Socratic Seminar 18

Previous Seminar Next Seminar

Announcements

• Respect people’s privacy
• Chatham House rules
• Join our telegram group
• Follow us on Twitter (@HonoluluBitcoin)
• Donate sats
• Sponsor shoutout
  • Hawaii Technology Development Corporation
  • Entrepreneurs Sandbox

Geopolitics

• Former FTX CEO Sam Bankman-Fried arrested in Bahamas (Obsidian Link)

  • See "Everyone's a Scammer" section under optional topics for other crypto-related drama in the wake of the FTX blowup
  • Recap/Background
    • FTX was one of the world's largest cryptocurrency exchanges before it collapsed last month.
    • Users withdrew roughly $5 billion of crypto assets in a single day as concerns mounted over the exchange's solvency.
    • Bankman-Fried resigned on November 11 and FTX filed for Chapter 11 bankruptcy protection.
    • John Ray III, who took over as FTX CEO, said in court documents the following week, "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
  • Bankman-Fried's arrest "followed receipt of formal notification from the United States that it has filed criminal charges against SBF and is likely to request his extradition," the Office of the Attorney General of the Bahamas said in a statement
  • The grand jury indictment charged SBF with seven counts, including wire fraud and conspiracy to commit wire fraud against lenders and customers, conspiracy to commit securities fraud, conspiracy to commit money laundering, and violations of campaign finance laws.
  • The Securities and Exchange Commission said following news of the arrest that it had "authorized separate charges relating to Bankman-Fried's violations of securities laws."
    • The SEC complaint alleges that Bankman-Fried diverted customer funds from FTX to Alameda Research and used that money for "fraudulent" purposes, including real estate purchases and big political donations.
  • The court documents also accused Bankman-Fried and FTX of failing to accurately account for the value of FTX's crypto assets and of disorganized management of FTX's cash holdings.
  • Bankman-Fried's arrest comes one day before he had been expected to testify at a House hearing on the crypto exchange's collapse.

• Coin Center response to the Digital Asset Anti-Money Laundering Act introduced by Senators Warren and Marshall (Obsidian Link)

  • BTC Policy Institute: "Senator Warren’s Misguided War on Self-Custody"
  • Opinion piece on how this bill proposes unconstitutional privacy restrictions for bitcoin users
  • "An opportunistic, unconstitutional assault on cryptocurrency self custody, developers, and node operators"
  • The bipartisan Digital Asset Anti-Money Laundering Act, introduced by Sens. Warren and Marshall, is the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen.
  • What it does
    • The bill seeks to designate developers of “unhosted wallets” (aka “self-hosted”/non-custodial wallets), miners, and node operators as Money Service Businesses or MSBs
      • Subjects them to burdensome, expensive, and unnecessary state-by-state licensing and reporting requirements that are impossible for software providers to comply with in many cases.
    • As MSBs, they would be obligated to:
      • identify and record the personal information of every person who uses their software or sends transactions over their internet-connected computers,
      • develop risk-calibrated AML programs that block persons from using their software or network throughput if they suspect those people are moving funds related to crime, and
      • file reports about their users without a warrant, government request, or probable cause as the trigger.
    • Additionally, these MSBs would be banned from making any transactions involving privacy tools (e.g. Tornado Cash or similar privacy software) or privacy preserving cryptocurrencies (e.g. Zcash, Monero, etc.), irrespective of any evidence of criminality related to those transactions.
  • The consequences
    • The bill has been deliberately crafted to make permissionless blockchains unavailable to Americans by forcing all validators and developers of these networks to gate and surveil their infrastructure.
    • The intended result is to forbid Americans from having any technological guarantees of personal privacy or individual agency when making transactions online, irrespective of whether those transactions have anything to do with crime.
    • To the extent cryptocurrencies could even continue to exist in a world where this bill becomes law, Americans’ ability to use them would be limited to a fully permissioned and surveilled environment.
    • This bill is focused exclusively on financial surveillance and does not address any of the issues of corporate control that led to the collapse of FTX.
      • Perversely, this bill would effectively outlaw self-custody, which is the only way for consumers to protect themselves from this kind of counterparty risk exemplified in the FTX collapse.
      • If 2022 has taught us anything about consumer protection in the crypto industry, it is that digital asset investors should take extreme caution before turning over custody of their assets to “trusted third parties.”
        • Firms like FTX, BlockFi, Celisius, and Voyager have a habit of going bust and losing customer deposits due to fraud or poor risk management.
  • If passed, the bill would face harsh constitutional scrutiny from the courts:
    • The MSB classification of network infrastructure operators infringes on the First Amendment (free speech)
      • Attempts at regulating the writing of software have been struck down by U.S. courts numerous times in the past
      • The attempt at restricting the development of non-custodial wallets would constitute a regulation of public-private key cryptography, which, too, has been attempted before and struck down due to violation of the first amendment of the U.S. constitution.
        • Non-custodial wallets transmit bitcoin the currency as much as the key to one’s door moves the house around. Non-custodial wallets function as signing devices, which transfer the access rights to bitcoin — while the asset itself never moves.
      • Bitcoin nodes do not secure third-party transactions. They validate their own version of the blockchain against copies obtained through other nodes in the network. Nodes neither secure nor transmit third-party transactions. No other user’s funds are affected if a Bitcoin node goes down.
        • The attempt of ruling Bitcoin node operators as money transmitters can therefore be seen as the attempt at regulating which individuals are allowed to compare information. Again, the proposed bill doesn't sufficiently prove that the scope is narrow enough to avoid infringing on aspects of free speech and the freedom of information.
      • A bitcoin miner is just a computer that runs certain software.
        • In no scenario does a bitcoin miner transmit bitcoin from A to B. Rather, a bitcoin miner propagates blocks of information to the network.
      • Additionally, the bill would make it impossible for users of these networks to make anonymous payments, including donations to political organizations and potentially other payments or messages that are essential to effective political assembly and therefore also protected under the First Amendment.
    • Could also infringe on the Fourth Amendment (unreasonable search and seizure)
      • The bill effectively deputizes software developers and miners to collect and report private information, without a warrant, about cryptocurrency users even though that information is not voluntarily disclosed by those users or in any way relevant to the business purpose of the developer or miner.
  • Ultimately, physical cash is a fundamental pillar of free societies because it preserves and enables the capability of transacting directly, citizen to citizen, without the need for approval from some corporation or state bureaucracy.
    • Bitcoin is the only way to maintain those characteristics in digital space
    • This kind of regulation is impossible to enforce and would just put Americans at a disadvantage

• EU to force crypto companies to report their users’ holdings to tax authorities (Obsidian Link)

  • The European Union indicated Thursday that it will make cryptocurrency companies report their European users’ holdings to tax authorities.
  • The new law, inspired by international standards designed to curb crypto tax evasion, could also apply to stablecoins, derivatives and non-fungible tokens (NFT), and force even non-EU based crypto providers to register within the bloc, the document reveals.
  • Under the plans, crypto asset providers would have to collect and verify information about their users such as names, addresses, social security numbers and dates of birth, which would then be sent to the tax authorities in the user’s country of tax residence.
  • In a statement, the EU Commissioner for tax, Paolo Gentiloni said, “Anonymity means that many crypto-asset users making significant profits fall under the radar of national tax authorities. This is not acceptable.”
  • The enforcement of the measures was not made entirely clear, as the cryptocurrency industry has various entities and actors residing in various jurisdictions, including some who claim no base of operations.
    • When asked how the EU will enforce the measures on companies outside the bloc, Gentiloni told reporters, “We will work on that. What counts for us is that EU residents are targeted by these measures,” even if they use crypto providers from elsewhere, he said.
  • The EU has said it believes the move could generate as much as $2.5 billion (2.4 billion euros) through the introduction of the directive.
  • Forcing companies to provide European tax authorities — including companies based outside of the EU — once again forces firms to collect copious amounts of data exposing user holdings, and then transmit them to tax authorities in Europe whom they must trust to keep them safe.

• Bank of International Settlements (BIS) committee finalizes policy proposal about standardizing digital asset exposure limits for banks

  • Bank for International Settlements finalizes policy with 2% cryptoasset exposure cap
  • Policy proposed by the Bank for International Settlements’ (BIS) Basel Committee on Banking Supervision
    • The policy has the support of the Basel Committee’s supervisory body, the Group of Central Bank Governors and Heads of Supervision (GHOS).
    • The framing is to protect banks from overexposure to cryptoassets
  • Key points:
    • Dropped clause from a previous proposal to penalize the use of permissionless blockchains
    • Endorsed capital rules for banks globally that enable holding up to 2% of Tier 1 capital in bitcoin/Group 2 cryptoassets
  • Tier 1 capital refers to a bank’s core capital, which is kept in its reserves and utilized to finance its clients’ commercial activities. Along with declared reserves and a few other assets, it also includes common stock.
  • Bitcoin would fall under the policy’s Group 2 crypto asset class as an “unbacked cryptoasset.”
  • The policy also mentions that “a bank’s total exposure to Group 2 cryptoassets should not generally be higher than 1% of the bank’s Tier 1 capital and must not exceed 2% of the bank’s Tier 1 capital.”
  • Chair of the GHOS Tiff Macklem stated "Today’s endorsement by the GHOS marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from cryptoassets. It is important to continue to monitor bank-related developments in cryptoasset markets. We remain ready to act further if necessary."
  • Even though a 2% cap is low, the proposal provides some regulatory clarity that might entice banks to consider exploring bitcoin as an option

Market/Adoption

• Bitnob partnerships enabling LN-based remittances in Africa
  • Strike enables instant, cheap remittances for people in Nigeria, Kenya, and Ghana (Obsidian Link)
    • The remittances service is initially enabling people in Nigeria, Kenya and Ghana to receive money from the U.S. and instantly convert it to their local currency.
    • The feature is made possible thanks to a partnership between Strike and local Bitcoin app Bitnob
    • “Now, using Lightning rails under the hood, Strike’s Send Globally feature provides users in the U.S. a cheaper, faster, and more innovative way to instantly send payments to Africa,” per the statement. “Payments are instantly converted into naira, cedi, or shillings, and deposited directly into a recipient’s bank, mobile money, or Bitnob account.”
    • Only requires a phone number from someone in Africa
  • CoinCorner partners with Bitnob to facilitate cross-border transactions from UK and Europe to Africa
    • Basically the same setup as the Strike <> Bitnob partnership
    • UK citizens can send Bitish pounds (GBP) or Euros (EUR) to transfer funds freely and instantly to Nigeria, Kenya, and Ghana via the Lightning Network
      • Funds end up as Nigerian naira (NGN), Kenyan shilling (KES), or Ghanaian cedi (GHS) in a local bank account or mobile money wallet
      • GBP/EUR in the UK --> LN --> NGN/KES/GHS in Africa

Technology

• Bitcoin Core version 24.0.1 released

  • Includes the new mempoolfullrbf configuration option which allows users to change the policy their individual node will use for relaying and mining unconfirmed transactions.
  • The option defaults to the same policy that was used in previous releases and no changes to node policy will occur if everyone uses the default.
  • Mempool observer tool to view recent full-RBF replacement events
  • Note: a version 24.0 was tagged and had its binaries released, but project maintainers never announced it and instead worked with other contributors to resolve some last-minute issues, making this release of 24.0.1 the first announced release of the 24.x branch.

• Ledger launches Stax hardware wallet

  • Will start shipping by the end of March 2023 - available for pre-order now
  • Will eventually be available at Best Buy stores like other Ledger products
  • Designed by Tony Fadell, the inventor of the iPod and co-creator of the iPhone.
  • The Ledger Stax will have a large e-ink touch screen
    • A lot of screen space to make use of
    • E-ink is low-powered, so a full charge can last for months if the device is left unused
  • It can connect to the Ledger Live mobile app on your phone via Bluetooth or to a computer via USB-C.
    • Looks like no QR or NFC capabilities
  • Uses the same secure element chip to store secrets as other Ledger devices (proprietary - have to trust Ledger)
    • "Trusted display" screen is operated by the secure element chip itself, so you can "operate a transaction knowing that what you see is what you sign"
  • The device body has "embedded magnets for stackability"
    • Interesting that they're encouraging keeping multiple devices stacked together in the same hiding spot
    • Can still use different PINs for each device, but it's generally safest to assume that if someone finds the device and has the right tools, they can eventually crack it
    • Contrary to the idea of geographically distributed multisig
  • It's set to launch next year and will be priced at $279, a markup from its Ledger Nano X, which currently retails at $149.
  • Ledger Stax will be available by the end of March 2023. You can pre-order today on Ledger.com. In the future, it will also be available from select retailers such as BestBuy in the United States.

• Jack Dorsey provides 14 bitcoin grant (~$250k) to open source distributed communication protocol 'nostr' with goal of censorship-resistant Twitter replacement (Obsidian Link)

  • @fiatjaf splits grant with @jb55 to enable 2 competing foundations pushing Nostr development
  • 2 days later: Twitter announces policy banning promotion of other social platforms: Facebook, Instagram, Mastodon, Truth Social, Tribel, Post and Nostr
  • Nostr refresher:
    • Nostr aims to be the simplest open protocol that is able to create a censorship-resistant global "social" network once and for all.
    • It doesn't rely on any trusted central server, hence it is resilient; it is based on cryptographic keys and signatures, so it is tamperproof; it does not rely on P2P techniques, therefore it works.
    • Everybody runs a client. It can be a native client, a web client, etc. To publish something, you write a post, sign it with your key and send it to multiple relays (servers hosted by someone else, or yourself). To get updates from other people, you ask multiple relays if they know anything about these other people. Anyone can run a relay. A relay is very simple and dumb. It does nothing besides accepting posts from some people and forwarding to others. Relays don't have to be trusted. Signatures are verified on the client side.
  • Dorsey found out about Nostr and was able to get funds distributed to fiatjaf in ~24 hours
  • Both groups are developing bounties for building various Nostr tools/apps (or to further the protocol itself)

• Coinkite launches 'BinaryWatch' Hub: tracks popular bitcoin software signature verification

  • The BinaryWatch.org website checks binaries from Bitcoin-related projects and monitors for any changes - will sound the alarm if signature verification fails
  • Best practice for software releases is to include GPG signatures to verify that the maintainers of the software are the ones that compiled and released the binary
    • This prevents a man in the middle attack where an attacker replaces a software release with a malicious version
  • User can and should verify GPG signatures themselves, but this hub automates the process
  • BinaryWatch follows these projects currently:
    • bitcoin_core, blockclock, coldcard, green_qt, joinmarket, lnd, core_ln, electrum, sparrow, specter, wasabi
    • Other projects can request to be added by emailing csumchecker@coinkite.com
  • Coinkite also operates bitcoinbinary.org a service that archives reproducible builds for Bitcoin-related projects.

• First successful discreet log contract has been executed on the Lightning Network (Obsidian Link)

  • A Discreet Log Contract (DLC) is a special type of bitcoin transaction that executes a smart contract with information provided by an oracle
    • These can be used trigger a variety of conditional payments (sports bets, wagering on the price of bitcoin, the temperature on a particular day, etc.)
  • To date, one of the things limiting DLCs from hitting a critical tipping point is the fact that they have only been conducted on chain
    • In a high-fee environment, many DLCs might be priced out
  • The Crypto Garage team announced that they successfully opened and closed a Lightning channel with an embedded DLC channel on mainnet.
    • Per their blogpost, it looks like the Crypto Garage team forked the Lightning Development Kit to add support for splitting a Lightning channel, which has enabled them to create a DLC channel within a Lightning channel.
    • From there, they were able to create special transactions — a split transaction and a glue transaction — that would enable the different parties engaged in a DLC to update the state of their contract within the Lightning channel and the DLC channel without giving one of the parties an unfair advantage, which was one of the big design challenges that was previously unsolved. This is a massive step in the right direction.
  • With that being said, the Crypto Garage team is warning that this implementation is in its very early days and should not be considered stable.
    • In fact, they warn that you are likely to lose your sats if you try to execute this on mainnet.

• Anonsats: Privacy-focused Chaumian ecash payment system built on Bitcoin, Lightning, and Cashu (Obsidian Link)

  • Anonsats is a Chaumian ecash payment and settlement system built on Bitcoin, Lightning, and Cashu.
    • Cashu is the final piece of the puzzle, a Chaumian mint component, that, together with Bitcoin and Lightning, has the promise of becoming an unstoppable and untraceable global digital cash payment and settlement network.
  • Anonsats is an experimental attempt to give you much better financial privacy in the digital world
  • Presently, the project is available intermittently through transient and ephemeral deployment instances. But as things progress anonsats will be deployed as a production service.
  • Anonsats is built on the shoulders of giants and fundamental concepts:
    • Bitcoin uses unspent transactions, known as UTXOs
    • Traditional financial systems (including Ethereum) use Account Balances
    • Anonsats, with the help of Cashu, used Blinded Promises
  • Blinded promises represent the major next advance toward total financial privacy.
    • Although in existence for decades, blinded promises combined with Bitcoin/Lightning payment/settlement network enable global scalability
    • What's fundamentally unique about blinded promises is that while they are in circulation (as tokens, coins, etc.), there is absolutely no record of their existence
    • Only when a blinded promise is presented for redemption, the mint can cryptographically confirm that they are good for the money.
  • Anonstats tries to combine everything to give the use best of all worlds:
    1. a custodial wallet for newbies who only care about having a Lightning address
    2. a method for more sophisticated users to easily convert online sats into negotiable tokens (Cashu tokens)
    3. a way to conduct offline payments (they are actually deferred redemptions) where either the payer or payee don’t have access to reliable internet
  • So in the end, whether you call them ‘tokens’ or ‘coins’ (techically, they are signed blinded secrets that represent a promise from the mint), they can be stored and circulated independently of the issuing mint.
  • The tokens, are like physical bank notes, they have an independent, self-contained and UNTRACEABLE existence. They are a BEARER instrument. In fact, through the magic of cryptography, there is no NO RECORD of their existence while they are in circulation. Only when they are redeemed are they checked for a double-spend condition, and another UNTRACEABLE token is issued.
  • An anonsat token can be simple text file, stored via NOTEPAD.exe. It can be QR code jpg file that is stored and scanned when it is used. It can be on a printed piece of paper, JUST LIKE A BANK NOTE! Only when the receiver redeems the coin, is there a secure blinded transaction back to the mint to redeem and to issue a new token to the subsequent holder (e.g., merchant)
  • Each Cashu mint, is its own independence instance. This is not a federation, but rather a competitive participant in a standards-based adverse clearing and settlement system
  • Anonsats abstracts the multi-mint instances away from the user to make it seamless. If a user gets nervous about a particular Cashu mint, they can immediately withdraw their sats to Lightning/Bitcoin and/or transfer them to a more trustworthy Cashu mint instance.
  • Every managed Cashu wallet automatically supports all of the mints that are a member of the trusted keyset
  • Finally, anonsats is ultimately backed by Bitcoin. If a user wishes, they can clear out their anonsats tokens via a Lightning invoice, and do final settlement on the Bitcoin blockchain.
  • Anonsats is a Layer 3 application, so there is some trust. It is a custodial wallet, yet it can be burned in a moment’s notice. But what you get in return is a massive increase in privacy and a custodial wallet that works across many trusted mints
  • Anonsats, in turn, has to trust a set of Chaumian mints that have promised to stay available online and willing to redeem Cashu tokens. A list of trusted keysets is being maintained, which reflects the set of trusted mints within the ecosystem.
  • The real power is when the user realizes that they can clear out these sats however they wish, to a BTC wallet or to a fiat currency of their own choosing.
    • Even better, if another app is using anonsats, they will be able to easily transact their sats to another anonsats app for use and redemption without penalty or restrictions.
  • Nothing is ever perfect privacy, but anonsats, if they are used within an app context or between anonsat holders, never touch a chain or channel.
    • Of course, there risk for surveillance within the app itself, but when transacting outside of an app, there is an extra layer of privacy afforded by the Chaumian mints (blinded signatures).
  • Think of anonsats as your personal secret stash of sats for fully anonymous transactions that, when the time is right, can be cashed out on the open settlement networks (i.e., BTC/LN).

Mining

• Mining in a bear market

  • How does the current bitcoin mining bear market compare to previous ones? (Obsidian Link)
  • Further analysis of the bear market impact on miners (Obsidian Link)
  • Coin Metrics' State of the Network’s Q4 2022 Mining Data Special
  • Current state of the mining industry in Q4 2022:
    • Bitcoin hash rate continued to push higher throughout most of Q4 in spite of a subdued spot BTC price
    • Hash rate hit as high as 250 EH/s (quintillion hashes per second) in late October, an all-time high
    • Hash rate had grown throughout the summer as publicly-traded Bitcoin miners continued to add capacity via mining rigs pre-ordered during the bull market.
    • There’s a potentially interesting explanation behind the late September and October rise in hash rate: The Ethereum Merge.
      • The end of Ethereum mining likely incentivized operators to repurpose industrial rack space, swapping out GPUs used to mine Ethereum with ASICs used to mine Bitcoin. It’s hard to put an exact figure on the magnitude of this resource reallocation, but Bitcoin hash rate grew quickly from 220 EH/s to 250 EH/s shortly after the completion of The Merge in September
    • Bitcoin’s mining difficulty decreased by more than 7% recently, the biggest decrease since miners abruptly exited China in spring 2021.
      • The stagnation in hash rate is a sign that miners are facing a new round of challenges amid wary market conditions
  • Comparison to previous bear markets:
    • At the end of 2020, one of the most profitable periods in bitcoin mining's history began.
      • It lasted until early 2022, when a lethal combination of a falling bitcoin price and growing hashrate pushed mining economics down to depressing levels.
    • Article defines a bitcoin mining bear market as a sustained period with revenue per kWh of less than $0.25, using the most energy-efficient machine on the market.
    • Although the current bear market is devastating for those with high operating costs and elevated debt levels, mining economics were significantly worse and stayed depressed for much longer during the previous bear market.
      • From a profitability perspective, the current bitcoin mining bear market has not been as bad as the previous ones, as the revenue per kWh was significantly lower in 2020.
    • Still, when it comes to capital destruction, no other bear market even comes close to the current one.
    • During previous bear markets, most bitcoin mining companies were privately funded, limiting the amount of outside capital in the industry.
      • At that time, most bitcoin miners organically financed their operations using cash flows from operations.
    • The private nature of the industry changed abruptly in late 2020 when an army of bitcoin miners started going public to take advantage of some of the hottest stock market conditions in modern history.
    • Most of these companies have raised enormous amounts of equity during this period and significantly diluted shareholders.
      • Therefore, most investors who bought these stocks even in late 2020, before the bull market, are significantly underwater with their investments.
    • A handful of public bitcoin miners are now close to bankruptcy as the depressed mining economics render them unable to generate sufficient operating cash flow to service debt.
  • Factors that could contribute to an extended bear market:
    • A substantial mining capacity is waiting to come online, and the hashrate will likely not stop growing until well into 2023. This hashrate addition will keep putting downward pressure on mining economics for the foreseeable future.
    • Both retail and institutional investors who got in during the previous bull run have been wrecked, and it takes time before outsiders are ready to invest in the sector again.
    • In addition, the crypto industry's reputation has gotten severely harmed by the FTX scandal, which will further prevent new investors from coming in.

• River report: "What Could Bitcoin Mining Look Like at One Zettahash?" (Obsidian Link)

  • 1 zettahash (1 sextillion hashes) per second would be ~300% increase from today's levels
  • River believes there are 3 categories of requirements to support a zettahash in hashrate, or any future grown in hashrate at all:
    • Security budget (Bitcoin's price, transaction fees, and developer funding)
    • Mining equipment (mining rigs, efficiency improvements, and manufacturing)
    • Energy (energy supply and grid infrastructure)
  • The report examines whether each category could become a potential bottleneck to hashrate growing to 1 zettahash:
    • Security budget
      • Conclusion
        • Bitcoin's usage and price will need to increase significantly to support that hashrate growth
    • Mining equipment
      • Conclusions
        • An overall production rate of a few hundred thousand ASICs per year is not an issue, unless major geopolitical tensions arise
        • Consistent efficiency improvements are historically proven, but this is no guarantee that they will continue in the future.
          • Supply chains and frequent technological breakthroughs are all unpredictable factors
    • Energy
      • Conclusions
        • There is an abundance of cheap energy in the world in places with low demand
          • Unlocking access to this energy is a bottleneck
        • Bitcoin mining can help reduce global warming by being the ideal customer to combust vented methane gas when it cannot be economically captured
        • Bitcoin mining can act as one of many tools to help stabilize energy grids as they ramp up their reliance on renewable energy

Optional Topics

• Everyone's a Scammer (Hold your own keys!)
  • Digital Currency group owes Gemini users $900m amid Genesis insolvency
  • Gemini modifies terms of service as Gemini Dollar stablecoin gets caught in market contagion (Obsidian Link)
  • Assessing Binance reserves and liabilities
  • SBF secretly funded 'The Block' news organization: CEO Michael Mccaffrey used Alameda money to buy out other investors, becoming the majority shareholder himself
• Brazil approves bill regulating use of bitcoin as payment (Obsidian Link)
• Nigeria looking to legalize the usage of bitcoin and cryptocurrencies
• Japan’s largest power company will mine bitcoin with excess energy (Obsidian Link)
• Core Lightning v22.11: "Alameda Yield Generator" (Obsidian Link)
  • Named by Alex Myers
  • Key features:
    • reckless is a new plugin manager that you can use to install and uninstall plugins with a single command.
      • CLN has always emphasized extensibility and customizability through plugins
      • Installing and managing plugins required manual work (cloning code, installing dependencies, and updating configuration files)
      • reckless is a tool that handles all those steps for you and does so in a way that helps avoid common problems (missing dependencies, wrong paths, missing permissions, etc.)
      • It also adds a way for node operators to easily search for and install plugins from the community repository
    • autoclean has become much more powerful and efficient, especially for larger nodes.
      • The autoclean plugin learned some new tricks on performance optimization and has become significantly faster
      • It can now automatically delete old forwards, payments and invoices based on parameters such as age or status. By batching those operations, the execution became way more efficient and time-saving.
      • For some operators this lead to a shave of several hundreds of megabytes from their databases, executed in a fraction of the time it would have taken before
    • A new filter API can be used to extract only fields you are interested in from most JSON-RPC commands
      • Could massively reduce the size of results if only part of the response is required
  • Updated versioning scheme to be date-based instead of time-based
    • Any change in the public APIs is marked as deprecated and will remain functional for six months or two releases after the deprecation has started
• New Lightning Network privacy research (Obsidian Link)
  • Split findings into three chapters:
    • In the Routing Analysis chapter we investigate ways in which other nodes on the network can compromise sender and receiver privacy by participating as one or more hops on a payment route. Some of the mitigations we explore include PTLCs, Timing Delays, and Multi-Path Payments.
    • In the Channel Coinjoins chapter we look into the on-chain connection to Lightning, where channel opens and channel closes can harm the privacy of a Lightning node. This is a particular problem for routing nodes which announce their channels to the network. Potential mitigations include Coinjoins of many flavors, including Coinjoin in and out of a channel, and splicing.
    • In the Blinded Paths + Trampoline Routing chapter we tackle the receiver privacy problem. In the current state of Lightning, receivers embed their node public keys in invoices so the sender knows how to route to them, which makes it challenging to receive privately. We explore the potential of Blinded Paths and Trampoline Routing, and the potential combination of both, to solve this problem.
• "Maturation of the Lightning Network: Growing up by going vertical" by Roy Sheinfeld from Breez
• Replit + Mash
  • Blog post from Mash about Lightning monetization and payment tools on Replit
  • TFTC Issue #1293: Replit + Lighting could open the floodgates to app building
• Legends of Lightning tournament announces winners (Obsidian Link)
• "Structural Adjustment: How the IMF and World Bank repress poor countries and funnel their resources to rich ones" by Alex Gladstein from the HRF
• "Oil, Gold, and LCLo(SP)R" by Zoltan Pozsar of Credit Suisse
• Coinbase received 12320 government demands for customer info this year: up 66% from last year
• "Do Not Rug on Me: Leveraging Machine Learning Techniques for Automated Scam Detection" research paper
• Gridless, a bitcoin mining company in East Africa, raises $2m in funding led by Stillmark and Block, Inc. (Obsidian Link)