Socratic Seminar 15

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Announcements

• Respect people’s privacy
• Interaction and asking questions are encouraged
• Chatham House rules
• Apply for a bitcoin job
• Join our telegram group
• Follow us on Twitter (@HonoluluBitcoin)
• Donate sats
• Sponsor shoutout

Bitcoin KPIs

• Clark Moody's Bitcoin Dashboard

Geopolitics

• The anniversary of Bitcoin becoming legal tender in El Salvador

  • El Salvador Bitcoin one year later (Obsidian Link)
  • What El Salvador's Bitcoin law brought
  • President Bukele's speech to the United Nations
  • Context/background
    • Salvadorans have been plagued by political corruption, gang violence, lack of opportunity, and constant emigration of younger citizens
      • Perfect storm to take a risk on Nayib Bukele and his New Ideas party
      • Provided the political conditions for El Salvador to adopt Bitcoin as legal tender
    • Bukele actually announced that El Salvador would adopt Bitcoin back in 2017, even before he was President
    • The move was about game theory, the first-mover advantage to a better monetary system and safeguarding El Salvador’s over-reliance on the U.S. dollar.
      • The obvious choice for a country like El Salvador is to seek refuge in the rising monetary system of our time instead of a dying one.
    • Bukele made it clear in his 2022 UN speech that he's tired of getting bullied (politically and economically) by other countries
      • Didn't really talk about Bitcoin in the speech
  • In practice
    • Depending on who you ask, El Salvador’s efforts have been an utter failure, a resounding success, or various stages in between
    • Most admit that the Chivo wallet rollout was not ideal - confused a lot of people initially, and the app still doesn't work great
    • Notable metrics:
      • 30% increase in tourism
      • 10.3% GDP increase
      • 19.5% export increase
      • 3.3% remittances destined for family use increase
      • 70.2% remittances destined for investment increase
      • 4.3% volume of economic activity increase
      • One of the lowest rates of inflation in the region
      • One of the lowest rates of outmigration to the U.S. in the region
      • A 62-year record in private investments
      • Improvements in road and highway infrastructure
      • El Salvador achieved the metrics above during a bear market and in the second year of the COVID-19 pandemic, despite constant criticism from the traditional finance sector
    • Other achievements:
      • El Salvador has hosted multiple Bitcoin conferences
      • They hosted central bankers from 44 other countries
      • Bukele has great approval ratings among constituents

• Consequences of Biden's Executive Order 14067 (March 2022)

  • E.O. 14067, AKA “Ensuring Responsible Development of Digital Assets”, called on government agencies to produce varying forms of research regarding consumer privacy and protection, energy usage, and central bank digital currency (CBDC) benefits and risks.
  • White House Office of Science and Technology Policy (OSTP) conducted a study into the climate impacts of crypto mining
    • White House condemns energy use of mining Bitcoin (Obsidian Link)
      • “Electricity usage from digital assets is contributing to greenhouse gas emissions, additional pollution, noise, and other local impacts, depending on markets, policies, and local electricity sources,” reads the report.
      • “Should these measures prove ineffective at reducing impacts, the Administration should explore executive actions, and Congress might consider legislation, to limit or eliminate the use of high energy intensity consensus mechanisms for crypto-asset mining,” per the report.
      • The Office of Science and Technology asserts that bitcoin mining facilities create added stress on the power grid that leads to blackouts, fire hazards, and equipment deterioration.
      • The report also claims that bitcoin miners will raise the average electricity cost for local consumers.
      • “Depending on the energy intensity of the technology used, crypto-assets could hinder broader efforts to achieve net-zero carbon pollution consistent with U.S. climate commitments and goals,” reads the report.
      • Finally, the last section concludes that there are ways in which bitcoin mining can actually benefit U.S. climate goals, although this is a much smaller section. “Proof-of-work mining that installs equipment to use vented methane to generate electricity for operations is more likely to help rather than hinder U.S. climate objectives,” per the report
    • Nic Carter's response (Obsidian Link)
      • Some good parts:
        • The OSTP acknowledges that PoW and PoS may not grant identical assurances, and there remains uncertainty as to whether PoS might be a perfect substitute for PoW
        • The OSTP acknowledges the interesting developments in mining with otherwise-flared or stranded natural gas (often released as an unsaleable byproduct of oil extraction)
        • The report meaningfully acknowledges the contributions to grid flexibility miners can offer via participation in demand response programs
        • The report notes the potential to mine with stranded renewables
        • And importantly, the report offers only lukewarm recommendations
      • However, the overall effort is weak:
        • The paper is effectively an extended literature review with very little in the way of new data or analysis presented.
        • Many of the academics cited are conflicted. Virtually no sources from the mining space itself are included.
        • Anything authored by the White House Office of Science and Technology Policy should adhere to a high scientific and academic standard.
          • Relying on non-peer reviewed, non-scientific estimates, especially by individuals with known conflicts of interest, should be an absolute dealbreaker.
        • Virtually no case studies are presented in the report, even though there are many examples of miners operating sustainably, adding power to the grid, taking zero-carbon approaches, and engaging in grid stabilization.
        • There are a number of outright falsehoods in the report
        • The report takes an extremely harsh stance on miners utilizing renewable sources, chastising miners for using renewables and laying out an extremely narrow set of conditions where their use would be acceptable.
        • The section on demand response concludes that it’s mostly irrelevant, because miners, in the eyes of the government, are raising aggregate power demand without inducing any additional supply.
        • The section on flared gas mining is a brief olive branch, but the report then concludes that because all oil and gas extraction must be shuttered to meet climate goals, no gas flaring can exist under Net Zero™.
        • Generally, the subtext is that because mining is a “bad” usage of power, it doesn’t matter if you promote grid stability, or use renewables, or even mine off-grid with stranded resources — you’re not welcome here, and you should buzz off.
      • Some of the main issues:
        • Presenting virtually no new data
        • Ignoring contributions of industry subject matter experts
        • Relying on non-scientific sources
        • Urging caution on data while using it recklessly
        • Pushing a “can’t win” approach to miners using renewables
        • Refusing to project Bitcoin’s energy consumption trajectory
        • Making stupid and counter-productive recommendations
  • White House releases regulatory framework for the "responsible" development of digital assets
    • White House releases digital asset regulatory framework
    • White House will empower the SEC and the CFTC to “aggressively pursue investigations” in the digital asset space based on the research provided
    • Additionally, Biden’s administration will push the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to “redouble their efforts to monitor” the ecosystem as it relates to “unfair, deceptive, or abusive practices.”
    • Following the OSTP report on the environmental impact of crypto mining (from the last socratic topic), the Department of Energy (DoE) and the Environmental Protection Agency (EPA) are being tasked with “tracking digital assets’ environmental impacts; developing performance standards as appropriate; and providing local authorities with the tools, resources, and expertise to mitigate environmental harms.”
    • The Bank Secrecy Act will be amended to apply to digital assets, leading to larger fines for unlicensed money transfers and stricter enforcement against digital asset service providers
  • White House Office of Science and Technology Policy (OSTP) releases a technical evaluation for a U.S. Central Bank Digital Currency system (Obsidian Link)
    • Report includes lots of buzzwords and biases
    • U.S. has not yet decided whether it will pursue a CBDC but has been closely examining the implications of/options for issuing a CBDC.
    • Supposed "benefits" of a CBDC:
      • facilitating efficient and low-cost transactions
      • fostering greater access to the financial system
      • boosting economic growth
      • supporting the continued centrality of the U.S. within the international financial system.
    • The report also estimates the technical feasibility of building a CBDC minimum viable product and describes how a U.S. CBDC system might affect Federal operations.
    • The report makes recommendations on how to prepare the Federal Government for a U.S. CBDC system.
    • Importantly, the report does not make any assessments or recommendations about whether the U.S. should pursue a CBDC, nor does it make any decisions regarding particular design choices for a potential U.S. CBDC system
    • They also note that a U.S. CBDC should be sustainable, avoiding the environmental concerns raised by some privately-issued digital assets.
      • Related to the OSTP's bitcoin mining report
    • It will be important for technical experts to work closely with experts in money and payment systems to ensure that a CBDC system serves broader economic goals while delivering a good customer experience.

• U.S. Department of the Treasury releases additional guidance on tornado cash sanctions

  • US Treasury OFAC releases clarifications on Tornado Cash sanctions
  • OFAC is requiring people request a specific license to engage in transactions involving sanctioned funds (Tornado Cash transactions initiated before but not completed by 8/8/2022)
    • U.S. persons should be prepared to provide, at a minimum, all relevant information regarding these transactions with Tornado Cash, including:
      • the wallet addresses for the remitter and beneficiary
      • transaction hashes
      • the date and time of the transaction(s)
      • the amount(s) of virtual currency
  • OFAC is aware of the dust attacks where people may have received unsolicited funds connected to Tornado Cash
    • Technically, OFAC’s regulations would apply to these transactions
    • OFAC will not "prioritize enforcement" against these individuals
  • While engaging in any transaction with Tornado Cash or its blocked property/interests is prohibited, interacting with open-source code itself is not prohibited (if it doesn't involve a transaction with Tornado Cash)
    • For example, US people are not prohibited from copying the open-source code and making it available online for others to view, as well as discussing, teaching about, or including open-source code in written publications, such as textbooks, absent additional facts.
    • US people are also not be prohibited from visiting an archived version of Tornado Cash's website (or the real website if it becomes available again)

• Hodlonaut vs. Craig Wright trial in Norway

  • Context/background from DefendingBTC
  • The OpenSats Legal Defense Fund (currently supporting Hodlonaut) has raised ~70 bitcoin + ~$75K = ~$1.4M
    • All proceeds go toward Hodlonaut's ongoing legal fees - any excess will be used for future legal matters
  • Craig Wright is a known bad actor - he has spent years claiming to be Satoshi without being able to cryptographically prove he owns Satoshi's keys
    • Craig's evidence tends to be from familial/friendly witnesses or entirely fabricated evidence
  • Instead, he sues people who claim he's lying - Hodlonaut, Bitcoin developers, Peter McCormack, etc.
    • The case against McCormack happened last month in the UK
    • Although the judge agreed that McCormack caused "serious harm" to Wright's reputation, Wright was awarded only nominal damages of one British pound (US$1.23)
    • Judge concluded that Wright had "advanced a deliberately false case"
  • In the Hodlonaut cause, Bitcoin Magazine has a reporter on the ground documenting the trial
    • BM rep has no legal experience
    • Some translation/technical difficulties in the courtroom added complications
    • Overall, great journalism with a lot of useful information
  • Quick timeline:
    • Hodlonaut tweeted about Craig being a fraud (late 2019)
    • Craig responded with a legal notice/complaint against Hodlonaut
    • Craig Wright/Calvin Ayre put out a $5k bounty to doxx Hodlonaut's identity
    • Origination of the #weareallhodlonaut movement on Twitter
    • Private investigator tracked Hodlonaut down and impersonated a police officer to get personal details/contact info
    • Hodlonaut filed a declaratory judgement in Norway that he was not liable to pay damages to Wright (in response to Craig's legal notice)
    • Craig filed an official libel lawsuit against Hodlonaut in the UK
    • Craig and Hodlonaut go back and forth trying to dismiss each other's proceedings
    • The UK case is originally dismissed but is reopened after an appeal from Craig
      • Based on the condition that the UK case doesn't involve the same cause of action as Hodlonaut's Norwegian case
      • Both cases allowed because they're slightly different
    • The case in Norway just finished
    • Official verdict likely sometime before early November (and will probably affect the upcoming case in the UK)
  • The Norway proceedings
    • UK has much more strict speech laws than Norway, which is why Hodlonaut wanted the case tried in Norway - better free speech precedent in his favor
    • Craig had ~9 lawyers, while Hodlonaut had 2
    • Hundreds of tweets and other documents referenced
    • Craig's side was more dramatic/vague
      • Craig's team mostly tried to bolster witness testimonies and discredit Hodlonaut's evidence
      • More emphasis on why Hodlonaut's actions harmed Craig, rather than real evidence that Craig is Satoshi
    • Lots of discussion on the nature of bitcoin and how it works technically as background context for the case
      • Anyone with a decent technical understanding of how Bitcoin works would probably think it's obvious that Hodlonaut will win, but it's hard to predict how it'll actually play out in court
      • The judge seemed to be following along well enough, but it showcased the need for more Bitcoin-knowledgeable lawyers
  • Why does this matter?
    • "There are plenty of technically unsophisticated but wealthy people out there who can be tricked into ignoring even the most conclusive technical evidence of fraud"
    • Most competent people have dismissed Craig's claims and ignored him, which has given him the opportunity to gather significant control over the media narrative (through events, press releases, paid testimonies)
    • "The world has been split into two groups: ones that don’t know any better and will repeat his claims with minimal skepticism, and people who know that they don’t want to go anywhere near it. As a result the first group sets the public narrative."
    • "although his court cases are laughable and doomed, he’s able to inflict millions of dollars in legal fees on his victims"
    • "He’s filed a lawsuit against a dozen (active and former, but increasingly former) Bitcoin developers demanding they aid him in producing and distributing a version of Bitcoin with a cryptographic backdoor which will allow him to seize those coins he claims to have lost (but obviously never owned) or otherwise pay him billions of dollars in damages"
      • Obviously, this wouldn't work technically because no one would run the code - but courts don't understand Bitcoin and just take Craig's word
    • Craig has nothing to lose - he’ll tell whatever lies are required to keep the litigation going for as long as possible

• Russian central bank and Ministry of Finance agree on draft bill allowing Bitcoin/crypto for international trade

  • The Russian Ministry of Finance and its central bank have agreed on a draft bill allowing bitcoin and cryptocurrency payments for international trade settlements, per a report from Russian news outlet Tass
  • Bill covers "how cryptocurrency can be purchased, what can be done with it, and how cross-border settlements can or cannot be made" according to the Deputy Finance Minister
  • Bank of Russia still opposes the legalization of cryptocurrency exchanges and settlements in cryptocurrencies within Russia
    • Continues to illustrate the divergence of opinion among regulators
  • Initial Russian bill proposing framework for digital assets was presented earlier this year and encouraged a ban on bitcoin mining
    • The Ministry of Finance rebutted with a bill of its own that called for stricter regulation, rather than a full ban.
    • Putin has since announced his support for the Ministry's bill, citing Russia's potential competitive advantages in the mining space

• Iran greenlights Bitcoin, crypto payments for imports (Obsidian Link)

  • Iran reportedly passed a law addressing the use of cryptocurrency for imports.
  • Cryptocurrency can be used as payment for imports to the country by government and local businesses.
  • The law also addresses fuel supply and electrical consumption for bitcoin mining
  • The authorization was an agreement between the Ministry of Industry and the Central Bank –– arguably suggesting a multi-departmental consensus on the viability of bitcoin as a means for international payments.
  • In May of 2021, Iran previously banned Bitcoin mining, citing power grid concerns.
    • The same month, the Iranian central bank also banned the trading of cryptocurrencies mined outside of the country.
    • The mining ban was later lifted in October 2021 just to be reimposed by December of the same year, once again citing power grid concerns.

Market/Adoption

• NYDIG announces Lightning accelerator project "In Wolf's Clothing" (Obsidian Link)

  • Announced in-person by Ross Stevens at the Bitcoin Commons on 8/26 (during BitBlockBoom)
  • Stevens shared what many Bitcoiners believe, "The technology underlying shitcoins is brittle," and assured the audience that his companies "will always stay bitcoin." From his paper with Allen Farrington, he shared his underlying mission. "The concept of decentralized finance is powerful, noble and worthy of a lifetime of focused effort."
  • Chose to launch a Lightning-focused accelerator after witnessing the growth:
    • "The reality is that this year, the progress in Bitcoin and Lightning is staggering. Month after month after month, the nodes on Lightning are growing."
  • The accelerator is geared toward individual founders and small teams, developers working on Lightning, Taro and covenants, and pre-seed, seed, series A companies.
  • Transportation and lodging will be provided for participants from anywhere in the world.
  • The program will be run in eight-week cohorts. There will be 8-12 teams per cohort. World-class mentors with office hours. The cohorts will be exclusively non-remote. There will be significant seed capital for each team with already-recruited investors and full-time, in-house expertise.
  • People who are interested can apply at apply@wolfnyc.com

• Ledger Nano X and Nano S Plus now available in all Best Buy stores nationwide

  • Ledgers aren't the best hardware wallets (and they entice people toward shitcoins), but they're fairly reliable at a reasonable price point
  • You can now walk into any Best Buy with cash and buy a hardware wallet privately
  • Physical purchases help prevent getting caught in online data leaks that might happen with online-only merchants
    • Privacy matters when dealing with Bitcoin/crypto hardware (like when 270K Ledger customers had emails and mailing addresses leaked in 2020)

• Human Rights Foundation donates $325K to Bitcoin development: 8 donations in total (Obsidian Link)

  • Latest round of donations focused on furthering key elements of the Bitcoin ecosystem:
    • Censorship-resistance
    • Open-source custody solutions
    • Bitcoin Core development
    • Chaumian e-cash
    • Education across the globe
  • Notable grants:
    • $100K to BTCPayServer (open-source payment processor)
    • $50K toward work on Fedimint (Chaumian e-cash)
    • $25K to Seed Signer (offline/air-gapped hardware wallet)
    • $25K toward Robosats (P2P LN-based exchange)
  • HRF has donated over $1.5 million in BTC and USD over the past two years to further Bitcoin development across the world
  • Will announce its next round of donations in January 2023
  • Related news (9/26): Bitcoin non-profit Brink announced that they fund 11 total Bitcoin/Lightning developers

Technology

• Carl Dong leaves Chaincode Labs and stop contributing to Bitcoin Core full-time

  • Most well-known for his work toward improving Bitcoin's software supply chain security (e.g., reproducible builds)
  • Also helped compartmentalize consensus-critical code away from non-consensus-critical modules
  • Not sure what he plans to do next - looking for opportunities

• Linux Foundation announces an intent to form the OpenWallet Foundation (OWF)

  • "A consortium of companies and non-profit organizations collaborating to create an open source software stack to advance a plurality of interoperable wallets"
  • OWF aims to establish best practices for digital wallet technology through collaboration on open source code for use by other developers to build interoperable, secure, and privacy-protecting wallets.
  • The OWF does not intend to publish a wallet itself, nor offer credentials or create any new standards.
  • The wallet engine they build will support a wide variety of use cases from identity to payments to digital keys and aim to achieve feature parity with the best available wallets

• NYDIG releases "Developers of Bitcoin" - paper on Bitcoin's technical development and open-source contributors over time (Obsidian Link)

  • Report looks at the technical development of Bitcoin and the active community of open-source developers who update, maintain, and enhance the Bitcoin code and its greater ecosystem
  • "The code has been available for public inspection, criticism, and analysis for over 13 years now. It has withstood the test of time and continues to evolve, while its community has become bigger and more vibrant over the years."
  • Context/Background
    • Paper provides a timeline of how the development process has changed over time
    • Breaks down who the core contributors were over different periods in Bitcoin's development
  • Analysis
    • By measuring the contributions from the open-source developer community to Bitcoin’s codebase, we can make quantitative assessments of its developments. In this analysis, we specifically look at code commits, which are small, generally self-contained sets of updates to a shared repository of code. Historical commit data can tell us who has been contributing most to the code over time. This helps us understand the pace of development across certain projects as well as the key players at each point in time.
      • They note the drawbacks to this kind of analysis:
        • Code commit quantity doesn't necessarily correlate with meaningful contributions
        • It only considers contributions that actually made it into the code
    • There have been 1,140 unique developers who have contributed to Bitcoin Core.
      • Impressive growth but still small relative to other open-source projects
      • The broader Bitcoin ecosystem is much larger, with 13,057 unique developers
        • This excludes developers working on closed-source solutions that are not open to the public, such as the developers here at NYDIG.
    • We define an active developer as anyone who has made a commit in a given month.
      • While that number can vary month to month, Bitcoin Core averages roughly 40 - 60 active developers per month.
      • The broader ecosystem has ranged between 600-1000 monthly active developers.
    • Bitcoin Core adds ~5-20 new developers per month
    • In 2021, over half the contributions to Bitcoin Core have come from developers that joined since the last bull market cycle in 2017
    • Average monthly commits consistently range between 200-400
    • While many people have contributed to Bitcoin over the years, a small number are responsible for the bulk of development:
      • The top 37 developers account for 80% of Bitcoin’s total code commits, and the top 50 account for 84% of code commits

• Riot and Blockware release Bitcoin transaction fee research report

  • For users of Bitcoin, its transaction fees represent an unpredictable cost, but a known benefit: global 24/7 digital final settlement of a highly liquid asset.
  • Report answers these questions:
    • Who pays transaction fees and how fee rates are set
      • Breaks down the UTXO model, scarcity of block space, and how a fee market emerges from a variety of different consumers
    • Why high congestion fees are transitory
      • Bitcoin’s scaling solutions are not perfectly timed to coincide with waves of new adoption resulting in fee spikes that correspond to scaling cycles:
        • High fees bring pressure to more efficiently use block space by adopting new scaling technologies
        • These cost-saving measures enable an increase in total throughput for Bitcoin settlements without significantly increasing the cost of running a Bitcoin node
        • Low-cost nodes empower users to use their own software's consensus rules to verify all transactions and blocks without trusting a third party
        • Low-cost verification secures Bitcoin's decentralization
        • Bitcoin's decentralization keeps the network alive, allowing adoption to continue growing over time (increasing demand on block space)
    • How Bitcoin transactors could use fees to route around unreliable miners
      • At the end of the day, miners have the ability to only do one thing: propose blocks that nodes (who set the consensus rules) verify, accept, and use to update the ledger.
      • Since miners cannot change key consensus rules, malicious or unreliable miners can only censor specific transactions they do not want to include in their own blocks.
      • The dynamic fee market provides a mechanism for economically disincentivizing bad miner behavior
        • Ex) Miners attempt to censor transactions, so censored users start increasing the mining fee they will pay to get in a block. In aggregate, these fees eventually reach a point where honest-acting miners will prioritize including them. Over a long enough time, high fees incentivize more honest miners to come online, making it even more challenging to maintain a censorship attack
      • Most miner attacks are wars of attrition - requires an ever-increasing amount of energy waste/cost in order to maintain censorship and outcompete honest market actors

• Public Fedimint instance launched on signet

  • Eric Sirion announced the official launch of the first public signet for Fedimint
    • Fedimint is the open source protocol that allows people to easily create their own Chaumian Mints on top of the LNP/BP stack
    • Signet is one of several test Bitcoin networks (alongside testnet & regtest)
  • Limited functionality: you can join a mint, receive signet ecash tokens that represent sats ,and send those ecash tokens to others

• RoninDojo announces Bokuto node

  • RoninDojo Node comparison guide
  • Attempting to lower the barrier to entry for sovereign, privacy-focused Bitcoin usage
  • "Recommended barebone hardware setup...3D print the enclosure yourself, or later upgrade your Bokuto with a Tanto Kit"
  • Comes without a case, LED lights, premium support, etc. - includes the minimum components to build a high-quality, functional node at home
  • Not Raspberry Pi-based - Ronin nodes use a RockPro64 Board
  • Spoke with BTCxZelko from RoninDojo about being a guest speaker at Honolulu BitDevs
    • He's interested in giving a virtual talk about Bitcoin privacy if we can accommodate

• Spiral is a privacy-preserving block explorer

  • All information about the addresses you look up stays on your device. The Spiral server learns nothing about your queries.
  • Spiral uses fully homomorphic encryption to "guarantee" your privacy.
  • Currently in beta - cryptographic implementation has not been formally audited
  • Queries are quite slow on average, and weren't working at all when I tried recently

• Validating Lightning Signer (VLS) separates keys from nodes (Obsidian Link)

  • Currently being used by Sphinx Chat (Lightning-based chat/podcast app)
  • Running a Lightning Network node can be difficult since you need 100% uptime to facilitate payments
  • Uptime requirements have pushed many enterprise-level Lightning users to run their nodes in the cloud using server farms
  • It would be trivial for a motivated attacker to identify and confiscate dedicated Lightning hardware sitting in server farms across the world, effectively allowing the attacker to confiscate a user's bitcoin
  • Instead of housing the keys and the node in the same hardware, thus creating a central point of failure, these projects aim to equip users with the means to separate the two functions and give those users back full control of their bitcoin by ensuring they can physically possess their keys using dedicated hardware that communicates with the node running in the cloud
  • The hardware running the node at a particular server farm can be shut off, but the user will still have their keys and, therefore, access to their bitcoin

Mining

• Major Bitcoin mining pool with 10% of hash rate, 'Poolin', freezes withdrawals

  • Poolin Bitcoin mining hash rate cut in half (Obsidian Link)
  • Bitcoin mining pool Poolin will issue 'IOU' tokens after suspending withdrawals
  • In early September, Poolin suspended withdrawals from their wallet service, PoolinWallet, in an effort to stabilize assets and preserve liquidity
  • Significant because:
    • Poolin is a China-based mining pool service, operating in China after the mining ban
    • The pool was estimated to have roughly 10% of the hash rate before withdrawals were suspended
    • Currently sitting at ~4% of global hash rate
  • Luckily, miners can easily switch between pools
  • Switching to another pool won’t unfreeze withdrawals from Poolin but it does provide the hash rate market a mechanism to vote with their ASICs in real time and choose a more competitive global pool
  • One interesting note is that Poolin announced its partnership with Three Arrows Capital back in June of 2020.
  • Poolin later announced the issuance of IOU tokens reflecting 1:1 ratio with user balances across a variety of cryptocurrencies
    • IOU tokens can be traded for the corresponding crypto, used to by new mining machines, or shares of the company
    • Poolin's intention is to gradually burn this IOUs in batches
    • Not the kind of scheme a financially solvent company engages in

• "Was Satoshi a Greedy Miner?" by Jameson Lopp

  • Long ago, people analyzed a particular nonce pattern in early mined Bitcoin blocks (dubbed the Patoshi Pattern) that some believe can be attributed to blocks mined by Satoshi himself
  • Lopp's analysis is based on the assumption that the Patoshi Pattern can be attributed entirely to Satoshi's early mining
  • He identified some peculiarities, like the fact that Satoshi appeared to be intentionally throttling his hash rate
  • Lopp's conclusions: "What am I sure of with regard to Satoshi?
    • Their goal was to keep the "heartbeat" of the network alive while it was being bootstrapped.
    • They mined on a single machine with a maximum hashrate of 6 Mhps.
    • They could have easily earned more than twice as much BTC if they had mined at full power.
    • They did not want to be in a position of dominating the network hashrate, but may have felt it was necessary during the earliest days when the network was far more fragile due to having fewer than five miners.
    • They cared a great deal about difficulty adjustments. The adjustment algorithm was one of Satoshi's greatest innovations and they opined upon the topic more than almost any other.
    • They wanted as many people to be able to mine on home PCs as possible (Satoshi decried the FGPA / GPU mining race)"

Coinkite Giveaway #2

• "Guess the Nonce" Google Form

  • Submit guesses ahead of time (only if you plan on attending the meetup)!
  • A specific block will be chosen at the meetup and its nonce will be compared to all submissions - closest guess wins
  • Video explaining what a nonce is in relation to bitcoin mining
    • A "nonce" is a "number used only once".
    • Miners are continuously hashing block data when trying to "win" the block lottery. The nonce is an extra field that can be repeatedly modified to produce entirely new hashes without changing the actual transaction data in the block.
    • Miners keep changing the nonce to generate new hashes, ultimately trying to get close enough to the difficulty target.

Optional Topics

• Last month's missed topics
  • Bitcoin without internet: SMS service allows sending BTC with a text (Obsidian Link)
  • Galoy brings synthetic USD to Bitcoin (Obsidian Link)
  • Foundry Makes BTC donation to open source Stratum V2 protocol developer to improve Bitcoin's proof-of-work mining layer (Obsidian Link)
• Conferences that happened
  • BitBlockBoom 2022 in Austin
  • Baltic Honeybadger 2022 in Riga
• Coinbase in the court room
  • Coinbase faces class action for crashing during volatility, listing securities
  • Brother of ex-Coinbase manager pleads guilty to insider trading charge (Obsidian Link)
  • Coinbase funding lawsuit against Treasury department
• Bitcoin mining hosting provider Compute North has filed for chapter 11 bankruptcy protection in a federal court
  • Clients include Marathon (one of the largest publicly traded mining companies)
  • A Marathon spokesperson said they don't expect the filing to impact their current mining operations
• Nigeria to establish special economic zone for Bitcoin/crypto (Obsidian Link)
• Australian federal police forms cryptocurrency unit focused on tracking and seizing funds
• Doctor Bitcoin jailed for selling P2P sats (Obsidian Link)
• U.S. recovers over $30 million in cryptocurrency stolen by North Korean hackers
• IRS says it exposed some confidential taxpayer data on website
• US Senator Wyden: Border agents are searching phones without warrants and storing data for 15 years
• Hosted VPN providers shut down in India over anti-privacy law: India will soon require operators to collect names, emails, and IP addresses (Obsidian Link)
• BitGo adds custodial Lightning support
• Digital Asset exchange EDX Markets launches with backing from leading broker-dealers, global market makers and venture capital firms (Obsidian Link)
  • Includes Fidelity, Charles Schwab, Citadel, and others
• Blockstream blog post "Tapscript: New Opcodes, Reduced Limits and Covenants"
• BlockStream and Sevenlabs launch decentralized Bitcoin exchange (Obsidian Link)
  • Leverages open source protocol TDEX and will operate 24/7
  • Provides access to the Liquid Network
• Trezor Suite v22.9.3 adds coin control
• BIPBounty: Tax deductible bug bounties for Bitcoin
• Credible Confessions: A webapp for writing credible, anonymized information
• Alby releases wallet API (Obsidian Link)
  • The API enables marketplaces, merchants, businesses, developers, and more, to offer instant, inexpensive, global payments to anyone, at any time