Preaching to the Nocoiners. Bitcoin Tech Talk #255

The hero’s journey for every Bitcoiner follows a certain arc. You learn about it, then go down the path of trying to figure out how to get it, maybe take some detours in trying to mine it or trade it. If you’re reading this newsletter, you’re probably near the end of the journey where you’ve become convinced of the value of Bitcoin and are now trying to convince your loved ones about its usefulness.

I’ve been in Bitcoin since 2011 and I’ve been talking to people about Bitcoin the entire time and what follows is just a little bit of social strategy that I’ve found regarding convincing people. As much as we like to think that we’re special and that we can get our loved ones to stack through our force of will, that’s generally not the case, though if it is the case for you, you should really look into a career in sales. We love our friends and family but orange-pilling is often not that simple and for many, a long and difficult road.

I still remember telling my parents and sister about Bitcoin in 2013 when Bitcoin was $80. I told them to buy some, even if they didn’t understand it, just in case. They didn’t listen. I also told my friends on Facebook to look at it. To my knowledge, none of them bought and several warned me that it was a scam. About the only person that listened was my mother-in-law, who, not having great command of English as an immigrant, didn’t exactly have the best deal flow.

My point here is that most people are resistant to Bitcoin when they first hear about it because they don’t understand it. The few people that do listen and buy are doing so because they trust you and your judgment. And though we’d like to think that we have massive credibility with our friends and family to get them to invest in what we think is best for them, most people simply don’t trust others with their financial decisions.

In other words, preaching doesn’t usually work and peoples’ natural defenses go up very quickly. This is because preaching is how a lot of hucksters work and they tend to emphasize doing things in a hurry. In a sense, preaching is a very high time preference method of convincing someone.

What works much better is to let people know that you are into Bitcoin and leave it at that. What I’ve found is that after a while, usually a period of 2-5 years, those that are curious will either buy on their own or come back to ask some questions. It’s well known in sales that you need to expose someone to an idea 7 times before they really investigate it. That’s the cognitive hurdle that we have to overcome and it can’t all come from the same source. Those exposures take time, and if there’s anything that helps you on convincing someone of Bitcoin, it’s time.

Bitcoin makes the news during bull runs and that’s typically when you’ll get a lot of questions from your friends and family. And really, this is the best thing for both Bitcoin and your relationship with that person. Leaving them alone to explore it themselves and only giving them guidance when asked is the best strategy.

Bitcoin’s number go up technology definitely helps here as the returns are undeniable and most people get a sense of regret at not being more curious when they first heard about it. This should increase your credibility with your loved one in the long run. The overwhelming evidence of its success, in other words, is the ultimate low-time-preference convincer.

Bitcoin

BIP174.org is a tool to parse and explore PSBTs. PSBTs are a bit tricky to debug and this is an excellent tool for users and wallet developers to figure out what’s wrong. The tool takes the base64-encoded PSBT and parses them into inputs, outputs and so on. As parsing base64 is very difficult (vs. hexadecimal), this tool helps in figuring out where the PSBT is doing something wrong. The really nice feature is that you can add or delete parts of the PSBT and the base64 PSBT automatically adjusts.

Yakshaver explains how AnyPrevOut (APO) enables Eltoo. Eltoo allows for multi-party lightning channels and removes some of the attack surface of current Lightning channels. The main thrust of the article is that we need some way to authorize not just a specific previous output, but any previous output that has the same public key. The tutorial is great for getting an idea on where the challenge with APO is. The on-chain discount and security simplicity that comes with Eltoo make this a compelling next soft fork.

Camouflage is a list of issues related to enhancing privacy in the various Bitcoin projects. For privacy advocates, this is the list to watch as it offers progress updates of various tools. I would love to see them incorporate bounties to some of these issues eventually.

Lightning

Michael Rhee gives a crash course on Lightning app development. The tutorial mimics his journey into developing for the Lightning ecosystem and makes heavy use of Polar and lnd. For developers wanting to play around with Lightning to see what it can do, this is a great way to experiment. Now if only repl.it would make something like this available…

Kollider writes about the benefits of the Lightning Network for traders. The article explains a lot of things traders care about, like perpetual futures, funding rates and arbitrage trades. The main argument is that most of these trades require fast execution, which are hampered by on-chain transactions, but can be made much faster and more securely with Lightning. As traders are big players in the Bitcoin ecosystem, don’t be surprised if their needs end up driving a lot of innovation in Lightning.

Substack is allowing receiving of Lightning payments for newsletters on their platform. As pointed out in the article, 2 of the top 5 money-making newsletters are about Bitcoin. Which makes me wonder, should I be creating a premium version of this newsletter? Please leave comments or reply to the email if you have an opinion.

Kriptode is an index of interesting lightning projects. I was floored by the sheer number of projects on there, many of which I hadn’t heard before. I’ve noticed a huge uptick in Lightning usage and for myself, I’m finding that I’m doing roughly 20x lightning transactions as I am on-chain transactions. I imagine this will only go up over time and that would man hyper-growth for such projects.

Economics, Engineering, Etc.

Alex Gladstein has a powerful interview with Roya Mahboob about her experience with Bitcoin and Afghanistan. This is a long read and shows just how powerful Bitcoin can be in places like Afghanistan which currently lack banking services. The article shows some of the pitfalls of Bitcoin, like the perception that it’s gambling or scammy, but also goes through some of the triumphs, like the Afghan women that were able to take their wealth with them when escaping abroad. I found it surprising that adjusted for purchasing power and internet penetration, Afghanistan is seventh in p2p exchange volume, suggesting that much like El Salvador, people without banking services are using Bitcoin. It will be interesting to watch Bitcoin’s development in this country as the years progress.

Robert Breedlove argues that Bitcoin is a way to limit war. The article focuses on what we really mean by property and how war is really a way to resolve property disputes. Property with clear edges make for less disputes and property that’s hard to seize also make for less disputes. As Breedlove points out, Bitcoin is property that’s very hard to seize or take, even with massive violence. I have some more thoughts on this that will be on Robert’s podcast soon.

The IMF has printed a bunch more money called Special Drawing Rights. SDRs are IMF’s fiat money that are only used by central banks. Not many people know about these, but they play a significant role in the world economy. As with all central bank monetary expansion, this sort of action is, at best, a redistribution, and at worst, straight theft.

Speaking of inflation, this essay looks at the link between Monetary Inflation and Verbal Inflation. The author compares academic credibility with monetary credibility and concludes that just as monetary credibility is lost through hyperinflation, a similar thing is happening with academic credibility. The result is that most people are largely discounting whatever the official narrative is on anything and thus much more skeptical in general. I suspect verbal inflation, much like monetary inflation, will be a big underlying driver of Bitcoin adoption in the years ahead.

Jack Dorsey wants to build a decentralized exchange. The idea seems to be to make each individual able to run a mini-exchange. This is the right idea of decentralization where each user is running their own server. I can imagine an Umbrel/Start9/MynodeBTC having the option to host an exchange where you trade BTC for Liquid Tether or something similar. That’s probably not what they’re thinking, as the details haven’t been revealed yet, but I would like to see something like that develop.

Quick Hits

Sweden made the mistake of denominating dollar amounts, not Bitcoin amounts.

Cuba recognizes Bitcoin.

Blockstream raised $210M at a 3.2B valuation.

Another week, another poorly engineered coin forks unexpectedly.

Events

There’s an online Christian conference that I have recorded a video for called Faith Driven Investor Conference that’s on September 8-9. I will be in Miami for the Oslo Freedom Forum October 3-6 and in Atlanta for TabConf on November 4-5. Unfortunately, I had to cancel the event in the UK as there’s a 10 day quarantine required.

The Programming Blockchain seminar is in Atlanta, GA on November 2-3. This is a 2-day seminar for programmers to learn about Bitcoin. You can apply here. I also have a few scholarships available for those that can’t afford it.

Podcasts, Etc.

On this week’s Bitcoin Fixes This, I took some listener questions. This ranged from my thoughts on war to Christian books I like.

I read through last week’s newsletter which you can find here.

I talked about the new book with Ashton Cohen:

My other books are here.

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.

Fiat delenda est.