Join me today for Episode 949 of Bitcoin And . . .
Topics for today:
- Latvia Central Banks Offer MiCA Free Consult for BTC Companies
- Bitcoin Rollups
- Confusion: FED's Upcoming Rate Cut
- nostr and Restaurant Menus
#Bitcoin #BitcoinAnd
Circle P:
Rev.hodl: https://primal.net/p/npub1f5pre6wl6ad87vr4hr5wppqq30sh58m4p33mthnjreh03qadcajs7gwt3z
Rev. Hodl's Applied Permaculture Class: https://primal.net/e/note1t6p47jytn4wg9ft5a4t4unm787y3jyz3drsrfgz072jjsuszpgsq2u370f
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Articles:
https://cointelegraph.com/news/latvia-mica-pre-licensing-crypto
https://bitcoinmagazine.com/technical/bitcoin-rollups-the-rock-or-the-hard-place
https://www.coindesk.com/markets/2024/09/09/a-050-fed-rate-cut-could-raise-alarm-for-bitcoin-10x-research-warns/
- https://www.cnbc.com/futures-and-commodities/
- https://dashboard.clarkmoody.com/
- https://mempool.space/
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https://www.nobsbitcoin.com/mercury-layer-v0-2-0/
https://www.nobsbitcoin.com/amethyst-v0-91-0/
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[00:00:00]
David Bennett:
Good morning. This is David Bennett, and this is Bitcoin and, a podcast where I try to find the edge effect between the worlds of Bitcoin, gaming, permaculture, podcasting, and education to gain a better understanding of all. Edge effect is a concept from ecology describing a greater diversity of life where the edges of 2 systems overlap. While species from either system can be found at the edge, it is important to note there are species in the overlap that exist in neither system, and that is what I seek to uncover. So join me in discovering the variety of things being created as Bitcoin rubs up against other systems. It is 9:58 am Pacific Daylight Time. It's the 9th day of 9th month of 2024. And this is episode 949 of Bitcoin. And the Circle P is open for business with Rev Hoddles.
What's he got? An applied permaculture class is gonna be Saturday, October 12th. Coming up on a month away from Rev Hoddle's class here. If you want to learn about permaculture and how it works in his life, I highly recommend doing this. It's gonna cost you a 100,000 satoshis. And if you're anywhere close to Baroda, Michigan Baroda, Michigan for a 100000 sats, you, yes you, on Saturday October 12th can go check out applied permaculture and how to apply it to any lifestyle building sovereignty, resilience, and wealth in this half day class. Now, if you want to go hang out with some of these guys, but you don't just don't have the 100,000 sats or you just can't make it on Saturday, but you can make it on Friday. Well, at 7 pm Friday, October 11th there is a fireside Bitcoin meetup in Baroda, Michigan. You'll have to DM Rev HODL.
His end pub will be will be in the show notes and all you have to do is click and it will take you right to his page. You DM him and you say, you know, you say basically, hey how do I get this done? How do I come up for Friday October 11th to chill out with the at the fireside Bitcoin meetup? Which, by the way, is bring your own beer. If you do have the 100,000 hats and you wanna learn about permaculture, then you can hang around and stay overnight because he's got, oh, what is it? He's got, like, some free camping and he's got a house with 4 bedrooms or 4 beds. He's got a tiny house with a queen bed. And then it looks like there's a yurt with a single queen bed. And you can book those so you'll have to DM him for details on that as well. But again, Saturday, October 12th is the applied permaculture class. And the night before Friday, October 11th is the fireside Bitcoin meetup. Make damn sure that you tell them that you heard it here on the Bitcoin and podcasts circle P.
On to the east. Let's get into Eastern Europe. Latvia's central bank opens pre licensing consultations to crypto companies. Cointelegraph starts us out this morning. The European Union's landmark crypto regulation, the Markets in Crypto Assets Regulation, is starting to be implemented in phases throughout the region and local businesses are responding. In Latvia, the central bank announced that it would offer pre licensing consultations for any local crypto asset service providers seeking to gain a MICA compliant license in the country.
Pausing just to remind you that if any of you guys have heard about the Baltic Honey Badger, you know, the Riga conference. Riga is the capital city of Latvia. So this is why this is important. It looks like for all the time that the Bitcoin conference has been going on over there, the honey badger conference, in Riga, that it has now permeated into the central banking figures of the country of Latvia, which is good news. Anyway, from January 2025, the bank will be in charge of accepting applications and issuing licenses for CASPs, that's the crypto asset service provider, in the country. In the meantime, it said it is helping to prepare companies for the process with free pre licensing consultations.
So experts from the central bank will offer companies guidance on the regulations applicable to said company. All required documentation and an initial assessment of each company's level of compliance. There's no way I can pronounce this name but this person is the executive director of the Latvian Blockchain Association said that the association is committed to supporting local C ASPs as they navigate the licensing process. Our goal is to make this transition as smooth as possible, ensuring companies can leverage the full potential of the Latvian market while complying with the new MICA framework. The central bank's announcement said there are no limits to the number of consultations or meetings companies can request before filing their licensing application.
Latvias invitation for pre licensing consultations is a preparatory measure to ensure that companies are ready to comply with Mica when it comes into full force. The proactive stance allows Latvia to align with Mica's requirements and position itself as an attractive location for crypto asset service providers within the EU. Micah is a significant part of the EU's broader digital finance strategy aimed at fostering innovation while ensuring financial stability and protecting investors. Compliance experts in the region have called its implementation a pivotal moment for crypto regulations. Latvia has been actively working towards implementing laws that will help its local crypto ecosystem blossom.
In June, regulators in the country pushed forward its crypto asset service law, which aimed to offer a clear regulatory framework to foster growth and investment and support the country's plans to be a hub for blockchain and crypto companies. At the time, the minister of economics, Viktoras Villanius, spoke in an in-depth interview with Cointelegraph stating, quote, we aim to double our economy over the next decade, reaching €83,000,000,000 in GDP by 2,035 smart technologies are a priority with €183,000,000 allocated for digitization and €210,000,000 for innovation.
However, Latvia is not alone in proactively approaching the forthcoming Mica implementation. In August, France's financial markets regulator, the Atorite de Marchas Finances I I I can't speak French, but I I try to fake pronouncing it. Announced that it would be accepting applications for CASPs 6 months before the laws are actually enforced. Does not look that's the end that's the end of the article. It does not look like crypto or, God well, Bitcoin and, God forbid, crypto is going away in the EU. It looks like they're getting ready. They can't fight it. The only thing that they can do is try to regulate the hell out of it. It's sad to see that the companies are gonna, you know, sit down and kinda, you know, kiss butt with the whole MICA regulation. But honestly, they don't really have a choice.
They don't. I mean, there's nothing that they can do. They're they're just they're they're stuck. We're all stuck with these these entities that somehow or another keep collecting the most sociopathic individuals the world has to offer and refining them and concentrating them into these groups of people that just hate humanity. But we're gonna have to deal with it. So the word of the day is workaround. And I don't know how that's going to happen. Maybe it can happen with something like Bitcoin roll ups. I honestly, I'm still confused about what the hell Bitcoin roll ups even are.
So let's see if Shinobi can kinda, you know, get us a little bit closer to what the hell Bitcoin roll ups are. This is from Bitcoin Magazine, again, written by Shinobi. Rollups have become the narrative focus of scaling Bitcoin lately, becoming the first thing to truly steal the limelight from the Lightning Network in terms of wider mindshare. Rollups aim to be an off chain layer 2 that is not bound or constrained by the liquidity limitations that are central to the lightning network. Like, you know, for example, end users requiring someone to allocate or lend them funds ahead of time in order to be able to receive money or intermediary routing nodes requiring channel balances that can facilitate the movement of the payment amounts all the way from the sender to the receiver.
These systems were originally developed to function on Ethereum and other Turing complete systems. But as of late, the focus has shifted to porting them to UTXO based blockchains such as Bitcoin. This article is not going to discuss the current state of things being implemented on Bitcoin currently. But we're going to discuss the function of an idealized rollup that people are aiming for in the long term depending on features Bitcoin currently does not support, namely the ability to verify zero knowledge proofs on Bitcoin directly.
The basic architecture of a rollup is as follows: a single account, or in Bitcoin's case UTXO, holds the balances of all the users in the rollup. This UTXO contains a commitment in the form of a Merkle root of a Merkle tree that commits to all the current balances of existing accounts in that rollup. All of these accounts are authorized using public private key pairs, so in order to propose an off chain spend, a user must still sign something with a key. This part of the structure allows users to leave without permission whenever they want, simply by crafting a transaction proving their account is part of the Merkle tree. They can unilaterally exit the rollup without the operator's permission.
The operator of the rollup must include the 0 knowledge proof in transactions that update the Merkle root of account balances on chain in the process of finalizing off chain transactions. Without this ZKP, 0 knowledge proof, the transaction will be invalid and therefore not inclutable in the chain. This proof allows people to verify that all the changes to off chain accounts were properly authorized by the account holder or holders and that the operator has not conducted a malicious update of balances to steal money from users or reallocate it to other users dishonestly.
The problem is, if only the root of the Merkle tree is posted on chain where users can view and access it, how do they get their branch in the tree in order to be capable of exiting without permission when they want to? In a proper rollup, the information is put directly into the blockchain every time that new off chain transactions are confirmed and the state of the roll up accounts change not the entire tree that would be absurd but the information necessary to reconstruct the tree In a naive implementation, the summary of all existing accounts in the roll up would have balances and accounts simply added in the transaction updating the roll up. In more advanced implementations, a balance diff is used.
This is essentially a summary of what accounts have had money added to or subtracted from them during the course of an update. This allows each rollup update to only include the changes to account balances that occur. Users can then simply scan the chain and quote do the math from the beginning of the rollup to arrive at the current state of account balances which allows them to reconstruct the Merkle tree of current balances. This saves a lot of overhead and block space and therefore money while still allowing users to guarantee access to the information needed for them to exit unilaterally.
Including this data in a formal roll up that uses the blockchain to make it available to users is mandated by the rules of the rollup. For example, a transaction that does not include the account summary or account diff which is short for difference is considered an invalid transactions. So there now comes this word, validiums. The other way to handle the problem of data availability for users to withdraw is to put the data somewhere else besides the blockchain. This introduces subtle issues. The roll up still needs to enforce that the data was made available somewhere else. Traditionally other blockchains are used for this purpose specifically designed to function as data availability layers for systems just like roll ups.
This creates the the the the the dilemma of security guarantees being as strong. When the data is posted directly to the Bitcoin blockchain, consensus rules guarantee it is correct with absolute certainty. However, when it is posted to an external system, the best it can do is verify what's called an SPV proof that the data was posted to another system. This entails verifying an attestation that data exists on other chains, which is ultimately now an oracle problem. Bitcoin's blockchain cannot verify anything completely except what occurs on its own blockchain. The best it can do is verify a ZKP.
A ZKP, 0 knowledge proof, however cannot verify that a block containing rollup data was actually publicly broadcasted after being produced. It cannot verify that external information is actually publicly available to everyone. This opens the door to data withholding attacks, Where a commitment to the data being published is created and used to advance the roll up, but the data is not actually made available. This renders users funds beyond the ability to withdraw. The only real solution to this is to depend entirely on the value and incentive structure of systems completely external to Bitcoin.
Now is the rock in the hard place. Because it creates a dilemma in terms of rollups. When it comes to the data availability issue, there is essentially a binary choice between posting the data to the Bitcoin blockchain or to somewhere else. This choice has massive implications for both rollup security and sovereignty as well as their scalability. On the one hand, using the Bitcoin blockchain for the data availability layer introduces a hard ceiling on how much roll ups can scale. There is only so much block space and that puts an upper limit on how many roll ups can exist at one time and how many transactions all roll ups in aggregate can process off chain.
Every roll up update requires block space proportional to the amount of accounts that have had balance changes since the last update. Information theory only allows data to be compressed so much, and at that point there is no more potential for scaling gains. On the other hand, using a different layer for data availability removes the hard ceiling on scalability gains, but it also introduces new security and sovereignty issues. In a roll up using Bitcoin for data availability, it is literally not possible for the state of the roll up to change without the data needed by users to withdraw being atomically posted to the blockchain.
With the Vellidiums, that guarantee depends entirely upon the ability of whatever external system is being used to resist gaming and data withholding. Any block producer on the external data availability system is now capable of holding Bitcoin roll up users funds hostage by producing a block and not actually broadcasting it to make the data available. So which will it be? If we ever do get an ideal roll up implementation on Bitcoin that actually enables unilateral user withdrawal? The Rock or the Hard Place? Again, Shinobi, Bitcoin Magazine with a brief overview of some of the issues going on with roll ups on Bitcoin.
And the way that I'm taking this is that I'm just going to simplify it in my own little brain of what a roll up is. It's simply I'm just going to say it is it's like closing a lightning channel that you've had open where you've had funds going back and forth for, like, let's say, a year. And somehow or another, you just need to close that channel to get the funds out or or whatever it is that that's going to happen. Right? That in a in a in a roll up issue, it's not clearly, it's not part of the Lightning Network at all. It has nothing to do with the Lightning Network. That in in one case, it is a a way to verify that you've done a whole bunch of off chain transactions between at least 2 parties and that you want to exit that well, you want to exit the party. You want to go home. You're tired of, like, having to search your drink for roofies. You're just done. Right? So you broadcast this roll up and then it's settled on the blockchain of Bitcoin, but that's a scaling issue because we get right back into the fact that block space is limited.
But the idea of being able to handle these transactions offline and then be able to have verifiable data be rebroadcast on the block on the actual Bitcoin blockchain itself is compelling. It's another way to do some kind of layer 2 type of implementation that doesn't depend on the liquid network or the Lightning Network doesn't depend on on the on being able to have immediate incoming and outgoing liquidity on a lightning node. So in a way, it resembles it resembles what, Homeboy is trying to do with ARC, which is the ability to do some kind of layer 2 back and forth transactions that after you're all done with making all the transactions you wanna make in that particular environment, that you can close out that arc channel for lack of a better term and the funds are distributed to both the parties that were involved in in that particular channel again for lack of a better term.
Layer 2 solutions are important for Bitcoin because they are the way that we scale. And layer 3 is going to be important. And layer 4 is going to be important. Right? These are the things that make Bitcoin scale. For those of you screaming, but what about somebody who's never going to be able to hold a UTXO? I don't know what to tell them. Buy Bitcoin while you can still own a UTXO. I don't really know what else to do. But past that you're gonna need layer scaling solutions and Bitcoin roll ups seems to be one of them. And for those going, but you're polluting Bitcoin with technology that was designed in the Ethereum ecosystem and that's bad.
I'm not a fan of Ethereum. If you've ever listened to this show, you know that. But I am a fan of good technology. ZK rollups, 0 knowledge proofs, all these things they were just because they were implemented first actually I don't think 0 knowledge proofs insofar as the exactly ZKPs were ever implemented directly on Ethereum but roll ups have been there for a while those things were theorized I think I think if I remember right roll ups were theorized by basically agnostic technologist that had no particular allegiance to Bitcoin or Ethereum or Doge, right? It was just a computer science technology.
It's not a bad technology. But as Shinobi points out, the second that we start going, okay, well, there's not enough room on Bitcoin to do it and we need more layer 2 stuff. I know we'll throw it on another blockchain like liquid and let liquid handle all the back and forth stuff and then we'll close it out on the Bitcoin blockchain. But Bitcoin knows nothing about what actually happened on the liquid side chain. So there this is a problem and that's what Shinobi is trying to detail is that you are literally between a rock and a hard place. The rock let's just say that the rock is the scalability issue of keeping everything safe and completely well known on the Bitcoin blockchain because there is a scalability problem. The hard place is letting somebody else take the scalability problem but now you've completely compromised the security.
Everything is a trade off and roll ups are no different. Let's move on. Let's go into a little bit of macro. A 0.5 percent Fed rate cut could raise alarm for Bitcoin, 10x research warns. So I'm going to put a little damper on your hopium today. CoinDesk, OMCAR Godbold is writing, Friday's US jobs report has seemingly set the stage for the Federal Reserve to start cutting interest rates with the first move likely to happen next week. The supposedly bullish liquidity easing cycle may click off on a sour note for risk assets including Bitcoin if if if the Fed cuts rates by a full 50 basis points on September 18th according to 10x Research.
Rate moves are expressed in basis points equal to 1 1 hundredth of a percentage point and central banks, including the Fed, typically opt for 25 basis point interest rate changes. However, more significant moves are occasionally chosen indicating a sense of urgency. For instance, the Fed delivered multiple 50 bps and 75 bps hikes during the 20 22 tightening cycle signaling an urgency to control inflation and causing risk aversion in financial markets. A 50 basis point cut next week might imply heightened economic concerns or a sense of falling behind the curve in combating the impending economic slowdown, thus leading investors to scale back exposure to risk assets like Bitcoin and stocks.
Quote, while a 50 basis point cut by the Federal Reserve might signal deeper concerns to the markets, the Fed's primary focus will be mitigating economic risks rather than managing market reactions, says Marcus Thelen, founder of 10x Research. At press time, the Chicago Mercantile Exchange's FedWatch tool showed almost 30% probability that the Fed will cut rates by 50 basis points to the 4.75 to 5% range next week. Quote, the probability of a 50 basis point cut is only 29%, contrasting our view and the prevailing consensus. The chorus is growing louder that the Fed is behind the curve, having missed signs of labor market weakness after being caught off guard in July, Thelen said.
I do believe that they are looking they are mentioning that the March jobs report was revised down that 818,000 jobs, which was the 2nd largest revision downward, I think, in the labor market in the United States economic reporting history. But I digress. Thielen's view is consistent with the consensus amongst traditional market experts. Quote, the Fed doesn't want to start with 50 basis point cut because frankly, at this point, the economy doesn't need them to panic, macro trader Craig Shapiro said on Twitter. Shapiro detailed that liquidity addicted markets will want the Fed to start with a 50 bps rate cut and will correct lower until the central bank opts for bigger reductions.
Quote, we are back in this zone. Risk assets will correct until the Fed capitulates and give it gives it what it wants. The market wants liquidity. We need to find the Fed put strike price. But given where the economy is now and with risk asset prices like stocks, credit spreads, etcetera still so elevated while the economic data is still slowly growing I fear the levels are significantly lower, Shapiro added. Past data show that the start of the rate cutting cycle irrespective of the size of the first move does not always have a stimulative effect on asset prices. Note that the expected Fed easing has been one of the key factors behind BTC's uptrend from 20,000 in January of 2023, which raises the question of whether the Fed rate cut is already priced in.
Yeah, so here's the thing. These dudes in in macro land are never happy. They're never happy. They the word on the street when Federal Reserve guy, you know, Jerome Powell started making dovish comments and and essentially the Fed came out with their minutes and said, yes, we're going to start easing rates in September. All of a sudden, the very first thing that came up was is it going to be a 25 basis point move or is it going to be a 50 basis point move down? And everybody was hoping that it was going to be a 50 basis point move down because that means that money well, in both cases, money printer goes BRRRR, but at 50% or a 50 basis point cut rather than 25, money printer go BRRRR even harder. Right? And they want the liquidity.
They these guys, they need cash. They need to take loans to get cash to buy stuff so that they can make their money. And with a 50 basis point move to the downside, they would have a much better time doing it. But but no no wait here's the guy from whatever 10x or whatever this outfits name is what is it yeah 10x research is saying well wait a minute but what does that signal if they go down 50 basis points to start then clearly they're terrified Well, everybody's terrified. We already know that shit. That's that cat is not only out of the bag but got on a ship that sailed away long ago. We know they're terrified.
Everybody's scared about this shit. So why what am I getting at? The amount of noise that retail investors have to wade through is beyond a limiting factor for retail to do well. Between that and getting taxed on on your capital gains, it's it's almost guaranteed that you can't beat inflation. Because not only do you have to beat inflation, you have to beat it far enough in advance so that you can pay your taxes on the gains that you hope actually beat inflation. See how this works? It's almost a guaranteed lose lose scenario. But with this kind of noise going on where we with just back and forth is it 25 okay they're gonna they're gonna cut now the first question with what happened within seconds of the Fed releasing the minutes is it 25 or is it 50 And then people are like going, oh, I hope it's 50. I hope it's 50. And now we've got this other guy saying, you better hope it's not 50 because that's going to scare the piss out of the markets.
Nobody knows what the hell to do. And it's a scary field out there. Even if they are cutting, it's become scary. So just the warning is be careful. Steadily stack sats. Do your daily cost average. Do what you can to limit your costs and honestly that's the way we get through what's you know these next 5 10 years I wish it wasn't going to be so long but and I don't mean to be a pessimist, but these cycles, they're I mean, they've always been here. I remember being a you know, I remember like the late 70s early 80s and coming out of the recession of the 70s. Man, it was bleak, dude. I mean, people were depressed.
It's like it like I've seen this is the 2nd time I've seen a national population this depressed. The seventies, people were depressed. Everybody was depressed. It's not like this hasn't happened before, but it took a while to get out of the seventies. And then what happened you got into the 80s and we all know what happened in the 80s and if you don't know what happened in the 80s we set ourselves up for what's happening today a whole bunch of people made a whole bunch of stupid moves. They got stupid rich, but they did things like create the mortgage backed security.
And they sold a lot of them until 2007 in which case everybody started going this is not good Not good at all. Speaking of markets, let's run the numbers. West Texas Intermediate Oil is up 1 and a third points to $68.58. Brent, North Sea rebounding 0.87%. Natural gas is down 5%. Because natural gas swings the other way. It always goes the other way. Gasoline up 1.16 percent to a buck 91 a gallon. Good luck finding it. And all your metal rocks are doing well. Gold up a quarter of a point. Silver is up 1 point 6 7%. Platinum is up 3%. Copper is up 1.7 and palladium is up, wow, 4 a half percent.
Ag is fully mixed today. The biggest winner is chocolate. 5.47% to the upside. Biggest loser is rough rice. 1.86 to the downside. Live cattle up 1 a quarter. Lean hogs down a half. Feeder cattle up damn near 2 full points. Dow is up 1 and a half. The S and P up 1 and a third. Nasdaq up 1 and a half. And the S and P Mini is up over a full point, which means that traders are having a good day today on this Monday. And we are at $56,570 per Bitcoin. That is a $1,120,000,000,000 market cap. You can now purchase 22.5 ounces of shiny metal rocks with your 1 bitcoin of which there are 19,751,792.99 of and average fees per block have fallen again 0.05 BTC taken in fees on average on a per block basis that is down from what was going on last week which was essentially just kind of locked in at 0 point 6. So we're down 1 100th.
And there are a 114 blocks carrying 227,000 unconfirmed transactions waiting for clearance at high priority rates of 5 satoshis per vbyte. Low priority is gonna get you in at 4. Mining hash rate is at 646 exahashes per second, down well below the 746 exahashes per second that we saw that one day last week. From build the invisible future, Bitcoin and episode 948, slow slow with 21100 sat says false data jobs report, false narrative on soft landing. Of course, they just lied to us. That's that's their gig. That's what they're paid to do, I guess. Blogging Bitcoin with a 1,000 says Noster is Galt's Gulch on the Internet. I agree.
Vague with 1200 says if the future is invisible, no one will be able to see it. What you meant to say was if the future is invisible, no one will be able to see it but us, the people that are on the other side of the gault barrier. That's where we wanna be. I'm not concerned if somebody is the boot licking regulation loving state fanatic that they are sees us or not. I don't care. That's the person I don't that's exactly the person I don't want to see us, man. So as long as it's invisible to the people that I don't want to be seen by, I'm totally fine if they can't see the future. Sword in the stone with a 1,000 says, great point about needing new open source structures and a whole new way of looking at it. Really great insight. Well done. Thank you. God's death with a 1,000.
Thank you, sir. Great episode. So no thank you. Mark, says good night and no no sats. Oh, man. Come on. Can we can we give him some sats? Come here some chat. See. Is there anybody else? I think that's I do I do believe that that's it. So that's gonna do it for the weather report. Welcome to part 2 of the news you can use. Rodolfo Novak at NVK has deactivated his Twitter account. And he's got some words about, why he did that over the weekend. And if you haven't seen if you don't understand what I'm talking about, Novak is the guy behind coinkite which is the guys that build the cold card hardware wallet and the block clock and a few other really high quality accessories I I don't have a block clock but I've got almost everything else he has a massive following on Twitter I mean massive I mean this is one of the guys that's been in the space forever Bitcoin Twitter you know when it first started coming up after it was like you know I don't know, kinda moved over from Reddit over to Twitter back in, I wanna say, like, between, I guess, 2013 to 2014. I wasn't really active in the space, so I don't really know.
But I know by 25th 2015 to 2016, all the action was essentially over on Bitcoin Twitter and now it's moving again. And one of the accounts that I never expected to actually deactivate their account is is Novak. But he's got some reasoning here and I'm gonna read it to you so that you understand what's kind of what's going on, what's in the mind of some of the other people that are deleting or deactivating their their Twitter accounts. Be aware there are some typos in here. So if I stumble, it's because I'm trying to to interpret on the fly. Bear with me.
From Novak, Twitter was paramount in Bitcoin's growth and its battles. It was a very cool, quirky place eons before that too. Even though I have a very old account, Bitcoin was the reason I started using it more frequently. I met an incredible amount of good people there. Some of the best people I know was directly or indirectly because of the bird app. Hired people. Connected people. There was and is absolutely nothing like it. It's hard to imagine how the direction of my life would have gone. It was greatly impacted by it. Crazy place. A true public square. I'm incredibly grateful for it. COVID killed it or at least accelerated its dystopian trajectory. US politics' gravitational force also doesn't help.
Nothing on earth can escape US politics. Everyone and everything deals with its consequences, even decentralized things. But they fare better. See Bitcoin. Anyhoo, being with the X account deactivated over the weekend was quite nice. It had been a very long time since I fully disconnected. It is still a lot of signal, a lot of Lendy. But is it also became an open sewer. Why? The algorithm evolved for maximum conflict. It's hard to even describe how much it makes your skin crawl. It finds all the shit you don't want to read by the people you don't even know about existed and vomits on you.
Even with a large muted word list, it is not a healthy place. Maximum engagement does it equal more ad revenues or more ad views? I don't want the fire hose all the time humans are not designed for that different moods different content different types of engagement maybe even different clients for different subnetwork graphs it's time to evolve I think Nostr takes us there but I think Twitter's value can't be ignored It's still a ginormous network. That's aside from good people I know there, where it is our only communication channel. I plan on drastically decreasing my use of it.
Truly limiting to post about Nostr, projects I like, and amplifying Bitcoin things that I believe in. The goal is to trend towards end of use. Hopefully, it gracefully coincides with Nostr Rising as the new public square. Protocols must be open. There must be algorithm choice, or we are doomed to doom scroll and add target conflict. I no longer will allow myself to scroll, and I will try to starve the beast as much as possible. Good night. Okay. So that's Novak's, yeah, I guess for lack of a better term, public statement on why he deactivated his Twitter account. But I'm confused, Novak, because you say that you're you've deactivated your account, but you plan on drastically decreasing your use of dead bird. How is this possible?
Unless he's talking about the coin kite, Twitter account, which he may be. But I'm a little confused as to when you deactivate account whether or or like if there's a difference between deactivating an account and is there anything more? I mean, can you delete your account? I was looking at at my Twitter account yesterday. It's I'm I really only post the only thing that I post to Twitter about at any given time anymore is when I release a show. That's about it. Everything else is like I'm just trying to either, you know, figure out a way to get in contact with some ranchers or, you know, things of that nature, but I I don't I don't really post on on Twitter very much anymore, which accounts for the fact that I've got, you know, I used to have, like, what, like, 10,000 followers and now I've got, like, 300 and honestly I kind of don't care because I've spent all of all of my time that I want to engage other people in a digital realm, I do on nostril.
Right? And which brings me to the point, we're gonna leave the the the Novak show here, and just say congratulations on Novak for at least delete, you know, or at least deactivating his account. I do hope that I see if, you know, somehow or another see a full deletion of that account so that there's no choice but to stay on Nostr. And you will ask me, well, you've got a Twitter account. You just said you did. Yeah. Nobody gives a shit that I got a Twitter account. If I deactivate my Twitter account with, like, 235 or 300 followers and post that shit to Noster, no one's gonna care because I'm not lose what what I've lost, I already lost. I lost that 2 years ago when they shit can my account on, sometime between, going to sleep on December 31st and waking up on New Year's Day. From between that time my Twitter account was gone, and all my followers were gone, and all of my posts were gone, and all of my contacts were gone, and everybody I knew was gone Just gone. Just take it away from me. And that's when I vowed that's well actually that that was when I realized not vowed that comes later. That's when I realized you we cannot rely on this stuff. And it just so happened that of just a few months later I want to actually maybe just the very next month like in in February or March that I started using Noster and I immediately saw its power I immediately saw what it actually means.
Alright? So for those of you that under that are on Nostr and understand what I'm talking about the following isn't for you. But if you haven't even tried Nostra or if you've tried Nostra like Parker Lewis and somehow or another thought it was great and now thinks it stinks, I implore you to try again. But this time try with with 0 expectations. Don't try to try to match your mental expectations of using Nostra the 2nd or 3rd time with what you expect on Twitter. Like the user interface, the the the the non kludginess, the the essentially, for lack of a better phrase, the clean lines of the centralized bird app that we've all know to come, love, and then now hate.
Because that that's a hard fought process for people like Twitter. Right? Not just because they became so insanely centralized because they came became so insanely big, but they've got good engineers. They know what they're doing. They know how to do user interface. That's that's not what Nostra is not yet not yet but Twitter was a shitty experience back in the day when it first started up the first 2, 3, 4 years even Jack will admit that it was a horrible user experience but nobody remembers that they still stay with it and now Twitter is what Twitter is so now if you come to to Nostr and you go, you know, this isn't this isn't as easy as Facebook. It's not as easy as Instagram. It's not as easy as TikTok or pick your poison. Right? And Nostr, by the way, represents a lot more than just different facets of social media.
It it it represents a new way to think about your entire digital identity and what you are and are not allowed to log on to. What what you are and are not kicked off of without your permission. You know? What you are or are not allowed to say whatever the hell you want without anybody's permission. It's a completely new paradigm. It's going to come with growing pains. And one of the growing pains I outlined on Friday was the reply guy that replied, like, 16 reply guys from with 16 different in pubs reply to every single note under the sun. And Will or, well, jb55, the creator of Domus, which is the iOS Nostra client, had a couple of things to say. I'm not gonna read it. I'm just gonna paraphrase it. But what he was saying was that if you're subscribed to, like, 30 relays, you're doing yourself a disservice and making yourself a target for overloading your your mind with just shit, complete spam, worthless information, utter noise. It becomes Nostra becomes a signal to noise ratio graveyard.
Right? And what he was suggesting was start curating what relays that you're attached to. And it dawned on me that a long time ago, I had recognized that relays in conjunction with different clients can give you a, like, sort of a made to order meal like you're ordering from a menu at a restaurant. Every somebody else is having, you know, surf and turf. You just want soup. 2 completely different worlds, same exact restaurant, same exact menu, but you made different choices. So here's what I here's what I would like to see somebody on Nostr do.
I don't want to delete and add relays all the time. I want to have a standard set of relays that I'm connected to, but I want something some kind of user interface to surface whether it's in settings or it's in a sidebar on the right hand side of my browser when I'm looking at like either Coreacle or satellite. Earth or whatever whatever nostriline I happen to be using where I can checkbox each individual relay or I can deselect them all and only select one particular relay. So that while I'm still connected to all the relays, I'm only surfacing the information from those relays that I have checked.
And that would be a step into having something to order because different relays do different things, Right? And different relays have different rules. There are some some are moderated. Some have spam filters. Some don't have anything. Right? With with surfacing the ability to turn off and turn on relays without having to delete and re add them every single time that I do that I believe that the Nostra user experience would be one step closer to being able to show just how different things can be because when they say the algorithm what if the algorithm we start looking at it at the base layer right now what Nostra is what we have right now and without writing any a lick of code at all about building an algorithm that you can quote unquote select to use, you can just use a relay. And that that relay, the rules of that relay, actually is the algorithm. Like, I want an algorithm where I never see a reply guy.
I click the no reply guy dot nostr dot relay which I don't think actually exists, but let's just say it does and it has one rule. It does not allow any reply guy stuff to come through. And that's done on whoever that's done by whoever is maintaining and building that relay. Right? So then I'm depending on that person to affect what it is that I see. Let's say that I don't give a shit. I don't really care if reply guys in my replies, but I want to see I don't want to see event kind once. I just want to see longer notes in which there's an event for. Right? That's sort of the way Nostr works is that, like, if I just write good morning, that's, you know, on on some Nostr client like primal, send it out into the ether, that's just a standard note event kind 1.
Right? But if I, like, really write out a lot of stuff, if an event kind one cannot handle that anymore. Like, if I write, like, you know, a 1000 words or something, I needed a different event kind. Maybe I want to use huddlbot's coracle as my nostril client, but only select long note forms. So between the the interface of Koracle and the color schemes that I've selected there, plus the the relay that I select, Now my experience with Nostra is completely different than somebody who's connected to 30 different relays and is just using primal. See where I'm getting at?
When I mentioned when I had the idea that this could be very much like a restaurant menu, this is getting closer to what I'm thinking about. So enough of Nostr. Let's move on to Mercury layer version 0.2.0. It's been released. And it's a fix for malicious backup transaction vulnerabilities. What is Mercury Layer? Well, it is another layer 2 protocol for Bitcoin. It enables the self custodial transfer of coins without on chain transactions, and that sounds a little bit a teensy bit like roll ups, but that's all I really know about it. If you're a Mercury user, you'll be interested in the fact that the new release of the Mercury layer client was announced by Tom Trevathon, CTO at Commerce Block, And says this update fixes vulnerabilities related to malicious backup transactions bypassing receiver verification checks. We've revamped the way backup transaction checks are constructed to ensure robust security.
There is the new things are a verification of backup transaction construction. In lock time checks against current block height and in sequence has been set to 0 in backup transactions. No. I don't know what any of that shit means because I am just hearing about Mercury layer version whatever just now. So I've never heard about Mercury layer before. But no on chain transactions in the custody of transfer of coins seems interesting and seems like it's playing in the Bitcoin roll ups arena, but I'm definitely not sure. Above my pay grade, let's talk about Amethyst version 0.91.0.
Edge to edge feeds. And if you didn't know, Amethyst is a free and open source Nostra client for Android operating system. Quote hidden words now filter by the user's fields as well. You can hide by name profile picture banner lightning and nip05 addresses and the about me fields announced the project. So what's new? Edge to edge transition for Android 15 and I assume that that means going right to the edge of the screen of your phone it adds compression settings to the media uploading screen adds sliding animations in all inner screens adds copy stack to clipboard for error messages that have an exception enables the use of hidden words for all visible properties to the user updated translations code quality improvements and a whole raft of bug fixes.
Alright. So that is the end of everything that I had to tell you about today. I hope you do enjoy your Monday. It looks like we are at $56,592.23. Who knows if we hit the bottom or not? I don't know. But remember that the hopium killer is the confusion around how important a 25 basis point versus a 50 basis point move by the Fed this month will actually be. I I I really hate that retail has to be confused this way. It's almost, like, guaranteed that retail never digs their way out of the hole and we have to dig our way out of this hole because if we don't, our children are gonna be in an even deeper hole. I will see you on the other side.
This has been Bitcoin, and and I'm your host, David Bennett. I hope you enjoyed today's episode and hope to see you again real soon. Have a great day.
Good morning. This is David Bennett, and this is Bitcoin and, a podcast where I try to find the edge effect between the worlds of Bitcoin, gaming, permaculture, podcasting, and education to gain a better understanding of all. Edge effect is a concept from ecology describing a greater diversity of life where the edges of 2 systems overlap. While species from either system can be found at the edge, it is important to note there are species in the overlap that exist in neither system, and that is what I seek to uncover. So join me in discovering the variety of things being created as Bitcoin rubs up against other systems. It is 9:58 am Pacific Daylight Time. It's the 9th day of 9th month of 2024. And this is episode 949 of Bitcoin. And the Circle P is open for business with Rev Hoddles.
What's he got? An applied permaculture class is gonna be Saturday, October 12th. Coming up on a month away from Rev Hoddle's class here. If you want to learn about permaculture and how it works in his life, I highly recommend doing this. It's gonna cost you a 100,000 satoshis. And if you're anywhere close to Baroda, Michigan Baroda, Michigan for a 100000 sats, you, yes you, on Saturday October 12th can go check out applied permaculture and how to apply it to any lifestyle building sovereignty, resilience, and wealth in this half day class. Now, if you want to go hang out with some of these guys, but you don't just don't have the 100,000 sats or you just can't make it on Saturday, but you can make it on Friday. Well, at 7 pm Friday, October 11th there is a fireside Bitcoin meetup in Baroda, Michigan. You'll have to DM Rev HODL.
His end pub will be will be in the show notes and all you have to do is click and it will take you right to his page. You DM him and you say, you know, you say basically, hey how do I get this done? How do I come up for Friday October 11th to chill out with the at the fireside Bitcoin meetup? Which, by the way, is bring your own beer. If you do have the 100,000 hats and you wanna learn about permaculture, then you can hang around and stay overnight because he's got, oh, what is it? He's got, like, some free camping and he's got a house with 4 bedrooms or 4 beds. He's got a tiny house with a queen bed. And then it looks like there's a yurt with a single queen bed. And you can book those so you'll have to DM him for details on that as well. But again, Saturday, October 12th is the applied permaculture class. And the night before Friday, October 11th is the fireside Bitcoin meetup. Make damn sure that you tell them that you heard it here on the Bitcoin and podcasts circle P.
On to the east. Let's get into Eastern Europe. Latvia's central bank opens pre licensing consultations to crypto companies. Cointelegraph starts us out this morning. The European Union's landmark crypto regulation, the Markets in Crypto Assets Regulation, is starting to be implemented in phases throughout the region and local businesses are responding. In Latvia, the central bank announced that it would offer pre licensing consultations for any local crypto asset service providers seeking to gain a MICA compliant license in the country.
Pausing just to remind you that if any of you guys have heard about the Baltic Honey Badger, you know, the Riga conference. Riga is the capital city of Latvia. So this is why this is important. It looks like for all the time that the Bitcoin conference has been going on over there, the honey badger conference, in Riga, that it has now permeated into the central banking figures of the country of Latvia, which is good news. Anyway, from January 2025, the bank will be in charge of accepting applications and issuing licenses for CASPs, that's the crypto asset service provider, in the country. In the meantime, it said it is helping to prepare companies for the process with free pre licensing consultations.
So experts from the central bank will offer companies guidance on the regulations applicable to said company. All required documentation and an initial assessment of each company's level of compliance. There's no way I can pronounce this name but this person is the executive director of the Latvian Blockchain Association said that the association is committed to supporting local C ASPs as they navigate the licensing process. Our goal is to make this transition as smooth as possible, ensuring companies can leverage the full potential of the Latvian market while complying with the new MICA framework. The central bank's announcement said there are no limits to the number of consultations or meetings companies can request before filing their licensing application.
Latvias invitation for pre licensing consultations is a preparatory measure to ensure that companies are ready to comply with Mica when it comes into full force. The proactive stance allows Latvia to align with Mica's requirements and position itself as an attractive location for crypto asset service providers within the EU. Micah is a significant part of the EU's broader digital finance strategy aimed at fostering innovation while ensuring financial stability and protecting investors. Compliance experts in the region have called its implementation a pivotal moment for crypto regulations. Latvia has been actively working towards implementing laws that will help its local crypto ecosystem blossom.
In June, regulators in the country pushed forward its crypto asset service law, which aimed to offer a clear regulatory framework to foster growth and investment and support the country's plans to be a hub for blockchain and crypto companies. At the time, the minister of economics, Viktoras Villanius, spoke in an in-depth interview with Cointelegraph stating, quote, we aim to double our economy over the next decade, reaching €83,000,000,000 in GDP by 2,035 smart technologies are a priority with €183,000,000 allocated for digitization and €210,000,000 for innovation.
However, Latvia is not alone in proactively approaching the forthcoming Mica implementation. In August, France's financial markets regulator, the Atorite de Marchas Finances I I I can't speak French, but I I try to fake pronouncing it. Announced that it would be accepting applications for CASPs 6 months before the laws are actually enforced. Does not look that's the end that's the end of the article. It does not look like crypto or, God well, Bitcoin and, God forbid, crypto is going away in the EU. It looks like they're getting ready. They can't fight it. The only thing that they can do is try to regulate the hell out of it. It's sad to see that the companies are gonna, you know, sit down and kinda, you know, kiss butt with the whole MICA regulation. But honestly, they don't really have a choice.
They don't. I mean, there's nothing that they can do. They're they're just they're they're stuck. We're all stuck with these these entities that somehow or another keep collecting the most sociopathic individuals the world has to offer and refining them and concentrating them into these groups of people that just hate humanity. But we're gonna have to deal with it. So the word of the day is workaround. And I don't know how that's going to happen. Maybe it can happen with something like Bitcoin roll ups. I honestly, I'm still confused about what the hell Bitcoin roll ups even are.
So let's see if Shinobi can kinda, you know, get us a little bit closer to what the hell Bitcoin roll ups are. This is from Bitcoin Magazine, again, written by Shinobi. Rollups have become the narrative focus of scaling Bitcoin lately, becoming the first thing to truly steal the limelight from the Lightning Network in terms of wider mindshare. Rollups aim to be an off chain layer 2 that is not bound or constrained by the liquidity limitations that are central to the lightning network. Like, you know, for example, end users requiring someone to allocate or lend them funds ahead of time in order to be able to receive money or intermediary routing nodes requiring channel balances that can facilitate the movement of the payment amounts all the way from the sender to the receiver.
These systems were originally developed to function on Ethereum and other Turing complete systems. But as of late, the focus has shifted to porting them to UTXO based blockchains such as Bitcoin. This article is not going to discuss the current state of things being implemented on Bitcoin currently. But we're going to discuss the function of an idealized rollup that people are aiming for in the long term depending on features Bitcoin currently does not support, namely the ability to verify zero knowledge proofs on Bitcoin directly.
The basic architecture of a rollup is as follows: a single account, or in Bitcoin's case UTXO, holds the balances of all the users in the rollup. This UTXO contains a commitment in the form of a Merkle root of a Merkle tree that commits to all the current balances of existing accounts in that rollup. All of these accounts are authorized using public private key pairs, so in order to propose an off chain spend, a user must still sign something with a key. This part of the structure allows users to leave without permission whenever they want, simply by crafting a transaction proving their account is part of the Merkle tree. They can unilaterally exit the rollup without the operator's permission.
The operator of the rollup must include the 0 knowledge proof in transactions that update the Merkle root of account balances on chain in the process of finalizing off chain transactions. Without this ZKP, 0 knowledge proof, the transaction will be invalid and therefore not inclutable in the chain. This proof allows people to verify that all the changes to off chain accounts were properly authorized by the account holder or holders and that the operator has not conducted a malicious update of balances to steal money from users or reallocate it to other users dishonestly.
The problem is, if only the root of the Merkle tree is posted on chain where users can view and access it, how do they get their branch in the tree in order to be capable of exiting without permission when they want to? In a proper rollup, the information is put directly into the blockchain every time that new off chain transactions are confirmed and the state of the roll up accounts change not the entire tree that would be absurd but the information necessary to reconstruct the tree In a naive implementation, the summary of all existing accounts in the roll up would have balances and accounts simply added in the transaction updating the roll up. In more advanced implementations, a balance diff is used.
This is essentially a summary of what accounts have had money added to or subtracted from them during the course of an update. This allows each rollup update to only include the changes to account balances that occur. Users can then simply scan the chain and quote do the math from the beginning of the rollup to arrive at the current state of account balances which allows them to reconstruct the Merkle tree of current balances. This saves a lot of overhead and block space and therefore money while still allowing users to guarantee access to the information needed for them to exit unilaterally.
Including this data in a formal roll up that uses the blockchain to make it available to users is mandated by the rules of the rollup. For example, a transaction that does not include the account summary or account diff which is short for difference is considered an invalid transactions. So there now comes this word, validiums. The other way to handle the problem of data availability for users to withdraw is to put the data somewhere else besides the blockchain. This introduces subtle issues. The roll up still needs to enforce that the data was made available somewhere else. Traditionally other blockchains are used for this purpose specifically designed to function as data availability layers for systems just like roll ups.
This creates the the the the the dilemma of security guarantees being as strong. When the data is posted directly to the Bitcoin blockchain, consensus rules guarantee it is correct with absolute certainty. However, when it is posted to an external system, the best it can do is verify what's called an SPV proof that the data was posted to another system. This entails verifying an attestation that data exists on other chains, which is ultimately now an oracle problem. Bitcoin's blockchain cannot verify anything completely except what occurs on its own blockchain. The best it can do is verify a ZKP.
A ZKP, 0 knowledge proof, however cannot verify that a block containing rollup data was actually publicly broadcasted after being produced. It cannot verify that external information is actually publicly available to everyone. This opens the door to data withholding attacks, Where a commitment to the data being published is created and used to advance the roll up, but the data is not actually made available. This renders users funds beyond the ability to withdraw. The only real solution to this is to depend entirely on the value and incentive structure of systems completely external to Bitcoin.
Now is the rock in the hard place. Because it creates a dilemma in terms of rollups. When it comes to the data availability issue, there is essentially a binary choice between posting the data to the Bitcoin blockchain or to somewhere else. This choice has massive implications for both rollup security and sovereignty as well as their scalability. On the one hand, using the Bitcoin blockchain for the data availability layer introduces a hard ceiling on how much roll ups can scale. There is only so much block space and that puts an upper limit on how many roll ups can exist at one time and how many transactions all roll ups in aggregate can process off chain.
Every roll up update requires block space proportional to the amount of accounts that have had balance changes since the last update. Information theory only allows data to be compressed so much, and at that point there is no more potential for scaling gains. On the other hand, using a different layer for data availability removes the hard ceiling on scalability gains, but it also introduces new security and sovereignty issues. In a roll up using Bitcoin for data availability, it is literally not possible for the state of the roll up to change without the data needed by users to withdraw being atomically posted to the blockchain.
With the Vellidiums, that guarantee depends entirely upon the ability of whatever external system is being used to resist gaming and data withholding. Any block producer on the external data availability system is now capable of holding Bitcoin roll up users funds hostage by producing a block and not actually broadcasting it to make the data available. So which will it be? If we ever do get an ideal roll up implementation on Bitcoin that actually enables unilateral user withdrawal? The Rock or the Hard Place? Again, Shinobi, Bitcoin Magazine with a brief overview of some of the issues going on with roll ups on Bitcoin.
And the way that I'm taking this is that I'm just going to simplify it in my own little brain of what a roll up is. It's simply I'm just going to say it is it's like closing a lightning channel that you've had open where you've had funds going back and forth for, like, let's say, a year. And somehow or another, you just need to close that channel to get the funds out or or whatever it is that that's going to happen. Right? That in a in a in a roll up issue, it's not clearly, it's not part of the Lightning Network at all. It has nothing to do with the Lightning Network. That in in one case, it is a a way to verify that you've done a whole bunch of off chain transactions between at least 2 parties and that you want to exit that well, you want to exit the party. You want to go home. You're tired of, like, having to search your drink for roofies. You're just done. Right? So you broadcast this roll up and then it's settled on the blockchain of Bitcoin, but that's a scaling issue because we get right back into the fact that block space is limited.
But the idea of being able to handle these transactions offline and then be able to have verifiable data be rebroadcast on the block on the actual Bitcoin blockchain itself is compelling. It's another way to do some kind of layer 2 type of implementation that doesn't depend on the liquid network or the Lightning Network doesn't depend on on the on being able to have immediate incoming and outgoing liquidity on a lightning node. So in a way, it resembles it resembles what, Homeboy is trying to do with ARC, which is the ability to do some kind of layer 2 back and forth transactions that after you're all done with making all the transactions you wanna make in that particular environment, that you can close out that arc channel for lack of a better term and the funds are distributed to both the parties that were involved in in that particular channel again for lack of a better term.
Layer 2 solutions are important for Bitcoin because they are the way that we scale. And layer 3 is going to be important. And layer 4 is going to be important. Right? These are the things that make Bitcoin scale. For those of you screaming, but what about somebody who's never going to be able to hold a UTXO? I don't know what to tell them. Buy Bitcoin while you can still own a UTXO. I don't really know what else to do. But past that you're gonna need layer scaling solutions and Bitcoin roll ups seems to be one of them. And for those going, but you're polluting Bitcoin with technology that was designed in the Ethereum ecosystem and that's bad.
I'm not a fan of Ethereum. If you've ever listened to this show, you know that. But I am a fan of good technology. ZK rollups, 0 knowledge proofs, all these things they were just because they were implemented first actually I don't think 0 knowledge proofs insofar as the exactly ZKPs were ever implemented directly on Ethereum but roll ups have been there for a while those things were theorized I think I think if I remember right roll ups were theorized by basically agnostic technologist that had no particular allegiance to Bitcoin or Ethereum or Doge, right? It was just a computer science technology.
It's not a bad technology. But as Shinobi points out, the second that we start going, okay, well, there's not enough room on Bitcoin to do it and we need more layer 2 stuff. I know we'll throw it on another blockchain like liquid and let liquid handle all the back and forth stuff and then we'll close it out on the Bitcoin blockchain. But Bitcoin knows nothing about what actually happened on the liquid side chain. So there this is a problem and that's what Shinobi is trying to detail is that you are literally between a rock and a hard place. The rock let's just say that the rock is the scalability issue of keeping everything safe and completely well known on the Bitcoin blockchain because there is a scalability problem. The hard place is letting somebody else take the scalability problem but now you've completely compromised the security.
Everything is a trade off and roll ups are no different. Let's move on. Let's go into a little bit of macro. A 0.5 percent Fed rate cut could raise alarm for Bitcoin, 10x research warns. So I'm going to put a little damper on your hopium today. CoinDesk, OMCAR Godbold is writing, Friday's US jobs report has seemingly set the stage for the Federal Reserve to start cutting interest rates with the first move likely to happen next week. The supposedly bullish liquidity easing cycle may click off on a sour note for risk assets including Bitcoin if if if the Fed cuts rates by a full 50 basis points on September 18th according to 10x Research.
Rate moves are expressed in basis points equal to 1 1 hundredth of a percentage point and central banks, including the Fed, typically opt for 25 basis point interest rate changes. However, more significant moves are occasionally chosen indicating a sense of urgency. For instance, the Fed delivered multiple 50 bps and 75 bps hikes during the 20 22 tightening cycle signaling an urgency to control inflation and causing risk aversion in financial markets. A 50 basis point cut next week might imply heightened economic concerns or a sense of falling behind the curve in combating the impending economic slowdown, thus leading investors to scale back exposure to risk assets like Bitcoin and stocks.
Quote, while a 50 basis point cut by the Federal Reserve might signal deeper concerns to the markets, the Fed's primary focus will be mitigating economic risks rather than managing market reactions, says Marcus Thelen, founder of 10x Research. At press time, the Chicago Mercantile Exchange's FedWatch tool showed almost 30% probability that the Fed will cut rates by 50 basis points to the 4.75 to 5% range next week. Quote, the probability of a 50 basis point cut is only 29%, contrasting our view and the prevailing consensus. The chorus is growing louder that the Fed is behind the curve, having missed signs of labor market weakness after being caught off guard in July, Thelen said.
I do believe that they are looking they are mentioning that the March jobs report was revised down that 818,000 jobs, which was the 2nd largest revision downward, I think, in the labor market in the United States economic reporting history. But I digress. Thielen's view is consistent with the consensus amongst traditional market experts. Quote, the Fed doesn't want to start with 50 basis point cut because frankly, at this point, the economy doesn't need them to panic, macro trader Craig Shapiro said on Twitter. Shapiro detailed that liquidity addicted markets will want the Fed to start with a 50 bps rate cut and will correct lower until the central bank opts for bigger reductions.
Quote, we are back in this zone. Risk assets will correct until the Fed capitulates and give it gives it what it wants. The market wants liquidity. We need to find the Fed put strike price. But given where the economy is now and with risk asset prices like stocks, credit spreads, etcetera still so elevated while the economic data is still slowly growing I fear the levels are significantly lower, Shapiro added. Past data show that the start of the rate cutting cycle irrespective of the size of the first move does not always have a stimulative effect on asset prices. Note that the expected Fed easing has been one of the key factors behind BTC's uptrend from 20,000 in January of 2023, which raises the question of whether the Fed rate cut is already priced in.
Yeah, so here's the thing. These dudes in in macro land are never happy. They're never happy. They the word on the street when Federal Reserve guy, you know, Jerome Powell started making dovish comments and and essentially the Fed came out with their minutes and said, yes, we're going to start easing rates in September. All of a sudden, the very first thing that came up was is it going to be a 25 basis point move or is it going to be a 50 basis point move down? And everybody was hoping that it was going to be a 50 basis point move down because that means that money well, in both cases, money printer goes BRRRR, but at 50% or a 50 basis point cut rather than 25, money printer go BRRRR even harder. Right? And they want the liquidity.
They these guys, they need cash. They need to take loans to get cash to buy stuff so that they can make their money. And with a 50 basis point move to the downside, they would have a much better time doing it. But but no no wait here's the guy from whatever 10x or whatever this outfits name is what is it yeah 10x research is saying well wait a minute but what does that signal if they go down 50 basis points to start then clearly they're terrified Well, everybody's terrified. We already know that shit. That's that cat is not only out of the bag but got on a ship that sailed away long ago. We know they're terrified.
Everybody's scared about this shit. So why what am I getting at? The amount of noise that retail investors have to wade through is beyond a limiting factor for retail to do well. Between that and getting taxed on on your capital gains, it's it's almost guaranteed that you can't beat inflation. Because not only do you have to beat inflation, you have to beat it far enough in advance so that you can pay your taxes on the gains that you hope actually beat inflation. See how this works? It's almost a guaranteed lose lose scenario. But with this kind of noise going on where we with just back and forth is it 25 okay they're gonna they're gonna cut now the first question with what happened within seconds of the Fed releasing the minutes is it 25 or is it 50 And then people are like going, oh, I hope it's 50. I hope it's 50. And now we've got this other guy saying, you better hope it's not 50 because that's going to scare the piss out of the markets.
Nobody knows what the hell to do. And it's a scary field out there. Even if they are cutting, it's become scary. So just the warning is be careful. Steadily stack sats. Do your daily cost average. Do what you can to limit your costs and honestly that's the way we get through what's you know these next 5 10 years I wish it wasn't going to be so long but and I don't mean to be a pessimist, but these cycles, they're I mean, they've always been here. I remember being a you know, I remember like the late 70s early 80s and coming out of the recession of the 70s. Man, it was bleak, dude. I mean, people were depressed.
It's like it like I've seen this is the 2nd time I've seen a national population this depressed. The seventies, people were depressed. Everybody was depressed. It's not like this hasn't happened before, but it took a while to get out of the seventies. And then what happened you got into the 80s and we all know what happened in the 80s and if you don't know what happened in the 80s we set ourselves up for what's happening today a whole bunch of people made a whole bunch of stupid moves. They got stupid rich, but they did things like create the mortgage backed security.
And they sold a lot of them until 2007 in which case everybody started going this is not good Not good at all. Speaking of markets, let's run the numbers. West Texas Intermediate Oil is up 1 and a third points to $68.58. Brent, North Sea rebounding 0.87%. Natural gas is down 5%. Because natural gas swings the other way. It always goes the other way. Gasoline up 1.16 percent to a buck 91 a gallon. Good luck finding it. And all your metal rocks are doing well. Gold up a quarter of a point. Silver is up 1 point 6 7%. Platinum is up 3%. Copper is up 1.7 and palladium is up, wow, 4 a half percent.
Ag is fully mixed today. The biggest winner is chocolate. 5.47% to the upside. Biggest loser is rough rice. 1.86 to the downside. Live cattle up 1 a quarter. Lean hogs down a half. Feeder cattle up damn near 2 full points. Dow is up 1 and a half. The S and P up 1 and a third. Nasdaq up 1 and a half. And the S and P Mini is up over a full point, which means that traders are having a good day today on this Monday. And we are at $56,570 per Bitcoin. That is a $1,120,000,000,000 market cap. You can now purchase 22.5 ounces of shiny metal rocks with your 1 bitcoin of which there are 19,751,792.99 of and average fees per block have fallen again 0.05 BTC taken in fees on average on a per block basis that is down from what was going on last week which was essentially just kind of locked in at 0 point 6. So we're down 1 100th.
And there are a 114 blocks carrying 227,000 unconfirmed transactions waiting for clearance at high priority rates of 5 satoshis per vbyte. Low priority is gonna get you in at 4. Mining hash rate is at 646 exahashes per second, down well below the 746 exahashes per second that we saw that one day last week. From build the invisible future, Bitcoin and episode 948, slow slow with 21100 sat says false data jobs report, false narrative on soft landing. Of course, they just lied to us. That's that's their gig. That's what they're paid to do, I guess. Blogging Bitcoin with a 1,000 says Noster is Galt's Gulch on the Internet. I agree.
Vague with 1200 says if the future is invisible, no one will be able to see it. What you meant to say was if the future is invisible, no one will be able to see it but us, the people that are on the other side of the gault barrier. That's where we wanna be. I'm not concerned if somebody is the boot licking regulation loving state fanatic that they are sees us or not. I don't care. That's the person I don't that's exactly the person I don't want to see us, man. So as long as it's invisible to the people that I don't want to be seen by, I'm totally fine if they can't see the future. Sword in the stone with a 1,000 says, great point about needing new open source structures and a whole new way of looking at it. Really great insight. Well done. Thank you. God's death with a 1,000.
Thank you, sir. Great episode. So no thank you. Mark, says good night and no no sats. Oh, man. Come on. Can we can we give him some sats? Come here some chat. See. Is there anybody else? I think that's I do I do believe that that's it. So that's gonna do it for the weather report. Welcome to part 2 of the news you can use. Rodolfo Novak at NVK has deactivated his Twitter account. And he's got some words about, why he did that over the weekend. And if you haven't seen if you don't understand what I'm talking about, Novak is the guy behind coinkite which is the guys that build the cold card hardware wallet and the block clock and a few other really high quality accessories I I don't have a block clock but I've got almost everything else he has a massive following on Twitter I mean massive I mean this is one of the guys that's been in the space forever Bitcoin Twitter you know when it first started coming up after it was like you know I don't know, kinda moved over from Reddit over to Twitter back in, I wanna say, like, between, I guess, 2013 to 2014. I wasn't really active in the space, so I don't really know.
But I know by 25th 2015 to 2016, all the action was essentially over on Bitcoin Twitter and now it's moving again. And one of the accounts that I never expected to actually deactivate their account is is Novak. But he's got some reasoning here and I'm gonna read it to you so that you understand what's kind of what's going on, what's in the mind of some of the other people that are deleting or deactivating their their Twitter accounts. Be aware there are some typos in here. So if I stumble, it's because I'm trying to to interpret on the fly. Bear with me.
From Novak, Twitter was paramount in Bitcoin's growth and its battles. It was a very cool, quirky place eons before that too. Even though I have a very old account, Bitcoin was the reason I started using it more frequently. I met an incredible amount of good people there. Some of the best people I know was directly or indirectly because of the bird app. Hired people. Connected people. There was and is absolutely nothing like it. It's hard to imagine how the direction of my life would have gone. It was greatly impacted by it. Crazy place. A true public square. I'm incredibly grateful for it. COVID killed it or at least accelerated its dystopian trajectory. US politics' gravitational force also doesn't help.
Nothing on earth can escape US politics. Everyone and everything deals with its consequences, even decentralized things. But they fare better. See Bitcoin. Anyhoo, being with the X account deactivated over the weekend was quite nice. It had been a very long time since I fully disconnected. It is still a lot of signal, a lot of Lendy. But is it also became an open sewer. Why? The algorithm evolved for maximum conflict. It's hard to even describe how much it makes your skin crawl. It finds all the shit you don't want to read by the people you don't even know about existed and vomits on you.
Even with a large muted word list, it is not a healthy place. Maximum engagement does it equal more ad revenues or more ad views? I don't want the fire hose all the time humans are not designed for that different moods different content different types of engagement maybe even different clients for different subnetwork graphs it's time to evolve I think Nostr takes us there but I think Twitter's value can't be ignored It's still a ginormous network. That's aside from good people I know there, where it is our only communication channel. I plan on drastically decreasing my use of it.
Truly limiting to post about Nostr, projects I like, and amplifying Bitcoin things that I believe in. The goal is to trend towards end of use. Hopefully, it gracefully coincides with Nostr Rising as the new public square. Protocols must be open. There must be algorithm choice, or we are doomed to doom scroll and add target conflict. I no longer will allow myself to scroll, and I will try to starve the beast as much as possible. Good night. Okay. So that's Novak's, yeah, I guess for lack of a better term, public statement on why he deactivated his Twitter account. But I'm confused, Novak, because you say that you're you've deactivated your account, but you plan on drastically decreasing your use of dead bird. How is this possible?
Unless he's talking about the coin kite, Twitter account, which he may be. But I'm a little confused as to when you deactivate account whether or or like if there's a difference between deactivating an account and is there anything more? I mean, can you delete your account? I was looking at at my Twitter account yesterday. It's I'm I really only post the only thing that I post to Twitter about at any given time anymore is when I release a show. That's about it. Everything else is like I'm just trying to either, you know, figure out a way to get in contact with some ranchers or, you know, things of that nature, but I I don't I don't really post on on Twitter very much anymore, which accounts for the fact that I've got, you know, I used to have, like, what, like, 10,000 followers and now I've got, like, 300 and honestly I kind of don't care because I've spent all of all of my time that I want to engage other people in a digital realm, I do on nostril.
Right? And which brings me to the point, we're gonna leave the the the Novak show here, and just say congratulations on Novak for at least delete, you know, or at least deactivating his account. I do hope that I see if, you know, somehow or another see a full deletion of that account so that there's no choice but to stay on Nostr. And you will ask me, well, you've got a Twitter account. You just said you did. Yeah. Nobody gives a shit that I got a Twitter account. If I deactivate my Twitter account with, like, 235 or 300 followers and post that shit to Noster, no one's gonna care because I'm not lose what what I've lost, I already lost. I lost that 2 years ago when they shit can my account on, sometime between, going to sleep on December 31st and waking up on New Year's Day. From between that time my Twitter account was gone, and all my followers were gone, and all of my posts were gone, and all of my contacts were gone, and everybody I knew was gone Just gone. Just take it away from me. And that's when I vowed that's well actually that that was when I realized not vowed that comes later. That's when I realized you we cannot rely on this stuff. And it just so happened that of just a few months later I want to actually maybe just the very next month like in in February or March that I started using Noster and I immediately saw its power I immediately saw what it actually means.
Alright? So for those of you that under that are on Nostr and understand what I'm talking about the following isn't for you. But if you haven't even tried Nostra or if you've tried Nostra like Parker Lewis and somehow or another thought it was great and now thinks it stinks, I implore you to try again. But this time try with with 0 expectations. Don't try to try to match your mental expectations of using Nostra the 2nd or 3rd time with what you expect on Twitter. Like the user interface, the the the the non kludginess, the the essentially, for lack of a better phrase, the clean lines of the centralized bird app that we've all know to come, love, and then now hate.
Because that that's a hard fought process for people like Twitter. Right? Not just because they became so insanely centralized because they came became so insanely big, but they've got good engineers. They know what they're doing. They know how to do user interface. That's that's not what Nostra is not yet not yet but Twitter was a shitty experience back in the day when it first started up the first 2, 3, 4 years even Jack will admit that it was a horrible user experience but nobody remembers that they still stay with it and now Twitter is what Twitter is so now if you come to to Nostr and you go, you know, this isn't this isn't as easy as Facebook. It's not as easy as Instagram. It's not as easy as TikTok or pick your poison. Right? And Nostr, by the way, represents a lot more than just different facets of social media.
It it it represents a new way to think about your entire digital identity and what you are and are not allowed to log on to. What what you are and are not kicked off of without your permission. You know? What you are or are not allowed to say whatever the hell you want without anybody's permission. It's a completely new paradigm. It's going to come with growing pains. And one of the growing pains I outlined on Friday was the reply guy that replied, like, 16 reply guys from with 16 different in pubs reply to every single note under the sun. And Will or, well, jb55, the creator of Domus, which is the iOS Nostra client, had a couple of things to say. I'm not gonna read it. I'm just gonna paraphrase it. But what he was saying was that if you're subscribed to, like, 30 relays, you're doing yourself a disservice and making yourself a target for overloading your your mind with just shit, complete spam, worthless information, utter noise. It becomes Nostra becomes a signal to noise ratio graveyard.
Right? And what he was suggesting was start curating what relays that you're attached to. And it dawned on me that a long time ago, I had recognized that relays in conjunction with different clients can give you a, like, sort of a made to order meal like you're ordering from a menu at a restaurant. Every somebody else is having, you know, surf and turf. You just want soup. 2 completely different worlds, same exact restaurant, same exact menu, but you made different choices. So here's what I here's what I would like to see somebody on Nostr do.
I don't want to delete and add relays all the time. I want to have a standard set of relays that I'm connected to, but I want something some kind of user interface to surface whether it's in settings or it's in a sidebar on the right hand side of my browser when I'm looking at like either Coreacle or satellite. Earth or whatever whatever nostriline I happen to be using where I can checkbox each individual relay or I can deselect them all and only select one particular relay. So that while I'm still connected to all the relays, I'm only surfacing the information from those relays that I have checked.
And that would be a step into having something to order because different relays do different things, Right? And different relays have different rules. There are some some are moderated. Some have spam filters. Some don't have anything. Right? With with surfacing the ability to turn off and turn on relays without having to delete and re add them every single time that I do that I believe that the Nostra user experience would be one step closer to being able to show just how different things can be because when they say the algorithm what if the algorithm we start looking at it at the base layer right now what Nostra is what we have right now and without writing any a lick of code at all about building an algorithm that you can quote unquote select to use, you can just use a relay. And that that relay, the rules of that relay, actually is the algorithm. Like, I want an algorithm where I never see a reply guy.
I click the no reply guy dot nostr dot relay which I don't think actually exists, but let's just say it does and it has one rule. It does not allow any reply guy stuff to come through. And that's done on whoever that's done by whoever is maintaining and building that relay. Right? So then I'm depending on that person to affect what it is that I see. Let's say that I don't give a shit. I don't really care if reply guys in my replies, but I want to see I don't want to see event kind once. I just want to see longer notes in which there's an event for. Right? That's sort of the way Nostr works is that, like, if I just write good morning, that's, you know, on on some Nostr client like primal, send it out into the ether, that's just a standard note event kind 1.
Right? But if I, like, really write out a lot of stuff, if an event kind one cannot handle that anymore. Like, if I write, like, you know, a 1000 words or something, I needed a different event kind. Maybe I want to use huddlbot's coracle as my nostril client, but only select long note forms. So between the the interface of Koracle and the color schemes that I've selected there, plus the the relay that I select, Now my experience with Nostra is completely different than somebody who's connected to 30 different relays and is just using primal. See where I'm getting at?
When I mentioned when I had the idea that this could be very much like a restaurant menu, this is getting closer to what I'm thinking about. So enough of Nostr. Let's move on to Mercury layer version 0.2.0. It's been released. And it's a fix for malicious backup transaction vulnerabilities. What is Mercury Layer? Well, it is another layer 2 protocol for Bitcoin. It enables the self custodial transfer of coins without on chain transactions, and that sounds a little bit a teensy bit like roll ups, but that's all I really know about it. If you're a Mercury user, you'll be interested in the fact that the new release of the Mercury layer client was announced by Tom Trevathon, CTO at Commerce Block, And says this update fixes vulnerabilities related to malicious backup transactions bypassing receiver verification checks. We've revamped the way backup transaction checks are constructed to ensure robust security.
There is the new things are a verification of backup transaction construction. In lock time checks against current block height and in sequence has been set to 0 in backup transactions. No. I don't know what any of that shit means because I am just hearing about Mercury layer version whatever just now. So I've never heard about Mercury layer before. But no on chain transactions in the custody of transfer of coins seems interesting and seems like it's playing in the Bitcoin roll ups arena, but I'm definitely not sure. Above my pay grade, let's talk about Amethyst version 0.91.0.
Edge to edge feeds. And if you didn't know, Amethyst is a free and open source Nostra client for Android operating system. Quote hidden words now filter by the user's fields as well. You can hide by name profile picture banner lightning and nip05 addresses and the about me fields announced the project. So what's new? Edge to edge transition for Android 15 and I assume that that means going right to the edge of the screen of your phone it adds compression settings to the media uploading screen adds sliding animations in all inner screens adds copy stack to clipboard for error messages that have an exception enables the use of hidden words for all visible properties to the user updated translations code quality improvements and a whole raft of bug fixes.
Alright. So that is the end of everything that I had to tell you about today. I hope you do enjoy your Monday. It looks like we are at $56,592.23. Who knows if we hit the bottom or not? I don't know. But remember that the hopium killer is the confusion around how important a 25 basis point versus a 50 basis point move by the Fed this month will actually be. I I I really hate that retail has to be confused this way. It's almost, like, guaranteed that retail never digs their way out of the hole and we have to dig our way out of this hole because if we don't, our children are gonna be in an even deeper hole. I will see you on the other side.
This has been Bitcoin, and and I'm your host, David Bennett. I hope you enjoyed today's episode and hope to see you again real soon. Have a great day.
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Nostr and Relay Management
