Zap to Zero Day 10

I also realized that "zapping all my sats away" is hard to define. Currently, I just zap to zero and then I put the phone away and go to bed but people might keep zapping me before the next rewards come in. So I could game it by just going to bed very early (which I didn't so far).

• @benthecarman has made it easy for me to start with this section today. He posted that we need to rethink lightning (or at least he does). He mentions how lightning still relies to some degree on low onchain fees and thus it's only a leaky abstraction which does not scale enough, especially when it comes to ownership:

When you lay out all the different tradeoffs a lightning node needs to make, especially in a high fee environment, it makes me think, what are we doing here, are we going down the wrong path? Lightning is still fundamentally a fantastic payment protocol but its limitation is that it requires scale. Basically every problem I've outlined goes away when you have a large lightning node with lots of liquidity and high uptime so many we should optimize for that. The market has been telling us this for years already, +90% of lightning users are using custodial wallets because it works so much better at scale. So how can we use large scale lightning nodes without custodial wallets?

Are we doomed then? Is there no way to scale bitcoin in a self-sovereign way? Luckily, the answer is no, but we need some soft-forks. Covenants are the way to scale bitcoin ownership. There are a bunch of covenant proposals but at their core what they propose to do is to add a way, so you can have a bitcoin address that limits where and how the coins in it can be spent. This can seem scary, but we already have these in bitcoin today, OP_CTLV (Check LockTime Verify), which was soft forked in 2016, only allows you to spend from a bitcoin address if the transaction has a given locktime, this lets you gate when a utxo can be spent. What the current covenant proposals do is let you gate where a utxo can be spent. With that simple primitive many different protocols can be built that allow for scaling ownership.

Fundamentally, all current lightning channels could become entirely useless if on-chain fees went high enough because a single payment would require too many reserves.

All layer two designs suffer the same problem. Fundamentally, transacting off-chain is going to be beneath “economic feasibility (if questioned)” for the median user.

Attempts to build larger coin pools suffer from exit-ability and consensus problems (how do people agree on the state of the L2 accounts to consider it valid?). I don’t expect this to ever change, no matter what new primitives get forked in or protocols for “sharing utxos” get invented.

Choosing fedimints is deciding on one set of tradeoffs (no supply auditability, risk of jurisdictional kyc ban hammer for federation withdrawals) — every choice has different drawbacks. There is literally no “best” solution. Saying you’ve found one without enumerating the tradeoffs isnt very useful imo for helping people understand the problem space.

• Next banger is from @davidw: The Law That Will Ruin The U.S. Tech Software Industry.

Many US software businesses amassed surprisingly high tax bills in 2023, seemingly out of nowhere, due to a tax change which took effect in July the previous year, which many small companies knew nothing about until finalizing their 2022 returns.

The change was expected to be repealed (reversed) in December 2022, so many accountants didn’t inform customers for that reason. So, businesses got a surprise when the first tax payments fell due last April.

The amendment to Section 174 means employing software engineers can no longer be accounted as a direct cost in the year they are paid – unlike the norm, globally.

• Next is actually a link from myself from yesterday that I accidentally found. I didn't read it until @davidw included it in his post about articles to persuade people on privacy. It's a blog post from Gloria Zhao from 2019: Digital Panopticon: Why Privacy is a Human Right

I’m not lying, initially: their data isn’t worth anything just like having a window in my home isn’t an invasion of privacy if nobody is looking through it. But I now have billions of windows, ranging from helpful smart thermostats to life-saving heartbeat monitors, in every person’s home.

The panopticon is a design of institutional building with an inbuilt system of control, originated by the English philosopher and social theorist Jeremy Bentham in the 18th century. The concept is to allow all prisoners of an institution to be observed by a single security guard, without the inmates knowing whether or not they are being watched.

• Next would have been the Daily ~Devs Hangout post from @bitcoinplebdev because I really like this territory, the idea of a daily post and noticed that I didn't give it a shout out here yet, but ... I realized there was no daily post yesterday! So here are links to all the days before: Jan 5, Jan 4, Jan 3 and the ~devs introduction post.