Bitcoin Tech Talk #303

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What I've been working on

1. Max and Stacy Report - I reviewed what I did in my short time in El Salvador a couple weeks ago and we spoke about the opportunity small countries like El Salvador can do and the arbitrage opportunities they have, particularly in education. The more I’ve thought about this, the more I’m convinced that a Singapore-like miracle can happen and will as they get out from under the monetary imperialism they’ve been under.

2. November to Remember - There are so many conferences scheduled in November for some reason, including some very good ones. Pacific Bitcoin, Adopting Bitcoin and laBitConf are just three of the many that are happening in the middle of the month. They’re all going to be great, but I’ll be in Buenos Aires.

3. Resisting Putin - I spoke to Anna Chekhovic of the Anti-Corruption Foundation, the main Russian resistance to Vladimir Putin. We talked about what it’s like to be financially deplatformed. Her story is unfortunately way too common and what she’s gone through should give you a good idea of how governments oppress political opposition. The hope of Bitcoin is so obvious when you hear about how they’re able to operate completely outside the country with donations coming in largely from Russia!

What I'm up to

1. Fedimint - I have a podcast with Obi Nwusu about starting businesses and why he started Fedi dropping on Thursday. Obi’s a real OG in this space and someone that’s really got an entrepreneur’s mindset. The episode was a fun one to record as we reminisced about what starting businesses is like and the crazy stuff that generally happens around them.

2. Reflecting on BCH - I wrote this article 5 years ago about Bitcoin Cash, the split and what was happening. Those were some heady days and I remember that announcement hit me like a ton of bricks. People were texting me while I was shopping with my family at Costco asking what the heck this all meant. I remember getting home quickly, researching what was going on and writing this article. 5 years later, BCH has split into 3 separate coins, whose combined market cap is less than 1% of Bitcoin’s. BCH futures 5 years ago were trading for around $500/coin. They’re now combined, about $250/coin.

3. London - I’m in London this week to do some sightseeing with my family. If there are any interesting Bitcoin places to visit, please reply to this email and let me know where I should go! I’m also in Edinburgh and Glasgow the following week, so I would appreciate recommendations there as well.

Tweet of the Week

What I’m Shilling

• Books

  • Bitcoin and the American Dream

  • Thank God for Bitcoin

  • The Little Bitcoin Book

  • Programming Bitcoin

• 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

Bitcoin

1. Taproot Advantages - Shift Crypto writes about the advantages of Taproot and the reasons for the relatively slow adoption. The main one is that there’s no clear economic incentive at play as there was with Segwit. There are some economic benefits with multisig if using MuSig, but that hasn’t been widely adopted yet. The main one, as they point out are around applications that can build on the MAST tree of every Taproot output. I personally think the UX problem needs to be solved first and the security benefits will be the main impetus for most people to upgrade.

2. Ways to Buy Bitcoin - Unchained Capital blog goes over the various different ways in which you can buy Bitcoin, from exchanges to trusts like GBTC. One way that I wasn’t aware of were Bitcoin vouchers, which let you pay cash for a voucher at some physical stores and deposit them to your Bitcoin wallet. Sounds like a nice way to get non-KYC coin.

3. Spending BTC privately - This rather long post goes through step-by-step how to spend UTXOs together in a way that won’t compromise your privacy. It’s a rather involved process and requires a bunch of coinjoins and such, but it is possible to do with these tools.

Lightning

1. Time Value of Bitcoin - Nik Bhatia and Joe Consorti look at the emerging capital markets around the Lightning Network. They’re approaching the analysis from first principles and using routing fees as the first piece to understand what the time value of Bitcoin might be. The most interesting part of the piece for me was analyzing channels as a form of lending. Inbound liquidity is very much a line of credit and in that sense, this is very accurate and a great way to characterize the network operations in capital market terms. They conclude that this is an exciting area of development which will transition Bitcoin from a reserve asset to a reserve currency.

2. pLN - This is a new lightning wallet focusing on privacy. The architecture decisions are interesting as they’re not going to prioritize minimizing routing fees, for example. The wallet’s design will create a different node for each channel to minimize information leakage. This is very bullish for Lightning as more niche products like this show that the network is growing and there are more use cases being explored.

3. Keet - This is an encrypted video app which uses the Holepunch platform. Holepunch is essentially a direct peer-to-peer connection using the Lightning network. The main use-case of this platform that I get excited about is any sort of teaching or consultation. I would love to be able to talk to my doctor over video and pay on a per-minute basis without any middleman. Heck, if there was a good app to do this, I would open up my calendar for consultation services.

4. bitcoinVend - This is a natural extension of LNURLPoS, which lets you pay for a product using Lightning to get a code which you can put into your vending machine for off-line sales. The concept is awesome and I really hope to see more of these things at Bitcoin conferences. Why pay for a sales person when you can just have a vending machine? Especially for stuff like bottled water or gum, this seems like a huge labor saving device cutting out the annoying payment infrastructure in most of these things today.

Economics, Engineering, Etc.

1. Costs of Bitcoin Maximalism - The post is a good summary of what to expect down your Bitcoin Maximalism journey. Once you’ve upgraded your money with Bitcoin, it’s hard not to change everything in your life to be more low time preference. As the post points out, there’s a cost to be paid, in terms of having to resist temptation. The opportunity costs with Bitcoin are brutal, so it’s a hard, but character-building road.

2. VPN with Bitcoin - Of course you can pay for VPN services with Bitcoin, but there’s another way to do VPN in a peer-to-peer way which this post describes. Essentially, you can use a peer to use their IP. This should be more private and allow for a way to monetize your current internet connection. I’m surprised no one has built this yet, and a marketplace of VPN endpoints that charge by the hour would be interesting indeed.

3. Sango Coin - The CAF’s new cryptocurrency hasn’t done very well, which shouldn’t be a surprise since it’s such a clear money grab. At least with a central bank you can back it with legal tender laws, these tokens have zero reason for existing. It’s sad to see how easy it is for government officials to fall for the altcoin siren song. This helps me appreciate the resistance El Salvador has shown toward the altcoiners that have tried hard to get into that country.

Quick Hits

• ARK dumps COIN - I blame their foray into DeFi as the reason they’ve done so badly.

• Stakechain - A bunch of people on Twitter showed that they were buying in a chain of transactions.

• Cash Bans - Israel bans use of cash for purchases greater than 6000 NIS (about $1700)

• Ruble Standard - Russia and Iran are now settling in the Ruble. The sanctions against both countries are basically monetary cartels and those are not stable.

• Honduras Bitcoin Valley - Article is in Spanish, but there’s going to be a Bitcoin hub in Honduras. I’m guessing there will soon be many such places all around the world.

• Roger Ver Token Sale - Strapped for cash, he’s doing some sort of token sale to raise money. The last 5 years have not been kind to him.

Fiat delenda est.