Bitcoin Tech Talk #377
Interesting Stuff
Stanford Prison Experiment was a Scam - One of the most cited studies in psychology was revealed to be a fraud. Essentially, the experimenters biased the results by making it clear to the guards that they should be cruel. Given just how many psychology experiments have been exposed as fraudulent, perhaps we should label them appropriately, as modern myths that we use to make a point. They would be a whole lot more entertaining if they had magical creatures and a moral at the end probably with more truth than they have now.
British Library Ransom Attack - A rather self-aggrandizing narrative of the librarian, from, who else? A librarian. Granted, this is one of the biggest libraries in the world and there’s quite the history in that place, but the article hits like a Luddite squeal. What happened was that the British Library was hit with a ransomware attack, which made research there impossible (virtually everything is tracked electronically these days). The hackers wanted 20 BTC for all the contents, which this author decries. While the hack itself is terrible, most of the article is about the importance of libraries and how they connect people to knowledge. But it makes you wonder, in the age of electronic information, why do we need physical books?
Selling Citizenships - The last few years have been one long rethinking of the countries we live in, especially as many supposedly free and democratic countries imposed some draconian measures on their citizens. This article is an exploration into what citizenship is and its commoditization. What I found most enlightening was how much of a say the US and EU have over these programs, as denying a particular passport entry into its borders devalues the passport immediately. As much as we’d like to think there’s competition here, there are certain levers that can still be pulled by the major powers.
What I'm up to
Gary Cardone - I was on Grant’s podcast to talk about my book, Fiat Ruins Everything. We talked about the history of cryptography, the changing narrative around Bitcoin from 2011 and why altcoins are really central banks. We also talked about how the US Central Bank, the Fed has a bunch of other central banks into its orbit due to its ability to give them swap lines to the dollar. We also talked about the IMF and how it uses its loans to monetarily conquer developing countries.
Bitcoin Beach Interview - I talked to Mike Peterson of El Zonte about all kinds of stuff. We discussed the rapid development of El Salvador, the connection between Christianity and Bitcoin, the book development process and my involvement in the CUBO+ program. We also talked about something close to both of our hearts, and that’s Christian missions and how that’s been debased through fiat money. Finally we talked about the response to the book Thank God for Bitcoin and its origin story.
FROST/MuSig/Taproot Class - Time is almost up to sign up for the 1-day Taproot class in Austin January 8th. This class will be in the style of my Programming Blockchain classes, which are based on coding the concepts as you learn them and with real transactions on testnet and signet. I already have around 10 people signed up. Spots are scarce, so apply today!
Nostr Note of the Week
What I’m Promoting
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Bitcoin
CPU Usage for Message Parsing - 0xB10C has some statistics on how much CPU time is spent on message parsing. As you might expect, the full relay connection takes more resources than a block relay connection. As such one of the proposals is to change the connection handling so that there are more slots for block relays than for full relays as to preserve system resources. Experiments like this will be crucial is optimizing nodes for minimal resource running.
2023 Bitcoin Software Benchmarks - Jameson Lopp has published his yearly performance of Bitcoin Node software results. As expected Bitcoin Core was the fastest to sync from the beginning, though GoCoin seems to be catching up. What’s clear in these is that there’s a lot of software that really need more development to be competitive, but don’t seem to have the developers. What struck me is that the top node software all use libsecp256k1, suggesting that the elliptic curve operations make things quite a bit faster.
Loan Shark - This is a clever scheme by SuperTestNet, which uses Omni’s Tether for the demonstration, but which could easily use something like Taproot Assets or RGB. The basic idea is that there’s a loan with some collateral that’s bigger than the loan amount which the loanee can take if the loan is not paid back. The idea is that there’s no escrow or third party involved, other than the issuer of the asset other than Bitcoin, but this can be done in such a way as to not let that issuer know of its existence. This is probably the best case for something like an asset issued on Bitcoin, as it enables this kind of finance. It’s clever, but I still wonder if there are alternatives that could do this sort of thing better.
Lightning
Lampo - This is a lightning node that uses LDK and Bitcoin Core on the backend. It uses the Bitcoin Core Wallet’s BIP39 seed to derive the lightning seed, but you still have to store the lightning seed as a backup. This looks like a project that grew out from wanting to test lightning implementations thoroughly, so that’s where this implementation may be especially good. A well tested node is one that will be most battle hardened, after all.
Mutiny 0.5.0 Release - This lightning wallet release is notable for the one feature that’s genuinely new. It has support for Fedimint transfers. This brings a different second layer into the equation and given that it’s got a different trust model that requires trusting a federation, the user experience, should, in theory, be a lot better. It’s all still beta at the moment and you need an invite code to a federation, but this is where we can start evaluating the tradeoffs of various L2’s. Ben Carmen has been critical of the Liquid trust model as it’s essentially the same as Fedimint’s, yet has the bloat of the blockchain. We’ll see if this other L2 has the popularity and usage of Liquid or even Lightning.
Lightning Economics - A new paper looks at the economics of the lightning network and where the fees tend to go as the network ages. As they point out, many of the largest nodes are not optimized for fee collection and there are forces that have a worrying tendency to centralize around certain well funded nodes. The big question here is whether in the long run the Lightning network is incentive-compatible with the countering aims of privacy, security and convenience. This is something well worth studying and I suspect that the most successful nodes will start taking these considerations into account.
Economics, Engineering, Etc.
Microstrategy almost has 1% - They keep buying Bitcoin with newly issued shares and interestingly, their stock price goes up a bit more than the Bitcoin they have on the treasury. Perhaps the market is anticipating a Bitcoin price rise in the midst of this relentless stacking, but the real question is, why aren’t other companies doing this? It’s a lot more effective than a stock buyback and the company becomes backed by a scarce asset. This has the potential to become a mainline corporate strategy for cash-flush companies, especially as interest rates lower.
Rod on Inscriptions - Rod makes the case that the Maxi bellyaching over inscriptions is making them look weak and ultimately causing needless drama. There’s a lot of good points being made here, particularly the Streisand effect in action as pissed of Maximalists only exacerbate the trolling. However, I think he misses the bigger and more important development of moral standards with respect to the communally used Bitcoin blockchain. A lot of people are allergic to any standards in general due to them being forced by central authorities in the fiat world, but decentralized natural law is not just good, but necessary from a civilization building point of view. I expect this argument to become a bigger part of Bitcoin as the years go on.
Mt Gox Claims Being Paid - The drama of the last 10 years and this exchange that went bankrupt 10 years ago has been truly tortuous for its claimants. The fact that Bitcoin rose enough in price to reverse the bankruptcy to a rehabilitation in itself was very strange, but the long court process was something to behold. At last, some of the claimants seem to have been paid. The trustee still holds over 130,000 BTC and there are many claimants, so this will still take some time to pay out.
Quick Hits
Banks Lay off 60,000 - Perhaps a sign of the high interest rate environment, but clearly, there’s a lot of fat to trim from these institutions.
India bans Crypto Exchanges - These are not Bitcoin exchanges, and perhaps reflects the sentiment against altcoin gambling.
Barry out at Grayscale - Barry Silbert is out as chairman of Grayscale, probably in preparation for the conversion of GBTC to an ETF.
Bitcoin Legal in Nigeria Again - After banning Bitcoin in 2021, the Central Bank of Nigeria seems to have reversed course.
Fiat delenda est.