I saw the following post on Nostr.
https://primal.net/e/note18u4fct2ydzdg976wwp0fmcrpa06rveefn5ree439g64qa7px4r2sh94279
In the comments, someone said the teachers would be better off holding their own keys. I think individual teachers would be better off stacking sats for themselves if they want to retire early or not rely on just half their salary the pension promises to give them, but this is a separate issue. Even if a teacher stays humble and stacks sats, they still are required to contribute 10% of their paycheck to the pension. This pension allocates a small percentage of the entire pie to the well-diversified portfolio to pay teachers 50% of their income when they retire. If they could somehow stop paying the pension and stack sats with the money instead, they would most likely be better off in the same way if you could throw the 12% of your pay that goes to "funding" social security into your hard wallet--You would have more money to spend at 70 then the government would give you--But you can't do that. This is why pensions are different than plebs. Bitcoin was discovered to prevent double spending and avoid trusted third party rug-pulls, but a pension is a trusted-third party and the goals of a trusted third party are different than the goals of an individual.
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.¹"
This is why I found the case for bitcoin so compelling in 2014. The individual can hold his or her own wealth in the midst of war, bank-runs or central bank collapse. I'm not Egyptian, but my mom's sister married an Egyptian immigrant in the 1980's. When I was like eight years old, he told me a story of being a young boy in an upper middle class family in Egypt. When the communists took over, his family lost everything because the communists confiscated everything they owned. It's one of the main reasons I became interested in bitcoin when I first heard about it. Bitcoin is communist resistant. **If your goal is to protect your wealth from communist confiscation, there's nothing better than bitcoin. If your pension is 100% allocated to bitcoin in a 100% self-custodial multi-sig wallet--The communists still know what doors to knock on.
Therefore, a teacher's pension has a different threat model. A communist takeover is probably beneficial to a teacher's union. I don't like it, but bitcoin is for enemies. A pension is also already a trusted third party. Teacher's pay 10% of their income to earn 50% of their paycheck when they retire. If the price of bitcoin does another 100X, the teachers still only get half their income when they retire. Even if the pension held bitcoin in self-custody it would not solve the double-spending problem in this situation because the retired teachers must still trust the pension fund to pay them in the future. . If Coinbase gets hacked, bitcoin, the peer-to-peer electronic cash system will still work, but the 1%-5% allocation would be lost. Therefore, in the worst case scenario, the pension should still be able to meet it's obligations as long as it is well diversified. I know bitcoiners don't like "dIvErSiFiCaTiOn," but it makes sense for a trusted third party created to pay all the retired teachers in a given state of the union.
I believe bitcoin ETF security can and should be improved using fedimints, federated side-chains like Liquid, or multi-institutional custody like unchained capital or On-ramp Bitcoin, but these tools have only been six months so we can't expect noobs in suits to have as much knowledge as the nerds who have thought about this for a decade or more just yet. A pension could increase security of their bitcoin allocation by minimizing trust using these tools because the "...most risky and expensive part(s) of a security protocol, the trusted third partie(s), are designed in parallel with security protocol(s) using those parties. The objectives of cost and risk minimization are focused on the TTPs rather than the security protocols themselves, which should be designed to suit the cost and risk minimized TTPs.²"
Again, the security could be improved and bitcoin ETF's do pose more risk than peer-to-peer electronic cash held by an individual in multi-sig, with each seed split using SEED XOR, and each part buried under a seprate volcano, but a pension is not the same thing as a sovereign individual. Since the goal of a pension is to pay retired teachers half their salary, a catastrophic % of a portfolio does not have the same effect on this goal as it would for a pleb who is all in on bitcoin. Therefore, it makes sense for a pension to put some bitcoin derivative in their portfolio, but it would be a bad idea to put 100% of that portfolio into a bitcoin ETF. In other words, it is a different risk model than that of an all-in pleb. If th decided to keep the bitcoin in a 3-of-5 multisig, it does not change the fact that it is still a trusted third party. Nicholas Pillegi wrote, Casino, a true story about how the Mafia skimmed money from the Teamster's pension to run the Startdust casino in Las Vegas. It was adapted into a movie by Martin Scorsese. If the Teamsters had bitcoin back then, it wouldn't have made much difference if the mob held the 3-of-5 keys. They still would have been able to skim the pension.
According to Jack Spirko, the bullish case for teachers pensions owning bitcoin ETF's is they are the biggest profession in the United States of America and the politicians don't want to fuck with them by making bitcoin illegal(I'm paraphrasing). The important thing to remember is a diversified pension can still meet its goals if and when Coinbase gets hacked, but an pleb who keeps all his or her sats on Coinbase will not. Plan accordingly.
1 Bitcoin: A Peer To Peer Electronic Cash System, by Satoshi Nakamoto
2Trusted Third Parties Are Security Holes, by Nick Szabo
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