Then they fight you? And shifts in developer thinking

The action in Bitcoin never stops

Hi everybody, sorry I’ve been a bit inconsistent with writing this newsletter but here we go again, and I’ll make an effort to keep it more consistent.

Samourai founders were arrested, Wasabi and Phoenix exited the US, the political race is heating up with Trump saying he’s “fine with crypto”, concerns on mining centralisation increase, and bitcoin developers are still not aligned on the next soft fork. At the same time, the fee pressure is sparking arguments between those focused on P2P and those focused on Store of Value. What to make of it all?

A few quick reactions:

• There are green shoots in terms of a renewed focus on bitcoin privacy development, as an example Silent Payments and the BIP got merged. I’m also hopeful that we see more efforts in getting PayJoin adoption to help with undermining the common input ownership heuristic. Watch out for upcoming episodes on these ideas.

• On the USG, it seems people are pushing back in the courts and politically, so hopefully that can help make the environment more favourable.

• With “P2P vs SoV”, I think we have to remember that HODLing is the most important use case and it is also the most popular use case. It will likely be this way for some time. Every time the fees rise, we get people complaining that bitcoin is not so easy to use for P2P anymore, but let’s remember that Bitcoin is not PayPal. People who want to do lower value commerce will have to either use a second layer like lightning, or perhaps they will shift off to using custodial things like custodial wallets, sidechains, fedimints or cashu etc. While I personally like to use bitcoin and lightning for payment, I know that most are not in this camp. Because remember, a lot of western people fundamentally don’t have a payment issue, they have a Store of Value issue. So from their POV, Bitcoin is an S tier store of value but only say, a B tier payment tool.

TL; DR of Podcasts over the week:

Then They Fight You? - Parker Lewis SLP570

• Increasing adoption amongst everyday people, such as ranchers, doctors and dentists will make it more challenging to criminalize Bitcoin. The state can’t so easily criminalize everyday innocent people.

• Recent events, including arrests and exits of prominent figures and companies from the US, coincide with the approval and launch of Bitcoin ETFs. Will self custody be the line to defend?

• The Department of Justice's actions against Samourai Wallet founders might have a chilling effect on Bitcoin-related activities, prompting a broader reassessment of service distinctions. Will the state go after miners, mining pools, lightning nodes or LSPs?

• The state seems to be going back on prior and long-standing FinCEN guidance, in their attempt to go after self-custodial applications. But it does seem rather arbitrary.

• Advocacy efforts for Bitcoin should focus on state-level engagement to educate lawmakers and citizens. This may also provide a more feasible path because state governments may be better able to fight the US federal government on behalf of their citizens.

• If you haven’t set up your bitcoin payment rails, are you ready for a future bank failure scenario? Consider having your bitcoin payment rails ready to go in advance. Whether that’s for you as a business making payroll, taking payments from customers, or whether you are an individual who wants to make/take payments easily.

What’s happening with JPY? - Peruvian Bull SLP571

• Japan's economic situation serves as a bellwether for global central banking policies due to its their very high government debt and aggressive monetary policies pursued for decades.

• The prolonged zero interest rates in Japan have led to a feedback loop of accumulating debt, incentivizing borrowing and lending, resulting in a synthetic short on the Yen.

• This situation exemplifies the impossible trinity in currency policy, where maintaining monetary autonomy, a fixed exchange rate, and open capital flows simultaneously is unattainable. Given that Japan wants to retain open capital flows, it means they have to give something else up. But for now, they’re trying to ‘have their cake and eat it too’.

• Bitcoin is viewed as a potential front-runner for a new global reserve currency, presenting itself as a solution to the shortcomings of traditional fiat currencies amidst the current economic landscape.

Bitcoiners, Don’t Sleep on Nostr! - Miljan SLP572

• Nostr, a decentralized publishing protocol, is gaining attention among Bitcoin enthusiasts for its potential in providing censorship-resistant communication.

• Miljan, the founder of Primal, discusses his background and how he got involved with Bitcoin and Nostr, highlighting the importance of quality signal amidst the noise surrounding the platform.

• Nostr operates on signed messages relayed, with the protocol defined in a series of Nostr Implementation Possibilities (NIPs), where only NIP-01 is mandatory.

• The network is growing organically, and current estimates are around 200k human users of nostr. It is creating a global web of trust accessible to anyone.

• Nostr offers various possibilities, including a coordination layer for Bitcoin transactions, verification services, and the potential for innovative applications beyond social media, such as event hosting and decentralized github.

A Shift in Bitcoin Developer Thought? with Brandon Black (aka reardencode) SLP573

• Brandon Black, discusses Bitcoin proposals and the ‘meeting of the minds’ at the recent Bitcoin++ conference in Austin, TX.

• The discussions also centered around various proposals like LNHANCE, CTV, and OP_CAT, each with different trade-offs for adding covenants to Bitcoin transactions.

• The highlight of the conversation was on ‘The Great Script Restoration’. The initiative seeks to enhance Bitcoin's script functionality by reintroducing disabled features with strict limits. Its goals include empowering developers with more expressive designs, fostering a shift towards better Layer 2 protocols, and promoting the creation of optimal solutions through the provision of versatile tools and improved protocol designs.

• Black emphasizes a shift in Bitcoin developer thought towards engineering the best future for Bitcoin, rather than minimal changes to move it forward. Perhaps there is some humility to this approach in not trying to play the ‘horse trading’ game, and designing better base layer tooling - which can then be leveraged for various other things - whether that is vaults, coinpools or improved lightning etc.

• Talks also covered concepts like vaults for reactive security, symmetry channels for Lightning Network, and Ark.

Upcoming conferences:

• Bitcoin Seoul May 29-31 in Seoul, South Korea. Discount code for general pass here, and for VIP pass here.

• BTC Prague June 13-15th 2024 in Prague, Czech Republic - code LIVERA

• Nomad Capitalist Sept 25-28, Kuala Lumpur Malaysia (tickets sold out but wait list possible)

• Pacific Bitcoin October 18-19 2024, Los Angeles, California - try code LIVERA but not sure if it is active yet

See you in the citadels!