Bitcoin fixes over-politicization. Bitcoin Tech Talk Issue #208

Brian Armstrong got a lot of flak for his recent blog post where he explained that his company would be mission-focused. What upset people is his indication that Coinbase would not be a place for lots of political activism, that he wants people who work there to be committed to doing the work of the company. This was obviously to quiet down the voices in the company that wanted the company to take a harder stance on Black Lives Matter. The next day, Coinbase was offering severance packages to those who disagreed with the blog post.

This post has led to a lot of backlash on Twitter, including the former CEO of Twitter, Dick Costolo saying that leaders like Brian will get shot once there’s a revolution. His tweet has since been deleted. What’s going on here? Why is a crypto exchange taking such a stand and why is it at all controversial? It’s because the workplace has become a political battleground. There is a severe over-politicization of certain issues today because of fiat money.

Fiat money gives the government a lot of power and the perception that the government can fix any and all problems. Whatever you might feel about the protests, there’s no doubt that this is a problem in the US. Because of the existence of fiat money, there will always be a group that wants to solve that particular problem through money printing and doing that requires politics.

What we’ve been seeing the last 4 months is a pushing of this particular issue to be solved by government intervention. Many companies, sports teams, celebrities and more have stated something about it, specifically because it’s something they think they can influence. Instead of companies that are making goods, sports teams that play and celebrities that entertain, we get companies, sports teams and celebrities that get political and demand government action.

This is over-politicization at its worst, when we can’t get away from it. The government’s ability to print money is simply too powerful to ignore for anybody and sadly, that’s meant that politics becomes ubiquitous in everything. We basically don’t have the option of being apolitical, at work, watching sports or watching entertainment. Instead we are propagandized every day because of fiat money.

This, in my view, is one of the subtle changes that a Bitcoin standard brings about. Because government can’t solve everything, government is more limited. And when government is more limited, politics becomes limited, too. Politics no longer is an all-encompassing behemouth affecting everything. That day can’t come soon enough.

Bitcoin

Ruben Somsen has an excellent post explaining SNARKs. SNARKs are a zero-knowledge proof technique that has the potential for what Ruben calls Non-interactive Witness Aggregation (NIWA). SNARKs prove that the state of the Bitcoin blockchain went from A to B without showing the exact steps. If it sounds like public key cryptography, it kind of is. The main use-case would be to reduce the validation time for the UTXO set. This is the major bottleneck for initial block download (IBD), and a clever SNARK created once could help put more nodes on the network as the blockchain gets bigger.

Sam Abbassi has a great explainer on covenants and vaults in Bitcoin. Covenants are essentially restrictions on how certain Bitcoin can be spent and is the subject of projects like OP_CTV. The main thing of interest in the article are vaults, which are a type of covenant where the conditions are time-based. This limits the attack surface significantly, making it impossible to spend funds until the conditions of the vault unlock are met. This is especially useful for custody, where a minimal attack surface is desirable.

Casa has published a great article on the things you should look for in a hardware wallet. The recommendation there, as elsewhere, is to have multiple wallets in a more complete setup that eliminates any single points of failure.

Speaking of hardware wallets, I’m pretty impressed with the new Cobo vault. It can be used in a strictly air-gapped manner with QR codes being the basis by which all data is transferred to and from the device. It’s even better now that it has Bitcoin-only firmware which supports PSBTs and thus multisig.

GLV Endomorphism is now out of patent! I have a particular fondness for this technique as implementing it in btcd years ago was what led me to learn the ins and outs of elliptic curve cryptography. The technique is really clever in that the number of operations required to do a scalar multiplication reduces from 256 point doublings to 128. Details can be found in this bitcointalk post. If you’re curious about how lambda and beta are derived for the endomorphism, I was, too and got an answer from crypto.stackexchange.com.

Lightning

Antoine Riard has a deeply introspective and insightful look at the current state of lightning. He lists a bunch of his own concerns regarding scalability and privacy on lightning to start, but continues with a really interesting perspective on the culture around Lightning. As he points out, Lightning has a “product-hunting” mentality whereas the traditional Bitcoiners have a more “security-focused” mentality. It’s one of the best articles on Lightning I’ve read this year. I look forward for more articles from him in the future and congrats to him receiving a 6-month grant to continue his Lightning development from John Pfeffer!

Economics, Engineering, Etc.

Kraken has an interesting new report on Bitcoin’s intrinsic value. The report goes through a lot of different comparables, attaching the various features that Bitcoin has with the value it provides. For example, the ability to transmit money quickly and efficiently across the world in minutes has value, though quantifying that is not easy. It’s well worth reading or sending to your skeptical no-coiner friends.

The Department of Justice charged BitMex with violation of the Bank Secrecy Act. This has led to a furious withdrawal of funds from that exchange as the CTO has already been arrested. Consequently, the mempool was filled for most of this past weekend. How this will play out is anyone’s guess, but I can’t imagine getting on the bad side of the US government will be easy to shake.

Nozomi Hayase makes an impassioned plea for more cryptographic tools. This is with the Julian Assange trial as the backdrop, and the idea is sound. We need more tools to protect our individual liberties against the tyranny of the state. Privacy tools, in particular are critical to protecting our rights.

Podcasts

This week, I talked to David Perell on my podcast. We talked about content creation, about writing, rhetoric and the advantage newcomers often have over experts.

I was on Tone’s show to talk about DeFi hacks, Iran and a bunch of other stuff.

Be a pal to your precoiner friends with my books!

Finally, I’m still working on a Bitcoin book for Christians. Whether you’re a Bitcoiner that doesn’t know much about Christianity or vice-versa, I would love to get some review on our manuscript! Please email me back if you’d like access.

Fiat delenda est.