Satoshi Scoop Weekly, 9 Aug 2024

Crypto Insights

BTC Transaction Volumes Vary Wildly at Bitcoin Conferences

• Statistics show a significant disparity in BTC transaction volumes per attendee at different Bitcoin conferences, reflecting varying interpretations of Bitcoin's role. Some see 'Bitcoin as a currency,' like Bitcoin Atlantis; while others view 'Bitcoin as a store of value,' such as Nashiville Bitcoin 2024.

• At Bitcoin 2024 Nashville, with 20,000 attendees, only 767 Bitcoin transactions occurred. In a follow-up Peter Todd mentioned on-site Lightning payment issues, eventually ended up paying in cash.

Bitcoin Core: Two New Security Vulnerabilities Disclosed

Two security vulnerabilities affecting Bitcoin Core v0.21.0 and earlier have been addressed:

• Remote crash due to addr message spam: Nodes could be spammed with addr messages, which could be used to crash them. A fix released on September 14th, 2021 in Bitcoin Core v22.0.

• Impact of an infinite loop bug in the miniupnp dependency: Nodes could be crashed by a malicious UPnP device on the local network. A fix released on September 14th, 2021 in Bitcoin Core v22.0.

Bitcoin Core: Optimizing Miner Transaction Selection When Using Cluster Mempool

Pieter Wuille posted on ensuring that the miner block templates can include the best set of transactions when using cluster mempool.

Bitcoin Mining’s Environmental Benefits: Equivalent to Removing 20 Million Cars Annually

• The Bitcoin Policy Institute (BPI) reports that Bitcoin mining reduces approximately 440 million tons of carbon dioxide annually, equivalent to removing 20 million cars.

Bringin: Linking IBAN With Any NWC-Compatible Lightning Wallet

• Bringin supports connecting users' IBAN to any Lightning wallet compatible with Nostr Wallet Connect (NWC).

ChillDKG: Safely and Distributedly Generating Key Shares for FROST Multi-Signature Wallets

So far, in the Bitcoin ecosystem, FROST (Flexible Round-Optimized Schnorr Threshold Signatures) has only been used in experimental implementations. The article The Key to FROST: What is Distributed Key Generation? explains why this is the case and how ChillDKG distributed key generation protocol (BIP draft) can advance FROST in Bitcoin.

A Venture Capitalist's View on the Nashville Bitcoin 2024: the Good, the Bad, and the Bullish

Macro Perspective

• Bitcoin as a Strategic Reserve: The United States may lead the concept of using Bitcoin as a strategic stockpile, marking an irreversible turning point in the integration of Bitcoin into national financial strategies.

• Impact on National Security: Nations must consider including Bitcoin as part of their reserves to remain competitive, making Bitcoin mining a national security issue.

Institutional and Retail Participation

• Companies and Institutions: Companies are also expected to include Bitcoin in their treasuries to avoid falling behind in asset value.

• Price Impact: The accumulation behavior of nations is likely to drive long-term price increases, affecting the treasuries of companies that do not adopt Bitcoin.

• Low Retail Participation: This may be due to investors being exhausted, fully invested, or waiting for the next catalyst.

Venture Capital

• Venture capital has a rather limited understanding of Bitcoin, with nearly 97% of capital concentrated in non-Bitcoin projects. However, as BTCFi and infrastructure opportunities emerge, this gap is expected to change.

  

  Via: UTXO management

• Investment Direction: The author is optimistic about investing at the intersection of Runes/Bitcoin-native assets and the Lightning Network infrastructure, believing that demand will naturally flow to these projects.

Bitcoin Layer 2

• Sidechains highlighted: The author mentions BitcoinOS, BitVMX, and believes that the focus on sidechains is significant (Note: The 'side chains' here can refer to the classification on Bitcoin Layers).

• Research: Rollup teams are leading Bitcoin research.

Community Insights

• Educational Needs: A need for more accessible educational content introducing the functions and proposals of Bitcoin.

• UX: Improving UX to achieve self-custody and interaction with L2 is considered a priority.

Conclusion

The article ends on an optimistic note, reminding readers of the long-term bullish outlook for Bitcoin.

Reflections on Crypto-Nihilism

From the following three perspectives:

• Refining Existing Financial System: The ICO frenzy (2017-2018) dominance hasn't improved the crypto order but led to new manipulations. Diminishing VC trust sparks a shift toward community-driven projects, reflecting a return to blockchain's innovative roots.

• Clarifying Terminology and Concepts: To avoid overhyping blockchain but set realistic expectations and avoid misconceptions about its potential.

• Addressing Fundamental Challenges: Moving all dApp calculations on-chain is impractical and resource-intensive, and does not bring real users. It's vital to refocus on blockchain solutions to address real-world needs.

Specialized vs. Generalized ZK: Which is the Future?

• Both types of ZK solutions have achieved a better balance between 'specialization' and 'generalization' through self-optimization: doing better on one point without sacrificing the other. The current situation: specialized ZK infrastructures is becoming more generalized, while generalized ZKVM is becoming more specialized.

• The author believes that it is impossible to conclude that one ZK solution will replace the other at a certain time. A more likely scenario is that specialized ZK infrastructure and generalized ZKVM may work together, and a tradeoff curve will be provided for developers to flexibly choose based on their specific needs.

Top Reads on Blockchain and Beyond

The 7th Property: Bitcoin and the Monetary Revolution

If you are serious about understanding Bitcoin and why it is creating a monetary revolution, this is where you need to start.

• Eric Yakes (@ericyakes) is the founder of Epoch venture capital fund. He invests in bitcoin and freedom enabling technologies. Now the PDF is available for download.

  

The Power of Nostr: Decentralized Social Media and More

The article analyzes Nostr as a decentralized social media and a public payment directory, also emphasizing its potential beyond these two.

• Decentralized Social Media: As a public domain communication protocol, Nostr aims to achieve interoperability between different social ecosystems. It allows users to control their own digital identities and content, offering a decentralized social media experience and supporting Bitcoin micropayments; by identifying users with a simplified public/private key pair, it enables users to freely move their social graphs and publishing history between different clients and relay servers.

• Public Payment Directory: In conjunction with the Lightning Network, Nostr provides a payment method with payment discovery functionality, allowing users to initiate payments to people within their social graph (similar to how Venmo has implemented this feature, by integrating a social graph with a payment method, users simply look up—'discover'—on their contacts on the app and pay them), and does so in an international, open-source, and interoperable manner (unlike Venmo, which is closed-source and centralized).

• Further Potential: Nostr’s design is characterized by its simplicity and openness. Simplicity means that Nostr can be rapidly and inexpensively integrated into a variety of applications. Openness means that any application can adopt this protocol to achieve interoperability of user identities, social graphs, and trust networks. Additionally, Nostr can work together with Bitcoin as parallel networks, akin to 'a global open-source sound money network' plus 'a global social graph and data availability network'. This combination provides powerful building blocks for constructing new and better interoperable applications, from which both can benefit.

Research Paper: Adaptor Signatures: New Security Definition and A Generic Construction for NP Relations

Introduces a new security definition for adaptor signatures, proposing a generic construction for NP relations while addressing witness exposure issues.

Abstract An adaptor signatures (AS) scheme is an extension of digital signatures that allows the signer to generate a pre-signature for an instance of a hard relation. This pre-signature can later be adapted to a full signature with a corresponding witness. Meanwhile, the signer can extract a witness from both the pre-signature and the signature. AS have recently garnered more attention due to its scalability and interoperability. Dai et al. [INDOCRYPT 2022] proved that AS can be constructed for any NP relation using a generic construction. However, their construction has a shortcoming: the associated witness is exposed by the adapted signature. This flaw poses limits the applications of AS, even in its motivating setting, i.e., blockchain, where the adapted signature is typically uploaded to the blockchain and is public to everyone.

To address this issue, in this work we augment the security definition of AS by a natural property which we call witness hiding. We then prove the existence of AS for any NP relation, assuming the existence of one-way functions. Concretely, we propose a generic construction of witness-hiding AS from signatures and a weak variant of trapdoor commitments, which we term trapdoor commitments with a specific adaptable message. We instantiate the latter based on the Hamiltonian cycle problem. Since the Hamiltonian cycle problem is NP-complete, we can obtain witness hiding adaptor signatures for any NP relation.