"In celebration of @tylercowen's excellent column on bitcoin today, I reread his most popular takes on bitcoin since 2013. "
- Tony Sheng aggregates a complete list of economist Tyler Cowen's takes on bitcoin over the years dating back to 2013 and divides them into three main stages:
1. Indifference (bitcoin is a curious thing that affords fun economic thought experiments)
2. Skepticism (grounding wild claims in economics reality)
3. Acceptance (belief of a lasting place for BTC in society).
BTC Media's conference Bitcoin 2019 wrapped up a few days ago. Though the livestream's been taken down on YouTube due to music copyright violations, several presentations were salvaged and re-uploaded.
Luckily, one of the most recommended conference presentation, Tetras Capital's Brendan Bernstein's talk about the macro factors that are currently setting the stage for bitcoin, was one of them.
As The Spartan Group's Jason Choi notes, Brendan did a great job showing us how to make a compelling case for Bitcoin without using the buzzwords "trustless," "permissionless," or "decentralized."
⚡️ Preventing an Eclipse attack
For our more technical readers interested in bitcoin updates, we highly recommend subscribing to the Bitcoin Optech newsletter. The most recent issue goes over a suggestion made during this week's IRC meeting of bitcoin core developers to differentiate peers based on ASN instead of address prefix to prevent an eclipse attack.
🔹 Onboarding Users
A neat tool we've tried out lately is Eth2.io (and the Linkdrop protocol in general). It's a simple way to introduce the uninitiated into crypto. The concept is pretty straightforward, you send someone a link that has a couple of bucks worth of ETH in it and in order to claim the ETH, the recipient has to download a "non-custodial" wallet. There's no need to enter an address or upload a driver's license to receive ETH -- just takes a few steps to download a supported non-custodial wallet and a few clicks to receive the coins on your phone.
🔹 Pool Together
This week, Pool Together's launch made its rounds on Twitter as the first no-loss lottery sans a central authority. How it works: players buy tickets using ETH, the ETH is lent on Compound lending protocol for 15 days, the accumulated interest is paid out to one lucky winner, and the pooled capital is returned to participants. There's been a lot of excitement about the project as well as a fair share of scrutiny since the smart contract code was initially closed-source. The team has since decided to open source the code to eliminate doubts around the project.
🔹 Beyond Blockchain
Consensys Labs launched its second nights & Weekends virtual hackathon called Beyond Blockchain. The goal is to encourage individuals from around the world to form teams and work on nights and weekends for 15 days to provide ideas/solutions for DeFi, Media or Healthcare. A 42 ETH pool of rewards will be paid to three winning teams across the three categories.
Some highlights from Zcon, the annual Zcash conference.
🕵️♀️ Sapling Shielded Transactions
Elena Nadolinski led one of the most interesting workshops at Zcon and it resulted inthe deck to end all decks. Reading through the 76-slide presentation (which didn’t even begin to touch on zk-snarks math) makes you trulyappreciate the work that's gone into implementing the Zcash blockchain.
🕵️♀️ Confidential Transactions on Mobile
Confidential transactions are computationally intensive which partly prevents them from being used in mobile wallets. At least it used to. Guarda Wallet just released the first Andriod Zcash wallet that supports confidential transactions.
🕵️♀️ Governance: How to Lose Friends and Alienate People
Admittedly, we didn't watch this panel with Anna Rose, Adrian Brink, Lane Rettig, and Fredrik Harrysson, but we're giving it an honorable mention because we got a good laugh out of the title.
THOUGHT OF THE DAY
If there's another bitcoin civil war, it'll be about privacy
To paint bitcoin’s development style with one brush stroke, it’s best characterized as the exact opposite of “move fast and break things.” The process involves slowly introducing changes after many rounds of review to minimize the chances of a catastrophic bug. Changes are only made when necessary or when upgrades have garnered wide support (known as 'rough consensus').
When it comes to major upgrades or critical decisions about the network, this sometimes leads to long debates that can end in undesired or unforeseen consequences. The obvious example here being the Bitcoin block size/Segwit activation debate. Bitcoin developers, users, miners, and holders engaged in a long debate that panned out over two years with major turning points including the UASF movement, the NYA agreement, the activation of BIP91 with miner support, and finally the Segwit2x/No2X civil war that defeated the Segwit2x camp. Consequently, several Segwit2x supporters from Bitcoin went on to support the Bitcoin Cash network as the network that more closely aligned with their vision.
Why resurface the past?
There are some early indicators that we may have a debate of the same magnitude, but this time, it’ll be around implementing privacy on the base layer.
Some folks including Udi Wertheimer have asserted that pseudonymous addresses implemented by Satoshi were a misstep. While some bitcoiners agree, there are two obvious problems:
1. Many Bitcoin supporters, especially investors, are comfortable with the current level of auditability and regulatory acceptance of Bitcoin. If privacy was successfully implemented on layer 1, it would come with tradeoffs the community may not like. For example, balance privacy could make total coin supply harder to audit (which would be especially problematic in the case of an inflation bug).
Regulators are comfortable with Bitcoin for a different reason: Bitcoin is transparent and, to a great extent, traceable. Enforcement of on/off-ramps KYC along with advanced chain analytics by companies like Chainalysis gives regulators the confidence that Bitcoin can hardly be used for illicit activities. Implementing on-chain privacy will be returning Bitcoin to square 1 for these supporters.
2. If Bitcoin ever implemented on-chain level-1 privacy, it’d have to implement a largely untested privacy protocol. As it stands today, Zcash and Monero’s privacy techniques are deemed too risky by bitcoiners. Zcash mainly because of its trusted setup and Monero because of its scaling problems (bulletproofs have helped but have not “solved” scalability). In either case, if bitcoin developers did begin rolling out a (largely untested at scale) privacy implementation on layer-1, this would be a bullish event for XMR and ZEC holders who’ve focused on privacy from the outset.
Currently, these concerns would likely lead to community-wide rejection of implementing on-chain privacy and instead encourage the use of obfuscation techniques like CoinJoin, layer 2 solutions for privacy preservation, and working on incremental privacy wins like Schnorr Signature & Taproot which make all signatures look the same. This eliminates one way of identifying transactions (e.g. whether or not multisig was used) so attackers cannot use that classifier to separate one group of transactions from another.
Whether the voices calling for on-chain privacy are loud enough to create a critical mass to push the debate further is yet to be seen, but if they do, we don’t anticipate a short or friendly debate.
Disclosure: Token Daily Capital and/or its partners may have exposure to some of the cryptocurrencies mentioned in this newsletter.