Trace Mayer and the perils of being a non-technical OG. Bitcoin Tech Talk Issue #177
“It takes 20 years to build a reputation and 5 minutes to ruin it” - Warren Buffett
And another one bites the dust. Trace Mayer ruined his reputation this past week by shilling MimbleWimbleCoin at the Unconfiscatable conference. This came as a surprise to many, as he’s been known as a Bitcoin maximalist and has been recommending Bitcoin since 2010. What’s really surprising is that he shilled the coin in perhaps the least altcoin-friendly environment possible.
To give you some background, MimbleWimbleCoin is a clone of Grin, which is a MW coin that launched in January of 2019 (Beam launched a little before). The main difference is that there was a 50% premine, a lot of which was airdropped to registered holders of BTC. Leaving aside the irony of creating a privacy token that forces users to give up their privacy to claim it, it seems that there weren’t that many BTC holders interested in the coin, and the vast majority of the airdrop ended up in the hands of those that registered. Trace Mayer is a BTC whale (he’s been accumulating since BTC was $0.25) so it’s safe to assume that he got airdropped a tremendous amount of MWC.
And this is where it gets worse as he started to talk about the coin in every interview after the airdrop. This culminated in his shilling the coin during Unconfiscatable.
To be clear, Trace Mayer can do whatever he wants. What I want to point out is that his endorsement of MWC is largely financially motivated. This has been the downfall of many Bitcoin OGs like Roger Ver, Vinny Lingham, Jeff Berwick, Rick Falkvinge and Chris DeRose as so many have gone on to burn their reputations on altcoins or ICOs.
The fact of the matter is that MWC is a technical mess. They’ve had some serious issues with their wallet client. I’ve archived what HotBit exchange was complaining about here. The technology behind MimbleWimble is more difficult to understand than Bitcoin and the software more complex as a result, so it’s no surprise that their wallet was having problems recognizing 51% attacks that were going on in the network. HotBit was then bribed by MWC with some of the leftover premine coins which caused them to take down the article.
In a way, this is a sad commentary on non-technical Bitcoin OGs as nearly all of them have gone on to other projects. Not understanding Bitcoin at a technical level, or even not being able to distinguish good vs bad developers causes many of these OGs to go astray. The siren songs of “something better” and “more profit” seem to lure all of them given enough time.
Pieter Wuille has posted a bunch of updates to BIP-340, which he explains in this bitcoin-dev post. The main updates are that the 32-byte public keys for Schnorr are updated to implicitly use the even public key instead of the square public key and the prevention of potential attacks around nonce generation. Using the even public key instead of the square public key is more backwards compatible as evenness and oddness are easier to compute for existing BIP32/HD libraries. The nonce generation specification updates prevent some potential attack vectors.
Suhas Daftuar has a proposal to transmit witness transaction ids instead of legacy transaction ids in network transmissions. This is to add efficiencies in how many times a node may be downloading the same transaction as it’s possible to create transactions that have the same txid but a different witness.
Stepan Snigirev has come out with a nonce blinding scheme to prevent compromised hard wallets from leaking the private key. The scheme involves using entropy from the host and forcing the hard wallet to commit to the nonce before any signing happens. This unfortunately requires more rounds of communication, which is not ideal for hardware wallets.
Casa has come out with an inheritance solution for estate planning. The solution involves a sixth key in their 3-of-5 setup which is given to an estate lawyer. One of the keys is kept by Casa and a third is recommended to be in a safety deposit box. The three keys make it possible to recover the funds after your death. It’s an interesting solution, though the fact that those three keys are not entirely under my control and subject to government pressure makes me very nervous. That said, I don’t know the details of the sixth key and how that works, so until that’s clear, I’ll withhold judgment.
Hector Rosekins has also published an article for Casa on setting up a watch-only wallet using electrum. The separation of private keys from the public observance of the blockchain is a good thing and a setup like this is what I would recommend.
Zebedee has released a software development kit for games that integrates Lighting. This is an interesting use-case for games as micropayments are very popular in a lot of games, especially mobile ones. The current types of micropayments require batching all of the payments into big enough purchases to make credit card payments worthwhile, so integrating lightning should make new types of payment integration into games possible that don’t take you out of the flow of the game.
Economics, Engineering, Etc.
Coinmonks has published an excellent article on a game-theory basis for why the stock-to-flow model does not correlate with the efficient market hypothesis. They describe two types of players, holders and opportunists and describe their incentives and how they affect Bitcoin price. According to the article, the Nash equilibrium in this game reflects the bubble periods of Bitcoin’s history. A major reason why the “halving is not priced in” seems to be that the holders have already devoted a large portion of their resources into Bitcoin and that opportunists haven’t come in yet. This article is definitely worth reading if you’re interested in the economic basis for Bitcoin’s valuation.
Coinmetrics has a really thorough article on what happened to BCH that was mistakenly sent to Segwit addresses. On BCH, Segwit outputs are spendable by anyone, though in practice, only miners can include them in blocks. There were ~20,000 BCH that were sent to Segwit addresses mistakenly over the past few years, meaning that any miner could spend them. From a user that managed to gather all of them and ran a recovery service to miners doing the same thing later to “unknown” miners that kept the money, it’s an interesting read on the game theory of lost coins. The main conclusion is that named miners generally act fairly (giving coins back to the people that lost it) and that unknown, anonymous miners generally act very selfishly. This may explain why so much of the mining hash power in BCH was “Unknown” (50%+ at times).
Ethereum is undergoing a proof-of-work change in July as specified in EIP1057. This new algorithm is called ProgPoW. The reason for the change is to make Ethereum more ASIC-resistant. In other words, it’s decentralization theater to ward off the boogeyman of miner centralization at the cost of less security for the network. The proposal doesn’t go all the way to proof-of-stake, which they’ve been promising for 5 years now, while bricking all the mining equipment that people already own. Unsurprisingly, many people are angry and this may lead to a chain split, a la Ethereum Classic. I spoke about this on a show with Tone Vays this week.
Podcasts, Speaking, etc.
Speaking of chain splits, I spoke about the upcoming BCH split on my show this past week. I also read through BIP325, or signet specification.
I will be at Bitcoin2020 where I will have some books available. I will also be giving my seminar right before on March 25-26.
Fiat delenda est.
Unfortunate with Trace. This doesn't detract from his ideas for BTC, ie: "7 network effects" and the Mayer Multiple. Perhaps we can give Trace a chance to air his side of the story and come back to the fold.
Trace publicly stated that he did not receive the air drop. (obviously we don't know if that's the truth) But if you listen to Trace, he says that MWC open for trading with a market cap of $1-2 million and he saw that low market cap as an acquisition opportunity. Trace thinks that bitcoin might have some frangibility and privacy problems in the future and wants to investigate technologies that could be used to support bitcoin.