Socratic 19
Announcements
Geopolitics
- EU lawmakers vote to impose strict capital requirements on banks holding bitcoin and crypto
- European Union lawmakers have voted to impose strict capital requirements on banks that hold cryptocurrencies
- Banks would be allowed to hold 2% of capital in bitcoin, but required to have one euro in capital for every euro in cryptocurrency held
- Lawmakers cite the chaos in the markets seen over the last few months as further evidence that such regulation is necessary - to “prevent instability in the crypto world from spilling over into the financial system,” according to Markus Ferber, economic spokesperson for the EU parliament’s European People’s Party
- The regulation mirrors the recommendation from the Bank for International Settlements’ Basel Committee - a 2% limit on tier 1 capital that could be held denominated in unbacked cryptocurrencies
- BIS committee recommendation was discussed at last month’s BitDevs
Market
- Where’s the money, Barry?
Technology
- Bitcoin Genesis block was 14 years ago on January 3, 2009
- 14 years ago, Satoshi Nakamoto created the first block in the Bitcoin blockchain
- Message engraved in the block: “Chancellor on brink of the second bailout for banks”
- The message establishes a sort of manifesto from the start
- Bitcoin seeks to level the playing field, ensuring property rights to millions worldwide
- People are losing sight of Bitcoin’s original purpose as they leave coins with 3rd-party custodians
- Bitcoin that is held by custodians can be frozen and stolen
- Proof of Keys Day, also celebrated on January 3, celebrates withdrawing coins to self-custody
- Bitcoin Core contributor Luke Dashjr loses ~200 BTC after private server compromised and warns users against upgrading Bitcoin Knots
- On 1/1/2023, Luke announced his PGP key was compromised and ~200 BTC stolen
- Luke cautioned against updating to the latest version of Bitcoin Knots signed by his key
- Most bitcoin hardware wallet users are probably in a more secure position than Luke was for protecting their bitcoin stack
- BIP 329 merged: standard for wallet label exports and imports between wallets
- BIP 329 sets a new standard for backing up various types of wallet labels and importing them into other compatible wallets
- Labels are important for tracking the history of UTXOs across transactions
- Craig Raw, developer of Sparrow Wallet, proposed the standard
- James O’Beirne proposes new OP_VAULT soft fork to enable simplified vault/covenant construction
- Wizardsardine announces Liana self-custody solution with unique timelock-based recovery mechanisms
- Wizardsardine is a development group known for their work on Revault, an advanced and complex self-custody solution targeted toward organizations
- Liana is a simpler, lighter self-custody solution that leverages timelocks and recovery keys
- Timelocked recovery adds a new dimension to leverage in custody setups
- You could previously configure authentication (who holds the keys) and space (where the keys are located) - now you can configure time (when the keys become available for use)
- Liana is basically in beta - it’s usable today, but the UX isn’t prioritized in the initial version
- Ordinal theory and the debate around “illegitimate” bitcoin transactions
- Ordinal Theory Explained: Satoshi Serial Numbers and NFTs on Bitcoin
- Ordinals Workshop with Casey Rodarmor
- Ordinal Theory Handbook
- Ordinal theory is the concept of assigning unique, numeric “identities” to individual satoshis and allowing them to be tracked, transferred, and imbued with meaning
- Arbitrary assets, such as NFTs, security tokens, accounts, or stablecoins can be attached to satoshis using ordinal numbers as stable identifiers
- Ordinal theory doesn’t require a side chain, a separate token, or any changes to Bitcoin
- Ordinals has resurfaced a debate around what constitutes a “legitimate” use of bitcoin - i.e., should bitcoin be used solely for financial transactions or also for immutable data storage?
Mining
- Luxor releases “Hashrate Index 2022 Bitcoin Mining Year in Review”
- 2021 bull market brought a lot of capital into the bitcoin mining industry, which became increasingly institutionalized and intertwined with traditional finance and energy sectors
- 2022’s bear market hit hard - most mining profits gained in the bull market were lost
- Hashprice hit an all-time low in November
- New-gen ASICs exited the year at all-time low valuations
- Many Bitcoin mining stocks fell more than 90%
- North America’s leading hosting providers went bankrupt
- Acquisitions and asset sales became a prevailing theme
- Even with last year’s market carnage, Bitcoin’s hashrate grew 41% in 2022 (compared to 2021’s 18% growth)
Coinkite Giveaway #3
- “Guess the Nonce” Google Form
- Submit guesses ahead of time (only if you plan on attending the meetup!)
- A specific block will be chosen at the meetup and its nonce will be compared to all submissions - closest guess wins
- Previous winners are ineligible
- Video explaining what a nonce is in relation to bitcoin mining
- A “nonce” is a “number used only once”
- Miners are continuously hashing block data when trying to “win” the block lottery
- The nonce is an extra field that can be repeatedly modified to produce entirely new hashes without changing the actual transaction data in the block
- Miners keep changing the nonce to generate new hashes, ultimately trying to get close enough to the difficulty target
Optional Topics