Bitcoin Tech Talk #329

Interesting Stuff

  1. Japan Freezing - The article is about Japan and how it hasn’t improved in 3 years. The author seems completely unaware of the monetary policy that created this mess, particularly with the establishment of an independent central bank in the ‘s that fueled the bubble and continued to prop up the economy since it burst. What was fascinating to me was how much the society has oriented toward keeping things the same. It’s a form of radical conservatism, which ironically is more the policy of the left the world over these days. This is how the party comes to an end sometimes, not with a bang, but with a whimper.

  2. Tipping Out of Control - As I’ve traveled, I’ve realized that tipping is a canary in a coal mine. A lot of inflating countries rely on tips for workers to make up for the loss in currency debasement. I’ve found that the most aggressive countries in terms of tips are the countries that are inflating the most. It’s really not a large leap to extortion and bribes, which also tend to be prevalent among bureaucrats whose wages are not increasing fast enough. The US has a culture of tipping that has grown with each period of inflation and it looks like we’re seeing that more now.

  3. Axiom of Choice not necessarily intuitive - I was a math major and the Axiom of Choice fascinated me. This is one of the most intuitive reasons to explore a rejection of the Axiom of Choice, which involves descriptions and not having any way to describe any element in an uncountably infinite set causes problems for making a choice. It’s short, but well described.

What I'm up to

  1. Bitcoin Debases Beliefs - This article took a couple months to birth as I had some trouble framing it properly. What really made the article click for me is that in the end, everything in a fiat economy is about money and power, which leaves little room for belief. Tying it in with Toxic Maximalism was a nice way for me to cap the article. The main point is that beliefs in the Bitcoin community are well earned and more stable than in fiat.

  2. The dollar backstop - I’ve been observing many countries that are in various stages of inflationary pressure and I find them fascinating. What’s startling for me is just how normal things appear in these countries, despite the rampant theft of value by the government. What I’m finding is that people in these countries are wise to the fact that their governments are trying to steal from them and use alternatives to store their value, namely the US dollar. In many ways, USD keeps these societies from getting too bad. I don’t think we see hyperbitcoinization until we the dollar starts hyperinflating. Then watch out, because hyperbitcoinization will happen very suddenly.

  3. Naked Marketing - This is an interview I did about two years ago and for some reason got released recently. The content is not something I normally talk about, which is marketing and how to approach it. I’ve always found marketing a black box and hard to really be good at, but hopefully, I had at least a few insights that you can use.

Tweet of the Week

What I’m Shilling

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Bitcoin

  1. ELI5 Whitepaper - It’s not as patronizing as it sounds. This is a great resource for those that aren’t technical enough to get the whitepaper straight away and is really a sort of commentary on the actual whitepaper. The work reminds me of the What If books and Thing Explainer by Randall Monroe where simple words are used to explain things that would otherwise sound complicated. They’re popular with kids for that reason and shows a deep understanding of the topic. I’m certainly going to show this to my kids to see if they understand Bitcoin better.

  2. Whatsminer Firmware - You can underclock your WhatsMiner if you want to. The optimization of these miners for various scenarios, all of it to generate maximum profit over the long term makes a lot of sense. What the release of this firmware tells me is that they’re probably running too hot and probably need too much repair to be run at that temperature permanently. I applaud the tweaking of their firmware being available, and honestly, this is something I expect to see more of going forward as mining equipment becomes more commoditized.

  3. The Case for Covenants - Jameson Lopp makes the case for covenants in Bitcoin. The post is great because he outlines the different covenant proposals and how they differ, in terms of what needs to get signed, whether they use OP codes or different SIGHASH flags. He also makes a distinction between recursive and non-recursive covenants. His main argument is that Vaults enhance security, through allowing for various recovery scenarios. I’m a bit skeptical that this really adds that much, but this is a good read.

Lightning

  1. Kollider Wallet - This is a new custodial lightning wallet that transactions in BTC, USD and EUR that’s browser based. The idea seems to be that this is a wallet that wouldn’t destroy your finances if it got compromised and is mostly for quick on-line payments. To me, this seems like they’re trying to create banking services without the onerous burdens of KYC, and given that it’s a custodial wallet, I suspect that if it gets popular it will get shut down by authorities. In the meantime, though, it’s bound to work pretty well, especially between Kollider users.

  2. Channel Opening Procedure - Elle Mouton has an amazingly detailed and easy to follow description of how lightning channels are opened on the network today. This goes over funding transactions, the first commitment transactions of both parties and the messages that get passed around to enable all of these. Note that this is pre-Taproot, that is without the use of MuSig Schnorr signatures which would require an extra round of interaction, but the post should be a good place to start if you’re implementing a channel open in any sort of lightning application.

  3. Emerging Markets and LN - The always informative Lightning Labs newsletter points out that there are a lot of developing countries who have communities relying on lightning for their payment and banking needs. This is an underrated aspect of Lightning that’s not obvious in western countries. Many places like Cameroon, El Salvador and Nigeria don’t have any sort of payment infrastructure. Furthermore, even countries that have payment infrastructures will break down once sufficient inflation hits. Lightning usage in places like that in the future will be a canary in a coal mine.

Economics, Engineering, Etc.

  1. Everyone’s a Speculator - Michael Goldstein writes about the nature of speculation and how every investment activity is speculating. As usual, Michael explains the Austrain economic concepts well and shows that calling Bitcoin a speculation is really an accusation of gambling, which he shows it’s not. The reasoning Bitcoiners are putting in is that Bitcoin is the best money and therefore will provide best for an uncertain future, like money is supposed to do.

  2. RBF’s effect on Miners - Compass mining goes through the second and third order effects of full RBF for miners. At first glance, it will give miners more fees and will generally increase fees overall. But that will also encourage use of lightning and other means of settlement. And lastly, there will be more variance on miner revenue. All of these things will affect miners over the long term, and while there are alternatives like CPFP, we’ll see better usage of block space with RBF. The article is a good starting point for thinking about the incentives at play.

  3. Using Taproot to store more data - The impetus for this is some form of NFTs on Bitcoin using ordinals, but it looks rather ripe for abuse as you can store arbitrary data in a tapscript. The limit calculated in the article is 400k bytes, which is more than enough to store, say, the Bitcoin Whitepaper, and not in a bunch of public keys, but straight in the witness field. I don’t think an NFT on Bitcoin is going anywhere, but this ability needs to be watched carefully for anyone exploiting it.

Quick Hits

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Fiat delenda est.

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