Bitcoin Tech Talk #449
Interesting Stuff
Democracy vs Technocracy - Readers of this newsletter will be very familiar with my rants against rent-seeking, bureaucracy and central planning so the fact that I link this article will not be a surprise. Much of what it says will be familiar, but the way it’s broken down particularly with respect to the beliefs of the technocrat provides a significant amount of clarity. In particular, technocratic scientism, hedonistic materialism and utopian progressivism lead to a compulsion to control, which result in a reduction of everyone else into homo economicus. This creates a managed democracy, which is really a technocratic autocracy with propaganda as the main tool for manipulation. I only wish the author would connect the growth of managerialism with the infinite money spigot.
Peak AI - This article is an intriguing result from AI research, which is that AI has a tendency to degrade over time as it feeds on its own information. This is in contrast to previous Kurzweil-like claims that feeding on its own information would bring AI closer to general AI and eventually singularity and makes a weird sort of sense. There’s no actual creativity and feeding on its own information essentially becomes a compounding of previous errors, not unlike a copy of a copy of a copy. Much like fiat money, at some point the copy stops bearing any resemblance to the original, and loses utility. We may very well be in the age of golden AI, when it was able to feed off of actual human input.
Gates Foundation Shutting Down - In 20 years, that is. The original plan was to spend about $6B a year and keep it going forever, but now the foundation is set to spend $9B a year and shut down in 20 years when it’s out of money. The article itself is generally very favorable towards the multi-billionaire and his foundation, but still spells out why they’re making this change. Namely, that the quicker spend of its $200B endowment is meant to make up for the shortfall in USAID funding to NGOs. Charitable foundations like this are allowed to invest their endowments in the stock market and benefit particularly from Buffet’s and Gates’s Cantillon status. Hence, even when fiat money is choked off from one source, there’s another fiat source that steps in.
Breeding of the Tomato - Whenever people ask me why I don’t eat fruits or vegetables, I inevitably end up talking about the history of fruits and vegetables and how they’ve been selectively bred by farmers and that they’re not what grew in the wild. This article is an excellent example of just how much something that you’re familiar with has been manipulated. In a mere 80,000 years, it has gone from a tiny fruit the size of a blueberry to the giant fist-sized thing you find in the grocery store. What’s horrifying is just how much this manipulation has accelerated in the last 20 years, particularly with gene editing. The article casts this as a good thing, but color me a bit skeptical given how bad the mainstream has been on nutrition.
Not a Housing Shortage - The article is about YIMBYism (Yes in my back yard) which is the idea of building more housing to make housing more affordable. As the article points out, it’s really not that simple and there’s a lot more going on than meets the eye. Namely, what people shop for when they’re looking for housing is a particular community. A safe neighborhood, good schools, convenient shopping and even potential mates are what people really want, not affordable housing. There are, for example, $1 homes in Detroit, if it was about just a home to live in. What everyone wants are homes in desirable places, which ironically no longer become desirable when the housing prices drop and become “affordable.” In other words, what people want are to belong to high status communities for a cheap price, which, given that status is zero-sum, is impossible to give to everyone, or even a majority of people.
What I'm up to
OP_RETURN Investigations - I did a couple of in depth investigations into non-standard OP_RETURNs as a way to inform myself on the topic. Some facts that I discovered were that there have been 7M+ OP_RETURN outputs in the first 4 months of the year, of which only 30 were bigger than the 80 bytes of free text. They generally paid 2-3x median fees and were mined only by two pools, whose hash rate is about 18% of the network, meaning they had to wait about 5-6x longer to get confirmations. The raw data is in the posts themselves.
ABC - The Austin Bitcoin Club is presenting Adam Back, Tuur Demeester and Parker Lewis at this meetup tomorrow and I’ll be in attendance! If you’re around, please come and say hi and we can talk about the OP_RETURN drama among other things.
TGFB BBQ - I’ll be at the Thank God for Bitcoin BBQ on May 27th and will have a talk prepared. I’ve bought the plane tickets and will *not* be around for anything else in Vegas. Come hang out with Christians before the activities the rest of the week!
Nostr Note of the Week
What I’m Promoting
Bitcoin
HashPool - With all the talk around decentralizing mining these days, it’s good to see more projects like this come online. HashPool is a cashu mint that pays out with no minimum withdrawal limits. This would be really nice in combination with Stratum V2 or DATUM and if the e-cash mint supported millisats, it’s possible you could get paid on every share, even from a small mining machine like a BitAxe.
OP_RETURN Again - The Core Dev who opened the original pull request to drop the OP_RETURN limit writes a long Delving Bitcoin post to explain why he made the pull request. It’s pretty thorough and explains the reasoning behind it, which from his point of view was misrepresented. The main reason is that he believes there are fake pubkeys that will store the data instead if the OP_RETURN limit isn’t raised, though he doesn’t reveal who is doing that or how much of it they will be doing.
UTXO Bloat Report - This is a report written by the research folks at mempool.space, examining just how many UTXOs are used for something other than transferring Bitcoin. Their findings are pretty troubling, to say the least. About half of all UTXOs have under 1000 sats, most of which use Taproot for transferring inscriptions, BRC-20 tokens and the like. These are very close to unspendable even in 1 sat/vbyte environments and are unlikely to get consolidated as they hold non-Bitcoin assets. There’s a lot more in the report including discussion of bare multisig which was used by a protocol called CounterParty about 10 years ago to store arbitrary data. 100,000 UTXOs are still around from then, which is suggestive of how the newer Taproot-based UTXOs are likely to stick around for a long time.
Lightning
Steak n Shake - The fast food chain that recently moved their french fry oil to tallow is now accepting Lightning payments at their 393 US locations. This is the first major retailer to accept Lightning payments that I’m aware of and a lot of Bitcoiners are going and testing it out. We’ll see if this lasts, as enthusiasm tends to be pretty high early on, but tapers off traditionally. Who knows, though? Perhaps there are enough Bitcoin-only plebs around that the demand will continue to be pretty high.
publsp - You can now advertise liquidity offers via Nostr using this handy tool. The main idea of this project is to have a common place to advertise liquidity offers instead of custom APIs which most LSPs offer. Checking each one to shop for one is not easy, and a common marketplace for liquidity would be very welcome. Nostr is the obvious place to do this, and it’s a creative way to gather these up.
Ark vs LSP Liquidity - Speaking of liquidity, Ark is planning to be compatible with Lightning, which means that it has liquidity requirements for sends outside the Ark system. But because there are many more people in a single Ark UTXO than a Lightning one, this results in some efficiencies, particularly with respect to liquidity. The full details and different simulations are in this post, but there seems to be a lot of promise for giving users better experiences once Ark gets going.
Economics, Engineering, Etc.
Nakamoto Holdings - This is a new Bitcoin Treasury holding company, which looks like it’s designed to give better access to Bitcoin to different asset classes, much in the same way that MSTR has. They’ve already raised $700M for the effort, which is no small chump change. There seems to be one of these companies that spring up every month or so as the Bitcoinization of the financial markets continues. Amusingly, they are using the nakamoto.com domain, which 5 years ago was a crypto news/commentary site that stopped publishing after its first week.
46,351 BTC - That’s how much Ukraine, currently at war with Russia, holds. Traditionally, when one country conquers another, the spoils all go to the winner. This may be one case where the valuable asset gets transferred out should it even get close to happening. It would be really interesting to see what would happen to the money should something like that happen, perhaps funding a government-in-exile or something similar. I think we could see Bitcoin make the spoils of war just a little less lucrative.
Specter Enclave - This is an interesting new Bitcoin wallet that’s using the Mac’s built-in Secure Enclave to hold the private key. Among other things, this means you can consent to sign a transaction using the fingerprint scanner. This is not the first time wallets have used the secure elements built into phones or computers, as many claim that these are harder environments to hack than the secure element of a hardware wallet. Yet I’ve never felt that comfortable with these because they’re connected to the internet and thus have a much larger attack surface. Still, this one is distinguished by the fact that it’s only usable as a co-signer in a multisig, not as a single-sig.
Quick Hits
13390 BTC - MSTR buys another $1.3B worth.
Lead → Gold - They did it at CERN using the Large Hadron Collider. Now if they could only optimize the process…
Knots v Core - A third party examines the Knots code and compares it to Core.
Coinbase joins S&P500 - COIN has made it to the top 500 company index, whose $53B market cap ranks roughly 350-400. MSTR, which is double the market cap and in the top 100, is still not in.
Fiat delenda est.