Bitcoin Tech Talk #389
Interesting Stuff
The Nocebo Effect - I had never heard of this term until this article, but it’s an interesting concept. Basically, it’s the opposite of the placebo effect where the patient gets bad outcomes from a completely inert medication. The fascinating part is that so many people tend to ascribe it to dark spiritual forces, which, given that the article’s author holds a materialist world-view, is not given any credence. Still, how people can cause themselves harm by believing it is a sad, but crazy idea.
The Dystopian AI Future - The article talks about how AI is taking over creative endeavors on the margin, where low and mid-quality content is being churned out ad nauseum. This results in a sort of information pollution that’s not easy to curate or filter and it’s eventually going to make a lot of the internet not just difficult to navigate, but difficult to get value from. Most people think of AI as some force multiplier on our productivity, but I think a scenario like this is just as likely as content companies are forced to scale up given the challenges of fiat debasement.
The Chevron Deference - This is an article about a legal precedent that essentially gives bureaucrats all sorts of discretion, which in a rent-seeking fiat world is about as insane as it sounds. Basically, the court ruled in Chevron v. Natural Resources Defense Council that regulators’ interpretations of laws. That is, the regulatory agencies are deferred to which is why it’s called the Chevron Deference. This has resulted in lots of politics being injected into regulatory agencies as Republican and Democrat regulators interpret things differently. But more importantly, it’s given bureaucrats an insane amount of power to regulate all kinds of things in the economy. Such is the way of fiat systems.
Power Law Culture - The article is about the popularity of cultural items, like movies and songs. What it finds is that despite the internet promising significant fragmentation, the resulting output has been highly concentrated and that the distribution of almost all cultural outputs follows a power law. This is not surprising since most people have finite time and don’t want to spend hours searching for something they like and use recommendations as a shortcut. It does open up the possibility that new influencers that have a different set of values will see new cultural items come to the forefront of the power law.
What I'm up to
Recent Events - I talked with Ben from Texas A&M on my own podcast about the recent events that are happening. We talked about Bitcoin, lawfare, ETFs, media, nuclear power and much more. In particular, we talked a lot about entrepreneurial energy that’s getting sucked dry by fiat money and how much gatekeeping and unfairness results from opportunity-cost-less money.
BCH Debate - There’s a book coming out by Roger Ver where he’s likely to be arguing that BCH is superior and that BTC was hijacked. I’m posting this debate I had with him 5 years ago to combat the falsehoods we’re likely to see in that book. I think my arguments hold up pretty well, but you be the judge.
BitBlockBoom - I’ll soon be at this conference in April as we get closer to the halving. It’s one of the longest run conferences that are Bitcoin-only and it’s a lot of fun hanging with Bitcoiners in a more intimate setting. I’ll be talking about one of my favorite topics, getting rid of rent seeking! Hope to see you there!
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
SRI 1.0.0 - SRI stands for Stratum v2 Reference Implementation and it’s now public and allows for the setting up of a Stratum v2 pool. What’s really nice about this software is that it allows either v1 or v2 clients to connect, not requiring firmware upgrades to get the benefits of a Stratum v2 pool. This has been 3 years in the making and the original idea came from Matt Corallo 5 years ago. Stratum v2 should give way more control to individual miners and take some power away from pools. I’m excited to see its adoption!
HashRate Vulnerability - ViaBTC is a pool that runs certain software which has a vulnerability that was disclosed by 0xB10C. Apparently, you could give it an older header with a new coinbase and it would happily try to find a block to build on top of it, which is a waste of hashing power. The pool has some of the code open source, but the client that they run is closed source and the vulnerability has been patched. Not sure how many pools use this software, but if they do, they should upgrade.
Off-chain Bitcoin Smart Contracts - A recent paper describes an off-chain protocol that lets you do pretty complicated smart contracts. The main idea is that given a bunch of different states, certain attained ones are signed for and “grafted” into a series of transactions with appropriate punishment mechanisms and so on, which are used in Lightning. It’s an interesting balance between full programs being hidden in a Taproot tree and using more native Bitcoin OP codes and would be interesting to see implemented.
Lightning
Bringin - This is a lightning app that’s taking a different approach by integrating with IBAN, the international bank network in Europe. The main idea is that merchants can get paid in lightning and have the amount deposited in fiat right away. It makes lightning payments, once completed, more reliable than something like credit cards and cheaper to boot. They use Breez SDK to make this work and the idea is that they’ll expand the offerings as they scale up.
Phoenixd - One of the most popular Lightning wallets now has a specialized lightning node for businesses! The software is meant for nodes that are sending and receiving payments and not, say, for routing, and it does a lot of things automatically, like liquidity and channel management. For sending and receiving while keeping custody of your BTC on Lightning, this is the right product.
Bitcoin Atlantis Case Study - BTCPay has a blog post on what handling the conference transactions was like and how the lightning network in particular fared. With almost 9000 transactions costing ~$130k in just a few days, that’s a pretty rock-solid performance. There were a lot of different ways people paid, including various lightning wallets and Bolt cards using their custom PoS terminals. It will be interesting to see how Bitcoin conferences will be going more on a Bitcoin standard for transactions over time.
Economics, Engineering, Etc.
Remittances API - The Bitcoin Company has an API specifically for remittances so that people can transfer funds internationally using Bitcoin as rails. This is not a new idea and there have been many different companies that have tried this, but as they say, being early is the same as failing. Perhaps this is the moment that Bitcoin starts to make a dent in the remittances business. Their initial target markets seem to be Mexico and Brazil.
Microstrategy $600M more - MSTR added another $600M worth of Bitcoin to its stash, now having more than 1% of the eventual 21M limit. What’s remarkable about this and the previous bond offering is how oversubscribed they were. This one was only supposed to be $500M, for example. This shows just how much of a demand there is in the bond markets for exposure to Bitcoin and so far, MSTR is the only one filling that demand. How long until they get some competition?
Mining Pool Basics - Mining is a lot more complicated than it was even a few years ago and this post goes through what the different payout schedules of pools are and so on. I suspect that mining is about to get more popular among retail as people come up with interesting uses for the mining waste heat and posts like this will help people understand the pros and cons of different pools.
Quick Hits
ETH Foundation Canary - The GitHub PR indicates they are now cooperating with authorities on something.
$4B in BTC seized - The story is a bit light on the details, but a Chinese woman who kept buying expensive jewelry and expensive houses got arrested for money laundering and had around 60,000 BTC seized.
Ryan X Charles on BSV - The guy went off the rails years ago, believing at one point that CSW was Jesus, but he’s come out with a mea culpa, saying that he was in a cult.
Congress Party of India - Is accusing the government of debanking them as they get more popular as the main opposition. Wonder when they’re going to look at Bitcoin?
Even Japan - One of the last bastions of low interest rates has bent the knee after 17 years of lowering rates.
Corporate Transparency Act - Jameson Lopp documents a regulatory agency acting bad.
Fiat delenda est.