Bitcoin Tech Talk #491
Interesting Stuff
Defensive Signaling - David Pinsof writes about the nature of status and the many layers of signaling that we engage in. As one study purports, something like 60% of human behavior is signaling to others about status. It would be a much simpler game were it not for the fact that we have the ability to see from other perspectives, and thus, we try very hard to hide our signaling, though that, too, becomes a signal given enough iterations. The most insightful part of the article was the concept of defensive signaling, where people signal that they are (of the right political opinion, for example) as a way to not get picked on or isolated. I suspect that this is one of the most exploitable vulnerabilities that propagandists take advantage of.
Iran War - Frank Wright has this piece on what is happening in Iran, including reports that the Iranian leadership offered to give up all its enriched uranium and submit to nuclear inspections. The attack on Iran was also going to happen with or without the US, according to Rubio, and the plans were apparently agreed to way ahead of time, making the actual peace talks complete theater. The war so far is very unpopular, especially with Trump's base, which makes you wonder, why do it then? And this is where the Epstein connection comes in. There's a lot of blackmail material and the managerial class are not as unaccountable as we thought. They're just accountable to the people that hold the blackmail material.
Sexual Deviance and Decline - One of the truly odd results of empires throughout history is that as they peak, they also become more and more sexually deviant. This article is about the reasons why, looking at the Hellenistic period of Greece, the Abbasid Caliphate of Bagdad and of course Rome. The main reason, as argued by the article is simply boredom. The affluent become more selfish and hedonistic over time and much like the mice of mouse utopia, instincts go haywire as struggle is removed. The behaviors trickle down to the middle class and eventually the lower, resulting in very low birth rates. What's particularly noxious about the current moment is that the trickling down is happening far faster than any of these other empires.
Aristocratic Duty - Johann Kurtz writes about fertility crisis's real cure. The jumping off point is this story, which is about a construction company billionaire in Korea offering $75,000 per child for his workers. As he points out the offer by the billionaire is very different than government policy, where it's a political payoff for votes. The act is one of aristocratic duty, solving problems by putting where his mouth is. The 84-year-old is being extremely generous, backdating the benefit, so that employees who already have children can still get the bonus, and also offering college tuition, medical expenses and for 3+ children, housing. The fiat world is so used to everything having to be a political solution that people have forgotten. You can just do things.
The VC Crisis - Will Manidis writes about the current VC crisis which nobody is talking about. The VCs are running out of exits. They used to be able to exit when companies were acquired by bigger ones, or when they could IPO, but due to the proliferation and sheer size of these funds, and the crazy amounts that subsequently have to get deployed whether these are good places to invest or not, have resulted in stratospheric valuations which can't reasonably be absorbed by public markets or public companies. It's not unlike Toronto real estate, many properties which sit empty because of the high property prices. Loans of one type or another fund the grand game of pretend, and there's no reckoning, or even price drops, until the whole thing collapses. Such is the pattern of fiat money.
What I'm Up To
Arctic - I was seriously impressed with Claude when it one-shotted a threshold signature scheme based on just the research paper. For those that are curious, Arctic is like FROST in that k-of-n signatures are required to generate an aggregated Schnorr signature, except that unlike FROST, the nonces for Arctic are deterministic and can be proved as such by each member. This prevents the key-recovery attack, for example. If you haven't played with Claude Code or something similar, I would strongly suggest you try.
Latin Study Tool - I'm a big fan of Lingua Latina per se Illustrata, and this is a companion tool to study much of what's in the book. Again, this was created with Claude and covers the first 15 chapters. There are obviously some flaws, but it's truly impressive how quickly you can take ideas to working software.
Newsletter Payment Bot - You can now get this newsletter via Nostr Zap! For a limited time, you can zap the Nostr post that promotes this newsletter for 2000 sats and you will get a copy of the whole newsletter in your Nostr DM. The formatting isn't great because of the expressiveness of markdown (or your Nostr client's lack of rendering it), but you do get the content.
Bitcoin
BIP110 Game Theory - This is one of the most comprehensive articles on BIP110, going through exactly what the soft fork does, specifically the 7 rules which are enacted as part of the soft fork. The most informative part of the article is the game theory of the soft fork itself, assuming no response (like in the next story). The mechanisms, particularly around the ratchet effect of adoption is probably what will cause a response. As the article points out, miners have little incentive to signal in advance of when they would implement BIP110 and can significantly hamper their competitors by doing not doing so. I'm not convinced miners are this Machiavellian, but this analysis is true of pretty much every soft fork. The question is, what say does the community get and how will they make their will known?
URSF-BIP110 - By now, you probably have heard about the User-activated soft fork BIP110. The game theory of the soft fork is such that should the chain enforcing more rules ever get longer than the chain that's not, the non-enforcing chain will get wiped out, merging the two. What this client does is change the game theory a bit by creating a User-rejected soft fork of BIP110 in particular, making it so that the UASF required signal is specifically rejected should it be in a block. This way, neither chain can be overtaken by the other, essentially creating two chains. This was something I expected to come up, though it remains to be seen if it becomes popular.
Infrastructure Resilience - A paper looks at how resilient Bitcoin is in all kinds of scenarios over the past decade. Bitcoin is very resilient against undersea cable failures (something like 80% of them must all fail), but not as much against targeted attacks. In particular, real-world cable faults which impacted other systems barely impacted Bitcoin at all as less than 5% of nodes were effected, suggesting that the network is highly redundant. Now, whether Bitcoin can survive a targeted nation-state attack is the real question.
Lightning
Liquidity Subscriptions - If liquidity management on Lightning is giving you headaches, Amboss has this product to handle it. You pay them $5/month + 0.5% and they handle your liquidity needs. They're using Magma to get inbound liquidity and the hope is to break the grip that credit card processors have over commerce. It's definitely an interesting business model, and I wish them the best, but as I've opined in the past, there's a reason people keep using credit cards. It's because the customers call the shots, not the merchants.
A Lightning Story - Roy Scheinfeld writes about the evolution of lightning the last few years, where it's not just about lightning anymore, but about all the infrastructure that communicates via lightning like Ark, Fedi, Cashu, Spark and many others. This is illustrated in how his company Breez has adapted its SDK. In particular, Cake Wallet wanted to use Breez SDK, but lacked a few features and they didn't want to compromise the trustlessness of their wallet. After Spark came out, they finally made the lightning wallet that they envisioned.
btcbitbybit.com - This is a lightning wallet for families, focusing on education about Bitcoin as a way for children to earn satoshis for their wallets. Much of the motivation for children on this platform is to earn sats, either by learning about Bitcoin or by doing chores. I'm not sure if I would teach my children exactly this way, but I'm sure there are families where this sort of system would make sense.
Economics, Engineering, Etc.
Bitcoin Preferred - At least according to AI agents as surveyed by the Bitcoin Policy Institute. The whole study is very cleverly constructed and essentially asked AIs without mentioning any specifics, what they preferred as monetary instruments, long-term store of value and everyday payments. AI agents, of course, are reflecting back what's already on the internet, and it's hard to ignore the price rise of Bitcoin over the last 17 years. As such, the most sophisticated model, Claude Opus preferred Bitcoin at a 91.3% clip. Amusingly, 86 times AIs responded by making their own currency, suggesting that there's some altcoin influence leaking into these AI responses.
Voided Serial Numbers - A plane filled with new currency crashes and disperses 17 million bank notes into a populated area. The central bank voids the serial numbers of the bank notes from the plane, meaning that they are illegitimate. Chaos ensues because people can't tell which ones are legit or not and refuse to take the currency. This is not something I would have thought of as a risk in fiat money, but it makes sense. The central bank is very selective about who to print money for, and they'll cause chaos in their economies to enforce this exorbitant privilege.
Unrealized Cap Gains - The Netherlands will be one of the few countries enforcing a wealth tax on unrealized gains should it pass the Senate. Such taxes have been on the radar for a lot of liberal governments, including California, and the math on it is devastating to anyone even thinking about investment. The rhetoric is easy enough to understand. If, after all, the rich have billions of dollars, then distributing some of that by taxing them now instead of when they sell (or die) is a way to get at their wealth. Yet the incentives of such things is that you inevitably depress the value of whatever wealth you tax. You can even argue that it depresses the money printing as there are fewer assets to lend against. The unrealized gains are often pretty fake anyway, so it'll be educational to watch what happens, should it pass.
Quick Hits
Paralelni Polis - One of the oldest Bitcoin coworking spaces is no more, closing up shop in Prague.
100-year bonds - These things that suppose banking systems will last past an average lifetime are back, this time to fund AI.
The Case for Stablecoins - A Keynesian thinks that there's no alternative to the dollar.
Ordinals BIP Rejected - The BIP to give "serial numbers" to sats, or otherwise add unfungibility and altcoinery has been rejected.
Fiat delenda est.