Bitcoin Tech Talk #365
Interesting Stuff
Bed, Bath and Beyond - What’s happened to the stock of this retailer is a microcosm of what happens under post-modern investing. The author details what ended up being 3 different pump-and-dumps, all entirely legal, and driven by narratives that really had nothing to do with the business itself. The dynamic at play is that the people that know what’s going on are able to make money by dumping on retail. And in a sense, retail doesn’t mind, as long as they get to gamble. I believe that this is the real dynamic behind all these altcoin pumps, and much like the story of this stock, the pumps are weaker and shorter over time. As the author points out, this particular stupid game has damnation as its prize.
Why Rome Fell - This is a great excerpt from Mises’ Human Action, where he explains that Rome didn’t fall because of barbarians, but because of government interference. There were price controls on food, which made food scarce and that caused people to move out of the cities, destroying the manufacturing capacity of cities, which in turn destroyed the food production in the countryside. All of this ultimately was the result of currency debasement and the policies that were enacted to combat the consequences of that debasement. It’s a great read on the second and third order effects of theft by debasement of money.
Illusion of Explanatory Depth - This is a term from psychology that recently stumbled upon and is an excellent way to describe how we think we understand something because we use it. The study quoted in this article is one where people are asked if they understand how a toilet works, and of course, all of them say yes. Then they are asked to explain exactly how it does, and they find they can’t. I’ve been saying for years that this is the case for most people and their impressions of money and energy. Glad that there’s a term for it, even if it’s not exactly a self-evident term.
What I'm up to
New Media - I talked to Aaron and David about new media and how the landscape is changing, particularly with respect to the economics of being a journalist. The current legacy media is hanging on through fiat subsidies, but that’s not sustainable, so we speculated on what media and media companies will look like in the future. As David pointed out, what people are willing to pay for in an age of free information are in-person experiences, which I think will be the bread and butter of most new media going forward.
Tech Intersect - I talked with Tonya Evans about my new book. We talked specifically about altcoins and why they’re very different than Bitcoin. The audience that Tonya has is a bit more filled with altcoiners, so this was a good chance for me to set the record straight on centralization vs. decentralization.
Bitcoin Amsterdam 2023 - I will be attending the second edition of this conference this week and will be speaking several times. Use code JIMMYSONG for 10% off and come say hi! I’ll also try to make the Amsterdam BitDevs on Wednesday, October 11.
Panel at Pacific - My panel from Pacific Bitcoin Conference is online! I was on a panel with Pierre Rochard and Tone Vays and moderated by Alex S. We talked about airline miles, stablecoins and some of the stupid things we did. The panel was a fun one and we had some disagreements about whether Bitcoin would be higher or lower or stay the same if altcoins never existed.
Nostr Note of the Week
What I’m Promoting
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Bitcoin
Hash Rate Estimation - Jameson Lopp tries his hand at estimating hash rate based on pool reports and averaging frequency over various time intervals. As he points out, we don’t really know the network hash rate, we just have estimates based on statistical probabilities and reported hash rates from various pools. As I’ve pointed out in various mining attack scenarios, the lack of such data is in a way a protection, as it’s very hard for attackers to know that they have 51% of the network, for example, and must thus overestimate the network hash rate by a large amount.
Secure Network Communication - BIP324 is finally merged after years of talking about having a more secure communication layer for Bitcoin. The most interesting part of this implementation is that the communication is encrypted, but not necessarily authenticated. The coupling of authentication and encryption makes sense in a centralized system, but in a decentralized system, they don’t necessarily have to go together. The benefits of encrypted network communication are that it’ll be harder to DDoS or MITM nodes, making them more robust.
assumeutxo - Another major feature that got merged is the ability to download a utxo snapshot. For initial block download, the bottleneck tends to be in calculating UTXO state as transactions are processed one by one to build up the current UTXO set. This should make that part a lot easier by getting the UTXO state at a certain block height and only doing the UTXO set calculation from that block to the current tip. This does require some trust in the published UTXO set, but the tradeoff is probably worth it, especially if the entity that you’re trusting is yourself.
Lightning
Self-hosting Mutiny - Mutiny is different because it’s a lightning wallet that is browser-based. It would be great for user privacy if the user data were only on the user browser, but terrible for recovery of funds, so they have a cloud service that has encrypted data that your browser can communicate with. Unfortunately, that cloud service had some downtime, and they had to rearchitect their product a bit so that it could be deployed anywhere. One of the upshots is that this means you will be able to host the wallet on your own server and use the wallet in any normal browser. Honestly, that’s a great product and an interesting evolution, which should make setup more secure.
Taproot Channels - lnd 0.17 has implemented Taproot Channels as pointed out in their blog. The main benefit here is that by using MuSig2, the channels are not easily identifiable onchain. Most channels currently use 2-of-2 multisig, which is fairly easy to identify, but with MuSig2, the channel opening transactions will look like any ordinary key-path spend of a Taproot output. It’s also cheaper on-chain to boot since there’s only 1 signature and 1 pubkey instead of 2 of each. Given lnd is such a large portion of the network (Zeus wallet uses it as a backend, for example), this should create more incentives for Taproot Channel opens and upgrade the network.
Mutiny Gifts - Another Mutiny innovation here, with a self-custodial wallet initialized by a single QR code. Because it’s browser-based, there’s no app to download and the recipient starts right away being able to pay Bitcoin for goods and services. For people that want a VPN and don’t want to give their personal information, this type of transaction could very well be the key to bridging the fiat and Bitcoin worlds for privacy.
Economics, Engineering, Etc.
Belt and Road Mechanics - Great article exposing exactly how China’s Belt and Road initiative has worked to create debt for many developing nations. The debt trap is a well-known one where the Chinese government lends money to developing nations who in turn use that money to pay Chinese companies to build them something. When the developing nation can’t pay it back, China takes whatever was built back and forces some restructuring. This is, of course, IMF/World Bank’s playbook and has been detailed in Alex Gladstein’s book Hidden Repression.
The Case for Simple Setups - Joko from BitBox argues that multisig is too complex and lead to fund loss, essentially advocating for single sig hardware wallets. The main point being that complexity often leads to screwing up and that the optimal balance between security against external threats and internal loss is something like a hardware wallet. I would disagree here, as the problem isn’t the inherent complexity of something like multisig, but rather, the UX around it. Still, this is a good way to think about peace of mind in that both external threats (key theft) and internal loss (key loss) have to be protected against.
Obscura - Carl Dong has a project in the works for making a VPN that preserves more user privacy. Traditional VPNs still have access to your browser history, which makes them more like an ISP with more capabilities. With the architecture of Obscura, there’s a blind relay which obscures what websites you’re going to, making web browsing a bit more lightning-like. I’m curious how it’ll work and how well it’ll make browsing from different countries.
Quick Hits
Ayre and CSW Split? - Apparently, Ayre will no longer be funding CSW’s lawsuits. This obvious scam is almost over.
Delly on Swan - Basketball player Matthew Dellavedova explains why he’s joining Swan.
Sat Comma Standard - Instead of 0.005 BTC or 500000 Sats, how about 0.00,500,000 BTC?
Ordinals and Security Budget - Remember when Ordinals proponents were saying how it would be a long term solution to the supposed security budget problem? Yea, it’s already failed in doing that.
Fiat delenda est.