So Bitcoin’s covenant discussion continues, and we also have some work to do in the EU defending Bitcoin’s Proof of Work, and the ability for people to self custody their Bitcoin.
Covenant Use Cases & TXHASH with Steven Roose SLP541
Steven Roose and I spoke about covenants for Bitcoin as well as TXHASH, a particular type of covenant proposal. Some highlights for me:
On the case for Covenants: Covenants are an addition to the things we can do with coins. We’ve always had some form of covenant, when we’re trying to scale bitcoin up to different layers we have to do things that are more complicated than just broadcasting a transaction and signature.
On Covenant restrictions: It’s just making the scripting language more expressive, and this is not in any way bad. Similar to how you can restrict your coins with multi sig or single sig, but they are your own coins.
“Where CTV allows a user to commit to an entirely pre-specified spending transaction of a certain transaction output, TXHASH allows the user to specify a range of individual bits of the spending transaction to be included in the transaction template.” (from covenants.info TXHASH page)
In this podcast we talk through some covenant use cases: Transaction Templating, LN-Symmetry, Vaults, Payment Pools, Ark and Congestion Control. So if you’re interested in those, they’re all timestamped and marked in the episode.
Overall, from some of the discussion on X, I see that more people are interested in CTV over TXHASH because it has been around longer and is a simpler, tighter scoped change to Bitcoin. The proposal that currently seems to have the most momentum is LNHANCE (CTV + CSFS + INTERNAL KEY) by recent guest reardencode (see Delving Bitcoin post here, and Bitcoin PR here).
Defending Bitcoin PoW in the EU with Lyudmyla Kozlovska and Bota Jardemalie SLP542
A few key points from this chat with Lyudmyla Kozlovska and Bota Jardemalie from Open Dialogue Foundation:
EU regulators are going after Proof of Work and also looking to impose more AML controls on Bitcoin, going after “self-hosted wallets”.
The ECB and others are attempting to brand bitcoin as “energy-wasting” or “environmentally harmful”. Which we know is a lie, but it takes work to debunk it. If the ECB and EU are successful in their propaganda campaign, it could disincentivise investing in Bitcoin or Bitcoin mining projects.
On the AML side, it is important to defend Bitcoin use here too. In practice tyrannical governments can put out negative smear articles on people or organisations, which in turn leads to those people being ‘derisked’ and debanked because “Oh look you came up on a negative news search” etc. This is why defending Bitcoin as a “bank of last resort” is essential.
So of course, watch the discussion to get more context, and if you’re interested in reading more you can view the latest submission here by OD Foundation.
My overall suggestion would be: fight these predatory government actions in any way you can. Whether that is public comments, submissions, helping share your own stories of how Bitcoin benefits you, writing open source code and tools, donating to the cause, doing whatever you can to help normalize bitcoin mining and use. The more we can normalize bitcoin use, the harder it is for any ignorant or evil politicians and bureaucrats to ban.
People who want to support the efforts in the EU can do so here on geyser or donate to the Defend Proof of Work lightning address: defendpow@geyser.fund
I made a donation using lightning, even though I don’t live in the EU. Being honest, I’m bearish on the EU, but nevertheless, helping keep bitcoin legal and driving bitcoin adoption is a good thing for the world.
Bitcoin ETFs: wen moon?
And finally a quick update on the Bitcoin ETFs as there seems to be some disappointment that Bitcoin has not already gone to $100k or whatever. So while Grayscale GBTC has seen some pretty big outflows, the other Bitcoin ETFs have seen net inflows, and it seems to generally align with the firm’s reach and distribution.
The general market read seems to be that the GBTC outflows were underestimated, because there are probably traders exiting their trades given the earlier ‘discount’.
Of course, some of these will be people who are exiting GBTC because of their crazy high 1.5% fee, in favour of the other ETFs with fees ranging more in the 0.2% to 0.3% range.
Perspective though
As I check bitcointreasuries.net now on 21/01/2024, the total supply of Bitcoin held by public companies, ETFs, governments, and private companies that doxxed their amounts, that number is 2,158,794 BTC, which is about 10.28% of the eventual ~21M Bitcoin supply. Which means just under 90% is held by other entities. So while Bitcoin ETFs are responsible for a reasonable chunk of Bitcoin HODLings, there is still a big market out there.
Zoom out though
Bitcoin’s price has gone from about $27k/BTC in mid October to about $41k/BTC now (or $0.04M/BTC to use Samson Mow’s terminology). That is about a 50% increase in the space of three months. Is that not enough for you?
So at the end of the day, don’t worry so much about short term moves. Keep stacking and HODLing. Be wary of leverage, stay solvent and stay in the game.
See you in the citadels.