Polar Opposites

>> May 12, 2020

>> Blog Post #70

Not a day goes by without you hearing about the dramatic effects the COVID-19 pandemic has on people’s lives and on the economy. The economy has tanked in all countries as a direct consequence of people closing shops during the confinement.

I’ve actually suspected that this economic turmoil is a bigger factor in why many countries are currently getting out of their confined states and back to more normal working arrangements (read normal as in the “norm”) than the sanitary situation itself.

You’d think that the markets would tank because of this but I have actually been extremely surprised by just how fast they have rebounded since the initial – and very strong – crash that occurred between end of February and end of March.

The only reason I can think of, and it’s probably the right one, is that the insane amount of money that has been injected by governments around the world in liquidity has artificially supported markets that are no longer correlated with the real economy. At this point, I believe it is fair to wonder if this can’t just go on forever as no one really seems to care. But please take a look at it and try to spend just two seconds figuring out if you are the one benefiting from the “free” money and / or the stock “performances”. Chances are, you might say no in both cases. Just think about it.

On the other side of the spectrum, Bitcoin has just lived another day yesterday. And nothing has changed. Well actually nothing has changed in the value proposition. The hardest money the world has ever known, sitting on top to a very decentralized protocol and network, with unprecedented censorship resistance characteristics. You have to marvel at what bitcoin has accomplished since its inception.

Yesterday was another milestone in Bitcoin’s very short, yet tremendously rich history. Bitcoin went through its 3rd halving.

See unlike FIAT currencies which might just be inflated into oblivion, Bitcoin’s total market supply is capped. No more than 21 million Bitcoins will ever be produced. The supply is finite, and its rate of production is hard coded in Bitcoin’s consensus rules so that it gradually decreases over time.  Bitcoin’s protocol states that every 210,000 blocks, the block subsidy is cut in half.

Now, I won’t get into too many details on how this works, as it can get confusing fast depending on how much you know regarding bitcoin, but you have to understand that the block subsidy, is part of the reward that is allotted to the miners in return for the work they provide in securing the bitcoin network. Here’s me trying to explain this as succinctly as possible:

Transactions are created every day by the participants who send and receive bitcoin. These transactions are pooled together and included in blocks by the miners, acting as some sort of housekeepers of the network. The miners are compensated for their housekeeping tasks by receiving a reward every time they mine a block. The block reward consists of the block subsidy – the part we are looking at today – and the transaction fees that are included in every single transaction contained in the block that is mined. When mining a new block, the miner will include in the block a transaction paying himself that subsidy, effectively creating new Bitcoins in the process. This is the only way Bitcoin is created, until the total number of Bitcoin every created reaches 21 million, at which point miners will only be collecting transaction fees.

As I said, yesterday was the third halving. Initially, the block subsidy for miners was 50 new bitcoin per block. After block 210,000 the rate of issuance of new money was cut to 25 new bitcoin per block, with blocks being produced approximately every 10 minutes. Since last evening, we are down to 12.5 bitcoin per block, which means every day, approximately 1,800 new bitcoins are issued.

This is going to be a very – VERY – scarce asset, not artificially inflated by governments. Its value proposition is extremely different from that of US dollars or Euros for example. No matter what you think of any of these three currencies, or your home country’s currency, you have to realize there might be some benefit to holding some funds in bitcoin, just in case.

Police – Do Not Cross

>> May 6, 2020

>> Blog Post #68

Another week, another company that folds due to restrictive legislation. This time it’s the Dutch company BitKassa.

last time was end of April only… 🙁

Imagine you run a business and from one day to another you see the need to place this big red banner on your front page.

It must hurt so bad.

Here’s their post about why. 1st paragraph includes this:

« Main reason is we no longer want to commit to the excessive demands of the Dutch Central Bank, and the Dutch Ministry of Finance who does a great job serving the Dutch Central Bank in enforcing unreasonable regulation upon Dutch Bitcoin companies. »

Country legislation that protects government sponsored associations of non-elected officials to the detriment of hardworking, honest people who are trying to build for the future.

Makes me sad.

Building is important. Staying in the shade probably is too. It’s still early in the game. I learned early enough that you did not want to sit at the frontier of bitcoin to FIAT if you did not want to face issues. This is just another example of this. License fees, legal delays or costs and fines are designed to run you out of business and protect the establishment.

Some Days Are Tougher Than Others

>> April 24, 2020

>> Blog Post #64

I just learned today that a friend of mine had decided to put a stop to his business preemptively in response to future laws being passed in his country of operations.

He did not do so because what he is doing is illegal. He took that hard decision because he felt he did not want to be morally corrupt, to resort to doing things to his customers that he did not believe in. This takes some kind of guts. And I’m telling you most people would not do that. Respect.

It also took me a couple hours testing some hardware and setting up various accounts here and there to test new services.

Another friend of mine and myself also discussed several bugs we keep encountering in an app we use a lot and that is supposed to be one of the best in the biz….

It’s these days you see just how far you are from what you envision would be a better – yet realistic – future.

I think it’s good to let some doubts assail you once in a while. It keeps you grounded and humble. It also lets you realize how much work there will be to put in and how tough some situations will be. It won’t be easy. But we’ve signed up for it.

Stay strong, follow what you think is right, not what people say is. And support people who you care about.

the pic is a piece of art from probably my favorite bitcoin artist. check him out at: https://www.phneep.com/

Payjoin is coming to Satoshiindex!

>> April 22, 2020

>> Blog Post #62

Super Bullish!

As I was saying in the last blog post I am very hopeful that people in the bitcoin space are going to actively collaborate to piece together their bits and pieces and offer a better bitcoin to all. This here is a good example of this.

I am still slowly setting up my website, but eventually it will have a store attached to it. One of the payment options will be bitcoin and I will use BTCPay Server as my payment processing software to do so. The BTCPay Server instance I have is running on one of the bitcoin nodes I run.

BTCPay server is terrific and I’ve used it for quite some while now, but it just got better with the “Block 626048” release, which introduces Payjoin support.

Payjoin is a specific type of bitcoin transaction that is designed to enhance privacy for users.

I’ll try to summarize it briefly while maybe giving readers who are not as familiar with how bitcoin works, a few examples.

Example 1

I am going to the bakery to buy bread. I ask for a baguette, which costs 1 € and pay for it with a 10 € bill. The transaction looks like this. I give the baker 10 €, he keeps 1 € and returns 9 € to me.

Example 2

I am trying to purchase the same baguette but only have a few coins in my pocket. I have a 50c and three 20c coins. I give them all to the baker, who keeps the equivalent of 1 € since he will hand me back 10c in change.

If you were trying to make the same payments in bitcoin, it would work exactly the same. Whatever you have in your pockets is used as the input to come up with enough money to pay for the product or service you are looking to buy. The recipient of the transaction will keep what he is owed, and there is a third component, the change that is paid back to you. (for people more familiar with bitcoin, the actual recording of transactions in an “accounting” type of view is different, but I am just trying to explain here what inputs, outputs and change are).

Some people are trying to attack bitcoin by tracking its users’ transactions – the chain analysis companies. This is absolutely unacceptable, as bitcoin should be fungible, meaning 1 bitcoin should be absolutely equal to any other bitcoin out there. They are replaceable by one another. Nothing you do with a bitcoin through your behavior can enhance or reduce the value of a bitcoin.

1 bitcoin = 1 bitcoin

However, the chain analysis companies are trying to flag users and bring AML/KYC rules in the bitcoin environment. They do so by analyzing the blockchain and trying to determine what people do with their coins. They do this through the use of math and … guesswork.

Take example 2 above. When you look at a transaction that adds 50+20+20+20 and that transaction input gives birth to two output transactions: one for 100 (1€)  and one for 10, it is fairly easy to determine that a user took several coins to pay for a product or service that cost 100 and that 10c is the change. If the service was 10c, the user would have only used one of his coins to pay for it. So, the chain analysis company has actually learned a lot from this transaction, but only if one of their assumptions is correct…

The common input ownership heuristic

One element of “guesswork” chain analysis companies rely on is that they consider that all inputs used to build a transaction actually belong to the same user. After all, it is fairly rare for you to buy bread with coins that belong to the person sitting in front of you in the line at the bakery.

Payjoin destroys that heuristic if it is implemented.

In a Payjoin transaction, both the sender and the recipient of a bread purchase will contribute coins to the transaction. The transaction generates the appropriate amounts of (1) payment for the recipient and (2) change for the sender based on both parties’ contributions to the payjoin.

So, what are the advantages?

Payjoin is a privacy enhancement for the network as a whole if implemented. By making it possible for different users to collaborate in creating the input of a transaction, payjoin breaks the assumption that all inputs belong to the same user. Today, I know of one wallet that proposes such a feature, Samourai Wallet. Through the use of the “Stowaway” feature, Samourai Wallet users can collaborate to create payjoin type of transactions.

Better privacy for users is terrific!

But there is also another benefit, this time for merchants. By contributing some of his own coins to the input of the transaction, the merchant will gain the ability to get rid of his spare change and consolidate his pesky cents into larger amounts. In bitcoin terms this is batching and is very useful in order to save on network fees. Through the whole process, the merchant too will gain the privacy benefits of no one knowing which coins are his and which coins are the customers.

I’m really super happy this is coming to BTCPay Server and can’t wait to implement it on this website and offer this as a feature to future customers.

Super Bullish! And congrats to the BTCPay Server team for this implementation of Payjoin (P2EP)!

Here is the official announcement made by BTCPay Server

I Wonder What The World Will Be Like In 10 Years

>> April 20, 2020

>> Blog Post #61

I wonder what the world will be like in 10 years.

I was talking to someone I know today about potentially partnering as our two respective products would work well together from a user’s standpoint. It was fun to discuss a new partnership as the past few weeks we’ve been focusing on our main product and today’s conversation was a refreshing break from it.

I think I’ve mentioned it in this blog before, I run a bitcoin business, and therefore the use cases we discuss are always fringe to a certain degree as Bitcoin is certainly not a massively adopted product, at least yet. Maybe it will never be and quite honestly that doesn’t bother me at all as I am not necessarily routing for it to be. I am convinced Bitcoin can have a perfectly bright future without mass adoption.

One specific topic that I am very interested in is the frontier between bitcoin and FIAT currencies. I am of the opinion that any business sitting at that frontier is taking a lot of risks as governments can turn on them in a heartbeat and create nightmarish scenarios. I’ll define a nightmarish scenario one in which either all of your cash or all of your time are captured for a period longer than you can withstand as an entrepreneur. It doesn’t mean these businesses currently trying will not succeed, just that it’s not a risk I personally feel like taking. That’s why I do not want to sit at the Bitcoin to FIAT frontier.

For the same reason, as an individual, I think someone who would like to accumulate bitcoin has two good choices he can make. Either he earns bitcoin for his work or he buys them – for FIAT – from an individual, not a crypto exchange. What will that market look like in 10 years? I feel alternatives are starting to emerge that offer bitcoin on and off ramps, but they all seem too centralized yet. As people seem to be focusing on usability through UX and UI, I believe the core tenants of privacy and security first might be taking a backseat. I hope that is just an impression.

People are the layer that I believe will provide the next step of development for Bitcoin. People coming together and putting their separate pieces of code, products, networks together. Advancing Bitcoin together as a community that shares the same intentions and beliefs. I see signs of this happening. People rising up separately because they do not like the current situation and then look around at one another and join forces with people who they recognize themselves in. I guess only time will tell whether I was right or not.

Stack safely.

Money is Coined Liberty…

>> March 9, 2020

>> Blog Post #37

To people who might wonder why I have become so passionate about Bitcoin.

Money is coined liberty, and so it is ten times dearer to the man who is deprived of freedom. If money is jingling in his pocket, he is half consoled, even though he cannot spend it. But money can always and everywhere be spent, and, moreover, forbidden fruit is sweetest of all.

Fyodor Dostoyevsky – The House of the Dead

People are growing increasingly tired of the lies and the cheating of the suits and ties. Bitcoin feeds off of that which is one of the reasons I think it is inevitable. Bitcoin is a tool for liberty, and we want more of it.

Bitcoin Training – Purpose

>> March 4, 2020

>> Blog Post #35

I have decided to start building training material about bitcoin and to slowly develop my training offering. If you have any questions or comments about this, please reach out to me at: elledub@tuta.io


Too many people around me still have a problem understanding what bitcoin is.

  • Some don’t know;
  • some think they know things that just aren’t true;
  • some blindly repeat the worst fallacies ever;
  • most people seem to want to understand it better if you listen to them and are at least a little curious.

What people say they want and what they actually want is different.

People ask how they could learn more

  • I don’t necessarily know where to send them;
  • I very much doubt they are going to read all of the Nakamoto Institute resources by themselves;
  • what they are really asking for is for someone to talk them through it at least to get started;
  • people are often afraid of asking too precise questions, for fear of looking bad;
  • many are not used to conducting researching by themselves. A large majority of people – not all of course – have become too accustomed to having their hands held while learning, or worse, being told what to think. Please consider what I just said very carefully as it is one of my strongest beliefs;
  • Bitcoin seems so complicated it is scary;
  • we are still early enough in the game, that we do have to concede that we lack widely available, easy to understand resources.

Why I decided to do this

  • I feel like I can help since I’ve been involved in bitcoin for a few years;
  • I want more people to know about it and understand it;
  • it really makes me angry when I hear stupid comments and I feel like it is a personal responsibility to react – I’m looking at you flat earther types;
  • it is a good test for me to see if I can explain it myself – clearly, and in a way people will find interesting and worthwhile;
  • it is a great way of bringing more people into the bitcoin world – evangelize;
  • it is a great way of meeting people and growing your own network. Always happy to meet people who have a very different background and set of skills than mine.

What I think I know and what I actually know is different.


  • only by talking to real people, with real questions, and real needs / use cases, can you better understand what people actually know, need, want;
  • I run a bitcoin-only business and having a clear and precise understanding of how people interact / want to interact with bitcoin is extremely valuable – this could lead to new products or services that can be discussed or tested during those real-life interactions

and obviously you knew about this one:

  • the last item is money, I hope to be able to monetize parts of this: more info in the last paragraph of this section.

What “training” am I developing

As of today, the only thing I have is what is in the few lines above, so at this stage it’s all a work in progress, but this is the vision I have and the way I wish to approach all of this. Everything will be iterated anyways, as iterating is really a great mix of getting stuff out through the door while always keeping a strong focus on quality through peer / outside feedback.

training material / content:

  • articles, posts
  • slide presentations
  • longer text material
  • videos
  • infographics

training time / events:

  • in-person bitcoin training
  • classroom bitcoin training
  • hands-on product training
  • remote consulting

How it should work

The bitcoin ecosystem is a wonderful space to work in. I came into bitcoin after reading about the lives of the people who created the internet, their dreams, their ethos. A lot of the principles that they held dear to their hearts are fundamental to bitcoin. Knowledge wants to be free. Decentralization is a goal to tend towards. Open source is extremely powerful. These are just a few examples, but hopefully you get the overall gist and I’ll detail some of these and more in the training itself.

What I listed under training material and content should consist mainly of knowledge, that I will be formatting one way or another. As such, it will be freely available to all as long as there is no specific design element to things such as infographics etc. I should have a lot of this content on the website and it will be available to download for free. I do not own bitcoin or ideas or concepts.

The items I list under training time or events work the other way around. My time is precious, and I own it. You should therefore expect most of the items falling under this category to be tailor made by me and represent a time commitment on my side. They will therefore come at a cost and that will be a way for me to monetize my work. As in the above paragraph, there might be a few caveats / exceptions. Speaking opportunities for example, under certain circumstances – community-focused nonprofit events for example – might actually be free.

Knowledge is free, my time is not.

Please let me know in the comments section below if there is anything specific that you are interested in or would like to see developed or contact me by email. I’m always happy to discuss.

What Has Government Done To Our Money – Notes – Part 5

>> February 26, 2020

>> Blog Post #31

Access part 1, part 2, part 3, and part 4

Stabilize the price level?

  • Some people believe money should be a fixed yardstick that never changes. This would mean government intervention, in the form of money supply management, instead of freedom.
  • However, the tools to hedge against price fluctuation already exist. Should people who do not wish to use these tools be forced to suffer from government stabilization of prices?
  • Government intervention would distort the market.
  • People would not be able to change their cash balances in proportion of prices.
  • Increased productivity tends to lower costs and prices, redistributing some of these benefits to the entire population under the form of lower costs of living.
  • Money is not a fixed yardstick. It is a commodity serving as a medium for exchanges. Flexibility in its value, in response to consumer demand, is just as important as any other free pricing on the market  

Co-existing Monies

  • Recap of what has been established so far:
    • In a purely free economy,
    • Gold and silver are used as medium of exchange,
    • Gold and silver are minted by competitive private companies,
    • Gold and silver are exchanged by weight,
    • Prices are set freely by the market in response to customer demand and product supply levels,
    • Freedom of prices = freedom of movement for the purchasing power of the money unit,
    • The resulting free economy would not be chaotic,
    • The economy would move swiftly and freely.
  • The market could very well choose to only accept one form of money but has not so far.
  • Over the past centuries, gold and silver have both been used.
  • Silver has proven to be more practical for smaller transactions and thus remained in circulation.
  • The exchange rate between gold and silver is set by the market forces of supply and demand.
  • The exchange rate and purchasing powers of the two metals will always tend to be proportional.
  • The free market is eminently orderly.

Money Warehouses

  • Gold has to be stored somewhere as it is usually awkward and difficult to transport.
  • Certain firms will specialize on the market as gold warehouses.
  • The owner of the gold maintains his rights on the gold thanks to deposit receipts and he can claim them whenever he chooses to.
  • Money being used mainly for its exchange properties and not its physical properties, it will most likely be transferred rather than consumed, making money warehouses even more important that regular warehouses.
  • Transfer of warehouse receipts becomes more convenient than the physical exchange of gold over time.
  • As the market for money warehouses develops there are three limits to the use of money substitutions in the form of receipt transfers:
  • The extent to which people are willing to use the money warehouses – we call them banks – instead of physical cash,
  • The more exchanges are carried out between clients of different warehouses, the greater the need to physically move gold,
  • The degree of confidence that clients have in the trustworthiness of their banks.
  • Paper receipts are bank notes.
  • Bank deposits are open book accounts at the banks.
  • Instead of transferring paper receipts, the client has a book claim at the bank. He makes exchanges by ordering the bank to make a transfer somewhere else. This is a check.
  • Economically there is no difference between a bank note and a bank deposit. They both represent a claim of ownership of physical gold at the bank. They are both transferred as money substitutes.
  • Token coins are the same thing as bank notes except they are printed on base metal.

Now this section of the chapter is extremely important, and it is the kind of information that you rarely see in economics textbooks when you study economics at school.

What has happened to the money supply as a result of all these money warehouse operations?

  • If paper notes or bank deposits are used as money substitutes does that mean that the money supply has increased even though the stock of gold has remained the same? Certainly not as the money substitutes are just warehouse receipts for gold that is actually deposited.
  • When the gold is transferred in the form of a money substitute being exchanged, the gold no longer exists as part of the effective money supply, but as part of the money reserve, as it can be claimed at any time by the holder of the money receipt.
  • An increase or decrease in the use of money substitutes therefore exerts no change on the money supply. Only the form of the supply is changed, not the total.
  • Banks could very well function on this 100% reserve policy and charge fees for their services. Use of their services would depend on the demand that customers have for their services.

Rothbard then proceeds to ask questions about the evaluation of fractional reserve banking, which he calls one of the thorniest problems facing the monetary economist:

Would fractional reserve banking be permitted under a free economy or would it be prescribed as fraud?

  • Banks have historically rarely stayed on a 100% reserve basis for a long time.
  • Banks have always been tempted to use seldom moving reserved for their own benefits.
  • People do not care whether gold they redeem is exactly the same gold that they deposited. They just care about the purchasing value of it.
  • Banks are tempted to use other people’s money to generate a profit for itself.
  • If banks use customer’s money, the receipts are then partially invalidated. Some receipts no longer have any gold behind them. The bank therefore becomes insolvent as it could not meet its obligations if a customer decided to redeem that gold.
  • These are pseudo money receipts that are loaned by banks on the market. The pseudo receipts are indistinguishable from the real money receipts.
  • You therefore end up having more receipts than gold in the warehouse, which falsely increases the money supply on the market, creating inflation.
  • Inflation is any increase in the money supply on the market, which does not consist in the equal increase of the stock of the physical gold.
  • Fractional reserve banks are therefore inherently inflationary in nature.
  • Bank deposits are not IOUs like a loan would be as they do not come with the promise that the bank would reimburse you a certain amount of money at a future point in time. They are warehouse receipts that are supposed to be redeemable at any point in time by the customer.
  • Fractional reserve banks create money out of thin air. They are at all times in a state of bankruptcy, that is only revealed if all customers decide to simultaneously claim their warehouse receipts, resulting in a bank run.
  • No other businesses in the world are susceptible to the same phenomenon of a bank run as a normal business takes risks with their own money, not their clients’ money.
  • Morally in a truly free market, fractional reserve banking should not exist as it is fraudulent.
  • Late coming claimants in a bank run are left high and dry.
  • On bank sizes and numbers:
    • The more banks and the smaller their clientele, the large the need to keep large reserves in case their clients claim their gold,
    • The larger the customer base of a bank is, the more it can run fractional reserve banking.
  • As monetary expansion continues with fractional banking, people who understand the truth of the system will be encouraged to create anti-bank leagues to urge bank runs.
  • This will help reduce monetary expansion.
  • Note that this is not at all to limit credit which is a promise to deliver future value at a future date and does not falsely change the money supply.

Isn’t it insane how blunt the question is:

Would fractional reserve banking be permitted under a free economy or would it be prescribed as fraud?

Before I ever started taking an interest in Bitcoin, I would have never even imagined this question and yet I consider myself as being educated. Maybe I was just educated by the wrong people / textbooks.

The level of corporate / governmental fraud we live with is endemic. I certainly do not want to be last in line if there is a bank run. And you shouldn’t either. This is the promise that holding gold yourself offered for years and that owning bitcoin (only if you hold your bitcoin keys yourself) furthers as it is less cumbersome to self-custody. Get on board people!

On a final note, maybe bitcoiners are just the manifestation of that anti-bank league that Rothbard was describing in his book. Are bitcoiners then supposed to encourage bank runs? I’ll leave that question open for you to answer. You can always post your opinion in the comments’ section below.