Here you'll find an assorted mix of content from yours truly. I post about a lot
of things, but primarily
Day 3: Rubin's Bitcoin Advent Calendar
30 Nov 2021
Welcome to day 3 of my Bitcoin Advent Calendar. You can see an index of all
the posts here or subscribe at
judica.org/join to get new posts in your inbox
Not your keys, not your coin. A simple maxim often repeated by Bitcoiners, but
an important one. Why?
That thing about the gold standard you probably heard before:
In the existing financial system, your assets aren’t really your assets. Let’s
suppose you own a share of Google. You don’t really own that share, you own a
virtual claim and the actual certificate sits somewhere with a corporation like
The Depository Trust & Clearing Corporation (DTCC). So what? Why does it matter
who holds the paper?
The U.S. Dollar is a great example of why you should care. One dollar used to
represent an amount of Gold you could redeem for real physical
bite-it-to-see-its-pure gold. This was a promise of course, the paper dollar did
not have the actual gold in it. This was all good and dandy until in 1933,
Executive Order 6102 was put in place which made the holding of physical gold
illegal. Get arrested and go to jail illegal. EO 6102 mandated that all Gold be
turned in to the Federal Reserve. This was quickly followed by a devaluing of
the redemptive value of the dollar in Gold by the government from $20.67 per
troy ounce to $35 as a “one time” move. Today a troy ounce costs around
$1,800. This is because in 1971 an Executive Order was put through that ended
the dollar’s gold backing entirely.
What’s this got to do with Bitcoin?
If Bitcoin is held in accounts at regulated entities like exchanges a similar
act to 6102 could make redeeming actual bitcoin impossible for users of those
services. Suppose those users are forced to receive in place of their exchange
Bitcoin a Bitcoin Note that is backed by bitcoin. And then one day, the amount
of Bitcoin per Bitcoin Note can be reduced
– or worse, completely unlinked.
If this happens, all is lost. Bitcoin is fundamentally about a monetary standard
for the world where no self-important rulers can manipulate the currency. Self
custody is a requirement for Bitcoin to avoid these sorts of takeovers.
OK, OK, I’ll keep my coins off exchange…
Just fixing your behavior isn’t enough, to keep Bitcoin functional you need most
users to follow suit. Yet many users today do choose to keep some or all of
their Bitcoin on centralized services (yours truly included!).
This is for two main reasons:
- Game Theory: we can’t do anything about this. As long as not too many other
people are using an exchange for custody, it doesn’t matter if you are since a
regulatory takeover won’t be too effective. So selfishly, you may as well
benefit from the ease of keeping your coin on a service (assuming it is easier)
rather than taking responsibility for your own assets. Likewise if no-one else
is self custodying there’s not much advantage for you to be either.
- Software freakin’ sucks for self custody! We can fix this. Although the
quality of wallets has improved dramatically from Bitcoin’s early days, it’s
still incredibly difficult to do well. Further, self-custody solutions don’t
have solid options for handling many common needs such as inheritance, spending
limits, and more.
If we work on strengthening the fully self-sovereign self-custody options that
Bitcoin users have at their disposal, we can help more Bitcoin users to choose
to keep their funds themselves and achieve “herd immunity” against future
executive order 6102s. If we self custody in great number, we don’t permit them
the immediate victory over most users. You can’t arrest everyone, not easily at
least.
in short…
PLEBZ
TOGETHER
STRONK
Day 2: Rubin's Bitcoin Advent Calendar
29 Nov 2021
Welcome to day 2 of my Bitcoin Advent Calendar. You can see an index of all
the posts here or subscribe at
judica.org/join to get new posts in your inbox
This is the first of four posts in an advent mini-series about four fundamental
pillars of Bitcoin. I know, I know, a series within a series. What am I, nuts?
But it’s important that we begin our journey by setting the stage with a few
big picture objectives for Bitcoin before we get into why Smart Contracts
matter.
After all, we’re trying to build the hardest money possible, not Crypto
Kitties… right?
The four pillars I’ve chosen to focus on are Scalability, Self Custody,
Decentralization, and Privacy. Are there other properties that are also
important? Sure. Might there be a “more fundamental” name for each pillar? Ok.
But generally I find that these 4 categories are different enough from one
another and capture a very wide swath of what Bitcoin is and not overly
specific or overly general. Otherwise we’d just have one pillar for Bitcoin:
“To Fix This”.
Now onto the content.
Scalability is a controversy generating issue. Throughout Bitcoin’s history
there have been acerbic disagreements about what sort of scale is required and
how to accomplish it. Back then I even helped create a conference series,
Scaling Bitcoin, where people got to present to/shout at each other in person!
But why is scalability so important? And why does it generate controversy?
Famously, certain folks have remarked that, “you can’t buy coffee with Bitcoin”
because fees would be too high. This is an issue that’s easy to empathize with;
if transactions cost $10 who wants to do that for a $5 coffee – No One!
The common response is that Bitcoin isn’t for trivial purposes like buying a
cup of coffee, it’s The Hardest And Most Sound Money To Ever Exist And If You
Buy Coffee With It You Are Stupid.
There’s some truth to that. Bitcoin doesn’t need to function to enable your
trivial day to day purchases, it needs to exist to help you take self-sovereign
control over your money! Forget about your coffee, stack sats, survive
hyperinflation, avoid the pod, don’t eat the bugs. Capiche?
So what’s the rub? Well, if Bitcoin is to really be the vaccine against
autocratic rulers and corrupt financial systems, it needs to protect everyone,
not just elite sat-stackers who can afford to use it. Scalability represents
our desire for Bitcoin to be affordable for all who could benefit from it. Many
who live under abusive or corrupt regimes today might already be priced out.
Imagine earning 1000 satoshis per day and spending 300 satoshis to do a
transaction. Real bummer. And what if fees go up? There’s also the insulting
concept of dust in Bitcoin, 546 satoshis, currently about $0.30. Some people
work hard just to earn that much! Where do you think people who fall on this
low end of the economic spectrum live… in the freest of the free western
countries? No, they’re Congolese children mining cobalt. Maybe it’s OK that
they’re priced out: Bitcoin preserves wealth (and freedom), it doesn’t create
it. And just having cheaper fees isn’t going to free the child workers. But
still, wouldn’t you rather have Bitcoin be able to benefit anyone who might
have the need to use it, regardless of net worth?
Good news: there are techniques that exist today for scaling access to Bitcoin.
Bad news: they all have different tradeoffs.
Just Make the Blocks Bigger Bro
Early on in Bitcoin’s history a contingency of Bitcoiners
felt strongly that Bitcoin should scale by increasing the size of Blocks to
accommodate more transactions per second and keeping fees low. While mild block
size increases (e.g., as done with SegWit) are probably ok, the ever-increasing
block size would threaten Bitcoin’s decentralization and make it harder for
anyone to be able to run and audit the system. And if you can’t run and audit
Bitcoin yourself, you might as well be using the legacy financial system.
There are some efficiency improvements that can shrink transactions marginally,
contributing to an effectively larger block. But Blockspace will always be
scarce, no matter how space efficient transactions are.
Lightning Network
The Lightning Network is a very popular means of scaling bitcoin. It makes a
second layer on top of Bitcoin where you can make cheaper and lower latency
payments. It functions sort of like the equivalent of Venmo versus Bank Wire
Transfers. You set up a “payment channel” with a counterparty, and are able to
make many cheap payments between you and the counterparty. You can even route
payments through friend’s channels if you don’t have a direct link. A few major
downsides to this approach are as follows:
- That it requires an active online presence and ability to get bitcoin
transactions confirmed (which still costs money!)
- It requires some form of durable storage any time you make a transaction.
- That in order to receive funds, you have to have someone loan you the
“potential” capital (think credit worthiness, which requires some sort of
reputation system and identities).
In countries like El Salvador, which have begun adopting Bitcoin as legal
tender, many users of the Lightning Network are doing so through a centralized
service provider which doesn’t protect users from the types of abuse possible
in current banking paradigms. In theory, this central service provider isn’t
there because the El Salvador government is some kind of soon-to-be
dictatorship, but rather because solving the problems of capital loan, regular
online presence, and durable storage are hard problems for citizens of a poor
country.
Sidechains
Another popular approach is to make federated sidechains, such as
RootStock, Liquid, Nomic, or ThorChain, etc. A Federated Sidechain is
essentially a “fancy multisig”, where funds are sent into the custody of a set
of entities (usually such that many independent entities would have to collude
to steal funds). The federation then runs some sort of cryptocurrency backed by
the deposits. Users are granted virtual bitcoin on the sidechain which they can
use in accordance with the rules of the sidechain. Eventually they may request
that whatever balance they have on the sidechain be sent out of the sidechain
and into a normal bitcoin address of their choosing. This achieves a sort of
scalability because the base layer does not have to validate or store any of
the transactions occurring on the sidechain. However, the tradeoff is severe:
the funds are completely owned by the Federation, which means that users are
not guaranteed to be able to access their funds. It’s basically a bank with a
cool API.
This post doesn’t end in a fun or upbeat way: we want everyone to be able to
access and benefit from Bitcoin; we can’t get everyone for access in the obvious
way of bigger blocks or we risk unravelling Bitcoin’s core guarantees; and the
solutions using layers on top of bitcoin reduce some of the core properties that
make Bitcoin valuable to society in the first place. Some of these tradeoffs may
be acceptable in certain cases, but we must always strive to support the most
users with the strongest Hard Money properties we can.
In future posts we’ll see how more sophisticated smart contracts could improve
Bitcoin’s scalability, or at least provide a different set of tradeoffs compared
to the solutions above.
28 Nov 2021
What says Christmas more than an Advent Calendar to count the days till Santa
comes? Honestly, I’m not too sure, I’m a Jew. Happy Hanukkah everyone! But in
the spirit of the season, I figured the community would love a series of blog
posts (one a day) discussing the future of Bitcoin and Smart Contracts.
You can find an index of all the posts here.
So here’s how it’s going to work:
Today’s the first day!
Advent Calendars are designed to be from the 4th Sunday before Christmas till
Christmas and as such vary in length. Lucky you; this year is a long one!
Unfortunately for me, I’ve got to make 26 more exciting posts to pull this off.
Each of these posts is going to be short-but-sweet (much like the chocolates
you’re used to) and designed to highlight an important concept or idea about
Bitcoin Smart Contracting. I’ll put each post on my personal blog, email out a
link on the judica newsletter, and tweet it out.
This series is for you.
It doesn’t matter if you’re a programmer,
investor, pleb, or just trying to learn more. Through the series
I’ll do my best to thoroughly introduce concepts for anyone to
follow along and learn.
Of course I’m going to be a little biased.
The perspectives shared are my own and the focus is on things that I focus on,
but I’ll do my best to present the balance and nuance!
If you want to send me some holiday cheer: 3E6p1UgrgwAFvZAF7xUiRcBR2vAEdYNXjZ
Hope you enjoy the series!
03 Sep 2021
The other day I was writing some tests for BIP-119 (shoutout
Gloria for the detailed feedback on improving
tests). I noticed something peculiar while attempting to write static test
vectors for CTV. This peculiar thing led me to discover a minor flaw in
Bitcoin’s interpreter – it isn’t going to break anything in the short term,
but it has implications for how certain upgrades might be done in the future.
In the interpreter we pass specific flags in at different times to check
different rules at different times. This is used because we generally want the
Mempool to be “restrictive” and block validation to be unrestrictive. That
sounds like the opposite of what you would want, but it’s because we want to
ensure that we never break a consensus rule, so our mempool is “strict” to
protect e.g. a miner from making a bad block, because our node’s understanding
of consensus validation is less strict so we always know the mempool is full of
stuff that will pass consensus.
One of the specific types of “stricter” that is in the mempool is for things
that may be changed in the future. For example, Taproot (a change proposed to
Bitcoin) uses a Witness V1 script. Before Taproot activates, Witness V1 Scripts
are always valid no matter if they’re signed or not. After it activates, a
new rule takes effect in consensus, and Witness V1 Scripts will be processed in
accordance with Taproot’s rules. Because the Mempool is stricter, it never lets in
any Witness V1 script spends until it knows how to properly validate it. That way,
for a miner who doesn’t want to upgrade to Taproot, they can use the old rules in their
Mempool and not ever mine a bad block.
One of the flags used for this purpose is DISCOURAGE_UPGRADABLE_NOPS. A NOP
is simply an opcode in bitcoin that has no effect (nada). In the future,
someone could add a rule to that NOP (e.g., check that the stack args present
when the NOP executes satisfy some properties or the transaction is invalid,
but do not remove anything from the stack so that the old consensus rules still
seem correct). This is sufficient for consensus, but maybe people have decided
that they want to create a bunch of outputs with NOPs in it because they are
cute. Then, a fork that would add new semantics to a NOP would have the impact
of locking people out of their wallets. To prevent this, the Mempool uses the
rule DISCOURAGE_UPGRADABLE_NOPS which makes it so that if you try to
broadcast an output script with a NOP it gets bounced from the Mempool (but not
consensus of course, should a deviant miner mine such a transaction). Hopefully
our users get the message to not use NOPs because we… discourage upgradable
nops.
CheckSequenceVerify (CSV) was one such NOP before it grew up to be a big n’
important opcode. Essentially all that CSV does is check that the sequence
field is set in a particular manner. This lets you set relative block and time
lock (e.g., takes this much time before a coin is spendable again). However,
it’s possible that we might come up with new kinds of lock times in the future,
so we have a bit we can set in the sequence that makes it ignored for consensus
purposes. Maybe in the future, someone would find something nice to do with it,
eh?
This is the sequence verification code:
case OP_CHECKSEQUENCEVERIFY:
{
if (!(flags & SCRIPT_VERIFY_CHECKSEQUENCEVERIFY)) {
// not enabled; treat as a NOP3
break;
}
if (stack.size() < 1)
return set_error(serror, SCRIPT_ERR_INVALID_STACK_OPERATION);
// nSequence, like nLockTime, is a 32-bit unsigned integer
// field. See the comment in CHECKLOCKTIMEVERIFY regarding
// 5-byte numeric operands.
const CScriptNum nSequence(stacktop(-1), fRequireMinimal, 5);
// In the rare event that the argument may be < 0 due to
// some arithmetic being done first, you can always use
// 0 MAX CHECKSEQUENCEVERIFY.
if (nSequence < 0)
return set_error(serror, SCRIPT_ERR_NEGATIVE_LOCKTIME);
// To provide for future soft-fork extensibility, if the
// operand has the disabled lock-time flag set,
// CHECKSEQUENCEVERIFY behaves as a NOP.
if ((nSequence & CTxIn::SEQUENCE_LOCKTIME_DISABLE_FLAG) != 0)
break;
// Compare the specified sequence number with the input.
if (!checker.CheckSequence(nSequence))
return set_error(serror, SCRIPT_ERR_UNSATISFIED_LOCKTIME);
break;
}
Spot anything funky? Look closer…
// To provide for future soft-fork extensibility, if the
// operand has the disabled lock-time flag set,
// CHECKSEQUENCEVERIFY behaves as a NOP.
if ((nSequence & CTxIn::SEQUENCE_LOCKTIME_DISABLE_FLAG) != 0)
break;
Here, where we say it behaves as a NOP we don’t check any rules and skip the checks.
See where the problem lies? If we ever did get around to a future upgrade
here, then old miners who refuse to upgrade would be more than happy to accept
invalid transactions into their mempool, and then following the fork, would end
up mining invalid blocks leading to potential network partitions.
That would be bad! Let’s not do that.
What we really should be doing is:
// To provide for future soft-fork extensibility, if the
// operand has the disabled lock-time flag set,
// CHECKSEQUENCEVERIFY behaves as a NOP.
if ((nSequence & CTxIn::SEQUENCE_LOCKTIME_DISABLE_FLAG) != 0) {
if (flags & SCRIPT_VERIFY_DISCOURAGE_UPGRADABLE_NOPS)
return set_error(serror, SCRIPT_ERR_DISCOURAGE_UPGRADABLE_NOPS);
break;
}
Which is exactly what I propose to do in this PR.
If this solution is adopted, then after the last release of the Bitcoin Core
Implementation that has the unpatched code goes
End-of-Life, we could safely deploy
new sequence rules. Because it takes a while for software to go EOL, I hope we
can patch this soon.
02 Aug 2021
TL;DR: click here to answer call to action
The infrastructure bill draft has been circulating which contains language that
would have massive impact for the crypto ecosystem (and Bitcoin) in the United
States, and most likely globally. The broad implication of the proposed bill is
that many types of service provider would be categorized as brokers, even if
fully ‘non custodial’. E.g., a coinjoin coordinator might be a broker, even if
they never take control of the funds, because they are facilitating a
transaction. There’s a lot of nuance, and the language is still being changed,
so we’ll see where it lands. But that’s not the point of this blog post.
The point of this blog post is that we need to hurry the fuck up and improve
the self-sovereign software available and widely used by bitcoiners. You heard
me right, hurry the fuck up.
While there’s space for debate around perfect designs and optima for protocol
improvements, these discussions take years to turn into code running in end
users wallets. I do not believe that we have time to leisurely improve
self-sovereign custody solutions while regulators figure out a wrench to throw
in our spokes.
Why am I so concerned about this bill in particular? A confidential source
tells me that this language came out of the blue, an executive branch driven
regulatory ninja attack of sorts. Normally, when the government looks to
regulate an industry, the provisions and terms get floated around by
legislators for a long while with industry input, comment periods, and more.
Then, when a bill or other rules get passed, it’s something that the industry
has at least had a chance to weigh in on and prepare for. My source claims no
one has seen the clauses in the infrastructure bill before, and they infer that
may mean this is a part of a broader crack-down coming from specific political
personalities and agencies. This means we may be seeing government actions
further restricting users’ rights in the pipeline much sooner than anyone could
anticipate.
I’ve long been saying that we should be deploying BIP-119
CTV for congestion control before we see broad congestion
on the network. If you wait until a problem is manifest, it can take years to
deploy a solution. This merits proactivity in solving a problem before it
comes. Today, the need to improve self-custody looms urgently on the horizon.
CTV is not a panacea solution. It doesn’t magically fix all custodial issues.
But, along with Sapio, it does offer a pathway
to dramatically improving self custody options, letting users customize vault
smart contracts which do not depend on any third parties. Deploying CTV now is
an opportunity to put in motion the wheels for broad ecosystem support for
these enhanced custody protocols. We may come up with better options in the
future which may obsolete CTV in place of more clever technologies. I cheer
those efforts. But we need solutions for Tomorrow.
A soft fork activation for CTV could be deployable for Bitcoin imminently,
should the community embrace it. The spec is nearly 2 years old, the code has
required only small updates to be mergeable with other changes to Bitcoin Core.
The review burden is 185 lines of consensus code, and a couple hundred lines of
tests. To that end I believe it is prudent for the Bitcoin community to embrace
the deployment of CTV and I’m calling on the community to soft-signal
intent for a soft-fork
activation of CTV.
We cannot control what rules state authorities attempt to mandate. But we can
individually control our own compliance with measures we see as unjust, and as
a community we can advance technologies and solutions that ensure that choice
remains squarely in the hands of every user and not the service providers they
may use.