Bitcoin Tech Talk #302

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What I've been working on

1. Fiat Meaning - My article this week explained how meaning has been debased by fiat money. Specifically, the things that used to give people meaning like family, community and religion have all been infiltrated by fiat money and made extremely high time preference. The result has been a plunge into addictions of all kinds.

2. Philosophy of Science - I talked to Troy Cross about philosophy, academia and Bitcoin. Troy is a professor and we talked about why science and academia are not producing good results and why they seem to be off track. Readers of this column will not be surprised at my opinion on the subject, but Troy gives a slightly different perspective from the inside.

3. El Salvador - I traveled to San Salvador to teach 9 programmers the Bitcoin protocol. I was really surprised by how much development they’ve had since I last visited, which was a mere 6 months ago. There are more roads, better looking buildings, really nice restaurants and so on. The country is developing quickly and it’s great to see it. It’s crazy to me how much human creativity and entrepreneurship can change a place, provided they aren’t being oppressed by those in power.

What I'm up to

1. Russia - I have a podcast this week with Anna Chekhovic, who handles finance for the main opposition party in Russia. She’s had to flee from Putin and lives outside her home country. This episode will be eye-opening for those that don’t understand the extend of control people like Putin have over the monetary system and how that can be used against you.

2. Fall Conference Season - There are a lot of different conferences that are coming up that I will be speaking at. There’s BitBlockBoom in Austin in late August, Baltic Honeybadger in Riga in early September, bconf.de in Innsbruck later in September, and Plan B forum in Lugano in October. I’ll try to have my books available at each conference.

3. Violence and the Sacred - I finally finished this book by Rene Girard and it’s definitely made me think about the precarious nature of violence in civilization. We take civility for granted, but it’s largely bought through shared belief. The violence at the heart of every civilization is something that we hide and purposefully mythologize. The book has given me much to think about with respect to how communities form and how communities are kept together.

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. Fedi - This is a Chaumian e-cash system for Bitcoin on a federation. Chaumian e-cash is great for privacy because there’s no public blockchain. Instead, each unit of cash is signed over in a cryptographically secure way as to be redeemable at the custodian. The main innovation here is that the custodian in this case is a federated group, which takes advantage of the multig capabilities of Bitcoin to make custodianship much less liable to typical banking shenanigans. It looks like the plan is to be full reserve and give privacy to those using the e-cash and give yet another way to anonymize coins.

2. Ordinals on BTC - Each sat on the Bitcoin network can be tracked and traced according to the transactions that they first appeared in. The coinbase transaction where the sat was initially brought onto the network would be its birth. Every transaction afterwards would transfer that sat according to which input it was in and the corresponding output in terms of sats. If it’s in the fee, it goes to the coinbase transaction as the fee. The idea is that every sat can be considered in that case like an NFT and the post goes through what some interesting sats on the network are.

3. Replacing a Key in Multisig - The Unchained Capital blog goes through the considerations for replacing a key in a multisig setup. The nice thing about multisig is that there’s no single point of failure. The slightly annoying thing is that when there’s a point of failure, that key must be replaced and redone. The post is a good reminder to check your bitcoin custody setup and make sure it’s to your liking.

Lightning

1. Storm - I wrote last week about Pine, the messaging system built on Lightning, but it looks like that project is no longer maintained. We have a similar system in Storm, another messaging app on Lightning. This one is a bit more comprehensive as it’s really a data storage smart contract. The details get pretty technical and require many proofs on each side, but this is what trustless transactions require. The idea is pretty cool and I hope this can find some traction.

2. T-bast interview - Bastien Tienturier talks about Lightning in the LNMarkets newsletter. His view on the state of lightning and its continued development is well worth reading. The main thing I learned was about all the different protocol upgrades that are coming on Lightning, like liquidity ads, blinded paths and onion messaging. All of them should make Lightning more robust and set it up for L3 apps.

3. Nostr CoinJoin - This is a clever use of the social network built on top of Lightning to enable coinjoins. The idea is that there is no coordinator, making the blind signing unnecessary. This is an example of a decentralized service with no privileged member. Services like this are generally much more difficult to code as there are a lot of steps and possible attack vectors. That said, the lack of trust in such protocols is a very desirable feature and I hope more services at least attempt these things.

Economics, Engineering, Etc.

1. Bitcoin Mining Economics - DSHR argues that many of these mining companies had too high a valuation based on very optimistic projections. This is not really surprising given the optimism money printing generates. The interesting part is that there’s good evidence many of the miners are simply not profitable to turn on at this price. He seems to have a gloomy outlook, but this is good. We want inefficient miners to go bankrupt.

2. DoJ and Coinbase - A Coinbase employee front-ran the listings for Coinbase for a large profit and the department of justice is charging him with insider trading. This was always a large moral hazard and it’s a surprise that it took this long for them to charge someone. The move seems a way to classify so many of these altcoins as securities. The move has a lot of altcoiners complaining and even accusing Bitcoin Maximalists of being statists! Of course, we’ve all known for a while now that these were centralized messes and their day of reckoning would come.

3. BRICS global reserve currency - The dollar hegemony will be challenged sooner rather than later. This story is about the so-called BRICS countries (Brazil, Russia, India, China and South Africa) making their own reserve currency and eschew the dollar. A multi-reserve currency world is a giant headache and it will lead to the demand for some other settlement currency. Bitcoin is playing the long game and is well positioned to take advantage by the time this thing rolls around.

Quick Hits

• Wizard of Oz Redux - Wizard of Oz is really about the Fed and fiat money. What would it be if we continued that analogy?

• Authorities Closing in - 3AC founders are explaining away their grift.

• Tesla sold some BTC - This was used to cover their revenue shortfall. It’s not a bad way to even out profit numbers, honestly. They used Bitcoin as savings.

• Nigeria Capital Controls - Nigerians buying dollars with naira are breaking the law now. Bitcoin users not affected.

Fiat delenda est.