Stuff like this shows how insanely powerful evolutionary pressure is.
Same with money. Grokking Bitcoin is about respecting thousands of years of selection pressure: what kinds of objects ppl gravitate to for storing wealth, and what are the common denominators of those objects?
PoW = emulating unforgeable costliness of gold
Fixed supply/ease of transport/verifiability/etc = humans’ evolved preference for these types of assets for storing & exchanging values
Physical AND social phenomena crystallized into code.
Apr 24 • 15 tweets • 3 min read
The way a statechain takes raw UTXOs and mint them into standardized units (fixed-denomination UTXOs) is similar to turning raw gold into gold coins. The digital equivalence of coinage.
Absolute genius. Maybe, just maybe, the Lydian moment for Bitcoin. 1/
I think statechain’s true potential is a payment solution that rivals the Lightning Network, not a niche privacy tool. 2/
Apr 23 • 13 tweets • 2 min read
Random thoughts on different L2 tech.
Sidechain is pretty much PoS (sans the penalty).
Aside from PoW, it’s interesting how the ratio 1/3 keeps reappearing in various distributed settings. It is like the number Pi, but for networking.
(Also a testament to Satoshi's genius.) 1/
The biggest downside of sidechain is the ultimate trust you must put in the federation. There is no failsafe (unless you count the multisig held by a subset of the federation as a failsafe).
Depending on whom you ask, 33% failure mode might not be a high enough bar for safety. 2/
Feb 13 • 4 tweets • 1 min read
BT lack nuances in discussions. I personally dislike that Trezor promotes shitcoins to users/initially supported AOPP, but they've arguably been net good.
Otoh, Coldcard for a long time was the only option for a Bitcoin-only HWW. For that alone they earned perpetual karma points.
The history of human progress has been one where humans gradually realizing their own shortcomings, taking themselves out of the equation, and letting the wonders of math, physics and engineering do the work.
Bitcoin PoW is no exception.
Less human intervention, not more.
Dec 8, 2021 • 40 tweets • 7 min read
Proof-of-Work versus Proof-of-Stake redux
The difference between PoW and PoS becomes starkly clear once you understand these 2 things:
* PoS is a modified, weaker form of PoW
* Energy efficiency and conservation of energy
A thread. 1/
Abstract: The only way PoS-aka-modified-PoW could be seen as an improvement over pure-PoW is _if and only if_ SHA256 hashing, which is what actually happens when you mine Bitcoin, is inefficient when it comes to protecting the Bitcoin ledger. 2/
A friend, who's a seasoned CFA analyst, cited Buffett's criticism of Bitcoin that it's a nonproductive asset and most successful Bitcoin investors were "lucky", i.e. investing based on sentiment not skill (like valuing stocks based on DCF).
Of course I need to play defense 🙂 1/
First of all, I’ve always been a fan of Buffett. Love his autobiography “Snowball” and I take his compounding interest lesson to heart. In investing and everything else in life: everything compounds. Knowledge, friendship, etc. 2/
2/ Another way to put it is that Bitcoin transactions are secured by high stock-to-flow ratio.
I mentioned this recently in terms of mining hardware stock. But economic history is also another kind of stock.
Jun 7, 2018 • 20 tweets • 3 min read
1/ Thread on variance.
PoW mining is critical to Bitcoin network security. Mining, in turn, is subject to 3 major sources of variance, from (roughly) easiest to tame to hardest:
i/ Finding blocks via SHA256 hashing
ii/ Market demand (for BTC & transactions)
iii/ Tech innovation
2/ Quick note: contrary to popular belief that miners are bad & evil, they are vital to Bitcoin’s survival. So it’s imperative to foster a healthy mining industry.
Apr 14, 2018 • 14 tweets • 3 min read
1/ This is an interesting idea. Leaving aside the issue of whether this would actually stop the rise of altcoins, I doubt that in-protocol incentives for future development would be feasible.
2/ The reason Bitcoin’s incentive scheme works is that it’s actually pretty simple.
*Note: this does not imply that the Game Theory aspect of Bitcoin is simple. Complex dynamics could develop from very simple rules (e.g.: think of Go/Chess).
Mar 21, 2018 • 11 tweets • 3 min read
1/ The fact that people still ask questions like this shows how not-well-understood Bitcoin still is. Bitcoin token has value because it directly represents the asset it tokenizes: an unforgeable, costly and decentralized ledger. (thx @NickSzabo4 for the lovely term).
2/ Bitcoin token-asset relationship is closed-loop. There’s a direct, self-enforceable linkage between the token & the asset. The token doesn’t reference any input outside of the BTC ecosystem.
Mar 13, 2018 • 19 tweets • 5 min read
1/ Did you know, that the Vietnam war was a major contributor to the US going off the Gold Standard (aka the "Nixon shock"), which gave birth to the international fiat currencies system that we know today? 2/ The Vietnam war was a senseless war that killed 3 millions people & crippled a beautiful country (my motherland). The US dropped 8 million tons of bombs in Vietnam- which is 3 times *the total amount used by all forces* in WW2.