July 2022 Topics

[MatulefM]

Web5: An Extra Decentralized Web Platform Credit: TBD

• “Web5 is a Decentralized Web Platform that enables developers to leverage Decentralized Identifiers, Verifiable Credentials, and Decentralized Web Nodes to write Decentralized Web Apps, returning ownership and control over identity and data to individuals.”

Reviewing Privacy-Enhancing Proposals For Bitcoin Credit: Seth for Privacy / Bitcoin Magazine

• “List of Bitcoin proposals and ideas to improve privacy that either are still a work in progress, were abandoned or never implemented, or failed to make an impact”

  • (related articles)

    - Bitcoin Needs To Be More Private For Adoption / Credit: Aneta Karbowiak / Bitcoin Magazine

    • “there’s one thing that could preclude bitcoin from remaining sound money, free of government intervention and subsequent destruction of its soundness: It’s the transparency of the Bitcoin public ledger and the lack of privacy undermining fungibility.”

    - Bitcoin Is Losing Favor On Darknet Markets / Credit: Wildsnow / Bitcoin Magazine

    • “"The more people that use bitcoin privately, the better privacy everyone gets, and the more likely it is that bitcoin will emerge again as the prominent currency of the darknet markets, and consequently of other markets too."

Lightweight anti-Sybil with anonymity in Bitcoin (RIDDLE) Credit: Adam Gibson

• “The perhaps central problem of the digital age is how users of services and providers of services can allow interaction without one of:

  • Invasion of privacy leading to complete loss of autonomy and unacceptable security risks via hacking, doxxing etc.
  • Rampant botting/spamming/Sybilling and a tragedy of the commons
  • Avoiding both the above by imposing large financial costs

• This document introduces, and argues for, usage of a cryptographic mechanism which is already well known (to experts, if not the general public), as a potential solution for this problem in a wide variety of contexts, leveraging Bitcoin's utxo set.”

PeerSwap - a trustless P2P lightning/onchain submarine swap rebalancing protocol Credit: ElementsProject

• “PeerSwap enables Lightning Network nodes to balance their channels by facilitating atomic swaps with direct peers. PeerSwap enhances decentralization of the Lightning Network by enabling all nodes to be their own swap provider. No centralized coordinator, no 3rd party rent collector, and lowest cost channel balancing means small nodes can better compete with large nodes.”

Bitcoin: Cryptopayments Energy Efficiency Credit: Michel KHAZZAKA / Valuechain

• “Based on physics, information science and economics, we compute and compare the energy consumption and define what is the energy efficiency of both the current monetary payment system and Bitcoin cryptopayment system. We demonstrate that Bitcoin consumes 56 times less energy than the classical system, and that even at the single transaction level, a PoW transaction proves to be 1 to 5 times more energy efficient.”

[MatulefM]

Bitcoin and Privacy (Socratic Discussion Questions)

• Does transparency of the Bitcoin public ledger and the lack of default privacy undermine Bitcoin’s present and future fungibility and adoption potential?

• To what extent are you concerned that government regulation of exchanges and miners (KYC/AML, compliant miner energy sources, blacklisted UTXOs) could hamper adoption or turn Bitcoin from a freedom-enabling money into a tool of oppression?

- What are your thoughts on current Bitcoin privacy practices (unique address per transaction, coinjoin implementations, non-KYC Bitcoin, L2 Lightning, etc)?

- Privacy implementation can be a friction point for new or basic users, how do you see this developing as Bitcoin adoption grows and more (less technical) users come on to the network?

• Should privacy be on the application level rather than on the protocol level?

- For those in attendance who have a more technical understanding and are familiar with the intricacies of some of the privacy-centric BIPs, what are your thoughts on those proposals? What are some of the major technical limitations to privacy implementations in Bitcoin?

[MatulefM]

Playing with full-rbf peers for fun and L2s security Credit: Antoine Riard

• “Currently Bitcoin Core only allows RBF if the version of the transaction to be replaced has a signaling bit enabled, as defined in BIP125. This creates a challenge for multiparty contract protocols, such as LN and DLCs, where it is sometimes possible for one party to remove the BIP125 signal from a transaction in order to prevent other parties from using transaction replacement. This can lead to delays, and in the worst case it may lead to a loss of funds in protocols that depend on timely confirmation” - Bitcoin Optech Newsletter #205

Hertzbleed Attack Credit: Yingchen Wang and Riccardo Paccagnella and Elizabeth He and Hovav Shacham and Christopher W. Fletcher and David Kohlbrenner

• “Hertzbleed is a new family of side-channel attacks: frequency side channels. In the worst case, these attacks can allow an attacker to extract cryptographic keys from remote servers that were previously believed to be secure.”

Tor is under attack (DDoS)

• “We are experiencing a network-wide DDoS attempt impacting the performance of the Tor network, which includes both onion services and non-onion services traffic. We are currently investigating potential mitigations.”

Lightning Network Explorer Credit: bolt.observer

Report from the Bitcoin Delegation in the Central African Republic Credit: Sebastien Gouspillou and Noor El Bawab and Jean-Christophe Busnel and David Oren and Gilles Cadignan and Gloire Wanzavalere

• “The main objective of this trip was to understand the Central African Republic context better and identify the main factors that will encourage or inhibit the adoption of Bitcoin in the country.”

[MatulefM]

July Augest Debate?

Resolution: Bitcoin cannot maintain security against 51% attacks once the block subsidy falls below a certain point

Opening words: Bitcoin's security is derived from the total hash rate of the network. The larger the hash rate, the more secure the network is from a 51% attack. While we have seen consistent growth in total hash rate, there is some doubt about the long term viability of the network as the block subsidy percentage of the block reward continues to decrease every halvening (210,000 blocks / ~4 yrs) until the last satoshi is mined around the year 2140, at which point miners will be paid solely by transaction fees.

Many of us may scoff at this concern today as an irreverent issue and something to be worried about in 100 years. However, Bitcoin’s supply issuance will reach 99% around the year 2035 with the remaining 1% being issued over the following ~105 years. As such, in the coming decades we should expect an organic tradoff to occur between the block subsidy and transaction fees as a percentage of the total block reward. As of this writing, the transaction fee percentage of the block reward is around 1%. If the transaction fee percentage of the block reward does not begin to grow consistently and substantially over the next few decades it may become a security issue and cause for concern.

Cross examination questions: (TBD)

Key links:

• Peter Todd Tweet
• So What If Bitcoin Miner's Fee Revenue Is Low?
• Bitcoin’s Security is Fine

[MatulefM]

Are Blockchains Decentralized? Unintended Centralities in Distributed Ledgers Credit: Trial of Bits

• “Over the past year, Trail of Bits was engaged by the Defense Advanced Research Projects Agency (DARPA) to examine the fundamental properties of blockchains and the cybersecurity risks associated with them. DARPA wanted to understand those security assumptions and determine to what degree blockchains are actually decentralized.”
• “For a blockchain to be optimally distributed, there must be a so-called Sybil cost. There is currently no known way to implement Sybil costs in a permissionless blockchain like Bitcoin or Ethereum without employing a centralized trusted third party (TTP). Until a mechanism for enforcing Sybil costs without a TTP is discovered, it will be almost impossible for permissionless blockchains to achieve satisfactory decentralization.”

Fact Check: DARPA Funded Report on Blockchain Centralization Credit: Yan Pritzker and Tomer Strolight / Swan Bitcoin

• “In this analysis, we examine and fact check the claims in the recent DARPA blockchain report which claims that Bitcoin’s blockchain is susceptible to centralized control.”
• “At face value, the paper elaborates on many already explored attack vectors in Bitcoin, some of which Bitcoin was literally invented to solve (sybil attacks), but fails to give context to the attacks and their achievability and consequences in the real world.”

[MatulefM]

Bitcoin Policy Institute Submits Report to US Department of Commerce on Digital Asset Competitiveness Credit: Bitcoin Policy Institute

• “The internet is changing society's relationship with money as profoundly as it has with information. To ensure sound policy, the U.S. needs rigorous research that moves past hype and cynicism alike.”

[BIP proposal] Private Payments Credit: Alfred Hodler

• “There have been attempts to create static payment codes that function as a way for transacting parties to create "private" addresses, where private stands for "known only to transacting parties". BIP47 was one such standard. I propose to build on the idea of payment codes under a new BIP”

[Lightning-dev] Achieving Zero Downtime Splicing in Practice via Chain Signals Credit: Olaoluwa Osuntokun

• “Assuming, we agree that a chain signal has some sort of role in the ultimate plans for splicing, we'd need to decide on exactly what such a signal looks like.”

[MatulefM]

Pickhardt Payments: How To Send Large Bitcoin Payments On Lightning By Namcios / Bitcoin Magazine

• “Pickhardt Payments quantifies the uncertainty around liquidity to a probability, mapping out all the possible paths for a given payment to take and selecting the one with the highest likelihood of succeeding. In other words, Pickhardt Payments seeks to select the path with the lowest level of uncertainty.”