Bitcoin is Forever

The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime – Satoshi Nakamoto, creator of Bitcoin

This goes against the more well understood motto of technology startups: “move fast and break things.” Unlike a startup, or even a big company, Bitcoin doesn’t move fast, or break things. Of course, I am not talking about its price as measured in USD or INR. I am talking about the entire Bitcoin system, or Bitcoin, the protocol. Bitcoin is stagnant, ossified, set-in-stone, resistant-to-change, and any number of such synonyms you can look up in a thesaurus. There are a few obvious questions that come out of this:

  • Why is ossification preferred over, say, innovation?
  • How do you achieve ossification in software?
  • Does it matter?

If you sit back and think, the answers to these questions are not obvious. Let’s address them.

Why?

It seems obvious that innovation is good, innovation is right, and innovation works. Maybe it even captures the essence of the evolutionary spirit. So, why does Bitcoin not want to innovate? The answer lies in layers. By layers, I mean – in layers of abstraction. In any system, the base layer has to be set in stone for the layers above it to work. Think of civil engineering: it works because the laws of physics are set in stone. The value of the gravitational constant doesn’t change over time, thankfully, just because nature wants to innovate. 

Having an “innovative” base layer comes at a high cost to systems being built above it. Bitcoin was designed as a base layer for the world’s financial system. We can argue that that’s a stupidly ambitious goal, and is most likely not going to happen. That might very well be. Given the goal (stupid as it might be), innovation goes against Bitcoin’s purpose. An unchanging base layer of money allows innovation in layers above because a predictable foundation is a good foundation. Change-resistance tells its users that their initial trust in the system will not have to be recalibrated every now and then. A user’s understanding of Bitcoin doesn’t have to be updated after every recession. Money should be independent of booms and busts in the real economy. 

On the flip side, change-resistance resists all changes, good and bad. This is a philosophical preference, and reasonable sides have disagreed about this. Ethereum, the second most popular cryptocurrency, has argued that good changes are worth the cost, and is going ahead with radical changes to its base layer as we speak. And has done sweeping changes in the past.

How?

Software is just text interpreted by a computer to perform some actions. How do you design a software system that cannot be changed easily? This goes into the weeds of decentralized distributed peer-to-peer systems, and a bit of the mechanics of how Bitcoin works. 

Bitcoin, the system, is made of tens of thousands of computers that run a specific piece of software. Each computer runs its own local copy of the software and maintains its own local copy of the so-called “coin-ownership database.” Satoshi released the first version of this software after 2 years of working on it (or so he/she claimed). This software’s source code is open, and anyone can modify it, or run it as it is. Many groups of people have modified this software as per their own vision. Each group has their own version of the software, which they hope users will run. 

The key thing to understand is that users decide what version of the software they want to run. All these users’ software together makes up the Bitcoin network. These users are not in a central database somewhere, with phone numbers or email addresses on which they can be contacted and asked to upgrade their software. They are not in a single country or jurisdiction where they can be coerced to upgrade their software, or else. They are spread all over the world in a loosely coordinated arrangement, interacting only through their already installed software. These could have been installed anytime over the last 11 years, and getting them all to agree on what software to run – is a coordination problem of mammoth proportions. Software that runs by itself on a device, while talking to a central server is reasonably easy to upgrade (like a gaming app on a phone). Software that only talks to peers will need other peers to also upgrade and follow the upgraded protocol for things to work. This kind of “protocol upgrade” is much harder to coordinate and enact. Cases in point: (a) the move from IPV4 addresses to IPV6 addresses on the Internet. (b) the disastrous set of upgrades from SSL 1.0->2.0->3.0->TLS 1.0->1.1->1.2->1.3 (SSL and TLS protocols enable the “S” in HTTPS).

The Bitcoin network agrees on a shared coin-ownership database despite every user running their own version of the software. If one user’s coin-ownership database differed from another user, Bitcoin would cease to work. So, how does it work then? This is where the idea of distributed consensus through proof of work comes in. Bitcoin nodes (each computer running the Bitcoin software is abstractly called a “node”) that also validate transactions and assign coin-ownership to users are called mining nodes, and these nodes have to burn enough electrical power to qualify every 10 minutes to propose valid transactions (a “block” of transactions) that the rest of the network accepts. The network rejects this block if it contains invalid transactions. What is valid/invalid was written in software by Satoshi in the first version of Bitcoin, and changing that requires the collective software upgrade that we encountered earlier. Additionally, this notion of what constitutes burnt electrical power is universal in nature, and all nodes can agree on this without relying on any trusted third party. This is the reason Bitcoin burns more power than your friendly neighboring country – to trustlessly determine who owns what through the universal physics of electricity.

But let’s say that some mining node decides to make a block with a transaction that allocates itself some additional money. An invalid transaction, so to speak. Let’s say this mining node can convince half the nodes in the network to change their software and accept that this block is valid. This half would accept this invalid block as valid and update their local copy of the coin-ownership database. The rest of the network would reject this block, and would have a different coin-ownership database. We have what is called a hard fork.

Bitcoin has had many hard forks in its history – almost all of them by design. And none of them with a 50-50 split; all of them were lopsided splits. A few people wanted to change the rules of the game over the years, got a few more people to agree with them, and decided to have different versions of the coin-ownership database. Think of how, before the partition of India in 1947 – there was one Rupee, and a database of who owns how many rupees. This database was, of course, not maintained on a computer – but through ownership of bearer notes. After partition, there were two versions of the Rupee, with two databases of who owns what. Each Bitcoin hard-fork can be thought of as a similar partition of a currency with separate coin-ownership databases going their own way after partition. The fork with the largest set of miners, users, economic value, and other intangible metrics takes the moniker of “Bitcoin.” Others call themselves “Bitcoin Cash,” “Bitcoin Cash SV,”, “Bitcoin Cash ABC” and so forth.

There is also a softer notion of partition called the “soft-fork”, which is a bit more technical and nuanced. Soft-forks do change the notion of what Bitcoin means, but affecting these soft-forks over the entire network takes many years of coordination, and can only be done for the least controversial changes. And there is no guarantee that they might ever see the light of the day. The last successful Bitcoin soft-fork (fork-name: SegWit) was in 2017 and the forking/upgrade process left such a scar on the system that the next fork/upgrade (fork-name: Taproot) though code-complete, and almost entirely uncontroversial, might take years to roll out – if at all.

If they are so hard, how does Ethereum pull off forks? These are some of my reasons (ranked in order of how controversial they could be):

  • Ethereum’s BDFL is well known in real life, very active, and has strong opinions on how Ethereum should evolve. His word commands respect in the community, and is able to affect change. Bitcoin’s creator disappeared in 2010, and has not been heard of since.
  • Ethereum’s nodes are comparatively harder to run, and are thus run by fewer people – who can coordinate upgrades more easily. Bitcoin nodes have a lighter CPU, memory, and network footprint, and can be run by more people.
  • Ethereum’s users want newer features and are willing to upgrade more easily. Bitcoin users are more resistant to change.

What now?

I claim that Bitcoin’s resistance to change is one of its biggest value propositions, and gives us a form of money whose monetary policy, rules of the game, and general contract with the outside world are almost set in stone. You can buy bitcoin, bury the private key, come back to it in 50 years, and it will still be valid, and perhaps, more valuable.

Expense Ratios of Mutual Funds in India

It’s hard to find what Indian mutual funds charge their customers to manage their money for them. The so called “expense ratio.” Try to find it on, say, the UTI website, or SBI’s MF website.

Also, since January 2013, SEBI (the market regulator) made it mandatory for all mutual fund houses (AMCs) to offer what is called a direct plan. Every fund offered by every AMC will have a direct plan where the AMC will charge you a lower expense ratio. This is the money saved by the AMC because you went directly to them, and not through your neighborhood bank branch manager or ShareKhan. This lower expense ratio is also hard to find.

My favorite mutual fund research website, Value Research Online (vro.in) also, surprisingly, does not make it easy to find the expense ratio of a particular fund. Other sub-standard sites like Money Control do not care about listing expense ratios at all.

Now, why the fuss about expense ratios?

  1. You do want the cheapest deal, don’t you?
  2. A fund that charges 2.6% vs. a fund that charges 0.15% to manage your money. Compound this difference over 15 years, and you will see what the fuss is about.

So, what’s the solution?

  1. Call the AMC directly. Some of the “customer care” personnel do not know what a “direct plan” is. Tough luck. But this approach typically works.
  2. Go to any list view on Value Research Online’s website — say, funds from HDFC, or all Large Cap Funds, or any other list that can be sorted on expense ratios. This seems to be the only way to find expense ratios in this otherwise great website.
  3. Download the latest factsheet from the AMC website. Most AMCs do have expense ratios buried deep inside the takes-forever-to-download facesheet somewhere.
  4. I hate saying this, but invest in HDFCFund. I am not affiliated in any way to HDFC or HDFCFund, but I found their website (logged in and logged out) the best to use. They list their expense ratios boldly, they offer cheap expense ratios, you have a great range of funds, their index funds are very cheap, and you can do everything online (except for opening the account).

I have been a direct plan customer of UTI, SBI, ICICI-Prudential, IDFC, HDFC, Taurus, and Quantum Mutual Funds. Here’s my order of preference based on the range of funds, past performance of funds, expense ratios, complete online usage, and overall experience.

  1. HDFCFund
  2. IDFC (if they had a Flex STP, they would rank #1 with HDFC)
  3. ICICI-Prudential (Cannot cancel STP’s online)
  4. Quantum Mutual Fund (wish they had a slightly wider range)
  5. UTI, SBI, and Taurus: all of their websites sucked. Funds are ok.

Well, that’s that.

Craft Beer in Bangalore

IPA beka?

IPA, Russian Imperial Stout, Blonde, Hefeweizen, Maibock, Pumpkin Ale, Belgian Tripel, Classic Pilsner, and such: all on tap.

Moving back from the US in 2012, one worrying thought at the back of my head was — where do I get good beer in Bangalore? Back in the late 90’s, I often drank unnamed beers on tap at Purple Haze, Guzzlers’ Inn, Pecos, Tavern at the Inn, and similar places. But now, where do I find the fresh hoppy lip-smacking taste of a good IPA? Or a thick syrupy malty Imperial Stout?

Well, Bangalore happens to be the craft beer capital of India. And nothing is more fun than asking “Yeshtu ee beer ABV?” and hearing “Aaru vare” from your bartender.

Here’s my list:

Windmills CraftworksEd Tringali is the brewmaster at this fantastic brewpub located in the EPIP zone in Whitefield. Their IPA is always on tap, and they have some special seasonals that come in during the right…er…seasons. Their Christmas Ale was mindblowingly good. It’s somewhat of a library bar with a Jazz music scene. But I go there strictly for the beer. But it is dreadfully out of the way for your Whitefield-free average Bangalore beer drinker.

Arbor BrewingGaurav Sikka is the man behind the scenes here. His story on how he brought Arbor Brewing from Ann Arbor, Michigan to Magrath Road, Bangalore is for the ages. Their IPA is hoppin’ hell great. This is my favorite brewpub in town. Actually, in the world. Logan Schaedig, their brewmaster, experiments all the time. Rye IPA, Espresso Stout, Saffron infused lager, Beetroot in Beer (!), and a few others that have all turned out great, if you ask me.

Toit: This is my least favorite of all the good brewpubs in town. Mostly because of how bad the service is, and how they never fill their pint glasses fully. There is always an inch of room above the head. Just skimming a bit of cash from customers. The redeeming thing about Toit was the Pumpkin Ale. Their regular Dark Knight stout is spectacular as well. Conveniently accessible under Indiranagar Metro station.

The Biere Club: Derek, the general manager is a great guy and has been around the Bangalore fine-dining, clubbing, and pub scene forever. The beer is good — though sometimes you might get served a great Belgian Tripel in a old-school German Stein (mug). But they do have the good glasses for more discerning beer drinkers. Bang in the middle of Bangalore ‘downtown’, probably the most accessible of all the brewpubs.

Punjabi by Nature: More of a food place than a beer place. And it shows. The ales are ok, the pilsners are fine, the stouts are passable. Only if you are in the Koramangala area. Not worth going out of your way — at least for beer.

Barleyz: They have the usual collection of Mild Ale, Indian-Craft-Brew-Staple Wit beer, another Wit beer (yes. They have two Wit beers), and something called the Jaggery Ale. The place looks a bit like NASA (Church Street), and is again, worth visiting only if you are in Koramangala.

A few others are waiting to open their beers to us, but are held back by licences, and other such crazy laws of Karnataka. It always makes for great storytelling: to hear about how the brewpubs got around Karnataka liquor laws to just brew beer and get people who love beer to drink it.

I, for one, am happy that they did it.

So much to learn, ponder about, and do….

And so much time to do it.

Scott Aaronson’s “rant” on naysayers of complexity theory got me pondering.

Over the last few months, my general scientific pondering has suffered at the hands of real work, startup life routine, system building, and a general state of being occupied by the trite. It’s fascinating, but not inspiring. The days are exciting, but not ecstatic. The nights are cathartic, but not liberating.

I miss my aimless pondering days.

I was missing this life then.

So it goes.

Porn and Masturbation

For a while now, I have observed this disturbing trend of using the words Porn and Masturbation (P&M) as suffixes in hyphen-separated-phrases to convey that the prefix is inferior, waste of time, pathetic, something to aspire against, etc. Cases in question: intellectual-masturbation, achievement-porn, etc.

I find two insulting underlying reasoning schools at work were. One: Just because something is _perceivably_ akin to P&M, it sucks. Two: P&M implicitly suck.

Well, that’s it.

Genius

The Feynman Method

Richard Feynman was fond of giving the following advice on how to be a genius. You have to keep a dozen of your favorite problems constantly present in your mind, although by and large they will lay in a dormant state. Every time you hear or read a new trick or a new result, test it against each of your twelve problems to see whether it helps. Every once in a while there will be a hit, and people will say, “How did he do it? He must be a genius!”

Dev D

Color, Pathos, Neon, Blood, Helplessness, Orgasmic, Irredeemability, Red, Anguish, Nods, Honesty, As-is, Succumbing, Delirium, Insecurity, Psychedelia, Skin, Sigh, Bitter-as-coffee, Physical catharsis, Uncontrollable-lust, Random, Wanton, Appreciation-hierarchy, Feeling, Denim, Masochism, Yellow, Numb, Lonely, Cold, Vivid, Very vivid color.

I am happy.

Kanyadaan

Do not influence others. Especially subliminally. Especially with ideals which you have internalized after prolong profound pondering. That’s what Nath Devlalikar does. He makes his life an experiment in ideology, and lives to live the tragic consequences. Walking out of Prithvi Theater, I felt an almost biological urge to wail out the anguish I felt for the fallen hero.

Vijay Tendulkar’s Kanyadaan is the most hard-hitting play I have seen. Tragedy and irony have never come together so well. The motif of victim morphing to victimizer is brought in a brilliant fractal like way. Son-in-law torturing the daughter to victimize the ‘other’ society. Daughter comparing her ideological upbringing to a kind of crippling that she can never revert out of. The former acknowledged, the latter acted out brilliantly.

Adding to all the motifs and superb acting – is the strikingly powerful overarching theme itself. The inability to live a life the one preaches, and live it to completion, at whatever cost — that’s what hit me. I remain hit.

And so…..don’t preach.

There Will Be Blood

If you have been waiting for a film for a while, watching it alone in a theater is probably most satisfying. For various reasons, but the most important being – I don’t have to justify why the film is worth someone else’s time. It would have been a very tough sell in There Will Be Blood’s case.

I am not sure if it was Raja Sen’s review on Rediff that tipped it for me, or the bulging veins on Daniel Day-Lewis’s forehead in some best actor award nomination preview – I had to watch this one.

What’s my verdict? I am not sure. Morally corrupt love has always perturbed me. Oxymoron?

There are moments in this film, or vignettes, if you will, that showcase this very corrupt kind of love that elevate it above your usual saga. Love for what you stand for, what goes through your veins, on one side – and on the other side, you have love for another person whom you have internalized as your extension.

ps: I walked out of the theater feeling somewhat like this.

The Long Tail of Blogging

Here’s what Nabokov said at the end of his literature-appreciation course:

“In this course I have tried to reveal the mechanism of those wonderful toys — literary masterpieces. I have tried to make of you good readers who read books not for the infantile purpose of identifying oneself with the characters, and not for the adolescent purpose of learning to live, and not for the academic purpose of indulging in generalizations. I have tried to teach you to read books for the sake of their form, their visions, their art. I have tried to teach you to feel a shiver of artistic satisfaction, to share not the emotions of the people in the book but the emotions of its author — the joys and difficulties of creation. We did not talk around books, about books; we went to the center of this or that masterpiece, to the live heart of the matter.”

Is this true? When I heard about Lolita, or more so, its purported story’s theme, I didn’t know that the book was about something else. But I know now. What if I didn’t? Or couldn’t? Would I have dismissed the book as a cheap attempt at erotica that’s not even there? Maybe.

The point is – When I write, I think of a certain type of reader who will get my allusions, and more importantly, whose appreciation hierarchy matches mine. The hope is to create something whose unravelling would thrill a reader – give that shiver of artistic satisfaction. I must also admit that, in retrospect, my posts from the past have given me more cringes than shivers.

Is that you? Not being able to believe that you could’ve written this? You should read some of the other stuff you’ve written.