Month: October 2024

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This weekend I finally got around to watching Money Electric, the HBO documentary that “reveals” Bitcoin Core contributor Peter Todd as the true identity behind Satoshi Nakamoto. It’s three weeks old by now and already forgotten by the 24-hour social media cycle, but as someone who wrote a book on the origin story of Bitcoin I still felt I had to hear them out— perhaps just to comment on it in a Take. (As I am indeed doing now.)

Even watching it for that purpose was a waste of my time. Sure, I could tell you that the evidence for Todd being Satoshi is very thin and circumstantial at best, but Rizzo has already done a sufficient job at that. I could also tell you that Satoshi’s real identity is irrelevant to begin with, since Bitcoin is a free and open source protocol that stands on its own, but that’s obvious too. Or I could emphasize once again that even if Satoshi really owns the roughly million bitcoin that are commonly attributed to him (itself a contested claim), he mined these coins fairly by investing computing power in mining, just like anyone else could have done.

But I didn’t have to watch the documentary to tell you that. The film just doesn’t bring anything new to the table. Indeed, the biggest insult to Money Electric is that Vivek accurately predicted its contents about a week before it even aired: “someone claims they know […] Satoshi, theories start swirling, but no convincing evidence ever materializes. Inevitably it ends with embarrassment for the accuser.”

Or, as Todd put it in the documentary himself: “The point is to make bitcoin the global currency,” but the people behind Money Electric (who, to their credit, left this part in), “are being distracted by nonsense”.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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I joined over millions of live viewers online in watching the Donald Trump rally at Madison Square Garden last night, and as someone who attended the Republican National Convention over the summer, I was blown away by how massive this event was. There were over 20k people inside the venue and tens of thousands more outside it. A week before the election, it feels like the entire country is behind him.

For the last couple of months, I had been pretty pessimistic about Trump winning the election due to my concerns about the Democrats’ plans to cheat the election. But as an American who is trying to keep his expectations leveled, it really does feel like there has been a huge shift to the Republicans advantage in this election. It feels like at least 80% of the country is now behind Trump, and I’m seeing a never ending stream of liberals and Democrats jumping ship from the Kamala Harris bandwagon.

I’m keeping a very close eye on early voter registration data coming in and most of what I’m seeing are people voting for the Republicans. Even in swing states like Pennsylvania, voters are turning out hard for Trump.

The sentiment is becoming more and more pro-Trump, and you can tell by the numbers too. Harris’ big interview on the Call Her Daddy podcast came out three weeks ago, and has only managed to get over 700k views on YouTube. In contrast, Trump’s interview on Joe Rogan was released only 3 days ago and has almost 34 million views. Trump’s overall viewership online, the bigger and more authentic rallies, and optimistic support from everyday people is indicative of having far more support than his opponent. Even potentially in some blue states like New York, where the rally was last night. I don’t think Kamala could get that much support and attendees in a deep blue state if she tried.

We’re only a week out from the election now, and if things keep going the way they’re going, pro-Bitcoin Donald Trump is going to win the election. If his promises are kept, then Ross Ulbricht will be a free man. Bitcoin will have a very regulatory friendly environment to have growth and innovation thrive in. The United States will establish a strategic Bitcoin Reserve. Gary Gensler will be fired. And the price of BTC will probably skyrocket into the six figures.

But none of this will become reality unless people turn out en masse to vote for Trump. Like Elon Musk said last night, we need to make the margins of victory so big that the election cannot be stolen by the Democrat’s cheating. Bitcoiners need to get out and vote, especially if you live in a swing or blue state!

It’s going to be a wild Tuesday next week, so Bitcoin Magazine is teaming up with Stand With Crypto to provide real time election coverage on November 5th. If you’re a Bitcoiner who wants to witness this election from the viewpoint of other Bitcoiners, make sure to tune into the stream. More details on the livestream and where to watch here.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Ark is the third major Layer 2 protocol with some form of unilateral exit or enforcement mechanism on the base layer to approach the point of launching on Bitcoin. Lightning came first when C-Lightning went live in the Reckless campaign in 2018, Statechains in 2021 when Mercury Wallet went live, and now Ark Lab’s coming Arkade wallet implementation of clArk (covenantless Ark) is approaching the same goal line.

clArk has some shortcomings compared to a full Ark implementation, namely the requirement in a trustless version for every user inside of an individual Ark to collaboratively sign the exit transactions in a massive n-of-n multisig when it is created. If we had CTV or another equivalent covenant, users would not need to participate in an interactive signing process, and the Ark Service Provider (ASP) could simply create the Ark using a covenant and users could be sure they have total control of their funds after it is confirmed.

Ark presents an interesting trade off in comparison with the Lightning Network, both require participants to have excess liquidity in order to receive payments. In the case of Lightning however, it is a complicated game of individual users having to figure out where to allocate their own liquidity and how to source liquidity from others in order to functionally send and receive. It is an individual problem that each user is left alone to solve. With Ark, any ASP can freely assign some of its liquidity to any of its users. They still need to solve the problem of sourcing it, but there is no longer the per-user problem of deciding whether it is worth it to allocate liquidity in that direction, it can simply be done in the moment as any individual user needs it out of a common liquidity pot.

There is still a problem with Ark’s liquidity issue though. For every payment floating on an Ark that hasn’t been closed yet, the ASP must front liquidity for those payments to allow users to receive them into a new Ark. When the ASP gets to a point where it is running out of liquidity, its fees must necessarily start skyrocketing in order to manage that issue until they are able to reclaim locked up liquidity by closing Arks.

I think a way to address this tail curve of higher fees could be to explore some lessons from Lightning, namely a routable topology. This would be incredibly simple compared to Lightning. Lightning requires mapping and routing through liquidity paths established between pairs of individual users, whereas with Ark it is simply ASP to ASP.

An ASP experiencing a liquidity crunch could “punt” payments from their own Arks to another ASP with more liquidity available, establishing the ATLC linkage between their own Ark the payment is originating from to another ASP’s Ark to be received, saving users fees. In turn as they are able to claw back liquidity as they close existing Arks and their own fees come down, other ASPs then experiencing a liquidity crunch could “return the favor” by punting payments back in their direction.

This could establish a sort of round robin and easily analyzable “I scratch your back, you scratch mine” dynamic between ASPs, that while leaving some revenue on the table during high fee liquidity crunches, would overall create a more predictable and affordable experience for their users.

This does come with the risk that payments across ASPs like this essentially interlink Arks across different ASPs, meaning non-cooperative closes would necessitate the closure of Arks operated by multiple entities, but given that cooperative closes depend on user behavior I don’t think this fundamentally changes the risk profile absent ASPs intentionally griefing each other. This could be viewed as analogous to the channel jamming problem of Lightning though.

There are some upsides, and potential downsides, but I think this is a concept that is worth exploring in terms of ameliorating Ark’s liquidity crunch issue. 

#Bitcoin ‘er pic.twitter.com/hGsYHMBqot

— ⚡₿itcoinTeddy⚡ (@Bitcoin_Teddy) October 7, 2024

We can’t transcend politics ‘because we have bitcoin now, bro’. Sometimes I see this kind of t-shirt or sentiment being shared online, but it’s simply misguided.

Just to prove I’m not strawmanning, here’s another similar example:

My condolences to anyone who pays attention to politicians 😅

Trust math, not politicians.

— FractalEncrypt ∞/21M (@FractalEncrypt) October 16, 2024

If you just mean “I’m not interested in politics” or you don’t like one particular party’s politics, that’s one thing, but it’s still not sufficient to secure your own liberty. As the saying goes, you may not be interested in politics, but politics is interested in you.

Zooming out a little bit here

Even if we abstract away from the upcoming US presidential election, politics more broadly is about making decisions in groups, and a reflection of power relations among individuals. We are determining who gets to control which scarce and rivalrous resources, ideally in a way that enables people to live together while reducing conflict. In a sense, Bitcoin does help reduce conflict over ownership of money, using cryptography.

But remember reality here

Now yes, we can talk about liberty, anarcho-capitalism and crypto-anarchy at a philosophical level. But the state exists today. So given this reality, if you want to secure your own political rights, it still matters to engage in some way. That could mean campaigning and contributing to bitcoin, economics and liberty focused education, it could be writing a submission to voice your opinion or lobby for a pro-bitcoin policy, it could mean being a part of a particular party, it could even mean contributing to secessionist movements and causes.

But entirely ceding the political turf to your enemies is a bad decision. In some cases, it is that the politicians are genuinely uninformed on Bitcoin, and they ‘follow it’ by seeing news headlines. In these genuinely uninformed cases, having educated Bitcoiners speaking to them, and helping them not make major mistakes will be helpful. It can reduce the risk of bad regulations or laws on bitcoin self custody, transfer, mining, node running etc. This can reduce the risk of bitcoiners being criminalised, reduce regime uncertainty, lower tax burdens or otherwise.

In other cases, there are politicians with an axe to grind about Bitcoin or Crypto, such as Elizabeth Warren with her “Anti Crypto Army”. In these cases, perhaps a more combative approach has to be taken where the community supports a pro-Bitcoin candidate instead of the anti-Bitcoin politician.

But what about cypherpunks writing code and existing in crypto-anarchy?

The late Hal Finney, Bitcoin legend and cryptography pioneer, was also libertarian and even he posted the following to a mailing list discussion (shout out to Aaron van Wirdum for surfacing this in The Genesis Book):

“I am not in cyberspace now; I am in California. I am governed by the laws of California and the United States even though I am communicating with another person, whether by postal mail or electronic mail, by telephone or TCP/IP connection. What does it mean to speak of a government in cyberspace? It is the government in physical space I fear. Its agents carry physical guns which shoot real bullets. Until I am able to live in my computer and eat electrons, I don’t see the relevance of cyberspace.”

It’s not that he was philosophically opposed to liberty or crypto-anarchy, it’s that he saw the real world limitations for what they were and are.

But wouldn’t it be nice if everyone got along? Kumbaya?

Yes there is the idealistic sense in which “Wouldn’t it be nice” or “what if we all just respected each other’s rights and ignored the state” – but the reality is that “people won’t all just”. They see a system that enables them to steal from other people or to control other people, and they will take advantage of it. This can manifest in very simple ways where politicians promise “free things” or to protect you from the boogeyman in exchange for power. Given that many voters in democracies are not net-payers into the system, of course they will not think about the long term. They will not think about the risk taken, or the effort to accumulate capital and build a business. For these selfish voters, they will just take whatever they can get here and now, and not think about the future.

Doesn’t Bitcoin Fix This?

Won’t Bitcoin fix some of these things though? Yes, it is true that the state uses cheap fiat credit and control over the money to expand itself. Yes it is true that the state undermines competing forms of private governance, such as the family, the community, even religion and private charity – in order to install itself as the more powerful government mechanism on which people depend.

As part of this process, more things are politicized, and this has taken place in most of our own lifetimes. There used to be unwritten rules about not talking politics while on a date, or in a polite social setting. That sense of decorum is now gone, and nowadays we all endure lectures about the latest ‘Current Thing’ even at non-political events.

Even in the hyperbitcoinized world, there will still be family politics about things like family business, or inheritance battles or divorce battles. Or if we have monarchies and free private city governance, there could still be politics involved. The benefit might just be that it’s easier to opt out of it, and everyday people aren’t forced to participate. So yes longer term, Bitcoin will reduce but not eliminate politics. But don’t confuse this world now, for that world later on.

If you think so much can be achieved politically, why have Bitcoin or code at all?

There’s a division of labor here. Bitcoin and writing code is absolutely essential. But my point is more that those people good at party politics should focus on that, and those people good at writing and reviewing code should focus on that.

Making the political system less hostile helps those people writing code, and it helps everyday HODLers who are holding their keys and running their node. After all, if Bitcoin and Bitcoin app code is improved, that could make it technically easier for people to use Bitcoin. In a broader political sense, writing code is reducing conflict by further reducing the cost of protecting money. It helps more people HODL and use their coins how they wish.

Summing it all up

Yes it would be nice if less people used the state to steal from each other, or control each other, but the pathway to get there does not mean you should just kneel down and take beatings from the other side. Yes it would be nice if we didn’t have to pay attention to these things, but that’s wishful thinking. Even if you personally don’t have the proverbial ‘stomach’ to wade into the swamp of political activism in favor of Bitcoin, the very least you can do is not poo-poo the efforts of those who do have the stomach for it. Likewise, the people who can do party politics or political activism should not poo-poo the efforts of those writing and reviewing code to improve Bitcoin.

Bottom line, don’t confuse the society you want, with the method of getting there. 

This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.