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.

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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.

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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.

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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.

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Beginners’ Guide To Off-the-Record Messaging

OTR

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.

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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.

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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.

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Liberty Forum Recap

I got to spend the last few days with a bunch of great liberty loving anarchists at the 2014 NH Liberty Forum. There’s a lot I could write about, but here I’ll just provide a quick rundown of the highlights.

  1. There seems to be a concerted effort on the part of the liberty community to reach out to non-libertarian, yet libertarian leaning individuals, give them a warm welcome and try to draw them in. I have to say, I LOVE that strategy. Not only does it give us the potential to convert influential people to libertarianism, but short of that it builds strong alliances and good will. It’s much better than just speaking to the echo chamber. The keynote speakers were Naomi Wolf on Friday night and on Saturday night a panel including whistleblower Thomas Drake, attorney Jesselyn Radack, and Trevor Timm of the Freedom of the Press Foundation moderated by Devon Chaffee of the NH ACLU.
  2. I got to speak to Naomi Wolf about Bitcoin! She seemed fascinated with the idea and asked me a bunch of questions. I was gonna try to get her to set up a wallet and send her some bitcoins but I didn’t have the opportunity to speak with her again after that. Although Alyson from Blockchain also had a conversation with her about it. I’ll probably send her a follow up email.
  3. I met Ladar Levison from Lavabit ― the email provider that shut down rather than let the NSA spy on them. He provided us with an update on the Dark Mail protocol he’s working on with Silent Circle. I wrote more about this over at Bitcoin Not Bombs.
  4. The FSP community in Manchester has built a couple makeshift night clubs. Not the most impressive party spots but pretty cool nonetheless. They sort of have a speakeasy feel. Very nondescript exterior, you’d never know there’s an anarchist hangout on the inside. And paying for drinks with Bitcoin really added to the underground feel.
  5. I got to meet Kash Hill from Forbes. She’s the writer who lived entirely on Bitcoin for a week last year. She told me she’s going to do it again at the one year anniversary. Should be pretty cool to compare it to last year and see how adoption in San Francisco has progressed.

Overall the conference probably exceeded my expectations. I’m glad my snowboarding plans fell through so I had an opportunity to go. I definitely plan to return next year.

Reinventing Email: Update on the Dark Mail Project

Dark Mail AllianceI just got back from the 2014 New Hampshire Liberty Forum where I got to attend a number of great talks on privacy and security. One of the cooler parts for me was meeting Ladar Levison. Even though he wasn’t a speaker, he still took time out to speak with a number of us. For those who don’t know who Ladar is, he’s the founder of Lavabit, Edward Snowden’s email provider.

Lavabit made national headlines last year when it became the first technology firm to completely shut down rather than allow the NSA to spy on its customers. At Liberty Forum Ladar provided a little more insight into what the NSA wanted. Basically, they wanted his SSL private key so they could perform a man-in-the-middle attack on his servers. All traffic to the server would be intercepted by the NSA, downloaded, then forwarded along to the destination (with the potential for the NSA to manipulate data in the process). Of course this wouldn’t have just affected Edward Snowden, but all of Lavabit’s customers. Lavabit offered to comply with the order by giving them special access just to Snowden’s emails, but naturally that wasn’t good enough for the NSA as they wanted to spy on everyone. So Ladar made the heroic decision to shut down rather than allow his customer’s rights to be violated.

Now you can pretty much guarantee that if the NSA was demanding MITM access to Lavabit, they basically have that access for nearly all other services.

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