This piece is being written as an immediate (community) response to the slew of half-truths and falsehoods perpetuated by blockchain's "flagship" publication, CoinDesk (once again; feels like we shouldn't have to keep doing this, right?)
Specifically, the article in question receiving the response is this one here: https://www.coindesk.com/bitcoin-sv-multisig-wallet-funds-at-risk
Failure to Accurately Characterize the Situation
One of the worst aspects of this article is that it perpetuates the fallacious, dishonest idea to readers that Bitcoin is devoid of defects and that alternatives to Bitcoin must be inherently inferior in design (especially if they have diverged from Bitcoin's overall design direction in some capacity).
Source of the Bias
More than likely 'Digital Currency Group', since they do own CoinDesk (the entire publication).
However, CoinDesk cannot be judged on the sole fact that they are a subsidiary of Digital Currency Group (which has behaved in the blockchain space in such a way to where there is no doubt that they would subvert CoinDesk to for their own benefit).
Conspiracies are nothing more than conjecture without evidence - and that helps no one. It merely adds noise to the overall situation.
However, objective fact does the opposite. It affirms for us (both privately and publicly) that are "worst fears" were well-founded.
Among the two scenarios above, the latter is the case here as we'll see by virtue of the information 'Grayscale Bitcoin Trust' inlcuded in their public archives.
The "Information Statement" filed by the Grayscale Bitcoin Trust tells an entirely different story: https://www.sec.gov/Archives/edgar/data/1588489/000119312519295206/d735049dex991.htm
Scrubbing Forward to the More Important Details
Specifically, on page 35 of the filing, the submission states:
"Both the Sponsor and CoinDesk are subsidiaries of Digital Currency Group, Inc. CoinDesk is a leading news publication and data provider, which plays a large role in aggregating, creating and disseminating news and other editorial content across the global digital asset industry."
"Although CoinDesk’s policy is to shield its editorial operations from Digital Currency Group, Inc.’s control, it is possible that CoinDesk’s news coverage could influence trading prices and demand for digital assets, including Bitcoin, and it is also possible that consumers of CoinDesk content may not appreciate that CoinDesk’s owner has substantial financial interests in digital assets, despite information to that effect on CoinDesk’s website."
"As a result, some consumers of CoinDesk’s content may place greater weight on such content than they would if they were aware of Digital Currency Group, Inc.’s ownership stake, and this could cause the trading prices of digital assets, including Bitcoin, to be higher than they would be otherwise."
This is a very lengthy excerpt from the paper (and it does not fully encompass all of what the excerpt above may have considered to be sufficient disclosure - but, again, we don't want to veer into conspiracy theory zone).
What We Did Learn Above, However is That:
- Digital Currency Group is well aware of the importance of their position at the helm of the space's largest cryptocurrency publication. For many, CoinDesk has a default level of legitimacy that only industry titans such as New York Times / Bloomberg / Washington Post etc., are able to enjoy in their respective fields.
- As the disclaimer above stated, despite mentioning an affiliation with "Digital Currency Group", many users will gloss over this simple fact and take the articles that CoinDesk reads at face value.
- There is a non-zero possibility (closer to highly likely), that CoinDesk is being used to maniuplate and skew the narrative for various facets of the blockchain space.
One Last Note (before we discuss Bitcoin SV)
What was written above was done with the intent of:
- Making it unequivocally clear that there are no projects in the blockchain space that are beyond reproach. This is simply not how technology works in general. This is why Satoshi sent the Bitcoin whitepaper to through the Metzdowd e-mail list to solicit the feedback of individuals like Hal Finney whom were experts in their own right.
- Taking the This idea that Bitcoin is right, by default is a counter-productive and harmful one for the community to take in. It ultimately sends the message that the developers are some otherworldly, ethereal beings that manifested Bitcoin magically with its perfect codebase and pased it on to humanity to be considered akin to fire.
Analyzing the Background Information Available
According to the information provided by CoinDesk, Bitcoin SV's fork of Electrum (ElectrumSV) suffered from a failed implementation of multi-signature addresses.
For some reason, the author attributes whatever issues Bitcoin SV was suffering from to their failure to implement P2SH addresses.
Specifically, the author states:
"[Bitcoin SV] gutted some of Bitcon's key features; now, it's worse off for it."
"One of these features, the so-called pay-to-script hash (P2SH) fucntion, allows a user to send a transation by signing it to a 'script' rather than a public key address. These scripts create special conditions that must be met in order to access the bitcoins sent to them, and they are most often used in multi-signature transactions - or, transactions that require more than one party to approve."
While what is stated above is true, it probably would be a better idea to have dedicated address types for the generation of wallets designed to satisfy the various conditions associated with mutli-signature wallets (but that's beyond the scope of what's being discussed here).
The author also incorrectly states the evolution of address types on the blockchain (see below):
"Before P2SH transactions came to Bitcoin in 2012, Bitcoin’s only transaction type would send payments to a public key address through the pay-to-public-key-hash (P2PKH) function."
This is simply true. In fact, the very first addresses ever generated were essentially payments to IP addresses rather than direct walle addresses.
This is outlined in the Bitcoin Wiki directly:
It turns out that Satoshi Nakamoto was actually the one that deprecated this payment address type on the protocol (see below):
P2PK Also Existed Before P2PKH
For reference, P2PK is an abbreviation for "pay-to-public-key", which allows a user to directly pay another without the additional transformations being necessary.
While this is still active on the protocol, it was unofficially deprecated in favor of support for P2PKH addreses (which allow users to pay to the hash of a public key [which means that the user in question must now provide their public key that hashes out to that hashed result as well as an accompanying private key that will be verified as the signature using OP_CHECKVERIFY flags on the transaction]).
P2PK Addresses Were Hard Coded on the Protocol
From 'learnmeabitcoin' (one of the best references for Bitcoin that has ever been created in mankind...period):
"You'll most commonly find P2PK in coinbase transactions in the earlier blocks of the blockchain. This is because the original Bitcoin Core miner would use P2PK for the blcok reward when constructing a candidate block."
Now that we've taken that detour to establish that, let's go back & revisit the absurdly written CoinDesk article.
Hypocrisy Stretches Deep in This Post
In the next section of the write-up, the aruthor goes to lengths to make it appear as though the wallet issue that Bitcoin SV was dealing with was solely the product of their own ignorance (and, of course, their refusal to acquiesce to any and all standards set forth by the Core developers).
Using terms such as 'homegrown' firmly imply that there are established "experts", such as Gary Maxwell - whom the article closely cites throughout (I guess this is the perceived 'expert' that areo consulting in order to arrive at the "correct" solution for developing mutli-signature addresses).
More Pro-Bitcoin Inaccuracies Laden Throughout the Article
In the following section, the author states:
To be specific, the idea that there are no other means of generating a multi-signature address in blockchain is patently bullshit.
Did We Suddenly Forget Ethereum Exists?
The crux of the hitpiece that CoinDesk wrote about Bitcoin SV is that their multi-signature wallet application suffered from a shortcoming in its implementation that failed to mandate a pre-determined number of signatures (out of the total possible signatures submitted) because they omitted the standardized address types that Bitcoin leverages for its protocol (i.e., 'P2SH', for instance).
Ethereum Works Entirely Different
Unlike Bitcoin, which relies on UTXO-based transactions (unspent transaction outputs), Ethereum has an account-based , stateful means of generating their wallet addresses.
As an external account makes a transaction on the blockchain, its internal state (nonce value )
This is in stark contrast to the UTXO-model that Bitcoin uses (pictured below):
Electrum Wallet Has Suffered From Worse Compromises
In fact, as recently as this year (and perhaps this is still going), users have been losing countless sums of money via faulty / poorly generated and designed wallets and protocols around the blockchain space.
Sadly, Electrum was far from an exception to this rule in blockchain. And neither is the Lightning Network, which is coming off of the back of two major vulnerabilities reported in the space of less than a week
Notably, the latter article pasted above is from **October 12th, 2020 **, less than 4 weeks prior to the time of writing.
Also, given the fact that the Electrum wallet has been suffering from the same attack since December 2018 with no apparent mitigation in site despite [the numerous, reputable malware analysis blogs, software providers, and firms that have publicly dissected the nature of the compromise (including Librehash), it appears that the Electrum development team cannot seem to find a create means of mitigating the attacks that their users are suffering from (although, undoubtedly, better documentation serves as a potential cure for this ailment).
So, in light of this fact - it seems downright hypocritical to suggest that the ElectrumSV wallet is suffering from a deficiency in its implementation that would have otherwise been avoided if they had instead acquiesced to the developmental standards imposed by the "Core" team for Bitcoin (the primary individuals responsible for maintaining and managing all of the code on the protocol).