Bitcoin Tech Talk #331
Interesting Stuff
People aren’t stupid - Sadly, it’s the elites that think the masses are dumb and that they can do much better by making choices for them. This is what has caused so much strife as authorities that get this control almost always make giant mistakes, moral or otherwise that lead to poverty, death or worse. The collective is smarter than the individual, almost always. The contempt that we see from the elites these days for collective opinion is the problem.
Nuclear Waste - This is an article written by an environmentalist formerly against nuclear energy. He looks at the misconceptions around nuclear, particularly around waste and concludes that it’s some of the safest, especially when compared to the waste products of other energy sources. I think he’s being too harsh on coal and oil, but he’s honest about the waste generated by solar and wind. It’s criminal how little progress we’ve made with nuclear and how much regulation they’re under nearly everywhere.
The Nature of Beauty - A very interesting first-principles based analysis of beauty. I really liked how the idea of desire was incorporated into his definition and how beauty is really a way to induce desire. I’m not sure I agree with the article exactly, but I always appreciate analysis like this that clearly outlines how a particular phenomenon works.
What I'm up to
Individual Incentives - My latest article for Bitcoin Magazine this week is the first of a 4-part series about incentives at various levels. The main point in this article is that there are no good savings vehicles, making nearly everything into crappy savings vehicles and encouraging lots of debt. The conspicuous consumption that we see every day is truly soul-crushing and meaningless, making the modern world so much more nihilistic. Thankfully, Bitcoin fixes this.
Nostr - I've finally created a private key and have been playing with it this past week. My public key is npub10vlhsqm4qar0g42p8g3plqyktmktd8hnprew45w638xzezgja95qapsp42 if you want to follow me there. I posted a story there that I didn’t put anywhere else that hopefully is a fun read (doesn’t have to do with Bitcoin, but it does have to do with Trudeau). I’ve also been playing around with some of the protocol, seeing how easy it is to program. Let’s just say that it was pretty easy for me to get some code for.
Yereven and Dubai - These are the next two cities on my itinerary and if you’re in either one, please drop me a line! There will be some sort of meetup in Dubai, though I don’t have the details yet. I’m hoping there’s some good steak. The interesting part about this region is that their currencies seem relatively stable, and requiring less cash. We’ll see if this changes as I make my way to southeast Asia.
Tweet of the Week
What I’m Shilling
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Bitcoin
FediPool - This is an interesting idea taking the Fedimint idea and combining it with mining pools. The main feature is that instead of relying on a single pool operator to both distribute rewards and construct blocks, each FediPool member would be relying on a federation of operators for both the reward distribution and the block construction. I’m not sure the reward distribution is much of a problem right now. The economic game theory of pools being really easy to switch seems to have made this a non-issue. The other part, I’ve been hoping would be mitigated with Stratum V2, but thus far, only a couple of pools have adopted it. This tells me that perhaps this isn’t a big concern for miners.
Multiparty Attack Vector - In the aftermath of the inscription stuff, nothingmuch has come up with a novel attack for multiparty transactions, particularly around various coinjoins which would force the transaction to have a lower fee rate than the transactor agreed to, deprioritizing the transaction. Much like the inscription stuff, this is a chain-bloat attack and isn’t useful unless you’re trying to attack Bitcoin, but it is something to consider in light of large witnesses being possible.
The case for Full-RBF - Peter Todd has published his rationale for full-RBF and why it’s good for Bitcoin. As he points out many people have tried to make a UX change by allowing for 0 confirmation transactions. The idea is that this reduces the 10 minute wait for that 1 confirmation. Of course, this allows for double-spending and some operators have lost a significant amount of money because of that. Still, there are some people that depend on the 0-confirmation behavior who are not happy with Full-RBF. A good read to understand what the technical aspect of it is.
Lightning
Mash Page Revealer - This is about as easy a setup for content-payment for the user. They pay in lightning and get to see the rest of the page instead of signing up for a subscription or anything else. For the content creator, you still have to add some integration and the wallet looks hosted, but it’s a good first iteration to see if such models work. I think in general that most people will find the mental calculation annoying, but that’s where a second iteration will let people just pay for something under a certain threshold.
Zaps - NIP-57 (Nosttr Improvement Proposal) defines a specific way for interacting with posts by paying sats via Lightning. Nostr creator fiatjaf is also a lightning developer, so this makes sense. Whether this will mean a lot of tipping for good content remains to be seen. I know that on Twitter, after an initial burst of tips, I rarely get any these days. Of course, the people on Nostr are much more likely to be on Lightning and depending on the UI, perhaps this will be a bigger source of revenue.
Breez SDK - Breez is attempting to make lightning payment as easy for the user as possible. As they mention in their post, their goal is to beat fiat in the UX game. The main advantages are that there’s no KYC, an LSP is already being used and interestingly, they claim there’s no wallet. I think this is just playing word games, but re-thinking the wallet paradigm is a worthwhile endeavor. We’re starting to see lightning pop up in more places as it becomes the transactional part of Bitcoin.
Economics, Engineering, Etc.
51% Attack Debunked Again - Alex Brammer goes into painful detail about why a 51% mining pool attack is completely infeasible. The article covers more than I did in my article 6 years ago and goes through the supply chain around power that’s needed, which I didn’t have a good grasp on, among other things. As the article points out, the cost of an attack is really high while the cost of subverting the attack is very low. This asymmetry in cost is the real reason why we won’t get any of the doomsday scenarios everyone talks about.
Fed is Broke - Lyn Alden explains the rather esoteric method by which the Fed does its accounting and how it’s now depriving the US Treasury of $100B/yr. As she points out, the reason for the current state of affairs is because of the interest rate increases by the Fed. They’re trying very hard to control inflation and paying banks not to lend to do it. The macroeconomic forces, particularly with respect to deficit spending and the larger budget item that interest costs are creating will create pressure to either cut spending or start easing. Let’s just say I think the latter is more likely.
Operation Choke Point - Nic Carter tells us that the government is seeking to choke out crypto exchanges by making it uncomfortable for banks. Banks in general are enormously sensitive to any government announcements. Even a hint that they might lose their FDIC insurance is usually enough to get them to comply. There’s good reason to believe that the SEC fine of $30M to Kraken is just the first shot. But this is why Bitcoin was built, to withstand these challenges. If Bitcoin survives, we’ll have a much more robust infrastructure that won’t be easily choked.
Mining Lender Economics - Braiins continues its series on how mining facilities are financed with a deep look into the lending economics. The main reason why so many miners went bankrupt is because their loans were backed by their ASICs, which unfortunately correlate with Bitcoin price, making the optimistic loans underwater pretty quick as price dropped. What this article pointed out to me is that the ecosystem is learning and lenders will likely require better assets for their loans or otherwise be more conservative.
Quick Hits
Short Bull - Arthur Hayes thinks there’s a short-term bull market in place.
Gavin on Satoshi - Gavin Andreesen has updated his 2014 post about CSW to say that he regrets “playing the who is Satoshi game.” Man, this guy can’t take an L.
Realistic Anonymity - Instead of creating a mystery around a persona, make a boring and believable anonymous identity, instead.
Ordinals Data - About 500 MB in block space have given miners about 6.7 BTC.
Privacy Coins Banned - Dubai bans Zcash and Monero. Let’s see how they enforce it.
Lebanese Bank Strike - Banks won’t transfer any funds, becoming one of the many results of their continuing hyperinflation.
Fiat delenda est.