An Epidemic of Fakeness. Bitcoin Tech Talk #266

I recently was discussing masks with some friends of mine. We were discussing how certain businesses required them and how that seemed irrational. Vaccines have been available for many months now, and pretty much anyone that is concerned with infection has already gotten it or isn’t going out to places. On the other side of the spectrum, masks have always seemed like an idiotic measure. Masks are a strange requirement since it taxes everyone in terms of time and energy without any obvious benefits.

Yet in a strange sort of way, masking makes sense. Many businesses took PPP loans, and defying local ordinances may jeopardize their access to free money next time. So businesses are showing their willingness to comply to government mandates using this very simple trick. Sure, it’s inconvenient for their customers, but what are customers compared to free money? Masks are a way to show loyalty to their real customer, the government.

As a result, we get people pretending that masking is about health when it’s really about freshly printed money. Government compliance pays and if that requires some mental gymnastics, so be it.

This is by no means an isolated thing. Almost all government programs have some brain twisting involved. We pretend that wars in foreign countries are about freedom and democracy when it’s really about making sure we maintain dollar dominance. We pretend that the TSA is about security when it’s really a federal jobs program. We pretend that bank bailouts are about the economy when it’s really cronyism.

This fakeness is everywhere, where people say one thing but mean another. This is polite fiction that is spouted to allow people to live with themselves. In reality, this fakeness is a form of rent-seeking behavior. The most ridiculous and inefficient mandates prove to the authorities a high level of compliance.

This epidemic of fakeness is a direct result of fake money. Money printed from nothing costs nothing to make and benefit the people getting stuff for free. Yet to receive that money without any justification is not easy to handle mentally, so the recipients pretend that they’ve earned it. Compliance and polite fiction are those justifications. Fake money, in other words, induces mental gymnastics. Fake money makes us more fake.

We see this not just in fiat money but in altcoins more readily. Everyone pretends there’s some “real” reason for the pump in random coin X’s price, as if there’s real utility when there’s not. Years, months or even days later, when the coin quietly loses price and liquidity, nobody will reflect on whether any of those reasons were true. The pumps are artificial, carefully managed through lock-ups and liquidity management. They’re games to attract real resources so money-printing schemes can continue.

The wheels on this fakeness are starting to come off. We’re seeing things pump that have no basis in reality. It’s hard to pretend that SHIBU has real utility, harder even than pretending masks do something. Soon we won’t be able to pretend anymore and that’s when we’ll see the destruction this fakeness has caused.

Thankfully, we have Bitcoin. It’s the one real thing in a sea of fakeness. Proof-of-work cannot be faked and real usage is happening. Let’s hope this makes people more real as well.

Bitcoin

Taproot is live! AJ Towns has a nice graphical view of nodes that have upgraded to Taproot. Andrew Chow has a vanity address generator. It’s been a long time coming and it’s still a little strange to think that it’s all live on mainnet. I’ve been in the process of coding this stuff in my library and I’m discovering how cleverly it’s designed. For example, the MAST tree combines child hashes lexigraphically sorted, so it’s a lot easier to code than the Merkle Root in BIP37. It’ll be interesting to see how quickly Taproot gets adopted given all the backup possibilities.

Muun Wallet wrote about on how they upgraded their app to use Taproot. The article is less about Taproot than it is about the problem of backups. As they point out, wallets have little interoperability and add a huge burden to users when they’re creating new wallets to back up everything. Output descriptors make it possible to have the same wallet in multiple places, and further, reduce the need to create new wallets. They made it possible to back up Taproot outputs before anyone spent any money to them! I love what they’re doing and I hope they continue pushing the UX of Bitcoin wallets.

Jeremy Rubin and Andrew Poelstra had an interesting debate about covenants at TABConf. The rules of the Socratic village meant that the thing couldn’t be recorded and thus, the link goes to the next best thing, a transcript. The main debate was around the type of covenants in Bitcoin rather than whether to have them. Covenants let you encumber the coins in the future and something called recursive covenants let you almost permanently encumber coins. As Jeremy’s CTV proposal specifically avoids recursive covenants, Andrew’s argument was that a more general covenant proposal that handles recursive covenants would be better.

Jameson Lopp did another round of physical tests on seed storage devices. Manufacturers have done much better than before as they’ve all learned that a single plate is the way to go. Less moving parts seem to make for a more durable device. I hadn’t heard of a lot of these devices before, but they’re clearly designed much better than devices even a couple of generations prior.

Lightning

Lightning Labs has their always informative newsletter. The most interesting part of the newsletter was the discussion of the utility-to-speculation ratio. I would characterize a high utility-to-speculation ratio as being low in hopium and the opposite high in hopium. Lightning is one of the lowest in hopium, unlike almost all of the altcoin world.

Business Insider has an in-depth feature on Lightning, Plebnet and El Salvador. This was a surprisingly well-done article in a mainstream publication about lightning, getting a lot of subtleties right that most mainstream articles get wrong, so I was impressed. They specifically talked about how plebs are leading the way in Lightning adoption instead of focusing on a specific hero CEO, as most of these articles do. I suspect it’s hard to deny the power of Bitcoin, or we have a Bitcoin enthusiast at these publications, which is turning the narrative.

Reusable Invoices were merged into LND. I’m excited for this update as this should allow for recurring payments. So much of the utility of Lightning depends on frequent payments and recurring payments seem like an obvious missing feature. I would love to see Patreon replaced with Lightning payments, for example.

Economics, Engineering, Etc.

Alex Gladstein has a tremendous long read about USA’s monetary imperialism. It will be hard to look at US foreign policy any other way after reading this. The article is based on his reading of the book Super Imperialism, which is focused on international monetary policy and how the dollar is used to get resources from other countries. This is an excellent article to learn how the dollar is a tool of foreign policy.

Jameson Lopp finally gets justice against the guy who sent a SWAT team to his house. I found the article both sad and hopeful. It was sad because it really does show the asymmetry in destructive actions like calling a SWAT team, which is ultimately the result of “public” services. I also found it hopeful because with enough determination, Jameson was able to get justice.

Vizio makes more money from ads than it does TVs. . This is what happens with persistent inflation, which is that companies find alternate ways to make up for the value lost. Instead of increasing the price of their products, they have been selling your information. In other words, because of inflation, companies are incentivized to be evil. Speaking of which, Joe Mallock explains how inflation really wrecks people. As the article points out, inflation affects goods way before wages, causing the vast majority of people to lose out. The narrative of the media that inflation is somehow a good thing is something that needs to be countered and we need more articles like this.

Congo is starting to get a Bitcoin economy going. It’s hard not to see the parallels of Congo with what’s happening in El Salvador. The banking services provided by Bitcoin are an obvious benefit to displaced people like the ones in the article and I hope this helps them get back on their feet. Perhaps in the not-too-distant future, Bitcoin will prevent refugee crises from becoming so terrible and allowing people to start new lives in better jurisdictions without the need to go broke in between.

The city of Miami is going altcoin. The cities that have benefitted the most from the pandemic have undoubtedly been Austin and Miami. While mayor Suarez has been very welcoming of Bitcoiners, this latest move shows that he really doesn’t have a clue about Bitcoin’s real value or altcoins’ scamminess. In a sense, this was inevitable as Miami has been the relocation city of choice for altcoiners while Austin has been for Bitcoiners. Let’s see what happens over the next few years.

Quick Hits

Did you know you can sign messages using your SSH keys?

Multisig saved one Bitcoiner from losing his Bitcoins.

Protos has a report on where Tether is going.

Tomer Strolight argues the benefits of Bitcoin are things money can’t buy.

Events

I am planning to be in London for Advancing Bitcoin March 3-4, but there is some possibility I won’t be able to get into the UK.

I’ll also be doing the Programming Blockchain seminars in London March 1-2 (subject to being able to get into the UK) and Miami April 4-5.

Podcasts, Etc.

On this week’s Bitcoin Fixes This, I talked to Gary Leland about opportunity. He has been a serial entrepreneur starting a wide variety of businesses and we talked about how he found them. Find out why he thinks Bitcoin has so many opportunities.

I read through last week’s newsletter which you can find here.

My interview from the Texas Blockchain Summit is up. I talked to Natalie Brunell about Taproot. I talked to Jay Gould about a variety of Bitcoin topics.

Here is the new book:

My other books are here.

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.

Fiat delenda est.