Bear markets are for building, it is sometimes said. What it means: When things go wrong (a “bear market”), the most beautiful things are made. People are less concerned about price, you stick with people who have long-term faith.
I don’t mind that the hype has died down a bit. All the altcoin and NFT nonsense is starting to die down a bit. So it’s time to refocus on what Bitcoin really is: better money for the world. Low prices also have advantages in my opinion: more time for FOCUS (and I can buy bitcoins cheaply…).
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In this free Friday edition of Bitcoin Focus, you can read a lot about the new improvements: Silent Payments are discussed. There is also money for BTCPayserver, I answer the question if I am worried about a death spiral, and more!
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Death and stress? Or big developments, donations and more privacy?
- Great: more privacy through silent payments. What is?
- Nice: money to develop bitcoin software
- Phew: death spiral among miners? What’s that?
- Sigh: lawsuits against bitcoiners and crypto stamps
Read the original article on bitcoinfocus.nl.
Secret payments: first test passed
Signet is a way to test bitcoin. Instead of sending “real” bitcoins over the bitcoin network, you can create your own testnet with Signet. Or use the general test network.
This week the first ‘silent payment’ was made on Signet, as a test. Dutchman Ruben Somsen is also working hard on it.
What is? Back to normal bitcoin transactions: I create a bitcoin address (these often start with bc1) these days. If you want to send me money, your wallet actually sends ‘to’ that address. This is also visible on the blockchain and traceable.
With silent payments (SP) things are slightly different. If I want to receive a SP, I create a SP address. It’s a new type of address, and sending wallets need to incorporate support for it.
What a wallet (that supports SP) doesn’t send directly to that address, but does a calculation with ‘your’ inputs (the bitcoin to be sent) and the SP address. This creates a new address type.
I, as the recipient, now have to review all transactions to see if I have received money. That’s a lot more work than ‘normal’ transactions, where I can see if my addresses have been sent. In the SP way, I have to check each transaction, do the same kind of calculation the sender did, and see if I’ve received any money.
The fact that you can no longer just look at the receive address also means that (for the time being) you can only receive with ‘full nodes’. Where ‘light nodes’ only store relevant transaction information (the transactions their addresses are involved in), all information must be seen with these SP addresses (and therefore the node must have it).
The big advantage is that it is more difficult for chain analytics companies to trace addresses. Do you want to see the transaction yourself? You can here, transaction 50b486aa2f8db4592936284aa7bf88537d571de3adaf33c3849cfaf132990244 in signet. And you want to do that transaction yourself? So here is an explanation.
A lot of money for the development of the BTCPay server
This week there is again the Oslo Freedom Forum (OFF), an annual meeting on human rights. Guests and activists from many countries were already invited.
This year is also about bitcoin. We know that the Human Rights Foundation (HRF) is a fan of bitcoin and lightning.
They have also shown it this year. Builders of BTCPay Server, a way to receive money as a store or individual (with links to web stores), are also present in OFF.
At the conference it was announced that HRF and Strike’s (a payment platform) BTCPay Server will receive $100,000 for further development.
I myself am a big fan of the software. It works well with payment platforms, and it’s nice to be able to use bitcoin easily. The fact that the money is going towards further development is 100% good news as far as I’m concerned. More + easier bitcoin usage = great!
Death spiral in miners?
With bitcoin, it is determined every two weeks how difficult it will be to find bitcoin in the upcoming blocks of 2016. We call this a difficulty adjustment.
If more miners search for bitcoin, it becomes harder to find bitcoin. And when the miners stop, it gets easier again. Everything to make the 2016 blocks takes me about two weeks.
Why 2016? If you want a block every 10 minutes, that’s 6 per hour, 144 per day. Two weeks of 144 blocks a day is 2016 blocks. Interestingly, 6102 (reversed) was an American law that prohibited the possession of gold. Chance?
So what is the death spiral? It sounds like the name of a metal band, but it has something to do with bitcoin.
Imagine a situation where it takes an average of 100 attempts to find a block for miners. 100 is then the difficulty. That means that for the previous two weeks there were around 100 attempts to find a block every 10 minutes. And that made the 2016 blocks last two weeks.
If the price suddenly drops hugely (sanctified, for example), fewer miners will be willing (and able!) to do so. For example, they cannot pay the price of electricity with the found bitcoin.
That could mean that a large part of the miners will stop. The idea behind the death spiral is that so many miners stop, that now, for example, only 20 attempts are made every 10 minutes.
That would mean the whole thing takes five times as long (first 100, now 20 tries). The two-week period suddenly lasts ten weeks. And now it takes an average of not 10, but 50 minutes before a block is found.
This immediately means that the miners’ income will decrease again, as it takes much longer to receive their reward. The idea with the death spiral is that the entire network comes to a stop with squeaks and creaks.
In the history of bitcoin, the death spiral has been predicted several times and has never happened. The chance of it happening is (as far as I’m concerned) getting smaller and smaller: miners are more aware of price changes.
Small amounts of miners canceling is not a problem. Then it takes, for example, 10% more. That will be rectified. In the highly unlikely event that many miners quit (again, I don’t see that happening), the network could also ‘fork’ to a version with a lower difficulty: keeping all the rules the same, but only lowering the difficulty.
In the event of an extreme emergency, there is always a way out. Also read an article from two years ago with four reasons why there was no “halving” death spiral.
Go to the hospital for judicial stress
Peter McCormack is the host of the What Bitcoin Did podcast. Discuss bitcoin news and trends with many guests.
The last few months have been dominated by a lawsuit. A known scammer (Craig Wright) has filed lawsuits against him.
McCormack’s trial concluded Wednesday and a verdict is expected in a few weeks. He shared his experience on Twitter.
If you read his story, you will notice that such a lawsuit is really an attack on a person. McCormack says he’s been in the hospital twice for stress, as well as seeing his primary care doctor several times for panic attacks.
I won’t go into the reason for the lawsuit, mainly because it is (in my opinion) complete nonsense.
What is abundantly clear is that filing lawsuits has a significant impact on people. The well-known twitterer Hodlonaut is also in the same boat (McCormack is now going to help Hodlonaut).
Costs aren’t cheap either, a million pounds has already been spent on defence, raised mainly by sponsors.
So it’s no surprise that the administrator of bitcoincore.org (bitcoin software) decided last year to remove the site’s white paper when there was a threat of a lawsuit.
Wright is an annoying man who keeps coming back. The claims on his side have been debunked several times, but he continues to move forward. I hope he finishes soon and the threat goes away as this will slow bitcoin growth a bit again (successful attack!).
“Crypto Stamp” – sigh
When I saw the news “PostNL launches the first Dutch crypto label”, I immediately had to sigh.
I’ve never really been a fan of the whole NFT thing. Cryptographically, proof of ownership is a good idea and works well when it comes to digital money (bitcoin), but there is a lot of nonsense around NFTs.
PostNL is trying to create a new type of collector with this stamp and get young people interested again.
source: PostNL press release
They are also quite late, interest in NFTs is already waning considerably. The question is also what is the added value here. The idea is that a real physical stamp is linked to a digital version: a digital twin. That digital version is then the NFT.
It is not yet clear when the stamp will go on sale. It will cost 9.05 euros. But I let it pass me by…