their labor and resources. Please have a listen later this week to understand why ending the current central-bank backed fiat monetary system is so important.
Fiat Meaning - I’m working on an article for Bitcoin Magazine on this idea that the meaning people derive is constantly debased. I’ve seen childhood dreams slowly degrade from changing the world to hoping for retirement. It’s a sad reality and something I want to explore in the next week or so.
Tweet of the Week
What I’m Shilling
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Bitcoin
Half-aggregated signatures - Blockstream folks have an informative post on these interesting types of signatures. They are non-interactive signatures whose total length is half that of the signatures individually. This can improve multisig signature sizes without requiring interactivity like MuSig does. They are in the process of creating a formal specification, which should eventually lead to formal proofs.
No Order Mnemonic - Mnemonics are tricky because you have to write down the order and words may repeat. For something like seed-picker, no order mnemonic would make more sense and that’s what this repository does. It’s the same list of words, just with no ordering involved. The code uses some clever combinatorics. Note that you need more words to make it work, so 16 and 37 words are needed instead of 12 and 24 for the normal scheme.
ItchySats - This is a Contract-for-Difference smart contract on Bitcoin, used to do derivative trading. The tech underneath looks like a discrete log contract with an oracle to settle the amounts. As long as you trust the oracle, this is an effective hedge without any KYC. I suspect that most uses of derivative contracts will be speculative gamblers rather than actual businesses that want to hedge against price collapse. That said, over time, there is a use case for institutions that want to hedge their holdings.
21 Million - Unchained Capital blog has an informative post on exactly how the Bitcoin Core code enforces the 21 million limit. Suffice it to say that 2.1M minutes is very close to 4 years and that 50+25+12.5+6.25+… = 100. The actual convergent series is discussed looking at the code. This is a good way to learn about the beautiful mathematics involved and see how the halving isn’t quite every 4 years.
Lightning
Pickhardt Payments - This article by Namcios goes through what Pickhardt payments are, what problem it solves and how the algorithm optimizes for probability. The main thing is that most algorithms for Lightning path-finding optimize for low fees. His system optimizes more for successful payments. This is especially useful for larger payments, which require more liquidity. The research is ongoing, but this should make the Lightning Network operate more efficiently once it’s deployed and in wide use.
Lightning Division of Labor - Sphinx blog has a very useful way to divide what a single lightning node is doing. They divide it into 3 separate and distinct tasks: managing channels, routing payments and signing. These have different security needs and attack surfaces and in their case, they’re changing their architecture so that the signing is done on a separate machine so that the attack surface is reduced. A great way to understand where Lightning is likely headed.
WooCommerce Plugin - This extension for LNBits lets you make a Lightning/Bitcoin payment gateway for Wordpress! Given how popular Wordpress is for blogs and e-commerce, I can see a potentially large maarket. The more advanced features like paywalls and crowd funding don’t seem to be there yet, but I can see this sort of plugin becoming a lot more popular.
Economics, Engineering, Etc.
Bitcoin Maximalism - Pete Rizzo argues for Bitcoin Maximalism in his latest piece for Forbes. He makes specific arguments against what Nic Carter wrote. The piece is a great explanation of the moral argument for Bitcoin Maximalism and against “crypto.” Something like this really needs to be made into a full-length book to get people to avoid altcoins. John Vallis wrote a more amusing retort to Nic’s article, centered around those steak dinners that Nic’s apparently tired of.
Tourists Getting Out - Glassnode says that the Bitcoin “Tourists” are now out of the market and the holders remain. They use a variety of on-chain metrics to show why they think this is the case, looking at active addresses. They also analyze exchange deposits and withdrawals to make the same case. One thing that I didn’t realize from reading this article is just how much BTC has been taken off of exchanges over the past 6 months. 750K BTC, or about 30% of all exchange supply of BTC has been withdrawn.
Miner Capitulation? - Core Scientific dropped a bombshell, showing how they sold 7000+ BTC in the month of June, which was almost 80% of their entire supply. Generally, miners don’t like to sell until there’s a market top, so liquidating here probably means they really needed the money. This probably has as much to do with the tight capital markets as it does with their bearishness on Bitcoin, as loans are not easy to get at the moment.
Quick Hits
Facebook (Meta) abandons Libra (Novi) - The names have changed a few times, but their dalliance with crypto seems to be at an end.
Buttcoin conference - The critics of Bitcoin, some for over 10 years, are getting together for a conference to talk about how irrelevant we are.
Chinese Data Leak - Apparently, 1 billion names and addresses can be had for a mere 10 BTC on darknet markets.
Axie Infinity Hack - The hack of this altcoin was made possible by a fake job offer. The proceeds went to the Lazarus group from North Korea. This is what centralization looks like.
CAR going altcoin - Looks like the Central African Republic is going altcoin.
Fiat delenda est.