Bitcoin News www.bitcoins.am

From FIRE To Bitcoin: One Canadian’s Journey To Bitcoin

Boomer — Wed, 06 Jul 2022 23:30:00 -0400

A one-year retrospective from a Canadian Bitcoiner who lived through the Freedom Convoy in Ottawa and found a lifeline in the Bitcoin community.

This is an opinion editorial by Boomer, a long-time and active member of the financial independence/retire early (FIRE) movement and a contributor at Bitcoin Magazine.

It has been exactly one year since I started my Bitcoin journey, and after being inspired by meeting several amazing Canadian Bitcoiners over the past few weeks, I want to share my story. In some ways, my orange-pilling has been the greatest thing to ever happen to me, but it has also been extremely trying. I guess you can compare it to “The Hero’s Journey.”

I’ve been a working-level economist in the Canadian government for about eight years. I’m fortunate to have a career as a public servant where I’m able to help people. I feel honored to serve Canadians and make a positive difference for my country. When the pandemic hit in March 2020, I did my part to help out. I followed mandates and restrictions, and I genuinely felt like I was doing the right thing.

The isolation and loneliness were very tough. As an extrovert who’s used to a lively and collaborative environment where routine and the sharing of ideas and thoughts were important, working from home was absolute torture. For years, I had been quite active in the FIRE (financial independence/retire early) community and started a financial literacy coaching company. Like most people in the FIRE movement, I dismissed Bitcoin as an interesting but likely passing fad. I could see that long-lasting pandemic lockdowns would likely cause supply shortages, and the combination of central bank money printing and government stimulus would be inflationary in the longer term. I started to consider certain inflation hedges for my own investment portfolio and thought that maybe my coaching service could differentiate itself in that way. I started my orange-pill journey with the intention of learning how exactly bitcoin would fit into an inflation-hedging strategy, but I knew it had a place.

I’ve been an avid podcast listener for well over a decade, and I will often pick a topic and listen to as many podcasts as I can about it until I’m ready to jump to a new topic. I went into learning about “crypto” in the same way. While I could see and understand the general economic aspects of bitcoin and how it could be digital gold, I’ve always lacked the computer science and technology skills to feel confident about jumping into the world of cryptocurrencies. I guess I just felt too intimidated to really dive in. I couldn’t make the distinction between crypto and bitcoin, but when I decided to commit to learning, I went in with an open mind. I wish I could say that I recognized these altcoins as shitcoins right away, but I didn’t. Despite not truly understanding what they were, I created a modest portfolio of the top-10 cryptocurrencies by market capitalization in an attempt to mimic what a cryptocurrency index fund would look like.

In the meantime, I was listening to podcasts from Robert Breedlove, Peter McCormack and Pomp, who were all telling me that bitcoin was the only true cryptocurrency. I remember listening to Breedlove’s series with Michael Saylor in mid to late June 2021 and feeling things start to fall into place. This is when I really started down the rabbit hole. I ordered a copy of “The Bitcoin Standard,” and I spent the summer consuming as much Bitcoin content as I possibly could. I created a Twitter account devoted strictly to Bitcoin in September, and I’ve been trying to contribute as much as I’m able to the Bitcoin community ever since.

If summer 2021 was my introduction to Bitcoin, fall was a honeymoon period. I had so much excitement and I wanted to share it with as many people as I possibly could. Since COVID-19 restrictions eased a bit, I set up a FIRE meetup in early October to talk about how bitcoin fits into a FIRE lifestyle. Over the years, I’ve organized about 10 of these kinds of meetups where people share ideas on how to save money, maximize credit card rewards and live with purpose. A normal turnout for one of these events was around eight people; my Bitcoin event brought out a dozen. I didn’t realize it at the time, and looking back on it, I know that I wasn’t anywhere near qualified for it. It was around this time that a local Bitcoiner met with me for a coffee. The first time that I talked about Bitcoin with a Bitcoiner in person.

By the end of 2021, I had completely sold out of my altcoins and was completely in bitcoin. The song of the shitcoin siren is tempting, and most of us fall for it at some point in our journey. Thankfully, I didn’t learn this lesson the hard way. I was able to sell out of my positions at a slight loss, and I consider that loss the price of my Bitcoin education. It was around this time that I also learned the importance of self-custody.

As anyone who’s dived deeply into the rabbit hole knows, there are some parts of the journey that make you question previously held beliefs and can change your views on certain aspects of the world around you. I realize that this is tough for everyone, but try doing it alone — during another COVID lockdown — while you live in Ottawa in the winter.

By the time the Freedom Convoy was being reported on the news, I was already questioning a lot of the things I was seeing. When the convoy began to make its way to Ottawa, I decided to follow it. I literally drove alongside the convoy across several Canadian provinces and saw people waving Canadian flags as they gathered on overpasses. It was an absolutely surreal experience that I’ll never forget.

It lifted my spirits to see “community” again after two years of lockdowns. It was also heartwarming to see Quebecers and Albertans chatting in broken English at the protests. I grew up in the 1990s, at a time when there was a genuine rift in Canada between French-speaking Quebec and the rest of Canada. This divide was extra impactful on me, since my mother is francophone and my father is anglophone. Something special happened in Ottawa this winter, and it saddens me that many — maybe even most — Canadians still haven’t realized it yet.

I was aware of what the Bitcoin community was doing to support the Freedom Convoy. I followed the Twitter threads and listened to the podcasts. I knew that Canadian Bitcoiners were stepping up to do what they felt was right in order to support the movement. I wanted to help so badly, but I was afraid. I was afraid that if I contributed in any way, I would be putting my career at risk. I also knew that I was just some pleb with 250 Twitter followers that nobody knew. How could I possibly help, even if I wasn’t a coward? At its core, Bitcoin is about proof of work, and I hadn’t done the work at the time.

I was invited to a Bitcoin meetup organized on Twitter that happened while the convoy was in town. Several Bitcoiners that I had been following for a while had come to the capital to experience what was happening in person. I can only speak for myself, but friendships built through orange-pilling feel special. This was the kind of community I was searching for.

In the months since the trucks left Ottawa, I’ve made it a focus to learn as much as I can and to let my curiosity take me wherever it goes. There have been times when I felt burned out and pessimistic from the journey. The first year of a Bitcoiner’s path isn’t always easy, but it got better for me as I met others who had gone through it. I’m continually amazed at how much of my preconceived notions have been questioned, and much about how I viewed money and economics has been relearned. It’s humbling and stimulating at the same time. It’s such a unique experience, but I’m grateful for those who have come before me. I know that I’m still early in the journey, and there will be more trying times ahead, but I know that I won’t be dealing with them in solitude.

Every time I meet a fellow Bitcoiner, I leave the conversation feeling energized. It’s amazing how people with all sorts of backgrounds and interests can find common ground in Satoshi Nakamoto’s creation. I’m so incredibly bullish on bitcoin, and I feel this way because of Bitcoiners.

I’m still trying to figure out how I can best contribute to this community, but I know this is where I belong. Maybe just being in the community is enough, but for the past few months, I’ve felt a strong desire to create something. I still don’t know what that is, but I know that I’ll find it if I keep surrounding myself with the great people that I’ve met on my journey. I came for the inflation hedge, lived through a moment in Canadian history, and now, I’m sticking around through a bear market to build a better world.

This is a guest post by Boomer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

What I Discovered About Bitcoin Culture On The Bitcoin Tour

Captain Sidd — Wed, 06 Jul 2022 20:00:00 -0400

Journeying across the United States and visiting various Bitcoin meetups showed certain aspects of Bitcoin culture are consistent regardless of location.

Over the last 10 weeks, I traveled over 8,000 miles of the United States by motorcycle, visiting 25 Bitcoin meetups in Texas, the South and the Midwest. I am not done yet, but I wanted to share a few of my thoughts while the memories are still fresh, so you and your friends and family can understand what I am learning about the culture developing around Bitcoin. If you want to follow my journey or donate, go here. If you want your friends and family to get a look into the Bitcoin world, share this article with them.

Me and my Harley Davidson motorcycle.

One of my motivations behind this tour was to establish relationships with Bitcoiners in person. The internet is a useful and powerful tool, but in some ways, I believe it stunts our ability to connect with others. The web — in its current form — also created fertile ground for centralized entities to scoop up attention and redirect it, all under the guise of decentralization. The simple way to combat this centralizing force? Put down the phone and talk to people in person. So that’s what I set out to do.

To help me on my journey, I reached out to companies in the Bitcoin space and pitched them on being involved in this exploration of the Bitcoin world. Swan Bitcoin, a tool for making regular purchases of bitcoin, was the first to jump on board and offer financial help as well as production support to create a documentary series of the tour (still on its way). Then Unchained Capital, a bitcoin financial services company offering multisig vaults and IRAs among other products, signed up to lend financial support and connections especially within Texas. Bitcoin Magazine is giving me a ton of media support through their channels, and Upstream Data pitched in to help pay for fuel as I cover 10,000 miles on my motorcycle. In return, these sponsors earned a logo on my orange saddlebags and mentions throughout the tour. The route, meetups visited and focus of conversation along the tour are entirely my own decisions.

Before I dive into what I am seeing on the road, it’s important for me to make the distinction between Bitcoin and other projects which claim to be cryptocurrencies like Bitcoin. On my tour, I am visiting meetups that focus only on Bitcoin, not other cryptocurrencies. While these are often lumped together, I have found that the characteristics of cryptocurrency enthusiasts could not be more different from those who are solely interested in Bitcoin. The reasons for this separation are out of scope for this article, but if you’re interested in why Bitcoin is different from everything else, this is a great read.

Here are a few trends I am seeing as I cross the U.S. visiting Bitcoin meetups.

Bitcoin Is A Lifeboat, Not A Lottery Ticket

Many outsiders to the Bitcoin community think of bitcoin as a lottery ticket, bought by proponents in the hopes of getting rich quickly. However, my experience meeting Bitcoiners across the U.S. shows me that nothing could be further from the truth.

It is increasingly clear that our society is facing myriad problems: prices are rising out of control, asset values are shrinking, governments are limiting freedoms in the name of collective safety and tempers often boil over. Younger generations feel a despondency about the prospect of buying a home, raising a family and building a better future. Any way you cut it and no matter your side of the political aisle, hope is hard to come by.

Through my journey across the U.S., I see that Bitcoiners are one of the few groups with hope. This stems from the fact that they recognize many of these problems as having roots in our monetary system — a system controlled by people and thus influenced by politics. The clear and fixed rules of Bitcoin’s monetary system eliminate this central control, and therefore could help clear up many of the seemingly intractable problems we face today. An investment in Bitcoin means jumping off the sinking ship of increasingly centrally controlled currencies and economies into a new, fairer system.

Bitcoiners are primarily savers, not gamblers — they are using tools like Swan Bitcoin to regularly buy small amounts of bitcoin because they see it as a lifeboat, not a lottery ticket.

You might expect from the way the media has portrayed Bitcoin that I see Rolls-Royces and designer clothes at Bitcoin meetups — in fact, I’ve seen the exact opposite. I find thrifty people who save money before they spend it, who drive older cars because they still run and can find no reason to buy a flashy, expensive one — even if they have the money and income to support it.

This is one example, a truck with the Bitcoin term “HODL” on the license plate, half white and half rust.

A focus on saving for the long term rather than getting rich quickly extends to the topics of discussion at meetups. The price of bitcoin in dollars is rarely discussed, and nobody is talking about what they’ll do if bitcoin goes to a million bucks. Attention is paid to the fundamentals of the Bitcoin network, like its stable monetary policy and ability to keep processing blocks of transactions — which remain unaffected through price swings. Beyond Bitcoin, I find discussion is focused on how to best build a fulfilling life, from nutritious food to sustainable businesses and strong relationships in a community.

One straightforward marking of the disconnection between the bitcoin price and enthusiasm of the Bitcoin community is attendance at meetups. As I’ve traveled across the U.S. to 25 Bitcoin meetups to date, meetup organizers are consistently telling me that turnouts are stable if not increasing over the past six months, all while the bitcoin price has steadily dived in dollar terms.

Bitcoin Is A Decentralized Movement

The first stop on my tour was Texas. There is a ton of activity in the state around Bitcoin and some of the biggest meetups in the country (and possibly the world) are in Austin and Houston. Austin is home to Bitcoiners of all stripes and capabilities, and it hosts one of the biggest Bitdevs technical meetups in the Bitcoin space. Houston brings together Bitcoiners and the energy community to discuss bitcoin mining in particular.

That said, Bitcoin is not a centralized movement springing out of Texas — my own experiences on this tour have made that clear.

Revitalizing The “Flyover States”

Unlike just about every other technological or business movement within the U.S., I am finding the most enthusiasm for Bitcoin can be found outside of the major metros, within small cities all around the U.S. Many of these cities — like Columbus and Milwaukee — felt the offshoring of manufacturing and the brain drain of talent to nearby major metro areas over the past 50 years.

To the participants at Bitcoin meetups in these cities, Bitcoin presents an opportunity to once again level the playing field for small businesses, communities and cities. In our existing politicized financial and monetary system, large corporations can lobby for contracts and bailouts funded by the money printer.

Bitcoin’s immunity to political forces means bigger does not always mean better. The Wall Street bank has no more permissions on the Bitcoin network than the small business on Turtle Lake, Wisconsin, running their own Bitcoin node on a laptop. This leveling of the playing field could drive a sharing of industry and wealth to more communities spread across the world.

Cambrian Explosion In Educational Materials

I am witnessing incredible inventiveness and generosity from Bitcoiners when it comes to educational materials. At a recent meetup in Denver, someone brought a box filled with copies of “Economics in One Lesson,” a foundational economics text that breaks down many of the fallacies employed in modern economic theory. I see many meetup participants customizing open-sourced pamphlets explaining Bitcoin to small businesses and sharing them in their communities.

The organizers of the Bitcoin meetup in Charlotte, North Carolina, regularly put together speaking events and book clubs to help people learn more about Bitcoin and its impact on our economy and society. Houston’s monthly Bitcoin meetup focuses on educating energy producers on how Bitcoin can improve the efficiency of their operations, thus helping all of society.

Bitcoin Makes People Stronger

One of my favorite parts about taking a long-term road trip across the U.S. is the late night wandering conversations I find myself in with new friends.

While discussing how Bitcoin impacted us both, a Bitcoiner who goes by @HodlRev on Twitter put it well: There is a mindset of independence that comes from deeply investigating Bitcoin. This does not mean venturing off into the woods to live alone, depending on nobody. What it means is to believe that you can depend on yourself and your own abilities to achieve anything you need to.

We were having this conversation while sitting on a ranch that proves the power of this belief: A couple who grew up in cities and had no experience with farming built a large flock of sheep, chickens, rabbits and an entire food forest in just four years. This attitude of independence stands in stark opposition to the “learned helplessness” which our modern society seems to cultivate and even prize through memes like young people clapping themselves on the back for “adulting.”

Link to @HodlRev Tweet.

Options Make Independence

Bitcoin enables independence not by forcing us into any lifestyle but by providing options. The clearest example of this comes from the options for holding bitcoin. You can optimize for convenience by keeping bitcoin with a centralized entity like Cash App; you can optimize for security by holding your bitcoin yourself via open-source wallet software; and you can get a bit of both with tools like Unchained Capital’s vaults. The traditional system gives you fewer choices when it comes to security and virtually no choice when it comes to monetary inflation.

However, with these choices comes personal responsibility to evaluate your options and select the best ones for your situation. The act of investigating and choosing takes effort but builds knowledge and self-sufficiency. That makes individuals stronger, which makes families, communities, and the world at large stronger.

Independence Through Homesteading

Throughout my tour, I am also struck by the great interest Bitcoiners take in homesteading and gardening. From the ranch run by HodlRev in Michigan to the Beef Initiative conference I stopped at in Texas to Brandon Quittem’s home garden in Minnesota, Bitcoiners are interested in finding sources of nutrition closer to home.

Bitcoin Must Be Relatable

If you are reading this and still not understanding what the hell us Bitcoiners are on about, know that understanding Bitcoin takes time. Very few people understand why any of this matters overnight, and those who do usually had a number of prior experiences that pointed them in the right direction.

Through talking to many people across the U.S. over the past 10 weeks, I’ve learned that, like anything, understanding Bitcoin comes when it is directly related to immediate problems in one’s own life.

Michael Atwood of Oshi App helped me understand that merchants face high costs just to accept credit card payments, and accepting bitcoin can help them cut that down significantly while also attracting a new group of customers. A Bitcoiner who goes by @elderndiablito on Twitter visits his local farmers market every Sunday to talk to merchants about this problem and help them understand Bitcoin, and he knows it takes more than one conversation to get them ready to accept bitcoin payments.

Link to @CaptainSiddh Tweet.

For some, a simple way to relate to Bitcoin is through bitcoin mining. If you have access to cheap power, say below six cents per kilowatt hour, mining bitcoin can provide you an income stream much like owning a rental property. However, this rental property has low to no maintenance costs, no tenants and it can fit on a shelf in your garage. In states with cheap energy — like Indiana — I found many people at the local Bitcoin meetup were mining at home. Tinkering with a miner can be a fun way to learn more about Bitcoin and collect a little income along the way.

Go Forth And Learn

I hope this article gave you a sense for what Bitcoin actually engenders in people and culture. I took a motorcycle across the country so I could see this developing movement with my own eyes, instead of through media outlets or the Twitter algorithm.

I encourage you to see this world with your own eyes as well. Find your local Bitcoin meetup and go — ask questions, pick up some recommended reads and feel it out for yourself.

Find your local Bitcoin meetup.

If you’d rather start with reading materials or videos, check out Swan Bitcoin’s Canon, Unchained Capital’s blog and the site you are likely on right now: Bitcoin Magazine.

You will make your own informed choices on Bitcoin, just like everyone I’ve met on the road.

This is a guest post by Captain Sidd. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Will Marathon Digital Join Other Miners In Selling Bitcoin? CEO Weighs In

Namcios — Wed, 06 Jul 2022 15:30:16 -0400

Marathon Digital is among the few miners to not have sold any of its bitcoin treasury during the latest market crash, but how long will that last?

Bitcoin miners have historically sold BTC as they produced it to cover operating costs. But over the past couple of years a “HODL” strategy has permeated the industry as participants have opted to pay off expenses with debt instead.

Miners racked up much bitcoin- and equipment-backed financing to raise a combined $4 billion in capital for daily expenditures as bids to keep increasing bitcoin treasuries rose in the industry.

While that strategy worked fine during the 2020-2021 bull market, when the bitcoin price was increasing and capital was easier to raise, over-leveraged miners have come under extreme pressure this quarter as the cryptocurrency lost over 70% of its U.S. dollar value.

Consequently, with current macroeconomic conditions impairing companies’ abilities to raise capital and a bleeding bitcoin price, many public miners saw themselves with no other option than to give up on their HODL mentality.

In May, most public miners started selling considerable amounts of bitcoin to pay off debt or recurring costs, and the trend has apparently not died off. While some have sold only periodically their mined BTC since then, others have opted to part ways with some of the coins they had put in the balance sheet in previous months.

In June, Riot Blockchain sold 300 BTC, while CleanSpark sold 328. Core Scientific, however, went a bit further and dumped 78.6% of its bitcoin holdings for $167 million, which it said “were primarily used for payments for ASIC servers, capital investments in additional data center capacity and scheduled repayment of debt.” The firm added that it will “continue to sell self-mined bitcoins to pay operating expenses, fund growth, retire debt and maintain liquidity.” Bitfarms also sold a considerable chunk of its holdings – over 3,000 BTC – last month. Meanwhile, Marathon Digital Holdings and HUT 8 remain depositing monthly bitcoin production into custody.

Bitcoin Magazine Pro/Company Filings

Marathon: To HODL Or Not To HODL

Marathon has been able to keep holding its bitcoin so far partly because of its operations structure. Contrary to some other big miners, the firm doesn’t seek to vertically integrate; rather, it outsources most of its operations while retaining ownership of its miners, which incurs costs only when the machines are online and hashing.

“I don’t have to worry about land leases, buying transformers, buying containers, building buildings, paying deposits to the energy providers, et cetera. What we do is we contract with a hosting provider with a fixed price,” Marathon CEO Fred Thiel told Bitcoin Magazine.

“So our model means that in times like this, we can literally just sit on our miners and, if we have to, operate at a very low cost,” he continued. “Because we’re not having to prefund these big CapEx [capital expense] investments. So it gives us an advantage in this current market situation.”

While this lean structure has allowed Marathon, which is the largest bitcoin holder among public bitcoin miners, to forgo selling bitcoin thus far, the company could soon start selling some of its produced BTC, Thiel suggested.

The executive explained that while the company currently is one of the very few miners who haven’t sold bitcoin amid a broader market slump, future market conditions might lead to a change in the company’s strategy.

“If bitcoin remains at these levels, it could be prudent for us to at least sell bitcoin as we’re mining it, enough to cover the current expenses,” Thiel said. “We’re currently not looking at necessarily selling our stockpile of bitcoin, but again, if it makes sense for us to do that from a capital perspective, then we would.”

Thiel highlighted that different price action by bitcoin will incur different actions from Marathon as the company seeks to navigate the current market; the executive hinted at three possible scenarios.

“If the situation remains status quo with the bitcoin price bouncing between $18,000 and $22,000, there’s one strategy. If bitcoin drops below that, there’s another strategy. And if bitcoin goes above that, there’s a third strategy,” Thield said, declining to provide more details.

“I prefer just not to go deeper than say that there may come conditions where we would sell the bitcoin as we mine it to cover operating expenses, and there may come a point where we would sell some of our stockpiling to cover CapEx if we needed to.”

While a sustained period of time in current levels could require Marathon to sell its monthly production, as Thiel explained, the firm would only be pressured to sell its accumulated BTC and risk losing its status as the largest public miner bitcoin holder if price began ticking lower. On the other hand, a rally would allow Marathon’s HODL strategy to remain intact.

“It’s just my personal belief that bitcoin is gonna grind along at these levels until something changes in the macro environment and people are willing to invest in risk-on assets again,” Thiel theoreticized.

“And that may come in the latter part of this year or next year, who knows at this point? It’s really going to be very dependent on the Federal Reserve and the degree to which we enter into recession and the economy, right?”

The Russian Black Bag

Gabriel Gavin — Wed, 06 Jul 2022 14:13:27 -0400

While Putin reaps a whirlwind, ordinary Russians look to bitcoin to try to weather the storm.

This article originally appeared in Bitcoin Magazine's "Censorship Resistant Issue." To get a copy, visit our store.

If the world around you collapsed overnight, it’s easy to imagine you would have a plan. Many people would pack their bags and get on the next flight out to start a new life somewhere better. But when society breaks down slowly, it is harder to know when it's time to go. Sure, the shelves are bare now, but it’s only because of the panic buying. The government may have passed laws banning criticism, but they won’t last, right? And besides, what would you do with your job, with your cat?

For weeks, these were the questions Russians found themselves asking when all of a sudden, it was too late. At first glance, not much changed after Vladimir Putin ordered the attack on Ukraine. Across the border, rockets rained down, killing countless civilians and forcing millions to flee their homes, but in Moscow, things carried on more or less as normal. People worked, shopped and partied just as they had before. But gradually,and then all of a sudden, the war began to shake the lives of Russians as well.

In the months leading up to the invasion, people believed what they were told by the government — that Western spy agencies’ reports of troops massing on the shared frontier were simply hysteria, and that there was no plan to launch an offensive.

“Throughout its history, Russia has never attacked anyone,” Kremlin spokesman Dmitry Peskov insisted, just two weeks before the tanks began to roll. “Having been through so many ourselves, we’re the last country that would resort to war.”

Few, it seems, were as surprised as ordinary Russians when Putin appeared on their television screens in the middle of the night to announce he had ordered “a special military operation” to “demilitarize and de-Nazify” Ukraine.

“We were like little children,” Masha Kopilova, a 28-year-old marketing executive from the Siberian city of Tyumen, told Bitcoin Magazine, “we didn’t think anything bad would ever happen — and then it did.”

She was on a business trip to Turkey at the time worrying about economic chaos and political repression; she is one of the tens of thousands of Russians now determined not to return home.

In the days and weeks since, the West has pressed the financial equivalent of the nuclear button, imposing sanctions on a scale never seen before against an economy that was, until recently, the sixth largest in the world in real terms. Measures introduced by countries like the U.S. and U.K., as well as the EU, have blocked investment by international firms and cut off access to foreign funds, threatening to force Russia to default on its debts. The scale and severity of the restrictions overshadow anything levied against countries like Iran, Cuba or North Korea in the past. Even if nobody knows what specifically they will achieve, it is clear they were designed to hurt.

“This is an economic Blitzkrieg against us,” President Vladimir declared in March, as another round of Western sanctions began to bite. “But it has failed.”

For years, the Kremlin has been working to reduce its dependency on foreign currency and technology, fearing the day might come when they were switched off. In reality though, Russia was as wired-in to the global financial system as almost anywhere else. Its disconnection from the SWIFT payments platform has wiped billions off the value of its banks, while export bans have seen manufacturing of everything from cleaning products to tanks ground to a halt.

Few believed their personal circumstances would change all that much. “We’ve had sanctions before,” Andrei, an agricultural pesticides salesman from the Volga River city of Samara, said just 36 hours after the invasion began. “We had them because of Crimea, we’ve had them because Donald Trump won that election — they will try to punish us for anything. But it’s never affected me.” And, in many ways, it hadn’t — he drives a new Mercedes and his Instagram is full of pictures taken on foreign holidays from China to London. This time though, things were different.

People like Dmitri hadn’t even noticed that the ruble had lost half its value after a brutal day of trading until the prices for basic goods began to shoot up due to rising costs for manufacturers. The price of a new iPhone had virtually doubled by the end of the first week, with speculators rushing to convert their cash into anything of value and Apple fans fearing the company would pull out. Just a few days later, the Silicon Valley firm announced it would stop shipping devices to Russia, closing its online stores. “We only have one laptop left,” a shop worker at a reseller on Moscow’s glitzy Tverskaya Street said the first weekend after the start of the war. “We’ve been totally cleared out.”

Social networks like Instagram, TikTok, Facebook and Twitter have been banned, cementing the country’s rapid descent into an isolated pariah state. New laws ban the “discrediting of the Russian military” and threaten journalists with up to 15 years in prison for spreading “fake news” about what officials continue to insist is just a “special military operation.” In reality, this means no printing of facts that do not come directly from the Kremlin, forcing independent media to shut down rather than face turning into propaganda outlets themselves. In their place, a web of Telegram channels and online news groups have become the only source of Russian-language news that challenges Putin’s narrative.

At the same time, young people were horrified by the news that some of their favorite brands, including H&M, Uniqlo and IKEA, would leave the country, as well as fast-food firms like KFC, Burger King and McDonalds. Some intrepid Happy Meal-lovers queued for hours on the last day the Golden Arches was open to fill their fridges with Big Macs and cheese sauce — a special menu item only available in Russia. “It’s not fair that ordinary Russians are being punished,” Vyacheslav, a student working part time in one store said. “People have families, they need to pay taxes.”

Not everyone has been as disappointed that the country is being cut off from the rest of the world. “The news is getting better and better every day,” brutal Chechen warlord Ramzan Kadyrov wrote online. “Gone is the domination of the market by American body-destroying booze and convenience foods from McDonald’s, catering for people who want to make themselves obese. I have always called for people to buy our organic food and eat right.” Beyond giving dietary advice, Kadyrov was put in charge of the failed assault on Kyiv and has previously been accused of abducting political opponents and murdering LGBTQ+ people in the region he rules.

The governor of Russia’s Central Bank, Elvira Nabiullina, agrees. “Now it is maybe more important than ever that people don’t waste money on unnecessary products,” she warned in April in a stark assessment of the “difficult period” citizens face. “Sanctions primarily affected financial markets, but now they’re starting to affect the economy,” she said, warning of price rises and out-of-control inflation.

But it isn’t just luxury imports Russians are missing out on. Fearing a return to Soviet-style shortages, pensioners have raided grocery stores across the country, stripping aisles of tinned goods and foods with long shelf-life. “The shelves were empty – no salt, no sugar, no pasta, no buckwheat, and only expensive rice,” Anna, a shopper at the Perekrestok supermarket in the Russian capital said, after posting a clip of elderly people wrestling for the last few items left. “Now my cat is eating more expensive food than I am,” Darina, a 25-year old interpreter said, bemoaning the price rises for pet supplies.

Like Kopilova, who has decided to stay in Turkey, many Russians are desperate to leave and live abroad instead. But with most of Europe closing its airspace to flights from the country, people have few choices to escape, with tickets to the few destinations still open — Turkey, Georgia and Armenia — effectively tripling in cost. “I bought a Rolex about a year ago,” Sasha, an IT specialist working for a British firm in St. Petersburg, told Bitcoin Magazine from a coffee shop in Istanbul. “I sold it to pay for tickets for me and my girlfriend to get here, and so we’d have some money to get set up.” Others aren’t so lucky, and it is believed tens of thousands of would-be emigres have returned home because they couldn’t access their funds with Russian bank cards blocked abroad.

In an effort to prevent people taking their savings out of the country, Putin has introduced a ban on buying foreign currencies and made it illegal to leave with more than $10,000 in cash. As a way around that problem, many were forced to buy jewelry or electronics to sell when they get to their destination.

“I waited for an hour to buy dollars,” Kyle, an American citizen working in the Russian capital sighed, having queued up at a currency exchange along with desperate locals, “but the woman in front of me got the last ones.” He has since left the country; “in the end, I put all my rubles into crypto to get my money out,” he says by way of an online update.

Anastasia, a young Moscow-based investor who advises firms on trading in cryptocurrency under the pseudonym @LadyAnarki, says that interest in digital exchanges has shot up in recent weeks. “Russians understand the black market and the gray market — everybody here understands how to get around rules that they don’t like. It’s quite anarchistic in that way. They follow the rules they really have to, and avoid the others. They’re not selling dollars, so where do people look? To Bitcoin.”

“Russians in general take everything in their stride, that’s how we are culturally because of how much we’ve been through as a country,” she adds. “Some people understand what’s going on, and those are the people who want to leave, but most are staying and hunkering down and will take whatever negative consequences and poverty that comes. The older generation living on pensions who don’t understand crypto will take the heaviest blow.”

In January, the country’s central bank said it was contemplating a “total ban” on cryptocurrencies — making buying, selling, holding and mining a crime punishable by hefty fines. According to officials, the technology consumes too much energy and is a high-risk investment for citizens. However, since the start of Putin’s war in Ukraine, it is clear many see Bitcoin as a safer bet than the ruble.

There has been speculation that Moscow and Russian state businesses could use crypto as a way around restrictions imposed by the West. U.S. Senator Elizabeth Warren claimed that "cryptocurrencies risk undermining sanctions against Russia, allowing Putin and his cronies to avoid economic pain.”

However, top industry figures have resisted calls for a ban on Russians buying and selling, with Changpeng Zhao, founder of Binance, saying that while it complies with the law, “we differentiate between the Russian politicians who start wars and the normal people, many normal Russians do not agree with war. We are not political, we are against war, but we are here to help the people.” Despite that, finding an exchange that is able to process Russian plastic is increasingly hard.

Those who have left and are able to wait out the crisis abroad seem overwhelmingly to be well-paid IT specialists who work remotely and were the first to invest in Bitcoin. One, Taras, who is half-Ukrainian but grew up outside Moscow, has relocated to the coastal city of Antalya in Turkey. “At first I wanted to protest,” he said, “but I realized I’d be arrested, I’d lose everything I have, and I’d still be in Russia. I never thought this would happen, but at least I had a plan to get out when it did.” Those who did not think ahead now find themselves in a poorer, gloomier and more repressive country by the day.

Public Miners Start Selling Bitcoin Treasuries

Dylan LeClair And Sam Rule — Wed, 06 Jul 2022 11:30:00 -0400

As June monthly production updates roll out over the next week, Core Scientific and Bitfarms have both sold nearly 50% or more of their bitcoin treasuries.

The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Core Scientific Sells 7,202 BTC

On July 5, 2022, Core Scientific, the world’s third-largest publicly traded bitcoin miner by market cap ($525.52 million) announced in its June monthly update the sale of 78.6% of its bitcoin holdings.

“During the month of June, the Company sold 7,202 bitcoins at an average price of approximately $23,000 per bitcoin for total proceeds of approximately $167 million. As of June 30, 2022, the Company held 1,959 bitcoins and approximately $132 million in cash on its balance sheet.
"Proceeds from bitcoin sales in June were primarily used for payments for ASIC servers, capital investments in additional data center capacity and scheduled repayment of debt. The Company will continue to sell self-mined bitcoins to pay operating expenses, fund growth, retire debt and maintain liquidity.”

Last week, in our latest mining issue, we covered some of the dynamics of the bitcoin mining cycle, and the hash price bull and bear market.

Given that hash rate is only 5.43% below its all-time high reading, some more pressure on mining operations looks to be on the horizon. Previous bear market miner capitulation periods saw hash rate drawdowns of over 25% from previous highs, with 52.22% after the China miner ban being the largest drawdown in the history of bitcoin.

Bitcoin mining hash rate drawdown from all-time high

While the relative growth of hash rate has diminished greatly in recent years, the absolute growth of the industry has been enormous, particularly in the publicly traded sector.

Public bitcoin miners' share of hash rate

The mining industry’s recent rise and synergy with public markets over the past two years gave it plenty of access to debt financing that was unavailable in previous cycles. This allowed for miners to boost equity market valuations by borrowing against their holdings to finance operations and additional capital expenditure.

This dynamic has led miner operations to be underwater on months of bitcoin mining revenue while still having to finance power agreements and outstanding debt. While this is a broad over-generationalization of the industry, it is the reason why the equity of said miners relative to bitcoin have performed so poorly.

What Sparks A Recovery In Public Miners?

When investing in bitcoin miner companies or infrastructure, you are investing for the next hash price bull market — the “gold rush” phase of the bitcoin market cycle. Shown below is hash price (in logarithmic scale) with the bottom pane showing its rise from previous all-time lows.

As a reminder, hash price is defined as daily miner revenue divided by hash rate.

Hash price percentage from market cycle lows

Given the vicious competitive nature of mining, and hash rates recent bounce back to 218 EH/s, more headwinds are on the horizon for the sector — which could place even more pressure on the BTC/USD exchange rate, further reenforcing the squeeze on margins in the mining sector.

In tomorrow’s Bitcoin Magazine Pro Issue, we will cover the latest moves in the macroeconomic landscape regarding interest rates, commodities and foreign exchange markets. Subscribe to access the full Bitcoin Magazine Pro newsletter.

Binance Removes Bitcoin Trading Fees In Fifth Anniversary

Namcios — Wed, 06 Jul 2022 11:15:25 -0400

The world’s largest cryptocurrency exchange will squash spot bitcoin trading fees starting July 8 as it celebrates its fifth year of operation.

Binance will remove bitcoin trading fees in its global platform in celebration for its fifth anniversary.

The move by the world’s biggest cryptocurrency exchange comes on the heels of a similar strategy enacted by its U.S. subsidiary, Binance.US. Late last month, the American firm squashed fees for spot bitcoin trading as it sought to increase its presence in the country and fire up competition. U.S. rival Coinbase’s stock took a hit after the feature was announced.

Binance’s move covers more ground than its U.S. counterpart. The global exchange said in a press release on Wednesday that starting on July 8, 2022 users will be able to trade spot BTC with no fees in 13 pairs, among fiat currencies and stablecoins, including the euro and the British pound as well as the two most popular stablecoins in the market: Tether’s USDT and Circle’s USDC. Traders can get the fee cut benefit with U.S. dollars only at Binance.US.

“In line with our user-first philosophy, Binance has always strived to provide the most competitive fees in the industry,” Binance founder and CEO, Changpeng Zhao, said in a statement. “At its core, Binance is an inclusive platform with accessibility in mind. Eliminating the trading fees on selected BTC spot trading pairs is another move towards that direction.”

Other fiat currencies that will also fall under the new fee-free rule include the Brazilian real, the Australian dollar, the Russian ruble and the Turkish lira. The feature will be live “until further notice,” Binance said.

Despite providing a convenient Bitcoin on-ramp, centralized exchanges can become a security hole if leveraged as custody providers by users. Those interested in reducing risk can mitigate exposure to third parties by securing their own bitcoin – which, despite the learning curve, can prove advantageous over the long run.

For Africa, By Africans: How Qala Is Building Bitcoin Developers

Heritage Falodun — Wed, 06 Jul 2022 05:00:00 -0400

A recent event hosted by Qala in Nigeria underscored the opportunity in Africa to leverage Bitcoin development for a brighter future.

“Bitcoin for Africa, by Africans” was the key theme at the Qala Bitcoin developer offsite event held earlier this month in Lagos, Nigeria. And that theme, as well as the event itself, spoke to one of the continent’s greatest opportunities today, as well as Qala’s larger mission and how it is finding success already.

Growing Opportunity Among Pervasive Challenge

It’s imperative to know that the growing adoption of Bitcoin in African countries like Ghana, Nigeria, Togo, South Africa and the Central African Republic is connected to the intensive Bitcoin education programs organized by Bitcoin-focused firms and stakeholders in these jurisdictions, such as Qala, a program meant to train African Bitcoin and Lightning Network developers.

Source: Author

Unlike a few years back, when Africa as a continent had always been thought of for dragging its feet in terms of adopting and getting acquitted with fourth industrial revolution technologies, the narrative is changing positively today as it’s becoming obvious that Africa offers the best use cases for Bitcoin as an innovation.

For instance, a recent report by Chainalysis, a blockchain data platform, has shown that between July 2020 and June 2021, Africans received $105.6 billion worth of bitcoin and cryptocurrency payments — with Africa’s cryptocurrency market increasing by 1,200% from the year before. In Africa, the usefulness of Bitcoin isn’t limited to building generational wealth alone, but it cuts across features such as enabling cross-border remittances, helping withstand inflation, as well as serving as a tool for social justice, among other things.

Abukakar Nur Khalil, who is a Bitcoin Core contributor, has highlighted the need to leverage Bitcoin infrastructure and layered frameworks in building products focused on creating real-time solutions and addressing problems specific to different regions in Africa. There are different Western exchange platforms and products offering peer-to-peer Bitcoin services in Africa but, not unsurprisingly, these products aren't developed and built specifically for Africans.

How Qala Helps African Bitcoin Developers

At the Qala event in Lagos, Nigerian entrepreneur Femi Lounge said, “Traditionally, African countries are consumers of products built outside of the continent. In this room, we are no longer consumers, we are producers. Bitcoin is the tool that we build with.”

Source: Author

The Bitcoin developer-focused gathering featured plebs, sponsors, speakers and representative from almost all the Bitcoin-only focused startups in Africa and beyond, such as Carla Kirk-Cohen, a board member of Btrust; Tim Akinbo, a long-time Bitcoiner and open-source enthusiast; Adam Jonas, core member at Chaincode Labs; Benard Parah, the CEO of Bitnob; Caralie Chrisco, content lead at Hello Bitcoin; Dele Joseph, logistics lead at DigiOats; Oluwasegun Kosemani, the CEO of BotMeCash; Nur Khalil; Femi Lounge, cofounder at Co-Creation Hub; and Qala program director, Victor Asemota; along with support from the Built With Bitcoin Foundation, among others.

The event made it clear that Africans are living to change the world and truly believe that Bitcoin will fast track that process. But it also acknowledged that challenges remain.

Seeing these challenges as an opportunity to build, train and enable productivity in the African Bitcoin ecosystem has fueled the structure and initiative around Qala Africa. Eight months ago, Qala admitted 12 Africans (Bamidele Oluwatobi, Collin Rukundo, Enigbe Ochekliye, Theophilus Isah, Olutobi Adeyemi, Peter Tyonum, Raphael Osaze Eyerin, Vladimir Fomene, Munirat Olayiwola, Oladimeji Omotosho, Jennifer Ezeobi and Omoniyi Ilesanmi ) with the goal of training them to become builders on Bitcoin’s second layer and testing protocols such as Lightning, Bitcoin’s testnet and other frameworks, rather than just remaining consumers and users of Bitcoin services.

Bernard Parah, the CEO of Bitnob who is also one of the six organizers of the program tweeted his excitement after three (Ochekliye, Isah and Tyonum) of the 12 graduates became competent Bitcoin and Lightning Network developers and product builders, and found full-time roles with Galoy.io, a payment solution platform offering lightning as a retail payment system.

Building on these developments, Qala promises to keep up with this feat by onboarding more developers who are interested in building with Bitcoin.

This is a guest post by Heritage Falodun. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The President-Elect Of Colombia Is Pro-Bitcoin

João — Wed, 06 Jul 2022 00:00:00 -0400

Former guerilla and Colombian economist, Gustavo Petro, was elected president of the country, beating his opponent who claimed ignorance of Bitcoin.

This is an opinion editorial by João, founder of Boletim Bitcoin, a Brazilian website focused on Bitcoin, and contributor at Bitcoin Magazine.

This story was originally published in Portuguese by Boletim Bitcoin.

Former rebel Gustavo Petro, left, his wife Veronica Alcocer, back center, and his running mate Francia Marquez, celebrate before supporters after winning a runoff presidential election in Bogota, Colombia on June 19, 2022. (Photo/Fernando Vergara—AP)

Who Is Gustavo Petro?

Gustavo Petro is a Colombian economist, who served as a guerrilla and most recently a senator from Colombia, and was elected as president of the Latin American country with 50.49% of the votes against 47.25% in favor of Rodolfo Hernández, a businessman who became known as the “Colombian Donald Trump.”

Petro served as a guerrilla in the Movimento 19 de Abril (M-19) group, which later became the M-19 Democratic Alliance party, in which he was elected a member of the Chamber of Deputies, starting his political career.

After the election, Gustavo Petro stated that he intends to “develop capitalism in Colombia.” According to the president, it is necessary “to overcome feudalism in Colombia, to overcome the hereditary mentality linked to this world of serfs.”

Rival candidate Rodolfo Hernández acknowledged the election result.

Petro became known for helping to sign Colombian government deals with the FARC (Revolutionary Armed Forces of Colombia) and similar groups in 2016, as well as denouncing corruption scandals.

Gustavo Petro And Bitcoin

On more than one occasion, Gustavo Petro has stated that bitcoin is a superior cash technology and that Colombia should direct its energy surplus to mine the cryptocurrency in strategic regions, as a way to curb the trade in illicit substances.

In 2017, Petro stated:

“Bitcoin removes the issuing power of states and seigniorage of currency from banks. It is a community currency that is based on the trust of those who transact with it, as it is based on a blockchain, trust is measured and grows, hence its strength.”

Regarding bitcoin mining, Petro said:

“Cryptocurrencies need clean energy and we can do what El Salvador did, which is export clean energy. We can do it with the wind from La Guajira, with the waterfalls, without making reservoirs, from the western mountain range to the Pacific or the ocean.
“And we can transform the Wayú communities, the coal workers of the Cesar region, the black communities of the Colombian Pacific coast into owners of these new forms of energy, linked to cryptocurrency computing, and then we will have another world.”

In a tweet in October 2021, Petro even suggested that the country should be a reference in the production of Bitcoin and not cocaine.

Interestingly, Petro is being billed by local media as the first left-wing president elected in the country, which has been ruled in recent years by supposedly centrist parties. This fact, in some ways, contrasts with the origin and libertarian ideas from which Bitcoin emerged — influenced by a strong community of cryptographers, mathematicians and libertarians.

When asked about Bitcoin, Petro’s rival candidate stated that he is unaware of the subject, and spoke about more regulations for the industry.

If Colombia integrates bitcoin under the government of Gustavo Petro, either through mining or making the cryptocurrency legal tender, it would be the third sovereign country in the world to follow this path, initiated by El Salvador and accompanied by the Central African Republic.

Importance Of Mining

Bitcoin mining is one of the most fundamental aspects of the protocol’s operation, being responsible for an important part of the network’s security. Through mining and the Nakamoto Consensus rules, the network agrees on the end state of transactions.

In recent years, dozens of major institutional players have started to integrate mining as a way to monetize idle and underutilized electricity, or energy sources that would otherwise be wasted. This is the case of a number of major oil companies, such as ExxonMobil, that are using flare gas — gas that would be burned into the atmosphere due to inherent issues in the sector — for bitcoin mining.

The government of El Salvador plans to use geothermal energy from its volcanoes to mine bitcoin, something that is set to become significant for the industry. Colombia entering into bitcoin mining would be exponentially bigger than the Salvadoran experiment, as the country has a gross domestic product of $271 billion, about 10 times that of El Salvador.

Colombia is ranked 11th in the global ranking of Bitcoin and cryptocurrency adoption in the 2021 Chainalysis report, behind Venezuela and Argentina in the region.

This is a guest post by João. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Proof Of Resilience — Zimbabwe Can Use Bitcoin To Change Its Future

Alexandria — Tue, 05 Jul 2022 22:00:00 -0400

Zimbabwe, currently faced with incredible inflation and tough sanctions, could massively benefit from increased adoption of the open network of Bitcoin.

The Small Steps To Resilience

“Scalability is the essential property of money. It is the ability for a good to be sold easily on the market, without much loss in its value.” —Saifedean Ammous

Scalability Through Time And How To Handle Volatility.

Zimbabwe experienced an estimated 79.6 billion percent inflation month-over-month, 89.7 sextillion percent year-over-year in mid-November 2008. Zimbabwe once again has the highest annual measured inflation rate in the world. It lacks a currency that is scalable through time.

Bitcoin’s average unrealized capital gains return is an annual 200%. No individual who has sold bitcoin after holding it for a period longer than five years has ever lost money. Bitcoin is a deflationary currency, a currency whose purchasing power appreciates with time — it is therefore a perfect method to store one’s wealth.

However it is still subject to volatility. As of today we have experienced a 70% loss in market value compared to all-time highs. Bitcoin’s prices volatility is always an issue raised, when asked, “how will Bitcoin become a medium of exchange?” It is often the first point of contention, although many today cite that volatility is expected for any new asset still within its “price discovery” years, and that as adoption increases the volatility will settle.

Bitcoin is a distributed software that operates based on peer-to-peer network members who are all equal. This software allows you to operate a payment network between those peers and that payment network has its own currency.

It allows cash finality; the moment at which funds, transferred from one party to another, officially become the legal property of the receiving party.

Bitcoin offers cash finality in 10 minutes, and Bitcoin Layer 2 protocols offer cash finality in under a second.

Scalability Through Space And How To Transact On Both Layers Of Bitcoin.

Over the last decade Zimbabwe has lost more than 100 relationships in our correspondent banking relationships network, due to sanctions. This greatly limits the ability to make payments to any one country due to our local bank no longer having relationships with banks outside to clear the payment, preventing the ability of citizens to buy and sell goods across borders.

In addition, our legal tender currency the RTG is a pseudo-currency, meaning it is not a currency tendered in any other country and it can be only traded locally. We lack a financial system and currency that is scalable geographically.

Bitcoin offers the transfer of value to anyone on Earth, without anyone's permission. The cost of doing transactions in an FCA bank account in Zimbabwe at the point of withdrawal has a 2% minimum and may go as high as 15% — while the cost of transacting on Bitcoin (using Layer 2 protocols) is less than 0.1%, to complete a transfer.

Bitcoin has the opportunity to gain massive market share for foreign remittances and local settlements. But only under the condition, I believe, that we mine bitcoin locally. Miners could sell bitcoin at a 1:1 rate or 2% charge, whenever they need fiat currency to pay expenses. But the biggest benefit miners bring is that individuals no longer need to send fiat currency outside at 5-15% charge to buy bitcoin and resell at a higher premium.

EcoCash’s new foreign currency wallet, combined with a Telegram bitcoin bot, may offer a solution to Zimbabweans’ inability to on-ramp and off-ramp into the Bitcoin network.

The Telegram exchange, which is custodial, allows individuals to buy and sell bitcoin to anyone around the world and receive funds through the foreign currency wallet and other fiat currency banks.

Zimbabweans can easily buy bitcoin using Telegram's network without having to use a bitcoin exchange.

I prefer social media platforms, instead of new Bitcoin applications, because so many foreign currency transactions are already done on social media (mainly WhatsApp). WhatsApp has a very strong network established locally, and Telegram is slowly developing one.

Scalability

Sanctions also created a third problem — the storage of foreigners’ currency reserves, which often results in higher inflation. But also this introduces the annoying problem of never having small denominations of money to purchase goods and services. We lack a currency that’s scalable, period.

“ It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things." —Niccolo Machiavelli, 1469-1527

Zimbabwe is in a unique position. Our primitive fiat financial system is repeatedly and consistently failing, we are suffering from two decade-long sanctions and our government deemed bitcoin as an illegal currency, preventing exchanges from operating. Conditions like these have destroyed countless numbers of once-flourishing industries in our country; industries that simply left and flourished in other regions of the globe, denying us citizens the ability to create wealth and achieve a higher standard of living.

The Zimbabwe Bitcoin Community on WhatsApp

P2P Zimbabwe Telegram Bitcoin Exchange Bot

This is a guest post by Alexandria. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Despite The Price, Great Things Are Happening In The Bitcoin Ecosystem

Adam Taha — Mon, 04 Jul 2022 23:00:00 -0400

Though the bitcoin price is bringing the overall sentiment down, many exciting things are happening in Bitcoin that will make this price drop temporary.

This is an opinion editorial by Adam Taha, a host of a Bitcoin podcast in Arabic and a contributor at Bitcoin Magazine.

The current bear market is on everyone’s minds. Doom and gloom are in every chart and metric. However, there is a lot to be excited about for Bitcoin HODLers and followers. Below is a list of exciting things happening in Bitcoin.

Bipartisan Bitcoin Bill

A bipartisan bill by Republican Senator Cynthia Lummis and Democrat Senator Kristen Gillibrand was introduced and will be voted on next year most likely (by the 118th Congress). This bill has been long-awaited because it would reduce many uncertainties for U.S. investors and corporate treasuries.

Lightning Finance

A few days ago, Bitcoin’s Lightning Network capacity reached an all-time-high capacity of 4,005 bitcoin, which is a 6% increase month-over-month. Soon, the world will get to learn and use Lightning Finance (LiFi) on a larger scale, especially with the launch of stablecoin transfers on Lightning. Sending bitcoin and receiving stablecoins, or sending stablecoins on Lightning and receiving groceries at your doorstep will put bitcoin adoption in high gear. This development is putting the Lightning Network and LiFi in a position to displace Visa and other payment networks in a few years.

Taproot Support

Back in November 2021, the Taproot upgrade was launched and given the green light by nodes around the world. So far, we have 75%-plus nodes supporting it. Taproot addresses, signatures and scripting are necessary to unleash the security and innovation that we need in order to begin onboarding companies, institutions and governments at a larger scale. We will reach 100% node support soon. This is a massive development to be excited about.

Taproot Asset Representation Overlay (TARO):

Non-fungible tokens (NFTs) and other innovations are coming to the Lightning Network. Not just stablecoins, smart contracts, digital services, collectibles, tokenized securities and any assigned-value assets, but a myriad of other innovations. Bitcoin is a payment network that only allows bitcoin for settlement. Anything built on or transferring above Bitcoin’s base layer gets settled in bitcoin. In other words, this is how we hyperbitcoinize the world and every fiat in existence. Today, the exchange rate of bitcoin is settled most frequently in U.S. dollars on exchanges, but with TARO, everything will be settled in bitcoin, including USD. It’s a financial revolution based on sound money.

SEC Regulation

We will see more regulations from the Securities and Exchange Commission throughout this year and probably into next year. Why is this good? The SEC views bitcoin as a non-security (commodity) asset. The regulatory position of bitcoin compared to all other crytpocurrencies is clear, according to the SEC and its chair Gary Gensler.

BTC Market Dominance

In January 2020, there were approximately 2,400 cryptocurrencies. In 2021, that number grew to 4,155 (73% increase). Today, there are 19,930 cryptocurrencies or an astonishing 380% increase since January of last year. Yet, for Bitcoin that’s a non-issue and bitcoin’s market dominance tells the story of where real value is. In January 2021, Bitcoin’s market dominance when the market had 4,155 cryptos with a total market cap of $958 billion was 68%. Today, Bitcoin’s market dominance is 47% against 19,930 cryptocurrencies in a total market cap of $908 billion. By the next halving (in early 2024), Bitcoin’s market dominance will likely be comfortably above 60% with many more cryptocurrencies and certainly a larger market cap. This shows bitcoin’s real value, resilience and dominance.

Buy and HODL. Current market conditions are temporary.

This is a guest post by Adam Taha. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

These Six Mining Charts Illustrate The Bitcoin Bear Market

Zack Voell — Mon, 04 Jul 2022 20:00:00 -0400

The bear market cycle is in full effect, and these bits of data from the mining sector illustrate the effects of a depressed bitcoin market.

Bitcoin’s price is down roughly 70% from its latest all-time high, and the mining sector is feeling the full weight of the ongoing bear market. Lots of fear, uncertainty and doubt (FUD) often spread far and wide about miners during bear markets, but the data about how these operators are affected and behave in this environment is simple. This article outlines six key data sets that illustrate the effects of the bear market on bitcoin miners and their operations.

Monthly dollar-denominated revenue is a hallmark metric that signals the state of the mining sector. In bearish market conditions, miners expect revenue to drop, and the below bar chart illustrates this is exactly what is happening. Primarily this metric is falling because of a cheaper bitcoin price quoted in dollars. In fact, monthly mining revenue in June is set to record its lowest level in 18 months. From August 2021 to April 2022, moreover, miners enjoyed a comfortable nine-month streak of at least $1 billion in total sector-wide revenue. May ended that streak, and revenue continues dropping in June.

Digging deeper into mining revenue, transaction fees are an important (and hotly debated) category of revenue. Many bitcoin advocates and critics alike argue that a strong fee market is critical for Bitcoin’s long-term success. And during bullish market conditions, fees generally represent a significant percentage of monthly mining revenue. But bear markets historically obliterate this revenue stream, and the current market conditions are no exception. From August 2021 to May 2022, fees represented roughly 10% to 15% of monthly revenue — but since August, that number has hovered around 1 percent. In fact, since August, fees have not represented more than 2% of monthly mining revenue as shown in the line chart below.

Mining machines have a very strong positive correlation to the price of bitcoin, and bear markets often cause prices for these machines to drop precipitously. There are several causes for this relationship, including repricing based on current revenue produced per machine and some basic psychological factors unique to the mining sector. Curiously, machine prices tend to lag behind bitcoin when the market sells off, and the below line chart illustrates this dynamic. Year-to-date, prices for mining machines across various levels of efficiency and profitability have dropped by 50% to 60% at the time of writing. If bitcoin’s price continues to dip, the mining hardware market will surely follow.

Not only are hardware prices dropping, but older machines are being squeezed out of the market altogether as economically rational miners are forced to power down less efficient hardware to avoid mining bitcoin at a price higher than the market is willing to pay for it. This effect is most clearly seen in the share of hash rate contributed by Antminer S9s, an old generation of machine developed by Bitmain. Compared to a 35% share of hashrate coming from these machines one year ago, S9s now contribute barely 5% of total hashrate, according to Coin Metrics data shown in the chart below. “At these BTC prices, the S9 once again looks like scrap metal,” said Coin Metrics analyst Parker Merritt.

The most precise metric for tracking mining revenue is hash price, which measures the dollar-denominated revenue per unit of hashing power energized per second per day. This metric often fluctuates independent of price, and it can go down even when the price of bitcoin goes up. The chart below shows growth in mining difficulty and plummeting hash price since early 2022. In fact, late June saw hash price drop below $0.10 for the first time since late October 2020. Yet another symptom of bearish market conditions making life more difficult and less profitable in the mining sector.

Collapsing share prices for publicly traded mining companies is probably the strongest signal of current market conditions. For all the reasons mentioned above, most mining companies are holding significantly devalued physically mining assets, operating with tightening profit margins and earning a much cheaper digital asset as bitcoin’s price drops. But mining stocks also tend to act as a high-beta play to bitcoin’s price, so when the bitcoin price moves either up or down, prices for shares of mining companies experience even larger moves in the same direction.

The line chart below shows the normalized one-year performance of a dozen different mining companies that trade on the Nasdaq. Almost every company is down at least 60% over that period, at the time of writing, with the worst performer — Stronghold Digital Mining — down 94%. Times are tough for bitcoin miners … and their shareholders.

In bearish conditions, the bitcoin markets often look to miners to gauge whether sentiment is stabilizing or worsening. Miners selling coins, unplugging machines, or liquidating hardware are all signs that, yes, conditions are bad. But ultimately all this data follows the price of bitcoin instead of affecting the price of bitcoin. So, when any of the above data sets will improve is an open question — it depends on when the bitcoin market levels out or turns bullish. Until then, miners continue operating according to their existing plans for surviving another long bear market.

This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Fiat Knowledge: Only Bitcoin Creates A Culture That Rewards Verification

Jimmy Song — Mon, 04 Jul 2022 13:00:00 -0400

Fiat knowledge is a result of information sources being centralized and misaligned in incentives.

This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.

Nobody wants to do the hard work of verification.

Instead most people want to just trust somebody and not worry about seeking out the truth. I get it, verification is hard. Verification is time consuming, it requires effort and taxes your brain. This is because the truth does not give itself up easily, especially when obscured by the people that want to get away with something. The critical thinking, research skills and analytical ability required are not easy to obtain, either.

Unfortunately, the fewer people who verify, the more trusted third-parties become a problem. This is not just true in bitcoin custody, as we're all too familiar with in the light of 3 Arrows Capital, Voyager and BlockFi, but in all sorts of other fields. The metaphorical cookie jar is very tempting for the trusted third-parties.

Fiat Knowledge

There are two kinds of knowledge. The kind that you have verified yourself — this bed is comfortable — and the kind that you are told (unless you're an experimental physicist, E=mc2). The kind that we've verified ourselves should be the one that we're more willing to stick our necks out for, but sadly, this is not the case.

Conventional wisdom, political correctness and the general desire to fit in and not get made fun of hinder our willingness to "die on that hill." There are social pressures at play that throw verified knowledge out the window.

There's a famous experiment in psychology which demonstrates this effect called the Solomon-Ash Conformity Experiment. The participants were tested on whether they would give the answer that was obviously true or the false answer that would conform to the answers of everyone else. The experiment was a simple comparison about the length of a line. About 2/3 of people ended up conforming to a false answer rather than being the lone truth teller.

This tendency is what authorities exploit. Many people would rather conform to popular opinion than say what they believe. Thus, trusted third-parties know they can get away with lies as most people will conform to the perceived popular opinion. The authorities can essentially tell us what we should believe. This is what I call fiat knowledge, and it's a major vector of manipulation.

Trust, Don't Verify

Rationally, knowledge that's given to us by someone else should be treated with more skepticism than knowledge we've gained directly. Yet when we are confronted by peers or authorities, we suddenly feel less confident in our knowledge unless it happens to jive with what others believe. It's much easier to defend something when you know you have the support of the crowd, than to defend something that doesn't.

This is especially true of specialized or technical knowledge. It's much easier to rely on an authority's conclusions than to come up with our own. It feels better to be wrong with the crowd than to be right alone. There's also the amount of time, money and effort to consider. Do you really want to dig through hundreds of pages, find all the flaws and analyze everything? Verification for most technical things just isn't worth the hassle.

As a result, the trusted third-parties can manipulate everyone who depends on them. By being the source of not just knowledge but also the actions that should be taken from that knowledge, the trusted few can get away with immoral behavior that hurts people.

The most obvious of cases is what the health authorities did during COVID-19. The trusted third parties demanded certain actions, which quickly became regulation. Anyone questioning the main narrative got canceled and called extremists. Rather than having to seek the truth and defend it, most people took the intellectually lazier route of defending whatever the authorities said. It's just a lot less hassle to do what we're told — even if truth is sacrificed.

Verification is simply too costly. These costs include significant harassment, many enemies and denied opportunities. Getting along with the powers that be generally means trusting, not verifying.

Hidden Costs Of Trust

Of course, trusting authorities is a Faustian bargain. Sacrificing the truth has some serious consequences.

First, trusting means that you will get manipulated by the people in authority. The demand for trust is a game of power. Giving in necessarily means that you've given up some power. These include the power to object or think for yourself. The authorities will demand crazier and crazier beliefs as a test of compliance. Stalin, for example, had meetings at 4:00 AM and put on music and demanded everyone dance — except for himself. This may sound ridiculous, but is it really more ridiculous than masking outdoors during the summer?

Second, trusting means that your sense of reality will be seriously distorted. Whenever there's disagreement on an issue, there will always be arguments for both sides. Instead of verifying, the temptation will be to pick what you want to be true first and then adopt the arguments for that side. Not only is this seriously lazy, but it leaves you very vulnerable to believing a bunch of lies. This is a great way to disconnect from reality and suffer when your desired belief is found to be false. Think about all the people that lost a ton of money on Ponzi schemes. Most of them wanted to believe and didn't seek truth and suffered as a result.

Third, trusting means that you never learn responsibility. Going with the crowd is always much easier than learning to defend something unpopular. But it also makes you depend on others for your arguments. You never really learn the arguments the same way you would if you prioritized truth. Many people never learn to verify in the same way that many people never learn to custody their own keys. They don't want the headache of responsibility. They'd rather live life letting others do the work for them. This is the attitude of little children, not full grown adults. And sadly, immaturity and irresponsible behavior seem to be the norm, even for older adults.

Fiat Knowledge Economy

In a sense, fiat money is a subset of the fiat knowledge as the whole system of central banking was set up to exploit the lack of verification by people. This gave free rein to authorities who wanted to get away with immoral behavior.

The current central bank backed fiat monetary system is obscure and difficult to understand. This is so that the mechanism of theft is hard to discover. The trust, don't verify mentality surrounds this system.

For example, why is it so difficult to audit the Fed? Gary North, in his book talks about being a staffer for Ron Paul. He tells of how he wanted to know who were the shareholders of the Federal Reserve. It was apparently taboo even to ask that question on The Hill. Why is that? Could it be that the people getting rich from the current system want to continue their grift?

The underlying dynamic at play is that the trust, don't verify mentality allows those in power to get away with unethical behavior. At some level, trust is broken so someone can do something they wouldn't do in full daylight.

Because so much money is printed through the current monetary system, there is an added emphasis on the dynamics of power. There are monetary rewards and rent-seeking positions available to those who will say what those in power want them to say, so the truth is further obscured. Trust flows to these designated experts and verification becomes even more costly.

Modern Day Knowledge

As a result, fiat knowledge thrives because of fiat money. As more money flows toward designated experts, they have more means to obscure their findings and make it more difficult to verify, therefore ossifying their rent-seeking position.

The sad result is that almost all knowledge people have is now based on trust, not verification. Given the incentives of the experts, this knowledge is likely not reflecting reality. Instead of a market based on rational analysis by independent verifiers, we have a lot more centralization where trust in a particular group of experts is the norm. The distortions this produces are great as is the obscuring of truth.

Fiat Intellectuals

The result is a phenomenon that I like to call fiat intellectuals. These are people that say enough buzzwords to sound like they know what they're talking about, but don't actually know very much. These gullible dupes know that most people won't verify what they say and they are confident enough in their obscuring abilities to cast doubt on the few people that do.

In our space, the most obvious of these are the business school types that talk about blockchain as if it's some magical device. This also goes for people that want to bring up quantum computing or proof-of-stake. They know enough to sound smart, but haven't verified anything. They trust some authority which usually means that they have been manipulated into believing they know something.

You can always tell these people have been manipulated by some of the ridiculous platitudes they spout.

"The truth is probably somewhere in between."

"So many people working on this thing probably means there's something useful there."

Fiat intellectuals are lazy and can't be bothered to actually learn the topic and instead rely on other people to tell them what's true. Sadly, most of the people in power, whether it be C-level executives, VCs or politicians are very much fiat intellectuals and are ripe for manipulation.

This is why so many altcoins have such high valuations. Almost every investor, even very big ones, do not verify, they trust. Think about what happened with LUNA and how many large players were involved in that complete disaster. Galaxy, 3AC and Celsius are just three names that were in the news recently due to this. They didn't verify and instead picked and chose what they wanted to believe. They wanted to believe their investments weren't scams and they all suffered as a result.

The pattern we're seeing in the "crypto" markets is the same as that of central banks. It seems there is a purposeful obscuring of everything that's going on. The Ethereum 2.0 platform is egregiously complex for that reason. White papers are difficult to read and are hundreds of pages for that reason. They imitate the complexity of central banks because they are exactly that — private central banks. They obscure what's going on for the same reason, because they want to get away with immoral behavior.

Leveling Up

Bitcoin has a radically different ethic of verify, don't trust. It's in that spirit that so many plebs have learned to run their own nodes, custodied their own keys and even learned to code. Verification at a deep level is what keeps everyone honest. We encourage verification in the community for that reason. We don't rely on central authorities and that means we don't get screwed by their immoral behavior.

This is in stark contrast to fiat monetary regimes and altcoins. They are all about relying on the trust of their designated experts and not about verifying anything yourself. They discourage “running your own node” because they don't want you to verify. The complexity of those systems is specifically geared toward making verification unrealistic and difficult.

This is why altcoiners become more like fiat intellectuals over time. They know lots of buzzwords but do little to really verify the truth of their respective systems. Hence, many of them are held down to the bottom because they really don't know anything about the systems they purport to understand. They believe what they want to believe and lose connection with reality. Such is the end for fiat intellectuals.

The truth is that fiat intellectuals are intellectual slaves of those in power. They are anything but self-sovereign and have convinced themselves that it's too much responsibility, too much work, too much effort. The only real path of self-sovereignty is to do the hard work of verification in all aspects. We cannot be free until we're free from the shackles of our intellectual chains. And that freedom is earned through verification. We must be relentless and seek truth.

Freedom isn't free.

Ten Signs That You're Becoming A Bitcoin Maximalist

You've made peace with the fact that you can't get certain friends or family members to buy Bitcoin.
You only check the price once a day.
You have a bookmark for bitcoinerjobs.com
You call your Bitcoin stash "savings" and not an "investment."
When you hear proof-of-stake, you think about cattle rancher protocols.
Your pronouns are stay humble/stack sats.
When you have free time, you spend it on improving yourself.
You get happy during bear markets because you can stack cheaply.
You stop regretting not buying when you first heard about Bitcoin and realize you got in at the price that you deserve.
You feel shame when thinking about your altcoin days.

This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

What American Independence Looks Like When Secured By Bitcoin

Bruce Fenton — Sun, 03 Jul 2022 22:00:00 -0400

Bitcoin is a monetary system that returns to the ideals upon which American independence was built.

This is an opinion editorial by Bruce Fenton, candidate for U.S. Senate and the founder and CEO of Chainstone labs.

It’s the money. The money is broken. Politicians broke it.

This truth pretty much summarizes much of what is wrong in our world today: inflation, war, the failed drug war and violence — all a result of bad monetary policy. Even obesity can be traced back to bad money and the broken incentives it causes, such as corn syrup subsidies. We must fix the money to fix America and the world.

In order to finance World War II, our government sent war heroes to American towns to sell citizens war bonds. They would have to make a case for the war and the use of citizen money. Even when facing Nazis, the government still had to make a case. They had accountability. Today, that accountability is gone.

In 1971, the U.S. went off the gold standard and modern fiat was born. Unlike in the days of WWII, the government no longer needs to sell you. They don’t need accountability. They have a magic money printer. That money printer says that they can print however much money they want for war or cronies or whatever else they choose. Accountability is gone.

This modern fiat system is not just unsustainable and harmful to the finances of citizens, it causes great evils in the world. I’d actually go so far as to say that fiat is evil. Fiat, indeed, is the ultimate force for bad deeds in our world. War, death, destruction and many evils of our world would not exist to the scale that they do if we took away the ability of tyrants to print money from thin air. If we starve the beast of government by cutting off its funding, we end up with more peace. Bitcoin offers an alternative.

In a world of sound money where you control your own wealth, politicians would have to make a case to take your money, they could not print it from thin air. If politicians had to sell you on for-profit prisons, the drug war or drone bombs, like they did in WWII, we’d have a very different world. The lack of accountability leads not just to bad economics but to evil.

America’s greatest strength has been its freedom and the protection of the rights of citizens enshrined in our highest law of the land. Our Constitution says we have the right to free speech and our courts have said that code is speech: Bernstein v. Department of Justice — this serves as a great foundation for Bitcoin.

Ideally, this solid base of freedom will help America serve as a model for the world. That ideal model is not one where the government embraces and adopts Bitcoin and has official wallets. It’s a world where the government ignores Bitcoin and the world of money and politics drift apart just as Church and State once drifted their own separate ways.

There are those with very different ideas. There are those who see money as a tool to control the people. Central bank digital currencies (CBDCs) and other tools of control and regulation must be rejected entirely. This is why I decided to run for office. Our world faces actual evil and we must fight for freedom and human rights. I believe that sound money can do more than I ever could in office for good and for peace, but I also think that it is crucial to have more voices for liberty in Washington. I’ve been psyched to meet so many people on the campaign trail and talk about liberty, freedom and sound economics. It’s also nice to be known as a Bitcoiner and I’m asked questions about Bitcoin every day. This isn’t a simple tech hobby, this may be a foundation for a more free world.

The foundations for America and for Bitcoin are both based on freedom and voluntary interaction. It’s a natural fit for America — specifically American citizens — to embrace the technology of freedom in order to further our national strength and independence by breaking out of the broken fiat system. If we fix the money, we fix our nation.

This is a guest post by Bruce Fenton. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

July 4th Is A Reminder To Declare Monetary Independence And Protect Freedom By Using Bitcoin

Mickey Koss — Sun, 03 Jul 2022 03:00:00 -0400

By saving in bitcoin and holding your private keys, you can opt out of a flawed financial system and participate in the world’s largest nonviolent protest.

This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the Infantry before transitioning to the Finance Corps.

“[P]aper is poverty, that it is the ghost of money, and not money itself.” — Thomas Jefferson

While the Founding Fathers understood the importance of hard and scarce money in the late 1700s, gold’s lack of portability and divisibility ensured that the base money became concentrated in the hands of custodians for convenience and security. The technology simply didn’t exist for anything else. Until now.

Bitcoin is freedom money. Though the Declaration of Independence brought about the slow progress of freedom to the United States, the Bitcoin white paper and subsequent network has the potential to bring freedom to the world. It is a hedge against inflation, irresponsible monetary and fiscal policies alike, but Bitcoin is so much more than that. An often overlooked characteristic of Bitcoin, especially in the Western world, is that Bitcoin is a hedge against tyranny itself.

Bitcoin has the potential to bring about a new age of freedom to the world. A world of cheap and abundant electricity. A world free from coercion, disincentivizing government overreach and violence. The only thing required is a 12-to-24 word seed phrase and a little bit of personal responsibility.

Why Western Nations Are Largely Blind To Bitcoin

Washington Crossing the Delaware by Emanuel Leutz (source)

With famous paintings dramatizing certain historical events like the Delaware River crossing displayed above, it’s easy to forget how hard-fought our freedoms were won. The reality of the above painting is that, simply put, it depicts the time when George Washington took the Army across a frozen river on Christmas night to kill a bunch of other people in their sleep.

With our war for independence nearly 250 years ago, it’s easy to see how so many people take our freedom for granted. Since the end of World War II in the 1940s, the Westernized nations in North America and Europe have experienced a remarkable period of growth and development, but a lot of people had to die to get to where we are.

The immutable ledger, the peer-to-peer transactability, the lack of need for a trusted third party, all aspects of Bitcoin combine to create the ideal hedge against tyranny. It enables action without violence.

While many argue that bitcoin has no value or no use case, the truth is that it’s been doing its thing around the world for some time. Using the words of prominent Bitcoiner and freedom activist, Alex Gladstein, our financial privilege blinds us to these problems.

In Afghanistan, women have been using bitcoin for years to build financial independence in a country where women are banned from earning or using money.

Recently, a head of state attempted to crack down on a peaceful protest by locking down the bank accounts of not only the participants, but those who donated money to the movement. This was done by executive decree, without the permission of the country’s legislature.

When those attempts failed, assisted through decentralized bitcoin crowdfunding, the Canadian Prime Minister ordered police to clear the area, ultimately breaking up the protest through implicit threats of violence and deprivation of liberty. The country is not some dictatorship in a developing nation, it’s Canada — a developed, Westernized, liberal democracy. At least, it used to be.

Why Western Nations Need Bitcoin

With “price stability” being one of the primary jobs of central banks, it seems like they’re not doing a very good job of it. You see, inflation is just the iteration of compound interest with a negative return: exponential decay instead of exponential growth. Most years, it’s barely noticeable, but it’s become more and more obvious recently. It’s why people who only save become poor; the reason why you are forced to become a professional investor if you have any hope of retiring in old age.

We discount the utility of bitcoin because our governments are relatively stable, our financial system is mostly reliable and our society is relatively peaceful. Everything is fine until it isn’t. Just ask the Canadian truckers.

The problem is that the system requires too much trust to keep it going. You have to trust central banks not to debase your currency. You have to trust governments and banks not to seize your assets when you upset them. Do you really actually own anything?

While a Canadian-style asset lockdown in the United States is incredibly unlikely, the fact that it’s even possible — that we have to trust others to let us use our own money — is a glaring flaw in the system.

By the time we actually need bitcoin in the United States to ensure our freedom, it’s likely going to be too late to get some in an easy or straightforward manner. That’s the purpose of hedging, of insurance. You don’t call Allstate to get a quote after getting rear-ended in the street. You don’t buy bitcoin because your bank just froze your account. You have bitcoin to ensure these things never happen in the first place.

We Hold These Truths To Be Self-Evident

Besides Bitcoin’s 21 million hard-cap supply, perhaps one of the most scarce assets on this planet right now is freedom. For nearly two and a half centuries, people have risked everything to come to America. Maybe it doesn’t have to be that way anymore; maybe a decentralized army of sovereign individuals can help tip the scales toward a more free society across the planet.

By saving your life energy in bitcoin and holding your own private keys, you can choose to opt out of a fundamentally flawed financial system and you can participate in the world’s largest nonviolent protest. You can now hold your money in a system completely outside the control of any government, disincentivizing violence and coercion on a global scale.

Bitcoin is the freedom to transact without political risk or censorship. Bitcoin is the freedom to save your productive value without getting diluted away by central banks. Bitcoin is a nonviolent protest, one that disincentivizes violence in return. Declare your monetary independence and protect your freedoms. All you need to do is hold your own keys.

This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Independence Day: Why America’s Founders Would Be Bitcoiners

Aaron Daniel — Sun, 03 Jul 2022 03:00:00 -0400

On this July 4th, let’s remember that America’s founding fathers wanted to create a republic based on sound money like Bitcoin.

Introduction: A Republic Built On Hard Money

On July 4, 1776, the Continental Congress approved the Declaration of Independence, marking the United States’ formal succession from Great Britain.

The Declaration contained revolutionary language, written by men willing to use violence and sacrifice their lives to throw off the bonds of tyranny and secure their rights to self-determination:

“...it is the Right of the People to alter or to abolish [Government], and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

The Declaration was an act of war. But it was not the first act of war taken by the Continental Congress.

In fact, over a year earlier, Congress had issued bills of credit (that is, paper fiat money not backed by specie such as gold or silver) to raise and fund its army. These unbacked notes were colloquially known as “continentals.”

“Congress launched its first paper issue of $2 million in late June 1775, and before the notes were printed it had already concluded that another $1 million was needed,” as Murray Rothbard wrote in “A History Of Money And Banking In The United States.”

All told, between 1775 and 1779, Congress issued "over $225 million” in continentals, “superimposed upon a pre-existing money supply of $12 million,” per Rothbard.

This rapid expansion of the money supply had debilitating inflationary effects:

“[A]t the end of 1776, the Continentals were worth $1 to $1.25 in specie; by the fall of the following year, its value had fallen to 3-to-1; by December 1778 the value was 6.8-to-1; and by December 1779, to the negligible 42-to-1. By the spring of 1781, the Continentals were virtually worthless, exchanging on the market at 168 paper dollars to one dollar in specie. This collapse of the Continental currency gave rise to the phrase, “not worth a Continental.”
–Rothbard, “A History Of Money And Banking In The United States”

The states, not to be outdone, issued their own paper fiat, adding “a total of 210 million depreciated dollars to the nation’s currency” by war's end.

"Finally in March 1780, with continentals good for about two and one-half cents on the dollar, Congress gave up the pretence that notes were on par with coin,” according to Robert G. Natelson’s “Paper Money And The Original Understanding Of The Coinage Clause.”

Congress stopped issuing paper altogether, and essentially announced a default.

Reflecting on the state of Revolutionary monetary affairs, James Madison explained that paper fiat had been a necessary evil:

“Being engaged in a necessary war without specie to defray the expence, or to support paper emissions for that purpose redeemable on demand, and being at the same time unable to borrow, no resource was left, but to emit bills of credit to be redeemed in future. The inferiority of these bills to specie was therefore incident to the very nature of them. If they had been exchangeable on demand for specie, they would have been equivalent to it; as they were not exchangeable on demand, they were inferior to it.”

The Founders knew fiat money was inferior to hard money like gold and silver specie, but without a sufficient supply of specie on the continent, and engaged in a war for their new country’s very existence, they were left with no choice but to run the money printer. The forced easy-money monetary policy of the Revolutionary era, and its resulting hyperinflation, would profoundly influence the Founders when drafting what was to become the U.S. Constitution.

Indeed, the Founders enshrined their preference for hard money in the various monetary clauses of the Constitution. It may come as a surprise to many that the Constitution does not authorize the Federal government to issue paper fiat money.

“The Constitution specifically provides that gold and silver coins will be the money of the United States and arguably prohibits the issuance of paper money,” as Ali Khan put it in “The Evolution Of Money: A Story Of Constitutional Nullification.”

That is a power that the Supreme Court subsequently conferred upon Congress despite the lack of any textual support. And the states are expressly forbidden from declaring anything but gold and silver legal tender.

The Founders’ primary monetary goal was to limit government’s influence over money, and thereby avoid the economic and societal ills that such influence creates. They understood that commodity money was superior to paper fiat because it was immune to political interference (with gold being the “preeminen[t]” money due to its “greater rarity”).

Had the technology existed at the time, therefore, the Founders would have been Bitcoiners.

This may seem a bold, unprovable claim. But by examining the history of money during the Colonial and Revolutionary eras, and, crucially, the Founders’ own understanding of the Constitution’s prohibitions on fiat, a credible argument can be made that Bitcoin would find itself next to "gold and silver" as Constitutional money, had the technology existed at the founding of the United States.

Fiat Money And Economic Chaos In The Colonial And Confederation Eras

The Revolutionary era was not America’s first experience with fiat money. The Colonial era was marked by repeated episodes of paper fiat emissions by the colonies, which led to inflation and economic hardship.

The colonies lacked specie, being on the other side of the world from the economies of Europe, and so at first, the colonial markets used money substitutes such as agricultural commodities like tobacco, rice, wheat, beef, pork, fish, corn and beaver skins. Collectible monies such as wampum (shell beads) also served as money for trade with Native Americans.

But commodity money, or paper money backed by commodities, did not allow for quick expansion of the money supply. And so it was that Massachusetts introduced the western world to paper fiat money.

"Apart from medieval China, which invented both paper and printing centuries before the West, the world had never seen government paper money until the colonial government of Massachusetts emitted a fiat paper issue in 1690,” according to Rothbard.

The impetus for Massachusetts’s historic emission of paper fiat was (as is ever the case) war. Massachusetts was at war in Canada and needed to finance soldier salaries, supplies and arms. The results were, predictably, disastrous.

“[W]ithin a year after the initial issue, the new paper pound had depreciated on the market by 40 percent against specie,” Rothbard wrote.

In 1692, Massachusetts declared its paper money official legal tender. In so doing, it invoked Gresham's Law:

“This legal tender law had the unwanted effect of Gresham’s Law: the disappearance of specie circulation in the colony. In addition, the expanding paper issues drove up prices and hampered exports from the colony. In this way, the specie ‘shortage’ became the creature rather than the cause of the fiat paper issues.”
–Rothbard, “A History Of Money And Banking In The United States”

Over the following decades, other colonies emulated Massachusetts by issuing their own paper fiat legal tenders:

“Similar consequences — dramatic inflation, shortage of specie, massive depreciation despite compulsory par laws — ensued in each colony. Thus, along with Massachusetts’ depreciation of 11-to-1 of its notes against specie compared to the original par, Connecticut’s notes had sunk to 9-to-1 and the Carolinas’ at 10-to-1 in 1740, and the paper of virulently inflationist Rhode Island to 23-to-1 against specie. Even the least-inflated paper, that of Pennsylvania, had suffered an appreciation of specie to 80 percent over par.”
–Rothbard, “A History Of Money And Banking In The United States”

In what was to become a recurring theme, Rhode Island was the worst offender:

“Notes issued by Rhode Island in 1740, later called ‘old tenor’ lost so much in value that in 1771 £8 ‘old tenor’ were accepted by the state Treasury in payment of taxes for 6 shillings ‘lawful money,’ a depreciation of almost 96%.”
–Nussbaum, “Money In The Law”

By most measures, the colonial experiment with paper fiat money was unsuccessful, and in 1751, the British Parliament sought to stanch the bleeding by "prohibit[ing] the colonies from issuing any further Paper Bills or Bills of Credit, of any Kind or Denomination whatsoever," and that “no paper money in New England should be legal tender," Natelson wrote. In 1764, Parliament "extended the ban on issuance of legal tender paper currency from New England to all American colonies," bringing an end to the colonial fiat era.

The period immediately following the Revolution is known as the Confederation Era, after the Republic’s first governing document, the Articles of Confederation, which was effective from March 1, 1781 to June 21, 1788. The Articles — unlike the subsequent Constitution — expressly empowered the Confederation Congress to emit paper money, but it declined to do so.

Ten of the states, however, did issue paper fiat. Rhode Island, once again, was a notorious abuser of this power, imposing draconian compulsory tender laws that nearly sparked a constitutional crisis within its borders. After the state’s courts declared the compulsory tender laws unconstitutional, Rhode Island’s Assembly “constituted itself into a tribunal taking the judges to account because of their disobedience toward legislation duly enacted by the Assembly. The procedure was not carried through but four of the judges, it seems, were not reelected,” per Nussbaum.

The Founders Intended To Prohibit Paper Fiat

This history, much of it experienced firsthand by the Founders, shaped their views on money. The Founders were certainly not a monolith, and discerning their original intent with respect to many provisions of the Constitution can be fraught. But their shared hatred for fiat money is undeniable.

The Constitution’s prohibition on state legal tender, and the absence of a federal power to issue paper fiat, was primarily designed to avoid inflationary monetary policy like that practiced by the colonies, Continental Congress and later, the states under the Articles of Confederation.

“The colonists had long recognized that depreciating currency enriched some social groups at the expense of others,” according to Natelson. Among those thought to be on the losing side of inflationary paper monetary policies were "widows, orphans, clergy, and "[s]alary [m]en," per Natelson. The winners were, of course, known to be the "debtors," whose obligations were depreciated by inflation.

Madison's notes from the Constitutional Convention detail the overall disgust held for paper money. For example, during the Convention’s opening remarks, Edmund Randolph, "speaking of the defects of the [C]onfederation” era, stated that “the havoc of paper money had not been foreseen” by the authors of the Articles of Confederation.

Madison’s notes further reveal that Roger Sherman, as part of the committee drafting what would become Article I, Section 10’s prohibition on state legal tender laws, sought to add “emit bills of credit, nor make any thing but gold and silver coin a tender” to the prohibition because he “thought [the Convention was] a favorable crisis for crushing paper money."

Likewise, the record of the ratification process, conducted by state conventions, "includes many general comments that the Constitution would put an end to paper money," Natelson wrote. The state legal tender paper laws "were cited as justification of the ban at ratification conventions, and 'were attacked both as immoral efforts to redistribute wealth from some constituencies to others and as a source of bad international and interstate relationships.'"

And a number of references to the clause prohibiting state tender laws are found in the Federalist Papers, which describe the section as removing from the states the power to issue “paper medium,” (“the same reasons which shew the necessity of denying to the states the power of regulating coin, prove with equal force that they ought not be at liberty to substitute a paper medium in the place of coin,” Madison wrote), or “paper money” (“The States, by the plan of the convention, are prohibited from doing a variety of things… The imposition of duties on imported articles, and the emission of paper money, are specimens of each kind,” Hamilton wrote). In Federalist No. 44, Madison explained the need to prohibit the states from issuing paper money:

“The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it.”

In a later letter discussing Federalist No. 44, Madison confirmed “[t]he evil which produced the prohibitory clause in the Constitution of the United States was the practice of the States in making bills of credit, and in some instances appraised property, ‘a legal tender.’”

Another after-the-fact exchange between two additional Founders demonstrates a continuing opposition to paper fiat. Writing to Thomas Jefferson in 1819, John Adams commented:

“[Debasing the coinage] is to steal. A theft of greater magnitude and still more ruinous is the making of paper. It is greater because in this money there is absolutely no real value. It is more ruinous because by its gradual depreciation during all the time of its existence it produces the effect which would be produced by an infinity of successive deteriorations of the coin.”

Jefferson responded (perhaps self-servingly):

“The paper bubble is then burst. This is what you and I, and every reasoning man, seduced by no obliquity of mind or interest, have long foreseen. Yet it's [sic] disastrous effects are not the less for having been foreseen.”

Although the Founders clearly hated paper money, they "were unsure about placing a total ban on Congress's power to issue paper money," according to Khan. Many thought by failing to expressly grant the power, the federal government (possessed of only those powers granted to it by the people and states) would not be able to issue paper fiat and declare it legal tender. It is clear, however, that "they were certain about denying states even a conditional power of issuance,” Khan wrote.

On the other hand, at the time of the founding, gold and silver “constituted the preferred money of the world primarily because supply was limited,” per Khan. That “natural scarcity … was a virtue to be preserved in both law and economics.”

For that reason, and "at the urging of Alexander Hamilton, [the Founders] adopted a bimetallic standard,” Khan added. Gold, of course, was known to be superior to silver due to its greater scarcity. But, "[s]ilver, the ancient money of the American colonies, had its status deeply entrenched in the consciousness of the people and realities of the market," and was thus allowed as parallel legal tender.

The historical record of the Founders’ writings and debates, therefore, establishes that the chief concern animating the decision to limit state legal tender to gold and silver, and refusing to grant the federal government an express power to adopt fiat money, was the history of inflationary paper money issuance and compulsory tender laws forcing its acceptance.

Bitcoin’s Qualities As “Digital Gold” Comport With The Founders’ Original Intents For The U.S.

The Founders permitted states to declare gold and silver tender because these metals were largely immune to government interference, which had produced inflation and economic instability. This immunity stemmed from scarcity. As Hamilton noted, gold’s “preeminence” as money was owed to its “greater rarity.”

Not only is gold scarce within the earth, but it’s also very costly to produce (mine, refine, smelt, coin), and difficult to forge or fake. These additional properties ensure that gold’s scarcity remains intact despite new gold being brought to market. As described by Saifedean Ammous in “The Bitcoin Standard,” at the time of the founding, gold had the lowest rate of inflation of any monetary good, meaning it was the “hardest” money, because the existing stock was so much larger than the flow of new gold into the

July 4th, Bitcoin And Sovereignty — Declaring Your Own Financial Independence Day

Dr. Riste Simnjanovski — Sat, 02 Jul 2022 22:00:00 -0400

This July 4th is an opportunity to think about how Bitcoiners reclaimed their own financial independence.

Part One: A Declaration Of Independence

There is a lot of history one could survey when examining Independence Day. Some historians might reference the 1940s, or the 4th of July being recognized as a federal holiday; maybe BBQs or fireworks would find their way into the conversations.

A military historian might dive into the American Revolution, 1776, the Continental Congress or the original 13 Colonies as an excellent place to begin boring their grandchildren. Bitcoin authors have also explored this topic from a variety of perspectives. I’m going to try an alternative approach; from a status quo perspective.

One aspect that many forget to mention is that only a small, fringe minority truly sought complete and sovereign independence from Great Britain in 1775. The colonists who believed that “America” should be independent of Great Britain were considered a radical group that deviated from the norm. The masses took comfort, even in tyranny.

Thomas Paine’s “Common Sense” onboarded many more colonists to take up arms as distrust and anger grew against Great Britain.Paine’s work has similarities to Satoshi Nakamoto’s white paper on Bitcoin. Both documents sought to expose issues in the current status quo and proposed an alternative solution.

The challenge was that most of the population found comfort in persecution, taxation, lack of representation and authoritarian rule. Many shrug this off now as years tick away and society is further removed from the past, but how would life change if people were genuinely sovereign in America?

Imagine if no governmental interference, no bailouts, no safety nets, no welfare, no subsidies and no “free” rides were the norm? I posit that if a census took place today, many Americans would err on the side of tyranny versus sovereignty — as they did in the late 1700s.

I could propose many rationales, but the bulk of them hover around a fear of the unknown or truly having to support themselves and those they care for with nothing more than their wits, hard work and determination. Bitcoin rewards all these human attributes with incorruptible, non-confiscatable, immutable and eternal property.

Bitcoin’s proof-of-work model mirrors the American spirit; even beyond generational hope, Bitcoin represents American grit. Bitcoin rewards hard work, because it was born of hard work, time, energy and sacrifice. Bitcoin is determination, because it was founded on an alternative to the status quo. Bitcoin mirrors Independence Day in a profound manner.

Bitcoin outwits stupidity, arrogance, ineptitude, laziness and greed. For individuals seeking sovereignty, there is no other alternative.

The irony is that everyone from liberals, moderates, libertarians and conservatives are represented in the Bitcoin network. Yet, they are still a fringe minority in their respective communities. This common thread has drawn them together, even moreso, in some respects, regardless of their political differences. Individual “Financial Independence Day” has not yet been identified by many individuals (non-Bitcoiners) — let’s change that.

Part Two: Individual Sovereignty

Many individuals, organizations, corporations and nation-states own bitcoin, or at least they think they do. Unless these parties hold their private keys, they entrust custodians, many of whom failed when push came to shove.

Many reading this article may have kept their private keys for years, while others might have recently set up a hardware wallet … and are plugging it in daily to ensure they understand how it works. Others either do not hold their private keys, have their life savings sitting on a third-party exchange or are not exposed to bitcoin (yet).

I would encourage Bitcoiners to see if they can look back on their hardware wallet’s transaction history to see when their first BTC transfer occurred. The day these individuals took custody of their first satoshi or bitcoin is their Financial Independence Day.

Next, I would encourage families to make this date known to the people they care about and, at a minimum, use this date as a reminder to discuss the significance and importance of Bitcoin, sovereignty, hard work, determination and independence.

Yes, the 4th of July is a federal holiday where families gather, break bread and enjoy time together; however, the meaning is lost if, even for a brief moment, time isn’t dedicated to remembering the significance and sacrifices made on your behalf.

When folks identify their family’s Financial Independence Day, I encourage them to celebrate just as much as they would when they honor this country on the 4th of July. The significance of Independence Day is that individuals can OWN property; and what better property to own than one that is completely non-confiscatable by any entity?

Perhaps, if you have not taken custody of your bitcoin, maybe this 4th of July is a great day to start.

Happy 4th of July, and a tip of the hat to sovereign individuals with satoshis and Bitcoin in cold storage.

This is a guest post by Dr. Riste Simnjanovski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Honey Badger Should Care: Why Bitcoin’s Price Action Does Matter

Joakim Book — Sat, 02 Jul 2022 20:00:00 -0400

Despite repeated statements from Bitcoiners that price does not matter, the price of bitcoin is fundamentally a measure of its success.

This is an opinion editorial by Joakim Book, a Research Fellow at the American Institute for Economic Research, contributor and copy editor for Bitcoin Magazine and a writer on all things money and financial history.

When bitcoin tumbles, Bitcoiners get poorer. They don’t have fewer sats in their (hardware) wallets but can get radically less stuff with those sats — hence “poorer.” Poorer Bitcoiners can do fewer things in the world; they have less command over the world’s economic resources. If you think Bitcoiners have something practical to contribute to the world, this is a bad thing.

Some things, like spreading ideas and learning, can be done without funds, but most important things require capital.

When bitcoin tumbles, the press, the skeptics and the haters have a field day (“see, bubble! Corruption! Risky scam!”).

When bitcoin tumbles, the idea that it is in any shape or form a reasonable asset to hold against a clownish world seems less persuasive. For all their flaws, at least my dollar cash, my euros or my credit card — suffering from inflation and the occasional censored transaction — don’t explode like this!

It should be obvious, then, that a falling BTCUSD is bad for Bitcoin. Still, the most vocal Bitcoiners tend to disagree: falling bitcoin prices purge the weak and over-levered, and it lets the rest of us stack and learn in peace.

Here is the contrarian case laid out in more detail.

Story Time: How Falling Exchange Rates Hurt Bitcoiners

A few months back, I spent 500,000 sats on an expense for a trip. “What?!” Says the purist. ”You should never spend your bitcoin!” Yah-yah, but if you never spend it, its use case never grows and, anyway, it made most sense given my financial situation at the time (anyone else irresponsibly overweight bitcoin?) Given what came to pass thereafter, who’ll blame me?

I got a few nights in a decent AirBnB with some friends. I could have gotten about two weeks’ worth of groceries or something like two years of Nik Bhatia’s excellent subscription, “The Bitcoin Layer.” When I first wrote this draft, that was down to about a single night, probably just one week’s worth of groceries, and just over six quarters of Bhatia’s unencumbered writing. Inflation might be a bitch, but then what do we call a BTCUSD crash?

Now, after yet another bitcoin price debacle, those 500,000 sats probably get me a single hostel bed or two and would barely have covered what I just spent to add some basic items to my empty post-travel fridge.

Inflation is terrible and unfair, but it is slow, often predictable and fairly manageable with even the smallest of efforts (often automatically adjusted through indexation in wage contracts or other recurring transactions). Bitcoin is fast, unpredictable and entirely unmanageable to the average person. That’s what makes it such a poor money at present. It’s pretty unusable in its main duties (carrying economic value across time and space), and that’s before considering the altogether artificial hassle of paper, tax and capital gains. Perhaps that’s part of the inevitable growing pain. Humans are ingenious types; we adapt and learn and make institutional arrangements that fit our environments. But it’s at times like these that I’m not so sure. That mountain we’re climbing looks awfully steep.

I never thought I would say it, but the bureaucratic monstrosity that is the euro proved a better store of value over this same time period — the USD even more so, as I pay some portion of my expenses in even weaker currencies than the almighty dollar. Between the two weeks of pulling some sats-denominated savings and spending them, I didn’t lose 25% of what they could get me, but only some minor fluctuation around a pretty steady downward trend. My flat’s rent, which is adjusted to official monthly inflation metrics, was in June about 3.5% more expensive in local currency than in March, about 7% more expensive in euros, and about 50% more expensive in bitcoin (had I paid it with bitcoin two weeks later, it would have been another 41% expensive still — rent steadily increased, dollar recuperated somewhat, and bitcoin collapsed even further). Some store of value, eh?

This isn’t a critique of bitcoin but a form of basic internal housekeeping. Hardcore Bitcoiners and the newly infatuated like to say that price is irrelevant, that bitcoin is amazing at any price, that the revolution is inevitable and gradual regardless of what silly traders are doing with the silly BTCUSD tickers. Purchases go one way, bro.

But you have to get to that future somehow, and having newbies rekt on 50% drawdowns and businesses saying “no thanks, give me d-o-l-l-a-r-s!” isn’t exactly helping.

(Cartoon/Lina Seiche)

Like goldbugs have long insisted about an ounce of gold staying the same, 1 BTC might equal 1 BTC but its economic value can still shift. In reality, prices adjust; as economic actors, human beings care about what money gets you, not what the denomination of that unit is. What, do you think Venezuelans consider “1 bolívar equals 1 bolívar” to be a profound statement?

When everything is priced in dollars, what “1 BTC” gets you is subject to ever-shifting bitcoin prices, with the nominal “1” in that unit being unimportant. Six months ago, 1 BTC got you a new Tesla Model 3 Performance with some extra fancy gadgets. When I first wrote this first draft, that same saving only got you a new Ford EcoSports. Now it gets you a couple-years-old used car with 80,000 miles behind it. But 1 BTC still equals 1 BTC, right?

No. A bitcoin is not still a bitcoin since those who would sell me anything of material value index their bitcoin sales to the dollar and not to a specific number of sats. That might be a fault with them that in time must change, but so far seems to be the way of the non-bitcoinized world. Unit of account is the required trophy for a Bitcoinizing world.

Sats Devaluation

Following the May blow-up from $45k to $30k, Nico Antuna Cooper wrote what most Bitcoiners chanted in public or in private: “Why the bitcoin price doesn’t matter:”

“The difference between Bitcoin and everything else is that the price of bitcoin doesn’t matter. Over the long term the price of bitcoin has gone up, yes, but the value proposition of bitcoin as hard, non-confiscatable and truly decentralized money is really what matters.”

Think about that statement for a minute. Money’s sole purpose is to coordinate consumption and production in the real world. It’s to move value from one place to another, across time, and to transact between people who therefore don’t have to trust one another. Money’s price is its purchasing power, how much real stuff it can get you. But Cooper, echoing sentiments of most Bitcoiners, claims that the price of bitcoin doesn’t matter. What you can get for bitcoin and therefore how it stores value across time is somehow inessential.

Cooper continues by saying that bitcoin’s value proposition isn’t as an asset that appreciates, but rather as a “hard, non-confiscatable and truly decentralized money.” True, but irrelevant. Yes, those things are what Bitcoiners treasure about bitcoin and how Bitcoin, the monetary network, can revolutionize the world. But bitcoin, the asset, can only do those things if the network’s total value packs some financial punch. At a sub-$1 trillion market cap — now sub-$400 billion — it doesn’t. With an asset tumbling in real-world market value, it doesn’t.

Put differently: the HODL mindset requires you to believe that -25% weekend drops — or -70% over seven months — in your net wealth is fine. Dandy fine. Time in the market beats timing the market, or some other fashionable Warren Buffet quote.

An asset’s price is a gauge of its success. Almost trivially so: an asset rises in price when buyers (i.e., those who want it) outnumber or out-money sellers (i.e., those who don’t want it). So in the recent seven-month period, fewer people or cumulatively less-wealthy people have wanted bitcoin. Tell me again how that’s good for Bitcoin?

Honey badger should care because price knows something you don’t and because a tumbling bitcoin price is the greatest vote-of-no-confidence any market economy could ever deliver. Sellers are dominating the market, saying, “We don’t want you.”

It’s because markets know something that it’s so hopelessly asinine for “trad-econ” profiles like Nouriel Roubini, Warren Buffet, Paul Krugman or Nassim Taleb to confidently claim that bitcoin is an overvalued bubble at x, y or z price. “Hurray,” cheers the Bitcoin crowd when we’re shitting on the haters.

Since the principle works in reverse too, it’s equally asinine to say that bitcoin is undervalued at $29,000 or $45,000 (what about $18,000?), like many prominent Bitcoiners are fond of doing. But how could it be? Markets know something. For you to say that markets are wrong reflects a quantity of hubris I don’t even want to contemplate. Yeah, really? Good luck with that.

Another piece in Bitcoin Magazine from last month stated confidently that:

“Bitcoin as a monetary tool allows everybody to have the same opportunity — accumulate and save as much money as possible and preserve any amount of wealth, large or small, without the worry of confiscation or inflation, i.e., the way money should be.”

In the last seven months or less, it’s true that a holder of bitcoin didn’t lose purchasing power to outright confiscation or inflation. But holding bitcoin stripped them of worldly value as they lost purchasing power nonetheless. Sellers of goods and services — those things we wish to acquire, today and tomorrow and the days and weeks thereafter — charged us many more sats after the crypto crash than before. And then yet some more again. How is 1 sat prior still equal to 1 sat now? Did bitcoin (hyper-)inflate against the dollar?

The promise is: you’re not going to be debased, that “people can plan for that in a much more logical way: they know that they won’t be debased out of their wealth.” And then they are anyway.

With a straight face, you can’t say that the problem with the dollar system is that it slowly erodes your purchasing power, and at the same time happily embrace a collapse in BTCUSD because it allows you to stack at lower prices or whatever. This is either disingenuous or schizophrenic. If a depreciating exchange rate between dollars and real goods and services is bad for those who hold and use dollars, then a depreciating exchange rate between bitcoin and real goods and services is also bad for those who hold bitcoin.

Bitcoin gradually making its choppy way from $60,000 to $20,000 is still a non-confiscatable and decentralized thing, but it’s not a “hard” money — and barely a money at all. Its quantitative scarcity — i.e., the number of sats outstanding — remained “hard” and unaltered (but not unchanged since 34,000 blocks were processed since then, creating more than 200,000 new bitcoin). But it’s not “hard” because its worldly scarcity was cut almost in half, twice in a row. And it’s not that money-like because fewer people want it (and with less urgency) today than they did half a year ago. . What users of a money can engage with is the prices of goods and services in that money.

I’ve heard prominent Bitcoiners say, “Bitcoin is antifragile,” stealing Taleb’s term and, I presume, content to rub it in his face. For antifragile things, any and all volatility is good, because the thing emerges stronger. That has some ring to it and is at some level the meaning of antifragility. But other things that are antifragile, like biospheres or human immune systems or — explicitly citing Taleb — the restaurant business, show us upper limits.

Taleb’s phrase for that is “absorbing barriers.” The immune system gets stronger when it gets stressed, but at some level of stress it breaks and the person it aims to protect dies. A single restaurant closing is quickly replaced by another, redistributing the use of the capital, labor and land that wasn’t valued enough by consumers. But in 2020 to 2022, a political class drunk on fiat money and fighting invisible COVID-19 enemies made a massive dent into many cities’ restaurant businesses, permanently damaging most of it. Not so good.

Bitcoin, the protocol, seems pretty antifragile. Bitcoin, the money, isn’t.

Bitcoin isn’t money — but it could be (and probably should be).

With a long enough time horizon, provided that this isn’t the end of our monetary experiment, bitcoin’s dollar price can only go bananas because we have another system alongside it. The only way in hell it can be “dandy fine” after the last six months-plus of chaos is that there’s another monetary system from which we can plunge more of our regular earnings to get our hands on cheap corn. Another monetary network that can prop up the quantity side of your sats stack, picking up your transaction slack and instead let you HODL your coins in relative peace. Because man’s gotta eat and we’ve got fiat bills to pay. We can live in a bitcoin world because we’re subsidized — saved — by the dollar system we hate so much.

What happens when we no longer have that safety net of dollar-denominated incomes, stable(ish) prices and a money system that still goes bananas over a single weekend? What happens when bitcoin tries to stand on its own two legs?

Feeling conflicted about it, Bitcoiners celebrated the institutional capital when it arrived — the traders and fast-moving speculative money when they delivered bitcoin’s latest 10x in 2020 to 2021. But now we’re coming to regret their presence as the liquidity spigot that propelled those funds is drying up and the fast-moving speculative guys move along.

Bitcoin’s dollar price matters because nobody prices things in sats. Since retailers adjust selling price to the BTCUSD rate, the holder of BTC carries all the downside risk, the pain of which we’re now learning to live with.

You can ostensibly buy anything for bitcoin, sure, but you’re not really buying it “for bitcoin.” Stuff from retailers left and right, some everyday things in El Salvador or select houses in Dubai and Portugal make the news and they indicate some amazing adoption of this still-young asset. But you haven’t gotten anywhere, really. None of the things you can buy for bitcoin were priced in bitcoin. That means your BTC didn’t hold any value; you took a short-term gamble from your entry price to your exit price, with a frantic sliver of hope that you overtook price appreciation in the Portuguese home you were eying up or the groceries in the store getting nominally pricier.

Had the home seller or supermarket priced their goods in sats, a shift in BTCUSD would be irrelevant, like the “1BTC = 1BTC” crowd says. But they price their wares in dollars and ask you to fork over more sats when the exchange rate moves against you (and fewer sats only when it moves in your favor). That means you’re not holding money, but a high-risk asset.

Which, of course, is how financial markets have priced it.

You Can’t Escape Risk: When Taleb Was Right

He said it so stupidly, tucked away in an otherwise laughable article, but he pointed to the risk-carrying problem of bitcoin adoption. I discussed it at length in an article last year titled “You Cannot Eat Bitcoin”:

[Taleb] writes that for a person to purchase consumption goods with bitcoin, she must have an income in bitcoin; but for her to receive (parts of) her salary in bitcoin, the employer must receive at least some bitcoin in revenue; and the seller of consumption goods must obtain at least some raw materials in bitcoin. Of course, this is terribly wrong; yet, he’s also profoundly right – in an almost trivial way. Unless currencies are fixed against one another or redeemable in the same outside money, purchasing and selling items in a currency different from the one in which you pay your expenses or earn your incomes exposes you to exchange rate risk.”

Much to the ire of bitcoiners and libertarians alike, Taleb has a point: when you opt into any monetary network, you’re not just making an isolated transaction between yourself and whoever sold you the money, but a bet on the future exchange rate of that money vis-à-vis other items.

What we need are high prices, wealthy bitcoiners and a greater tolerance for variation in real income. For Bitcoin to work, truly revolutionarily work as its own independent thing rather than a patchy add-on to a faltering dollar system, people must carry the price risk that’s been artificially purged from the legacy system.

What the goldbug argument above shows is that you cannot escape market risk. For thirty years, inflation-targeting central banks have tried by keeping the CPI-genie in the 2% bottle — unleashing property booms and busts, financial mayhem, an economy of zombie corporations and runaway public deficits.

For bitcoin to work as money, its users need to embrace the market risks that otherwise get hidden in the fog.

On a recent “Fed Watch” podcast, Tone Vays says that “Bitcoin was built for this, but the price keeps going down.” Let’s rule out the uncomfortable option that we were wrong ab

I Thought This Bitcoin Cycle Was Different

Cory Tucek — Sat, 02 Jul 2022 07:00:00 -0400

Like many Bitcoiners who came before me, I thought this cycle was the one to end it all and lead us to hyperbitcoinization. Boy, was I wrong.

This is an opinion editorial by Cory Tucek, the CEO of Movies Plus and the host of the “Bitcoin Made Simple Podcast.”

To all the plebs that came before me, listening to your tireless explanations and warnings saved me from some terrible mistakes. Thank you.

“As a Bitcoin newbie, I thought this time was different.” — Me (and every Bitcoiner past, present and future)

The above statement is something that I said to my wife just a couple of weeks ago, prior to the carnage that brought us down to $20,000 again. I was certain this time was different. There wouldn’t be 70% drawdowns in bitcoin anymore. This was hyperbitcoinization, the moment bitcoin would soar past $100,000. This was when bitcoin would become the world’s reserve currency.

It was … until, it wasn’t. Don’t get me wrong, that day is still coming. It’s just a little further than I originally thought.

The purpose of this article is not to rehash what all the Bitcoiners who have been here before already know; it’s more to serve as a warning to future Bitcoin newbies. When you get into Bitcoin, you will think, “This time is different. Thank God I got in at this price before it takes off and never comes back!” You will think, “Good thing bear markets and drawdowns are a thing of the past.” Which is to say, you will think all the wrong things and you will think them right off the bat.

To give you perspective, here is my Bitcoin journey.

I first heard about Bitcoin in 2012 when a filmmaker I had worked with, Nick Mross, posted on Facebook about a documentary he was directing. It was untitled at the time, but eventually became the film, “The Rise and Rise of Bitcoin.” I looked into it, considered speculating but, like everyone, my next thought was, “It’ll get hacked.”

The following year, I saw the price rise to $100 per bitcoin and I contemplated throwing $1,000 in and grabbing 10 bitcoin for the hell of it, but like everyone else, I thought I was too late to the game and would surely lose my money. Instead, I added a few extra days to my honeymoon with that money. “Hey honey, I got us three extra nights on our honeymoon for only $200,000,” is what I should have said.

I told that story to Ben Prentice and Heavily Armed Clown, and they reassured me, saying that had I bought 10 bitcoin for $1,000, I would have sold them for $1,200 and thought I was a genius. Truer words have never been spoken.

For some time after, bitcoin was something that I occasionally looked into, but never enough to fully understand. In 2017, the price took off and again I was too late — Bitcoin at $10,000 was too rich for my blood. It was certain to crash, and this time I paid close enough attention to feel justified when it did crash. It was over; bitcoin was dead, but it hung around through 2018. It didn’t die. Then I started to watch more closely to see if it could rebound, and it did. By the spring of 2020, I was ready to FOMO into bitcoin.

At the beginning of the pandemic, it started with, “We own a little bitcoin,” and quickly escalated into, “Liquidate everything and buy all we can!” I was determined to buy as much as I could before it reached its previous all-time high of $20,000 again. I did, and then bitcoin started its run. It passed $15,000. I was a genius! It smashed through $20,000. My IQ was increasing by the second!

When it broke $30,000, I began telling people how I knew with 100% certainty that this would happen. I even had another great idea that no one else had thought of, “I am going to start a podcast! About Bitcoin!” The “Bitcoin Made Simple” podcast network is the only good thing to come out of this phase, not because I am great at podcasting or understanding Bitcoin, but because the interviews I’ve done made me realize more just how little I knew about Bitcoin, and how much I had to learn.

Then Elon Musk invested. I knew I was smart, but now I was even smarter than the only guy sending rockets into space that aren’t shaped like male genitalia.

Bitcoin broke $40,000. I tried getting every person I knew to invest before it took off and blew through $100,000. My streaming platform, Movies Plus, had just brought on investors, and I convinced them to make the whole investment in bitcoin, because “To tHe MoOn!”

Bitcoin broke through $50,000. I was so ahead of the game I made Hal Finney look like a noob.

Then it broke $60,000. It was Satoshi and I. We had done this together, just the two of us.

Then suddenly, it retraced a bit. I confidently told people it was an expected dip because this one time I saw someone post a chart with an arrow. “Just look at S2F (stock-to-flow), it’s only up from here on out.”

Then, the bottom fell out. It crashed down into the $30,000s! What happened?! This had to all be Musk’s fault. What a moron. The day it was crashing, I even texted Guy Swann and said, “So did I earn my bear market badge today?” I literally blushed when I typed that out. I was so naive. I might as well have tattooed, “Hi, I’m new to Bitcoin. Here’s how I will fix it,” on my forehead.

I spent the summer nights of 2021 on Twitter Spaces railing against the powers that be, pushing everyone toward fighting for freedom, but I noticed I slowly stopped talking about how much I knew about Bitcoin. The realization was setting in that I knew nothing about Bitcoin. I needed to shut up and learn. That was when I thought I finally understood Matt Odell’s great quote, “Stay humble and stack sats.” I was back to being humble, back to just stacking sats and learning.

Then bitcoin started to rebound and I thought, “Wow I am lucky, we only had a 50% dip.” Bitcoin was ripping towards its all-time high, so I “got on zero,” and went all in on bitcoin.

Once we got back above $60,000, we all knew this was it. This was the moment we had waited for. Hell, look at the tweet that I sent right at the tippy top of the price action.

Nobody saw what was coming next. (Except for HODL Magoo and you can hear him explain it in this podcast.) The price was swatted down again. It fell and fell, and then landed in the range where we were stuck all of summer 2021. “It’s okay,” I thought. “The thesis hasn’t changed and I still haven’t had to experience the max pain.”

At this point, I started to take my own advice: only invest money that you can leave untouched for four-plus years (sorry, “get on zero” gang), keep your head down, find ways to crush it in the “fiat mining” world to increase your cash flows, and stack bitcoin. Or as Odell puts it, “Stay humble and stack sats.”

It finally sunk in: Bitcoin is a test of many things, but it really tests your ability to stay humble. Being humble goes a long way in life. I am on a journey towards trying to be more humble in all aspects of life, thanks to Bitcoin.

I was glad to be humbled, but even more glad that I didn’t have to deal with those 70%-plus drawdowns because “This time was different.” Until recently, when this time was starting to look like those of the past.

I never understood why the “stay humble” part was so important until recently. If you drift around Twitter and pay attention to the sentiment, almost everyone is down. They’ve taken all the punches they can take and it feels like everyone is retreating into the corner. Everyone, that is, except the real plebs who have been here before and aren’t going anywhere. Follow their lead. This is why staying humble is so important, it helps you keep your chin up when times are tough.

Bitcoin isn’t about me and it isn’t about you. It’s an opportunity to escape the clutches of the fiat world. It won’t happen on your timeline and it won’t wait until you’re ready. It will just keep producing blocks, one after another.

So if you’re new to this space, listen to your fellow plebs, the ones who have been through hell and are still standing. They are the ones to listen to. If they try to sell you a coin other than bitcoin, block and move on. If they seem too “toxic,” they honestly are just trying to look out for your best interests. Ask questions, learn from their mistakes, and most importantly … stay humble and stack sats because the next time will not be different than the last — until one day it isn’t.

This is a guest post by Cory Tucek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Bitcoin Ban In Nigeria: What Has Changed?

Abdulrasaq Ariwoola — Sat, 02 Jul 2022 05:00:00 -0400

More than a year since Nigeria banned bitcoin services, its SEC has released updated regulations. Will the bitcoin market be affected?

An order from the Central Bank of Nigeria (CBN) barring financial institutions from servicing cryptocurrency transactions, effectively “banning Bitcoin” in the country, withstands more than 16 months later, despite the Nigerian Security and Exchange Commission (SEC) recently releasing new regulations for digital assets and the continued significant adoption and use of Bitcoin in the country.

How Will The Latest Regulation In Nigeria Impact Bitcoin?

Last month, the Nigerian SEC released a set of regulations aimed at governing the issuance, exchange and custody of digital assets there. These new sets of digital assets regulations are a follow-up to a September 14, 2020 commitment to work on regulation that would solve many of the perceived problems with the cryptocurrency market in Nigeria.

The long-awaited regulation was purportedly a move to guide the use of digital assets in the country. The word “Bitcoin” does not appear in the rules document, and the regulatory guide outlines rules that would govern cryptocurrencies outside of BTC, including the issuance of new digital assets.

But some of the new rules would apply to businesses that presumably offer Bitcoin services to customers, though they may offer other cryptocurrency services as well. The regulation defined entities that qualify as digital asset actors to include digital asset offering platforms (DAOPs), digital asset custodians (DACs), virtual assets service providers (VASPs), and digital assets exchange (DAX). The SEC further stated that it would accommodate DAOP operators, so long as they tendered evidence of a “minimum paid up capital” of 500 million naira and a current fidelity bond covering at least 25 percent of the minimum paid-up capital.

The SEC also added that it might reject an application for registration of digital assets if its operation will be against public policy, be detrimental to investors, or violate any of its laws, rules and regulations. The commission further stated that the rules could be reviewed from time to time to arrive at the needed regulatory fluidity of digital assets or security.

While the regulation could set the path for a gradual loosening of CBN restrictions, it also raises concerns about the effect it would have when it gains traction, particularly for the growing use of BTC in the country. An expected outcome could be the stifling of bitcoin transactions, including know-your-customer rules and the tracking of transactions carried out on exchange platforms. Consequently, this could discourage Bitcoin enthusiasts from using regulated cryptocurrency exchanges, as it defies the essence of decentralization and anonymity, which attracts many to Bitcoin in the first place.

Bitcoin And The Continued CBN Ban

It has been more than a year since CBN banned financial institutions from facilitating cryptocurrency-related transactions and further ordered that accounts serving cryptocurrency operations be shut down. This move came at a time when bitcoin was recording massive price gains, and the country’s population was turning to it en masse.

The ban, as the CBN explained at the time, did not outlaw cryptocurrency-related activity in the country, but rather the involvement of financial institutions in the cryptocurrency market. Many framed this move as CBN’s way of preventing a systemic failure, should financial institutions start to dabble deeply into the highly-volatile cryptocurrency market.

While the SEC has now fulfilled its promises of introducing regulatory guidelines for the treatment of digital assets, the introduction of this new regulation does not remove the ban on financial institutions facilitating cryptocurrency-related transactions. This gives insight into the mixed reactions elicited by several industry experts, who have opined that the authority of the CBN as the chief financial regulator in the country makes the SEC susceptible to its rules and regulations.

In October 2021, Nigeria launched the eNaira, a central bank digital currency (CBDC) in a bid to promote the digital use of the naira. While the eNaira runs on blockchain technology, it differs from bitcoin in many ways, including the fact that it is not in and of itself a financial asset, but rather a digital form of the naira from which it draws its value.

The continued ban from CBN and facilitation of the eNaira suggest that the country’s official stance on Bitcoin is not changing, despite its increasing adoption throughout Nigeria.

Bitcoin Has Thrived In Nigeria Regardless Of Regulation

While the ban on financial institutions made it difficult for individuals and entities alike to facilitate cryptocurrency transactions, Bitcoin has thrived in Nigeria nonetheless.

Data from Paxful and LocalBitcoins have demonstrated that Nigeria records high peer-to-peer (P2P) transactions. Data has also shown that Nigeria witnessed a 15% year-over-year increase in P2P trading of bitcoin after the central bank ban.

Despite the bearish state of the bitcoin price, it has managed to stay afloat and shows many indications of bouncing back. This has further spurred agitations from the Nigerian public for the formal legalization of bitcoin use among the country’s financial institutions.

With Bitcoin demonstrating itself as a technological innovation that will thrive well into the future, it is possible that the CBN will make a turnaround and lift this ban on financial institutions in the country. However, until that is achieved, the SEC regulation remains merely a blueprint to achieve some sort of regulation and stability in Nigeria’s cryptocurrency space.

This is a guest post by Abdulrasaq Ariwoola. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

We Need To Declare Our Independence From The Federal Reserve

Joe Moffett — Sat, 02 Jul 2022 03:00:00 -0400

It’s time for the Libertarian Party and Bitcoiners to team up and make their voices heard in order to declare our monetary independence from the Fed.

This is an opinion editorial by Joe Moffett, a contributor at Bitcoin Magazine.

The Democrat and Republican parties have been wielding social movements as weapons in a culture war. Is it time the Libertarian Party wields the Bitcoin hammer in the battle against the Federal Reserve?

In the cypherpunk mailing list, Satoshi Nakamoto had a back-and-forth exchange with an unknown cryptographer:

“You will not find a solution to political problems in cryptography.” — Unknown cryptographer

“Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.
“Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.” — Satoshi Nakamoto

Between Nakamoto’s emails, the Bitcoin white paper and the source code, there was probably nothing they said with a more aloof tone than this quote. I have to imagine they understood the economic ramifications that would come with developing such a system and this was likely why they remained anonymous. Then again, maybe they were blissfully unaware that there is no more dangerous enemy to the power of the state than economically free people.

Many early adopters of bitcoin were more likely software and tech gurus than they were economists or libertarians, but this comment by Nakamoto was profoundly libertarian. After all, if the government can wage war on poverty, drugs, crime and terror, why can’t libertarians and Bitcoiners alike wage war on money printing? It’s hard to overstate the phrasing here: “[W]e can win a major battle in the arms race and gain a new territory of freedom.”

The Libertarian Party, under new management, recognizes just how important Bitcoin is in this battle. Angela McArdle, chair of the Libertarian National Committee, embraces the importance of bitcoin’s scarcity, self-sovereignty, and censorship resistance. On a phone interview, McArdle shared:

“Inflation is being reported at 8.6%, but if you fill up the gas in your car, you know that it must be higher than that. No one knows the real rate of inflation, but what I do know is you cannot print more bitcoin. You can print dollars perpetually until it’s worthless like Venezuela, but you can’t print more bitcoin.”

Sure, the Libertarian Party is using the language, “Declare your independence from the Fed,” in a metaphorical way, but we can never forget that our country was founded on a very real Declaration of Independence that led to something very tangible.

“We, the members of the Libertarian Party, challenge the cult of the omnipotent state and defend the rights of the individual.” — The Libertarian Party’s Statement of Principles

Today more than ever, the enforcement tool of the so-called “omnipotent state” and those in power is their monetary policy. The monopolization of fiat currency and the burden of taxes have become weapons of the state to empower Washington and disenfranchise the people. Libertarians and Austrian economists have been sounding the alarms for decades, but as Ron Paul has attributed to George Orwell, “Truth is treason in the empire of lies.”

At a certain point however, the truth comes out.

This inflation was either due to incompetence or deliberate debasing of the U.S. dollar, but Jerome Powell, chair of the Federal Reserve Board, admitted that he doesn’t understand basic economics. I would have preferred him to come out and admit he lied.

Our favorite Bitcoiner, Peter “Gold” Schiff, along with every Austrian economist, pointed out how inflation works when the money printer started in March 2020 (when Schiff comes to the same realization as Bitcoiners, we will welcome him with open arms),

So here we are, July Fourth is coming up and we, the people, are in a quandary. Our leaders lie, our media covers for them, our financial institutions are corrupt and consent of the governed sounds more like a brand slogan than the foundation of our government.

So what options do we have?

Fix the money, fix the world.

Bitcoin is the greatest peaceful revolution the world may ever know. Back to that seemingly innocuous Nakamoto quote, “[W]e can win a major battle in the arms race and gain a new territory of freedom for several years.” The arms race they must be referring to is power — political and economic — of governments versus economic power in the hands of individuals. Maybe it’s time to turn Rosie the Riveter into Dolores the Diamond Hands.

(Painting/J. Howard Miller)

Libertarians and Bitcoiners are allies in the fight for sound monetary policy. Speaking of a Bitcoiner and Libertarian alliance, McArdle said, “It’s important for us to build a parallel economy, so in the event the dollar collapses completely, or some kind of financial crash, we have something to shift over to laterally. The more people that have Bitcoin and understand it, the better.”

Nakamoto had this revelation when they said, “It’s very attractive to the libertarian viewpoint if we can explain it properly. I’m better with code than with words though.” Clearly, they weren’t wrong. Nakamoto’s creation spawned a movement without a speech or catchy slogan, just code and believers. Some of us libertarians may have been a bit late to bitcoin, myself included, but the troops are coming.

“Once more unto the breach, dear friends, once more” — King Henry in “Henry V” by William Shakespeare

The Libertarian Party is hosting a livestream event at 2:00PM EST on July 3, 2022. Join the call and declare your independence from the Fed.

Declare your independence from the Fed

Join the Libertarian Chair Angela McArdle and Vice Chair Joshua Smith July 3 at 2:00 PM EST with the Bitcoin experts Saifedean Ammous, Marty Bent, Stephan Livera, Jameson Lopp and Guy Swann.

Think about doing three things in preparation for Independence Day:

Watch the livestream and donate some sats (bitcoin) for liberty
Stack some sats for yourself
Help one friend or family member stack their first sats

I want you… to buy bitcoin.

(Source)

This is a guest post by Joe Moffett. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

A Day In The Life Of A Bitcoin Core Developer

Bitcoin Magazine — Sat, 02 Jul 2022 02:00:00 -0400

Bitcoin Core developer Gloria Zhao shares what it’s like to work on Bitcoin and why the code needs to be maintained for the long-term security of the network.

Watch This Episode On YouTube

Listen To The Episode Here:

In this week’s episode of “Bitcoin Bottom Line,” hosts C.J. Wilson and Josh Olszewicz are joined by Gloria Zhao, a Bitcoin Core developer who breaks down the behind-the-scenes action.

Wilson begins by asking, “What got you into Bitcoin in the first place?” To which Zhao responds, “There are a lot of ideologies in there from the beginning that I found very appealing, and on top of that, there are a lot of very interesting engineering technical challenges to work on. As a computer science student, obviously I was drawn to that.”

She continues, “I grew up in Silicon Valley so I think that gave me perspective on how endless it is to chase this idea of ‘innovation’ and profit, and that always struck pretty empty to me so Bitcoin was very different and I had an immediate draw to it.”

Olszewicz follows up, “What is your day-to-day like? Zoom calls and meetings? Or do you work independently as a decentralized developer?”

Zhao answers “I work on Bitcoin Core, which is one implementation of a Bitcoin client … Day to day, I’d say, save a few community, cultural changes, it's kind of just like working on any software project, except we don’t have a boss, we just kind of review each other's PRs [pull requests] because we care about them and they are important to Bitcoin. We fix bugs because if they stay in the client then the network might have some troubles, not because our boss told us to.”

To follow this up, Wilson asks, “What's the percentage of time you spend, let’s say, reviewing other people's work, having conversations with other people about what you guys are working on versus just going into the rabbit hole yourself and doing more of a deep dive?”

Zhao responds that because of the nature of her work, she keeps a detailed breakdown of her time. “About 30% of my time on my main project … I try to do about 50% of my time on just peer review, and/or opening small PRs to fix bugs … about 10% of my time on things like advocacy and education … and 10% just pure learning.”

She goes on to say, “I very much value time like this where you are able to send a message … I can tell people, ‘Hey, there's people working on Bitcoin. Hey, it's gonna break if nobody works on it,’ so it's really important to pay the people who do, and get more people to want to be Bitcoin Core developers, because that is very important for Bitcoin's health, developmentally.”

Discussing personal securities, Zhao details, “We live our lives online and there is a lot at stake and a lot to lose. I think everyone should learn how to code a little bit, or equip themselves with tools to protect themselves on the internet.”

Continuing on the discussion of security in regards to Bitcoin, Zhao explains, “We care about operating in this system because there are legitimately people who need money in these systems, and other altcoins where they are not operating under that threat model, and maybe they are doing something or solving an interesting technical challenge that is useful in other aspects, but they don’t have — what I think is — Bitcoin’s core value proposition which is its security model.”

Zhao finishes the episode, “It is going to be built brick by brick, where everything is stable underneath, so we need more people.”

Bitcoin Is A New Paradigm Of Stakeholder Capitalism

Mickey Koss — Fri, 01 Jul 2022 23:00:00 -0400

If bitcoin becomes the world’s reserve currency, we can add scarcity and consequences back into the system to stop the cycle of moral hazard and malinvestment.

This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the Infantry before transitioning to the Finance Corps.

History may not repeat itself, but it sure does rhyme from time to time. As overextended cryptocurrency platforms like Celsius and Three Arrows Capital go insolvent, a benevolent billionaire steps in to rescue BlockFi and Voyager. But why? Because of the incentives; this is true, stakeholder capitalism at its best. The virtue of greed is playing out right before our eyes.

Knickerbocker Crisis: Banking Panic Of 1907

In 1907, the United States financial system was nearly brought to its knees through a series of defaults on stock market margin loans. Rampant speculation led to an over-leveraged system, ultimately resulting in a cascade of liquidations, the stock market crashing and the insolvency of the Knickerbocker Trust Company.

As contagion spread, individuals and banks alike began to withdraw deposits from the banks, lowering reserves at a time when banks were actually required to hold a portion of their deposits on hand.

Luckily, J.P. Morgan organized a private bailout of select banks by providing their own personal capital to shore up balance sheets and guarantee liquidity. Even though Knickerbocker was the third largest bank trust in New York City at the time, it was liquidated in a relatively orderly fashion and allowed to fail.

Though it may seem strange to think why these greedy capitalist fat cats would risk their own capital to save banks they didn’t own, it actually makes perfect sense if you think about it. If contagion was allowed to spread, it ran the risk of spreading to their own banks and companies. This was not altruism. This was pure and profitable self-interest: stakeholder capitalism. Save your competitors to save yourself because holding a stake in a failing system means that your stake risks failure as well. And guess what? It worked to an extent.

Lender Of Last Resort

The cryptocurrency space has no central bank and no lender of last resort. Without the ability to print his own money, Sam Bankman-Fried (SBF) is risking his own money to prevent the collapse of others. If BlockFi or Voyager goes down, SBF may be left with hundreds of millions of dollars in losses.

His reasoning undoubtedly must be similar to that of J.P. Morgan in 1907. Panic and contagion are not good for business. SBF is just following the incentives. By saving the businesses he assesses are viable in the long term, he is helping to stave off panic which could result in more pain and more loss for the industry. By allowing for the defunct business strategies to fail, he is mitigating the risk for further hazard in the future.

Save the system to save yourself. The private markets are incentivized to step in when no other alternative exists.

Bitcoin Fixes This

The fiat system is currently propped up by a central bank that promises to backstop banks with unlimited liquidity. The result is a system wrought with moral hazard. For the most part, banks don’t have to answer for their mistakes when they can be papered over with printed money.

The longer this is allowed to occur, the more deadwood piles up, increasing the risk of a truly apocalyptic financial forest fire.

By adopting bitcoin as a reserve currency, central banks can move back to a sound money standard. By removing the ability for unlimited liquidity creation, central banks will no longer be able to save the entire system from collapse. They can no longer prop up zombie companies and incentivize irresponsible risk-taking. Losses will no longer be able to be socialized while the banks privatize profits after their bailouts.

Scarcity is not only a key property of hard money, it is also a necessity for a sound and stable system of value. By adding scarcity and consequences back into the system, we can stop the cycle of moral hazard and malinvestment. We can clear out the deadwood and pave a path for a better future.

This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Just As The Harlem Globetrotters Changed Basketball Forever, The Perth Heat Can Change Sports Forever With Bitcoin

Steven Nelkovski — Fri, 01 Jul 2022 22:00:00 -0400

An Australian baseball team, the first to fully adopt a bitcoin standard, is well-positioned to be a bitcoin advocate in the sports world.

Almost 100 years since the Globetrotters were formed in 1926, the Perth Heat, Bitcoin’s baseball team from Australia, is set to change sports forever, but in a different way.

Originally, the Globetrotters played a huge role in the desegregation of professional basketball. But some 20,000 wins later, and having played for more than 120 million fans in 123 countries worldwide, the Globetrotters’ legend lives on.

Back in November, 2021, Perth Heat became the first team in the world of sports to begin operating on a Bitcoin standard. It’s a move which surprised many — a move which the skeptics laughed at, and a move which normies had no idea the meaning of or why a business would even consider BTC.

But just like every piece of technology that’s passed through human hands over centuries, these attitudes will change, and it won’t be too long before all professional sport teams have bitcoin integrated into their business.

Why Will Sport Teams Integrate Bitcoin?

Firstly, because their players will demand payment in bitcoin. Athletes understand low time preference better than most.

Secondly, sports organizations won’t remain competitive if they stay on the sidelines.

Likewise, bitcoin won’t win if it stays on the sidelines.

Recently, Block Inc. published some research on the global awareness of bitcoin which Marty Bent summarized in his issue-1218:

“Currently, the conversation around bitcoin is confined to Twitter, YouTube, technical mailing lists/forums, and GitHub. Whether you like it or not, one thing bitcoiners can do to try to close the information gap is meeting the audience where they live these days, which include platforms like TikTok and Instagram,” Bent wrote.

So how does the famed history of Globetrotters and a baseball team from Perth, Australia, help the global adoption of bitcoin?

Well, just like the Globetrotters helped bring basketball to so many new fans, the Perth Heat can bring bitcoin to many new communities.

Did you know there is a semi-professional baseball league in France?

Now picture this.

The Bitcoin baseball team lands at Charles de Gaulle airport, Paris, to play a series of games against the best baseball team in France, the Huskies de Rouen.

The Huskies are like the Yankees. They have won 15 of the last 17 championships — they win a lot.

So, can a baseball team, operating on a Bitcoin standard, halt the Huskies juggernaut?

Would such a game intrigue France’s leading newspaper L’equipe?

How about scenario two?

This time the Bitcoin baseball team crosses the Atlantic sea for a trip to Mexico!

Mexicans love baseball and we know Ricardo Salinas loves bitcoin.

Now, if Uncle Ricky was to throw the ceremonial first pitch at the game, do you think photos of Salinas throwing a bitcoin-branded baseball would make headlines?

While in Mexico, the Bitcoin baseball team could play a series against Durango. Durango are in the Mexican league and the organization has developed their very own fan token, Xoy Coin!

Suddenly, we could have the first-ever international event between a Bitcoin sports team and a tokenized team — and when Perth wins, the inevitable conquering of bitcoin over all other coins will become apparent!

The cities and host venues are endless.

Tournaments around the world could be created, and the Bitcoin Cup could be hosted in different cities like London, Shanghai or Johannesburg.

Imagine, the Bitcoin Sports League! Perth Heat (baseball), Peter McCormack’s Real Bedford (soccer) and the NBA’s Houston Rockets who have partnered with NYDIG (basketball).

Out of season, March to October, the Bitcoin baseball team could travel around the world to help education and global adoption as role models and community partners, even supporting projects like Jack Dorsey and Jay Z’s Btrust in Nigeria.

Just like the Globetrotters took basketball to all parts of the world, entertaining communities who knew little about basketball, the Perth Heat are primed to play a similar role for bitcoin.

It’s time to play ball.

This is a guest post by Steven Nelkovski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Reusing Bitcoin Addresses Can Lead To Private Keys Being Stolen

Bitcoin Magazine — Fri, 01 Jul 2022 19:30:00 -0400

Only using Bitcoin addresses one time is best practice. By using addresses more than once, users give up information that can result in negative outcomes.

Listen To This Episode:

In this episode of “Bitcoin, Explained,” hosts Aaron van Wirdum and Sjors Provoost discuss reusing Bitcoin addresses. More specifically, they explain why reusing Bitcoin addresses is a bad idea.

Reusing Bitcoin addresses is a bad idea for roughly three reasons. The first two of these are that it harms privacy and impedes on Bitcoin’s censorship resistance . In the episode, van Wirdum and Provoost go over a couple examples of how such a loss of privacy and censorship resistance can negatively affect bitcoin users.

The third reason that reusing Bitcoin addresses is a bad idea is because it opens up the possibility of some niche attacks. In certain cases, attackers could extract private keys from signatures after coins are first spent from an address — though this does require that a wallet implemented the signing algorithm incorrectly in the first place. There are also some potential future scenarios where quantum computers could extract private keys from signatures if addresses are reused.

Another type of niche attack is a timing side-channel attack, such as the recently disclosed “Hertzbleed Attack.” Provoost explains that attackers can potentially derive a private key from a wallet by closely monitoring how the computer that hosts the wallet behaves when signing a transaction. This attack is more plausible if addresses are reused.

These aforementioned examples are some of the reasons why bitcoin users should refrain from using addresses more than once. Address reuse hurts users’ privacy and can potentially lead to a Hertzbleed Attack.

West Virginia Vs. EPA: Good News For Bitcoin, Beyond The Obvious

Colin Crossman — Fri, 01 Jul 2022 17:00:00 -0400

Here’s how the recent Supreme Court decision will impact the Bitcoin industry.

This is an opinion editorial by Colin Crossman, a corporate attorney and entrepreneur.

The Case

On June 30, 2022, the Supreme Court of the United States issued an opinion in the case West Virginia et al. vs. Environmental Protection Agency et al.. This decision, which found that the EPA exceeded its authority, will have wide-ranging benefits for Bitcoin.¹

At first glance, this appears to be a case related to the Clean Air Act, and the EPA’s ability to regulate carbon dioxide emissions. And if that’s all it was about, it would be a good result. The EPA was stopped from implementing a plan that would have massively increased the costs of operating fossil fuel energy plants. Specifically, the EPA’s plan was to use its regulatory power to shift the entire energy mix of the United States from 38% coal to 27% by 2030.

Fundamentally, the EPA was trying to use an “obscure, never-used section of the law” (Section 111(d) of the Clean Air Act), as a general “permission slip” to recalibrate the power mix of the entire country.² The large amount of procedural posturing aside, the fundamental question the Court faced was whether or not Congress intended Section 111 of the Clean Air Act to grant the EPA the extraordinary power that it wished to use.

Had it issued a less sweeping edict, the EPA likely would have succeeded in making its rules stick. However, the Court has previously held that for certain major questions, where there are “extraordinary cases” of “economic and political significance,” an administrative agency cannot simply conclude that “Congress meant to confer such authority” when the law does not explicitly and clearly provide for it.³ The Court concluded that such a broad restructuring of the country’s energy economy, especially using such an obscure and unused provision, qualified as that kind of major question.⁴

“Capping carbon dioxide emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible solution to the crisis of the day. But it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme in Section 111(d). A decision of such magnitude and consequence rests with Congress itself, or an agency acting pursuant to a clear delegation from that representative body.”⁵

Impact On Bitcoin

The benefits to the Bitcoin mining industry seem clear: the EPA has been stopped from implementing a regulation that arguably would have had negative impacts on miners’ ability to obtain inexpensive power. In addition, further regulation along the path the EPA was taking could have reached into the uses of power, impacting miners’ freedom to operate. That specific policy was stopped cold here.

But, in a broader sense, the EPA being unable to unilaterally use its authority to modify the country’s energy mix, the invigoration of the major question doctrine is a much bigger deal. This can potentially be used whenever an administrative agency (such as the SEC, OCC, CFTC, the IRS and Treasury more broadly, etc.) seeks to expand its authority, without “clear congressional authorization.”⁶ Of course, whether or not a specific instance of agency overreach will be seen by the Court as an “extraordinary case” where they will apply the major question doctrine, remains open to question and hence much further litigation.

What this does mean is that if an administrative agency attempts to extend their authority over Bitcoin in an unprecedented manner, without clear Congressional authorization, those affected should consider whether or not they can make an argument under this rationale (in addition to whatever other arguments they have). This is especially true if the new regulation by the agency can be shown to have broader effects than just on Bitcoin itself; given the global significance of Bitcoin, I believe such arguments should be tried even if no such broader effects are present.

Final Thoughts

While it is not mentioned anywhere in this decision, today’s decision can be seen as another step towards finally reversing the terrible doctrine known as Chevron deference.⁷ Chevron deference essentially gives administrative agencies a pass when interpreting ambiguity in their enabling statutes.⁸ This doctrine has made it nearly impossible in most circumstances to challenge a government agency’s interpretation or rulings or to hold them accountable to a reasonable standard when making determinations. For example, if a ditch has run-off in it after a large rainstorm, and the EPA and the Army Corps of Engineers decide to label it “navigable waters” in order to assert their jurisdiction over it, the affected property owner has no real prospect of overturning that absurd designation, thanks to Chevron deference.⁹ This near-total lack of democratic accountability has been a significant factor in the insane growth of the administrative state since the early 1980s.

Justice Gorsuch once observed that, if the Supreme Court were to overrule Chevron, “[t]he only difference would be that courts would then fulfill their duty to exercise their independent judgment about what the law is.”¹⁰ Yet that comparatively small legal difference will ultimately make a huge difference to everyday Americans, who will once again be able to hold their government to account for its decisions. The sooner the court abandons Chevron and forces both Congress and the administrative state to return to their proper duties, the better.¹¹

Footnotes

1: In the interest of time and space, this is an extremely concise overview, which leaves out a ton of detail. Please read the case itself.

2: West Virginia vs. EPA, 597 U.S. ____, slip op at 6 (2022) (quoting remarks of Sen. Durenberger).

3: Id. at 17 (internal quotes omitted).

4: In a footnote, the Court states that “Section 111(d) empowers EPA to guide States in establish[ing] standards of performance for existing source[s], §7411(d)(1), not to direct existing sources to effectively cease to exist.” Id. at 24, footnote 3 (internal quotes omitted).

5: Id. at 31 (internal quotes and citations omitted, emphasis added).

6: Id. at 19.

7: Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

8: There’s another form of deference, known as Auer deference, which is also bad, and works hand-in-hand with Chevron deference. Auer v. Robbins, 519 U.S. 452, 461 (1997).

9: See Kristen Clark, Navigating Through the Confusion Left in the Wake of Rapanos: Why a Rule Clarifying and Broadening Jurisdiction Under the Clean Water Act is Necessary, 39 Wm. & Mary Envtl. L. & Pol'y Rev. 295 (2014).

10: Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1158 (2016) (note that Justice Gorsuch was Judge Gorsuch when he wrote this opinion).

11: See Christopher J. Walker, Attacking Auer and Chevron Deference: A Literature Review, 16 Georgetown J. L. & Pub. Pol’y 103 (2018).

This is a guest post by Colin Crossman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Quiet Revolution Bubbles Below Chaos of Canada Day 2022 Celebrations

Jesse Willms — Fri, 01 Jul 2022 16:00:00 -0400

How the Canadian government unintentionally fast-forwarded bitcoin adoption.

Canadians owning bitcoin jumped to 13%, up from 5% in the last year according to the Bank of Canada.

As we go to publication on Canada Day it appears that the Canadian government’s war on its people continues with a huge police presence on Parliament Hill, enforcing nonsensical rules like no shouting or flag waving.

Tamara Lich, an organizer with the Truckers Freedom Convoy, was rearrested on June 27 for violating her parole conditions during a ceremony in Toronto put on by the Justice Centre for Constitutional Freedoms — a legal organization and registered charity. There, she spoke with another organizer at a dinner that celebrated her award.

Unlike previous years, Canadians will celebrate Canada Day today, July 1, with the recent memory of a government that used extraordinary legal measures — including freezing people’s bank accounts — to end a peaceful protest.

It’s been almost six months since the Canadian government brought in the Emergencies Act (with the help of the socialist New Democratic Party) to put an end to the peaceful protest by truckers on Parliament Hill. (The Liberal government was reelected with less than 33% of the popular vote, and needed the NDP to ensure passage through the House of Commons.)

Under the financial measures in this legislation, more than 200 individual bank accounts, holding about $7.8 million, were frozen according to a finance department spokesperson.

The Mareva order restricted convoy leaders including Lich, Nicholas St. Louis, Benjamin Dichter and their fundraisers from “selling, removing, dissipating, alienating, transferring, assigning” up to $20 million in assets raised from donors around the world.

As Bitcoin Magazine reported earlier this year, the Truckers Freedom Convoy raised about $1 million in bitcoin donations through a fundraising platform, Tallycoin.

St. Louis, who goes by the name NobodyCaribou on Twitter, was able to redirect bitcoin funds raised through Tallycoin to individual truckers just in time. A modern-day hero, he was later detained by police and forced to hand over his bitcoin seed phrases.

Unintended Effects Or How A Government Unintentionally Fast Forwarded Bitcoin Adoption

The idea that the Canadian government could freeze people’s bank accounts for not agreeing with government policy was a shock for many and left a chill in the air even after winter was over.

In a recent report, the Bank of Canada said that 13% of Canadians now own bitcoin, up from 5% the year before. This is an outstanding jump and likely an undercount.

In an interview with Reuters, a seemingly panic-stricken Bank of Canada Senior Deputy Governor Carolyn Rogers said that the number of Canadians owning crypto assets is growing rapidly and efforts to regulate are not keeping pace.

“This is an area that is still small, but it's growing really rapidly. And it is largely unregulated,” said Rogers

“We don't want to wait until it gets a lot larger before we bring regulatory controls in place,” she added.

Anecdotal Evidence Backs Up Bank Of Canada Numbers

Francis Pouliot, CEO of Canadian bitcoin-only exchange Bull Bitcoin, is thrilled that despite recent volatility, Canadians are using his exchange in record numbers.

Tweet linked here.

Pouliot agreed that the threat to freeze people’s bank accounts was a prime motivator and a wake-up call for Canadians.

“Absolutely and not only in Canada. I've spoken to a U.S. company that saw an uptick in U.S. clients because of the threats to freeze people's accounts in Canada,” he added.

(By comparison, data from crypto-research firm Chainalysis suggests that crypto adoption in the U.S. stands at 14%.)

Benjamin Dichter is an organizer with the Truckers Freedom Convoy and told us in an interview featured in the Bitcoin Magazine Print Censorship Resistant issue that the issue was simply a matter of freedom:

“Most of us are vaccinated,” he explained. “It was the mandates, the lack of choice. That was the problem.”

Like St. Louis he is seeing an uptick in interest in bitcoin:

“Interest in bitcoin is through the roof. I keep doing spaces to orange pill supporters and it has been working,” he says.

Bitcoin Fundraising Using Tallycoin

A group of Canadian Bitcoiners who prefer to remain anonymous have organized a fundraising drive to continue the work of the Truckers Freedom Convoy.

Tweet linked here.

The Democracy Fund.

Honking For Freedom Tallycoin fundraiser.

As explained here, Tallycoin is ideal for bitcoin fundraising:

“Tallycoin enables donations directly to a fundraiser’s Bitcoin wallet and offers the option to list an extended public key so that each individual Bitcoin payment generates a unique address.”

“This is a critical privacy best practice that makes it more difficult for observers to associate these payments together. The platform also offers Lightning Network donations for fundraisers that use Bitcoin payment processors or by directly connecting their own Lightning nodes.”

This Canada Day 2022, the story of the Truckers Freedom Convoy continues to make history. As noted here:

“…the saga served as one of the most high-profile test cases for Bitcoin as a sovereign financial rail in its thirteen-year history.”

“As Bitcoiners continue to tout the technology as an off-ramp from undue censorship and surveillance, its use as a system for getting hundreds of thousands of dollars in value directly into the hands of those who had been blacklisted by the Canadian government may be the most potent illustration of that power to date.”

FTX Buys BlockFi But Passes On Acquiring Celsius

Dylan LeClair And Sam Rule — Fri, 01 Jul 2022 12:30:00 -0400

FTX is in accumulation mode with the market near rock bottom. Although it’s a fire sale in the market right now, some institutions are well past saving.

FTX Buys The Dip

In a massive announcement, it was reported that FTX is closing a deal to buy BlockFi for a major discount below their previous estimated $5 billion valuation at peak. Although news initially mentioned the deal was for only $25 million, it’s likely more around $275 million including the previous FTX revolving line of credit of $250 million. This comes right after CEO Zac Prince announced BlockFi faced 10% of asset withdrawals in a “massive stress test” just last week.

Either way, FTX is in accumulation mode with the market near rock bottom and BlockFi down roughly 95%. They even looked at acquiring Celsius but the state of its finances with a $2 billion hole in the balance sheet was too much. Although it’s a fire sale in the market right now, some institutions are well past saving. Celsius will likely continue down the most probable path: bankruptcy, years of legal proceedings with customers and a possible buyer getting distressed assets for cheap.

Knowing FTX is both working to expand their retail customer base and their FTX Earn product, acquisitions at these discounts make strategic sense. The move likely wipes out all BlockFi equity holders but saves customers’ deposits. It’s also in FTX’s interest to keep the contagion contained for the sake of the entire industry’s reputation. Either way, they look to be the industry’s lender of last resort and the show continues on.

For now it’s not clear what’s going to happen with the Celsius assets or even if the market has priced in potential future liquidations. Alts and DeFi bets have been falling in BTC terms throughout the year, despite recent rallies, and it doesn’t look like the total damage is over yet.

Year-to-date returns for the top cryptocurrencies priced in bitcoin

El Salvador Buys The Dip, Holds 2,381 Bitcoin In Treasury

Shawn Amick — Fri, 01 Jul 2022 11:47:25 -0400

El Salvador President Nayib Bukele announced the country bought another 80 BTC, resulting in a total treasury of 2,381 BTC valued around $46.1 million.

El Salvador bought the dip and acquired 80 BTC at an average price of $19,000.
Two days ago, MicroStrategy also bought the dip to the tune of 480 BTC.
Nation-states and institutions continue to dollar-cost average whilst a contagion effect bores a rocky bear market.

President Nayib Bukele of El Salvador announced late yesterday evening that the country bought the dip with another 80 BTC added to the national treasury for an average cost of $19,000.

In total, El Salvador has a total bitcoin treasury of 2,381 BTC, currently valued around $46.1 million. The nation-state has slowly been accumulating bitcoin since its first bitcoin buy on September 6, 2021 when it purchased 200 BTC and became the first country in the world to hold bitcoin on its balance sheet three months after declaring bitcoin was legal tender.

Of late, the Bitcoin and broader cryptocurrency ecosystem has witnessed what is being referred to as a “contagion” in which cascading failures of one institution have bled into another amid market corrections. Due to this effect, institutional and nation-state holders of scale in the bitcoin ecosystem came under scrutiny for continuing to hold bitcoin under the circumstances - El Salvador being one of the criticized holders.

Similarly, Michael Saylor was interviewed to discuss whether or not he regretted the bitcoin strategy his software analytics firm, MicroStrategy, chose to adopt. Yet, in the same light of Bukele, Saylor continues to buy the dip and holds strong to the ethos of dollar-cost-averaging - the continued accumulation of an asset overtime, regardless of price.

As prominent figures like Bukele and Saylor continue to accumulate large amounts of bitcoin over time, they will continue to be criticized when the price is not going up. However, the important thing to note is they are not trading bitcoin. If the purpose was to buy and sell bitcoin within a short period of time, then sure, criticize the bad timing. But as it stands, El Salvador and MicroStrategy are clearly continuing to look through a longer time horizon than they are usually given credit for.

OpenNode, Lemon Cash To Onboard 1 Million Argentines To Bitcoin Lightning Network

Shawn Amick — Fri, 01 Jul 2022 11:00:31 -0400

The cryptocurrency exchange and digital wallet provider Lemon Cash is partnering with OpenNode to enable Bitcoin Lightning payments for its 1 million customers.

OpenNode partners with Lemon Cash to bring the Lightning Network to over one million Argentines.
Lemon Cash is a LATAM fintech company well-known for its digital wallet and cryptocurrency exchange which will begin supporting Lightning.
Argentina has seen a 12-month rolling period of over 60% inflation and ranks 10th globally in adoption of cryptocurrencies, by country.

More than one million Argentines will soon have access to Bitcoin’s Lightning Network on the Lemon Cash digital wallet through a partnership with bitcoin payments infrastructure company OpenNode, per a joint press release.

Lemon Cash is a fintech company based in Argentina and is mostly known for being a cryptocurrency exchange and also for operating the aforementioned digital wallet. The company serves well over one million customers in the Latin American (LATAM) region. This integration will allow all of these customers to facilitate transfers of value on Bitcoin with low-fees and fast settlement times through Lightning.

"Introducing the Lightning Network to more than one million users in partnership with OpenNode will be a huge step towards our main goal: to make crypto more usable and accessible in LATAM," Lemon Cash co-founder Borja Martel Seward said.

LATAM has a higher level of concentrated adoption of bitcoin and other cryptocurrencies than most regions, but Argentina itself ranks 10th globally in a report from on-chain analytics firm Chainalysis. Countries with heightened levels of inflation are more prone to rely on bitcoin as a store of value, which is also the case for Argentina as Reuters reported a rolling 12-month period of over 60% inflation.

“This partnership is yet another example of our capability and belief in Bitcoin as the new base layer for global payments," says Josh Held, head of strategy at OpenNode. "We're proud to support Lemon's mission, its desire to scale and benefit its customers and ultimately the growth of the Bitcoin economy in Latin America and beyond."

How Bitcoiners Should Use Their Hardware Wallets For Advanced Security

Josef Tětek — Fri, 01 Jul 2022 08:00:00 -0400

Hardware wallets can protect your generational wealth. Leverage them to gain the highest level of security and privacy.

This is an opinion editorial by Josef Tětek, the Trezor brand ambassador for SatoshiLabs.

Whether you’re just contemplating buying your first hardware Bitcoin wallet or have already had one for years, it’s always a good idea to refresh on the basics of these marvelous devices. Contrary to popular belief, a hardware wallet isn’t a “set it and forget it” tool that will take care of your bitcoin for you. Instead, a hardware wallet can help you with your ongoing bitcoin security.

When And Why Should I Buy A Hardware Wallet?

Since hardware wallets start around $70, it’s obviously not an attractive idea to buy one if you’re just dipping your toes into Bitcoin. There is no clear cutting-off point after which it is imperative that you buy yourself a hardware wallet, but a good rule of thumb is to get one once you have around $1,000 worth of bitcoin to protect. When you stack regularly and bitcoin appreciates in the meantime, chances are you’ll cross the $1,000 threshold quickly, so don’t put it off for too long.

Some people hold the view that hardware wallets are superfluous and an old phone/laptop will work perfectly well in their place. The problem with such general-purpose devices is that virtually anything can run on such hardware and unless you’re an advanced security expert, you won’t know if the device is really safe, even if disconnected from the internet (and honestly, security experts would rather assume it is not safe in the first place). Hardware wallets are special-purpose devices with firmware that performs a limited set of processes, namely generating keys and cryptographically signing with those keys — all in a strictly offline environment.

Writing Down And Protecting Your Recovery Seed

When you’re setting up your hardware wallet, one of the first things the wallet does for you is that it generates your private keys. To ensure you will hold on to your bitcoin even if the particular device is lost or breaks down, you will be prompted to write down your recovery seed: a human-readable secret that can be used to recover your private keys in other compatible wallets.

Writing down the 12 or 24 words that make up the recovery seed is one of the most important things you need to do in order to protect your bitcoin. Hardware wallets typically do not show the recovery seed again — you need to write it down and keep it safe during the setup process.

Here are some basic tips for protecting your seed:

Write the words down with your own hand on a piece of paper
Alternatively, you can use a more robust solution such as Cryptosteel Capsules or other metal solutions
Never take a photo or keep a digital copy of the seed — hackers are actively looking for such data
Store your recovery seed in a location with controlled access away from water, fire hazard, etc.
Consider setting up a Shamir Backup — multiple recovery seed shares that increase the safety of your seed

Checking Your Recovery Seed

Once you have your recovery seed written down, it’s advisable to verify that it really works to restore your wallet. You want to check the integrity of your seed before there’s any bitcoin attached to it, not after.

The best practice is to factory-reset your hardware wallet and then recover your wallet from the seed. Alternatively, some hardware wallets offer dry-run recovery — this option will make you more comfortable if you already have some bitcoin stored on the device. To perform the dry-run recovery in the Trezor Suite, for instance, navigate to settings, select “Check Backup” and follow the prompts (note that the connected Trezor device should respond in the third step — never input the seed words into a computer if the device doesn’t respond!)

View the 3 images of this gallery on the original article

It’s a good idea to check your seed backup regularly. If your security setup involves multiple Shamir Backup shares, inspect them every 12 months at least to make sure the shares are still intact and ready to be used when needed.

Setting Up The PIN And Passphrase

Most hardware wallets can be secured with a PIN. A good PIN can keep an attacker from stealing your funds if they discover your device, but note that a PIN only protects the device, not the recovery seed. So if the attacker were to discover both your device (protected by the PIN) and your recovery seed, they might steal all your bitcoin, as with a recovery seed in their hand, they don’t actually need the device itself.

Fortunately, there is a way to mitigate the threat of an attacker finding your recovery seed as well. Some hardware wallets, such as Trezor devices, offer the option to protect your seed with a passphrase. Passphrase helps you create a brand new set of wallets that are derived by combining the recovery seed and a particular passphrase. This means that the seed itself becomes useless to an attacker, as they wouldn’t be able to derive the correct set of wallets with a recovery seed alone.

Inputting the passphrase straight on the device eliminates the risk of leaking the passphrase to a keylogger.

If you’re having a hard time telling the difference between the PIN and the passphrase, just remember: the PIN protects the device, the passphrase protects the seed.

If you opt to use the passphrase, do not rely on your memory. If you forgot the passphrase, there will be no way to access your funds. It’s imperative that you create a backup of your passphrase, similar to what you've done for your seed. Keep the seed and the passphrase separate and you will make it impossible for attackers to steal your funds if they accidentally find either of those.

The Device Screen Is There For A Reason: Always Verify Your Addresses!

Hardware wallets are useful beyond simple HODLing. One of the main benefits of these devices is the ability to receive and send bitcoin in a very secure manner.

A common clipboard malware can change the address you are copy/pasting on your computer. If your computer is infected with such a virus, the only line of defense is to compare the address shown on the device with the sending/receiving counterparty (the exchange website, your friend’s phone wallet, a Signal message, etc.). This is one of the reasons why all the hardware wallets worth their names must have their own screens, and why some cold storage solutions such as near-field communication (NFC) cards without screens aren’t good design choices.

When receiving bitcoin, the device will show the full address on its display, so that you can independently verify that the address shown in the companion app is the correct one (i.e., generated by the device). After you verify the address and give it to your counterparty (either as a scanned QR code or copy/pasted string), verify it again to make sure it wasn’t modified by the clipboard malware.

Always verify your receiving address with the device screen!

When sending bitcoin, the process involves multiple checks: verifying the address you’re sending to, the associated fee, and the total amount to be sent. Be sure to double check everything!

Do not rush through the process of verifying everything. Only the device screen can tell you what is really going on inside the hardware wallet, so make sure you are really sending or receiving funds where you’re supposed to.

Beware Of Phishermen!

There are many bad people out there who would like to steal your bitcoin. Some choose to spread their tentacles through malware like the one described above, others try to take your coins through social engineering techniques — fake websites, e-mails or apps that try to make you type your seed along with the passphrase are widespread.

The best protection is to remember one simple rule: never type your seed into a website or an app without the hardware wallet guidance. When recovering your bitcoin with a hardware wallet such as a Trezor, you either type the seed words on the device itself (possible with the Trezor Model T), or the device tells you the order in which you have to type the words (like the Trezor Model One), so as not to leak the correct order to possible keyloggers or other spying techniques.

Routing Through Tor, Connecting Your Full Node

To improve user privacy and prevent IP address leakage, it’s advisable to route all the bitcoin-related traffic through the Tor network. Tor is better than a virtual private network (VPN), as VPNs often keep logs of customer traffic that can leak or be handed over to authorities if requested. With Tor, your IP address is truly hidden, so your bitcoin transactions remain private (although keep in mind that Tor by itself won’t protect you if your bitcoin addresses are linked to you because you bought bitcoin on a centralized exchange that knows your identity). You can route your Bitcoin transactions originating from your hardware wallet with Bitcoin Core (see this guide) or other compatible wallets.

To further strengthen your privacy and sovereignty, you can connect your hardware wallet to a full node. When running your own full node, you don’t have to rely on any third party to broadcast your transactions and to give you the latest state of the Bitcoin ledger. You can run a Bitcoin full node on your home computer, laptop or a Raspberry Pi device, and connect your hardware wallet through a Bitcoin Core HWI or Electrum.

Prepare For The Real Risks

The most common risk when handling bitcoin is accidental loss. Throwing out the recovery seed, sending or receiving funds to a wrong address, falling for a phishing scam, forgetting a passphrase, or failing to take self custody and keeping coins on an exchange that’s later hacked — these are much more probable risk vectors than any government seizure. The inconvenient truth is that Gitcoiners are their own worst enemies.

A good rule to remember is to test out everything. After you set up your new hardware wallet, test that your recovery seed really works, either by wiping the device or performing the dry run recovery. When you’re sending your first transaction using a hardware wallet, send a few dollars first to get a feel of how everything works. If it has been some time since you’ve checked up on your seed, make sure it’s still there. If you’re considering using a passphrase, try sending just a few sats into the new wallet and then try logging in and out with and without the passphrase a few times. Being familiar with how the hardware wallet should respond will be to your advantage if you ever find yourself in a stressful situation.

Also keep in mind that all the major hardware wallet manufacturers use a mutually-compatible recovery seed standard (BIP39 for regular seed or SLIP39 for Shamir Backup), so even if a particular manufacturer went bankrupt, your coins will always be safe and you’ll be able to recover your bitcoin in a multitude of open-source wallets, hardware of software.

This is a guest post by Josef Tětek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Fixes The Economic Hurricane Happening Around The World

Ansel Lindner — Fri, 01 Jul 2022 00:00:00 -0400

With the Bank of Japan trying yield curve control, negative GDP growth in the United States and cracks showing in the eurozone, bitcoin looks like a smart bet.

Watch This Episode On YouTube or Rumble

Listen To This Episode Here:

“Fed Watch” is the macro podcast for Bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currencies.

In this episode, Christian Keroles and I cover developments in Japan, in regards to yield curve control (YCC); in the U.S., in regards to growth and inflation forecasts; and in Europe, in regards to the concern about fragmentation. At the end of the episode, we celebrate the 100th episode of “Fed Watch” by reviewing some of the guests and calls we have made throughout the show’s history.

Big Trouble In Japan

The economic troubles in Japan are legendary at this point. They have suffered through several lost decades of low growth and low inflation, addressed by the best monetary policy tools of the day, by some of the best experts in economics (maybe that was the mistake). None of it has worked, but let's take a minute to review how we got here.

Japan entered their recession/depression in 1991 after their giant asset bubble burst. Since that time, Japanese economic growth has been averaging roughly 1% per year, with low unemployment and very low dynamism. It's not negative gross domestic product (GDP) growth, but it's the bare minimum to have an economic pulse.

To address these issues, Japan became the first major central bank to launch quantitative easing (QE) in 2001. This is where the central bank, Bank of Japan (BOJ), would buy government securities from the banks in an attempt to correct any balance sheet problems, clearing the way for those banks to lend (aka print money).

That first attempt at QE failed miserably, and in fact, caused growth to fall from 1.1% to 1%. The Japanese were convinced by Western economists, like Paul Krugman, who claimed the BOJ failed because they had not “credibly promise[d] to be irresponsible.” They must change the inflation/growth expectations of the people by shocking them into inflationary worry.

Round two of monetary policy in 2013 was dubbed “QQE” (quantitative and qualitative easing). In this strategy, the BOJ would cause “shock and awe” at their profligacy, buying not only government securities, but other assets like exchange-traded funds (ETFs) on the Tokyo Stock Exchange. Of course, this failed, too.

Round three was the addition of YCC in 2016, where the BOJ would peg the yield on the 10-year Japanese Government Bond (JGB) to a range of plus or minus 10 basis points. In 2018, that range was expanded to plus or minus 20 basis points, and in 2021 to plus or minus 25 basis points, where we are today.

The YCC Fight

(Source)

As the world is now dealing with massive price increases due to an economic hurricane, the government bond yield curve in Japan is pressing upward, testing the BOJ's resolve. As of now, the ceiling has been breached several times, but it hasn't completely burst through.

(Source)

The BOJ now owns more than 50% of all government bonds, on top of their huge share of ETFs on their stock exchange. At this rate, the entire Japanese economy will soon be owned by the BOJ.

(Source)

The yen is also crashing against the U.S. dollar. Below is the exchange rate for how many yen to a U.S. dollar.

(Source)

Federal Reserve DSGE Forecasts

Federal Reserve Chairman Jerome Powell went in front of Congress this week and said that a U.S. recession was not his “base case,” despite nearly all economic indicators crashing in the last month.

Here, we take a look at the Fed's own dynamic stochastic general equilibrium (DSGE) model.

The New York Fed DSGE model has been used to forecast the economy since 2011, and its forecasts have been made public continuously since 2014.

The current version of the New York Fed DSGE model is a closed economy, representative agent, rational expectations model (although we deviate from rational expectations in modeling the impact of recent policy changes, such as average inflation targeting, on the economy). The model is medium scale, in that it involves several aggregate variables such as consumption and investment, but it’s not as detailed as other, larger models.

As you can see below, the model is predicting 2022's Q4 to Q4 GDP to be negative, as well as the 2023 GDP. That checks with my own estimation and expectation that the U.S. will experience a prolonged but slight recession, while the rest of the world experiences a deeper recession.

In the below chart, I point out the return to the post–Global Financial Crisis (GFC) norm of low growth and low inflation, a norm shared by Japan by the way.

(Source)

European Anti-Fragmentation Cracks

Only a week after we showed watchers, listeners and readers of “Fed Watch” European Central Bank (ECB) President Christine Lagarde's frustration at the repeated anti-fragmentation questions, EU heavyweight, Dutch Prime Minister Mark Rutte, comes through like a bull in a china shop.

I read parts of an article from Bloomberg where Rutte claims it's up to Italy, not the ECB, to contain credit spreads.

What's the big worry about fragmentation anyway? The European Monetary Union (EMU, aka eurozone) is a monetary union without a fiscal union. The ECB policy must serve different countries with different amounts of indebtedness. This means that ECB policy on interest rates will affect each country within the union differently, and more indebted countries like Italy, Greece and Spain will suffer a greater burden of rising rates.

The worry is that these credit spreads will lead to another European debt crisis 2.0 and perhaps even political fractures as well. Countries could be forced to leave the eurozone or the European Union over this issue.

A Look Back On 100 Episodes

The last part of this episode was spent looking back at some of the predictions and great calls we've made. It didn't go according to my plan, however, and we got lost in the weeds. Overall, we were able to highlight the success of our unique theories put forward by this show in the Bitcoin space:

A strong dollar
Bitcoin and USD stablecoin dominance
The U.S.’s relative decentralization makes the country a better fit for bitcoin
Bearishness on China and Europe

We also highlight some specific calls that have been spot on, which you'll have to listen to the episode to hear.

I wanted to highlight these things to show the success of our contrarian views, despite being unpopular among Bitcoiners. This show is an important voice in the Bitcoin scene because we are prodding and poking the narratives to find the truth of the global monetary system.

Charts for this episode can be found here.

That does it for this week. Thanks to the watchers and listeners. If you enjoy this content, please subscribe, review and share!

This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

No Matter The Price, The Message Of Bitcoin Has Already Won

Aneta Karbowiak — Thu, 30 Jun 2022 23:00:00 -0400

Bitcoin’s message of freedom has been set in stone. It speaks to us with increasing confidence about what is to come. Bitcoin has already won.

This is an opinion editorial by Aneta Karbowiak, a contributor at Bitcoin Magazine.

Bitcoin has conveyed an important message to the world since its inception. It is the message of liberation from corrupt governments and financial intermediaries. Bitcoin is free speech recorded in every block and replicated on thousands of computers distributed around the world. It cannot be silenced any longer; it is here to stay to speak its immutable truth. Its message of freedom has been set in stone. It speaks to us with increasing confidence about what is to come and that Bitcoin has already won.

Since Satoshi Nakamoto mined the first block, Bitcoin has been communicating with us. Communication does not take place solely through the use of words. Much of it is accomplished through nonverbal means. Each movement, tone of voice, pause and reaction sends nonverbal cues that reveal what the speaker is thinking, what they want, or how confident they are.

In the s-curve of adoption, characteristic of every disruptive technological innovation, Bitcoin is sending us cues. This curve is the expression of the steps and hurdles a new product must overcome before becoming widely adopted. Bitcoin is still in the innovation phase. It is building up the tension prior to the exponential phase that will bring the masses. Then, it will be talked about in every household and held by everyone. This was true for cars, television, cell phones and the internet. The same will be true for bitcoin as well. The difference is that it will happen faster because of the spread of information via mass media and the game theory incentives of adoption.

Bitcoin has been asserting itself through every major crash, starting with the Mt. Gox hack, other hacks on exchanges, the China ban, remittance hostility around the world and regulatory difficulties. Despite numerous price corrections, early investors persevered and maintained strong price support. With each dip, bitcoin emerged victorious from the fight against the bears, being stronger than ever, and reaching new all-time highs. Every battle that bitcoin won has increased investors' confidence that they are dealing with something special that is becoming more and more antifragile, block after block. Their conviction grew along with new waves of investors, bringing us to an all-time high of $69,000. There is no “Pinocchio effect,” where a single gesture indicates lying. Bitcoiners had to learn to distinguish complex market behavior to describe what was being communicated. They had to observe the bitcoin market and the on-chain data to look for the signs of truth and deception. It has been 13 years of unstoppable speech that Bitcoin was speaking its message of truth, and that message is stronger than ever.

The message is saying that Bitcoin has already won.

So what are these messages of truth conveyed to us as facts? There are many, and Michael Saylor transmits them with accuracy:

“Two years ago, we had a COVID crisis and since then, the U.S. money supply expanded by 36%. Bitcoin is up 229%. Gold, the NASDAQ, and the S&P all underperformed the U.S. money supply, so over a two-year, a four-year, a six-year, an eight-year time frame, bitcoin is outperforming everything.”

With ultra-low interest rates and trillions of dollars of inflated money supply, U.S. policymakers created a financial market bubble. The currency is losing its value at a staggering speed while prices of food, energy, rent and services are rising.

The inevitability of the effects that are manifesting themselves as the consequence of the money supply expansion, as well as the impending crisis following currency debasement few have the foresight to notice, will be a further primer for bitcoin’s success. There is no better place to hide your wealth from inflation than bitcoin. When your currency is losing value faster than the 0% rate your bank is offering you or faster than your real estate or gold that can be seized, there is only one asset offering security because it is scarce and desirable.

The U.S. Federal Reserve raised interest rates in June 2022, to curb price rises. Rate hikes in the U.S. frighten other countries because it will lure global capital back to the U.S. This will harm developing economies that will likely see an outflow of cash. These economies may be in the shadow of the U.S., so for them, bitcoin is a better solution. For most countries, bitcoin represents liberation from Washington D.C.'s hegemony and its flawed monetary policy. These countries are at the forefront of cryptocurrency adoption. According to a Chainalysis report, ordinary people with a “focus on use cases related to transactions and individual saving, rather than trading and speculation,” have been the main drivers in this industry in recent years. These people “turn to cryptocurrency to preserve their savings in the face of currency devaluation, as well as to send and receive remittances and carry out business transactions.” Countries like Vietnam, Nigeria, Kenya, Ukraine, India, Pakistan, Argentina and many others choose cryptocurrency over the dollar. According to the Chainalysis report, cryptocurrency adoption has grown by 880% over the past year. A Blockware report estimates that bitcoin adoption should exceed one billion users within the next eight years.

Bitcoin is used for a variety of purposes all over the world. It functions as an inflation hedge, a store of value and a decentralized settlement network. Saylor, like many other Bitcoiners, sees it primarily as a form of property that no one can take from you:

“Bitcoin is property rights properly understood and that is important economic empowerment. It’s the protection of individual liberties. It’s John Locke’s dream: life, liberty and property.”

All the above statements are true, and they do not need to be rehearsed when trying to persuade someone.

By memorizing a seed phrase, you can transport your bitcoin across borders. You can't do that with cash, gold or real estate, which can be seized at any time. But you can own bitcoin on the blockchain and no one can take it away from you. According to Chainalysis, bitcoin adoption in sanctioned countries like Cuba, Russia, Venezuela and others grew. This is a bullish sign because it shows that no one government or a coalition can censor Bitcoin. People living in sanctioned countries use bitcoin to buy food and to thrive in a hostile environment. They are often victims of their corrupt governments and their policies. Bitcoin gives them hope.

Storing your savings in bitcoin is better than storing them elsewhere. Even the latest cryptocurrency market crash is providing more proof that there is no better asset than bitcoin. While the Nasdaq, S&P 500 and other markets melt, the bitcoin price action is not out of the ordinary. The fear and greed index is in the red now and it may go lower, but bitcoin maintains control over the temporal aspect of its speech. The Bitcoin network continues working as designed for millions of people throughout the world. It sits comfortably on the throne of cryptocurrency dominance, occupying almost 44% of the total $897 billion in the space. This command of time and space is displayed in its stock-to-flow ratio, conveying that Bitcoin is in control of the situation on the global stage. Bitcoin does not scream, it does not rush, it goes forward calmly with wide, parabolic moves. Like a public speaker that has confidence in himself and who catches the audience's attention by owning the discussion with pauses for suspension and wide gestures inciting trust, Bitcoin does the same — it owns the stage.

While other markets jitter and display nervousness after escalating fear, bitcoin exhales and takes a deep breath to de-escalate and return to homeostasis. There can't be any fear when there is the knowledge that the printing machine cannot be stopped and that there is nothing that can tap the broken dam protecting us from the inflation flood. What is to come is inevitable and it cannot be stopped. You can always mine more gold, but the only certainty you have is the 21 million bitcoin hard cap. With less than 2 million bitcoin left to mine, there is no more scarce asset you can own. Bitcoin is digital gold. There is no CEO, no cost of production, no company, and no government creating a risk. You can move it around the world at the speed of light with the protection of thousands of computers securing the network.

Confidence is the feeling of being certain that something will happen or that something is true. Bitcoin is confidence in the inescapability of something that has not yet occurred, but that will happen for sure. Bitcoin is the truth.

Synopsis

From the moment Satoshi Nakamoto mined the first block, Bitcoin has been communicating with us through nonverbal cues. It has been asserting itself with each market dip and subsequent rise, demonstrating growing maturity. Millions of people have adopted and used it for different reasons, but Bitcoin continues doing what it was born to do: speak its immutable truth. In a world where censorship is rampant and currencies are debased through inflation, bitcoin is a safe harbor. There is no better place to hide wealth from money supply expansion or a corrupt government. Bitcoin can’t be corrupted nor inflated. It is hard money and it has already won.

This is a guest post by Aneta Karbowiak. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

For Bitcoin, Sentiment And Value Are Not The Same Thing

Mickey Koss — Thu, 30 Jun 2022 22:00:00 -0400

While bitcoin’s price might be “down,” the metrics that indicate the growth of Bitcoin are on a true course to the positive.

This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the Infantry before transitioning to the Finance Corps.

Link to embedded Tweet.

Sorry guys. Time to pack it up. Bitcoin died again.

Just kidding. And for Peter Schiff, I’ll just leave the gold 10-year chart below for fun. Pretty wild ride for a 17% gain over the last decade. I thought these gold guys were supposed to be low time preference?

(Source: Macro Trends)

In my original article, I discussed the difference between signal and noise and how mass media incentivizes clicks through misleading headlines. I decided to write a follow-up to discuss the Bitcoin value signal I’ve seen over the past week or so.

As all the normies lose their minds over the recent market crash below the previous all-time high, I’m trying to remain objective by identifying value signals hidden through the fear articles littered throughout the internet.

Price Versus Market Cap

Doing a little research on Coin Market Cap, you can clearly see bitcoin’s price breaking the previous all-time high amid massive capitulation, liquidation and general bearish sentiment selling.

(Coin Market Cap BTC Price Chart)

If you change the chart to market cap instead of price, it paints a slightly different picture.

(Coin Market Cap BTC Market Cap Chart)

While the shapes are similar in appearance, if you dig into the numbers you can see the difference more clearly. In 2017, Bitcoin peaked at a $296 billion market cap with $14 billion in 24-hour volume. As of June 19, 2022, Bitcoin has bottomed (for now) at a market cap of $367 billion with $44 billion in 24-hour volume.

Had you dollar-cost averaged over this period, you would have not only captured a larger share of a credibly enforced, digitally scarce network, you would also have access to a more liquid value network had you had the unthinkable urge to sell your hard-earned coin.

Wallets, HODLers, And Hash Rate Oh My

(Source: Glassnode Insights)

Wallet growth also appears to be on the rise. With a little blip of noise on the right tail, the trend is obviously up and to the right, experiencing a nearly 45% increase over the past two years.

(Source: Glassnode Insights)

In addition to nonzero wallet growth, wallets with 0.1 to 1 BTC have been on the rise since July 2021. In my eyes this indicates the steady growth of the serious pleb-level investor, rather than a pattern of panicked tourists leaving the market. Perhaps skin in the game incentivizes the proof of work required to learn the value of bitcoin rather than focusing on price alone.

(Source: Glassnode Twitter)

In terms of HODLers, the amount of bitcoin held by long-term holders increased by nearly 20% since April 2021 and has remained relatively constant, even with the slow grind down from the all-time high last fall. This doesn’t look very bearish to me. The ones who sold barely made a dent in long-term holder supply.

Last in the chute is hash rate. There are sensational articles abound about a shrinking hash rate and miner capitulation. If you actually read the article though, it’s not quite as shocking. Hash rate has dipped to lows not seen for nearly… four whole months. Shocking, scandalous.

Link to embedded Tweet.

Will Clemente paints a darker picture, yet my conclusion is still the same. If I remember correctly, Bitcoin was still secure two years ago and was able to avoid attack and exploitation. As miners fall off the network, difficulty should adjust downwards over the coming weeks, making it more profitable for those who are able to hang in there. It’s a self-correcting system.

Bitcoin is not just secured by a wall of pure energy through the miners. It is also secured by a massive army of scarce and expensive computing equipment; The equipment is scarce as well.

Even if you miraculously had the electric infrastructure to attack the network, good luck getting your hands on the computing power. I think we’ll be just fine.

Even with the recent downturn in hash rate, the macro trend is still up and to the right. As Nico from Simply Bitcoin likes to say, incentives are stronger than coercion. Incentives take time to play out. Don’t let the short-term noise scare you out of your position.

Stop Feeding The Whales

“We few, we happy few, we band of brothers; For he to-day that [HODLs their stack] with me Shall be my brother” — King Henry V on Bitcoin, circa 1599

(Source: Glassnode Insights)

Stop feeding the whales. As traders and tourists panic sell and get their stacks liquidated, the whales are beginning to feast. What do they know that you don’t? They’re watching adoption grow nearly every day.

Warren Buffet says to be fearful when others are greedy, to be greedy when others are fearful. How about this: dollar-cost average and be greedy regardless of what other people think or feel. (Maybe a little extra greedy when everyone is freaking out, like right now).

Never forget the constant devaluation of your dollars. Stake your claim of absolutely scarce digital real estate before the big boys start to really figure it out. I know that’s what I’ll be doing. When in doubt, keep calm, zoom out and stack sats.

This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

How The Fiat Standard Has Impacted Relationships, Sex And Family — And How Bitcoin Can Fix It

Paloma De la Hoz — Thu, 30 Jun 2022 20:00:00 -0400

The fiat standard has drained the value out of more than just money, leaving family units a weak shell of their former strength.

This is an opinion editorial by Paloma De la Hoz, a licensed psychotherapist and psychologist with a focus on sex and couples therapy.

"The government cares about you" is a fairytale that many people choose to believe nowadays.

When I started going down the Bitcoin rabbit hole, I learned about the evolution of money and I was surprised to find that the present is the first time in history that money has been purely controlled by the “state.”

I dare to say that most of the population is unaware of what the fiat standard is, let alone the often-fatal consequences it has on the family and the very evolution of human society.

I had always had the feeling that something was wrong with society. Everything is connected, of course, but to discover the cause of what is screwing everything up, just blew my mind.

Generations of people over the past century, especially the most recent, are plagued by what I personally call "fiat behaviors." Most of them are immersed in an incongruity of life and the way out feels as complex as exiting a maze. Such a waste of human potential.

This article is the result of my personal experience as a psychologist for most of the last decade of my life, alongside my more recent discovery of Bitcoin, the fiat standard (thank you Saifedean) and all that it entails.

I will share my opinions on why I believe that the fiat standard affects the family, couples and sex from a personal, feminine and professional perspective.

1. Young Adults Are Less Motivated To Get Married And Build Families Due To Inflationary Pressures

I remember growing up listening to my parents talk about how everything was always expensive. This came not only from people with humble origins where I grew up, but wealthy people whom I had come across.

When I was just four years old and I was asked what I wanted to be as an adult I always answered, "I want to be a mother." This thought changed as I got older and by virtue of modern culture I came to develop a “career.” I began to see firsthand the rat race that we’re all entrapped by.

I know a lot of you can relate. Nowadays in particular, it seems as though the cost of living goes up weekly. How can one be motivated to start a family? In fact, I see more young people opting to stay at home with their parents for increasingly long periods of time. This is not normal. Instead of becoming adults, they remain children — albeit overgrown ones.

Misguided Keynesian principles of economics state that postponing current consumption by saving will put workers out of work and cause economic production to stop.

Yet, a hundred years ago, most people paid for their housing, education or marriage with their work or accumulated savings — and the world did not stop. On the contrary, it flourished and formed the basis of the wealth and capital we are eroding today.

When compared to past generations, and in fact, millenia of evolution, we find that modern society is less likely to invest in family because it is decreasingly rational in an economic sense. Family is a low time-preference endeavor, which has little place in a high time-preference society. I would say that this is highly detrimental to everyone, because the family represents the center of society.

It is no coincidence that the dissolution of the family has come as a result of the implementation of the economic precepts of a man who never had any interest in the long term.

2. Due To High Time Preference People Don't HODL Onto Relationships

I remember when I used to visit my grandfather in the countryside — we had good conversations and he would casually tell me about the situations he and my grandmother were going through as a couple.

He always emphasized how much he loved her and that despite the difficult times he would never trade her for anything.

This thought helped me in my adolescence when I was just beginning to walk the path of life and love.

A phenomenon I see in today's couples is the ease with which people prefer to end a relationship rather than stay and fix it.

In fact there’s a MTV show "Next" that comes to mind which was basically a person dating and the moment they didn't like something about that person they would say NEXT!

What a barbaric show.

Just as it is in relationships today — there is a huge tendency, as soon as problems arise, not to try to find a solution but rather to end the relationship. This is a high time-preference behavior.

Mises defines time preference more clearly in "Human Action":

"The satisfaction of a need in the near future — all other circumstances remaining equal — is preferred to that which can be obtained in the more distant future. Present goods have greater value than future goods."

To lower one’s time-preference means that you lower the discount you place on the future. That is the basis of all long-term thinking, and therefore behavior.

I believe these high time-preference tendencies are fundamentally caused upstream by broken money. It causes us to mis-value everything else.

If people were really aware of the value of money, they would be much more selective about their consumption and would save a higher portion of their income for the future.

“It is remarkable the culture of conspicuous consumption, of going out to buy as therapy, of having to exchange cheap plastic junk for newer ones...,this culture will have no place in a society with a currency whose value appreciates over time.” — Saifedean Ammous

3. The Fiat Standard Is An Illusion That Promotes Promiscuous Behaviors In Which Affairs And Dishonest Relationships Are The New Normal

It does not seem abnormal to me that in a world where money is controlled by the state, who are the official sponsors of “culture,” that the people within that culture seem to also engage in ever-increasingly promiscuous behavior.

Sex and money rule the world but people are living under an illusion about both. I believe this directly affects the way people behave in their intimate relationships. Perhaps today’s hookup culture is something that emerged under the fiat standard?

Since fiat is the worst kind of money we have had in history I am not surprised that under this state of falsehood people also engage in dishonest behavior such as extramarital affairs and infidelity.

It’s a domino effect. Dishonesty starts with what we touch and move with. Dirty money leads to dirty value judgments, which leads to erroneous behavior, bad actors, dishonest people and fake relationships.

The result of having put money and state together is a whole generation of unprincipled people, living double lives because they prefer not to be honest enough with themselves and with the person they have decided to spend the rest of their lives with.

Of course, there are many other factors, but once again I cannot help but wonder if they are all linked.

Nowadays we glorify casual sex — without discussing the energetic consequences — in the same way we promote materialism.

Something is obviously wrong, but most people aren’t ready for this conversation. It requires a lot of inner work to develop a state of self-awareness that allows you to understand and realize this.

4. This Last Generation Of Men Have Been Raised Without Any Masculine Pride — State Money Promotes Feminism And The Destruction Of Families

If we look at things through an energetic lens, the result of the absence of women at home is the outgrowth of an entire generation of feminine men who have lost their pride and masculinity.

Raised under the shadow of often tyrannically feminist women, they unconsciously drop their masculine frame and develop shadow feminine tendencies. This, by the way, is the primary cause of unhappy, sexless marriages that end in divorce.

From my perspective, this can all be traced back to how inflation has forced women to replace home with work in order to support their families.

In prior centuries, before the advent of the fiat standard, women stayed at home to care for the children and nurture the family. What an incredible gift to the world. Men maintained their dignity and pride by going out to build, create and provide. What a team they were!

“This is where the disconnect lies in the world today.
We have deprioritized the creation of HEALTHY married family units because we view men and women as separate competing entities in an inherently oppressive system instead of two forces working together for a common cause - the raising of children.” — J.Malik

I believe forcing women to leave the house and be absent in the day-to-day raising of children has unleashed generations of unframed men with weak character.

The modern woman is everyday less and less interested in being a mother — she is more focused on being a “career woman.” We highlight the burnt out superboss chick mom as an ideal that women should be striving for. I think women have convinced themselves that all this so-called “female empowerment” is in their favor, but it is the opposite.

In their unfortunate ignorance and blindness they are unaware of their true gifts. They’ve become a product of the parasites and lemmings (as Aleks Svetski would say) running the state. These people care not about women or the family.

Women would be better off if they did not have to worry about making money to support their families. They would have the time and space to flourish. If I were a man I would be accused of being a misogynist, but since I am a woman, a psychologist and sex therapist, I base this opinion on my own experience.

I am a woman and I recognize that my life would be less complicated if I did not have to dedicate a significant portion of it trying to “compete” in the marketplace. I would much rather spend my time raising a family and nurturing my man, my children and if I have the time, my community.

I’m not sure a greater purpose exists, as a woman on this earth.

“We live in a feminist establishment because generations of weak men dropped frame which caused them to lose power in their relationships and over their children. We live in a feminist establishment because women are collectivist and gain power through their coordinated voting bloc. We live in a feminist establishment because fathers have been disempowered by governments who have robbed them of authority over their children by letting women have total psychological control over their upbringing. We live in a feminist establishment because our societies have become promiscuous which has created a large group of both celibates and eternal bachelors who have little positive influence over the women in their society.” — Jerr rreJ

If the state cared about you, or the preservation of the family they would not be devaluing our savings or making it impossible to live by printing money out of thin air, and playing god with our cultures and ways of life.

In Closing

I dream of a society in which we can go back to being closer to our unique, individual essence. My hope is that Bitcoin creates this opportunity.

Svetski has called Bitcoin “Responsibility go up technology” because it is fundamentally a kind of money in which responsibility must be borne by the user. Not your keys, not your coins. This is not only present at the level of the individual, but all the way up through larger organizations (no bailouts).

By upgrading to responsible, sound money, I think we change the behaviors of people so that they’re once more in line with their core nature.

Masculine framed men may once again lead, and women in their feminine will nurture and bring forth color and life to the world.

This is a guest post by Paloma De la Hoz. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Euronext Amsterdam To Launch Its First Spot Bitcoin ETF

Shawn Amick — Thu, 30 Jun 2022 10:55:12 -0400

The Jacobi Bitcoin ETF will be the first spot bitcoin ETF offered on the Euronext Amsterdam exchange for institutional European investors.

The Jacobi Bitcoin ETF will be Europe’s first spot bitcoin ETF listed on the Euronext Amsterdam exchange.
The ETF will have a 1.5% annual management fee.
Fidelity Digital Assets will serve as the custodian for Jacobi's bitcoin while Flow Traders and DRW will facilitate as market makers.

Jacobi Asset Management is launching the first spot bitcoin exchange-traded fund (ETF) in Europe through Euronext Amsterdam, the largest exchange to host a spot bitcoin ETF, according to a report from Reuters.

The Jacobi Bitcoin ETF will have a 1.5% annual management fee and, furthermore, this will be a first for the Netherlands as this ETF will serve as its first primary listing of a digital asset fund.

“The Jacobi Bitcoin ETF will enable investors to access the underlying performance of this exciting asset class via a well-established and trusted investment structure,” said Jamie Khurshid, CEO of Jacobi Asset Management. “Our goal at Jacobi is to make digital asset investments simpler and more familiar for institutional and professional investors.”

Being a spot bitcoin ETF, the fund will hold bitcoin on balance and has partnered with Fidelity Digital AssetsSM to serve as the fund’s custodian, while Flow Traders and DRW will facilitate the fund as market makers.

“We are excited to be acting as lead market maker for Europe’s first Bitcoin ETF, which is another milestone in the development of the institutional digital assets space,” said Edd Carlton, institutional digital asset trader at Flow Traders. “This is also aligned with the growing demand from institutional investors who are looking to diversify their portfolios by adding Bitcoin and other digital assets.”

The impending ETF reportedly received regulatory approval from the Guernsey Financial Services Commission (GFSC) in October 2021 and is set to begin trading in July on the Amsterdam exchange under ticker symbol BCOIN.

Grayscale Is Suing The SEC For Denying Its Spot Bitcoin ETF

Shawn Amick — Thu, 30 Jun 2022 09:47:43 -0400

Grayscale Investments announced it will sue the U.S. SEC for denying its application to convert its fund into a spot bitcoin ETF.

Grayscale Investments is suing the SEC for denying its application to convert GBTC into an ETF.
The filing was submitted yesterday evening by the former top legal mind that served in the Obama administration as U.S. solicitor general.
Over 11,000 comment submissions were sent to the SEC by investors, 99% of which were positive towards the transition of GBTC into an ETF.

Grayscale Investments, one of the world’s largest digital asset managers, is suing the U.S. Securities and Exchange Commission (SEC) after the regulator denied its application to convert its flagship bitcoin fund, GBTC, into an exchange-traded fund (ETF), per a press release

“As Grayscale and the team at Davis Polk & Wardwell have outlined, the SEC is failing to apply consistent treatment to similar investment vehicles, and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934,” said Donald B. Verrilli Jr., Grayscale's senior legal strategist and former U.S. solicitor general.

Verrilli was announced as a new member of Greyscale’s legal team on June 7, as the company had been preparing for a worst-case scenario. Grayscale also began a letter campaign with investors where over 11,400 total submissions were sent to the SEC, 99% of which were in favor of the fund’s transition to an ETF.

“Through the ETF application review process, we believe American investors overwhelmingly voiced a desire to see GBTC convert to a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world’s largest Bitcoin fund further into the U.S. regulatory perimeter,” said Michael Sonnenshein, Grayscale’s CEO.

Grayscale announced its intentions to transition the fund into an ETF in April 2021. A formal request to do so was then submitted later that year, in October. Since then, Grayscale has mounted many efforts to properly inform the public of its intentions and to meet all regulatory requirements.

While the SEC has a 240-day deadline to make decisions on these matters, which would have ended July 6, it can issue decisions early. Even though some may hear this news as disheartening, the forced litigation of the matter could create a standing precedent for the ecosystem that might be beneficial in the long-term.

Honk, Honk, HODL: How Bitcoin Fueled The Freedom Convoy And Defied Government Crackdown

Peter Chawaga — Thu, 30 Jun 2022 08:29:38 -0400

Among the chaos of the Freedom Convoy and Canada's authoritarian reaction, Bitcoin proved itself to be a sovereign financial rail for fueling protests.

This article originally appeared in Bitcoin Magazine's "Censorship Resistant Issue." To get a copy, visit our store.

The Freedom Convoy, a sweeping protest prompted by COVID-19 vaccine mandates for Canadian truckers, saw authorities work outside of established laws to quell demonstrations and block financial support. Among the chaos, Bitcoin proved itself to be a sovereign financial rail as hundreds of thousands of dollars in BTC reached protestors in spite of government efforts to block donations.

On January 22, a convoy of Canadian long-haul trucks left the port city of Prince Rupert, British Columbia, and arrived in nearby Prince George. The next day, another group of trucks traveled from Delta, British Columbia, to a section of the Trans-Canada Highway. By the end of the month, some 3,000 trucks and other vehicles, accompanied by more than 15,000 protesters, had converged on the country’s capital of Ottawa, blocking its streets and calling itself the Freedom Convoy.

The city’s police promptly launched a criminal investigation into their assembly.

The protestors were initially motivated by COVID-19 vaccine mandates for cross-border truck drivers implemented by the Canadian government on January 15. On February 7 and for several days afterward, protestors intermittently blocked Ambassador Bridge, the busiest international crossing in North America, which sees $323 million worth of goods cross daily. Ottawa businesses were damaged and blocked from operating, with Canadian economist Armine Yalnizyan later estimating that local workers’ suffered $208 million in lost wages.

The protestors were almost immediately successful in disrupting business as usual and attracting media attention and on February 11, Ontario Premier Doug Ford declared a state of emergency. On February 14, the Canadian government took unprecedented extralegal measures by invoking the Emergencies Act for the first time since it was enacted more than 30 years ago, giving authorities the temporary power to reach beyond the scope of existing law to quell the protest. Later that month, similar protests were organized in more than 30 other countries, including the U.S., Argentina and New Zealand.

And through it all, the Freedom Convoy quickly became one of the most high-profile test cases for the use of Bitcoin as a permissionless and censorship-resistant way of transacting value to whomever, wherever, whenever.

“This will be a historical moment for Bitcoin,” explained B.J. Dichter, a Toronto resident born and raised in Canada, who was a long-haul trucker himself before becoming a spokesperson for the Freedom Convoy. “Because we always talked about this hypothetical, the government tyranny of blocking your bank accounts, stealing your money and whatever… Well, now they just did. So, it proved everything. Everything that people said about Bitcoin like, ‘Oh, that’s hyperbolic. That’s never gonna happen.’ Well, guess what? Yesterday’s conspiracy is today’s reality. And I think in the future, people are going to see, that was the moment that regular people and everybody understood that the government can’t track it, can’t block it, and shouldn’t be able to.”

Pushed To Protest

In 2018, Canada’s trucking industry pulled in about $31.5 billion, moving more than 63 million shipments, according to Statista. From 2009 to 2018, it generated $277.1 billion in all. For many Canadians over the last few years, working as a long-haul trucker was seen as an opportunity to earn a flexible and dependable income.

“I got my license before the regulations changed in Canada that made it very restrictive to get a trucking license,” Dichter explained. “My brother thought it would be good when he retires that maybe we’ll start doing a business together and he wanted to go into trucking… So, I got my license and was getting a little bit of experience, part time when I had days off… Trucking became a side hustle.”

Dichter recalled his role in the Freedom Convoy while sitting in the halls of the Miami Beach Convention Center during the Bitcoin 2022 conference in April, where he had been invited to speak about the role that Bitcoin played in sustaining the protest. He described himself as a “serial entrepreneur,” who has worked as a geologist and diamond grader, in the motorcycle industry, as a podcast producer and more. His own interest in Bitcoin was piqued in 2015 and he first invested in bitcoin the year after.

He said that stringent regulations imposed on Canadian truck drivers had been a longstanding point of contention between drivers and regulators since well before the Freedom Convoy was organized. In 2019, for instance, 150 truckers from Alberta took a four-day convoy drive to Parliament Hill in Ottawa, calling themselves the United We Roll convoy. According to local news coverage at the time, the truckers were protesting a slew of government impositions, including oil and gas taxes.

Dichter called this year’s vaccine mandates the “straw that broke the camel’s back” for Canadian truckers.

“Most of us are vaccinated,” he explained. “It was the mandates, the lack of choice. That was the problem.”

Dichter described a personal experience that took place just days before the convoy occupation of Ottawa; border agents had tracked his vaccine status by surveilling his phone within a certain vicinity of the U.S. border as he drove back home. To him and many other Canadians, this level of government monitoring was indicative of a growing willingness by government officials to track personal details about their citizens without permission.

“If that’s the case, then we have a completely tracked and surveilled society, like this is crazy where we’re going, we’ve got to stop this now, and all of us saw it,” he said. “It was these final restrictions of ‘Papers please,’ to cross the border into your own country that was just enough.”

About a week before protestors left for Ottawa, Dichter was contacted by Freedom Convoy organizer Tamara Lich, a longtime friend who has organized numerous protest movements in her native Canada. She was arrested on February 17 for her role in the Freedom Convoy and, as of this writing, is legally barred from returning to Ontario except for court-related reasons. Lich asked Dichter for help with media relations.

“I love these truckers, I’m friends with them, but none of them have any media experience or any media training whatsoever,” Lich told Ditcher, as he recalled. “Can you be the spokesperson, help with the press releases, all that sort of stuff?”

Freedom Convoy organizers launched a fundraiser on centralized donations processor GoFundMe in January 2022, hoping to raise about $20,000 for fuel and other basic supplies needed to sustain their protest. To their surprise, by the end of January they had raised about $4 million from more than 100,000 donors and GoFundMe had distributed about $800,000 to the organizers.

But in early February, GoFundMe paused the distributions over concerns that the fundraiser was not in compliance with its terms of service, which include prohibitions on “user content that reflects or promotes behavior in support of violence.”

“Recent events in Ottawa, Canada, have generated widespread discussion about the Freedom Convoy 2022 fundraiser on GoFundMe,” according to a company statement from February 2. “As part of our information gathering process, we also requested more information from the organizer regarding the use of funds to ensure the fundraiser is still compliant with our Terms of Service. When we do not receive required information, we may put a pause on donations as we did in this case.”

That’s when the Canadian government started getting directly involved in the transmission of funds from donors to protestors.

On February 3, a committee from the Canadian House of Commons asked GoFundMe officials to testify over security concerns about where the donated funds were coming from and where they might be going. Members of Parliament also asked the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to testify. The next day, GoFundMe removed the campaign.

Several other centralized fundraising platforms started collecting funds for the Freedom Convoy, but it was clear that the Canadian government had drawn a line in the sand. Fundraisers on Christian-focused donations platform GiveSendGo had collected more than $8.5 million for the protestors, but the Ontario Superior Court of Justice granted a court order to freeze the funds. By late February, Canada had invoked the Emergencies Act and had frozen more than 75 bank accounts linked to the protests.

“Three years ago, if you had asked me what’s the chance that Canada would freeze individuals’ bank accounts… I’d find it really hard to believe it was 20%,” said Greg Foss, an outspoken Bitcoin advocate and fifth-generation Canadian. “And three years later, it’s 100%... It was not a good thing for freedom.”

A Permissionless Avenue

As Dichter and others organizing the Freedom Convoy wrestled with centralized fundraisers, Bitcoiners who had been supporting the movement throughout took it upon themselves to raise BTC donations through Tallycoin, a bitcoin-based fundraising platform.

“The Bitcoin community was awesome,” said Dichter. “Of all the things I had to deal with — these little groups infighting and people, you know, trying to do their own press conferences — the one community that I could depend on was the Bitcoin community, because they had all their ducks lined up. They were great, they just kind of kept me up to date.”

Tallycoin enables donations directly to a fundraiser’s Bitcoin wallet and offers the option to list an extended public key so that each individual Bitcoin payment generates a unique address. This is a critical privacy best practice that makes it more difficult for observers to associate these payments together. The platform also offers Lightning Network donations for fundraisers that use Bitcoin payment processors or by directly connecting their own Lightning nodes.

Using Tallycoin, a Bitcoiner named Nicholas St. Louis, who used the pseudonym NobodyCaribou, spun up a fundraising campaign called “HonkHonk Hodl,” receiving its first donation on February 1. As the Freedom Convoy’s fiat fundraisers were shut down and frozen, this Bitcoin-based campaign announced that it had surpassed its 5 BTC goal, worth about $213,000 at the time, on the same day that the Canadian government invoked the Emergencies Act.

But getting the bitcoin from HonkHonk Hodl’s Tallycoin addresses into the hands of protesting truckers, many of whom knew very little about the technology, would be a challenge. St. Louis teamed with J.W. Weatherman, a Bitcoin developer and donor, to establish a plan and they published a lengthy, public Google Doc called “Step-By-Step Guide For Distributing Bitcoin.”

The guide described a process of creating envelope packages to be handed out to protesting truckers directly via a “phone wallet that is properly backed up on paper.” At the time of this writing, the Google Doc appears to have been abandoned, with several items left unfinalized, but it outlined a process in which organizers utilized the security-focused Tails operating system, then the Electrum Bitcoin wallet to generate private keys, which would be handwritten in pen on two separate pieces of paper. These papers would then be sealed in an envelope, labeled as “trucker 1 — seed 1,” for instance, then sealed inside another envelope, alongside written directions for how to import the seed into a secure phone wallet and, ultimately, spend the donated bitcoin.

On February 15 via Twitter, St. Louis informed donors that he planned to distribute the bitcoin to 200 protesting truckers in a “verifiable way” by handing out paper bitcoin wallets containing seed words pre-loaded with 10,000,021 satoshis, along with instructions for how they could secure and utilize the funds.

On February 17, St. Louis tweeted an update that he and a partner had distributed 14.6 BTC to about 90 truckers in a 24-hour span, walking cab to cab and personally handing them out.

“There’s eight grand in bitcoin in there,” St. Louis tells a trucker in one video posted to Twitter on February 18, as he hands the trucker an envelope covered in sparkly stickers. “Basically, open it up, there’s instructions. All you do is a recovery code, it’s going to tell you to download BlueWallet, which is what the recovery code is for… Boot it up, it’s yours, thanks for your service.”

The video then shows the driver and St. Louis shake hands through the truck’s cab window before St. Louis walks on.

“I just met that guy a couple, I don’t know, a week ago, and he had a Bitcoin toque on,” the driver explained after turning back to the camera. “I said, ‘What’s up with that?’ He said, ‘Actually, if you don’t mind…’ So I let him sit in the truck or whatever, and we downloaded his wallet or whatever and he said there’s some massive, freedom loving people who love Bitcoin and stuff like that, so he said we’re probably going to get some big donors in the future, so whatever. And apparently there’s eight grand of bitcoin in here… I guarantee it’s legit… That’s definitely one of the craziest things that’s happened in the last two weeks.”

A brief documentary released by Reason’s Zach Weissmueller indicated that the HonkHonk Hodl fundraiser raised more than $1 million worth of bitcoin before it was shut down by St. Louis, and that it delivered more than $600,000 into the hands of protestors.

A Central Point Of Failure

On February 16, the Royal Canadian Mounted Police (RCMP) issued an order to all FINTRAC-regulated entities, demanding that they cease transacting with a list of 29 bitcoin addresses that it had associated with the protest.

On February 17, the same day that St. Louis announced that he and a partner had personally distributed more than 14 BTC to protesting truckers, a private class action lawsuit targeting Freedom Convoy participants received a judicial order, known as a “Mareva injunction.” It granted a freeze on the cryptocurrency affiliated with a group of listed defendants and restricted them from moving that cryptocurrency into bank accounts and wallet addresses named in the suit.

Defendants in the lawsuit included Lich, Dichter and St. Louis. It ordered TallyCoin and other digital asset platforms to freeze any transactions related to the identified wallets. The suit was initiated by a group of Ottawa residents who claimed that they were forced to close their businesses or lost work as a result of the protest. This was the first time in Canada’s history that such an injunction was used to freeze cryptocurrency and the lawyer representing the plaintiffs reportedly hired a private investigator to track down the Freedom Convoy organizers.

“The velocity with which the Canadian government was able to target and freeze the flow of money speaks volumes about how much power lies in the freedom of transacting,” said Econoalchemist, a pseudonymous Bitcoin privacy expert who publishes guides online focused on how to accumulate and protect BTC while obscuring your real-world identity. “This is where Bitcoin shines, a decentralized, peer-to-peer electronic cash system. With no central authority to deny transactions based on some floating moral standard, peers within the Bitcoin network can transact free from anyone’s permission. No government blacklist or class action lawsuit can stop a Bitcoin transaction from going through.”

As evidence of Bitcoin’s ability to enable transactions despite government regulations, HonkHonkWallets.GitHub.io, a website run by convoy fundraisers to automatically scan the Bitcoin blockchain, indicates that 59 of 100 wallets distributed to truckers had been claimed and that 29 of those had seen at least one additional transaction, as of block 732,726. Much of this activity occurred well after the Mareva injunction was granted.

But Bitcoin is pseudonymous, rather than anonymous, and all transactions are recorded on Bitcoin’s public and immutable ledger, meaning that every transaction is subject to scrutiny in perpetuity. Bitcoin may have proven to be a powerful method for circumventing centralized fundraisers for the Freedom Convoy, but it demonstrated its current limitations as well.

“The limitations of transacting with Bitcoin are mostly from connecting external information to on-chain activity,” Econoalchemist explained. “For example, using on/off ramps that require KYC information. This is where permission and censorship creep into the Bitcoin ecosystem.”

By March 18, Canadian police had managed to freeze nearly 6 BTC raised for protesting truckers.

“Though the RCMP won’t comment on the case, it issued a statement to CBC News saying it has the capability to seize and recover digital currency assets, pointing to past cases where the Crown successfully prosecuted crypto criminals,” according to a March 21 CBC News report.

Perhaps led there by on-chain surveillance methods, police raided St. Louis’ home in late February and, according to him, seized 0.28 bitcoin stored in a wallet that he controlled along with Lich and Freedom Convoy organizer Chris Barber.

“Officers forcibly removed me from my apartment and took me to an unmarked police vehicle,” St. Louis told the Financial Post, per an article published in March. “Police wanted the seed phrases for my crypto wallets. Under police compulsion, I provided my seed phrases.”

When Bitcoin Magazine reached St. Louis in mid-April, he declined to comment for this article, explaining that he was still subject to the Mareva injunction and was concerned that further legal troubles could put an additional 7.5 in donated BTC at risk of government seizure.

“I would have used a Bitcoin donation tool that generates a new address for every donor,” Econoalchemist said about how he might have operated the Freedom Convoy fundraiser differently in hindsight, while acknowledging that these privacy measures would disrupt transparency about how the donations were distributed. “I would have been sending all donations to [bitcoin mixing service] Whirlpool at periodic intervals during the fundraising campaign… I would have asked the truckers for their deposit address instead of creating the wallets on their behalf… Then I would have sent them their bitcoin from the Whirlpool post-mix balance.”

A Beacon Of Freedom

On February 17, the day that the Mareva injunction was granted, police in Ottawa constructed a 12-foot high fence around the Parliament building and established more than 100 checkpoints throughout the protest area. Barber and Lich, among others, were arrested. The ne

Exploring The Bitcoin Use Cases Of Spacechains

Shinobi — Thu, 30 Jun 2022 05:00:00 -0400

While spacechains have limited functionality for Bitcoin users, they do provide some interesting use cases worth exploring.

In the last article, I broke down what a spacechain is and how they work, but didn't go into any of the things you can do with them. Ultimately, the lack of a two-way peg mechanism severely limits the functionality it can provide to Bitcoin users.

A One-Way Trip

The original idea of a sidechain was to have a two-way mechanism where bitcoin can be transported to entirely new blockchains, that can have any arbitrary functionality or features that users want to take advantage of, and then move them back. The idea was to allow for experimentation in features that is currently done by altcoins to occur with Bitcoin itself without having to alter or present risks to the main Bitcoin blockchain, but still allow users to utilize the Bitcoin token and not have to speculate on completely independent tokens to gain access to new functionality.

Economically, the thinking was that bitcoin on any sidechain would never significantly deviate from the price of bitcoin on the main chain, the reason being due to arbitrage trading. If a sidechain bitcoin ever became worth more than bitcoin on the main chain, you could simply transfer your coins to the sidechain, sell them for a profit, and repurchase bitcoin on the main chain. The same is true in the opposite direction. It's essentially free money for anyone to capture, and so if such deviations occurred traders would quickly bring the price back in line.

The logic of a one-way peg is not so dissimilar, but only functions in one direction. In a spacechain, with a peg moving in one direction, you can burn your bitcoin on the main chain to claim a token on the sidechain, but you can never transport that back to the main chain. It's a one-way trip, and irreversible. This still creates a kind of arbitrage opportunity. The spacechain token can drop below the value of bitcoin if the demand for whatever utility is provided on the sidechain drops, but the token can never exceed the value of bitcoin in the long run.

If you have a need for whatever features the spacechain provides, and the value is less for the spacechain token than bitcoin, the rational thing to do is simply buy the token on the market and use it. Why would you take bitcoin and send it through the one-way peg to receive less value on the other end? Conversely, if the token is worth more than a bitcoin, the rational thing to do is simply send bitcoin through the peg. Why would you spend more money buying the token on the market when you could effectively "buy it" for less than market rate by pegging in your bitcoin?

This creates an arbitrage dynamic where whenever the price of a spacechain token exceeds that of bitcoin, someone can peg bitcoin into the sidechain, sell it for more, and buy back bitcoin on the main chain. Eventually this will drive the token price back down in line with bitcoin.

A Features Sandbox?

This makes spacechains a perfect place to implement features that, for one reason or another, will not make it into the main Bitcoin protocol. I would, however, not call it a suitable place for experimentation, given that the peg mechanism is one way. If some feature that was being considered for main chain deployment was done with a spacechain and you burned bitcoin to peg into it, that feature being deployed to the main chain would effectively render your spacechain tokens worthless. There would be no way to return them to the mainchain, and likely no market buyers for them, given the feature was now available for use on the main chain.

However, something not likely to ever be deployed on the main chain, like Confidential Transactions (due to the risk of inflation bugs being undetectable) would be a logical feature set to deploy in a spacechain. Likewise, more complicated or Turing-complete smart contract languages that would never be accepted in the main Bitcoin protocol due to complexity or security risks would also be something that would make sense on a spacechain.

DNS Tokens

One of my favorite ideas of something that could be done with a spacechain is facilitation of a Domain Name System (DNS) token, like Namecoin. Almost all of the internet you regularly interact with requires using the Domain Name System. Any website address you type into a browser pings a DNS server, checks the entry, finds the appropriate IP address and then connects to that server to retrieve the webpage. The entire system is centralized, domains can be seized and taken away, and you cannot even register one directly without intermediaries without providing your full legal identity. Putting such a system on a blockchain where anyone can register and own a domain name, deciding where to point it, without any centralized entity in control or able to stop you from doing so, would be a very valuable utility. Spacechains could accomplish this without the need for a new token, simply burning bitcoin to run the system.

But one-way pegged bitcoin tokens taking advantage of special features are not the only thing that can be done with spacechains.

Trusted Tokens

There are many types of assets that can be issued on a blockchain that are ultimately centralized assets regardless of how decentralized any blockchain they are issued on is. Stablecoins, equities, bonds, anything with an issuer that is either controlling backing collateral or a legal claim to centralized rights or dividends owed to the holder of the asset.

Spacechains would be a very fitting system to build such assets on. It provides a mechanism for transferring them with a much more open access model to facilitating transactions. Federated systems like Liquid ultimately have trusted parties in control of minting blocks for the sidechain, and although Liquid utilizies Confidential Transactions to obscure the amounts and assets being transferred, a critical mass of the federation can stop producing blocks and bring the system to a halt to prevent transactions.

A spacechain, however, cannot be subject to such conditions, given that the mining of blocks is open access to anyone willing to pay a high enough Bitcoin transaction fee for miners to mine their sidechain block, there is no ability for a federated group to halt the progression of the spacechain altogether like a federated sidechain. In combination with technologies like Confidential Transactions, it could improve even more the Liquid model of "the operators can censor but can't see what to censor." The "operators" are literally anyone who wants to pay a Bitcoin transaction fee, so no one can stop the blockchain if someone else is willing to pay.

One other benefit is atomicity. It's not possible without altering the main Bitcoin protocol in a way that is effectively a block size increase to make the Bitcoin chain "aware" of what is happening on a spacechain, but a spacechain can implement as a consensus rule the requirement to also validate main chain Bitcoin blocks. This allows atomic swaps to occur cross chain with the guarantee that something cannot be valid on the spacechain without a transaction also occurring on the mainchain. I.e., the transfer of a stablecoin is only valid if a pre-defined Bitcoin transaction is also mined at the same time, to facilitate a bitcoin sale. This would provide much stronger atomicity guarantees than a conventional cross chain atomic swap.

Two-Way Federated Peg

Everything up until now has been discussing one-way pegs. Spacechains are at the core built around this mechanism because a truly trustless two-way peg cannot be done without altering the core Bitcoin protocol itself to specifically facilitate it. This would require new consensus changes beyond what is needed to implement the spacechain itself. You can, however, still implement a two-way peg using a trusted federation just like Liquid or Rootstock does.

This comes with two major advantages over Liquid as a federated system. Firstly, as mentioned above, the federation is no longer in control of the process of mining blocks for the sidechain. They can participate, and in doing so earn transaction fees on the sidechain, but they do not have exclusive monopoly over this role anymore. Any entity or individual who chooses to pay the required main chain transaction fee to get their block mined by miners can participate in moving the chain forward in exchange for the transaction fees in the sidechain block. Secondly, the awareness of the mainchain that is possible with a spacechain offers the potential to drastically improve the process of pegging out of the sidechain.

Currently, it is possible in theory, although physical hardware security modules act as a layer of defense against this, for a person pegging out of a federated sidechain to have their funds seized. There is a delay between initiating the exit on the sidechain, and funds actually being sent to the user on the mainchain. Nothing except secure hardware prevents the federation from simply refusing to actually process the withdrawal on the mainchain.

With a federated peg on a spacechain however, every peg out could actually be conducted as an atomic swap. The system could be designed in a way where if a user conducts a transaction on the sidechain to peg their coins out, that transaction is actually invalid by consensus unless a specific transaction sending coins on the mainchain to that user is mined at the same time. If it is not, the coins can be returned to the user on the sidechain, and because the federation that denied their peg out has no monopoly over the production of sidechain blocks, they cannot prevent the user from moving their funds on the sidechain and finding another way to dispose of or remove them from that sidechain.

This would be a strict improvement of the security model of federated pegs for sidechains, and provide a mechanism to actually have a two-way peg function on a spacechain.

Spacechains can provide a large range of utility to users of Bitcoin, or even potentially people who do not use Bitcoin at all. They are possible to deploy in a somewhat trusted manner now, and if either CHECKTEMPLATEVERIFY or ANYPREVOUT are deployed on Bitcoin in the future, can be deployed in a trustless manner. One way or another, they are something that is possible to build on Bitcoin without requiring a specific change made to Bitcoin for the sole purpose of enabling spacechains.

So, whether you think there is valuable utility to be had here, or don't, if people want to deploy them, it is likely going to happen eventually.

This is a guest post by Shinobi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Creates A New Type Of Property Ownership

Jens Bucher — Wed, 29 Jun 2022 23:30:00 -0400

Bitcoin derives its monetary value from the fact that it is a new type of property that is independent and autonomous, amoral and apolitical.

This is an opinion editorial by Jens Bucher, a contributor at Bitcoin Magazine.

Bitcoin is a topic that stirs the passions in a way few other topics, perhaps barring CrossFit or veganism, tend to do. As Bitcoin increasingly comes under attack from governments and media, it is doubly unfortunate to see passionate defenders of Bitcoin produce such passionately incorrect apologia. This article is my attempt to cut down on the laser-eye profile picture hodl gang hype, and instead couch bitcoin ownership as a natural and inalienable right.

Bitcoin is first and foremost independent property — not money. It actually derives its monetary value from being property. Bitcoin can be owned not because it's money, but because it's property. Therefore, property takes precedence. Semantics? We'll see.

Property can mean a variety of things but there are suppositions to it. Generally, a type of property is imposing a social and or economic system, order, or more broadly, a political belief. Independent property, however, is ambiguous. Imagine a citizen of a nation with sturdy democratic institutions. Far away from them is a sailor in international waters, void of citizenship. Now imagine they are holding one bitcoin in a multisig wallet — meaning they hold collective rights of some sort to the bitcoin. If our citizen would have her private key stolen, she could report it to the authorities, claiming her lawful private property was stolen. For the sailor, however, there is no legal construct for his property, no political belief system to put his property into context. The nature of the bitcoin remains the same, yet its property type is ambiguous; it’s independent. Sometimes bitcoin is contextualized as a public good or a common property, das Allgemeingut — for the good of all. That might be a fair description of the network or the code facilitating the network, but this classification does not tackle the novelty of independent ownership.

Let’s quickly contextualize bitcoin as property. Critics are useful as a starting point and they are easy to emulate. The first objection, in disbelief to the citizen/sailor example, would be: “Property can not exist outside of the state. It is a creation of it. You can't just make a new property type up!”

As usual, critics aren't nearly as original as they think. This disagreement isn't exactly new. Thomas Hobbes, the 17th-century philosopher, wrote, “Law-makers were before that which you call own, or property of goods ... for without statute-laws, all men have right to all things ... You see then that no private man can claim a propriety in any lands, or other goods, from any title from any other man but the King, or them that have the sovereign power.”

While around the same time, John Locke and Samuel von Pufendorf argued, “That people in a state of nature must obtain the consent of their fellow men before the fruits of the earth can be privately appropriated …”

Consent is a core mechanism for property to gain independence from a king. What I'm referring to is the act of ownership, not necessarily the technical machinery. By owning bitcoin, I universally express the following: I acknowledge what is mine and I acknowledge what isn't. Otherwise, in the words of Hobbes, “... every man has a Right to every thing and therefore as long as this natural right of every man endures, there can be no security to any man.”

The very act of independent ownership implies consent. Skeptics would still claim, “Ha! You own nothing. It's an illusion, not property!” To which I reply, “How is it then, that I'm able to verify and prove to you, irrefutably and universally, the consensual possession of nothing.”

How could I do such a thing without it being my property? Code is not law. Laws are the law. But code is consensus. It's the Bitcoin network itself that issues and maintains the independent rights to the property of itself and can exclusively do so through its independence. The law, state or critic is free to interpret this consent however intelligible as they see fit.

Beware Of The Narrative Salesmen

I'm often told I need to buy bitcoin because there is only so much of it. But what is it? Cash? Currency? Hard money? Digital gold? A store of value? Ah, interesting. Can I pick? If I inquire, out of curiosity no less, how it can be all those things, I'm told off. I must read Friedrich Hayek, Ludwig von Mises, Murray Rothbard, etc. I'm told I lack belief, that I lack a deeper knowledge of truth to understand Bitcoin. Fine then, I will buy it — if only to get it over with. But which one of those things is it? There are so many. I'm told that, obviously, it is it, because it has the most of you: the network effect! We are it. I must take on its form, and submit my individuality to it. My eyes start to glow and pulse … Eureka! You need to buy it, there is only so much of it! In all this madness, I'm never seduced to own it and contemplate the novelty of my ownership, never told to take ownership of what I can possess the most, steer clear of what merely mimics independent property. I stay oblivious to the fact I was never able to possess anything this much in my life. Not your keys, not your bitcoin. I'm reminded once a year, if at all — how nostalgic. The climax of the narrative groupthink is then reached by the following disgraceful advice: if you only buy $100 of it, do not worry about ownership. Just let someone else own it for you.

The bazaar of narratives deafens all common sense. Therefore, I rebel and reject all sentiments excluding independent ownership. I declare ownership maximalism. Hard money? Soporific. Hosted wallets? Theft. Fixed supply? Economical blabber. You and I couldn't own bitcoin any less if it was issued differently or if its block reward was forever coupled to the distance between the moon and Earth. Economics and astrology are of similar scientific gravity to my independent property. As far as I'm aware, there is no economic theory that does not allow for a shelter to be built. There seems to be a distinction between what makes bitcoin ownable, and what allows it to take on other forms. This distinction seems to be important. There can’t be abundance, I admit, because scarcity is a prerequisite of property. Only in one regard do I caution you: Under no circumstance should you infringe on the extent — meaning the current amount and or predetermined issuance — of my property. I'm unwilling to renegotiate its extent. I can't be forced to consent unless I'm ruled by kings. My property would lose its independence and therefore be reduced to a narrative — a fairy tale. I watch with growing concern, seeing how easily my peers are willing to submit themselves to a greater political and economic cause.

Labor needs to be mentioned when talking about property. As with anything, there is a narrative for it. A popular idea spearheaded by Michael Saylor, is that bitcoin transforms energy into future purchasing power: a monetary battery; the concept of which is often misunderstood as a literal battery by critics. When I first heard this analogy, I was enchanted by the idea. For bitcoin’s creation, I need to build a power plant. Then there is computational labor and various instrumental forms of labor and trade in the issuance of bitcoin. Out of this narrative, there seems to be a growing number of people who claim that bitcoin is energy efficient — the most efficient of technologies no less! What a brilliant retort to the critic who, out of pure distaste, claims it's all a waste. How can all this effort not be what gives bitcoin value?

Not only do I think bitcoin is not efficient, but after all, how would one measure it? I simply don't care if it is. I'm not saying it should be wasteful, just that my ownership isn't necessarily dependent on any particular efficiency. Miners should be applauded as they use energy otherwise stranded, yet I fail to see how this could qualify as the labor which my property is born out of. Stay with me, I'm not here to speak ill of proof-of-work, just make you understand what it's not. If I told you to run laps on a track and for each lap, I will reward you with one kiss, you wouldn't conclude that the act of running is the labor that is producing the kiss, would you? Oh, how adorable you are, running your laps so efficiently.

Bitcoin is not the only independent property machinery either. It split into two at one point, for the sake of simplicity. If all this labor was needed for me to own it and create it, how was it able to duplicate itself without its past labor doubling? “But you can't copy the network effect!” I hear you plead. “It is not special, we are!” Have you not paid attention? How can I labor for one apple by picking it from a tree, and end up with two in my hands? What labor did I steal? None. Independent property is unorthodox, it’s labor agnostic and that's a good thing.

The Core

We often say Bitcoin is decentralized because we refer to Bitcoin as a computer network. Sure, it's the technically apt description, but it's autonomy. It's why we prefer to feed our machinery with real-world resources, not efficiency. It's what enables our property to be independent. The only reason our consent matters is the reason we can own it. There would be no point in forming universal independent consent without autonomy at the core, therefore, it’s our core value — the inherent value of bitcoin, so to speak. If we truly care about what we can possess the most, if we care about our ownership and the extent of it, is it not through this notion alone that we can reject all compromise?

To put it differently, we don't change Bitcoin’s “fixed supply” issuance because it is the “correct” theory of money, but because a higher cause demands we don't. We don’t change it because we would lose the independence of our property.

As an ownership maximalist, I only acknowledge independent proprietors. The phrase, “I want to gain exposure to bitcoin,” expresses an infantile state of mind and a lack of responsibility, similar to a child taking a whiff of whiskey, not having developed enough to taste to appreciate it — the parent will not allow it. What better way to describe the modus operandi of the crowd bitcoin increasingly finds itself in, wanting all the exposure but none of the responsibility of a hangover. So before you, fellow proprietors of bitcoin, call your representatives or otherwise, make sure you advocate for yourself. Advocate for the autonomy of the network and your property alone. Be very cautious when advocating for those unwilling to take on the same responsibility you do.

Get Your Politics Off My Property

Modern conservatives often find themselves at impossible junctions: On the one hand, taxes are theft, but on the other, a seething hatred for those who would dare defund the police. Markets must be radically free, but I’d like to keep my limited liability, please. Central banks are the root cause for wealth inequality, but when corporations buy bitcoin with cheap corporate debt, I cheer them on. Goldbugs don't understand money as I do, that's why I foresee central banks buying lots of bitcoin. Politicians shouldn’t be allowed to trade stocks, but if they trade bitcoin, I will vote for them. I’m a single-issue voter, but make it absolutely clear which political party I vote for in each election.

Bitcoin is not an expression of political belief, because it is independent of it. As soon as I impose my political belief or a higher cause onto bitcoin and use it as an expression of my belief, which I'm surely guilty of, I find myself in a corner having to defend it. Find myself seething over journalists claiming terrorists use bitcoin for funding, which is contrary to my political belief, so I point out that human rights activists use it too — as if it magically equals out. Never mind what the terrorist terrorizes for or what the human rights activist defends, those are of no concern. Contrary to popular belief, the existence of independent ownership needs no moral justification. Bitcoin doesn’t fix anything, you do!

This is a guest post by Jens Bucher. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Changing The “Bitcoin Is Useless” Narrative

Ray Youssef — Wed, 29 Jun 2022 22:00:00 -0400

There are a myriad of examples of bitcoin financially enabling people around the world despite common notions that bitcoin is useless.

This is an opinion editorial by Ray Youssef, CEO of Paxful and co-founder of the Built With Bitcoin Foundation.

Bitcoin has the power to help real people, but the “Bitcoin is useless” narrative still exists. Traveling on the ground in the emerging world, I’ve heard hundreds of stories from people who’ve said that Bitcoin has changed their lives for the better. And it’s no surprise. People are using Bitcoin for remittances, e-commerce, wealth preservation and social good. It’s the strongest solution for the unbanked, giving people the opportunity to put the financial power back into their own hands. So how do we change the narrative? Only with education can we break through the noise and show the rest of the world what Bitcoin can really do.

Over the last few months I’ve traveled through the U.S., South America and Europe, attending meetups, events and speaking with our users. One of my stops was the Oslo Freedom Forum, where I was lucky enough to meet activists from all over the world who are fighting for freedom. Bitcoin not only provides freedom from government control, but provides access to the global economy. It’s the people who are on the ground spreading this message that will really change the world.

Bitcoin Is Freedom

I’ve heard Farida Nabourema speak many times, and I continue to be inspired by her story. Her work fighting for democracy in Togo is the work of a true hero. In a country where people are silenced for speaking out, or prevented from receiving money from their family or friends outside the country, Nabourema is showing the way out. Bitcoin offers an alternative to traditional finance that is permissionless, borderless and inclusive of everyone. And now with Bitcoin, the people of Togo can take control of their financial future.

Back in 2020, the people of Nigeria were fighting against police brutality though the #EndSARS protests. Ire Aderinokun witnessed what it was like to be shut out by the banking system when the government froze bank accounts. Instead, the Feminist Coalition turned to Bitcoin to continue raising funds for their efforts.

Another activist I admire is Roya Mahboob, one of the first people to introduce Bitcoin to Afghanistan. Understanding the opportunities that Bitcoin could provide, Mahboob paid her female employees in bitcoin. For some, it was a way out from under the government — for others, it was a sense of independence they didn’t have before. Bitcoin not only provides sovereignty, but a sense of ownership. Thanks to people like Mahboob, more people are learning that.

Bitcoin On The Ground

Hearing these stories confirms that the key to global adoption comes from the ground up. I strongly believe in the power of local education, and in order to get to a billion Bitcoiners, we need to listen to the needs of different communities. I’ve been on the ground in communities all around the world to learn more about how Bitcoin can help the little guy. Take El Salvador, for example: while bitcoin is legal tender there’s still a massive need for education. Nathaly Maria Cortez from El Salvador came to our education center in the country to learn more about Bitcoin. She now advises her family and friends that do not have access to banking or the traditional financial system. Another user, Don Walter, has seen firsthand how Bitcoin has transformed his community through bitcoin donations. I could go on.

Changing The Narrative

These stories are just a handful of the many voices who have now experienced the power of Bitcoin firsthand. Farida once shared that you cannot have independence without monetary independence and that is what Bitcoin truly provides for the first time. All around the world, Bitcoin is creating opportunities for people who have limited financial access. It’s only through Bitcoin education and its real use cases that we can inspire even more people to take part in this financial revolution.

This is a guest post by Ray Youssef. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Samsung To Begin Production of 3nm Chips Which Could Be Used For Mining Bitcoin: Report

Shawn Amick — Wed, 29 Jun 2022 16:27:14 -0400

Samsung is reportedly trialing the production of 3nm foundry processing for chips enabling bitcoin miners to operate faster and with less power consumption.

Samsung is reportedly in a trial production stage for 3nm foundry processing which could be used for mining bitcoin.
The first customer will be PanSemi, a Chinese ASIC manufacturer and Qualcomm may also take part in the future.
3nm foundry processing can enable chips to have reduced power consumption, increased speed, and higher quantities of transistors.

Samsung will reportedly start trial production this week of three nanometer (3nm) chips for application-specific integrated circuits (ASICs) – the most efficient machines for mining bitcoin.

Samsung’s first customer, according to the report, is a Chinese ASIC company known as PanSemi, which designs ASICs used for mining bitcoin. Similarly, Qualcomm - Samsung’s largest customer - has also made reservations to take advantage of the new manufacturing process with sources reportedly stating Qualcomm can opt in at any point, but is not committed.

Previously, Qualcomm had placed orders for 4nm chips, but were canceled this past February due to a surprising lack of production from Samsung. This caused Qualcomm to lean on another company - Taiwan Semiconductor Manufacturing Company (TSMC).

The latest offering from Samsung is being referred to as gate-all-around (GAA) which, as the name implies, will have gates on all four surfaces. Until now, the most commercially successful process is FinFET, which has only utilized three surfaces instead of four. This upgrade reportedly allows the gates to be narrower and allows more precise control of currents. Reports suggest this could cause a 45% area reduction and 30% increase in efficiency if the trial production is successful.

In addition, Tech Monitor reported that TSMC’s 3nm process would shrink the size of the semiconductor which, in turn, would allow up to 30% reduced power consumption, up to 15% speed increases, while also allowing 33% more transistor density - which makes the hardware more powerful.

Even though that report was from last year, it is still valuable to understand the possible impacts this advancement will have on the technology.

High School Students In El Salvador Can Earn A Bitcoin Diploma

Shawn Amick — Wed, 29 Jun 2022 14:08:25 -0400

Two public schools in El Salvador are offering a vocational course that teaches Bitcoin as a skills-based diploma and counts towards graduation.

NGO My First Bitcoin, in partnership with IBEX Mercado, just announced 38 high school students graduated with Bitcoin diplomas in El Salvador.
Bitcoin education is taught through a vocational program in public schools where it serves as a practical skills-based degree necessary for graduation.
Yesterday, the companies announced a second school had adopted the Bitcoin diploma.

On June 25, in partnership with bitcoin-only company IBEX Mercado, a non-governmental organization (NGO) by the name of My First Bitcoin announced 38 high school students had graduated with Bitcoin diplomas through a new vocational program in El Salvador. Bitcoin Magazine subsequently reached out for an interview to discuss the success and future of this program.

Complejo Educativo Ignacio Pacheco Castro, or La Pacheco, is a public school that has served its community for 75 years. Recently, the school decided it would best serve its students by offering vocational education and degrees in a program called Bachillerato Vocacional.

Rodrigo Ayala, who is a member of the El Salvador Legislative Assembly and staunch supporter of La Pacheco, introduced IBEX to the school this past February with the intention of bringing bitcoin education to this vocational program. Soon after, IBEX partnered with My First Bitcoin – who developed the curriculum – while IBEX provided financial support for the program. On April 23, My First Bitcoin began teaching the first class of students.

The new curriculum consists of 10 lessons which include: an introduction to monetary systems, the consequences of fiat, monetary history, understanding bitcoin, wallets and the Bitcoin network, the double-spend problem and nodes, security and mining, the value of bitcoin, the Lightning Network and Bitcoin’s future, and the final project.

Furthermore, passing the final exam requires students to: create a bitcoin wallet, make a backup for that wallet, perform a wallet recovery from another existing backup, and transfer the bitcoin from one wallet to another.

Bachillerato Vocacional allows students to earn eight skills-based diplomas as part of their requirements for graduation while also providing practical skills for life. For the students of La Pacheco, Bitcoin is now one of those skills-based diplomas. However, the Bitcoin diploma does not stop at one school.

Ataco, El Salvador begins Bitcoin classes.

My First Bitcoin

Yesterday, My First Bitcoin announced another public school would be adopting the Bitcoin Diploma in Ataco, El Salvador. Furthermore, teachers, parents, and the surrounding communities will also be offered free weekly courses on bitcoin in each community that offers the course.

"We're looking for companies, organizations or individuals that want to support our project to take this program to other schools in El Salvador and nearby countries,” a representative from My First Bitcoin told Bitcoin Magazine.

My First Bitcoin

“As the first nation in the world to adopt Bitcoin we believe that what happens in El Salvador will create powerful precedents,” IBEX and My First Bitcoin jointly said in a release. “Quality, impartial education will be paramount to ensuring those precedents are positive ones.”

21Shares Released The Lowest-Cost Bitcoin ETP In Europe

Shawn Amick — Wed, 29 Jun 2022 10:50:16 -0400

21Shares released a new bitcoin ETP with the lowest cost basis in Europe as its first of many products being designed for a bear market.

21Shares released a new ETP on the SIX Swiss Exchange today meant to offer low-cost exposure to bitcoin.
The ETP will be the lowest-cost product of its kind on the European market.
This ETP is the first of a line of 21Shares products meant to allow investors to weather bear markets.

Today, 21Shares announced the release of its Crypto Winter Suite – a collection of exchange-traded products (ETP) meant to weather market downtrends – beginning with the lowest-cost European bitcoin ETP on the market, per a press release.

“Given the current market environment, many investors are looking to ‘buy-the-dip’ and generate the maximum potential long-term return,” said Arthur Krause, director of ETP product at 21Shares. “Our Crypto Winter Suite will provide ways for investors to dip their toes in the water at some of the lowest costs on the market.”

The 21Shares Bitcoin Core ETP (CBTC) is meant to offer low-cost exposure to the asset with a total expense ratio of 21 basis points (0.21%), which is meant to reflect the 21 million unit cap for bitcoin. This is reportedly 44 basis points lower than the next lowest product on the market. The ETP will lend out a portion of its underlying bitcoin through a fully collateralized basis in an attempt to offset operating costs, however the lending will not begin until the product achieves scale deemed appropriate by 21Shares.

“While we’re experiencing a tougher market today, interest in the long-game of cryptocurrency has not wavered,” said Hany Rashwan, CEO and co-founder of 21Shares. “We’ve seen investor demand for low-cost exposure to this asset class – and the 21Shares Bitcoin Core ETP – the first product in our new suite – does just that, at the most competitive pricing in Europe.”

Over these past few months bitcoin has fallen from its highs of almost $69,000 down to $17,500 where it managed a reversal back to a psychological level of support of $20,000. Representing an almost 71% downturn at current levels, the current state of the bitcoin market can seem difficult to those who aren’t simply hodling their bitcoin.

“Our bear-market products provide investors with a robust toolkit for navigating the challenging market environment,” said Rashwan.

Michael Saylor Announces 480 Bitcoin Buy For MicroStrategy

Shawn Amick — Wed, 29 Jun 2022 09:35:32 -0400

The CEO of MicroStrategy announced the company has purchased an additional 480 bitcoin, netting a total treasury of 129,699 BTC amid market downturns.

Michael Saylor, CEO of MIcroStrategy, announced the company has purchased an additional 480 BTC for its treasury holdings.
The company now holds a total of 129,699 BTC with a total cost basis of $3.8 billion.
Saylor recently provided a list of 10 things bitcoins needs to become a stronger asset.

Michael Saylor, CEO of Bitcoin bull company MIcroStrategy, announced the firm purchased an additional 480 BTC for $10 million, with an average cost of $20,817 per bitcoin.

The software analytics company now holds 129,699 BTC with a $30,664 average price – noting a $3.8 billion cost basis. However, the current bitcoin holdings in treasury for Microstrategy are valued at $2.5 billion.

The CEO has come under fire of late for his staunch support of bitcoin as its price has fallen amid the contagion currently suffocating the broader market. Saylor recently did an interview with Bloomberg where he discussed bitcoin in a general sense, but also noted his list of 10 requirements bitcoin needs to become a stronger asset over the next decade.

Indeed, one may mistakenly assume that his list of requirements suggest a lack of faith in bitcoin as an asset, if it needs to become stronger over time. However, this is not the case as Saylor is building a case for institutional adoption which will drive market cap through clearer regulation, not a betterment of the technology. Furthermore, the CEO clarified that while bitcoin can achieve a grander level of institutional adoption over the decade, it is still the best performing asset the company could have chosen.

“We did a lot of backtesting and I’ve gone back and looked at the numbers,” Saylor explained in the interview. “On August 10, 2020 when we announced our $250 million bitcoin buy, since then, bitcoin is up 72%.”

In addition, Saylor provided the returns of other typical assets held for the long-term which included: the NASDAQ (-2%) , gold (-9%), S&P 500 (+9%), and single-family homes (+26%).

Following the list of assets bitcoin outperformed since the initial purchase, Saylor concluded his thoughts in the interview by saying:

“The bottom line is that the bitcoin strategy is 10x better than any other alternative,” Saylor concluded. “So, no. I don’t regret it.”

Truly, one thing can be said of the consistent acquisition of bitcoin from MIcroStrategy: It is a long-term strategy extending past a decade, and neither Saylor nor the company seem to have any regrets.

Crypto Lending Scheme Implosions Make Bitcoin Stronger

Anita Posch — Wed, 29 Jun 2022 09:22:25 -0400

Amid the cryptocurrency market decline, it’s clear that Bitcoin can’t be stopped despite a price drawdown.

This is an opinion editorial by Anita Posch, founder of Bitcoin For Fairness.

Recently, one of my followers from Zambia asked, "Why has the price of bitcoin gone down in the last few months?" While I usually don't talk about price movements, because I think the utility of Bitcoin as digital cash and a global financial rail is more important than the question of when bitcoin will reach $100,000, recent price events deserve some attention.

Why Did The Price Of Bitcoin Go Down 72% From The All-Time High?

Source

As you can see in the graph above, the recent bitcoin price drawdown is not the first of its kind in the history of Bitcoin. It's not unusual that the price reaches a low in between two halving events, when the amount of newly-minted bitcoin is split in half, which occurs every four years.

Although the volatility of bitcoin has gone down over the years, these drawdowns have real-world implications if you can't afford to lose money and are not able to hold bitcoin for the long-term.

Bitcoin is a free market. The price of bitcoin is not centrally controlled. It's defined by the supply and demand of bitcoin. If more people want to buy bitcoin than there are sellers, the price goes up and vice versa. Since single events, news, sentiments and the general economic situation influence people's perception and willingness to spend as well as the possibility to save money, they also can influence the price of bitcoin.

The below graph shows the price development of bitcoin on a logarithmic scale. At times of high price, many people and mainstream media outlets start to speak of bitcoin being in "a bubble." When the price drops they say, "Bitcoin is dead." As you can see, Bitcoin has survived more of these up and down phases in the last 13 years, while the price went up in general.

Source

Below, you can see the same chart on a linear scale. The price is still on the level of its all-time high from 2017. I admit this doesn't look good for new entrants. It's bad for you if you obtained bitcoin the first time in late 2021, when the price was $60,000. But on the other hand, it's a great opportunity to start using bitcoin now or to get more bitcoin to lower the price at which you bought it on average. Say you bought bitcoin at $60,000, if you have been holding it, you’ve lost 60% value on paper. If you get more bitcoin at $20,000, your entry price is $40,000, optimizing your investment and giving you the chance for higher profits, because Bitcoin will be stronger in a few months. It will rise from the dead as it has done many times before.

Source

What’s The Upside Of The Current Bitcoin Price Drawdown?

These are turbulent times. First, we're in a typical bitcoin bear market in between two halvings. The newly-minted supply of bitcoin will be reduced by half, from 6.25 to 3.125 bitcoin per block, in 2024. Additionally we're seeing high inflation rates and rising prices for energy, food and living all over the world. People start selling assets to pay for their needs, which leads to more bitcoin being sold which drives the price down. On top of this, we’ve seen some big cryptocurrency companies go bust in the last few weeks, which caused panic and started a bitcoin sell off from holders who are not convinced that bitcoin's price will bounce back sometime in the future.

First, the Terra/Luna ponzi blew up and forced a liquidation of about 80,000 bitcoin. Then, Celsius, a centralized cryptocurrency lending platform which held cryptocurrency with a value of around $3 billion more than 1 million customers, halted paying out funds to its clients and seemed to be insolvent.

Reckless lending practices brought the whole system down. These centralized services take customers’ bitcoin and promise monthly returns. They lend it out to other DeFi projects, which is risky in the first place, and, on top of that, they lend out more money than they hold in assets. This is essentially a practice that led to the global financial crisis of 2008, which was a reason that Satoshi Nakamoto released the Bitcoin software in the first place. Now, the cryptocurrency industry is building the same over-leveraged financial products and one has to ask: Did they not learn? Did they think they found a solution to magically make profits, where there is no underlying economic activity?

The failure of these yield-searching companies brought the whole market and bitcoin down in the last weeks. It's a great reminder that one should have all assets in self custody and that there is no magical solution to money making by over-leveraging. Hopefully, investors and businesses learn from these busts.

Despite Price, Bitcoin Is Getting Stronger

Bitcoin is a decentralized technology which is unstoppable. No government nor any bank can change or control it. No one can take it away from you. This is especially important if you live in a country with authoritarian leaders or a broken banking system. Bitcoin has been declared dead several times, but it has been producing new blocks every 10 minutes anyway. It’s unstoppable, like a clock.

There is a phenomenon called the Lindy effect that proposes that the longer something has survived or been used, the more likely it is to have a longer remaining life expectancy. In short: the longer a new technology is working, the longer its life will be.

While many individual bitcoin holders sold their coins in panic, institutions are buying, as the Canadian Purpose Bitcoin exchange-traded fund (ETF) is showing.

This ETF fund "has witnessed consistent inflows over the last 30 days, precisely since the day the crash began,” stated AMB Crypto. “During these inflows, the total holdings of the ETF grew by 10,767 BTC and hit the ATH of 43,701 BTC ($1.3 billion)."Source

Source

The Lightning Network, which enables the use of bitcoin for fast micropayments and opens the door for people with few financial means at their disposal, is getting stronger, too. Below you can see the red line is Lightning Network capacity, which indicates how many bitcoin are used within the network. It has been growing despite bitcoin’s price decrease.

Source

Bitcoin's utility is unbroken, it's getting stronger with each new network participant, like Bitcoin Ekasi, a township with a circular Bitcoin economy in South Africa — it's running its own Bitcoin and Lightning full node now.

Ways To Mitigate Your Risk

Always hold the keys to your bitcoin yourself, because then nobody can build risky lending pyramids on top of your money. Use bitcoin either as a medium of exchange or a tool to send and receive remittances from abroad and exchange it immediately to local currency to be able to spend it for your daily needs.

If you have the possibility to save and store bitcoin for the long-term, then do it. Start earning, saving and using it with a long-term perspective through the halving cycles. Remember, you can buy and send a fraction of a bitcoin, too. The sooner you get acquainted with this new form of money and technology which enables you to send it peer-to-peer without banks and borders the better you'll be prepared for a frugal future.

This is a guest post by Anita Posch. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Spacechains: How This New Bitcoin Sidechain Proposal Works

Shinobi — Wed, 29 Jun 2022 05:00:00 -0400

Spacechains is a proposed Bitcoin sidechain that offers a one-way peg mechanism utilizing blind merge mine design.

The idea of sidechains as a scaling and feature extension mechanism for Bitcoin is a very old concept. A kind of basic "ancestor" idea of sidechains, merge mined chains, even goes back to before Satoshi disappeared.

That proposal was simply the idea of two completely separate and unrelated chains being mined by the same group of miners, with no ability to move anything between chains. The original sidechain proposal was made in 2014 by many of the people who went on to found Blockstream literally a week or so after the paper was published. The basic idea was to be able to have coins move back and forth between the main Bitcoin blockchain and other sidechains, with simple payment verification (SPV) proofs being used to prove things are valid when you send coins from one chain to the other. This never came to fruition due to complexities in implementation around chain reorganizations, the potential for theft and risks of mining centralization (all of which can be read about in section four of the Bitcoin white paper).

Peg mechanisms for sidechains can be of two varieties, one way and two way. The meanings should be obvious — in a two-way peg coins can move back and forth between the parent chain and the sidechain, and in a one-way peg, they can only move from the parent chain to the sidechain and never move back. Currently, the only form of two-way sidechain pegs implemented on Bitcoin are through federated consensus, meaning the peg is guaranteed by a trusted set of "custodians" who maintain control of funds pegged into the sidechain in a multisig wallet until they are withdrawn.

People, however, have continued working on other designs for sidechain pegs that are not federated. Here I am going to go through Ruben Somsen's Spacechain proposal as one example. It is a one-way peg mechanism using a blind merge mine design, similar to Paul Stztorc's. This means that coins can only go into the sidechain and never leave, and that miners do not have to run new software to get compensation for mining the sidechain (however, as I will go into later, they can benefit more by doing so).

The Spacechain Proposal

Merge mining requires miners to run the nodes of both the Bitcoin chain and whatever other chain they are mining, in order to compile the blocks for both chains and commit to them in the Bitcoin block header they are mining. Blind merge mining takes advantage of the fact that in reality, the Bitcoin miners only really need to have the other chain's block header to commit to in their Bitcoin block, someone else can actually take the trouble of putting together the block for the other chain.

Somsen’s proposed mechanism for this can utilize ANYPREVOUT (APO) to allow open competition for anyone to be able to compete to construct the next sidechain block while guaranteeing only one block can be committed per the Bitcoin main chain block. Another benefit of Ruben's proposal is that it does not require a specific soft fork to enable the possibility of deploying spacechains. Eltoo/ANYPREVOUT is being proposed for benefits to the Lightning Network, enabling flexible statechains, as well as channel factories. Spacechains are simply another possibility of the many things that enabling ANYPREVOUT would pave the way for.

The general idea of his blind merge mining proposal is that, by making use of APO, you can predefine a long set of transactions that take the same initial UTXO fed into them and commit to always recreating it. So, imagine a single satoshi UTXO, with each pre-created transaction guaranteeing that that same UTXO is recreated as an output when confirmed. Think of it like a sort of marker, this special UTXO is the identifier that allows anyone looking at the main Bitcoin blockchain to know, "This is where I find a commitment to sidechain X's blocks." This leaves open one problem though: miner fees. If that UTXO has to be recreated with the same amount, there are no funds to pay fees with.

This can be dealt with by utilizing SIGHASH_SINGLE (the signature from an input only signs that single input, and the corresponding output) and SIGHASH_ANYONECANPAY (people are freely able to add additional inputs and outputs without invalidating the signature as long as the input/output using SIGHASH_SINGLE is left as it is, to not invalidate that signature). Then anyone can add an input and change output to pay miner fees for the transaction.

This is also the mechanism used to commit to the block header of the sidechain block. The same way that Taproot commits to the tree of different spending conditions by tweaking the normal public key with the Merkle root of the tree, anyone can tweak the normal public key with the block header hash of the sidechain block. Sidechain nodes can then reveal and relay that block header with a pointer to transaction in the main chain to prove it was actually mined. From there, sidechain nodes would do all the normal validation to ensure the sidechain block is following proper consensus rules, and relay the actual blocks across the sidechain network just like on the main chain.

If one of the transactions used to commit to the sidechain blocks on the main chain was used to commit to an invalid block, or even completely garbage data, then when sidechain nodes see the commitment transaction used on chain, two things can happen: One, an invalid block will be propagated across the sidechain network, and when it fails to pass validation checks it will be orphaned; or two, the data is never revealed, in which case the next sidechain block will build on top of and commit to the last block actually revealed, and the unrevealed commitment will be ignored. This second possibility follows the same kind of longest-chain logic as the main chain, so even if something was revealed later, it will still be orphaned because of future blocks that did not build on it.

But there is still the problem of double spending. Anyone with the private key used to generate the marker UTXO could potentially doublespend any one of the predefined transactions used to commit to sidechain blocks and invalidate the entire set from that point forward.

This is solved by actually inserting the signature into the locking script of the UTXO itself. This locks in the signature on the input and output, guaranteeing the recreation of the marker UTXO in the next transaction using it. Because that signature is going to be automatically passed and checked when the UTXO is spent, it's not possible to simply replace it with another one and spend it to a different destination.

This leaves one last outstanding problem. It would be possible, in theory, to submit multiple transactions all in a row into a single Bitcoin block, so that a vast number of sidechain blocks are confirmed by miners all in a single main chain block. This could be abused to denial-of-service attack the sidechain network.

In order to solve this problem, a CHECKSEQUENCEVERIFY (CSV) relative time lock can be inserted into the marker UTXO script to guarantee that only one transaction using the marker UTXO can be confirmed inside a single given main chain block.

Altogether it looks like this:

Source

It is also worth noting that two variants of this design can be implemented with CHECKTEMPLATEVERIFY (CTV) or without any changes at all. These two design variants simply have suboptimal tradeoffs.

The CTV variant would use that functionality to commit to the chain of transactions using CTV instead of APO with the hack including the signature inside the UTXO locking script. CTV commits to all the outputs of a transaction spending the CTV UTXO, but it doesn't commit to any input besides itself.

This means you can add inputs, but not outputs, to a CTV transaction. So you can bring your own fee just like in the APO design, but you cannot add a commitment to the sidechain block header.

So, what we need to do here is create a transaction completely outside of the chain of CTV transactions for the sidechain commitment to create a UTXO that is just enough to pay the fee for the CTV transaction (because you cannot create a new change output in that transaction, 100% of the input you add goes to fees), and inside the transaction preparing the fee UTXO is where we commit to a sidechain block header. So, first step: a transaction creating a fee paying output and a commitment to a sidechain block header. Second step: we take the fee output and add it as an input to the CTV transaction, which when confirmed, "mines" our specific sidechain block. This variant looks like this:

Source

The next variant simply uses pre-signed transactions. It could be deployed today, but because of the limitations of what script can do, it requires all the fees for the transactions to be paid up front by whoever creates the spacechain.

The chain of transactions starts with a single UTXO, and in a chain creates two outputs. The first output is the marker UTXO, which signals that the chain of transactions is related to a specific spacechain, the second one is a small value UTXO that is spendable openly by anyone allowing for attaching another input/output to it. This second transaction is where anyone can openly commit to be the first to spend that second output from the spacechain transaction chain, and use it to commit to their sidechain block header.

In the CTV variant, the sidechain block had to be committed to in a secondary transaction because CTV does not allow adding new outputs in a transaction spending an input locked by CTV. This variant requires using a secondary transaction because if you add any new inputs or outputs to the pre-signed chain, you would alter the TXID of the transaction and invalidate all the pre-signed transactions that come after it. This variant looks like this:

Source

The one downside of this last variant is that if whoever pre-signed all of the transactions to use for sidechain block commitments does not delete the private keys used to do so, they can effectively halt the chain by double spending the current marker UTXO at any time.

And there you have it. This is the most recent proposal for a sidechain design on Bitcoin, and it can be implemented in three different ways, with the obvious caveat that the implementation path that can be done now has the issue of requiring someone to delete a private key.

This article is simply the first in a series relating to the major sidechain design proposals that have been published for Bitcoin since the original 2014 design. Keep an eye out for the rest.

This is a guest post by Shinobi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

We Need To Encrypt The Peer-To-Peer Layer Of Bitcoin For Privacy

Marty Bent — Wed, 29 Jun 2022 03:00:00 -0400

By making traffic between network peers encrypted, Bitcoin Improvement Proposal 324 can improve privacy by hiding node locations and other private data.

The below is a direct excerpt of Marty's Bent Issue #1231: “BIP 324 would bring encryption to bitcoin's P2P layer and it needs some review.” Sign up for the newsletter here.

Visualizing how encrypting data can obfuscate network connections

via bip324.com

As some of you freaks may be aware, Bitcoin is by no means a perfect system. Satoshi Nakamoto launched the protocol in January 2009, and gifted the world with a sly, roundabout way to take money out of the hands of the government so that we can get back to an economic system built on truly free markets and an accurate pricing mechanism. However, that doesn't mean Nakamoto was infallible. There are aspects of Bitcoin that can be significantly improved. One of those aspects is privacy at the peer-to-peer layer where transactions are broadcast and propagated.

Since inception, peers on the network have been communicating with each other using unencrypted connections. This type of communication leaves network participants at the peer-to-peer layer susceptible to man-in-the-middle attacks where nefarious actors — like governments — can sit on top of the network and identify where nodes are being operated and which node is broadcasting which transaction. In fact, in a report that was contracted out by the Defense Advanced Research Projects Agency (DARPA) and released last week. The researchers (whose report was riddled with many inaccuracies) did correctly highlight this shortfall and pinpoint it as an avenue through which nefarious actors can attack the network.

via Trail of Bits

This is a critical attack vector that could be made significantly more secure by making it so traffic between peers is encrypted. Luckily for us, there is Bitcoin Improvement Proposal (BIP)324, which would do just this. BIP324 has been around for many years, but hasn't been merged and set live at the peer-to-peer layer yet. However, earlier today, Bitcoin core maintainer Wladimir van der Laan took to Twitter to signal boost BIP324 and throw out a call to action to other developers for review of pull requests (PRs) that have been standing idle for an extended period of time. It seems that this BIP has been neglected and could use some love.

Let this rag serve as a signal boost of van der Laan’s signal boost. If you are a developer who is interested in making the Bitcoin network more private and less susceptible to somewhat trivial attacks at the peer-to-peer layer, give these PRs some love by giving them a review and some feedback. Review is necessary to get the network closer to implementing better privacy tech into the bitcoin stack (if that review deems it acceptable and worthy), so let's push this issue forward.

While everyone and their mother is focused on the latest credit explosion in the space, it could be a good time to get back to basics and drive value to the underlying protocol by making it more private and secure.

Perth Heat Baseball Adopts A Bitcoin Standard

Bitcoin Magazine — Wed, 29 Jun 2022 01:00:00 -0400

The Australian baseball team announced plans to fully adopt bitcoin, including ticket sales, paying players in bitcoin and making a bitcoin-related jersey.

This is a recording of a recent Twitter Spaces conversation about the Australian baseball team, Perth Heat, moving to a bitcoin standard.

Listen To This Twitter Spaces:

Transcript

[0:06] Perth Heat: We had a great experience of credit to the whole organization that put the conference together. Scaling of that size after a few years I thought was quite phenomenal the way Bitcoin Magazine was able to run the event in a lot of ways, not knowing what sort of support you'd get globally after all the lockdowns and travel restrictions, et cetera. To see that many Bitcoiners to have those interactions was just a phenomenal three days. It's hard not to get excited about 2023 and what's to come. For those that didn't attend in April this year, the opportunity to purchase those tickets at a discount rate, secure them as quickly as you can, because it's an event you want to be at next year. No doubt.

[1:01] Q: I see. I didn't even have to tell you, guys. He's not even paid to tell you guys, I'm paid to tell you guys that.

[1:08] Perth: Well, you can't buy experience, can you, Q? I was there this year with this at firsthand and it's quite phenomenal, an amazing three days. On the back of putting that conference together, as I mentioned, in light of what's happened, it's pretty cool to see what Bitcoin Magazine will be able to do next year and in the coming years. If you're a Bitcoiner or you're thinking about becoming one, wanting to learn more about Bitcoin and the conference is a place to be, and probably what's the best feature is just the atmosphere that you have amongst everyone who are willing to chat, which is gorgeous and really refreshing. Everyone there, in some ways, like-minded and willing to share opinions, stories, ideas, and knowledge. It's fantastic.

[2:08] Q: I know we're still waiting for Patrick. I don't want to tease or get ahead of anything, but I do want to maybe ask, it's bright and early, you guys are getting ready for winter, how was the season for those that maybe didn't stay up to date with Perth Heat's baseball season?

[2:28] Perth: Well, unfortunately, last year, it was a little tricky, so I can just say Patrick, he's online now. If you may just want to put him on this or in the handle there it’s Pleb. We've got him online. We'll just make him live if you've got him there.

[2:48] Q: He should be coming up right now.

[2:49] Pleb: Hello, hello!

[2:50] Q: Patrick, how you doing?

[2:51] Pleb: Yeah, I'm doing fantastic.

[2:52] Q: How are you?

[2:53] Pleb: How are you?

[2:53] Q: Wonderful. Thank you for joining us. Thank you both for joining us. We're really excited. Bitcoin Magazine is to help announce this very exciting announcement the Perth Heat have for the entire world to hear and participate and be a part of, and I'll let you two take it away.

[3:12] Perth: Ah, thanks. Well, there a couple of little things we'll touch on in regards to some updates as to what we'll do throughout the season, but today's announcement is, we've always said that what we do with the team and with the slogan, the Bitcoin baseball team, we really want to be a great representation of the network. We want to hear from the community what would they like to see from the first team in world sport who are operating on a Bitcoin standard. What would they like us? How would they like us to operate? Is there some sort of edge to what we do, how we do it, or how we advance Bitcoin?

So there are quite a few different parts to our operation. One of the smaller parts, but quite interesting ways we present ourselves is with our uniforms. This season we had two jerseys, which were Bitcoin baseball jerseys, the white and black one which had been incredibly popular worldwide in terms of people and fans who wanted to purchase those. For the coming season for 22/23, we thought it was important that we could put it out to the Bitcoin community to design our jersey. As of today, we're running a competition, which as you said is global. We want you to design our Bitcoin baseball jersey and there's really no rules or guidelines in terms of how this jersey needs to look or what it has to include.

The guidelines are simple. It can be any color, pattern tone, that you decide, and it can be as subtle or as loud as the individual wants to make it. Traditionally, Perth Heat, if you looked at our colors, they're red, white, and black in terms of our jerseys, but that's not to say that this one can't be orange or it can't be bright yellow, it can't be a mixture of those colors or any of that. Be creative. This is a jersey for the Bitcoin community to design. We're really excited by the combinations that we're going to see come through.

We've just sent through a tweet which has got a link which can go to our website. There's a template there, which you download, design the jersey, and then send it back to our office and we'll start sharing those designs as they come through the next couple of weeks and then announce the winner. The other Jersey, which we judge to be the best will be the Bitcoin baseball jersey for 22/23, and that will be one in games on our global broadcast. It's going to be pretty cool and that's going to be someone from the Bitcoin community who's in some ways helping the global adoption of Bitcoin by designing a jersey, which will proudly wear throughout the season, which we are planning on being a championship season.

[6:18] Q: I love it. Very, very exciting. I love the fact that you guys are bringing in fans from all over it. I'm assuming that in the same way that last year's jerseys were on sale, everyone in the world, these would also, whatever Jersey is selected, would also be the jersey marketed and sold to everyone.

[6:38] Perth: Absolutely. This will be our Bitcoin baseball jersey. Not only will we wear it, but it'll be online for Bitcoiners around the world to purchase and wear proudly. The Bitcoin community has got so many talented people in so many different sections, departments, areas, were very, very talented and creative group as well. Like I said, my ideas with our marketing team in new balance as to how to put Jersey together for this season, but what we'll get from the community will be so much better. What excites us so much is that there's many talented designers throughout the Bitcoin community. Let's see what we can put together. As said, it doesn't have to be necessarily loud and have a million Bitcoin logos all over the jersey. Something that's going quite subtle. Maybe something that looks the sharpest but let's get the designs coming through. We'll post them, we'll get reaction, we'll get feedback from across the network and through Bitcoin Magazine and it's got to be pretty powerful, the jersey that we get together and maybe the story that's attached to it as well.

Also, a really nice part of this exercise is that no doubt some of the jerseys that come back with the designs will also have a really nice story to it as well, which will be great to share. That story can be anything from here. Someone's journey with Bitcoin, how they got started, who orange pilled, a whole heap of things. As I said, there are no rules with the design. I think that's pretty important for people to understand. So in different shades of color, textures, patterns, let's get as creative as we can.

[8:36] Q: This is going to be a lot of fun. I'm really excited to see some of the submissions. I already have a couple people that I'm going to DM and be like, "You should submit something to this." I'm curious because I'm a loud guy. I like wearing loud clothes. If you saw me in Miami, I looked ridiculous most of the time. But in American sports, they love to make all these ridiculous extra jerseys sometimes that have nothing to do with the colors of the team, but maybe have something more to do with the city. In my mind, you brought up the fact that your colors are synonymous with that of the Miami HEAT, but this last year, I thought the freshest jerseys in the NBA were the Miami Vice jerseys. Obviously, there's the tie into the show. Is there anything culturally relevant to Perth that maybe you'd love to see incorporated into this as well as Bitcoin?

[9:27] Perth: That's a really good question. Some from Perth that we could incorporate, probably the state colors. If you looked at that, they're gold and black. So there's that attachment to the city, we're a coastal city. If the jersey was blue, naturally be very different to anything that we'd previously worn that would have a connection, huge mining, and resources, state. So up north, there's a lot of the red dust coming through, but nothing specific. If it's a complete contrast or anything we've had, we'll give it more relevance in some ways stand out and people understand. So if this jersey was the most foreign jersey ever seen on a sporting team, well that could become a pretty good marketing play for Bitcoin as well because people around them will be going, "Have you seen that baseball jersey on Perth Heat?"

It's 27 different colors, become a talking point and how are the Bitcoin baseball team. And then suddenly, the orange peeling process with people that had nothing to do with sport or Bitcoin becomes relevant because they're introduced to Bitcoin in a different way through what could possibly be the most horrendous jersey that anyone's ever seen in world sports. As I've said, have some fun. I think going to be important, and being created.

[11:01] Q: I apologize in advance for the absurd submission that you'll receive on my behalf.

[11:08] Perth: No, no, that's good. Keep it coming on. As I said, we'll share

them all and we'll get feedback. I've got a feeling that something loud be well-liked.

[11:23] Q: I'd love to expand a little bit. You brought up something, I think that every Bitcoiner loved to discuss and love seeing when teams or people, especially in sports, start to take on Bitcoin. Perth Heat was one of the earliest adopters who's taking on Bitcoin. We've since seen efforts by teams all over the world now, as well as athletes all over the world. I'm curious what the reception locally in Perth has been since your adoption of Bitcoin, what that conversation's been like with fans as well as community members.

[12:02] Perth: Yeah. Maybe I'll get Patrick to come on here and speak to this as a Chief Bitcoin Officer who's been instrumental in our project. I've said a couple of times, I think we'll see change in the world moving forward where it's no longer the CEO who's at the top of the C-suite executive will be the CBO. The amount of reference I have with Patrick each day is more than anyone else within the organization. Patrick's had a lot to do with how we've onboarded and what we've done. So maybe he can be a best speaker to this one, Pat.

[12:41] Pleb: Yeah. Awesome. Thank you, Steve, and thanks to Bitcoin magazine for having us. I would say the reactions in the beginning locally was one of absolute intrigue. I think we're past the point where there's confusion in the general public about Bitcoin. Obviously, they've probably been touched by one or two times and they were just looking for an excuse to look deeper down the rabbit hole or to even start to stumble down the rabbit hole. Locally, in terms of government, we've seen nothing but support. As they start through meetings with them, they start to understand and realize how they can leverage everything that is happening at the Bitcoin part essentially, how they can use this in their own ways to advance their own agendas locally.

The public has been responsive in what it's going to mean for the team, what it's going to mean for the players, the organization, our ability to continue to provide positive influence in the community. There's been questions, but the questions haven't been around, is it a Ponzi scheme? The questions have been around tell us exactly how it works? How is it going to integrate? How do you run a team on a Bitcoin standard? You mentioned other sports teams. Teams saying, coming out, and trying to leverage off of announcements saying, "We're going to accept Bitcoin for tickets," and that's fantastic. There's athletes coming out saying, "We're going to convert some of our salaries into Bitcoin." Again, a positive step in the right direction.

The Bitcoin baseball team is entirely different. Everything that we are doing here is different because it's coming from the top down. This is a change from the organization, from the inside out. Essentially, we're going to do everything that Bitcoin users have always desired. We're going to do that. We're going to try to represent the best of Bitcoin to our best ability. So that's we're going to pay players in Bitcoin. That's we're going to accept all the sponsorship from Bitcoin. You'll be able to buy everything at the ballpark in Bitcoin. There's going to be a number of different ways that fans can interact with Bitcoin and get education components in Bitcoin. We're going to put Bitcoin on the balance sheet, we're only going to put Bitcoin on the balance sheet. All of these things, everything that Bitcoiners have ever wanted is what we're doing now.

Is it early in a lot of those areas? Yes, absolutely. But we knew that making the announcement, we knew that in the months leading up to it, was it going to be possible to seamlessly integrate all areas of the business straight out the gate? No, but we wanted to take on that challenge because if not us then, who? Someone has to do it, someone has to be the first to do all of these things. We think that sports can have a major impact on the general public. It's one thing to sit around in the Twitter world and communicate back and forth, argue over the merits of one theory over another theory. It's another two to reach out to the general public and sort of Trojan horse, the education of exactly what is happening with the money and sports is a fantastic way to do that.

It's been proven over the last hundred years through fiat marketers, that a good way to get your message out there is to go through sports. We're trying to do the exact same thing, but the opposite and try it towards some [inaudible] people into understanding, even in the community. We have a proof of work of 30 some odd years of being up the impact in the community. We think sports can be the vehicle that everyone involved with the team is going to be better off because of it. Therefore, the community is going to be better off for it. All of the questions that have come from the community, from the players, from the staff as we started to make this change, there has been very little, if any negative feedback, it's all been "Okay, how does this help? How can we use this to become a better baseball player, to become a better community member, to become a better organization?"

So far, it has been a real pleasure in dealing with everybody because the openness is there because people sense like a splinter in their mind, they sense that something is not right. Hopefully, the Bitcoin baseball team can be there. If it's not their initial point of contact for what the solution might be, we can just be another support system to show people that yes, this isn't something that your crazy uncle is investing in. This is something that an entire organization, an extremely successful sporting organization can run off of. It's been really, really positive all the feedback and excited about the future and the season and the jersey.

I would just reiterate what Steve said. One of the beautiful things about the open-source nature of Bitcoin is that we can leverage talent from all over the world. When we made the announcement, there was a bunch of groups, companies, individuals that reached out and said, "I'm not a coder. I don't know how to do technical things, but I have other skills, but I can't find a Bitcoin job where I can't get involved." Well, this is an opportunity to graphic designers or just normal pledges around the world to hopefully be able to create a cultural icon that we can say, "This represents Bitcoin. This represents what we think is a Bitcoiner, and people can wear it and be proud that it represents the network." That's exactly what we're going through, so it's an exciting announcement. We're looking forward to hearing the feedback and hearing which direction the network wants to go going.

[ads]

[20:06] Q: I love that. It's very exciting to hear how the reception internally, both with your own players and with the community itself, has been open and collaborative. How have you felt the impact or support of Bitcoiners from abroad has been for you guys and your efforts all the way out, all the way down under?

[20:30] Pleb: The individual Bitcoiners when we're around the world have been nothing but positive. We had the exact reaction that we anticipated from the corners around the world. I think everyone has been positive. Everyone that has reached out had ideas to make us better. Every time that Steve or I do any sort of media, whether that's legacy media here in Australia or around the world, or whether that is doing stuff like this or different podcasts, it has always been that we're trying to harness the best of Bitcoin and show that off and be a showcase for people that are new to the idea and for salty veterans. They have come up with amazing ideas that we've actually integrated into the business itself.

So I would reiterate that if you are a Bitcoiner and you wanted to see a Bitcoin company, do something, please reach out and let us know because we don't have all the ideas. We are trying to leverage the open-source nature of it. Everybody has these things that they can contribute and they can make an immediate impact. The story of the Bitcoin baseball team locally, nationally, and internationally has gained so much traction that oftentimes this will be the first dip of the toe in the water for most people that are hearing about this. We like those ideas from individuals around the world. I think on the company side of things, as it gets bigger and bigger, Bitcoin it may seem really, really big from the inside looking around it, seeing all the companies, but it's still at an extremely nascent stage of development.

Companies now are only just starting to realize there's a world outside of Twitter and podcasts that we can reach and sports can be a great way to do that, but it's also about educating them on not being a Fiat Sponsorship Organization opportunity. We don't want to partner up with companies that just want to put a patch on a Jersey. This is about creating the future. This is about stumbling forward together and making a better world for the people that follow the team, enjoy the team, and just for the network in general. It has been a learning experience and it has been constantly evolving, but every time we sit down for chats with individuals or companies, everyone is getting smarter by the day because of the education that's out there. It just seems like we are moving at a mile a minute, everything's happening so quickly, and the landscape is changing so rapidly that it makes for extremely exciting times.

[23:09] Q: It really is exciting. The first call to action is for anyone and everyone to submit a jersey design. I'm curious, when is the deadline for this or when is the cutoff? I'm assuming it has to be well before the season.

[23:25] Perth: No deadline. We got a couple of weeks to run through this, so 27th of June. So the end of this month is when we'll close it. A few weeks after people get started on putting the jersey together. We've got to obviously finalize design files with new balance, then produce, and also ship them. The advice is get started ASAP.

[23:56] Q: Got it. that's just about three weeks guys to actually get this design into them and have them sort of start to decide what they want. I'm curious, Patrick, you kind of brought up a very interesting point about how there are some resources that the community still needs build-out. I haven't been to Australia in almost a decade. Now, I'm curious of what is available technologically on the Bitcoin network for you guys? What is it that you guys feel you could use more support or help with? Is it getting more wallet options? Is it getting more exchange options or places to buy Bitcoin, or is it getting more lightning node set up? What is it you're finding that Australia or at least Perth needs more of?

[24:49] Pleb: Yeah, I don't know. Here in Perth, the world is so easily connected now. It's like we can get access to all of those things. It's more from an organizational standpoint because what we are trying to do, as I mentioned before, is we are trying to not send people down a path that is questionable when they are j

It Is Time To Turn The Tables On The Bitcoin Environmental Debate

Marie Poteriaieva — Tue, 28 Jun 2022 22:00:00 -0400

Bitcoin’s infamous energy criticism is misguided as mounting research shows the exact opposite of those claims are true.

This is an opinion editorial by Marie Poteriaieva, a Ukrainian-French crypto industry observer and educator, following the space since 2016.

Bitcoin is routinely treated as an environmental pariah: its energy consumption is quite simple to track and quick-label as “anti-ecological.” This statement is wrong on many levels, but public opinion is rarely nuanced, and politicians often have little to lose by attacking Bitcoin on ecological grounds — at a (comparatively) small expense of alienating crypto enthusiasts they can position themselves as planet-saviors to a larger audience.

This approach won’t last long though. More and more voices are rising to contest this immature presentation of Bitcoin, its mining, and its importance for the world. These arguments go in three main directions:

- Energy consumption of Bitcoin versus the traditional monetary system it is intended to replace.

- Green mining and its potential to boost green energy development around the world.

- Multi-purpose use of miners, recycling their waste heat or capturing flare gas.

Fiat System Energy Consumption

The notion of “a lot” only makes sense in comparison. In the case of Bitcoin energy consumption, the most relevant comparison is with the fiat money system (and not with some small European country, as some clickbait articles may quote).

While Bitcoin is pretty much self-sufficient, in the fiat world its job is done by a plethora of different organizations in charge of issuance, distribution, management, bookkeeping and payment services.

A 2021 study by Galaxy Digital, an asset management firm specializing in cryptocurrencies, looked deeply at only four metrics of the fiat world — branches, servers, ATMs and card networks' data centers — and estimated that the banking system consumes over 263 TWh yearly.

More detailed research, recently published by Michel Khazzaka of the Paris-based consultancy Valuechain Technology Ltd., combs through the energy consumption of more aspects of fiat money: the printing and minting of physical notes and coins, ATMs, cash in transit, cash at electronic points-of-sale, card payments, banking offices, banking employees’ commutes, banking IT and inter-banking. The results are stunning: the traditional money sector — excluding finance and insurance — would consume around 4,981 TWh yearly.

Bitcoin Energy Consumption

Bitcoin network hash rate — the collective computational effort miners are deploying to mine a block — is public information, which makes it possible to calculate Bitcoin electricity consumption by estimating how much energy is needed to produce it.

The most popular resource on Bitcoin energy consumption is the Cambridge Bitcoin Electricity Consumption Index (CBECI), which estimates electricity use by “simplistic weighting of profitable hardware,” a method relying heavily on electricity cost estimate and is thus not particularly accurate. CBECI currently estimates Bitcoin yearly energy use at 120 TWh.

The above-mentioned study by Valuechain proposes a different methodology: counting miner nodes and their efficiency, i.e., watts consumed per hash and the release date of each miner (assuming that non-ASIC mining is marginal and should not be taken into account anymore). This method gives another figure of 88.95 TWh.

Bitcoin is thus estimated to consume 2-56 times less energy than the fiat system it is an alternative to.

Bitcoin As A Way To Greener Energy

A number of studies, such as those conducted by the Bitcoin Mining Council, have pointed out that the exceptionally high percentage of renewables in the Bitcoin energy mix — 58% — is considerably more than any other major industry.

This is not surprising, for Bitcoin miners are mobile, and they naturally go where the energy is cheapest — which in many cases means going to green energy sources that cannot efficiently stock and transport their extra energy.

Bitcoin mining is also flexible, meaning that a miner could be turned on and off instantaneously following energy fluctuations, which in case of green energy can be considerable.

These two qualities allow Bitcoin mining farms to be installed in some of the world’s most remote places, like a dam on the Amazon or a solar farm in West Texas, making them more profitable and incentivizing more green energy developments.

Good examples of such incentive alignment would include two hydroelectric plants built on the edges of Virunga National Park in the Democratic Republic of Congo. The initial investments were enough to build the plants, but not enough to get electricity to people, who continued using charcoal and cutting trees in Virunga, precipitating its deforestation … until a Bitcoin mining company from Paris came. Now based in Switzerland, BBGS has installed mining rigs on the dams, making them profitable and allowing them to finance the rest of operations, including the necessary infrastructure.

Carbon-Neutral And Carbon-Negative Mining

Miners are subject to constant innovation, not only in the size of their chips (smaller chips equal less energy required to transmit data), but also in technologies allowing them to capture and repurpose the waste heat they generate, making mining de facto carbon-neutral.

Canadian MintGreen uses miners to warm water for a whiskey distillery, and a project to heat buildings in Vancouver is underway. Norwegian Kryptovault recycles the waste heat to dry timber, and soon — seaweed. Sweden’s Genesis Mining uses its miners to heat up greenhouses. Similar initiatives are popping up all over the world, and projects like The Block’s “custom silicon” rigs will only increase the number of ways a Bitcoin miner can be used.

What’s more, Bitcoin mining can be carbon-negative, i.e., effectively reducing the quantity of greenhouse gasses emitted into the atmosphere. It can do so by capturing flared gas — a by-product of oil production, which is often too expensive to transport, so it is simply flared into the atmosphere, emitting harmful air pollutants like black carbon, methane and volatile organic compounds. Oil producers all over the world are being increasingly told to curb the gas flaring, and Bitcoin mining is a clever way to do it.

Some smaller oil producers in Texas and Montana have already partnered with mining companies to capture the flared gas, but it was the arrival of ExxonMobil and its pilot Bitcoin mining program in North Dakota that has definitely put this practice on the map.

Humanity needs energy to live and to develop, and instead of trying to curb its use, bringing us back to candlelight, we should aim to develop energy efficiency and sustainability.

Bitcoin uses 2-56 times less energy than the fiat system, and the Lightning Network can allow it to scale as needed without spending much more.

Bitcoin mining is already the greenest industry, and it can incentivize many more green energy developments around the world.

Bitcoin miners can also be used for a number of non-mining endeavors, including actually preventing more greenhouse gas emissions into the atmosphere.

Now it’s the fiat system’s turn to justify its ecological footprint.

This is a guest post by Marie Poteriaieva. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Does The Wisdom Of Bitcoin Come From An Ancient Civilization?

Leon Wankum — Tue, 28 Jun 2022 14:30:00 -0400

Bitcoin doesn't try to change our nature. It works with nature; it's part of nature. It is the combination of ancient wisdom and scientific knowledge.

This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis about Bitcoin in 2015.

As I walk through the ruins of Machu Picchu, an Incan citadel built in the heights of the Andes Mountains in Peru and dating back to sometime around 1450, I see the magnificent remains of buildings and structures erected by a civilization long gone. To this day, we cannot explain how the Inca built it or what its exact use was. Historians know the Inca used Machu Picchu as a sacred site to house around 700 high priests. A place full of magical mysteries, Machu Picchu is known for its intricate ashlar walls that fuse huge stones together without mortar and for buildings that incorporate astronomical alignments.

Machu Picchu is part of a series of humanity's greatest achievements, which we do not fully understand how they were built, such as the pyramids in Cairo; the pyramids in Teotihuacán, Mexico; and Coricancha in Cusco, Peru. How were the Inca able to carry and then align large stones up a 2,430-meter mountain, which would be difficult even with the most modern tools?

What we do know is that the Inca lived in harmony with nature. They participated in an agricultural society that used the forces of nature to build cities and sacred sites that still stand today. The philosophy of life in the Andes was based on benefiting from nature without destroying it. According to Juan Carlos Machicado Figueroa in “When the Stones Speak,” samples of this way of life are seen in different archeological sites, from the early cultures to the complexity of Incan society. Generally speaking, scholars are obsessed by the idea of resolving the question of how the Inca managed to construct their buildings and have forgotten to understand why and what thinking was behind these constructions.

We should ask ourselves, “What can we learn from these ancient cultures?” Technology needs to work in harmony with nature and so do we.

Just as the Inca worked in harmony with nature to create magnificent forts and sacred sites, Bitcoin exists in harmony with nature to create sound money from energy. Sound money is money that is not subject to sudden increases or decreases in value, assisted by self-correcting mechanisms inherent in a free market system.

Contrary to popular belief, money is not a product of the state; it is a natural product of our environment. On a metaphysical level, money is energy. We use our time and our energy to make money. So, money is a store of our energy, a store of value. Energy is plentiful and should be accessible to all. Any kind of centralized system — like a central bank trying to manipulate money — creates an imbalance that is not natural.

Traditional centralized banking systems like the Federal Reserve are subject to boards and government institutions controlling the supply and distribution of money. In contrast, bitcoin is entirely produced collectively by the network, at a rate which was defined when the system was created and known to the public, to paraphrase Andreas Antonopoulos in “Mastering Bitcoin.”

Bitcoin is an open monetary system, accessible to everyone.

For the Inca, gold was not valuable because of its purchasing power but because of its energy. It was representative of the sun, the life force of the Earth. Like the sun — which serves as the energy source for all life on Earth — Bitcoin serves as an inclusive financial system in which everyone can participate. Bitcoin is the first successful attempt to create digital property that can be sent securely to someone else without the risk of third-party obstruction. Again referencing Antonopoulos, as of today, no one has been able to disturb the mining process or figure out a way to mine bitcoin without using the required Bitcoin software with its internal security and self-reliant value system. It is money backed by mathematical proof.

Despite what the mainstream media tells us, bitcoin using energy for its production process is not bad for the environment; it is a natural process. The fact that mining uses energy makes bitcoin money because money is energy. The law of conservation of energy, also known as the first law of thermodynamics, states that the energy of a closed system must remain constant: It can neither increase nor decrease without external influence. The universe itself is a closed system, so the total amount of energy in existence has always been the same. However, the forms that energy takes are constantly changing. Energy is never wasted; it is used. Like a child eats food in order to grow, humanity uses energy to move forward. Miners use electrons and produce bitcoin. They are literally creating digital gold out of energy.

Credit: NASA/CXC/Wisconsin/D.Pooley/CfA/A.Zezas/ESA/JPL-Caltech/J.Huchra et al. (Source)

In fact, Bitcoin will enable humanity to use energy more efficiently, make progress, create wealth and foster a healthier relationship with our environment. There are estimates that up to 30% of the energy produced is wasted through losses in generation, transmission and distribution. Bitcoin miners are trying to capture this energy, because they need to find cheap energy in order to lower their cost structure. For example, companies like Great American Mining use excess gas released from oil production to mine bitcoin.

Oil drilling releases gas. Since the drilling takes place far from residential areas, the gas released has no other use than on-site. It is very difficult to store the gas and bring it to residential areas, so most of it gets burned. The burning of gas is called flaring. A gas combustion engine can be used in industrial facilities, such as petroleum refineries or chemical plants. Bitcoin mining is not dependent on residential areas; it can take place anywhere. Great American Mining takes advantage of this by capturing the released gas, which would otherwise be burned and polluted, to mine bitcoin. Showing how mining can solve the so-called energy crisis.

(Source)

Additionally, a study published by the Bitcoin Mining Council estimates that 58.5% of the global mining sector is powered by renewable energy, as renewable energy is among the cheapest energy sources. This makes their use very attractive for miners, who in turn help to make the use of renewable energy more efficient.

Technology is first adopted by the people who need it most. El Salvador became the first country to adopt bitcoin as legal tender on September 7, 2021. The Central African Republic followed in 2022. Both countries are on continents that have been plundered for their natural resources. War-torn places caught in a vicious cycle of trauma, war and suffering.

The financial institutions created by the international community under U.S. leadership to provide aid to developing countries — such as the International Monetary Fund and the World Bank — have failed. They have enslaved the developing world by putting them in debt, instead of giving them the opportunity to develop further. Creating debt obligations is a soft form of imperialism. It doesn't help; it makes everything worse.

Those benefiting from the current financial system are trying to fight Bitcoin. The establishment being resistant to change is a recurring phenomenon throughout history. In 1633, the Catholic Church imprisoned Galileo Galilei for fear of losing power for his correct argument that the planets revolve around the sun and that the sun is the center of the universe, not the Earth. The Catholic Church believed that the Bible said that all other planets revolve around the Earth and to defy this belief was considered an act of heresy. Back then, a person could be prosecuted (and even executed) for disobeying religious teachings. Similarly today, governments and central banks are trying to fight Bitcoin because it threatens their position of power. It is not in these institutions’ interest that an open monetary network exists outside of their control, so they demonize it and claim it's bad for the environment, although the opposite is true.

Since President Richard Nixon announced that the United States would end the convertibility of the U.S. dollar into gold on August 15, 1971, central banks began operating a fiat-money-based system with floating exchange rates and no currency standard. The term “fiat money” comes from Latin and means “let it be done.” Fiat is a type of money that is not backed by a commodity, such as gold, and derives its value entirely from government decrees. It is a debt-based system in which central banks create and lend out fiat money, solely for the promise of the recipient to repay in return.

Any central bank in the developing world that adopts bitcoin has a chance to compete with the world’s most powerful central banks by acquiring bitcoin, a debt-free asset. This challenges the global power dynamic. As a decentralized, open monetary network, Bitcoin enables everyone who uses it to become independent.

Mass adoption of bitcoin will take time. It could take centuries, but it will happen.
As Robert Breedlove points out, Bitcoin is software, software is code and code is information. Information wants to spread. The Bible has survived many empires, so Bitcoin has the potential to outlive any individuals, parties and groups that try to fight it. As long as there is one computer running the Bitcoin protocol, Bitcoin won’t die. We have effectively created this new life form that will outlast us all (and probably humanity).

Bitcoin is hope because it allows everyone in the world to store value, regardless of gender, race, location or age, and it allows people to save for the future. This results in positive second-order effects. The inflationary fiat system that we live in today incentivizes short-term thinking. Money that we earn today will lose value in the future, so we spend it on things we don’t need. We are incentivized to consume constantly, to waste the world's resources and to make bad decisions because we don't care about the future. Bitcoin is different. It's disinflationary. It encourages long-term thinking. As Bitcoiners, we are more aware of the value of our money because it increases in value. Why should I spend my bitcoin on a car today when I can use it to buy a house in the future?

People are taking on more responsibilities and they can see a better future on the horizon because there is a greater sense of freedom due to the qualities of Bitcoin and what it allows. Once you adopt bitcoin, you pursue work that you find meaningful. You establish more meaningful relationships and live a more meaningful life. These second-order effects apply to the individual and humanity as a whole because Bitcoin is an open network that anyone can use.

Can we even imagine a united humanity? Probably not, but Bitcoin makes us dream. Imagine if we could build on each other instead of taking from one another. If one eats, we all eat. When you work, when you make an effort, we all benefit. This is the power of an open network, controlled by no one but open to all. With Bitcoin there is no “us and them,” there is an “I” from which a universal “we” emerges.

Many cryptocurrency companies are trying to capitalize on the human need for harmony with false promises, but these efforts are only made to enrich certain individuals. Bitcoin is here to enrich humanity. It's about the intention. Alone we can go fast, but together we can go far.

Bitcoin doesn't try to change our nature. It works with nature; it's part of nature. It is the combination of ancient wisdom and scientific knowledge. A bridge between old and new — the future.

Machu Picchu (Source)

This is a guest post by Leon Wankum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.