Bitcoin Tech Talk #362
Interesting Stuff
The Economics of Debt Collection - Long-read about how the debt collection industry works and the incentives that drive everything about it. The story details how debt collection agencies work and how they buy debt, then try to collect. The incentives are just completely out of whack and unsurprisingly, they hurt the poor the most. What’s particularly egregious is that the debt collection companies use such unsavory, illegal tactics to collect the debt. Even more surprising is that the people working in these debt collection roles are not exactly having a great career, either. This is one of the underbellies of a financial system that issues loans ad infinitum out of nothing.
Why You’re Single - Fascinating study of why people are so frustrated with dating and what the data seems to be saying. The main thing I got out of the article is the almost visceral sense of fatalism that comes through in the various surveys. I’ve been married a long time, so most of what they’re talking about, in particular the on-line dating stuff, is completely unfamiliar, but I’m much more sympathetic to my single friends, who all seem to be frustrated. As with most things fiat, there seem to be a lot of people that have lost hope.
Consequentialist Justice - One of those articles that really make you think about a world designed purely on incentives. As the article points out, punishing family members for the crimes of an individual is actually an amazing deterrent, which is why dictators have used such tactics so often. North Korea, for example, uses this punishment mechanism now. Yet, from a philosophical perspective, there is something horribly wrong about punishing innocent people for the actions of their family members. The appeal to a higher law is in the end what stops most societies from implementing such unjust laws. Sadly, that hasn’t been the case for money.
What I'm up to
Saifedean Podcast - I had a lot of podcasts this week and it starts with this one. His book, The Fiat Standard, was a major inspiration for Fiat Ruins Everything, so this was a very satisfying conversation for me. We talked about declining birthrates all over the world, the fiat system disincentivizing families and much more.
The Investor Podcast - Preston is one of my favorite people and he had me on his show to talk about the book. We talked about the QR code I include in all my signed books, the global supply chain and why there’s such a huge disruption when there’s inflation. Chip manufacturing in particular was something we hit on with the winner-take-all dynamic in the fiat system.
Blocktime - I spent time at the Riot offices to talk about the book and the travel that I did the previous year. The inequity resulting from inflation is the really troubling part that I point out.
Thank God for Nostr - I talked with Jordan Bush about my book, the traveling and the plans I have for my family. I also talked about how I think about investing in a Bitcoin world as well.
Generation Bitcoin - I talked about specific chapters of the book, with a long rant on the wrong lessons of Pizza Day.
What’s Your Bitcoin Story - I talked about the book and my journey from seeing the story on Slashdot to my various jobs in Bitcoin. I also talked about writing books using the book sprint process and what it takes to really become a Bitcoiner.
Bitcoin Source - I talked on this podcast about the books I’ve written. In particular we talked about the dollar hegemony and its role in the current world order.
Brandon Gentile - I talked to this former hockey player about the book and focused on the role of the Frankfurt School in modern leftist politics. We also talked about what causes people to fall away from Bitcoin into altcoins.
Nostr Note of the Week
What I’m Shilling
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
Prometheus - Maxim Orlovsky claims this will enable a trustless two-way peg without new op codes and can be done right now on the network. If so, this would be a huge thing for scaling. The most obvious consequence would be that this would more or less be the end of drivechains. There would be no need to add op codes if Prometheus can do the same without them. Most likely, though, there will be some tradeoffs that will get debated ad nauseum. The most exciting thing about Prometheus is that it can be done without any permission from anyone.
Byzantine - This is a product for collaborative custody, where one person is an advisor and the other the client. The main idea is that the advisor can be the backup for the client. I suspect that the backup requires some time lock before it can be unlocked, so that the client isn’t rug-pulled. This is a great idea and I would love to see something like Blockstream Green’s model, except the advisor can play the role of Blockstream for the backup. The hope is that we get lots of advisors that can help onboard less technical people to help them have peace of mind.
BIP for describing setups - Output descriptors, xpubs, and miniscript all are different ways to describe what a wallet is. Some of it is redundant (like the type of key being used) and miniscript branches pre-Taproot can use the same signature for the same key. Hence, handling these conflicts is the point of this BIP and a way to get some standardization between software and even hardware. This will be very useful as we get more complicated setups going forward.
Lightning
Hold Invoices - Voltage explains what hold invoices are and what they’re used for in this informative post. These are essentially payments that are optionally completed by the recipient, which can be very useful for security deposits, peer-to-peer trading and so on. These are not used enough on the network and the dynamic interactive payment use-case has a lot of interesting potential applications.
Satogram - This is a way to spam the entire lightning network by paying them! Unlike traditional spam, this doesn’t work unless you send some sats with your payment and the message can be anything. It’ll be interesting to see if UIs will start hiding sat payments below a certain threshold, creating a dynamic market for these messages.
lnplay - This is a way to create a closed regtest lightning network for playing with. The idea is that you can use it for learning the lightning network in an environment where there aren’t economic consequences. As of yet, these nodes aren’t too customizable, but I can see a future where people will be able to test out various lightning products in a similar way.
Economics, Engineering, Etc.
Fortress and Prime Trust - Jameson Lopp goes over what happened to both these companies according to the public documents we have available. It seems that Prime Trust used a multisig to which they didn’t have the threshold number of signatures and thus lost a lot of customer funds. Fortress seems to have lost funds in a security breach. Both times, incompetence led to loss by a custodian. Ripple seems to have bailed about Fortress, which signals they intend to use the company for some purpose in the future as I laid out in the last edition of this newsletter.
Fall of the US - Peter St. Onge argues that we’re living through a fall in civilization similar to that of Rome. He makes a compelling case that we, like they, are living through economic mismanagement, endless wars and political corruption. As is obvious, these have all accelerated during the pandemic and they are a recipe for the destruction of civilization. As he points out, there is hope, but it’s not entirely obvious when we’re going to recover.
CPI Up - Even with all of the rate hikes, just the month of August brought a 0.6% increase in this highly manipulated metric. My gut feeling is that this is sandbagging for the very important number that will come out in September of next year, which will be a huge part of the election. Still, it’s clear that prices are undeniably going up, though Krugman says if you exclude anything you actually buy, inflation isn’t bad.
Quick Hits
Paxos $500k Mistake - Paxos mistakenly had a 19.8 BTC fee for a transaction. Thankfully, they got it back from f2pool.
Hayes on debt-to-GDP - We’re in for some strong Bitcoin because the debt is going to explode.
FTX Liquidating Crypto - They had $10B worth when they declared bankruptcy and have much less now, and will liquidate $50M/week.
Swan Launching with BitGo - Swan will have a new trust company in partnership with BitGo.
Fiat delenda est.