Bitcoin Tech Talk #352
Interesting Stuff
Hoarding - A fascinating look into the hoarding phenomenon and how people get trapped in sort of a learned helplessness. The article goes through the possible causes of hoarding and stories of people that have so much stuff that they end up bathing in sinks. I have a deep suspicion that much of this behavior is due to money not holding value and people treating possessions as stores of value instead. If I’m right, it’s a modern phenomenon caused by fiat money.
Lapsed Atheist Speaks - This is an account of an atheist who has grown disillusioned with the promise of New Atheism and has since recognized the chaos that an atheistic belief system creates in a society. For me, the whole article reads as a real life example of what Nietchze warned against regarding the removal of God, which is that there’s no anchor anymore and without an anchor, there is a deep dissipation of order that’s not easy to get back.
College Grade Inflation - Written by a current Harvard student, the article goes through how grades have been inflated over the last 50 years. If what the article says is true, Harvard is currently almost exclusively handing out As and A-’s. This is in contrast to before the Vietnam War when the average grade was a B-. College has become almost completely transactional with students being consumers. Administrators are giving them what they want because they cost so much.
What I'm up to
Go Woke, Go Broke - My column for the print version of Bitcoin Magazine is now live! Normally, they make you buy the magazine itself to read it, but the good folks at BM have made this one free. In it, I argue that wokeism is essentially a form of tyranny and that it’s going to get worse. Reality has a way of hitting back and it’s not going to be fun when government doubles down on their policies.
Austin Bitcoin Club - I talked with Parker Lewis about my new book, travels with my family and a lot more at the meetup this past Thursday. I was blown away by how many people showed up and how fun it was to connect with Bitcoiners in Austin again. If you want a sneak preview of what Fiat Ruins Everything is, check out the conversation.
Max and Stacy Meetup - I’ll be in El Salvador for the CUBO+ program and will be attending the graduation that Max and Stacy will be hosting on Saturday. If you’re around, please come by and hang out!
Nostr Note of the Week
What I’m Shilling
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Bitcoin
Covenants using OP_CHECKSIG - One of the weaknesses of a SIGHASH approach covenant proposal like ANYPREVOUT is that you have to keep a bunch of pre-signed transactions around. Or do you? As written up by Rusty Russell, you can specify a UTXO with an additional OP_CHECKSIG to check that the transaction has a form that you expect. By adding the signature and pubkey of some unrelated private key, you can get Bitcoin Script to check that the transaction has the form that you expect. What form it takes depends on the various SIGHASH flags that are recognized by the network, but this is a very clever way to implement covenants without needing to keep around pre-signed transactions. Note that because you need to sign the transaction with this key, we would need the UTXO’s transaction hash, but that can’t be computed since ScriptPubKey is part of what gets hashed, so you need ANYPREVOUT or something similar.
Fee estimation - Pieter Wuille has opened a discussion for improving the fee estimation algorithm in Bitcoin Core. This has been an issue for some time as it only uses historical fee data to compute what the user should pay. I’ve always found that fee estimations based on the current mempool has generally been the best, but as Pieter points out, there may be some ways for mempools to get manipulated with what look like high fee transactions, causing divergent fee estimations. That is not an attack vector I’ve thought too much about, but there are plenty of financial incentives for such an attack to occur.
Long-term Developer Support - OpenSat's new initiative is a way for Core contributors to have a little more long-term security. Most of them either work for free or have grants that renew on a yearly basis and this is an alternative way to give long-term contributors a better financial footing. Marco Falke is the first recipient of the long-term grant, which given his abundant contributions and long-term track record, makes all the sense in the world.
Lightning
Rise of LSPs - Pav has a great summation of what’s happened in the Lightning network and why LSPs are gaining traction. The main reason, as you might expect, is due to the complexity around Lightning, channel opens/closures, routing and rebalancing. The post is great for cataloguing the various different providers that exist and knowing what capabilities each has. If you’re building anything on Lightning, knowing about these ecosystem players is a must.
Lightning DLCs - Part 2 of this informative series on discrete log contracts on Lightning is how it interacts with the channels. As pointed out in the article, it can be difficult to update channels that have a DLC embedded in it and frankly a bit clunky. That said, it is all in the background and can be abstracted away from the end-user, but for programming purposes it is a very tricky process.
Aperture - This is an interesting new project from Lightning Labs, meant as a seemless way to add payment to an API you might provide. The idea is that API calls can be priced in sats instead of the typical rate-limited amounts that most API pricing uses. The new standard is called Lightning 402, which is, of course, the HTTP code for payment required. You can see tehir announcement and ideas here.
Economics, Engineering, Etc.
BaseFEX - I didn’t know about this story from 2019 until seeing this writeup, but basically an exchange wash traded and found itself on the losing end of an algorithmic trader. It turned out that 99.9% of the volume from this exchange was from the wash trading and the algorithmic trader managed to increase his 0.3 BTC to 3 BTC before they realized what was happening and denied his BTC withdrawal. The story sheds light on the sordid games exchanges play and as far as it goes, this one isn’t even that bad. But there are a lot of skeletons in these places and it’s no wonder so many are in trouble.
US Debt - Croesus has an excellent post outlining the debt situation in the US in light of the bond crisis that has so many banks in trouble. The craziest part of the article is that the US has already gotten $1T more in debt in the month since the debt ceiling deal. I suspect a lot of that is delayed payments from the treasury for the time that they bought before the deal actually happened, but it points out why the newest deal is so different. There’s no actual ceiling this time as the ceiling is suspended and we can expect insane amounts of spending as there’s right now no check on it other than the Fed’s desire to slow inflation.
Rigly - This is a financial product for miners to hedge against the many variables that are inherent to the mining industry. Not only does hash rate change significantly over time, but there’s also price and equipment costs to consider, which make the business a graveyard of failed projects. The idea of selling some forward hashrate into the market is a very interesting idea and essentially acts as a market to predict how hash rates, price and other factors will change. As mining matures, these sort of services should become more popular.
Quick Hits
Purse acquired - This is one of the longest-running Bitcoin services I’ve known and it looks like they’re going further down the altcoin/Web3 route.
French Surveillance - Their authorities can activate phone cameras among other things without the users’ permission.
Gemini Suing DCG - The altcoin fallout continues as DCG allegedly hasn’t paid debts owed to Gemini. Play stupid games…
Animated Elliptic Curves - A really nice visual representation of elliptic curve mathematics.
Nostr search engine - I haven’t seen anything like it and it’ll be interesting to see if it can be as robust as the Twitter one.
Fiat delenda est.