Bitcoin Tech Talk #388
Interesting Stuff
Payroll - The article is about how payroll systems have become the way they are and why it’s so hard to dislodge the big players in the industry, but it’s really more about government tax collection strategy. Before inflation, we had the income tax, where companies were deputized for tax collection with the idea that workers wouldn’t really notice or at least not protest too much because the money was taken out *before* they received it. It’s a really interesting read about how the bureaucratic state finds ways to rent-seek off of productive activity.
Profit vs Loans - A lot of VCs and startups get pissed off at me when I tell them that VC money sucks and is a terrible way to fund a business. This article shows you just how a business can be run without external money and be good for everyone involved. The current ideal of 80-hour weeks working for a startup is just insane and working off of profit is just generally much healthier for the company and customers involved. If you’re in a startup, get to profit ASAP because Bitcoin is going to seriously disrupt the Venture Capital Industrial Complex.
Explaining Midwittery - The article is ostensibly about why “smart” people do dumb things, but I realized that the people being described were exactly the people in the midwit meme. That is, the “smart” people here don’t recognize their own limitations and can explain away any inconsistencies. This is the result of fiat money putting a lot of midwits into bureaucratic rent-seeking positions where they’re not challenged like they would in a free market. I think midwittery is vastly diminished under a Bitcoin standard.
Space Exploration - This story is about the Voyager 1, which was launched in 1977 to send back various pictures and things from deep space. What was fascinating to me about the story is not how long it was able to operate, but how little we’ve done since then. For whatever reason society has not been interested in exploring space since then. Instead, the focus is deeply inward, which is what happens when you get on fiat money. Perhaps this field reopens under a Bitcoin standard.
What I'm up to
Local Biz - This is a panel I moderated back in January about small businesses adopting Bitcoin. This is an under-the-radar reason for a lot of Bitcoin growth and the three people on this panel showed just how much they want to change their industry through decentralization and self-sovereignty. I was inspired by this panel because these are people trying to change their industries and remove the corrupt influence of fiat from them and they’re finding Bitcoin to be an excellent tool. Amazingly, the values of Bitcoiners is a big part of why they like accepting Bitcoin.
Bit Block Boom - I will be at this conference in a few weeks to talk about how to destroy rent seeking. Dallas is a wonderful city and I will be getting some boots now that Bitcoin has crossed $50k. It’s one of the first Bitcoin conferences in the US and given that it’s right before the halving, should be a lot of fun. Come by and say hello!
Bitcoin Seoul - I am heading back to Seoul in May to attend this Bitcoin-only conference in Asia! Korea has had a reputation for being an altcoin zone, but it’s been changing in significant ways for the last couple of years. Turns out that when people keep getting ripped off, they learn a bit more about money and learn what Bitcoin is actually about. Please come by if you’re in the area. Korea has great connectivity to the rest of Asia and it should be a good time.
Nostr Note of the Week
What I’m Promoting
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
BIP324 Proxy - BIP324 allows for secure communication between nodes, which is definitely desirable where you don’t want people to know you’re running a node. But what if you have Bitcoin software that doesn’t support v2 transport layer? This project is a local thin wrapper that translates v1 messages to v2 so that you can connect to the newer software that supports BIP324. It’s not complete yet, but I generally like ideas like this that let you “try before you buy.”
Onchain Softfork Bet - Zman proposes a way for users to weigh in on soft forks, by incentivizing miners with their transactions. Essentially, Alice and Bob on different sides of the fork can create transactions that give them custody over coins on their preferred fork. This is an interesting idea to settle soft forks, because it’s decentralized and can’t be gamed by exchanges cooperating with one side. Given the many different proposals at the moment, I have no doubt some drama is likely in the next couple of years, so a mechanism like this may very well gain traction.
Covert channel negotiation - A new paper uses the Bitcoin blockchain to negotiate a covert channel for communication. The idea is that if you have any direct communication, there’s always the possibility of a man-in-the-middle attack, but by using the Bitcoin blockchain, you can create some sort of key exchange protocol and establish a secure communication channel. There have been many ideas like this before, including BitMessage and BIP47, but this is the first one I’ve seen where you can establish the channel purely with Bitcoin.
Lightning
LNCal - This is a service like Calendely, except you get paid for your time on your calendar. It’s an interesting idea and I always thought open calendars like this look ripe for abuse. This way, there’s cost involved to schedule something. I can see this sort of thing becoming very useful, especially if there’s an API for it and you can pay and schedule for someone’s time. There’s no reason why there couldn’t be, say, some aggregator that can vouch for the quality of the people it’s representing in the calendar and what work they can do.
Emeralize - This is a lightning-powered learning platform where you can buy/sell courses on various topics. There’s not that much content right now, but payments have to be the single most painful thing to charging money for courses on the web. Most consumers want to use credit cards, and platforms take a big chunk of the profit, so the creators actually don’t get that much. The model here should have less friction. I would love to see something like Zaprite which passes through the payment to the creator, while charging for hosting and payment solutions.
Boltz Client - This is a new client for Lightning node runners that have a few really interesting and useful features. It’s first of all compatible with both LND and CLN. Second, it has Liquid and Taproot swaps built in, so that channel management can be both automatic and cheap. Channel management is generally necessary for routing nodes, and I expect clients like this to be most used for that purpose. As I’ve said many times in this newsletter, we need different software for different types of lightning nodes on the network.
Economics, Engineering, Etc.
CSW ≠ Satoshi - The judge in the COPA case surprised everyone with some early pronouncements before handing out the final judgment. Essentially CSW is not Satoshi and he had basically nothing to do with Bitcoin from all the forgeries and such he produced during the trial. COPA is seeking prison time, Calvin Ayre is disappearing and BSV folks are very confused. The judgment should put a stop to CSW’s lawfare, particularly against Bitcoin Core developers, and we’ll see if his forgeries have consequences.
Conviction of Bitcoin Fog - Bitcoin Fog is a mixing service that was just convicted of money laundering. I’m of the opinion that AML laws are a travesty, but even if you think such laws are a good thing, there’s significant doubt as to whether the conviction had merit. This is an article on why the analysis used by the prosecution is a miscarriage of justice. There’s going to be more of this type of stuff because we’re firmly in the “then they fight you” stage.
Miners in Texas - The article is framed as neighborhood people not liking mining companies around, but in reality, it’s a much more sinister political game. NIMBYism is a common game to extract resources from the people that want to build useful things, and it’s been used to great effect all over the world, particularly in popular places. Because democracy lets the majority steal from the minority, there’s a shakedown at play here, where the people around the mining facility are hoping to get bribed. This is the real tragedy of the commons problem and it’s rearing its ugly head in Bitcoin.
Quick Hits
$500M more - On the heels of their $800M oversubscribed bond offering, MSTR is raising even more using a convertible note structure to the tune of $500M.
Constant-time Crypto - Great article on why constant-time libraries are essential to not leaking the private key.
Biden Tax on Miners - His proposed budget has a 30% tax for cryptocurrency miners.
El Salvador’s Bitcoin Treasury - Nayik Bukele is showing the onchain address of the country’s Bitcoin treasury. And random Bitcoiners are donating to it!
ETF Resistance - The reason why the ETF approval took so long.
Fiat delenda est.