To The Moon With Larger Blocks

I’ve written a number of articles as of late that are related to the bitcoin block size debate but have never really laid out my reasons for supporting an increase. This occurred to me while reading Greg Maxwell’s trip to the moon reddit post.

In that post Greg more or less gave his reasons for not supporting a block size increase. It comes down to:

1) Bitcoin can’t handle transaction volumes similar to credit card companies without payment systems layered on top of it.

2) Attempting to increase transaction volumes without using these layered solutions makes bitcoin less secure.

Rejoinder: Soft Forks Are Safer Than Hard Forks

This is a bit of a rejoinder to Peter Todd’s blog post, Soft Forks Are Safer Than Hard Forks, which I assume was a response to my previous post on soft forks.

I’m happy that the issue is being discussed more and it seems more people are questioning the appropriateness of softforks. Or at least enough people are questioning them to provoke a response from supporters. I’m open to changing my mind. Bitcoin development isn’t (and has no reason to be) as partisan as, say, political ideology, but Peter’s blog post didn’t convince me.

If you recall from my original post I stated that the primary reason why we are told softforks should be preferred over hardforks is because with softforks the chain converges while with hardforks it forks.

I proceeded to give several reason why I believe that conventional wisdom is wrong:

Against Softforks

The Bitcoin protocol is in constant need of upgrade. Either to add new features, fix critical bugs, or improve scalability. The question is how best to upgrade the protocol of an already-deployed multi-billion dollar currency/payment system without disrupting everything. To do so we really only have two options ― softforks and hardforks. We’ll get into the difference between the two in a moment. To date, all planned protocol upgrades have been done via softfork and none via hardfork. Naturally, as with all things in Bitcoin, this has become a point of contention.

Up until recently I was firmly in the softfork camp. If we can upgrade the protocol rather seamlessly without causing any noticeable disruption, then why not do all upgrades as a softfork? Looking back on it, this was a rather naive view to have. I never really thought through the consequences of both types of forks and just sort of went along with what everyone else was telling me. I will get to my criticisms of softforks in a moment, but first a refresher.

Lightning Network Skepticism

I like the idea of the lightning network. I think the developers behind it are very smart and it’s a very clever use of Bitcoin contracts. I’m sure that whatever comes from it will be useful to some parts of the Bitcoin ecosystem at a minimum. What I’m not for, however, is prematurely deprecating critical parts of bitcoin (zeroconf transactions and low transaction fees) when it’s not yet clear that the lightning network will be a viable replacement for them. Yet that’s what the core developers seems bent on doing.

We know that lightning is at least technically feasible. We don’t know if it’s economically feasible or even a desirable alternative. Will it be a decentralized peer-to-peer payment layer or will it end up as a quasi-centralized payment network similar modern banking? We don’t know the answer to this question and probably wont know until we see it in action. Which is why it comes across as irresponsible to go “all-in” on lightning at this point.

My main concern from the beginning was that, as a hub-and-spoke payment layer, there would be very few hubs and the network would be quasi-centralized and a regulatory sitting duck. It seems I wasn’t the only one with this concern as there’s been a fairly recent pivot away from the hub-and-spoke network topology to a more organic, wallet-to-wallet routing. The network is now envisioned as a more pure p2p payment layer without those large scale payment hubs.

Certainly this has to be viewed as a promising development as it begins to address my primary concern. Unfortunately, I find this view of the lightning network overly optimistic. In what follows I will give a lightning network overview and some reasons why I think it’s likely the network will end up with the hub-and-spoke topology anyway.

On Zero Confirmation Transactions

This article is a response to a growing meme in the Bitcoin community that ‘zero confirmation transactions were never safe’ and therefore the core developers should change the code to make zero confirmation transactions totally unusable. Not only is this meme false, but the proposed code changes substantially reduce the utility of Bitcoin in the short run, and possibly the long run as well.

What are zero confirmation transactions?

Here’s a little refresher for those unfamiliar with how Bitcoin works. When someone sends you bitcoins, the transaction is broadcast to all the nodes in the Bitcoin network. The mining pools collect these new transactions and temporarily hold them in memory. At this point we say that transactions are “unconfirmed” or “pending” inclusion in Bitcoin’s ledger ― the blockchain. Approximately once every 10 minutes a mining pool collects these transactions from memory, organizes them into a block, and adds that block of transactions to the blockchain. This process repeats every 10 minutes on average.

We sometimes hear people say that Bitcoin transactions are irreversible. That’s not technically true, or at least not true of transactions that have been made recently. In the first number of minutes after a transaction is made, it can theoretically be reversed (or ‘double spent’) by the sender, assuming he has some technical ability. This means someone could pay you for some merchandise, then steal back the coins afterwards. The more time that passes, however, the more difficult it becomes to reverse a transaction. Typically we say that “unconfirmed” transactions are the easiest to reverse, while the deeper a transaction is in the blockchain, the more difficult it is to reverse. After a transaction is buried six or so blocks deep in the blockchain (about an hour), the probability of a successful double spend drops close to zero.

But why all the fuss about about unconfirmed transactions? While most Bitcoin users can afford to wait an hour for their payments to confirm, there are some business models which cannot. Retail is the most obvious example. Customers need to be able to pay the cashier and leave the store instantly. They can’t be required to wait around for 10 minutes or longer for their transaction to confirm. If retailers are unable to mitigate the risk of fraud when accepting unconfirmed transactions, then they simply wont accept Bitcoin.

Feminist Brutalism

A couple weeks ago Jeff Tucker wrote a great (and controversial) article about Libertarian Brutalism. In architecture brutalism was:

An affectation, one that emerged from a theory robbed of context. It was a style adopted with conscious precision. It believed it was forcing us to look at unadorned realities, an apparatus barren of distractions, in order to make a didactic point.

Of course today brutalist buildings are nothing but eyesores.

In the same vein, libertarian brutalism:

Strips down the theory to its rawest and most fundamental parts and pushes the application of those parts to the foreground. It tests the limits of the idea by tossing out the finesse, the refinements, the grace, the decency, the accoutrements. It cares nothing for the larger cause of civility and the beauty of results. It is only interested in the pure functionality of the parts. It dares anyone to question the overall look and feel of the ideological apparatus, and shouts down people who do so as being insufficiently devoted to the core of the theory, which itself is asserted without context or regard for aesthetics.

We seen this is works like Defending the Undefendable. It’s sort of a celebration of the worst things one could do with their freedom.

I bring this up because I see a strong brustalist streak among modern feminists, especially in the libertarian movement.

Beginners’ Guide To Off-the-Record Messaging

This is a sequel to my earlier post Beginners’ Guide to PGP which was the first in a series of posts aimed at introducing new bitcoiners to various encryption technologies. In this post we’re going to teach you how to use Off-the-Record messaging (OTR).

So what is OTR? Like PGP, it’s a cryptographic protocol designed to provide strong encryption of your communications. However, it shouldn’t be considered a competitor or replacement for PGP, more like a welcomed complement. Where PGP is often used to encrypt emails, files, and authenticate messages with digital signatures, OTR is an encryption protocol for real time chat. And unlike PGP, which can be a little daunting to learn and use securely, OTR is quite easy to setup and use and provides a pretty good user experience.

Under The Hood

Before showing you how to use it, let’s take a look under the hood. If you recall from the last post, PGP uses public-key cryptography. That is, one key (a public key) is used to encrypt a message and a separate key (the private key) is used to decrypt it.

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Some Thoughts On “Ban Bossy”

Watching this video really makes me feel sheltered. I almost never hear women called bossy. And I’ve never heard it used as a sexist/derogatory adjective for an ambitious woman.

There is no shortage of exposure to feminism in the libertarian movement. I have to admit that I often struggle to relate. Most of the time I just chalk it up to being a man. I think, “maybe being a man has insulated me from these issues”. So I usually don’t say anything and accept that the women are probably in a better position judge this stuff than me.

This is What Most Likely Happened to MtGox

There has been a ton of speculation as to what happened in the catastrophic failure of MtGox. The only thing we know for sure is that it somehow “lost” upwards of 750,000 of customer BTC, valued around $450 million. A number of theories have been circulating on the internet. Here I’m going to talk about the one that seems the most plausible to me. H/t to /u/PuffyHerb on Reddit for most of this.

The theory is essentially that the U.S. Government seized MtGox’s cold storage wallet and Karpeles can’t disclose that information due to a gag order.

Before getting into that let’s recap the “official” story of what is believed to have happened.

Arizona SB1062 and the Freedom of Association

There’s a big stink lately over a bill in Arizona that would allow businesses to discriminate against homosexuals. Many gay rights activists are comparing the legislation to the discrimination against African Americans throughout the civil rights era. The supporters on the Right are framing this as an issue of religious freedom. Indeed the proposed bill is an amendment to the existing “Religious Freedom Restoration Act”, and would allow business owners to deny service to gay and lesbian customers so long as the business owner was “acting solely on their religious beliefs.”

Now of course I’m not going to defend discrimination here. I personally wouldn’t patron a business that discriminates against customers on the basis of skin color, race, gender, sexual orientation, national original or what have you. Businesses that do so are rightfully condemned. But what always goes missing in these discussions is any acknowledgement of the freedom of association. This isn’t about religious liberty at all. In fact, religious liberty is just an outgrowth of the freedom of association. One either has the right to associate (or not associate) with whomever they want, or they don’t.