@btkicio @umbertoravizza Ok, quick thread here.
1/n
There are 2 different issues in Bitcoin: privacy & censorship-resistance (connected but not the same). The former is about attackers not being able to cheaply spy on you. The latter about attackers not being able to prevent you from spending sats.
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1/n
There are 2 different issues in Bitcoin: privacy & censorship-resistance (connected but not the same). The former is about attackers not being able to cheaply spy on you. The latter about attackers not being able to prevent you from spending sats.
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@btkicio @umbertoravizza ...
2/n
The connection is due to the fact that intelligence about you can be used to hurt you in retaliation for your transactions (including the one to your future self: saving/hodling). This threat is just a fear-based kind of censorship. But let's just consider the latter.
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2/n
The connection is due to the fact that intelligence about you can be used to hurt you in retaliation for your transactions (including the one to your future self: saving/hodling). This threat is just a fear-based kind of censorship. But let's just consider the latter.
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@btkicio @umbertoravizza ...
3/n
Since day 1 of Bitcoin, there was only the problem of discretionality of tx inclusion: miners can chose to generate "empty" (ie coinbase-only) blocks, preventing people from transacting onchain (and thus also creating friction for settlement of offchain transactions).
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3/n
Since day 1 of Bitcoin, there was only the problem of discretionality of tx inclusion: miners can chose to generate "empty" (ie coinbase-only) blocks, preventing people from transacting onchain (and thus also creating friction for settlement of offchain transactions).
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@btkicio @umbertoravizza ...
4/n
This in general could *not* be solved by any kind of privacy improvement: even if txs where obfuscated (ring signatures, confidential txs, zkSNARK shielded-txs, signature-aggregated CoinJoins, etc.), thus preventing tx-blackisting, tx-whitelisting is alwsys possible.
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4/n
This in general could *not* be solved by any kind of privacy improvement: even if txs where obfuscated (ring signatures, confidential txs, zkSNARK shielded-txs, signature-aggregated CoinJoins, etc.), thus preventing tx-blackisting, tx-whitelisting is alwsys possible.
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@btkicio @umbertoravizza ...
5/n
This means that even if you introduce privacy features, censoring miners can just opt to exclude any tx which is not explicitly approved, either by excluding the txs enabling the features (which is *all of them* if they aren't opt-in: empty blocks again), or worse:
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5/n
This means that even if you introduce privacy features, censoring miners can just opt to exclude any tx which is not explicitly approved, either by excluding the txs enabling the features (which is *all of them* if they aren't opt-in: empty blocks again), or worse:
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@btkicio @umbertoravizza ...
6/n
by *including* them only after requiring the transactor to disclose off-band the necessary keys/signature. Privacy mitigates blacklists, whitelists are not affected. The issue moves then to economics & game-theory. Empty blocks only reward the subsidy, not the fees.
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6/n
by *including* them only after requiring the transactor to disclose off-band the necessary keys/signature. Privacy mitigates blacklists, whitelists are not affected. The issue moves then to economics & game-theory. Empty blocks only reward the subsidy, not the fees.
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@btkicio @umbertoravizza ...
7/n
Boot-licking miners, producing empty blocks, only earn block-subsidies, which will eventually go to 0 (slowly). Actual miners also earn block-fees, which will increase. Of course, central banks, nation states & other mafias can subsidize boot-licking miners off-band!
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7/n
Boot-licking miners, producing empty blocks, only earn block-subsidies, which will eventually go to 0 (slowly). Actual miners also earn block-fees, which will increase. Of course, central banks, nation states & other mafias can subsidize boot-licking miners off-band!
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@btkicio @umbertoravizza ...
8/n
This unfair competition may remain sustainable for a long while: governments & other mafias don't have to earn the money the spend for subsidies w/ productive (positive-sum) work. They just steal it directly w/ guns, or indirectly w/ printers ("Cantillon tax").
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8/n
This unfair competition may remain sustainable for a long while: governments & other mafias don't have to earn the money the spend for subsidies w/ productive (positive-sum) work. They just steal it directly w/ guns, or indirectly w/ printers ("Cantillon tax").
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@btkicio @umbertoravizza ...
9/n
So, the ultimate question boils down to: "will the market-demand for uncensored txs be sometimes higher than the budget for censorship?" There's not a certain answer, but we only need a "sometimes yes" for Bitcoin to ultimately succeed in improving fiat status quo.
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9/n
So, the ultimate question boils down to: "will the market-demand for uncensored txs be sometimes higher than the budget for censorship?" There's not a certain answer, but we only need a "sometimes yes" for Bitcoin to ultimately succeed in improving fiat status quo.
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@btkicio @umbertoravizza ...
10/n
This is the "competition phase" that @evoskuil conceptualized already years ago in the Cryptoeconomics wiki: state-subsidized bootliking-miners vs fee-earning market-miners. It could go on for years: not a trivial equilibrium. Read more here:
github.com/libbitcoin/lib…
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10/n
This is the "competition phase" that @evoskuil conceptualized already years ago in the Cryptoeconomics wiki: state-subsidized bootliking-miners vs fee-earning market-miners. It could go on for years: not a trivial equilibrium. Read more here:
github.com/libbitcoin/lib…
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@btkicio @umbertoravizza @evoskuil ...
11/n
There are actually 2 kinds of empty-block attacks: boot-licking miners refusing to include non-coinbase txs in blocks (soft version), and book-licking miners refusing to build on blocks which themselves include non-coinbase txs (hard version: an "evil soft-fork").
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11/n
There are actually 2 kinds of empty-block attacks: boot-licking miners refusing to include non-coinbase txs in blocks (soft version), and book-licking miners refusing to build on blocks which themselves include non-coinbase txs (hard version: an "evil soft-fork").
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@btkicio @umbertoravizza @evoskuil ...
12/n
The long-term game-theory is not fundamentally different between the 2 kinds, but the latter may be more disruptive, including several deep reorgs, unpredictable confirmation times, slower block production, reduced effective hash-power. But it's the same dynamic.
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12/n
The long-term game-theory is not fundamentally different between the 2 kinds, but the latter may be more disruptive, including several deep reorgs, unpredictable confirmation times, slower block production, reduced effective hash-power. But it's the same dynamic.
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@btkicio @umbertoravizza @evoskuil ...
13/n
It may look like this "OFAC compliant" bullshit is substantially different from an empty-block attack, but upon rational analysis of long-term economic incentives it's not, it's basically the same thing. "Compliant blocks" are ultimately empty blocks. This is why:
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13/n
It may look like this "OFAC compliant" bullshit is substantially different from an empty-block attack, but upon rational analysis of long-term economic incentives it's not, it's basically the same thing. "Compliant blocks" are ultimately empty blocks. This is why:
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@btkicio @umbertoravizza @evoskuil ...
14/n
there's no upper limit to the amount & scope of demands "regulators" will impose on boot-licking miners they subsidize. After accepting "OFAC compliance" they will be asked to be "full KYC compliant", then eventually to be "SEC compliant" by introducing *inflation*!
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14/n
there's no upper limit to the amount & scope of demands "regulators" will impose on boot-licking miners they subsidize. After accepting "OFAC compliance" they will be asked to be "full KYC compliant", then eventually to be "SEC compliant" by introducing *inflation*!
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@btkicio @umbertoravizza @evoskuil ...
15/n
The equilibrium that the regulatory-pressure on boot-licking miners will likely eventually reach is *fiat-bank* level. It's rational to predict that the market demand for a "Bitcoin" system which is just as crippled as the fiat one (but less efficient) would be ~0.
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15/n
The equilibrium that the regulatory-pressure on boot-licking miners will likely eventually reach is *fiat-bank* level. It's rational to predict that the market demand for a "Bitcoin" system which is just as crippled as the fiat one (but less efficient) would be ~0.
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@btkicio @umbertoravizza @evoskuil ...
16/n
Assuming there is any demand at all for Bitcoin, that demand ultimately overlaps with the market for "things you can't do with regulated/censored money". Which include permissionless saving, not just spending. To summarize: "If you only need PayPal, you use PayPal".
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16/n
Assuming there is any demand at all for Bitcoin, that demand ultimately overlaps with the market for "things you can't do with regulated/censored money". Which include permissionless saving, not just spending. To summarize: "If you only need PayPal, you use PayPal".
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@btkicio @umbertoravizza @evoskuil 17/n(n=17)
This is why the "regulated Bitcoin" dystopian nightmare is ultimately just the same as the "state-sponsored empty-block attack" scenario. Privacy features which Bitcoin has & will adopt, may help avoiding blacklists, but the fight is ultimate about fees vs taxes.
END
This is why the "regulated Bitcoin" dystopian nightmare is ultimately just the same as the "state-sponsored empty-block attack" scenario. Privacy features which Bitcoin has & will adopt, may help avoiding blacklists, but the fight is ultimate about fees vs taxes.
END
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