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Taleb, Peterson and Weinstein's engagement with Bitcoin. Bitcoin Tech Talk #231
Allen Farrington’s masterful piece on Weinstein and Gauge Theory has been creating some waves in the Bitcoin space, a culmination of what started on clubhouse a couple of weeks ago. To recap, Eric Weinstein found his way into a room labeled “Taleb vs Peterson” populated by Bitcoiners. The room was about their respective views on Bitcoin and their engagement with the community within the context of their celebrity and contrasted each of them, but Weinstein inadvertently put himself under the same microscope as the people being discussed in that room.
Taleb, of course, has more or less disavowed Bitcoin due to his COVID fervor and his very public disagreement on that issue with Saifedean Ammous. He was a Bitcoin supporter before this year, so his subsequent disavowal based on his feud on a completely different issue with Ammous has made him look incredibly petty. He has continued to double down on trashing Bitcoin and frankly looks increasingly ego-driven and has soured many Bitcoiners to him. In other words, his unbelievable arrogance and mental gymnastics is evidence to Bitcoiners that he’s an intellectual fraud.
Peterson, on the other hand, has engaged humbly, not making proclamations one way or the other, but coming in to learn from many Bitcoiners who are also his fans. He’s not only been complementary of the articles written that make connections between his writings and Bitcoin but also has been open to Bitcoiners helping him understand what the significance of Bitcoin is in the world today. In other words, his humility is evidence to Bitcoiners that he’s sincere and not a fraud.
This is par for the course in Bitcoin. There are lots of people that have encountered Bitcoiners online over the last 10 years, some coming in arrogantly, others humbly. Generally, the arrogant ones act like something is wrong with Bitcoin and that only by listening to them, could Bitcoin be fixed. The humble ones take time to learn the system, sometimes taking significant amounts of time to learn the technology, the economics and more before saying something.
With Weinstein, it’s not clear which category he falls into. On the one hand, his manner of speech is filled with terms that few understand. Much of it seems purposely confusing and attempts to get him to explain what he means by esoteric terms like “Gauge Theory” on clubhouse were, in my estimation, deeply lacking and not easily understandable at best. The impression he gave was that he thought Bitcoin was deficient in some way and couldn’t explain in normal terms what that deficiency was. This is reminiscent of many scammers that have come through Bitcoin, many of which spout complex terms that don’t mean much as a way to fool the gullible. In other words, he sounds perilously close to being an intellectual fraud.
On the other hand, he professes to want to learn from the community and has put himself in a position of engagement with the community that seem intellectually sincere. This dichotomy is all the more amusing given that he walked into the room talking exactly about these two attitudes of somewhat famous people on Bitcoin. He’s managed to find some third way of being both arrogant and humble.
As a result, we’ve seen community immunity responses to Eric (read: rude, sometimes really mean) from the Bitcoin ecosystem, which has turned him off to a degree. On the other hand, we’ve also seen a significant amount of engagement, where a lot of people are willing to help him understand Bitcoin. Where will he end up? There’s a decent chance that he’s an intellectual fraud like Taleb. There’s also a decent chance that he’ll begin to learn Bitcoin humbly like Peterson. I suppose there’s also the possibility that he’ll be somewhere in between.
Regardless, what this episode reveals is a certain irreverence from the Bitcoin community. Much like Bitcoin itself, the Bitcoin community does not care how famous you are or what you think it needs to prove or why it needs to change. The Bitcoin community engages on its own terms. There have been many who have gotten destroyed. The Bitcoin community is a meritocracy and new ideas are judged on merit, not on the fame of its champion. I sincerely hope Mr. Weinstein can show proof of work.
Jameson Lopp has published a well-researched post on TX spam in Bitcoin. The post is well worth reading just for the catalog of spam attacks that have been executed in Bitcoin over the years. Jameson asserts that these weren’t done for some privacy-compromising reasons, but for other reasons such as flooding the mempool. In the end his conclusion is that fees seem to be working well to reduce spam as it costs a lot of money to execute them. Much of the historical spam cost over 5 BTC, which would be over $300k as of this writing.
Ryan Gentry and Buck Perley have a post on the theory of governance in Bitcoin. The article recalls some of the Miner/Dev/Nodes triangle theory of governance from 2017 and make some interesting observations about who has what power. Ultimately, the authors believe that LOT=false is what will help going forward. My view is that this is a bastardization of the concept of governance as the nodes are the network and they can choose what they want to do. I don’t have much opinion on LOT yet.
Hector Rosekans has an analysis of security risks of custody. He goes through the various ways in which custody at an exchange can fail, some of which are preventable by the user, others which are not. A good read-through of the tradeoffs and failure modes of various solutions. If you’re reading this newsletter, you probably already have self-custody, hopefully in multisig.
Hodlhodl has an interesting product which allows L-BTC loan. The idea is to use L-BTC as a loan to transact quicker on the Liquid network instead of on-chain BTC. This makes sense as loaned funds are likely to be transferred quickly to something else.
Regarding last week’s paper about RSA, here’s a rebuttal. Apparently there’s a n! term that was missing which would render the solution exponential, meaning that RSA isn’t broken.
OKCoin is now sponsoring Antoine Riard. Congrats Antoine!
Ryan Gentry has his always informative update on lightning and how to bring it to the next billion people. Among other tidbits I had missed, Paxful is integrating Lightning and there’s a community in El Salvador that was using lightning for day-to-day transactions. The conclusion is what you’d expect. Lightning is the solution to the high fee on-chain transactions that are currently on the network.
Moon is a way to buy visa gift cards with lightning. The cards are virtual, meaning that they’re used for a limited time and then thrown out. As credit card numbers are frequently stolen, this can be a nice arrow in the quiver of personal privacy practices. The fact that they take lightning means that there’s probably a startup working on integrating it in a browser extension so everything that takes credit cards can be paid for instantly via lightning in a smooth and quick way.
Economics, Engineering, Etc.
Robert Breedlove has the second of his sovereignism series. This article focuses on Bitcoin’s role as an offshore bank account. There are some interesting historical tidbits here, including the fact that being on the high seas was a way to get away from authorities and a way to establish self-sovereignty. Bitcoin is very much like an offshore bank account, but available to everyone and less susceptible to seizure. He concludes that Bitcoin is a huge win for self-sovereignty.
Lyn Alden has an economic analysis of fee-based security in Bitcoin. The article has some great statistics, such as the cost per transaction if including block rewards (in 2020 this was about $40). As she states, currently, holders pay for the majority of the security of the network through inflation. As we transition to fees, it will be the senders of the transactions who will be paying for the security. A well-thought-out article and worth reading in full.
Dhruv Bansal has another post on Bitcoin astronomy. The first two were pretty out there where he speculated about what human settlements will do within our solar system. This one is about alien civilizations and speculations about what we might find. He theorizes we may see some alien blockchain and speculates on what would happen. Worth reading if you’re a sci-fi writer.
William Clemente III has an analysis of the cash-and-carry futures trade. The trade is buying Bitcoin now and selling a future for a profit and then carrying the Bitcoin to maturity to settle the future, which currently yields somewhere around 14% APR. He points out that the over-collateralization requirements for Bitcoin mean that there’s going to be a lot of Bitcoin locked up as a result of this trade, further decreasing the supply. This may mean that we’re about to see even more drastic movements upward in price.
Andy Edstrom has some thoughts on the leverage being applied to the Bitcoin market. Essentially a liquidation event in the DeFi space could have repercussions in Bitcoin which may slow its fantastic bull run.
Aaron Batalion argues that Bitcoin is fantastic for the environment. As he points out, commercial Bitcoin mining is only 5 years old and in its infancy. As it grows, he predicts that mining will have a huge impact on the energy industry in terms of subsidization.
Ethereum is having a miner revolt. This is not a surprise since they’d be completely shut out in a proof-of-stake system which Ethereum has been trying to transition to for a while now. The current revolt is about EIP-1559 which will burn most user fees instead of giving them to miners. This apparently has been met with a proposal by Vitalik to transition to proof-of-stake faster. Ethereum continues to show that it’s essentially controlled by one person.
Another week, another corporation using Bitcoin for treasuries.
Another week, another DeFi smart contract hack.
This week, on Bitcoin Fixes This, I talked to Shawn Baker about nutrition. Find out about the carnivore diet, the defenses plants use and its parallels to Bitcoin.
Fiat delenda est.