Bitcoin Tech Talk #397
Interesting Stuff
Hitler, the Eternal Boogeyman - The article is not about Hitler, per se, but about his status as the personification of all that is evil. This is what’s called Hitler’s second career, which started after his death as culture’s “worst thing ever.” What’s astonishing about Hitler’s second career is its longevity and universality. No other historical figure has had a run in a position like that at any point in history. As the article suggests, this is not an accident and is useful for propaganda and manipulation. I suspect this is the real reason for this longevity, and it’s a useful tool for the fiat authorities. Perhaps his second career will be retired in a post-fiat world.
Republican/Democrat Switcheroo - The article starts out with the cultural impact of the Tom Brady roast, but then goes on to observe what’s been obvious to me the last 10 years. The Republicans and Democrats have switched who they represent. Democrats used to be for the working class and the Republicans the rich people. Now it’s the other way around, as nearly every rich suburb votes Democrat, while rural counties are reliably Republican. The key insight here is that this switching looks like some sort of revolution, but isn’t in reality. True revolution is much deeper than the surface level things that are being protested about on college campuses.
Teachers are Clueless - This article is the results of a survey about teachers and students and how they perceive the classroom. As can be expected in a monopoly, the quality is going down and the costs are going up. What’s fascinating is that the teachers almost all overestimate their impact and usefulness. Only 19% of teachers believe students are bored, but 70% of students are. In other words, they’re delusional. Teachers also have poor morale compared to previous years. I’ve observed over the years that poor morale is usually a sign that there’s a lot of rent-seeking, and this seems to be the case here.
Changing People is Hard - We’d like to think early intervention programs, particularly in education, like the safe sex and anti-drug programs work. But as this article points out, they mostly don’t and the reason isn’t because the programs are terrible, though they are, the reason is because it’s really hard to change people. At its heart, this is the problem with government intervention of all kinds, particularly the ones of the Marxist variety. They think through force that people can be changed to be the ideal that they wish, when in fact, changing people is very hard, particularly with respect to virtue.
What I'm up to
Relating to Technology - I talked to Anjan about our relationship with our devices. We’re all pretty much addicted, not just to our phones, but to our computers, and it’s made us more distracted, less healthy and deeply dissatisfied. Anjan is trying to change that by making devices that work with you. It’s an excellent point to ponder upon as we move into an even more pervasive technocracy.
Bitcoin Seoul - I’ll be at this conference in a couple of weeks. If you haven’t been to this part of the world, it’s a really fun trip to make. I was surprised when I was there a year ago, how in many ways technologically more advanced than anywhere else.
Oslo Freedom Forum - And right after Bitcoin Seoul, I’ll be going to the Oslo Freedom Forum. The Financial Freedom track is packed with really interesting speakers and topics and given what’s been happening with all the government attacks against transaction privacy, should be a good event to discuss what we can do about it.
Nostr Note of the Week
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Bitcoin
BitVMx - This is yet another attempt at making program execution verifiable on-chain. BitVMx was optimized to be compatible with RISC-V CPU instructions, making it much easier to do these verifications. It’ll be interesting to see which of these standards end up winning out as there’s now no less than 4 different types of these Bitcoin VMs.
Penlock - If you don’t trust computers and still want to create a seed phrase, here’s a cool product that’s entirely mechanical. You print out some paper and put them together using the instructions, and you have a way to generate a 12-word seed without any device. Even cooler is the Shamir-ing of the seed phrase into 2-of-3, which I suspect uses SLIP-39 (or some similar technique) to do.
OP_CAT - This is an excellent overview of what OP_CAT will do, particularly with how it will enable covenants. As reardencode points out, however, much of the problem of OP_CAT is in the Miner Extractable Value (MEV) potential of the various things built on top of it. Currently, colored coins protocols have some MEV associated, but as he points out, as the MEV gets more convoluted and requires more computation, it becomes a natural centralizing force. We definitely do not want to end up there, and hence, why this proposal will likely not be the next soft fork.
Lightning
Lightning Address Privacy - Mutiny has an informative blog post on exactly how they managed to add privacy to LNURLs. They use a Fedimint gateway and issue ecash to the user to redeem using their public key, but they go further by blinding the addresses themselves! The privacy aspect is looking less like a nice-to-have and more like a necessary part with the DoJ starting to crack down (see story below).
High Fee Lightning - CoinShares has this report on the state of the Lightning network and what they expect to happen as high fee environments become more frequent and longer lasting. The main problem, of course, is that channel transactions need to be settled in case of cheating or even capacity exhaustion. They expect other federated technologies like Fedi (as in the above story) to help Lightning scale. My feeling has been that other layer 2’s will incorporate with Lightning, like Fedi, Liquid, even Statechains to reduce the on-chain footprint and slow down the need for settlement. The more frequent these high fee environments come, the more these will be developed.
Payment Channel Taxonomy - The article here is more about micropayments and their advantages, but the part I found interesting were the different payment channel designs. The article unfortunately doesn’t make clear exactly what the tradeoffs are on each design, but it’s good to know what the different designs are and how they affect the network itself.
Economics, Engineering, Etc.
Tornado Cash Dev Sentenced - The linked court decision is in Dutch, but the summary is that the developer of this Ethereum mixer has been sentenced to 64 months in prison. There are some obvious legal questions about how such a verdict can be justified, particularly as it seems to be punishing the tool maker rather than the tool user, but the more immediate concern is for those working on privacy to start defending themselves. Will we see a lot more anonymous developers as a result of this verdict?
Wisconsin Investment Fund - The state of Wisconsin has bought around $100M in Bitcoin ETFs. This is what we all expected as part of the ETF approval is these large funds starting to allocate bits and pieces to it. Wisconsin isn’t the only one, as according to CoinTelegraph, there are 600 firms investing billions. There’s still some resistance, especially on the part of some of these brokerages, but the dam is starting to break.
Silent Payments - Given what’s going on with Tornado Cash and Samourai devs, there’s a lot more demand for privacy tech that doesn’t have centralized components, and silent payments may be just that. This is essentially an impovement on BIP-47, which Samourai wallet had incorporated years ago, but instead of using OP_RETURN to store public keys, just uses the input’s public key instead. This naturally means wallets will have to scan a lot more to see if transactions are payments to them, but this is honestly not a terrible tradeoff, especially if the “difference” in the pubkeys of the UTXOs are published in some way. Ideally, these would be merkelized and put into the OP_RETURN of the coinbase tx, but that’s a soft fork and would require this type of payment to become way more popular first.
Quick Hits
$1.7B Hack - This time from BlockTower, the crypto hedge fund. I honestly wonder if the exploit was from an altcoin they held.
Okhlahoma Bill - This bill gives Bitcoin holders a bunch of rights including self-custody that the federal government seems intent on taking away.
474 BTC - Is how much El Salvador has mined for itself using Volcano energy the last 3 years.
Senate vs SEC - Some Democrats are going pro-crypto in this bill designed to limit the SEC’s overreach. Biden is expected to veto, though.
Fiat delenda est.