Rabbit Hole Recap: Week of 2020.10.19
10/23/2020 · 112 min · transcript via mlx
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Key topics
— Two LND vulnerabilities disclosed and patched: high-S ECDSA signatures (v0.9 and below) and invoice preimage leakage (v0.11 and below); both privately disclosed by Antoine Riard, no evidence of exploitation.
— PayPal announced cryptocurrency buying, selling, and merchant integration via partnership with Paxos; users cannot self-custody or withdraw assets, replicating the Robinhood custody model.
— Coinbase released a transparency report showing U.S. law enforcement makes ~1,113 information requests (dominant globally), raising privacy and regulatory friction concerns.
— FinCEN fined Helix mixer CEO Larry Harmon $60 million and he faces criminal proceedings; demonstrates regulatory targeting of custodial privacy services.
— Financial Action Task Force travel rule working group quietly built an API for regulated exchanges to share customer KYC data; raises concerns about privacy erosion and potential network bifurcation.
— Multiple software releases: BTCPay Server, Bisq, Phoenix, Breez (RC1), Tails, Tor Browser, Raspiblitz (includes Circuit Breaker), Sparrow, and new Voltage cloud Lightning hosting service.
Market & price signals
— Bitcoin broke through $11,000, $12,000, and currently sits at $13,124. Market cap: $243.2 billion. One bitcoin buys 6.9 ounces of gold and 131 barrels of oil. Difficulty adjustment scheduled for Halloween (next Saturday) predicted to be -7.3% due to hash rate leaving the network as China's rainy season ends. Mempool shows 52,503 pending transactions with 7.51 BTC in fees; next block fee reward ~1.17 BTC (15.76% of total reward). 98% of all Bitcoin buys in Bitcoin's lifetime are in profit. Top 10 best weekly returns since 2011 represent less than 3% of Bitcoin's operational time; missing just those weeks degrades returns by orders of magnitude.
Actionable insights
— Verify LND version immediately: If running version 0.10 or below, update to 0.11.0+ to patch both disclosed vulnerabilities; neither was exploited, but the risk to routing nodes is material.
— Withdraw from regulated custodians regularly via CoinJoin: Use Whirlpool (or Wasabi if necessary) as a protest signal against the travel rule API; even ineffective privacy efforts demonstrate user resistance to KYC data sharing and regulatory creep.
— Do not purchase Bitcoin on PayPal or Robinhood: You do not own the asset, cannot withdraw, and are exposed to counterparty risk and potential seizure; use non-custodial services like Cash App with withdrawal enabled, or better yet, acquire via peer-to-peer or trusted on-ramps with self-custody capability.
Episode sponsorships
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