Bitcoin Tech Talk #305
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What I've been working on
Holiday in the UK - I’ve been enjoying the various places here in the UK, I saw the statue of Adam Smith in Edinburgh, which appropriately had some birds poop on his head. If you’re not familiar, the guy basically did not credit any of the people before him and demanded that everyone after him credit him. He essentially declared himself the “father of economics” through political wrangling.
Taproot Talk - I gave this talk back in March, but it’s finally up now. It’s talking about how to do multisig on Taproot and the various approaches that are possible. In particular, I go over various MuSig, single leaf and multi leaf CHECKSIGADD approaches. The really nice thing about Taproot is that you can have all of them if you want, which you can check out in the talk.
Rant about altcoins - I have a lot of such altcoin rants, but this one was for Bitcoin Magazine live. Given what’s been going on with altcoins, this is an appropriate rant to send to your altcoiner friends.
What I'm up to
BitBlockBoom Talk - I’m preparing a talk called “Fiat Delenda Est” for BitBlockBoom. This is a phrase I’ve been saying for a while now, and I hope to show why fiat must be destroyed. The more I study the current system, the more I’m convinced that fiat actively prevents technological progress and civilization building. I’ll argue that it’s really a form of socialism that we don’t recognize as such.
Listener Questions - It’s been a while since I’ve had an episode like this. I’m going through the questions and figuring out how to answer them. There’s a lot of talk about stablecoins, which I’ll definitely think hard about.
Fiat Relationships - My article for Bitcoin Magazine will be about how every relationship that we have has been infected by fiat money, making them shallower and more political. My contention is that relationships in a market economy tend to be a lot more long lasting and hence more low time preference. The high time preference relationships that we have now lends itself to people screwing each other over, which is unfortunately all too common.
Tweet of the Week
What I’m Shilling
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Bitcoin
8 Security Threats - Casa has a great taxonomy of security threats to your Bitcoin. Many of these are obvious, but the mitigations are not. Two-factor authentication and offline wallets are obvious, but curiously, they omit multisig as a major mitigation for single-point-of-failure stuff. I would argue that’s the mitigation for most of the possible security threats. The taxonomy is useful and I hope new proposals are put in these terms.
Seed Backup Best Practices - Jameson Lopp opines on what makes for a good seed backup device and what properties it should have. His main takeaway is that it should be able to survive all kinds of disasters and the big one is that it be a single piece of metal and the markings on the steel. There are lots of tradeoffs discussed in the post, and it’s a good reference for figuring out your backup setup.
SMS tx broadcasting - Machankura is a service for those without internet access in Africa to broadcast transactions via SMS. The main drawback at the moment is that it’s a custodial service. I would love to see a more general service that can broadcast the transaction and send a block header back along with a Merkle proof to show that the transaction has been included.
Lightning
Bolt NFC - Bolt has open sourced its NFC for lightning on Android. I would love to see a standard around this that lightning wallets can use instead of QR codes. Confirmation would be required as part of the UX , but for in person payments, NFC seems like it would be a more convenient way to do everything.
Vision for Taro - The logic for why Lightning Labs is focusing on Taro is in this post by Ryan Gentry. The idea is that they can make it easy for the many people in the developing world that want some sort of stable coin as a store of value. This is the major use case for Tether and USDC. I have some doubts about this business model as so much of it is dependent on a backed stablecoin continuing to exist. As we’ve seen with TornadoCash and USDC, this has a huge regulatory risk and accounts that hold the backed USD are vulnerable.
Explaining Lightning - Lyn Alden does an amazing job explaining the purpose and design of the Lightning Network. It’s a wonderful article that goes through all the reasons why Lightning exists and how its necessary to be built on Bitcoin. All of the design decisions are necessary and in contrast to altcoins, the Lightning Network is actually decentralized because the underlying settlement network is. Good article to really “get” lightning.
Coinbase Likes LN? - Generally anti-BTC company Coinbase actually wrote a positive article on LN after completely ignoring it for 4 years. Better late than never, I guess.
Economics, Engineering, Etc.
TornadoCash banned by USDC - Circle, creators of USDC has banned a bunch of addresses by order of the US department of treasury. Infura, among other services has also banned TornadoCash. A developer has been arrested as well. If there ever was an obvious choke point, this is it, and as useful as stablecoins might be, this is the fatal flaw likely to keep it regulated. The centralized nature of backed stablecoins makes avoiding government permission very difficult. If the international monetary order wants, this one action has proven that they can shut off this spigot at any time.
Iran and Bitcoin - About $10M worth of goods are avoiding sanctions using Bitcoin. Sanctions have been and continue to be enabled by fiat money and a single reserve currency monetary order that we have right now. Since Bitcoin is permissionless, places like Iran can avoid these sanctions. This has always been a feature we’ve been aware of, but it’s really starting to take shape now.
Fix Money First - Nice article defending Bitcoin Maximalism as the idea that the money ain’t fixed yet and should be the first priority. The best idea from the article is that altcoins are a continuation of fiat money by other means. And like fiat, it’s destined to lose against the sound money that is Bitcoin.
Quick Hits
BTC-e owner in US - The US department of justice generally gets the people it wants, and I’d bet that the book gets thrown at him.
Coinbase loses $1B - That’s in just 1 quarter. They have a warchest of $6B, so they can survive on these losses for a while, but it does make you wonder. What are they spending all this money on?
Cuban getting sued - VC pumps and dumps, now is getting sued in a class-action lawsuit. I expect a lot more of this.
Blackrock and BTC - Blackrock now has a Bitcoin product.
Fiat delenda est.