Bitcoin Core changes playbook for AI-found flaws

Protocol (19)

• B10C says TCP hole punching could give home Bitcoin nodes direct inbound peers despite NAT and firewalls; NAT-PMP became the Bitcoin Core default in version 30 but did not clearly increase reachable nodes.
• B10C describes hole punching as two nodes opening TCP connections at nearly the same time, allowing each router to admit traffic through its temporary return-connection window. Simultaneous open is part of TCP, though UDP applications use hole punching more often.
• A message board could verify that a participant controls the IP address used to request a hole punch, limiting fake-address denial-of-service attempts. Unlike a coordinator, the board need not choose peers or learn which listed participants actually connect.
• The proposed coordinator-free design would derive matching connection times and peer choices from shared secrets and a new Bitcoin block, reducing participants’ ability to grind for a chosen connection. B10C says the protocol design remains open and the case for deploying it is unsettled.
• B10C estimates 30,000 to 40,000 non-listening nodes alongside roughly 10,000 to 15,000 listening nodes. A message board could be distributed across reachable nodes and disconnected after hole-punch connections form.
• Hole punching could add direct clearnet peers for nodes that otherwise rely on cloud-hosted listeners or Tor, which can have higher latency and limited bandwidth. The host notes that manual RPC coordination with trusted peers is another possible, more private use case.
• Shors prototypes opt-in replay protection using Taproot’s annex: a future Taproot version could treat an annex-committed block height as a block-hash commitment in the signature hash. Transactions without the protection would retain existing signature behavior.
• Shors’s proposal would make a protected signature valid only on the chain containing the referenced block, preventing replay across a fork. He suggests referencing a block at least 100 blocks old to match the security assumption used for coinbase spends.
• Shors says fork replay became a practical concern during Ethereum’s 2016 split and Bitcoin’s 2017 fork disputes. He argues that pre-installed opt-in protection could avoid the political fight over which side of a contentious fork must add protection.
• BIP54 remains under discussion as a soft fork fixing four consensus problems, including the time-warp issue, worst-case block validation time, a Merkle-tree vulnerability, and duplicate transactions. Bitcoin Core’s implementation is under review for regtest only, not mainnet activation.
• BIP54’s proposed ban on 64-byte transactions is its most contested component. Murch argues that such transactions have no input script and can only create anyone-can-spend outputs, while an alternative bitmap check to reject transaction-like Merkle hashes would add consensus complexity.
• Murch says forward blocks would exploit the time-warp bug to pair a faster compatibility chain with a slower, larger-block chain. He considers the design complex and risky, and says fixing time warp would rule it out; the proposal had little traction when raised in 2016.
• James Tagg’s Qsafe draft proposes a post-quantum migration soft fork that adds a second spending condition to unmigrated outputs, including a proof-of-seed option. If an owner cannot satisfy it, an off-chain lost-property process would let a quorum review evidence and authorize recovery.
• Murch says recovery schemes for quantum-exposed coins rely on knowledge asymmetry, such as proving that a secret seed derives a public key. He identifies Qsafe’s off-chain legal-style adjudication as its hardest unresolved part.
• A separate proof-of-decay proposal would gradually reduce the spendable value of unmigrated quantum-exposed outputs, with the lost portion burned or paid to miners. The sketch gives a small percentage reduction every 50,000 blocks but does not specify a final rate or complete spending rules.
• BIP300’s alarm mechanism lets miners veto sidechain withdrawal bundles, and a miner with about 26% of hash rate could block withdrawals indefinitely under the described scoring rules. Murch notes that two miners on the eCash fork already exceeded that threshold.
• Draft BIPs 458, 459, and 460 specify cross-input signature aggregation: non-interactive half aggregation, an interactive full-aggregation protocol, and transaction formats for the schemes. The proposals do not yet specify activation parameters.
• Murch cautions that half aggregation saves signature bytes, not the larger non-witness input commitments, so ordinary Taproot transactions should not expect dramatic weight reductions. Aggregation could matter more for post-quantum inputs with signatures and public keys hundreds or thousands of bytes long.
• Rust Bitcoin PR 7067 updates Taproot signature-hash helpers to accept an optional annex and the last OP_CODESEPARATOR position for script-path spends. Without those inputs, the helpers could not calculate the correct signature hash for such transactions.

Safety (2)

• B10C says the main design question is whether more direct home-node connections justify exposing nodes that firewalls currently shield. Recent TCP-related Bitcoin Core vulnerabilities make the added reachability a potential attack path, not an automatic network improvement.
• LND 0.21.6 and 0.20.7 disable multi-TCP listeners by default to mitigate a Linux kernel vulnerability that could allow remote code execution. The LND change does not patch the kernel, so affected systems still need a kernel update.

Custody (3)

• Luke proposes a draft BIP for a shared cosigner policy format, arguing that lenders and other multisig services currently enforce separate rules. Standardization could make policies portable between services, including refinancing without moving bitcoin or changing custody.
• Luke’s design uses Taproot outputs with multiple spending paths: script enforces conditions it can express, while a cosigner checks off-chain policies such as daily limits or confirmation thresholds. He wants at least one spending path that needs no cosigner so the owner retains control unless agreed conditions are breached.
• The proposed cosigner policy format could also standardize escrow behavior for peer-to-peer markets and multisig wallet services. The host cites Green Wallet, Cash App’s BitKit, Unchained, BitGo, and Bisq as examples of existing multisig or escrow use cases.

Coding (2)

• Bitcoin Core PR 36539 restores PSBT version 0 as the GUI default after version 32.1 began exporting version 2 without a GUI choice. RPC behavior remains separate, and the external-signer workflow can use HWI to convert for devices that require version 0.
• Bitcoin Core PR 35714 prevents block-index and UTXO database writes after block or undo data fails to flush, avoiding inconsistent disk state that could require a full reindex. PR 35492 also makes wallet exports report incomplete writes and remove partial dump files.

Lightning (6)

• Core Lightning PR 9419 adds a failure-reason field to forwarding records and notifications, letting operators distinguish causes such as insufficient liquidity or too many HTLCs instead of seeing only a generic temporary-channel failure.
• Core Lightning PR 9592 makes xpay avoid a forwarding node for the rest of one payment after two repeated unknown-next-peer failures. The change addresses retries that repeatedly selected the same failing node, while accepting that exclusion may discard a usable route.
• LDK PR 5089 broadcasts a Lightning commitment transaction even when the node cannot fund its anchor-output child transaction for CPFP. The fallback gives the commitment a chance to confirm if fees fall, but excludes TRUC transactions that require a fee-paying child.
• LND PR 11357 tightens BOLT11 invoice parsing by rejecting duplicate payment-secret fields and incorrectly sized fields, avoiding ambiguity between implementations. It also requires low-S ECDSA signatures when an invoice explicitly includes a receiver public key.
• LND PR 11413 batches cleanup of resolved locally initiated HTLC results during startup, avoiding repeated database round trips that could make PostgreSQL cleanup take hours. The benchmark showed a 30-fold speedup even with a local database.
• LND PR 11151 rejects incoming channels with excessive commitment fees and enforces both sides’ initial reserve requirements. The fee cap is the greater of ten times the three-block estimate or 100 sat/vbyte; reserves preserve a penalty balance if a peer cheats.

Privacy (2)

• Olex describes a protocol for sending silent payments from MuSig2- or FROST-based wallets without reconstructing the shared secret on one device. His construction is intended to remain byte-for-byte compatible with BIP352 interfaces, but its security paper is still under review and lacks a reduction to the discrete-log assumption.
• Olex says the proposed silent-payment method could serve nested multisig constructions, but adoption depends on wallet support for silent payments and multiparty signing. He estimated only 2% to 3% of silent-payment use might involve multisig, while Merch noted that Taproot outputs still hold little bitcoin overall.

Lightning (5)

• Nishant says Core Lightning accepted a channel announcement whose two node IDs were identical, stored it, then crashed while building its gossip graph; the bad entry could make the node crash again after restart. The attacker only needed an unspent 2-of-2 output, and older CLN nodes could rebroadcast the announcement to other vulnerable nodes.
• Eclair 0.14.6 fixes splice and on-the-fly funding risks: it rejects unconfirmed splice inputs by default, limits peer-added splice inputs and outputs, selects the newest confirmed funding commitment for force closes, and accounts for unconfirmed ancestors when calculating CPFP fees. It also claims outputs promptly when an older funding state is spent.
• Eclair’s on-the-fly funding fix flags peers who request liquidity fees from future payments but reject the payment, preventing repeated unpaid channel openings. Separately, Core Lightning’s XPay route finder now respects BOLT4’s 1,300-byte routing-information limit and penalizes extra hops to favor shorter routes.
• LDK fixed two Lightning issues: an attacker with a suspected funding output could use onion messages to test whether two nodes shared an unannounced channel, and duplicate LSPS2 request IDs could fill the LSP’s global request queue. LDK now avoids revealing the real short channel ID and rejects duplicate request IDs.
• LND’s maintenance releases add validation for auxiliary Taproot Asset HTLC signatures needed for on-chain recovery, address SQL database memory and deadlock issues, and advance draft Gossip v2 work for announcing Taproot channels. A separate fix enforces the minimum commitment fee rate consistently during channel opening and fee updates.

Protocol (2)

• SegWit separates TXID from witness data so signature changes do not alter the transaction ID used to identify spent outputs and preserve compatibility. WTXID commits to the full transaction, including witness data, distinguishing transactions with the same TXID but different witnesses; Bitcoin Core’s P2P transaction traffic now uses WTXIDs.
• Bitcoin peer protocol version 70,017 supports BIP434 peer-feature negotiation, which lets nodes select compatible variants of optional features without repeatedly increasing the protocol version. Peers that do not understand a negotiated feature can ignore it.

Custody (2)

• A Stack Exchange answer by Ava Chow explains that MuSig2 signing through Bitcoin Core requires two PSBT-processing rounds: wallets first contribute public nonces, then combine the PSBT after every nonce is present. Skipping the second processing step leaves the PSBT unfinished.
• BIP139 proposes a JSON format for exporting wallet accounts and metadata without private keys, enabling watch-only migration between wallets if adopted. Bitcoin Core’s wallet documentation also explains that MuSig2 PSBTs need the nonce-collection and nonce-combination steps completed before analysis can succeed.

Payments (1)

• BTCPay Server fixed API-key authorization errors that could grant unchecked optional permissions or let an application request access scoped to another store. The fixes preserve the merchant’s selected permissions, following a separate API-key privilege-escalation issue covered in the prior newsletter.

Payments (1)

• Sat Attack found that Three Forks no longer accepted Bitcoin after a point-of-sale upgrade, though a sourdough pizza-roll shop accepted Bitcoin through Square; Austin merchants often do not advertise acceptance.

BTC Markets (1)

• Satoshi Nakamoto revised the Bitcoin white paper through four versions, and the drafts later surfaced in Craig Wright’s failed lawsuit over claims that he was Satoshi. Keon argues Bitcoin’s unusual value comes partly from rules that make the system resistant to change.

AI & Tech (1)

• Keon says Wei Dai left cryptography circles around Bitcoin’s launch and now focuses on existential risk from AI, including work associated with LessWrong. The hosts also debated whether altcoin creators understand Bitcoin but pursue modifications, or become detached from money through wealth and speculation.

Society (1)

• Totally Human Writer returned to a Himalayan trek eight years after postponing it to be with his terminally ill father. The guided journey passed villages and monasteries; a Sherpa guide was working through a holiday to help fund his children’s university studies in Japan.

Religion (1)

• The hosts described Nepal’s Kumari tradition, in which a young girl is selected as a living goddess and kept in a palace; the current Kumari was three years old and reportedly waves to visitors three times daily. The tradition ends for a Kumari if she sheds blood.

Privacy (1)

• Motorola’s Signature is the first Motorola phone designed to support GrapheneOS, with Gemini available through Google services and a camera advertised with 100x zoom. Keon questioned whether a $1,599 flagship is useful for privacy-focused users who may prefer simpler, cheaper hardware.

Elections (2)

• Carr viewed the Democratic election gains as a possible benefit for Bitcoin, arguing that Bitcoin has performed poorly during Trump presidencies; Carr expects more pressure on stablecoins and non-custodial tools but sees political opposition as potentially strengthening Bitcoin. The hosts also discussed reported Democratic gains in Texas and Greg Abbott’s defeat.
• CJE95, a Republican congressional staffer with five years on Capitol Hill, expected to lose a mid-level job after Democrats took control of the House, which would shift two-thirds of office funding to Democrats and one-third to Republicans. CJE95 said an impeachment conviction would require a two-thirds Senate vote, which was not attainable at the time.

Labor (1)

• Keon expects AI to reshape tasks inside jobs more than eliminate whole categories of work, while Carr sees roles combining into broader positions and small startups doing more with fewer people. They disagreed with claims that AI will quickly erase pointless jobs, especially in slow-moving organizations.

Enterprise (1)

• Proton’s CTO declared that software engineering had irreversibly changed and quoted a senior engineer saying nobody in one business unit wrote code anymore. Keon warned that sensitive products involving email, VPNs, documents, and wallets need close human review because AI-written code can be harder to verify.

AI Infrastructure (1)

• Keon warned that automated agents make it cheap to scan internet-wide software for weaknesses, so outdated hot wallets are especially risky for operators who cannot monitor them. He expects the current security turmoil to ease by early next year, while Carr doubted it would settle that quickly.

Startups (1)

• Discussion of Spyro’s follow-up on Bitcoin use in gray markets surfaced a broader concern: nonprofit funding and grants may crowd out entrepreneurial experimentation. Carr argued that independent Bitcoin businesses and events such as the Austin Rodeo produce useful products and bring new people into Bitcoin.

Social Media (1)

• Reddit plans to require users to log in to browse, a change Keon linked to scraping and AI companies’ demand for platform data. Carr expects content creators to move toward higher-quality formats such as video as platforms restrict access to text and other material.

Psychology (1)

• The hosts briefly discussed sleep paralysis: Keon recalled possible episodes in childhood, while Carr described one vivid dream that felt like being awake. They noted that people often report sensing a frightening presence, but did not establish whether Carr’s experience was sleep paralysis.

Macro (2)

• The host put US debt above $40 trillion, interest costs above the military budget, and inflation at 3.7%, while gold and Bitcoin were down for the year. Lawrence Lepard said Morgan Stanley had shifted to a 60/20/20 portfolio of equities, bonds, and gold.
• Lawrence Lepard says the dollar and other fiat currencies are losing ground as reserve assets: US Treasury bonds have fallen 80% against gold since 2020. He described Saudi Arabia converting excess yuan from oil trade into gold through the Shanghai Gold Exchange as one possible route.

Markets (4)

• Mark Valek said gold rose more than 65% in 2025, then corrected after a January blow-off; he named Kevin Warsh’s hawkish rhetoric as a possible trigger. Lawrence Lepard said Bitcoin fell from $124,000 in October as war, oil prices, and hot inflation data shifted expectations.
• Mark Valek said central banks have been net gold buyers since 2010, with purchases accelerating after Russia sanctions in 2022; he cited roughly 850 tons bought in 2025. Lawrence Lepard said Western investors taking profits and newly mined supply may meet some official demand, while Chinese buying remains opaque.
• Lawrence Lepard described silver as both an industrial metal and a high-beta monetary asset, noting that its price rose from roughly $25 to $30 to $120 before falling below $50. He said Toshiba’s proposed solid-state batteries could use kilos of silver each, adding possible future demand.
• Lawrence Lepard expects market stress to force a policy reversal within months, watching the S&P 500’s 7,300 support level; Mark Valek expects a monetary-policy turn and sees limited gold downside below $3,500. Lepard’s longer-term targets include gold at $6,000 to $7,000 and silver at $200.

Inflation (2)

• Lawrence Lepard argues official inflation understates the pressure: he estimates inflation nearer 6% to 7% than 3%, despite roughly 4% GDP growth. He says rate hikes cannot solve supply-driven price increases without worsening debt costs in a system moving toward short-term borrowing.
• Lawrence Lepard cited Florida home-framing costs doubling in a year, including wages rising from $20 to $40 an hour. He attributed the labor-cost jump partly to ICE enforcement reducing the supply of lower-cost workers.

Banking (1)

• Mark Valek sees French sovereign credit spreads and debt costs as signs of strain; Lawrence Lepard added rising US commercial-real-estate and consumer delinquencies. Lepard said gated private-equity funds and weakening AI-company credit spreads expose illiquid assets, hidden leverage, and losses that have not been marked to market.

Fed (2)

• Lawrence Lepard and Mark Valek expect policymakers to print again when falling asset prices threaten the system. Lepard pointed to the Fed’s reserve-management purchases of up to $40 billion monthly; Valek said future support may arrive under a new label rather than “QE.”
• Lawrence Lepard said central-bank credibility depends on maintaining the appearance of control, while Mark Valek called that performance a mirage. Lepard recalled Alan Greenspan telling Brian London that controlling the cost of money felt intoxicating, illustrating the personal appeal of monetary power.

Europe (1)

• Mark Valek described Europe as burdened by high public debt, bureaucracy, Germany’s ongoing deindustrialization, and deeper EU involvement in Ukraine. He sees more market-friendly attitudes in Eastern Europe than Western Europe, partly because of lived experience with socialism.

BTC Markets (2)

• Lawrence Lepard said Bitcoin likely bottomed just below $60,000 after reaching $124,000, and expects $180,000 to $200,000 in a future upswing. Mark Valek agreed the drawdown was smaller than prior cycles but warned that Bitcoin now trades more as a macro asset as adoption growth slows.
• Mark Valek said MicroStrategy’s cash reserves eased his concern about the company’s ability to meet dividend obligations, but Bitcoin remains exposed to concentration risk. He also warned that ETF holders could become important sellers because Bitcoin ETFs hold about 5% of supply, unlike gold ETFs at under 1%.

AI Infrastructure (1)

• Lawrence Lepard said AI investment has diverted capital into equities and debt while rising input costs and limited energy and metals investment threaten the buildout. He cited Jeff Currie’s argument that copper supply must expand sharply and said few new copper mines had opened in recent years.