💪 BTC Dominance Soars | 🔍 Pre-Halving Hodlers Drive BTC Scarcity | 🐛 LN Bug Mitigations Proposed
Naiw
October 29, 2023
Greetings Earthling,
Welcome to issue #38 of the Bitcoin Breakdown, where we recognize Bitcoin as a revolt against financial oppression and a giant leap towards a fair and open financial system for all.
In this week’s Top Stories edition:
💪 Bitcoin dominance hits 2.5 year high as the halving approaches
🔍 Pre-halving hodlers drive BTC scarcity
🐛 Lightning Network bug mitigations proposed
🔑 Hacker team develops technique to crack encrypted USB containing 7002 BTC
🔫 Bitcoin is facing a ‘trigger’ moment that would lead to a $1 million price tag
🤖 Why Hal Finney was not Satoshi Nakamoto
🗽 Report: Bitcoin reshapes the American dream for younger generations
🕵️♂️ The Patriot Act comes to cryptocurrency
💣 Hamas learned a brutal lesson about Bitcoin. Can Senators also learn it?
😎 How one man single-handedly caused the Bitcoin Ordinals bear market
📈 How inflation steals your wealth and why Bitcoin offers a solution
💰 Bitcoin vs gold: which is a better investment in 2023?
Happy readings! 👽️
📰 HEADLINES
Bitcoin dominance hits 2.5 year high at 54% as the halving approaches. The real Bitcoin dominance (measured among proof of work coins attempting to be money) also hit a two year high of about 74%.
Over 76% of the available BTC supply is now held by long-term holders, marking an all-time high previously set in 2015. This has led to less liquid supply in the market, implying potential upward price pressure.
Respected Lightning security researcher Antoine Riard disclosed a vulnerability in the Lightning Network that could allow attackers to steal funds during transactions by means of a complex ‘cycling attack’.
@mononautical explained in an illustrated primer how exactly a Lightning replacement cycling attack works.
Solutions proposed include redesigning HTLC protocol, changing relay policy, adding miner caches of replaced transactions, or modifying Bitcoin Core code.
Bitcoin core developer Peter Todd proposed a new operation code that would help render the attack ineffective, but requires direct changes to the main Bitcoin network through a soft fork, the consequences of which, as always, remain unknown. [So, no. - ed].
The practicality of the attack is debateable seeing that it hasn’t been seen on the network yet, and all Lightning implementations have countermeasures in place.
The latest weekly Bitcoin Optech brilliantly covered all the discussions on assessing the attack's criticality and proposing mitigations.
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🏆 TOP STORIES
They Cracked the Code to a Locked USB Drive Worth $235 Million in Bitcoin. Then It Got Weird (Oct 24 | 15 min read)
A hacker team called Unciphered has developed a technique to crack a specific model of encrypted USB thumb drive known as an IronKey S200. They believe that an IronKey in a Swiss bank vault holds the keys to 7,002 BTC worth close to $235 million. Unciphered successfully cracked the IronKey and offered to help the owner, Stefan Thomas, unlock it, but he declined their offer. Thomas had previously made deals with two other cracking teams and wants to give them more time to unlock the IronKey but one of the teams disputes this. Unciphered is now trying to persuade Thomas through an open letter and video. [Something seems off here - ed].
Arthur Hayes: ‘This is the Trigger’ (Oct 24 | 25 min read)
Hayes, former CEO of BitMEX, writes in a blog post titled ‘The Periphery’ that Bitcoin is facing a ‘trigger’ moment that could lead to a $1 million price tag due to yield curve control (YCC), which is used by central banks to manage interest rates by targeting specific yields on government bonds. Hayes believes Bitcoin is already warning markets about the future and that global wartime inflation, driven by the US's involvement in two new wars, will drive up the prices of Bitcoin and gold. Bitcoin is currently rallying against a backdrop of an aggressive selloff in long-end US Treasuries. Investors should start rotating out of short-term US Treasury bills and BTC, according to Hayes.
Hal Finney was not Satoshi Nakamoto (Oct 21 | 11 min read)
Jameson Lopp, CTO of CASA, thoroughly dispels the theory that Hal Finney, the distinguished coder, was the mysterious Satoshi Nakamoto, creator of Bitcoin. Lopp uses detailed analyses of various email correspondences and writing styles to prove linguistic discrepancies between Finney and Nakamoto, provides timeline contradictions which question Finney's possible involvement and discusses the improbability of him using his own (less-secured) codebase. Additionally, Lopp incisively rebuts other speculative claims, concluding there's no credible evidence linking Finney to the Satoshi pseudonym, despite Finney's early and impactful contributions to Bitcoin's development. Regardless, both are still legends in their own respective rights.
Coinbase’s Q3 Quarterly Insights Report shows Gen Z and Millennials are disillusioned with traditional finance and the American dream, actively embracing alternatives such as Bitcoin as an alternative path to economic prosperity and financial independence. The report explores how younger generations are seeking financial education from social media, online platforms, and their parents, and are taking agency to create their own paths to prosperity. It concludes that politicians and institutions need to catch up with the younger generation's demand for an updated financial system that supports equality of opportunity and an inclusive American Dream.
The Patriot Act Comes to Cryptocurrency (Oct 23 | 15 min read)
Seth For Privacy demystifies FinCEN’s proposal to extend the Patriot Act, originally aimed at combating terrorism, to include cryptocurrency privacy tools. This extension would have all these tools, regardless of technical function, custody, or decentralization, be considered a threat to national security, and thus subject to extensive reporting to FinCEN by all regulated entities. The crux of the proposal hinges on centralized exchanges with broad swaths of user data complying, and most of these regulated entities will happily go along if profits continue. Seth For Privacy implores readers to not allow regulation and fear tactics to dissuade you from fighting for the right to privacy, or your ability to transact without fear of surveillance or censorship will be slowly stripped away from you.
Hamas Learned a Brutal Lesson about Bitcoin. Can Senators also Learn it? (Oct 26 | 4 min read)
Jason Les, CEO of Riot Platforms, criticizes Sen. Elizabeth Warren for ignoring the blockchain's role in stopping illicit activities, like the Hamas funding case. Warren's Digital Asset Anti-Money Laundering Act would classify many crypto participants as financial institutions, subjecting them to the Bank Secrecy Act's regulations. This equates individual miners to burdens of large banks, even though they don't manage assets similarly. Warren aims not to prevent money laundering but to hinder innovation. Senators should recognize crypto's transparency and traceability instead of hindering its growth due to unfounded concerns.
How One Man Single-Handedly Caused the Bitcoin Ordinals Bear Market (Oct 27 | 5 min read)
Charlie Spears discusses for Ordinal Hub how in October 2023, Rijndael (rot13maxi on Twitter) significantly impacted the Bitcoin Ordinals market by creating a ‘sophon’ bot. This bot preemptively broadcasted BRC-20 deploy inscriptions with higher fees, making Rijndael's tickers official and halting other tokens. By setting each deployed token supply to one, he virtually stopped BRC-20 activity. After the bot ran out of funds, activity resumed. Rijndael's experiment, costing only 0.0129 btc, highlighted BRC-20 vulnerabilities and, once concluded, he donated the BTC to opensats. The incident raises concerns about future market vulnerabilities.
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📖 GUIDES & EXPLAINERS
How Inflation Steals your Wealth and Why Bitcoin offers a Solution (Oct 16 | 25 min read)
Crypto Overload, writing for Coinmonks, examines the impact of inflation on wealth and the potential of Bitcoin as a solution. They argue that inflation, as an invisible tax, erodes purchasing power and affects everybody, especially those on fixed incomes. Governments use it as a tool to pay off debt, often leading to wealth inequality. Bitcoin, with its finite supply and decentralized nature, is an alternative that is immune to inflationary pressures. This allows it to protect and potentially increase the value of individual wealth over time, offering a promising solution to the adverse effects of inflation.
Bitcoin Vs Gold: Which is a Better Investment in 2023? (Oct 26 | 10 min read)
Athena Alpha discusses the comparative benefits of Bitcoin and gold as safe-haven assets in this piece. Bitcoin's portability, divisibility, and resistance to censorship are superior to gold, but one needs to acknowledge gold's long-standing history and intrinsic perceived value. Bitcoin's potential for high returns, increased acceptance, and shortage of supply mimic the advantages of gold while exceeding its limitations, making Bitcoin a superior investment.
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Until our next transmission,
Naiw
