HomeBitcoinMagical Crypto Friends ep. 14: BAT, BCH, and BTC mining

Magical Crypto Friends ep. 14: BAT, BCH, and BTC mining

In many ways, the fourteenth episode of Magical Crypto Friends is a return to the original purpose of the show: making fun of silly uses of the blockchain and slamming projects with unrealistic promises and poor technical implementations. The first few seconds present the four anthropomorphic animals ironically agreeing that blockchains should be used for plenty of purposes outside of Bitcoin, and the moment when they can no longer keep their straight faces becomes the perfect occasion to kick it off with the show intro.

“Riccardo Fluffy Pony” Spagni on his Twitter debate with Brave’s Brendan Eich, creator of BAT.

The Basic Attention Token, also known as BAT, is an ERC20 token on the Ethereum blockchain which serves as a monetary incentive to viewing advertisements on the Brave browser. It was created in late May 2017 and, according to Crypto Insider’s Michael Kern, has the ability to reinvent tipping and small value transfers on the internet.

However, Mr. Spagni has publicly expressed an issue with the reward mechanism and the underlying policy. First of all, he argues that ad-viewing bots can be invented to cheat the system and stack on undeserved BAT tokens which didn’t get a real human’s attention. Secondly, exchanging the currency requires registration through a KYC/AML procedure, and the lack of compliance means that the time has been lost and the money gets to be kept by the founders.

Ultimately, the question at stake is “Why is a blockchain necessary anyway?”. If the influx and the supply are completely centralized and controlled, all of this can be made more easily through a good old database. Like the fervent privacy proponent that he is, Fluffy Pony adds that private browsing is obliterated by the simple fact that the KYC registration will associate the data you generated with your name. Therefore, there is no way one can enjoy the monetary benefits of the BAT token under anonymity.

In addition to the arguments presented, Whale Panda adds that he doesn’t really understand why Coinbase has given the project so much attention by putting it on the shortlist for future additions and then allowing costumers to exchange their BTC for BAT.

Charlie Lee mentions that the purpose of BAT wasn’t to be sound money, but to become an incentive for users to embrace the browser. Nobody would give Brendan Eich free BTC to give out to his community, so in this regard, it made sense to start something which may acquire value in time: it has no costs and it creates even more hype and speculation about the software.

Samson Mow briefly name-drops the Lightning Network, and from that point onwards the increasingly more mature technology which helps Bitcoin scale for microtransactions becomes the center of attention. Riccardo Spagni carries on with his argumentation by mentioning that Lightning channels between the content producers and the users/fans make so much more sense and hold more value.

The Blockstream CSO brings to attention the fact that the gaming industry has already created tokens that get distributed in-game for watching advertisements, except that they are stored more efficiently in a proprietary database.

As a way of bringing the topic full circle, Riccardo Spagni addresses the issue of BAT apologists who accept the questionable nature of the token just because the quality of the web browser is high. Whale Panda disagrees with this last point and says he didn’t like Brave, and Mr. Spagni admits that he’s given up on the browser. Charlie Lee adds a new layer to the argument by saying that the fact that something scammy is supported by the browser takes away from its quality and value.

A comparison is made with the ToR browser which has been around for over a decade and hasn’t resorted to blockchain financial incentives for the sake of increasing adoption. Riccardo Spagni says that the functionality and features-driven model of the Onion browser is way superior, and then the folks decide it’s time to stop giving the Basic Attention Token too much attention.

Bitcoin Cash: ABC vs Satoshi’s Vision.

Given the clear and well-known views on the supremacy of BTC that the four anthropomorphic animals share, it’s only normal that they resent any other attempt to replicate the original coin in a more centralized way and even make fun of the attempt.

First of all, jokes are told about the confusing nature of the abbreviations: BCHABC and BCHSV, or BAB and BSV? Did BCHABC turn into BAB and then get standardized as BCH for having the original leadership. Does BCHSV or BSV have anything to do with Satoshi and his often misunderstood vision? It all sounds whacky because it is.

Given the novelty of this network hard fork which turned into a market-ravaging hash war, not even the exchanges have understood the situation clearly by giving the two projects resulting from BCH standardized stickers. Some only list only BCH and imply that it’s actually BCHABC, some call it BAB, while others have decided to give their customers both versions of the coin (but then again, a universal convention regarding the abbreviations has yet to be established).

However, the gravity of the situation is given by how much more centralized both projects have become: in order to protect themselves from attacks, the developers have arbitrarily decided to do blockchain checkpoints and remove the zero-confirmation feature. Fluffy Pony argues that the idea is so bad that the Zcash founder Zooko Wilcox-O’Hearn has proposed it. Charlie Lee jokes about it by saying that at least the proposal hasn’t been put into practice. But the Fluffy Pony replies that, according to his research on the ZCash GitHub, the checkpoints have actually been implemented.

Charlie Lee seems concerned about the idea and remarks that there is a good reason why Satoshi and the Bitcoin developers haven’t proposed to do anything similar. It’s a simple idea that crosses anyone’s mind, but it’s bad for the entire idea of decentralization.

Whale Panda adds that the early days of Bitcoin did have Satoshi Nakamoto making use of a type of checkpoint system which made sure that no unwanted forks would occur. The consensus between the debaters is that there is nothing wrong with the idea of checkpoints in the beginning when the network has to grow and the founders must be protective of their efforts. At the same time, doing it in the middle of the road is a terrible idea that can backfire and compromise the entire decentralization.

Charlie provides a technical explanation about the intentions of Satoshi and how it was important for everyone to be on the same blockchain and synchronize without issues in the early days, but after that, only the chain with the longest Proof of Work should remain relevant for the purpose of decentralization. Samson Mow made it even clearer by saying that anyone setting checkpoints makes the entire idea of a blockchain redundant, as you basically have a block producer who is in control.

The discussion comes full circle to reveal the “this can simply be put into a database” argument: Riccardo Spagni mentions that lots of Proof of Stake projects run checkpoints and that just removes any real reason to have a blockchain or pretend that the network is decentralized.

As a way of returning to the core discussion (no pun intended), Samson adds that there are BCHABC (or BAB) nodes which still haven’t upgraded the client version that they’re running, and the existence of centralizing and protectionist checkpoints opens up the network for an attack.

Charlie Lee couldn’t help but point out the irony that a project which pretends to follow Satoshi’s vision is eager to centralize the network through checkpoints. However, Whale Panda reveals that it isn’t BCHSV (or BSV) which implemented the checkpoints, but BCHABC (BAB). So it’s Satoshi’s previous vision, not the newer one. The jokes about visions keep on rolling, and the bearded moderator decides to change the topic.

The BitPay malicious exploit.

In late November, an exploit in the Javascript code of the BitPay has been found and its implications are quite shocking: the users’ private keys have been exposed to the potentially-malevolent intentions of a hacker. In the meantime, the software has been updated to eliminate the malicious code, but there’s no clear way of knowing whose funds are in danger of being stolen, so all custodians were asked to withdraw their cryptocurrencies to another wallet that’s safer.

Fortunately, according to the ongoing debate between the Magical Crypto Friends, no funds were stolen. Yet it’s unknown how and when the hacker will strike. Additionally, there is the issue of other crypto wallets that have been forked by copying data from the BitPay GitHub, as they are in danger of experiencing the same problem with the same exploit.

Samson Mow mentions that the Bitcoin.com wallet is also a fork of the BitPay version and unless a serious security update gets deployed, the fund custodians may be in danger. The issue at stake revolves on dependencies and the quality of development: building a good wallet shouldn’t entirely depend on one single source, and Riccardo Spagni also suggests that the Electron source code isn’t very safe in spite of the opinions of other coders.

Charlie Lee contributes to the debate by saying that having multiple sources also implies constant auditing of every update that gets released, so no change from one dependency can pose a security threat for your product. Fluffy Pony manifests his preference for C++ over Javascript and NPM when it comes to reliability and security, and the consensus becomes that BitPay has actually used some of the most popular choices of repositories. Therefore, the attack must have been some type of social engineering.

In addition to what’s been said, Samson states that web wallets are the most dangerous ones out there, and projects like Blockchain.info are susceptible to exploits. Mr. Spagni presents the case of Monero wallets and the fact that, in spite of all efforts to preserve security, users fall for phishing scams very often.

Mr. Satoshi Lite takes advantage of the situation to take a cheap shot at the MyMonero wallet (which was developed by Riccardo Spagni) and jokingly mention that it gets hacked all the time. Whale Panda also roasts Blockchain.info for not integrating SegWit features after 1 and a half years, and the four friends decide to move on to another topic.

OFAC blacklisting two BTC addresses.

The news about the Office of Foreign Assets Control blacklisting two Iranian BTC addresses has made the rounds in late November, and everyone seemed to express concern about the government overregulating in a field that policymakers don’t really understand. This action has created a potentially-dangerous precedent for the entire world, but in technical terms, it doesn’t really mean much since funds can be transferred in a permissionless way from one address to a newly-created one.

This issue, which has also been covered in a Crypto Insider article, is most problematic for exchanges. According to Charlie Lee, the fact that crypto exchanges will have to check for these blacklisted addresses is extra work and a big headache in relation to the regulating governments. Nevertheless, Samson adds that exchanges already to make lists of bad actors, so this decision by OFAC doesn’t change the nature of the game but only makes the problem more governmental.

That’s why Whale Panda steps in and says that he regards the decision as a legitimation for Bitcoin. However, Fluffy Pony points out that new rules will make people become more creative: if the laws or regulations decide to block funds being received from addresses which 3 or 5 or 10 transactions ago were associated with a bad actor, they can just make even more transactions to make their affairs seem legit in relation to this filter. The pseudonymous and permissionless nature of Bitcoin allows anyone to transact without restrictions, and the action of creating a new wallet is instant and free.

The comparison which Samson makes is rather hilarious: it’s easier to blacklist two atoms in the universe than to run such measures on Bitcoin addresses. However, another pertinent point is made by Whale Panda in regards to bad actors wanting to stain the reputation of others. If someone who is blacklisted wants to drag millions of people with him, all he has to do is send 1 satoshi to every address and automatically compromise everyone else through a faulty association. Bitcoin is permissionless and irreversible, which means that you can also receive coins unexpectedly from people who know your public key.

In the case of Monero, which is more fungible than Bitcoin due to its privacy settings, it’s enough to just transfer your funds into a decentralized exchange and withdraw them into a new address to be, as Fluffy Pony puts it, “golden”.

But the issue is deeper than this: what if the person with a tainted address pays a fee to a miner? Does the miner’s address also get blacklisted by default by the OFAC? There are many implications involved in such a decision, and the conversation moves on to the next topic.

CoinShares report about Bitcoin mining being done with 78% renewable energy.

Whale Panda talks about the “whitepaper” on Bitcoin mining which CoinShares has released in early December of 2018, and Samson Mow goes on to mention that he’s surprised the percentage of renewables isn’t higher, as renewable energy is the cheapest to produce.

The Belgian bitcoinist Whale Panda makes a syllogism which points to the fact that being against Bitcoin mining (which may or may not imply being a Proof of Stake advocate) means that you’re stalling the development of renewable energy power plants.

Samson also goes on to mention that there are cases in China and Tibet where people migrate their mining rigs from water wheels to windy mountains, and the consensus between the participants is that the energy which goes into producing Bitcoin would be wasted otherwise.

XRP community initiative to plant a tree for every 2 XRP tokens.

While the plan is really generous and thoughtful in relation to mother nature, the underlying idea is a cheap shot at Bitcoin mining: the tree is regarded as a way of compensating for the damage these mining operations do to the environment.

As soon as he realizes that the price asked is below the $1 threshold, Charlie Lee comes up with the ultimate burn by saying that this grassroots initiative is the first real use case of XRP. Riccardo Spagni adds that he would like to see a Proof of Tree, Whale Panda turns the discussion dark by changing the term to Proof of Burn, and then Samson quickly proceeds to satirize the situation by referring to the general stereotype of a Bitcoin maximalist taking shots at anything outside BTC.

Charlie’s use case joke is so appreciated that his three friends remark that Satoshi Lite hasn’t posted anything humorous on Twitter in the last few months, despite being funny in their private discussion channel.

Humor on social media and self-censorship.

As Riccardo Spagni puts it, this truly comes from the list of first world problems. The four friends talk about not expressing all of their humorous on Twitter due to the responsibility they have in regards to the projects they’re involved in or due to the negative feedback they sometimes receive. Even when the comments are sarcastic, they get misunderstood and people take them seriously. And as Charlie Lee puts it, even the addition of the “/s” signature can make some folks think that there’s sarcasm in pretending to be sarcastic.

The discussion in itself is fascinating just because we get an insight into the thoughts of people whose fame and following bring about a lot of responsibility.

Blockstream’s Simplicity.

This fall, Blockstream has been the most prolific company in terms of releasing Bitcoin tools and projects that are meant to spread adoption and provide the community the means to create (or BUIDL). Simplicity, which was also described in a Crypto Insider interview, aims to be a more robust and accessible smart contract language for blockchains.

Samson begins his speech about the technical features of Simplicity, but as soon as he mentions that the language was written in “Coq” the rest of the folks start a series of surprisingly mature jokes. For instance, Riccardo Spagni wants to know if “Coq is hard”. The response is affirmative, which stirs a contagious wave of laughter.

Nevertheless, the group’s lion carries on with his description and mentions that Simplicity has two main advantages over Ethereum’s Solidity: the costs of deploying it are visible beforehand and can be easily projected, and the language is less buggy and requires fewer auditing costs. The language is compatible with Blockstream’s Elements and will be integrated into Liquid for features that Bitcoin’s Script cannot do.

“It’s like Solidity if Solidity worked, it’s simple and that’s why it’s called Simplicity” – this is the combined conclusion that Charlie, Whale Panda and Samson come up with after a brief exchange.

Charlie Lee is curious if the language will get integrated into Bitcoin, and his lion friend’s answer is very conservative: such an implementation will only be made after rigorous testing on the Elements platform (which is a fork of Bitcoin) and its first use case will be the Liquid federated sidechain. If there is enough demand for the features to get transferred to Bitcoin, then the team will make the required efforts to make the integration.

Then a joke about soft forks gets pushed, and Luke Dashjr’s name gets mentioned by Charlie Lee as if he is responsible for all the modification.

Question from the audience: When will Monero overtake Bitcoin Satoshi’s Vision?

Fluffy Pony implies that he doesn’t do technical analysis (like Tone Vays) and allows Charlie to speculate based on the market capital. Satoshi Lite’s comment is a rather confident “pretty soon”.

Question from the audience: Issues with Lightning routing, in a very simple way.

This idea originates from a comment Craig S. Wright has made about Lightning, only that he said he would reveal the issues he identified by the end of 2019. Charlie Lee jokes that we will have to wait a year until we find out.

Whale Panda becomes more incisive and asks directly about known issues with Lightning routing. Everyone shrugs and Samson mentions that there are many different ways of doing routing and there are lots of developers who currently work on Lightning.

The Blockstream CSO sidetracks the discussion by mentioning that Monero has already flipped BCHSV on CoinMarketBook.cc, a website which ranks coins according to the buy support criterion.

Then Fluffy Pony adds that on CoinMarketBook, EOS is more valuable than XRP. This reminds the others about the aggressive toxicity that some XRP fans show on Twitter through their relentless hashtags and irrationally exuberant arguments against Bitcoin. They also mention how Dogecoin creator Jackson Palmer had to create a script to block all XRP folks after he received a nasty backlash from eliminating the token from AreWeDecentralized.com.

The four friends also joke about the ridiculous claims that some community members make, which include XRP being created before Bitcoin and Ripple’s token having something to do with Satoshi. However, it’s the Lite version of Satoshi who steals the show with an ironic remark about supporting XRP. He is fully aware that the clip can be cut to be used in another context, yet he goes with the flow.

Question from the audience: How do you rewire the brain of a no-coiner?

Charlie Lee suggests that he wouldn’t bother, but Whale Panda is bolder by referring to the case of inflation. Samson returns the argument to the issue of fees and overregulation by implying that the international bank transfers can be enough of a reason to get into Bitcoin.

Riccardo Spagni makes a case about Venezuela and Zimbabwe (thus approaching the topic of hyperinflation). He mentions that the governments can manage the economy so poorly that there are real instances of toilet paper being more expensive than banknotes.

The second time around, Charlie Lee distinguishes between two types of no-coiners: those who haven’t heard about Bitcoin and those who think that it’s a scam. In the case of the latter, his approach is to not even bother to change their convictions. But in the case of the former, the best solution can be that of offering some coins to figure out how they work.

Samson decides to take the discussion back to the definition of the term “no-coiner”. In Whale Panda’s view, a no-coiner is somebody who doesn’t own any cryptocurrencies. Conversely, Samson labels these folks as the ones who think that cryptocurrencies are scams and insist on not having any possessions.

Charlie Lee reiterates his laid-back approach which he describes as “Darwinism”: sooner or later people will see the value of Bitcoin, so he won’t bother to change everyone’s mind if he faces opposition. Whale Panda confesses to having a similar approach, as countering beliefs can be difficult.

Then Satoshi Lite decides to talk about the people on Twitter who think that Bitcoin is old and stagnating, while some new crypto project is deemed as the next big invention due to some extra features. The one who comes up with the quick reply is Whale Panda, who implies that the trend has been going on for over five years and every new project has claimed to improve on some aspects of Bitcoin.

Riccardo Spagni likewise affirms that he doesn’t bother to convince people about the utility and value of cryptocurrencies.

Question from the audience: How do you spend crypto without exposing your total balance and what are the best wallets?

Fluffy Pony jokes that the feeling of absolute swagger that you get when you pay money to the cashier and she gets to see all the banknotes in the wallet. But on a serious personal note, he recommends using Monero as a store of value, as a service like XMR.TO can automatically convert the payment to Bitcoin. This isn’t financial advice, but the best way of making sure that the transactions remain private.

Samson Mow says that the best way to keep your privacy with a specific Bitcoin wallet is to use Samourai, Wasabi, or Electrum.

Charlie Lee brings the discussion to the matter of fungibility and how Bitcoin deserves more of it. Just like you don’t go to the supermarket and try to decide which of the $20 bills in your wallet should be handed to the cashier, all BTC coins should be universally accepted while users don’t have to bother thinking about UTXOs.

Once again, Samson contributes to the discussion by saying that Lightning channels have pretty good privacy.

Question from the audience: How do you separate facts from FUD?

“The best way to know is to watch Magical Crypto!”, says Samson Mow enthusiastically. “And all we talk about is FUD”, adds Charlie.

However, Charlie Lee projects the issue on the media system itself and how every piece of FUD is based on some kind of distorted half-truth which gets framed in the desired form. It’s hard for anyone to really make the distinction, and as soon as the information propagates it’s even harder to change people’s minds.

Riccardo Spagni takes the discussion back to Bitcoin and says that unless you’re fairly technical and actively involved in the space, there is no way of knowing if a specific piece of news is factual or FUD.  In this case, lesser technical folks turn to those who appear to be smart on Twitter. And since everyone has some type of economic interest in this industry, it gets even harder to tell what is pure hype and what the ugly truth is.

Samson contributes to the debate by saying that he only follows the events going on in the world of Bitcoin and it’s enough for him. Though 2017 has been the year when a lot of people put ideas on blockchains and started ICOs for various purposes, it’s healthy to simply know your interest and follow it accordingly.

The last part of the show is dedicated to hardware wallets, as Whale Panda receives a delivery of three Trezor devices. His friends joke about his multi-million dollar possessions being spread across three multi-sig devices and inquire about the way in which he will conceal his holdings. Mr. Panda replies that he would dig a hole in the woods and bury an entire cyphered safe.

Then they talk about Casa, and Charlie reveals that he has a Lightning node running on his desk. This pre-Christmas season product placement ends yet another chapter in the lives of the four cute anthropomorphic friends.

 

Written by

Vlad is a political science graduate who got a little tired and disillusioned with the old highly-hierarchical and centralized world and decided to give this anarchistic blockchain invention a little try. He found out about Bitcoin in 2014, had to do a presentation about it at Sciences Po Paris in 2015, but was too foolish to buy any. Now that he’ll never be a crypto millionaire and hasn’t acquired his golden ticket to lifelong financial independence, he’ll just write op-eds on various topics.

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