The great bitcoin debate: #ossification vs. #innovation
🗣 The #bitcoin community has contrasting opinions on the future of the bitcoin network.
Some people are “monetary #maximalist” and believe that Bitcoin should remain as it is, as it’s already performing the function it was aimed for: transferring value across the world, in a censorship-resistant manner, with close to immediate finality and at a low cost 💸 .
Other people are “platform maximalist” and believe that Bitcoin protocol should extend its functionalities well beyond its monetary use case and that introducing new features is necessary to address #scalability issues, improve user experience, and expand use cases beyond store of value.
⛔ This debate is as old as Bitcoin and it will probably never end.
Advocates of ossification strongly believe in the fundamental properties of #decentralization, #security and #immutability of the network: Bitcoin has these three properties and we should not risk extending its utility beyond its monetary use case.
Any change to the protocol, despite being tested and retested by core developers, might bring unintended consequences and create vulnerabilities and potential attack surfaces to Bitcoin.
The Taproot update was thought to increase privacy, scalability and security, but has created the possibility to create “inscriptions” and to mint ordinals on-chain. 🤡 Monkey jpegs and other valueless NFTs, originally created on other blockchains, started to be written also on the Bitcoin blockchain, driving away extremely scarce and valuable blockspace from transactions to pure gambling activities.
This is a major unintended consequence of a protocol upgrade and represent a risk that ossificators don’t want to face.
Platform maximalists would like Bitcoin to be the everything protocol, where you can directly interact with various decentralized applications (dApps) and smart contracts, similar to platforms like Ethereum 💩 .
They envision a future where Bitcoin serves as the foundational layer for a wide range of financial services, decentralized exchanges, and even social networks, all built on top of its secure and censorship-resistant infrastructure.
👨💻 Introducing additional functionalities to Bitcoin's protocol requires careful consideration of trade-offs between innovation and maintaining the network's core principles. There are concerns about potential security risks, scalability issues, and decentralization.
Satoshi gifted humanity the best form of money ever invented. Absolutely scarce, transparent, and immutable money which removes state monopoly on the creation of currency and can grant real freedom to individuals, by allowing them to travel the world with their wealth transported in their minds 🤘 .
🐢 I believe that #innovation in Bitcoin shall come as fast as a turtle with a broken leg. What’s your position?
Demand-Response (DR) Programs: Another Benefit of #Bitcoin #Mining
🚨 Energy grids serve the function of bringing energy from anywhere it is produced to the end users: residential buildings, offices, industrial companies, and any other sector of the economy.
Technical offices of engineers monitor daily maps of energy distribution, demand and load flexibility, to direct energy where it is required at any specific time, so to not overcharge or undercharge the grid and create imbalances.
🔌 Energy grids facilitate the transmission of electricity generated from fossil fuel sources or renewable plants and allow to carry it around via specific infrastructure.
Fossil fuels tend to generate #baseload #electricity, where energy is produced constantly. #Renewable sources (e.g., solar and wind) tend instead to produce peak-load power due to the intermittent nature of their sources and create imbalances to the electric grid any time the immediate supply doesn’t meet the exact energy demand.
Production peaks 📈 cause the owners of the PV or wind farm to sell electricity at negative prices 📉 during hours when electricity demand is low, not allowing the plant to be economically feasible and survive without any government subsidy.
DR programs are created to stabilize the grid and mitigate the effects of excess supply or demand: specific buyers in need of electricity can turn on when energy is abundant (and cheap) and curtail activity once the energy is needed elsewhere.
⛓ Both consumers and grid operators benefit from DR. For consumers, DR programs can lead to lower energy bills by offering incentives for shifting usage to off-peak hours when electricity prices are lower. Grid operators enjoy higher grid stability, reduced reliance on expensive peaker plants, and improved overall efficiency.
Bitcoin miners represent one of the best flexible loads to make effective DR, via:
- adjusting their energy consumption patterns to times of the day when renewable energy is abundant and traditional electricity demand is low ⬇ .
- quickly ramp up or down energy usage in response to fluctuations in grid demand, helping to stabilize the grid and prevent blackouts or brownouts.
- temporary reduction or suspension of their mining activities ⛏ during periods of high electricity demand or grid congestion by voluntarily curtailing their energy consumption, while earning incentives or rewards from grid operators.
In a world where the energy mix is tilting towards the intermittent nature of sources like solar and wind that create imbalances in supply and demand and destabilize the grid, Bitcoin miners can step in as a flexible energy consumer that allows renewable sources to be properly integrated with the electric grid.
✳ DR programs are a win-win strategy for all stakeholders involved, promoting cheaper electricity prices to consumers, a more balanced grid, and allowing a decentralized, immutable monetary network to work on the cheapest electricity available.
Hey #nostr community
I’ve been offline for about 10 days, who can tell me more about
@Michael Saylor and
@ODELL situation, as well as about 10 mining pools having one single custodian?
Really eager to learn here.
Thanks in advance
Price discovery is upon us!
No more clouds and blue skies ahead 😎⚡️
🍊💊 to friends becomes officially easier to give.
#bitcoin
Controversial thoughts on Satoshi Nakamoto’s treasury ⚱️
Much is being said about Bitcoin’s creator lately, due to the false claims from Craig Wrigth that he is the inventor of #Bitcoin.
He, she or they, whomever #Satoshi actually is. This topic should not bother anyone. The greatest invention of our time, digital, peer-to-peer money with no trusted intermediary was given as a gift to humanity and should be all that matter.
🥷🏻 Satoshi did not premine any coin for himself. He did not allocate bitcoin to a company’s foundation. He created and made available to the world the best money ever invented without looking for any personal recognition or acknowledgment. His only desire is to remain anonymous. And many people are just trying senselessly to attribute a face to him/her/them.
When people ask me “How can you trust money which has been invented by someone anonymous?” I always make efforts not to care, while I point at the brilliance and simplicity of the system he has created. Bitcoin operates on a #transparent, #decentralized #ledger where trust is not placed in any single individual but in the collective power of the network's participants ⚡️, which are expending energy to keep it decentralized and secure.
Others seem to be worried that Satoshi’s wallet contains approx. 1 million bitcoin. This is true. Satoshi’s wallet has only accumulated btc in the early days, mining ⛏️ the coins like anybody can do, and never spent any output – it is one of those few wallets appearing in the #Hodl waves with holding time > 10 years.
In his communications with the cypherpunk community, Satoshi defined any lost coin as a “donation to other bitcoin holders” as that btc supply remains inaccessible and is therefore contributing to increase the value of the other coins.
For how I see it, Satoshi’s wallet could be activated 10 or 15 years from now and could be the catalyst to drive price down 📉 from $ 1,500,000 a coin to $ 300,000 a coin.
Would this change my view on the reliability of the Bitcoin network or Bitcoin’s value proposition? NO.
I would see this as an additional gift to humanity, considering that coins available by then will only be those who are left to be mined, and Satoshi’s 1 million bitcoin could improve the distribution of coins in the world and allow many “plebs” to increase their bitcoin position. 🔅
In the end, Satoshi's anonymity and the mystery surrounding his identity serve as a testament to the decentralized and #trustless nature of Bitcoin itself. Satoshi’s wallet, whether will be activated or not, ultimately represents an opportunity for redistribution and further decentralization within the Bitcoin ecosystem.
Whether these coins remain dormant or are eventually reintroduced to market, their impact on the network's integrity and the principles of decentralization will be nil.
Bitcoin mining #trilemma ⛏
Bitcoin mining is known to be one of the most competitive industries on the planet, as working at the intersection between energy and money, two key items for the development of society, is a compelling task requiring being very strategic on the operational strategy to foster business sustainability 💹 over the long term.
Similar to blockchain’s trilemma ♻ which is based on #decentralization, #security and #scalability, where two conditions of the three can be fulfilled together but the last one ultimately resolves in not being optimised, bitcoin mining has its own trilemma.
Mining’s trilemma is based on availability of
(i) capital to deploy ,
(ii) mining machines, and
(iii) cheap source of energy.
These three conditions are key for strategic decision-making that miners need to navigate so to mine profitably and sustainably. Due to market dynamics, one condition of the three can never be optimised.
In mining, access to capital💲is a strong barrier to entry in the industry. Significant upfront costs need to be incurred by miners to get the necessary hardware, secure suitable sources of energy and cover the initial operational expenses. Once a site has been setup, capital is also required to remain competitive and being able to upgrade machines with more efficient ones, scale operations or weather market fluctuations due to changing bitcoin price or fees, the two revenue outputs from mining.
Once capital is secured, being able to acquire the right mining equipment does not come without issues. Mining machines 🖥 have complex manufacturing processes, require very specific microchips and their demand is tightly linked to bitcoin’s price – creating bottlenecks during bull runs and not finding many buyers during bear phases. Also, the obsolescence rate of mining equipment is very high and miners need to choose a balance between having more efficient machines and investing significant CapEx into them, or optimise their production by running older, less efficient machines, but at very low energy costs.
Energy is the main source of OpEx of miners🔌. Due to bitcoin fixed monetary policy and difficulty adjustment, access to the cheapest sources of energy can determine whether a miner is able to remain profitable after halving and other volatility events, or whether their OpEx are too high and lead to an unprofitable business. Finding cheap energy come with regulatory and geopolitical risks, as each country has its own specific environment concerning mining regulation, public perception of the activity and other social frictions.
Mining conditions are constantly changing within the trilemma due to market dynamics, investors’ sentiment, supply chain functioning, macroeconomics, and other factors. Bitcoin miners need to be dynamically adapting to different scenarios while growing their business, so to keep the Bitcoin network as safe and decentralized as possible.
H/t @Bob Burnett
The vanishing of low time preference.
In a world where instant gratification and short-term thinking are the basis of society, the concept of low time preference is fading away and leaves many lives without hopes. Delaying gratification and prioritize long-term goals over immediate desires has always been considered as the cornerstone for the development of society, but such values have melted away.
In such a hyperconnected world we live in, we have never felt so lonely. We are driven by #consumerism and by the willingness to show who we are (not) in exchange for a few likes and some acknowledgment that we look cool. We always strive to have more: travel more, dress more, dine more and show more!
#Patience, prudence, and foresight are being overthrown by impulsivity and instant satisfaction. People don’t invest time in meaningful relationships. The concept of family has faded away: parents don’t try to fix things in their relationship but take the easier route of finding a new partner, leaving the education of existing kids to single parents and their new couple.
The erosion of low time preference has profound implications for economic stability and prosperity. If consumption is always prioritized over savings and investment, individuals become trapped in a cycle of debt and insecurity that does not allow to build wealth. Without sacrificing present #consumption for future prosperity, innovation disappears and economies stagnate.
As a #Bitcoiner and supporter of #Austrian economics, I am a believer that the fading of low time preference is due to the lack of a #hard #money standard. Having a finite, scarce asset as the basis of how and when currency is produced, changes everything regarding long term planning, financial stability and the empowerment of individuals.
As hard money requires a certain investment of time and resources to procure such asset, it removes incentives for governments to create currency due to the need of backing it with real world resources.
Hard money leaves a certain degree of predictability and stability in societal activities. If individuals know that their money will buy them more over time, they’ll be less incentivised to consume and they’d be more focused on saving for the future. #Saving should be the basis of capital accumulation and creation, as savers can allocate their unspent resources into productive activities. A supportive and stable economic environment would encourage entrepreneurship, foster job creation, and favour technological advancement.
#Debt accumulation would be disincentivised and people would live within their means. Natural #deflationary forces brought by #technology could finally play out and let everything become cheaper over time.
As purchasing power increases over time, people would have more time to dedicate to eat healthy food and practice sport, cultivate meaningful relationships, educate kids and think about the future.
Is it such an utopic world the one based on hard money?
More than 600 million Africans don’t have access to reliable electricity. 🔌 Blackouts are very frequent, even in more developed central cities, and don’t allow the creation of a developed society. Hospitals, schools, and other industries cannot run their businesses with such frequent electricity interruptions.
The problem with Africa, however, is not that they don’t have electricity generation capacity. They have it, and it is abundant. 💧 Hydro, dams and geothermal sources are quite spread across the continent, but they create energy not available where and when it’s needed, resulting in huge amounts of waste #energy that cannot be used nor monetized. 💸 The lack of infrastructure does not allow the creation of an energy market and not mining bitcoin would effectively be a waste of energy.
The Green Africa Mining Alliance 🤝 has been created by different pioneers such as Gridless and @Trojanmining with the goal to bring mining companies in Africa and support the electrification and advancement of rural communities via the #monetization of the #stranded energy available.
Bondo, a small cluster of villages in Malawi, underwent the installation of a mini grid composed of three turbines propelled by a small hydro scheme to exploit the significant region’s rainfall. The integration of bitcoin #miners brought direct monetization of any unused energy, and its revenues allowed the creation of infrastructure to power 1,800 homes ⚡now connected to the mini grid.
Virunga National Park, in Congo, abundant in hydro power but lacking basic monetary resources to cover its operating budget, has been saved thanks to a mini grid mining bitcoin. 🏞 The park was at risk of deforestation and loss of biodiversity due to sale of the land to oil companies, but proceeds from the sale of Bitcoin stopped sale activities and are helping to pay for park salaries and for infrastructure projects like roads and water pumping stations.
Other similar initiatives are ongoing in Ethiopia, Nigeria, Kenya, Ghana and will allow the creation of off grid #electricity sources, able to power little communities and effectively turn free, otherwise wasted electricity into global incorruptible capital.
Energy sites in Africa are normally built via #donation programs 💰, which take long time, leave total dependence of the community on the donor and do not make economic sense for communities nor grid operators. If governments need money to fund a project, they could ask for #IMF support, sell bonds in their local #currency, reduce fiscal expenditures or raise taxes – all of which are unpopular methods. Investing in Bitcoin miners could be the last request for funding to unlock energy abundance and access to free capital.
In addition, African countries would normally have to sell goods to USA or Europe to earn $ or € and spend them on the international markets💲. #Bitcoin removes such friction and allows them to have direct access to international money.
@gladstein
#Bitcoin as the best #collateral
The features of bitcoin make it one of the most valuable forms of financial collateral available in markets – and most people don’t know it yet! 👀
In the financial world, collateral is needed anytime that a person or corporation wants to increase its spending capacity via the use of #debt 🏦 , and it is used as a form of #guarantee to the lender in case the loan is not repaid within its schedule or the borrower defaults.
Shares in listed companies or private funds, real estate assets, bonds, commodities or other objects can be used as a pledge to borrow funds 💶 . But each of these types of collateral has some shortcomings linked to their nature, geographical location, liquidity, divisibility and other features.
Bitcoin’s properties, on the contrary, make it stand out as a high-quality collateral.
Bitcoin loans work under the principle of #overcollateralization ⚖ , so that by providing more collateral of what would be needed to obtain the loan, the lender has a greater #security package available. #Dynamic #collateralization techniques, allowing the volume of the collateral to vary based on its market value 🎢 , can be included in loan contracts so to leverage on bitcoin’s scarcity, which makes it likely to grow in value over time and therefore leaves the possibility to reduce the total collateral granted.
Bitcoin divisibility ✂ allow for a total adaptation of the collateral tailored to the target loan amount, where loans can now be extended to a wide variety of borrowers, including #micro-loans.
Bitcoin’s #portability allow for collateralized transactions to occur quickly and efficiently without the need to have physical presence and intermediaries.
Bitcoin #transparency makes sure that the collateral is highly verifiable ✅ at each moment over the loan contract, removing the need for any third-party to verify and confirm the existence, valuation and other crucial aspects of collateral management.
Moreover, bitcoin’s global accessibility 🌍 allows borrowers and lenders from different backgrounds to participate in collateralized transactions without imposing any geographical constraint. Such accessibility is a considerable step forward also concerning the inclusion of unbanked people onto an open monetary network, spurring innovation in many underdeveloped economies.
Applying automation procedures in the management of the bitcoin collateral can also strongly mitigate #counterparty #risk, as collateral management activities will be reduced to zero and no counterparty will directly have to manage the collateral, but all conditions can be verified via smart contracts instead of intermediaries.
I am excited to see another great real world application to Bitcoin and how it will develop in the future.
How does #collaborative #custody work and why it can be a key element for the future of bitcoin custody?
In response to the global financial crisis of 2008 and the consequent loss of faith in financial intermediaries, Satoshi created bitcoin as the perfect bearer-asset that would solve the problem of #trust when it comes to who is in control of your #money.
Asymmetric cryptography, via its public and private key pair, allows everyone to be self-sovereign as it permits to store wealth on the bitcoin network via encryption. Upon the creation of a digital wallet by a user, a new pair of keys is created which can be used to transact in a pseudonymous way. Self-custody, by allowing the user to store independently his private key represented by a combination of 12 or 24 words, can freely access his holdings anywhere in the world.
However, despite being the best option to be completely self-sovereign, storing private keys can become a burdensome task for non-technical people and it is a big responsibility as it leaves everyone entirely in charge over their own wealth. By not existing any intermediary in bitcoin, if stored and used correctly via non-custodial wallets, the loss or compromise of the private key would translate in lost access to the wealth stored in bitcoin.
To try to solve these issues and give more comfort to bitcoin owners, while encouraging them to remove their bitcoin from exchanges and custodial solutions, leader players like Unchained and @theBitcoinAdviser are working on collaborative custody solutions with the goal to improve the user experience and safety of storing bitcoin, by sharing the responsibility of owning private keys between different parties.
#Multi-signature (multisig) solutions allow to split the control over the private key among multiple parties (typically 3), therefore leaving a share of the private key to each party. Once somebody needs to initiate a transaction at a #multisig address, it would need 2 out the 3 keys to authorize the moving of funds.
This setup allows for enhanced security over your wealth by eliminating a single point of failure on who would otherwise store the single private key. Also, professional custodians can offer security enhancement via multi-factor authentications or specific approval workflows.
The most interesting part to me is that collaborative custody helps solve the problem of “what happens to my bitcoin if tomorrow I get hit by a bus”? Collaborative custody players support you in the creation of a succession plan over your wealth to facilitate a smooth transition and continuity over your assets’ ownership, so that in case of unexpected events, the bitcoin is not lost.
Collaborative custody is a growing solution among bitcoiners. The next bull run will likely push the wealth of many towards new highs. It would be interesting to see if #hodlers would still feel comfortable managing their private key or if they switch to new options.