4th of July and Monetary Independence! Bitcoin Tech Talk Issue #195
It was 4th of July this past weekend and it’s a good time to remember the independence that America achieved and why it happened. I published a piece about this, going through the Fed, Oresme and the dollar hegemony. Guy Swann has graciously read the whole piece for those of you that want to listen to it instead.
What’s striking to me about the current situation versus 1776 is that the situation is very similar. A bunch of people were upset about taxes that they couldn’t do anything about. They also felt like they were on the margins and didn’t have any say in how they were being governed. Both sentiments are fomenting today with how the world seems to be organized. What’s important to realize is that it’s the entire world under the thumb of the Fed’s monetary tyranny, and not just the US.
Along the same vein, Robert Breedlove has published a piece about how money creates slaves of us all. This is a great long read and definitely thought-provoking about money, logos, truth, Bitcoin and lapis philosophorum. He manages to tie them all together to explain the moral curruption of the current system.
Is the Spirit of ‘76 still alive in the world today? Given the unrest all over the world, I suspect there is. How this will play out in the next 6-12 months is anyone’s guess, but Bitcoin definitely has a role.
Bitcoin
A new paper summarizes alternative ways to do covenants using Elliptic Curve Cryptography. The main mechanism way in which to do covenants here is to pre-generate certain transactions and then to delete the private key. That way, the possible ways the coins can be spent are limited by whatever has been pre-generated. The details of different ways to use this property are in the paper.
Electrum 4.0 is out! It integrates PSBT (partially signed Bitcoin transactions) and Lightning! This is the first release in almost a year and should make hardware wallet integration, in particular, a lot more robust with PSBT support. Of course, adding lightning is also quite exciting and adding the feature to one of the oldest wallets in the space can only be a benefit.
Speaking of Electrum, Casa has published their results of different Electrum backends and how they perform. Basically, electrs uses the least resources, but also is pretty slow. Esplora and ElectrumX perform a lot better and have different tradeoffs, with Esplora taking a lot more space, but being a bit faster under certain scenarios.
Unchained Capital has published on minimized trust for recovery of funds. The procedure outlined gives a good overview of all the steps involved in recovering in a multisig setup and deserves consideration if you’re not using multisig already.
Lightning
Rusty Russell has written a test suite for BOLT compliance which he details here. This was motivated by the fact that the different lightning implementations often had some incompatibilities so a library written from scratch to test all the interactions is very welcome. This should make implementing lightning much easier as the acceptance testing, so to speak, is now taken care of.
Strike is available in beta! This is the service that flips lightning on its head by allowing merchants to receive Bitcoin for fiat payment. For businesses such as marijuana dispensories that can’t get a bank account, this sort of service is a Godsend and allows such businesses to be their own bank and keep money themselves.
Economics, Engineering, Etc.
Raj Maitra has a heartwarming story of going from being a complete non-coder to contributing to Bitcoin Core. It took him 2.5 years, start to finish. He lists all the resources he used and is inspirational in how much of the Bitcoin philosophy got him there. He says himself that he had to lower his time preference drastically in order to achieve this goal and the piece has details not just on the how to become a coder that can contribute to Core, but also to become a person that understands the value proposition of Bitcoin. Kudos to Raj, and I hope more of you reading this begin on that journey.
Adam Back outlines exactly what happened with Liquid and the 2-of-3 bug that was left unpatched. If you’re not familiar, James Prestwich discovered this bug. Essentially, Bitcoin funds in Liquid are supposed to be secured by an 11-of-15 federation. In case of 5 of them going off-line, there’s a Blockstream-only 2-of-3 multisig to release the funds which come after a timelock. It turned out that much of the funds in Liquid fell through to the 2-of-3 incorrectly, which Adam explains in his post.
Kraken has an interesting post on why Bitcoin’s price differs across exchanges. The post and the series in general are very good overviews of how exchanges work and how not to get fooled, for example, by a deep order book. Traders should definitely read the whole thing.
Another DeFi contract was exploited on Ethereum this week, this time to the tune of $500k. This wouldn’t be so sad if it wasn’t so utterly predictable. Smart contracts are hard to secure and complicated “DeFi” contracts are ripe territory for unintended use, which many in the ETH community have a habit of calling “hacks.” Really, it’s good smart contract lawyering.
An article from BTSE argues that Bitcoin dominance is deceiving. The main argument is that price times supply is not really achievable without liquidity. Indeed, Liquidity is difficult to measure and for most altcoins, liquidity is sorely lacking. Similarly, an interesting new way to look at market cap comes from coinmetrics. Essentially, the metric takes into account how much of the supply is out there for trade, or “free floating supply.” Unsurprisingly, coins like Ripple do much worse under this metric.
Podcasts
I did a couple of shows with Tone Vays. The first was on PayPal, Blockstream and the Liquid stuff from above. The second was on RVN inflation, BitPay’s Segwit adoption and Strike. I had a fun chat with Alex Svetski and Swan Bitcoin about how Bitcoin changes people. Catalina has released a video where I explain what Bitcoin transactions are at a technical level.
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Fiat delenda est.