What hot issues were discussed in the secret meeting of the bitcoin elders community?

The secret annual gathering of bitcoin hardcore OG is the hot topic of their discussion this year.
Source: chain smell

The "nakamoto round table" is an annual secret gathering held by the bitcoin community OG (original gangster). The participants are strictly invited, and no keynote speeches are provided. The specific venue is not disclosed before the meeting.

This year's satoshi nakamoto round table is the sixth gathering of the event, to be held in cancun, Mexico, in early February 2020. After the meeting, Jameson Lopp of keys.casa, a hardcore cypher punk, recorded the hot topics he was interested in at the meeting: channel, bitcoin, BIP 174, charity...

Jameson Lopp, keys.casa CTO, founder of statoshi.info and bitcoinsig.com

New Year, new satoshi nakamoto round table. The annual "non-conference" sponsored by Bruce Fenton (now executive director of the bitcoin foundation) has become the start of a winter holiday. I have participated in this round table in both bull and bear markets. The mood is very positive this year and we are at the dawn of a banner year.

Note: "non-conference", English is an open, equal and free conference, no guests, no keynote speech, no break time, the whole conference is free and open microphone.



This non-conference has eight different "stacks," and no one can review all the issues. Here are some of the topics from day one that you can get a glimpse of:



In order to learn more, I chose a few topics that I am not familiar with. From the discussion I participated in, I gained the following insights.

Get on the bus with the new person

Bitcoin-related legal tender channels have two payment options: push vs. pull. "Push payments" are hard to cancel, including wire transfers and certified checks. "Pull payments" include ACH (automated clearing center) and credit CARDS, which carry the risk of a refund. Institutions tend to use push payments, while retail or retail consumers tend to use pull payments.

One of the challenges of accepting an ACH payment is that you may have to wait several days to find out if the payment information is valid. There are some bank authentication services that help improve the certification process, but they require users to hand over their bank login certificates, which have huge privacy and security risks. You should assume that any service that requires you to provide bank login has the potential to see every transaction you have made in the past.

Rumor has it that Banks tend to flag any transaction involving "bitcoin" or "cryptocurrency" in the comments column, while savvy merchants give themselves names that don't sound like financial companies. Of course, this only works if your business is small enough to evade the radar. Companies with large cash operations, such as bitcoin ATM (BTM) operators, risk having their accounts blocked.

Many cryptocurrency exchanges process their credit CARDS through the European Union rather than the United States, where credit card payments and card networks are handled directly, while the United States requires transactions to be handled through a commercial bank, adding to the additional scrutiny risk. Another way to handle credit CARDS in the us is to create a bank escrow account for each of your customers and top it up in a similar way to 'cash advance'. The downside is that cash advances tend to have a single handling charge of around 5%, and interest charges of more than 20% if they are not repaid on time.

A simple way to prevent credit card swiping (someone swipes someone else's credit card to buy bitcoin, and the payment is returned when the card owner discovers and reports the loss) is to add a unique code to the authorization string to verify that the card is the real owner. This authorization call does not charge the card, just requires the card owner to log into his or her credit card account to find the unique code. You can also use third-party services like Riskified, which even offer a refund guarantee.

Interestingly, Coinbase has been rumored to experience very few credit card refunds, so it doesn't bother to argue with customers when a refund dispute arises because the more refunds there are, the more risky the platform's credit card processing is.

Stabilitycoins are another way for new users to get on board, but their escrow problems pose an additional risk of default. In many cases, people don't understand the custody of collateral. For example, when the trustee declares bankruptcy, can the collateral be guaranteed not to be seized? This aspect may not be legally protected.

Another warning about DAI is that it offers unlimited leverage that could act like the auction rate preferred shares that toppled PIMCO, the us bond manager, a decade ago.

I'm not familiar with this concept, so I did a little research:

Auction-rate securities are defined by periodic auctions held every 7, 28 or 35 days. During the auction, holders have the option to sell their bonds. By early 2008, such auctions generally failed to attract enough buyers. When the auction failed, bondholders faced a severe reduction in the interest rate on the bonds because of their illiquidity. To stem the selloff, some Wall Street firms began buying back bonds they hadn't sold. But when the financial crisis hit in 2008, and Banks were forced to build up their capital reserves, they pulled out, no longer a last resort, and the market crashed.

Coincidentally, a week after nakamoto's round table conclusion, events in DeFi territory reminded me of this warning; It should be the case that someone has found a way to manipulate the market by exploiting the complex interaction between multiple DeFi systems.



2/ full details and post-mortem review of bZx have not been fully disclosed. However, the community believes that the following transaction is the initiator:

https://etherscan.io/tx/0xb5c8bd9430b6cc87a0e2fe110ece6bf527fa4f170a4bc8cd032f768fc5219838

- at work was a complex single transaction that used lightning loans to lend 10,000 ETH from dYdX, half to Compound and half to Fulcrum

3/ - Compound deposit of 5, 000 ETH for loan of 112 WBTC.

- another 5, 000 ETH as collateral on Fulcrum to short WBTC

- then the 112 WBTC were sold in Uniswap to drive down the WBTC price

-fulcrum's WBTC shorted to cash out and then repaid the flash loan on dYdX

Bitcoin atms

One benefit of the bitcoin cash machine (BTM) is that it is less reliant on traditional bank channels; Only two anonymous assets, cash and bitcoin, are available, and users do not have to worry about intermediary scrutiny. However, BTM operators still face many difficulties.



Many BTMS can buy and sell bitcoins, a two-way transaction that allows cash to circulate. Savvy operators will even adjust rates to promote arbitrage, to spur users to rebalance the machine. There is even a proposed "worker bee rebalancing system" that tells bitcoin users that they can make money by moving cash from a BTM to a nearby BTM. In the early days, it was difficult for BTM to obtain cash shipping services, but by 2020, companies like Brinks and Guarda were already offering similar services.

From the BTM operators we actually spoke to, we learned that about 90% of BTM transactions were bought and only 10% were sold. It is clear that BTM has very little price elasticity to demand, which means that if BTM raises its fees from 5 per cent to 20 per cent, operators do not expect this to drive customers away. That's why you see a lot of BTM spreads -- because they can.

Another factor may be that BTM does not show price differentials or rates to users; The customer just wants to put X dollars in, not care what the actual market price is. BTM operators, which also trade stable COINS, have noticed that the value of stable COINS is much lower, partly explained by the fact that when you buy a cryptocurrency denominated in dollars, fees stand out.

BTM's operators are optimistic that, in the long run, cash flows from buying and selling will stabilise and fees will come down as regulatory uncertainty and other business risks reduce.

As for anti-money laundering/know your customer (AML/KYC) regulatory requirements, different BTM operators have different approaches. When the transaction amount is less than $300, some BTM requires almost no customer information, and some BTM's quota is set at $3,000. That depends largely on state law, not federal law, and on how quickly and loosely operators are willing to enforce regulations. Competition in this area is now intense, with some BTM operators reporting that other operators have been too lax with customer ID requirements.

Demand for counterfeit COINS is low. Someone mentioned litecoin, which has the highest demand, probably because of its fast transaction confirmation time. Unfortunately, integrating lightning networks on BTM is not feasible because the average transaction size exceeds the actual limits of the protocol.

One weird thing, we hear, is that traditional Banks increasingly hate atms because atms are money-losing products. On the other hand, due to the saturation of ATM market, some ATM operators are said to be entering BTM business. ATM installation contracts are basically divided into areas of influence, and there are many years of lock-up; But those contracts don't cover BTM, so if operators extend their operations to BTM, they can expand their operations and place BTM machines next to rival atms.

As an embryonic business, many of BTM's deals come from the inner cities of high-crime American cities. BTM machines facilitate all kinds of scams and crimes, and operators have to deal with the corresponding problems; They receive a large number of requests from law enforcement and generally resolve them quickly and comply with the rules. Some of the most common crimes include:

An emotional scam aimed at older women to send money overseas.

Falsely claiming to be an irs/law enforcement agency and demanding payment to avoid jail time.

Through credit card laundering. Someone buys credit card information on the dark web, USES the card to buy goods and sells them to a buyer at a steep discount. The buyer would go to BTM and exchange the cash for bitcoin, which would be remitted to the criminal, who would then exchange the cash and use the profits to buy more stolen credit card information.

There is also a suspicion that some gangsters are hoarding their drug profits in bitcoins, or that they smash BTM on rival gangs' turf.

There have been many BTM theft cases in recent years.

Police in northamptonshire are looking for three men who robbed a Costcutter convenience store. One threatened an employee with a knife, while the other smashed a bitcoin machine with a sledgehammer to separate it from the shop wall. They took the bitcoin machine. (details)



Vernon, Canada. Two men broke into Simply Delicious and snatched cash from a bitcoin machine in the store. They stole two money boxes with about $4,000 in them, but left a third box with $50,000! (details)



A Philadelphia store manager was left scratching his head after thieves broke into an empty bitcoin cash machine, ignoring a nearby traditional cash machine filled with cash. (details)

A network of trust, identity and reputation

Early bitcoin transactions were conducted through over-the-counter markets, which themselves have a network of trust rating systems. Today, many otc transactions take place in private chat rooms that require member sponsorship. A "soft guarantee" means that someone puts up only their reputation as collateral. A "hard guarantee", on the other hand, means a promise to take financial responsibility for any deal that the secured member fails to honour. So it looks like we've actually degenerated from a network of trust in the strict sense of the word to a network maintained by administrators of private trading communities.

Generally speaking, reputation is built by the testimony of others, who can or cannot be trusted to prove that your actions match your words. Interestingly, it is not possible to create some sort of global reputation score through a trust network because it can be hit by a sybil attack, and that is exactly what happens in bitcoin otc transactions. However, you can create personalized scores, which are calculated based on the reputation people share with each other.

The idea of giving everyone a global reputation score is also terrifying because it could be manipulated by the masses. For example, a person who angers the world over a controversial post or action can ruin his or her reputation for the rest of his or her life. A hypocrite, on the other hand, may confuse the public, attract a large number of fans and give him a high reputation, but when he hurts an innocent person, he gets away with it, because a little negative evidence is quickly drowned out. So, instead of creating some sort of global reputation rating system, you should start with where you are in the trust network and weight your score based on the reputation of the person giving the testimony.



We also have to give up the idea that there is only one reputation for one identity. An identity can have an infinite variety of reputations, depending on the type of interaction he or she has with others. A bad taxi driver, for example, doesn't have to be a lazy gardener -- your reputation should vary from service to service.

Sovereign identity is in your control, not dependent on a grant of authority. In the context of the Internet, this is the logical explanation for online identity. However, in the physical world, there are also large Numbers of people who do not have identity CARDS issued to them by the authorities, such as refugees fleeing a country. These people desperately need such an identity system.

There are several self-dominating identity systems:

Blockstack
Handshake
ION

Blockchains are just weird databases of public keys; Their real value is to provide you with a way to pick the lock without a trusted third party. But any identity system that wants to run on a large scale needs to be able to handle billions of public keys and the regular running of those keys. Putting such a large amount of data into a decentralized network is likely to create problems.

It is an interesting topic how the sovereign identity system can cope with the expansion challenge.

Bitcoin is an asset that generates revenue
Almost everyone in the field wants more bitcoins, so designing a financial instrument that generates revenue in bitcoins is obviously more attractive than using legal COINS. It is widely believed that fully managed products will become more competitive in the future, and that product competition will be dominated by profitability.

I'm personally wary of using revenue-generating services because I used a similar service in 2016, when one way to make money was to lend bitcoin to financing traders on Bitfinex. As a result, when Bitfinex was hacked, the losses were Shared by all users, each losing 30%. Although I've never been a Bitfinex user, I indirectly put some money there, so I'm affected. As the saying goes, no risk, no reward. I believe that over a sufficiently long time frame, something similar will happen to these disparate lending systems of late.

In a particularly interesting development, I recently started lending out my Grayscale bitcoin trust, GBTC, through a margin trading system at my broker, despite an annualized return of only 1% to 2%. But all of these loans were fully collateralized at several mainstream Banks, and my counterparty was an institution that managed trillions of dollars, so the chances of these products defaulting were extremely low. Sure, low risk, low return.

Launched in April 2018, GBTC, or Grayscale Bitcoin Trust, is described as "the first publicly traded security to invest independently and extract value from Bitcoin prices," enabling investors in public markets to buy Bitcoin in a regulated and protected environment. GBTC is the closest thing to an exchange traded fund because it allows investors to invest in bitcoin without having to worry about storage or safekeeping.

Another danger today is refinancing. When you pledge your assets to someone or an institution, and they turn around and use the collateral you have provided as their own collateral to borrow money, it's called refinancing. This is obviously risky because it results in these services actually becoming part of the reserve. If too many creditors make demands, this could cause a catastrophic "bank run".

Another risk is that the servicer may not provide security for assets held as collateral, meaning that if the lender goes bankrupt for any reason, the assets held as collateral may not be protected and may be drawn into the bankruptcy process for redistribution to creditors. You could easily get into a situation like MtGox's bankruptcy, where it would take years to recover the rest of the money.

BIP 174: a partially signed bitcoin transaction

I've been working on a bitcoin multi-signature wallet for the past five years, and the lack of standards has been a nightmare. The good news is that BIP 174 proposes a standard for how to serialize partial signed transactions. Each hardware and software wallet seems to have its own unique serialization that is incompatible with other wallet software. Results in the PSBT (Partially Signed bitcoins the Transactions), before can use all sorts of multiple signature wallet purse software is actually unable to create, it poses a potential single points of failure.

We have deployed PSBTS at Casa as part of our Coldcard integration efforts, and we would like to see other hardware manufacturers follow suit!

The PSBT format also has a nice additional security feature that lets you pass the XPub and the derived path along with the transaction information so that the signature software can verify that the changes have been returned to the target wallet.

Going forward, we expect that the PSBT's extensibility will enable it to support the unique features of various wallets, but first, we have to get everyone to support the standard!

There is also work underway to add PSBT support to flash trading of hardware devices, though some of the non-standard attributes of flash trading will require more work from hardware manufacturers.

charity

Bitcoin's long-term HODLers, or "HODLers", are finding they can now play a bigger role as their assets grow. There would be a tax benefit if you gave the value of the bitcoin directly to a charity, because if you converted the bitcoin into legal currency and then donated it, there would be a capital gains tax.

There are also tax breaks for donations to eligible institutions. If you want to donate bitcoin to charity, check out my resource list. Please note that if you intend to donate more than $5,000 worth of bitcoins in the United States, you will need to complete the 8283 tax form, obtain third-party identification of bitcoins (you know), and have the recipient sign at the end of the form.

Another perspective is that when bitcoin appreciates, individuals can play a more direct role than institutions because they are more flexible. Bureaucracy slows down decision-making, and individuals who make their own decisions do not have to agree with others.

In addition, bitcoin allows us to send money to places that were previously hard to reach. We can support people who don't even have access to traditional financial institutions. Opposition figures fighting for human rights could be funded, and financial institutions blocked from using payment networks by government order.
It is interesting to note that using bitcoin to fund the work that drives bitcoin further can be particularly challenging. If organized, such activities are likely to be met with resistance from people concerned about the distortion of incentives. So perhaps the best option is for individuals and companies to fund some developers directly.

Back to construction!

If you have to sum up the 2020 satoshi nakamoto round table, it is a word: 2020 will usher in a bull market!

Source:https://www.chainnews.com/articles/411642028939.htm

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