Bitcoin Tech Talk #380
Interesting Stuff
Neuroscience LARP - The article is about how a lot of what neuroscientists produce is essentially meaningless, but the article delves much deeper into the reason why the data from neuroscience is so completely useless. As the author points out, the methods they use to examine the brain would completely and utterly fail to tell you anything about, say, the Nintendo Entertainment System, which is far less complex. As with much of academia, this field seems to have completely been captured by fiat, with lots of money going into illusory knowledge.
How to De-Bog - The article is about the many ways in which your life can get stuck and why those things seem so tempting. What was so hilarious is not just that I could relate myself to these traps, but because they are all situations you must overcome to mature. Sadly, most people get stuck in one or more of these things, and the rent-seeking available in a fiat economy incentivizes not getting out. It’s much easier to rationalize staying stuck when there’s little financial penalty.
Multi-armed Bandit - The post is about finding an optimum with little to no information to start. The idea is that you will need to do some exploring and exploiting of the best you can find, but getting there in some reasonable way turns out to be an interesting problem. The analogy to life is that finding that optimal place vs being able to exploit opportunities is the great tradeoff of life. What I came away with reading this article is that I think most people are terrible at this game. They either specialize too early or spend too much time exploring. There’s also a bias for exploring in a fiat system because there’s so little to exploit. Hence, the emphasis on diversification. It’s an article worth chewing on.
What I'm up t
Decentralized Radio - I talked on this podcast about the mechanics of adoption, the book, the importance of economics and much more. We touched on health care, food and the debasement of everything because of the constant monetary debasement. We got into more details on why big companies are controlling things and how they rent seek along with what innovations we should have had since the 70’s.
Tahini’s - This is from a talk I did last summer in London, Ontario about escaping the fiat system. I talked about the dead-eye stare of the typical corporate zombie, the reason why so many people get stuck in those positions and how it destroys your morals and dreams. I also talked about how to escape from it and how providing value directly to the market is the way to economic salvation. Overall, it’s a short-ish summary of a lot of the things I talk about at conferences.
Adopting Bitcoin - I’ll be going to Capetown, South Africa, this week to speak at this conference. This is my first Bitcoin conference in Africa, so I’m looking forward to it. If you’re around, please come say hi!
Nostr Note of the Week
What I’m Promoting
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Bitcoin
BitVM Sidechain - Radical new sidechains design from Supertestnet that uses BitVM as the basis. The main mechanic seems to be that whatever is deposited into the sidechain can be claimed back on chain if the operator does not send you the bitcoins you are owed. I haven’t examined this closely (I’m not sure anyone has), but the lightning-like punishment mechanism is a brilliant way of creating a trustless deposit. If this mechanism works, I would expect exchanges to offer this as a way to reduce trust eventually. Also, I struggle to see how Drivechains remains at all relevant if this works.
One Shot RBF - Peter Todd has a proposal for a different RBF mechanic, designed to thwart the pinning attacks which can cause so much trouble on Lightning. The idea is to make a one-time exception to BIP125 rule #3 which says that a replacing transaction needs to pay a larger total fee. The intuition is that a smaller transaction with a better per-vbyte fee rate should take priority even if it pays less in total. Thus, there is an exception made as a one-time thing to prevent this particular type of pinning. It’s a pretty nuanced change, but it’s well worth thinking about as the incentives are very tricky in RBF situations.
BitBlend - The unsigned 32-bit integer that represents the unix timestamp is a bit of a problem as the dates beyond 2106 will overflow. This paper has come up with a way to solve the problem by interpreting the 32 bits as the mod 2^32 of the real absolute unix time. It’s hard to classify this as a soft or hard fork as past that date, there’s no way for the older software clients to progress. It is, however, a really clever solution and it essentially makes the timestamps not matter.
Lightning
Strike Annual Review - Jack Mallers has a review of how the company he founded did in the past 12 months. The post is long, but worth reading in detail for all the insight about how a company like this thinks. The main thing I learned from the article is that the demand in the market is still for buying and selling Bitcoin, not in payments. Lightning, despite being billed as a peer-to-peer transaction network, is for Strike, at least, currently the easiest and cheapest way to buy and sell sats. I suspect that this will prove true to a lot of Lightning companies as price continues to rise.
Sulu - This is a service that lets you monetize your APIs. The idea is that they do all the hard stuff like lightning invoicing and payment detection and so on and also collect data to make the APIs more useful and customized. There’s a treasure trove of data out there, especially with AI needing such large training sets that this kind of service seems obvious for these data brokers. The only reason I’m skeptical is that data prices generally are a race to the bottom, essentially going to the price of the bandwidth and storage. But then again, maybe if there’s computing involved, there could be something there.
BoltCard Terminal - NFC Lightning cards have a great form factor, but unfortunately, not every merchant takes these cards. Now there’s a solution which lets you pay the merchant using the BoltCard by using an app as a go-between. It’s a bit of a kludge compared to the tap experience of the card itself, but it’s nice to have the option. In essence, you’re using your phone as the translator between your card and the merchant who’s posting an invoice.
Economics, Engineering, Etc.
ETF Thoughts - Allen Farrington has more than you ever wanted to know about the mechanics of the ETFs and much more. He analyzes the actual incentives at play and concludes that Blackrock, et al are going to try to pull off a NYA 2.0 at some point in time. There’s a lot about ETFs I had no clue about, especially about the different kinds based on laws from 1933 and 1940. Self-custody helps you avoid all these problems, but as he points out, it’s hard to get the masses to do the same given how difficult it is at the present moment.
MEV - Kiara Bickers has a wonderful article on miner extracted value and how that relates to the covenant proposals in Bitcoin. The article is an excellent overview of what this rather esoteric profit strategy is and how it gets executed on other chains. As she points out, there are some dangers of MEV becoming more prominent in Bitcoin as a result of covenants and that’s honestly not an attack surface that I thought of. MEV sadly seems to be a rent-seeking strategy that pays off on altcoins and avoiding that is a good thing on Bitcoin.
ETF Fallout - If you’re wondering why the ETF has caused a dip in price, here’s your answer. There are a huge number of GBTC holders that are now selling, causing redemptions or Bitcoin sells on the back end. As the article points out, they’ve been acquiring Bitcoin for about a decade now and have never been allowed to sell because of their structure. Now that they’ve been converted to an ETF, they can and have been selling. Their 150 basis point yearly charge seems to be driving this move and it could be a while before they’ve been sufficiently divested for the price to recover.
Quick Hits
BTC for rent - Someone in Argentina is now renting a house in Bitcoin and doing so with the full blessing of the state.
Blackrock’s on-chain Address - Pretty crazy how many transactions they seem to conduct onchain.
Leveraged BTC ETFs - I can’t say this is great, but probably way better than the leveraged trades most people make on Binance.
Core Scientific - This bankrupt mining company is getting ready to relist on NASDAQ as part of the bankruptcy proceedings.
Fiat delenda est.