Bitcoin Tech Talk #479
Interesting Stuff
American Caste System - argues that we’re well on our way to having a caste system in America in all but name. As he shows, there are a whole bunch of factors that correlate and run together based on income like height, education, marriage, daily screen time, smoking rates and even number of drinks per sitting. What’s intriguing is that the same is true of the spouses, suggesting that at least for family formation, people tend to stay close to their “caste.” As he suggests, if you look around at your friends, they’re also most likely to be in the same caste. Perhaps India just codified what naturally happens.
Defanging Insults - has an article on a new tactic that’s emerged to debate with people on the left. It’s a bit like the final battle scene in 9-mile where Eminem basically pre-empts the worst insults that can be thrown at him by admitting them before launching into the attack. The essence of the tactic is to essentially admit what the worst thing the leftist can possibly say about you (being racist, sexist, a Nazi or whatever) as a way to take the focus off your person and put it back on the content. It’s such a strange, but brilliant way to actually argue about the issue at hand and taking the option of devolving into name-calling away.
Chinese Order - has this long-read on his observations in China. This is not the first person that I’ve heard say essentially the same thing. China is changing very quickly and has surpassed the US in many different areas. As most people are aware, they are the primary trading partner now for most countries around the world (including pariah states like Russia, Iran and North Korea) and the fact that they are the source of a lot of innovation puts to question just how effective the US-led sanctions regime can be without their cooperation. But more than that, there’s a much lower time preference plan at play there, which western countries don’t seem to really appreciate in their politics.
SpaceX - has a review about Elon’s prolific company that has displaced NASA. As usual, there’s a lot about the book that he’s reviewing, but it’s really more meta-commentary about what the author of the book missed and in this case, it’s the relentless focus of Elon and how that has shaped the company as it exists today. The impression you get from the review is that this is a complete maniac that is completely relentless about getting to other planets. He will risk billions, even trillions, on bets that he believes will progress the company rather than play things safe. The purpose of the company, in other words, is not survival, and ironically, that’s what has allowed it to thrive. The bureaucracy and competing entities putting up road blocks is infuriating, and as John implies, Elon has played that game, too, by buying Twitter.
First AI Bubble - Scott Locklin has this amusing and informative blog post about the first AI bubble from the 80’s. Yes, AI hype is actually pretty old and pre-dates the dot-com era. As he shows, there are a lot of parallels to the current AI bubble, including mainstream companies spending a lot of money, perks to entice in-demand engineers and tech press hype. That bubble came to mostly nothing, though the impact was relatively minor since computing was a much smaller part of the economy. What’s scary is that the current bubble is not only much larger, but also has much less feedback. The companies back then IPO’d and were judged by their stock price. Many of the companies today are private and much more newly printed money makes their way to them without price signals.
What I'm up to
Charity and Legacy - I talked to Johann Kurtz about his new book Leaving a Legacy. Specifically, we discussed what charity is, how we should think about our legacy, what taste is, how we can raise children to take on the responsibility of wealth and why illiquid assets are what we should be leaving them.
The Bitcoin Group - I was on The World Crypto Network again to discuss a variety of topics, the most interesting of which were around Bitcoin-as-payment, stablecoins, Do Kwon and AI. It strangely reminded me that I really need to do more of these sessions, public or not, to flesh out some of the nascent thoughts I have.
Nostr Note of the Week
What I’m Promoting
Bitcoin
The CAT - A new BIP proposes invalidating spam UTXOs such as ordinals, stamps and the like. The idea is to mark such UTXOs as unspendable and essentially “rugging” them to discourage their use. I don’t think this has any chance of going through, but it reminds me of how testnet coins used to be coveted and people would pay real Bitcoin for them. That is, until testnet3 was introduced which completely rugged all the testnet coins that were in existence until that time.
Human Bitcoin Addresses - Spiral has a blog post on the problem with Bitcoin addresses and how they’re not really human-friendly. Much like how IP addresses are translated to domain names for human-friendliness, they propose something that looks like an email address (₿conorokus@twelve.cash) with the special Bitcoin unicode symbol prefix to do the sending/receiving. The main weakness is that the domain has to stay under the control of the recipient that you intend though on the plus side, domain names are quite familiar to most people.
FROSTR - Schnorr signatures are a lot more flexible than ECDSA, allowing for interesting multi-party signatures as with MuSig and FROST. This particular project applies this property to Nostr, allowing for k-of-n signed events. The coordination of the signing is done over Nostr as well, allowing for multi-party control of a single Nostr identity. It’s a great idea, and given how FROST works, key rotation and revocation are available as well for organizations that don’t want these identities to get lost or compromised.
Lightning
Neutrino Guide - Neutrino is one of those things that are really useful not just in Lightning, but in Bitcoin, but unfortunately suffers from a lack of understanding of what it is. It’s essentially a light client that uses a form of simplified payment verification by requesting entire blocks that are relevant to that wallet. This is a guide that helps you set up Neutrino step-by-step, especially in a lightning context.
Modularization Part 1 - This post from Alby goes into the technical choices they made in designing the user interface around their product, Alby Hub. What’s interesting about this post is how they think about the tradeoffs that they’re making. Specifically, running a service all day that only gets used for 10 minutes a day is wasteful, so they’ve come up with ways to offload that requirement and so on. The main result is that they have managed to separate most of the UI from the actual signer.
Modularization Part 2 - The followup post from Alby focuses on how to minimize the cost of the signer aspect, which is what the user would be controlling. Certainly, users can run something on the cloud 24/7, but as with the last post, this is a bit overkill given that most users sign a few dozen times a day at the most. Enter serverless architectures, which are cloud offerings where just snippets of code are run as needed. They cleverly use Spark and Ark to obviate the need for the user to be online during receive, which makes this viable.
Economics, Engineering, Etc.
Perpetual Futures - This is one of the best explanations of how these derivatives of the actual underlying assets work. As the article notes, this is especially prominent in crypto exchanges and is the reason why companies like Binance make so much money. Essentially, the derivative allows for large amounts of leverage, including the famous 100x offered by BitMex and make the price movements a lot more fun for the people that gamble. Yet there are many risks involved, including losers not having enough collateral and the exchange not having enough reserves to cover them. It’s a great explainer of the dynamics and incentives.
Do Kwon 15 Years - The LUNA scammer has finally been sentenced, and 15 years does seem reasonable. What’s remarkable is that investor losses amounted to around $40B while his assets when he was caught was just $19M. Who knows how much Bitcoin he stashed away before he got caught? I suspect that his parole will require some very careful monitoring of his finances for this possibility. Regardless, this is hopefully the beginning for prosecution of these obvious scams.
Bitcoin Inheritance Guide - Nunchuk has this very thorough list of concerns when it comes to Bitcoin inheritance. As the article states, this is not an easy problem as you either have to give them access to funds while you’re alive, in which case you risk getting stolen from through a much larger attack surface, or you have to trust some mechanism to get them the money. They have a great list of how to evaluate potential inheritance solutions and go through the various ones that Bitcoiners use.
Quick Hits
Lotto Browser - You can now use your browser to mine which is roughly a millionth to a billionth of the hashing power of a typical ASIC.
Bitcoin Echo - Apparently a new implementation being written in straight C to be a permanent fixture.
Node Faker - You can also use your browser as a fake node on the network.
PNC Bank - The first of (probably) many banks offering direct Bitcoin access which uses Coinbase as their backend.
Fiat delenda est.