europe: août 2024

Resistance Money

Sans aucun doute, le meilleur livre que j'ai lu sur Bitcoin à ce jour.

1 Bitcoin's genesis

to heed: écouter
prescient: annonciateur
dubbed: surnommé
cunning: malin
trinket: bijou
behest: ordre
to stifle: réprimer
groundhog: marmotte
momentous: capital
aplenty: en abondance
trump: prendre
to trespass: pénétrer illégalement
to squint: loucher
the choir: la chorale
goading: pousser
crummy: miteux

Our transactions encode our dreams and desires.
Prior to Bitcoin, digital seemed incompatible with cash.
Corporations that issue stock are makers.
Many influential bitcoin enthusiasts do endorse Austrian economics and some form of radical libertarianism or even anarcho-capitalism.
The central question of the book is wether we ought to prefer a world with bitcoin to a world without bitcoin.

2 What Bitcoin really is

installment: épisode
rod: baguette
scrunch: chiffonner
to pour: verser

Makers: Money has Makers. Even if you're unfamiliar with corporate finance, you've likely used the dollar, euro, or yen. Their makers are banks.
Managers: Few store their life savings in cash under a pillow. Instead, we have others store our savings for us : managers.
David Chaum's privacy project, Digicash, and Hal Finney's implementation of bitgold.
Mediators: When using cash, you hand over some dollars bills, and the transaction is complete. No one else needs to know what happened, and no one else needs to cooperate for full settlement to occur. The handover is the settlement. In modern electronic payment systems, the "handover" often involves a complex web and trusted parties. These are the mediators.
Bitcoin addresses - i.e., the "places" where we hold bitcoin in the ledger - actually correspond to location on a geometric curve.
Miners compete to find a number by trial-and-error. They take node-approved transactions and "scrunch" them. The scrunching occurs within a Merkle tree.
Bob hasn't really sent bitcoin to Alice's address until the transaction appears in the ledger. Once it does, the transaction output locks bitcoin to Alice's address. The output remains an unspent transaction output - a UTXO - until Alice unlocks it with a digital signature in a transaction of her own.
UTXO are like little digital checks; they are digital financial instruments that need an authorized digital signature to spend the quantities of bitcoin they specify. Alice's UTXO specifies a quantity of bitcoin under her control. And it's under her control because she has the private key for the recipient address in the UTXO. With that private key, Alice can produce a verifiable digital signature. As long as Alice retains exclusive access to this private key, she alone can get a transaction in the ledger that spends the UTXO in question.
So now we have the digital version of physical possession - exclusive information control.
Volskuil: Censorship resistance property

3 Where Bitcoin fits

ferret: furet
skid: dérapage
lumber: bois
wiggle: latitude
ore: minerai
to endow: doter
scheming: faire des plans
hogged: monopoliser
straggler: retardataire
splinter: se briser
handily: facilement
apt: pertinent
spade: pelle
aptness: pertinence
to fare well: bien s'en sortir
goodness: vertu

Money is a social kind and solves a problem.
The history of money is, in part, the history of humanity.
A medium of exchange - this is what money is.
Store of value and unit of account.
Bitcoin miners perform a service - competitive publishing that protects against double-spending and preserves the issuance schedule.
Bitcoin solves a problem of coincident wants, not for consumers in search of food but for speculators in search of a profitable trade.
Bitcoin isn't just digital money; it's a directly possessable digital money that's costly too produce and lacks central issuers.
Supply Equality Ratio (SER) - the ratio of "supply held by addresses with one ten-millionth of the current supply of native units to the supply held by the top one percent of addresses". Even among the most widely distributed coins, Bitcoin has a SER around 50% higher than ethereum and 200% higher than litecoin.

This is remarkable, since bitcoin is also the primary crypto asset being custodied by large financial institutions; a trend that increases SER's denominator and puts overall downward pressure on the ratio. The sustained increase in bitcoin's SER shows that, in spite of large institutions entering the space, bitcoin is still very much a grassroots movement.

Network Distribution Factor (NDF), which is the "ratio of supply held by addresses with at least one ten-thousandth of the current supply of native units to the current supply". A low NDF signifies better distribution as there are fewer entities at the top 0.01%. Conversely, a NDF close to 1 signifies very low crypto asset distribution". Bitcoin shines again, with half the NDF as its closest competitors, ethereum and litecoin.
Anyone can risk a little now for a potentially massive benefit later.
Bitcoin's global daily volume surpasses that of many state-issued currencies.
"It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules...You could say coins are issued by the majority. They are issued in a limited, predetermined amount" Nakamoto (2009)

4 Behind the veil

clerk: employé
fullness: abondance
welder: soudeur
yoked: atteler
nipped: mordre
to stem: juguler
spawn: produire
wedded: lier
bob and weave: flotter
flimsy: fragile

Who benefits from or is harmed by bitcoin, how, and to what degree?
Bitcoin now is the upstart competitor that threatens to expose the weaknesses of the incumbents.
Bias of self-enhancement: we also tend to discount or dismiss ego-unfriendly evidence. Surestimer ses compétences.

5 Money machine

dung: fumier
tangle: fouillis
to recourse: recourir
wonky: bancal
accomplices: complices
to dole out: distribuer
stork: cigogne
tinker: bricoler
to flounder: patauger
hatch: trappe
chug: avancer tant bien que mal
hades: plongement d'une faille
to lurch: vaciller
attendant: domestique
peddler: colporteur
eschew: rejeter
to cast off: se débarrasser
careening: osciller
to beckon: attirer
chopping: découper
foreboding: inquiétant
riddled with: plein de
embezzle: escroquer

opt-in money machine
bitcoin's money machine
The contrats between the price stability that prevailed in most countries under the gold standard and the instability under fiat standards is striking.
Price levels under commodity and fiat standards
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
The two design choices - fixed issuance and halving - serve to induce volatility.
Satoshi chose a deterministic schedule and its attendant price volatility over price volatility with a trusted party.
To achieve disintermediation, bitcoin was designed as a self-contained, deterministic money machine. The machine issues bitcoin not through rulers but through automated rules.
Maintain a fixed portfolio allocation to bitcoin - 5% for example. Nic Carter has made a similar point with respect ti institutional bitcoin allocation mandates.
Bitcoin offers an opt-in monetary system governed, not by bankers or bureaucrats but by rules.
"Current monetary arrangements represent not the rule of law, but the rules of central bankers".
The dollar is discretionary, and few are the deciders. Bitcoin is a machine.
People can simply hedge against both forms of instability by holding both dollars and bitcoin.
Under political pressure, or in a pandemic, or an economic downturn, will the central bankers pull the lever more than usual to create more money? That's up to them. But if they pull a little too hard and hyperinflation ensues, wouldn't you like to access an asset with no such lever? You might want bitcoin around to hedge, as a form of insurance.

6 Privacy in public

to vie: rivaliser pour obtenir
swaths: bande
profligate: dépensier
bent: penchant
reprisal: représailles
fleeter: flotte
diapers: couches
to forsake: abandonner
vow: voeu
sting: piqûre
hatch: éclore
to mow: tondre
glitter: paillettes
wad: paquet
wedge: cale
nefarious: abominable
glob: goutte visqueuse
to abscond: s'enfuir
sever: sectionner
to leave someone in the lurch: laisser qqn en plan
smeared: étalé
deeds: actes
weirdos: tordus
abiding: durable
to spur: inciter

Money, as a medium of exchange, is an altar upon which our sacrifices reveal our values
Amazon knows when you're depressed long before you go to the therapy.
Money is not just a medium of exchange but a medium of revelation.
Each UTXO is like a single-use digital check that represents some quantity of bitcoin. All these UTXO appear in a public, global accessible ledger.
A dollar's purchasing power in 2023 is 1/7th of what it was in 1971.
Despite its cypherpunk roots, bitcoin could become a tool for mass financial surveillance, in the same league as credit cards and digital dollars.
Using the cryptocurrency Zcash, users can send and receive value on a public ledger without revealing any information about amounts, destinations, or sources.
Bitcoin at present lacks the programmability and technical infrastructure to natively implement either zero-knowledge shielding or ring signatures at its base layer. But its open architecture enables other means for enhancing privacy.
At present, there are about 30,000 lightning nodes with public channels.
The network requires capital. Users must lock bitcoin into payment channels for the whole thing to work.
It's tough to buy a house with physical cash, and it's similarly tough to CoinJoin millions of dollars in bitcoin or send millions in bitcoin through lightning channels. Overall, both cash and bitcoin need a sufficiently large crowd to offer meaningful privacy.
For up-to-date statistics on lightning network nodes and channel capacity, see https://1ml.com
For a comprehensive and up-to-date overview of privacy on lightning - and its limits - see https://lightningprivacy.com
"Therefore the replacement of cash by central bank electronic money is likely to spur demand for alternative means of payments to solve specific privacy problems" - Kahn

7 Resisting Censorship

harrowing: atroce
frisked: fouiller
pelf: blé, oseille, argent
to elude: échapper
wield: exercer
gals: nanas
behest: ordre
elusive: insaisissable
staggering: impressionnant
lump: regrouper
plop down: laisser tomber
undergird: soutenir
remittance: paiement
squash: écraser
admittedly: il faut reconnaître

Bitcoin hosts less illicit activity than traditional fiat currencies in both absolute and relative terms.
Code is a form of protected speech, guarded by the First Amendment and a host of enthusiastic civil rights attorneys.
Censorship-resistant money already exists in the form of physical cash.

8 Money for the marginalized

undaunted: téméraire
qualms: scrupules
to tally: compter
haven: havre de paix
overdraft: découvert
predicament: situation délicate
fending: se débrouiller
to bum: taxer
sling: lancer
nip: mordre
heels: talons
to forgo: renoncer
damning: barrage
spurious: faux

Always and everywhere, watch for fees.
Bitcoin requires little more than an internet-connected device and a bitcoin private key, along with the address that it generates through elliptic curve multiplication.
The problem is us - human beings. We lack knowledge. We have imperfect judgment. And we have character flaws.
Silicon Valley Bank on March 10, 2023, and Signature Bank on March 12 - bitcoin's price rose around $20,000 to $24,000. The market seems to have grasped the value of a trust-minimized monetary network in the face of a system that had lost the trust of depositors.
The bitcoin network is not a system of credit. There is no way to get a mortgage for your new home on the bitcoin network either. It is fundamentally a system of money, not finance.
Bitcoin is an alternative system. Its inclusivity stems from the simple but powerful design choice to forgo trusted authorities.
CDBCs would give users direct access to central bank money in digital form as opposed to mere commercial bank deposits.
Digital cash - not mere digital money - is the solution to these problems of inclusion. And that's what bitcoin is.
Unbanked people are better off in the bitcoin world.

9 Security through energy

heists: braquage
foil: déjouer
deterrent: moyen de dissuasion
liability: handicap
fanny pack: banane (ceinture)
to ward off: repousser
to vet: vérifier
scoured: fouiller
vent: cheminée
rub: qui fait mal
gullible: naif
trope: rhétorique
err: pêcher
sneer: ricaner
raucous: tapageur
askance: soupçonneur
lavish: promettre
kickbacks: pot de vins
heed: écouter
spur: stimulant
red herrings: diversion
sludge: boue

At the time of writing, aggregate power demand for bitcoin mining amounts to around 14.12 GW. That's a lot of gigawatts - about ten nuclear power plants's worth.
As with money, what we do with energy shows what we value.
Bitcoiners collectively pay miners to help secure bitcoin's monetary system, and those miners buy electricity with their earnings.
Different people value different things. And so people use energy in different ways. People who don't like to do certain things, furthermore, have a long history of objecting when other people do those things.
Nodes protect against false and counterfeit spending; miners protect against double-spending.
M0 - currency in circulation plus commercial bank reserves held in central bank accounts.
We've argued that bitcoin is useful as resistance money on dimensions ranging from privacy to financial exclusion and more.
Bitcoin miners often go bankrupt, which is evidence of thin margins. Also some bitcoin miners are publicly traded firms, and their financial reports also indicate razor-thin margins.

10 The Price of Energy

eggshell: coquille
trivialize: banaliser
casual: désinvolte
guzzling: engloutir
rigs: plateforme
belching: jaillir
redeeming: racheter
oughta: devoir
strike: coup
substantive: considérable
off the hook: non déclaré
gripping: captivant
sniff: reniflement
withering: méprisant
thrice: 3 fois
scathing: très critique
spring: ressort
mourn: pleurer
masquerading: se faire passer pour
cater: préparer
impinging: affecter
teeter-totter: faire du yoyo
kickbacks: pot de vin
delusions: illusions
flounder: patauger
to the fore: en avant
parlay: faire fructifier
stranded: abandonné
do-over: refaire
boonies: cambrousse
smelting: fondre
ruthlessly: impitoyable
dung beetle: insecte qui mange du fumier
buildout: construction
scrounging: grapiller

dichlorodiphenyltrichloroethane, commonly known as DDT
But in an era of growing concerns about climate change, journalists and environmentalists claim bitcoin uses too much energy and emits too much carbon dioxide.
Environmentalists can embrace bitcoin without betraying their values.
Why in the world do we allow bitcoin to do more harm to our planet than Youtube, video games, or Switzerland?
Bitcoin emits far less than tobacco production, data centers, or gold mining - not to mention air-conditioning.
Physical exercise is like that - worth it despite the pain and risk of injury.
They would need to show that video gaming is more valuable than a tool for global financial inclusion, for resisting censorship, for enhancing financial privacy, and so on.
Oceanographer Camilo Mora "Bitcoin émissions alone could push global warming above 2°C"
Those in power typically lack the necessary insight to judge the value of certain activities, especially when they involve new technologies.
Notably, bitcoin's energy mix is already impressive - somewhere between 37% and 50% of electricity that miners uses is zero-emissions, compared to the global average of 16% - 20%
High prices drive new miners to enter the race, which increases hash rate and decreases profit margins for all. Only those with the cheapest energy survive long. In equilibrium, then, miners are pushed to the spatial and temporal corners of energy markets. And unlike other industries, they can actually go to those corners.
The economics of mining drive hashrate to the margins, which tend to be served by energy sources that few others want or can even use. They happen to be renewable sources of energy. Bitcoin is, as a result, inherently self-decarbonizing. It decarbonizes without policy intervention or direct climate action from its users.
Bitcoin mining doesn't just help with balancing intermittent sources of renewable energy. It also helps balance grids themselves.