Bitcoin Tech Talk #436
Interesting Stuff
Inside Story of DOGE - If you’ve been astonished at the speed with which Trump 2.0 has attacked the administrative state, this is the article for you. The article is about how the entire approach to government has changed this time around with “follow the money” replacing the old “personnel is policy” paradigm. Instead of putting friends in places and hoping they do the best for the country, they decided on a very different tactic of seeing where the money went and stopping the flow of it. They figured out that the swamp won’t be drained until the spigot of money flowing in was controlled and that seems to be the strategy behind it. The first weeks have been encouraging, but for everything to stick, there has to be a reform of the money itself.
Work Destroying Fertility - The article is in a series about the drawbacks of meritocracy, which isn’t contemplated much as it’s a part of the egalitarian ethos. Yet the author makes an excellent point, when everything is based on merit, the people that work hardest are rewarded, which generally means that there’s much less effort expended on getting married or having children. Indeed, the places where hard work is most valued, like South Korea or Singapore tend to have the lowest fertility. I suspect, though, that this is a secondary effect to the fact that the most profitable careers are jobs, and that family businesses in particular and entrepreneurial endeavors in general which are much more conducive to marriage and children, don’t get as much status. Alas, jobs are a fiat phenomenon, borne out of a deep need to scale.
The Coming Chinese Decline - Despite now being the biggest manufacturer of nearly everything in the world, all is not rosy in China. As the article points out, something like 70% of the savings in China is in real estate, whereas it’s only 29% in the US. Which would be fine if the population were growing and the real estate scarce, but it’s anything but. As the article points out, there are estimates that China has enough homes for 3 billion people, but only has a population of 1.4 billion and declining. There are so many empty apartments that will never be lived in given the demographic trends. This is sadly predictable in a country that very severely restricts where their citizens can put their savings, and should result in an epic real estate collapse, a la Japan.
Eternally Star Wars - Insightful article on the mentality that’s driven the leftist political strategy since WWII. That’s essentially the last time the US won a war that had any uncertainty at all and the cultural result was to look for the same enemy from that time. Star Wars captured the spirit of this by copying the Nazi aesthetic for the Empire. As such, all wars, on the ground and in politics are cast in WWII terms, and the good guys are the “rebels” while the enemy is Nazis. Thus, it’s never good to be like Chamberlain and concede anything and everything has to be fought until the enemy is obliterated. Such commitments are what have made politics so nasty, and why the vitriol was so effective, though becoming less so more recently.
Ordo Amoris - Latin for Order of Loves, which JD Vance recently brought to the forefront of the cultural conversation by asserting that charity to people closer to you is good and right. The opposite of this is something like Effective Altruism, values every life equally and every obligation to them equally, regardless of where they are or how they relate to you. Ordo Amoris is an old concept and a very practical one as equally treating people very far away from you as ones near is pretty much impossible. Again, this is one of the weird consequences of an egalitarian ethic that’s taken hold of the liberal ethos.
What I'm up to
Debt Debate - The debate I had with Mauricio at Plan B San Salvador is up. The argument that I made is that fiat debt is bad for civilization and personal debt is bad for the individual. Debt is bad for civilization because fiat debt is how the money supply expands and the holders of. the currency get no say in the loans that are made which dilute them. Mauricio argued that accelerating the collapse of fiat money was itself a good thing and that individuals should take advantage of the loans available to them.
Programming Blockchain - The last chance to take this class is coming on March 31-April 1 in Austin, TX! You, too, can learn the ins and outs of the Bitcoin protocol. Apply today for the early bird discount.
Palm Beach Atlantic University - I will be speaking at this university on March 27th. Details still to come, but it will be about Bitcoin to mostly young college students.
Nostr Note of the Week
What I’m Promoting
Bitcoin
Deterministic vs Hedged Signatures - The article is about the weakness of deterministic signatures, particularly the combine function, which extracts randomness deterministically with the private key and message. If there’s some way to compromise that function, the private key could be revealed. As a precaution, what the article suggests is that you add randomness on top of that, so something like a fault injection attack won’t work to reveal the private key in what’s called a “hedged” or hybrid randomness generation.
Bitcoin Forking Guide - This is a consensus manual written by AJ Towns about how he perceives soft forks, or consensus upgrades are likely to get through. The main idea is that soft forks really need to get some buy in from the people that matter, and given that we have a consensus system, the people that matter is a variety of different groups that he’s identified including: researchers, power users, industry, protocol developers and investors. As I’ve opined in the past, these people are not likely to agree on too much other than maintenance and emergency tasks. That said, this is a good starting point and the current crop of soft forks vying for consensus should consider this.
Introduction to UTXO Sharing - Spiral has an introductory blog post on UTXO sharing, the first of a multi-part series. The main idea is that Bitcoin scaling has a big limitation in block size, which limits both lightning and straight transaction throughput. But with some sort of UTXO sharing, we can make a merkle tree of 32 depth that covers 4 billion endpoints within Taproot, so this is an approach that at first glance looks promising. They’ll be exploring the specifics of how this can be done in future articles.
Lightning
Reinforcement Learning for Path Finding - A recent paper looks at ways to optimize path finding under dynamic conditions. Essentially, a deterministic path finding algorithm for the Lightning Network suffers from the fact that it doesn’t take current situations into account. For example a channel along a path may be nearly depleted by the 4th time the same kind of payment goes through in one direction. By using reinforcement learning, the paper claims that payments go through at 10% higher rates, a notable improvement.
Shared UTXO Lightning Swap - Lightning Labs has a blog post on how they’re using MuSig2 to improve their Lightning Loop product. The main thing that caught my eye was this idea in the conclusion: “The main obvious target for our improvement in the future is to collapse the funding of swaps so that instead of each individual requiring their own individual output per swap, we have individuals share their outputs across swaps and then we have sharing of the funding UTXOs across individuals.” Multiple users will be able to fund swaps in a single UTXO, which would be a huge scalability improvement.
DiceLN - This is a fair dice game with odds that you can choose. It’s not very different than SatoshiDice back in the day, except done over lightning, so it doesn’t spam the blockchain. Honestly, this seems much more transparent and fair than the current memecoin craze.
Economics, Engineering, Etc.
El Salvador and the IMF - There’s some confusion around the status of Bitcoin after the $1.4B loan from the IMF to the country. It’s a substantial amount of money for a country whose GDP is $34B. What they do have to do is to no longer make Bitcoin legal tender, though it doesn’t seem to stop them from accumulating BTC in their reserves. This means that the Chivo wallet is likely done, but the rest of the tradeoffs are largely unknown as the interest rate is unknown.
BTC Cap Gains in Czech Republic - The country no longer has capital gains on Bitcoin held over 3 years. This is one way to attract some of the richest people in the world, though there are many like Bermuda, Monaco, UAE and Singapore which have no capital gains taxes at all. Given that there are already some Bitcoin businesses there, starting a Bitcoin business with Bitcoin in the treasury seems like an obvious thing to try there.
Milei Memecoin - In the biggest self-own in his presidency, Javier Milei created a memecoin, made it sound like it was an investment in Argentina, ran the pump up to a $4.4B market cap before a 95% drawdown within hours as insiders pocketed $87M. As usually happens in altcoin crashes, there is plenty of stupidity and malice to go around and the opposition party in their parliament is threatening impeachment over this obvious money grab. As exciting as his presidency was for libertarians like me, this behavior is despicable, though sadly, par for many VCs, celebrities and even world leaders.
Quick Hits
7633 BTC - More BTC for Strategy.
UATX Bitcoin Fund - The new university has a $5M Bitcoin fund as part of its endowment.
Buying the Landfill - The guy that threw away a hard drive with ~8000 BTC in it is trying to buy the landfill that he thinks has the hard drive.
Obscura VPN - Carl Dong’s new service lets you surf privately through Mullvad while avoiding obvious VPN markers.
Fiat delenda est.