Bitcoin Tech Talk #393
Interesting Stuff
Financialization and De-Civilization - I wasn’t familiar with the economist mentioned in this article, Giovanni Arrighi, but the concept that he explored is quite intriguing. The main idea is that hegemonic powers start dying when they financialize. The reason being that the order the hegemon imposes on the world is to the hegemon’s advantage, but that it disincentivizes productive activity, which in turn causes more financial games, eventually toppling it. The article argues that each successive hegemon has declined quicker and quicker, starting with the Italian city-states, through Amsterdam, England and now the US.
Organ Donation Bureaucracy - There are 17500 human kidneys that are lost or thrown away in the US every year. So describes the article about the unacceptably inefficient organ donation system. Much of this is due to really bad regulation, in that there’s essentially a monopoly due to the way the system was set up. As with most monopolies, there’s no real incentive on the part of the monopolist to improve their services and indeed, this is why so many people are on dialysis machines waiting for kidneys. The rent-seeking here is particularly egregious because of the people that literally die waiting for these organs, but if there’s anything I’ve learned about rent-seekers, moral duty is not enough incentive for them to do the right thing.
Work vs Talent - This essay puts to words what a lot of us feel, but can’t express. Namely that while hard work will get you places, it’s really talent that makes the difference in the end. There’s a notion that everyone is equal and that hard work can make up for any lack, but as reality shows us, it’s not true. No matter how hard I work, there are some things I will not be good at. Yet in a strange way, economics provides some hope, because there is the concept of comparative advantage. Even if someone else is better than you at every conceivable task, there are still things you will be able to do for money that your rival will not, simply because you both only have 24 hours in a day.
Undermining the Blue Church - The article is about the academic/hollywood/elite group think and how to subvert it. As the author points out, the current metric of whether to accept an opinion right now is whether they have a credential, rather than what was traditionally used: the ability to predict things. As he points out, Bitcoin is one of the rallying points against the Blue Church. There’s much more in the article, and it’s worth your time to think about it.
What I'm up to
Destroying Rent Seeking - My talk from BitBlockBoom is up as part of the livestream that they did. I talked about rent-seeking at the company, nation and global levels, the consequences and how we’ve become a static society that’s actively getting worse as a result of this terrible system of control by the money printers. One part that I would like to expand on next time is this idea that rent-seeking is usually backed by violence.
Bitcoin Country - My conversation with Max and Stacy at the Plan B forum in Lugano last October is up! We talked about the battle between the IMF and Bukele, the other national governments watching the fight, and the safety upgrade in El Salvador and a lot more. Max and Stacy shed some light on the arrest of the gangs and the energy costs getting lower and the positive changes in the country. Lastly, we talked about the charge that Bukele is a dictator.
Book Available for BTC - You can now buy Fiat Ruins Everything in Audiobook or eBook at the Bitcoin Magazine Store using BTC! It’s cheaper than the paperback, and it’s deliverable all over the world. If you’ve been wanting to read or listen to this book and happen to be from a non-Western country, this is your chance to read it!
Nostr Note of the Week
What I’m Promoting
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Bitcoin
Bitcoin Core 27.0 Released - Some notable changes include v2 transport protocol being the default, libconsensus no longer being updated and the new cluster mempool features being usable on testnet. It’s a bit sad for me to see that libconsensus didn’t really end up doing what everyone envisioned, which was to allow clients to hook into it to do all the critical consensus calculations, but it turns out that elliptic curve operations via libsecp256k1 and the new libbitcoinkernel are more practical for programmers to use.
Brainwallets 2.0 - I always cringe a little when people say “you can memorize 12 or 24 words!” The actual BIP32 spec lets you define an HD wallet with any passphrase, meant as a way to do brain wallets. Of course, the original was simply a SHA256 of a passphrase turned into an address and that’s turned out to be a bit of a disaster. Now we have a real contender for a brain wallet that’s hard to guess. Armed with many rounds of memory-intensive Scrypt and requiring salt in the form of your email address, this is a type of brain wallet that can withstand brute force attacks and it’s also an HD wallet. Maybe we’ll have something other than memorizing words to keep wallets in our brain.
BIP-42 - Jameson Lopp writes the story of the future soft fork which was half-joke and half serious. The main issue has to do with the behavior of right shifts when done after the 64 bits that are in the two bytes that define the block reward. What I didn’t know was that this bug was pointed out by a developer (ditto-b) that showed up out of nowhere. As Jameson speculates, ditto-b is a well known Bitcoin dev that decided to anonymize because of the sensitivity of this particular issue.
Lightning
LRC-20 - As if we don’t have enough colored coins protocols, we have yet another one that’s Lightning-based. What’s really interesting about this one than, say, Runes or Counterparty, is that the on-chain footprint is nearly nil. The data is committed to using Taproot key tweaking. It’s all theoretical at this point, of course, but if there is going to be some sort of colored coins protocol, this is pretty ideal from a on-chain footprint minimization and lightning compatibility.
LN Contraction - This is a sobering article about what’s going on with the Lightning Network as the network has contracted somewhat from its peak a year or two ago. Of course, what we’re talking about is not usage, which is up significantly, but there are fewer nodes and less total amounts on there and this article goes through why that is. Essentially, there were a lot of people that created their own nodes and so on but got disillusioned as the maintenance was more than they thought and the fees earned less than they thought.
Lightning and Mining - This article goes through how lightning is being used in mining, particularly for small players where on-chain payouts are too expensive. Especially given the fee environment we’re in with all the Runes stuff, this article looks prescient, having been published before the halving. I expect Lightning payouts for pools to become much more prominent during this 210,000 block epoch.
Economics, Engineering, Etc.
MEVil - Matt Corallo writes about the concerns around miner extractable value coming to Bitcoin. This is a major concern in Ethereum, for example, and one of the many reasons why doing almost anything there costs so much money. As Bitcoin get stuff like ordinals and Runes, we are starting to get that as well. Matt writes pretty convincingly here that MEV is likely to centralize mining as figuring out which transactions will get the most value is not at all trivial. He also expresses much about which kinds of rollups are likely incentive compatible with Bitcoin’s decentralized ethos.
Slow and Steady - Another core dev, AJ Towns, weighs in on the Bitcoin culture wars naming his general philosophy “Slow and Steady.” The main idea here is that ossificationists, the covenants people and the filterers are all demanding changes too quickly and that in a consensus environment, about the only way to do things is slow and steady. As he points out it’s really a much more practical philosophy in that every requested feature should have tests, good use cases and some reasonable review. It’s an excellent approach to Bitcoin in particular and open source software in general and it’s worth reading in full.
IMF Report - I can’t believe we’re already here, but the IMF has released a report on Bitcoin’s impact on cross-border transactions. Among other findings, people in developing countries generally view Bitcoin as a risk-off asset and use it to subvert capital controls. Unsurprisingly, Bitcoin tends to be more popular the more volatile the local currencies are.
Quick Hits
CSW Drops Cases - Apparently, without Calvin Ayre’s backing, it’s hard to engage in this expensive lawfare.
Explaining the Halving to F&F - You can now share with your friends and family this nicely illustrated cartoon explanation of the halving from core dev Amiti Uttarwar.
Review of Hijacking - Stephan Kinsella reviews Roger Ver’s book.
Weak Blocks v2 - Instagibbs asks the question whether there’s something useful about weak blocks, a tech the big blockers were pushing back in 2016-2017.
Scambrian Explosion - You can look at all the altcoins/tokens being launched on Runes. It’s easily over 3000 already.
Fiat delenda est.