Bitcoin As Our Digital Monetary Foundation
In what ways should Bitcoin remain the same, and in what ways should it change?
This is a free newsletter to go along with my podcast. I’ll summarise key points from the show and include some updates on Bitcoin, Austrian Economics and Liberty. Hopefully it helps for some show listeners as revision, and perhaps for others who missed that particular episode, it’s a chance to catch the highlights in written form.
SLP536 Michael Saylor on Bitcoin Principles
So for my recent episode 536 with Executive Chairman of MicroStrategy Michael Saylor, we got into Bitcoin Principles. Now to be clear, this is Bitcoin as Michael views it, other people come to Bitcoin with their own views of what it is.
Some high level takeaways:
Bitcoin is a rational foundation for economics for the human race.
Bitcoin is the granite base that must be preserved for a very long time, and that people can build their businesses up on top of this.
Changes to Bitcoin should be carefully evaluated on the basis of ethical, engineering and economic soundness. Complexity should be minimised.
Bitcoin can be successful and helpful to a wide range of people, organisations and even ideologies. This is why it’s important to be humble, constructive and patient when teaching people about Bitcoin.
Now while some of the comment section will criticise Michael Saylor for speaking more about the broad ideas rather than technical details, I think Michael does deserve a bit more credit here as he has been operating a large software company for over 3 decades (and MicroStrategy went public in 1998). But that said, I have consistently maintained that to really grasp Bitcoin, we need to learn about both the economics and the technological aspects of Bitcoin. While Michael’s view is closer to the ‘ossificationist’ camp, he does make fair points about the notion that sometimes engineers can create projects that don’t see a lot of commercial use, or suck up a disproportionate amount of resources. Or perhaps someone wants to get an idea ‘in’ Bitcoin, but really it’s about ego and wanting to be one of the people who changed it. I’m not personally an ‘ossificationist’ myself, but it is worthwhile being cautious about changes to Bitcoin.
SLP537 Are Covenants Necessary for Bitcoin with Brandon Black
Next up was my conversation with Brandon Black on whether Covenants are necessary for Bitcoin. Some key takeaways:
Given today’s technology and bitcoin parameters (e.g. block size), we likely cannot onboard more than 10M-100M people in a non-custodial way. Even with 4,000 tx per block times 6 per hour, times 24 hours in a day, times 365 days in a year - yields about 210M transactions. So with 100M on-chain transacting entities per year, this would only yield about two transactions per year per entity. If we want to go above this, we will probably need to explore other ideas, such as a covenants soft fork, or perhaps in the longer term future, a block size increase.
CTV - Check Template Verify is a very simple and minimal change to Bitcoin that itself can enable more scaling ideas such as Timeout Trees or Ark. Combined with other ideas such as CSFS (Check Sig From Stack), it could enable an upgraded lightning network aka LN-Symmetry.
Some of these proposed changes discussed have a very small scope of change. For example, changes like CTV, APO (AnyPrevOut) and CSFS are very minimal in their impact. For the sake of comparison, SegWit and Taproot were big, wholesale changes to Bitcoin and are much larger in terms of lines of code changed.
Value density - The longer term future of Bitcoin is to pack more value into each on-chain transaction. For example with lightning, we can achieve a lot of ‘compression’ by using only a channel open tx, channel close tx, and perhaps some splice tx - to achieve thousands of off-chain transactions. This is one way that monetary transactions can outcompete the ordinals and inscription transactions over time. Covenants may be part of this story of achieving greater value density in Bitcoin transactions.
Also note that after our conversation, Brandon Black (aka reardencode) created a new proposal to bring in CTV + CSFS + INTERNALKEY. You can read more about that on his post at delving bitcoin here. This proposal would help with Ark, LN-Symmetry and various other ideas for bitcoin scaling.
The Real Origins of Money with Natalie Smolenski SLP538
Natalie Smolenski joined me to talk about the intersection of Bitcoin, anthropology and political economy. A few highlights:
Anthropologists and Economists sometimes debate the true origins of money. See late David Graeber’s debt/credit theory of money as contrasted with the Austrians who have a commodity theory of money. This even played out in recent years in a Twitter debate between David Graeber and Nick Szabo.
We’ve been living through this era of high nationalism and homogenization of culture, but now with information technology, the monopoly of the state on information, commerce and warfare has been fundamentally undermined. Now, jurisdictional arbitrage and competition is changing things.
There is a new threat to open source development in the EU which could cause serious legal issues even for volunteer developers. Natalie wrote about it here and you can see another blog post on this here. The short version is that open source developers could be dragged into court and held liable even if some company were to pick up their code or call it in their own software. This might push EU developers out, and push companies to not serve EU customers as part of a ‘chilling effect’ on commerce and software because of legal liability risks.
Living in Dubai and Bitcoin Oasis with Lara SLP539
Next up I spoke with Lara from the Bitcoin Association UAE and organizer of Bitcoin Oasis. We talked about:
Why she moved to Dubai and what she likes about it. This ranges from the safety, low taxes, business friendliness, convenience of services, culture, and flight connectivity.
Why the UAE is well placed for Bitcoin adoption, being a jurisdiction that is actually taking competitiveness seriously, unlike a lot of other countries.
Bitcoin Oasis coming up Feb 8th and 9th 2024 - featuring speakers like Adam Back, Jimmy Song, Giacomo Zucco, Irina Heaver, myself and more. Attendance at this event is by application, make sure to mention my name when signing up here.
A New Era for Bitcoin with Tuur Demeester SLP540
On the eve of the US Spot Bitcoin ETF approval, I spoke with Tuur Demeester, a long time Bitcoin advocate. Some highlights from this conversation for me were:
Tuur’s reports often mark the ‘bottom’ in the bitcoin price cycle, and we spoke about how he’s able to sense where we are in the cycle.
Whale behaviour can provide insights into the market cycle and help identify trends. This can happen where they are the ones selling into the rallies, especially if they don’t believe that “this rally is the final hyperbitcoinisation rally” - they’re often selling some coins with the aim of buying more back at the bottom. (To be clear, I don’t recommend trying this!)
Every company needs a bitcoin strategy to avoid extinction and stay competitive in the changing financial landscape.
Sponsors and some upcoming conferences:
If you want to stack sats and learn about Bitcoin, check out Swan Bitcoin. My link here gets you $10 of free sats when you start stacking with Swan.
The best bitcoin hardware devices are available at Coinkite.com - I use the Coldcard as part of various setups I have. Get a discount on your Coldcards using code LIVERA.
Mempool.space is an invaluable tool for targeting your bitcoin transaction fees and searching things. They’ve got a transaction accelerator program that you can sign up for here.
BTC Prague June 13-15th 2024 in Czech Republic - code LIVERA
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