Introducing The Bitcoin Way’s New Collaborative Custody Service

  • The Bitcoin Way is launching a no-KYC collaborative custody model in collaboration with Nunchuk.
  • The service offers users a collaborative and user-friendly experience, along with robust security and access control features.
  • The Bitcoin Way plans to introduce additional features in the future to enhance Bitcoin self-custody capabilities.

The Bitcoin Way is launching a no-KYC collaborative custody service, enabling individuals and businesses to securely take control of their Bitcoin holdings. This innovative solution caters to less tech-savvy users while also ensuring collaboration, ease of use, a high degree of security, access control, and broad hardware compatibility. 

Latest Announcement: No-KYC Collaborative Custody

In partnership with the renowned Bitcoin wallet provider Nunchuk, The Bitcoin Way is launching a no-KYC co-custody service in response to the high demand for advanced, yet user-friendly Bitcoin collaborative solutions.

Key Benefits:

1. Collaboration and User-Friendly Approach
The service offers a distributed setup, allowing shared custody among multiple participants, such as family, friends, or partners. A private, encrypted group chat simplifies communication, while assigned roles streamline management. This user-centric design enhances both ease of use and security.

2. Robust Security and Access Control
The service’s core offering is it’s multi user, multi signature setup with customizable options such as 2-of-3, 3-of-5, or 2-of-4 keys. This approach ensures resilience against key loss or theft. Alerts, notifications, and a health check system further enhance security and prevent errors. An emergency lockdown feature and key recovery through TAPSIGNER provide additional peace of mind. Compatibility with various hardware wallets adds an extra layer of security.

What Lies Ahead?

The Bitcoin Way plans to expand its service with features like inheritance planning, spending limits, recurring payments, and batch signing, aiming to create a comprehensive co-custody solution for Bitcoin.

Visit their website at for more information.

About The Bitcoin Way

The Bitcoin Way is a specialized IT team boasting over 20 years of cybersecurity, encryption, and privacy expertise. Their mission is to empower individuals with financial sovereignty by offering education and personalized guidance for navigating the realm of Bitcoin.

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Theya Review: The Mobile Multisig Wallet Making Bitcoin Self-Custody Simple

Theya is a brand-new multisig mobile wallet designed to make it as simple and safe as possible to self-custody your bitcoin.

Founded by seasoned entrepreneurs Vikas, Sriram, and Smeet, the Y Combinator-backed startup takes advantage of over a decade of their combined backgrounds in Bitcoin engineering, product, design, and traditional finance.

Outside of the success in building their own companies, they have also built and scaled consumer-grade products with large corporations like Google, Robinhood, and Deutsche Bank.

Theya is on a mission to facilitate the growth of Bitcoin adoption by giving people an option that is more secure than exchanges and easier to use than hardware wallets.

Their goal is to one day be the default consumer app for Bitcoin, with accumulation, lending, investments, and payments all on the horizon.

What Is Theya And How Does It Work?

Theya is a new mobile wallet for self-custodying your bitcoin.

As a 2-of-3 multisig wallet, you need two keys to access your wallet and transact your bitcoin.

There are three keys in total; you keep two, and Theya secures the third key for recovery.

Your two keys are stored on separate devices, which could be two phones, or a phone and a hardware wallet, etc.

This way, keys can be shared between two people (for example, on each person’s phone) or kept by one person with two devices (whether that be a phone and an Apple Watch or hardware wallet, etc.).

Since two keys are needed to transact, Theya cannot access your bitcoin with the one key that they hold.

The third key acts as a kind of “forget password” function, whereby if you lose one key, the third can be used with your remaining key to access your wallet.

How Secure Is Theya?

The beautiful thing about Theya’s wallet is that there is no single point of failure.

If you lose one of your keys, you can still access your wallet using the third key they secure for you.

If Theya were to go under as a company, you would still retain access to your wallet as you still have two keys.

Similarly, if they or their enterprise servers were hacked, hackers would, at worst, only have access to Theya’s key, and couldn’t possibly get your personal keys without individually hacking your personal devices.

One of your keys can also be stored on a hardware wallet in “cold storage,” making it safe from hacks.

Currently, Theya supports hardware wallets from Ledger, and Trezor wallets are expected by the end of October. By the end of 2023, several more popular hardware wallets will also be compatible.

While the service is currently only supported by iOS, the plan is very much to bring it to Android.

What Problems Are Theya Solving?

Theya firmly believes that Bitcoin is not a choice but an inevitability.

However, the founders realized that for new generations of Bitcoiners, there was too much friction in the process of buying and storing bitcoin.

Either you store your bitcoin on an exchange, which lacks security and essentially means you don’t really own the bitcoin (“Not your keys, not your bitcoin”). Or you take full responsibility for securing your bitcoin by using hardware wallets, which can be intimidating for newcomers and present a single point of failure; if you lose access to your hardware wallet, you lose your bitcoin with no hope of recovery.

Theya presents a solution that takes the best of both worlds.

By using a 2-of-3 multisig wallet, with Theya storing one of the keys, there is no single point of failure, and there is a recovery option in the case of a lost key.

However, unlike exchanges, they do not custody your bitcoin, which means you stay in control.

They have also put a huge emphasis on ease of use and a user-friendly experience that will appeal to those who might be intimidated by the setup and responsibility of hardware wallets.

In this way, the ease and simplicity of exchanges are retained, while the security of hardware wallets is also matched (especially if you use a hardware wallet to store one of your two keys).

In Summary

Theya is a mobile multisig wallet designed to enable less tech-savvy people to join the Bitcoinization process.

It also makes it more attractive to people who are used to their wealth being custodied by banks, and don’t feel comfortable with the weight of responsibility and single point of failure created by hardware wallets.

On top of this, the recovery function that Theya facilitates by having one key creates a forget password function that hardware wallets do not have, providing a layer of security against the loss or theft of one of your two keys.

With an intuitive, user-friendly interface and an emphasis on accessibility, Theya could be the self-custody wallet of choice for the next generation of Bitcoiners.

Visit the website for more information
You can also download the app for iOS here

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Block Rewards Review: Helping Canadians Solve The Money Problem

Block Rewards is a service that gives Canadian employers the tools and expertise to provide bitcoin-based benefits and compensation to their employees.

Founder Scott Dedels recognizes the knowledge deficit that exists in Canada about what bitcoin is and how it represents the solution to the money problem currently fuelling the cost of living crisis.

For that reason, Block Rewards provides business owners with the education necessary to onboard them and their workers to Bitcoin.

In the words of the founder himself:

“The greatest incentive a company can offer today is hard money, and bitcoin is the hardest money that has ever existed.”

What Service Does Block Rewards Offer?

Block Rewards offers Canadian employers the ability to compensate their employees in bitcoin in the form of savings, payment, and rewards.

The Bitcoin Purchase Plan (BPP) is an investment plan they offer to help employees save in bitcoin by dollar-cost averaging.

Options include:

  • Matched contribution: The employer will match the employee’s investment.
  • Voluntary: The employer offers the benefit as an option but does not contribute.
  • Employer only: The employer buys staff an amount of bitcoin per month.
  • Percent of salary: The employer contributes as a percentage of the employee’s salary.

As well as savings plans, Block Rewards also offers employers the ability to fully or partially pay their staff in bitcoin.

Finally, the BPP can also be offered as part of a rewards plan, such as by offering it as an elective perk or including it as part of an incentive structure.

What makes Block Rewards unique is that they are a compensation and benefits company, with a niche focus on delivering bitcoin products.

Block Rewards offers complete hand-holding during this process, educating both employers and employees about exactly what bitcoin is, how it works, what problems it solves, and how to incorporate it into savings, payments, and rewards plans.

With a background in benefits, Dedels believes that bitcoin is the perfect asset for Canadians to deal with today’s money problem.

The key point is that Block Rewards offers the education and expertise required to teach employers and their staff about bitcoin, while also offering the tools to facilitate the use of bitcoin in their compensation plans.

Even though they facilitate the use of bitcoin for these compensation and benefits plans, Block Rewards is entirely noncustodial and holds no bitcoin.

What Problem Is Block Rewards Solving?

Canadians are experiencing a crisis of affordability.

Inflation destroys savings by eroding purchasing power and making money worth less in the future. This is a problem employers can help solve by learning about bitcoin and encouraging employees to save using it.

Dedels says:

“Bitcoin is a zero to one technology for savings. It can take some time for the masses to understand zero to one innovations because they’re so different from what came before.”

Bitcoin is the solution to the affordability crisis: hard, sound money that holds its value and gives Canadians the chance to hold onto their wealth, rather than watch it disintegrate.

Block Rewards wants 1 in 10 Canadians being compensated in bitcoin by 2028, and they believe that the way to do that is clear:

“To provide Canadian employers a simple path to incorporate bitcoin into total rewards strategies and to provide their staff with the education needed to participate with confidence.”

Block Rewards wants “A Canada where bitcoin has integrated into the mainstream lexicon of compensation and employee benefits.”

Bitcoin offers Canadians a chance to store their wealth in a form of money that doesn’t lose value over time, and will actually gain value in the near-to-medium term as adoption picks up.

Employers who are first to take advantage of Block Rewards’ offers will surely see the most benefit.

But even for those who join the party later on, when the price of bitcoin is much higher, the advantage of compensating workers in hard money instead of money that gets less valuable every day will be just as clear then as it is now.

Block Rewards And The Future Of Bitcoin

Right now, an education gap exists that prevents people from connecting the dots between the growing (and already large) problem of inflation and the constant growth of the money supply.

Dedels aims to bridge that gap by initiating as many Canadian employers as possible into the Bitcoin ethos.

To some extent, bitcoin is inevitable. And as adoption grows, so too will the number of people who want to be compensated in it, whether in the form of a pension plan or directly in their paycheck.

Currently, Block Rewards is limited to Canada, but as Bitcoinization takes place, the aim scales with it. Their goal is to become a global leader in helping businesses compensate their employees in bitcoin.


Block Rewards is a service that educates employers on the importance of bitcoin and provides them the tools to compensate their employees with hard, sound money, offering dedicated hand-holding throughout the process.

Their mission is to empower companies by evolving total compensation in a way that will help their teams thrive in changing global financial conditions.

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Zaprite Review: Helping Businesses Migrate To A Bitcoin Standard

Zaprite is a bitcoin payments platform that aims to help businesses migrate to a bitcoin standard. Let’s take a closer look at the service and the startup’s vision.

The software is deliberately designed to be highly configurable and committed to facilitating payments without handling the money itself., Ease of use and self-custody are at the center of Zaprite’s principles.

What Are Zaprite’s Core Principles?

There are two main principles at the heart of the software.

The first is self-custody. Zaprite is committed to the Bitcoin ethos of self-sovereignty and peer-to-peer payments.

It doesn’t hold any money at any point in the transaction process.

Instead, it operates as the piping between users in order to facilitate their transactions.

This also allows it to operate globally, making it usable all over the world with only an email address necessary to sign up.

The second is ease of use. Zaprite aims to be as simple as possible whilst affording users maximal functionality.

Everything is designed to be configurable, so users with different needs can use the software in whichever way suits them best.

There are yet more features on the roadmap, and with each new feature, there will be new functionality.

What Are Zaprite’s Key Features?


Zaprite’s core functionality is its connections.

This is what allows users to receive payments through a multitude of wallets and providers.


Zaprite is wallet-agnostic. It doesn’t mind what wallet you’re trying to connect with; it aims to provide the connection.

In this way, Zaprite offers users the freedom to accept bitcoin payments in whichever way suits them best.

Configurable Checkout and Customized Branding

The checkout section keeps track of the connections you want active when you get paid with bitcoin.

This can be configured on each individual invoice or can be preset in the checkout tab and saved for all future invoices.


You can, of course, save a preset and then adjust those on individual invoices in the future. Zaprite is designed to be as customizable as possible.

Zaprite also has branding options in the settings tab, allowing your invoices to be personalized with your business’s name, color and logo.


Task Management

Zaprite is aimed at everyone, from freelancers and contractors to small and large businesses.

However, the initial idea was to build a platform that enabled freelancers who were getting paid in bitcoin to invoice their employers as easily as possible.

The task management feature is a great tool for freelancers/contractors who are working large jobs over weeks or months and want to split them up into tasks that they can individually keep track of and invoice for.

This is an optional feature that supports Zaprite’s goal of being as easy to use and configurable as possible in order to suit as many different needs as its users could have.

Transaction Records

Zaprite also works as a bookkeeping service.

The transaction tab keeps a record of the users’ invoices once they’ve been paid, showing the fiat value as well as the BTC value of the payments, along with the conversion rate that was used at the time of payment.

Transactions are also timestamped, allowing users to keep an accurate record of all their previous invoices.

In the future, Zaprite is planning to expand this section, adding analytics to track the performance of the bitcoin received in relation to fiat.

Transaction receipts include all relevant information such as the fiat value, BTC value, fiat-BTC conversion rate, a timestamp, and the recipient

Email Notifications

Zaprite provides all the relevant information at every stage of the invoicing process.

Whether you’re requesting, sending, or receiving payment, Zaprite sends email notifications with all the information you need pertaining to the invoice.

The payer receives an email notification detailing the payment request:
The payer then receives an email notification with a receipt of their successful payment:
The user then receives an email notification informing them that the invoice has been paid.

In this way, every step of the process is documented with all the necessary details.

Ease of use isn’t the only priority of Zaprite; accessibility of information is another key principle that users benefit from.

In Summary

Zaprite is a great tool for people who want to pay or be paid in bitcoin.

Its configurable nature makes it perfect for a variety of people, each with their individual needs, and users who vary from freelancers to small businesses will be able to customize it to suit them.

The task management section is a great example of an optional feature that could be a massive benefit to freelancers or contractors who want to break larger jobs into smaller tasks and invoice them individually.

Information is provided at every step of the way for both payers and payees, as well as being stored on the transactions tab, making it a great bookkeeping service as well as an invoicing one.

The fact that there’s no KYC and self-custody is maintained, with Zaprite never touching any of the transferred funds, means Bitcoiners can use this software whilst maintaining their commitment to the Bitcoin ethos.

In short, Zaprite is perfect for the Bitcoin era.

As more people start to work in the Bitcoin space and get paid in BTC, more businesses will find themselves using Zaprite to facilitate those demands.

There’s never been a better piece of software for helping employers and employees alike migrate to the Bitcoin standard.

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What Is Bitcoin? Understanding The Basics And Benefits

Since bursting onto the scene in 2009, Bitcoin is taking the world by storm. But what is Bitcoin? Understanding the world’s leading digital currency is crucial to getting ahead of the curve as decentralized money becomes more important than ever.

What Is Bitcoin?

Bitcoin is a decentralized, peer-to-peer payments settlement system with its own native digital currency, bitcoin.

Bitcoin with a capital “B” refers to the network, whilst bitcoin with a small “b” refers to the digital currency, also known as BTC.

It’s important to note that the Bitcoin network is not a payments aggregator like VISA, but a base layer settlement system like Fedwire.

Layer 2 protocols such as the Lightning Network operate more like VISA, handling large numbers of microtransactions almost instantaneously and settling them at a later time.

The final settlement is performed on the base layer, the actual Bitcoin blockchain, solidifying the final balances of transactions.

Bitcoin uses blockchain technology, a type of distributed ledger technology (DLT) where multiple nodes keep an updated copy of a database, rather than a centralized institution keeping the only copy.

The ledger is public, so anyone can read it, and all transactions are traceable. Every bitcoin can be traced back to the first block it was mined it.

Mining refers to the process of adding blocks to the blockchain.

Miners add blocks to the blockchain by competing in a process called Proof of Work (PoW).

What Is The Bitcoin Network?

The Bitcoin network is made up of nodes, miners, and participants.

Nodes each store a full copy of the blockchain – a complete record of the transaction history on the network.

Nodes also store the network protocol, which governs the rules of the network.

Miners compete to add blocks to the blockchain by performing PoW, which uses computing power (or hashing power) to guess the hash of the next block.

Miners choose which transactions to compile in each block, but they must abide by the rules of the network or the nodes will not accept their proposed blocks.

Participants are ordinary users who transact in bitcoin, the network’s native currency.

When you buy, sell, or move bitcoin, your transaction is sent to the mempool (memory pool) where it waits for a miner to add it to a block to be added to the blockchain.

The Bitcoin blockchain is known as a layer 1 protocol, the base layer, or the mainnet (main network).

Additional protocols, such as the Lightning Network, are known as layer 2 protocols or layer 2 solutions.

Layer 2 solutions are “off-chain”, they conduct their own transactions and settle the final results on the base layer.

What Are The Characteristics Of The Bitcoin Network?

Bitcoin is decentralized, meaning there is no single entity or third-party institution that owns or controls the network.

The network is governed by community consensus, which is enforced by the nodes.

Anyone can become a node, as long as they have a computer that can store the blockchain history and run the network protocol.

Bitcoin is permissionless, meaning anyone can use it. As long as you have an internet connection, you can transact in bitcoin or view the full transaction history.

Bitcoin transactions are pseudonymous, meaning all the transaction addresses are publically viewable but not necessarily tied to any individual’s identity.

Transactions are also immutable, meaning they cannot be changed. Once performed, a transaction cannot be reversed.

This is guaranteed by the PoW consensus mechanism, which prevents forking (splitting the blockchain) and double-spending (counterfeiting bitcoin).

The supply of bitcoin is capped at 21 million, making it the only provably scarce asset in the universe.

What Is Bitcoin Mining?

Bitcoin mining is the process of competing to add the next block to the blockchain.

Each block has a hash, a string of numbers and letters unique to that block.

Miners have to expend computational resources (in the form of electricity-powered hash power) to guess the hash of the next block.

This works by running a hash function through a computer, essentially guessing as many random hashes as possible as quickly as possible.

The miner that correctly guesses the next hash then broadcasts it to the rest of the network, which can then confirm that they got the correct answer and has won the right to propose the next block.

Miners compete to do this for two reasons: transaction fees (or miner fees) and the block reward.

Transaction/miner fees are tips offered by participants transacting on the network. Participants will offer higher fees to try and get their transactions prioritized.

The block reward is a set number of newly minted bitcoin that is granted to the miner as compensation for the electricity they had to buy to complete the PoW.

The original block reward was 50 bitcoin, but this halves every 210,000 blocks.

This halving is often considered to be every four years, but it is more accurately roughly every three years and nine months.

Currently, the block reward is 6.25 bitcoin.

Blocks are mined on average every 10 minutes, which is maintained by the difficulty adjustment that takes place every two weeks.

As more miners compete to mine the next block, more hash power is added to the network, which speeds up the mining process.

The difficulty adjustment, therefore, makes mining more difficult so as to maintain the average block speed of 10 minutes.


How Does Proof Of Work Benefit Bitcoin?

The Proof of Work consensus mechanism is crucial to the Bitcoin network and to bitcoin as an asset.

It benefits the network by ensuring its security.

In order to attack the network, a bad actor would need to be in control of at least 51% of the hash power.

This would theoretically enable them to reverse transactions, allowing them to double-spend their bitcoin.

The more hash power the network is currently producing, the more secure the network is against attacks.

Proof of Work also benefits bitcoin by imbuing it with intrinsic value.

Bitcoin is actually the only digital asset in existence with intrinsic value, and it’s entirely down to the PoW consensus mechanism.

Unlike other digital assets (largely including fiat currencies like dollars), bitcoin can’t be inflated free of cost.

Although bitcoin does have a capped supply, the supply is currently increasing by 6.25 BTC every block. However, this isn’t for free.

Whilst dollars can be “printed” by updating numbers on a spreadsheet, bitcoin can only be brought into circulation by expending real-world resources in the form of electricity.

This gives bitcoin the “hardness” of sound money such as gold.

Value has to be expended in order to produce bitcoin, so bitcoin is imbued with the value that had to be spent to create it.

Proof of Work also provides a support to the price of bitcoin, because miners will simply hoard it if the price drops below the cost of production.

This would lower selling pressure whilst raising buying pressure (because bitcoin would be undervalued), thus pushing the price back up above the cost of production.

In this way, the PoW consensus mechanism gives bitcoin intrinsic value.

As more miners join the network and compete to mine blocks, the network becomes more secure, and bitcoin becomes more valuable.

As such, Proof of Work benefits both the network and its native currency.

Why Is Bitcoin Useful?

Understanding what characterizes Bitcoin is important, but what is Bitcoin good for?

Bitcoin is useful for two main reasons.

The network is the most efficient financial system ever created, and bitcoin is the most perfect form of money the world has ever seen.

There are additional benefits, such as the environmental ramifications of Proof of Work, but these are secondary.

The Bitcoin Financial System

Unlike the traditional financial system, which operates through centralized institutions such as central and commercial banks, Bitcoin operates 24/7/365.

Anyone, anywhere, at any time can use the network and transact in bitcoin (as long as they have internet access).

This makes it perfect for banking the unbanked, providing financial services to those left out of the traditional banking system, which amounted to 1.4 billion people in 2021.

Transactions are also settled in a matter of minutes (or hours at most) whereas transactions take days to be settled through traditional channels, despite your VISA payments seeming instantaneous.

Transactions are also far cheaper because they don’t have all the manpower, energy costs (such as transport, as well as heating and electricity of banks, ATMs, and other financial institutions), and inefficiencies of traditional payment channels.

The centralized financial system involves multiple parties with each transaction, whereas Bitcoin is peer-to-peer. Taking out the middlemen increases efficiency, reducing costs.

You might not notice the costs in the traditional system, because your VISA payments don’t have an extra charge, but the costs are spread thin and hidden throughout the system in all the other ways your banks and payments processors extract money from you.

Bitcoin transactions have an obvious transaction fee, but this is a small, one-time charge that isn’t hidden from you.

The speed, low cost, and efficiency of transactions also make Bitcoin the most effective remittance system in the world.

Its resistance to censorship (external controls on transaction approval) also makes it perfect for evading authoritarian monetary controls enacted by corrupt governments.

And despite a reputation to the contrary, Bitcoin is not popular for criminal activity because the public availability of the ledger and pseudonymous nature of the transactions makes tracing activity too easy for criminals to feel comfortable with it.

What Is Bitcoin (BTC) – The Perfect Money

Bitcoin is the best form of money ever invented.

Like gold (and unlike fiat), bitcoin possesses the six necessary characteristics of money:

  • Scarcity – Bitcoin is coded to cap out at 21 million
  • Divisibility – Each bitcoin can be divided into 100 million satoshis
  • Durability – No bitcoin can be destroyed; this is ensured by the PoW consensus mechanism
  • Acceptability – Bitcoin has achieved mainstream acceptance and is still growing
  • Portability – Bitcoin can be transported anywhere in the world at the speed of light
  • Uniformity – Each bitcoin is equal to every other bitcoin, and they cannot be debased or counterfeited; this is ensured by PoW

Whilst gold also achieves these characteristics, it doesn’t do so as well as bitcoin, and gold was the best money in existence prior to BTC.

As a digital asset with intrinsic value, bitcoin acts as a store of value, making it a useful hedge against inflation.

For this reason, citizens of countries such as Venezuela have used it during periods of hyperinflation when their countries’ fiat currencies have dramatically decreased in value.


Bitcoin Is Good For The Environment

Bitcoin mining has a reputation for being energy-intensive and therefore bad for the environment.

In actual fact, the exact opposite is true.

Since miners have incentives to produce as much hash power as possible, they buy cheap electricity and invest in more and more efficient mining computers, known as ASICs (Application Specific Integrated Circuits).

This makes the Bitcoin network the most energy-efficient network on the planet.

Despite the criticism it gets for supposedly being bad for the environment, Bitcoin has a higher sustainable energy mix than any other industry.

This is because renewable energy is often the cheapest.

Bitcoin miners also act as buyers of last resort, buying electricity that would otherwise be wasted.

Miners often buy wind and solar energy that would otherwise be curtailed due to a lack of storage options.

This makes renewable energy build-out more profitable, increasing the economic viability of expanding sustainable energy infrastructure.


Summarizing Bitcoin

Bitcoin is a payments settlement system that is:

  • Decentralized
  • Peer-to-peer
  • Immutable
  • Permissionless
  • Censorship-resistant
  • Pseudonymous

The Bitcoin network outperforms the traditional financial system in:

  • Cost
  • Speed
  • Accessibility (in time and space)
  • Security

Bitcoin (BTC) is the network’s native digital currency that:

  • Fulfills the six characteristics of money better than anything else
  • Has intrinsic value
  • Is a store of value
  • Is a hedge against inflation

The Proof of Work consensus mechanism:

  • Secures the Bitcoin network
  • Imbues bitcoin with intrinsic value
  • Facilitates the transition to renewable energy infrastructure

Overall, Bitcoin is an improvement on anything the world has ever seen in the realm of economics, finance, and commerce.

The sooner we replace the traditional financial system with the Bitcoin network and fiat currencies with BTC, the sooner we fix the incentive structures of the world economy.



What is Bitcoin?

Bitcoin is a decentralized, permissionless, peer-to-peer payments settlement system that operates on an immutable public ledger known as the blockchain.

What is bitcoin (BTC)?

Bitcoin, also known as BTC, is the native digital currency of the Bitcoin network.

What is bitcoin mining?

Bitcoin mining is the process of adding new blocks to the blockchain by expending computing power (known as hash or hashing power) through the Proof of Work consensus mechanism.

What is Proof of Work?

Proof of Work is the process of reaching a consensus on who gets to add the next block to the blockchain.
Proof of Work secures the blockchain and imbues bitcoin with intrinsic value.

What are the six characteristics of money?

The six characteristics of money are scarcity, divisibility, durability, acceptability, portability, and uniformity.

The post What Is Bitcoin? Understanding The Basics And Benefits appeared first on Bitcoin News.

Bitcoin Plunges Below $26,000 As SEC Sues Binance

The price of bitcoin has plunged to its lowest point since March following a lawsuit from the Securities and Exchange Commission (SEC) in the United States against Binance, the largest digital asset exchange in the world.

Why Is The SEC Suing Binance?

The SEC has accused Binance of committing several offenses that amount to avoiding regulations in the U.S. market, misrepresenting their activities, and endangering their investors’ assets.

Binance and founder Changpeng Zhao are accused of:

  • Advising high-value U.S. clients on how to circumvent Binance’s own restrictions on operating in the U.S. market;
  • Secretly controlling Binance.US behind the scenes, despite it officially being separate from;
  • Exercising control of customers’ assets, allowing them to mix or divert their assets to Sigma Chain, another entity owned and controlled by Zhao;
  • Concealing the fact that billions of dollars in investors’ assets were being sent to another Zhao-owned third party, Merit Peak Limited;
  • Engaged in manipulative trading through Sigma Chain to artificially inflate the platform’s trading volume;
  • Operating unregistered national securities exchanges, broker-dealers, and clearing agencies;
  • Unregistered offering and selling of Binance’s own digital assets (BNB and BUSD), digital asset lending products, and a staking-as-a-service program.

The lawsuit amounts to a total of 13 separate charges and argues that Binance was fully aware of its wrongdoing and actively attempted to forestall regulatory intervention.

How Has Binance Responded?

Changpeng Zhao responded to the allegations by arguing that the SEC was only harming the United States as a place to do business within the digital asset world.

According to the Binance CEO, the Commission should instead have taken a “thoughtful, nuanced approach” as opposed to the “blunt weapons of enforcement and litigation.”

In a scathing attack on the SEC, Zhao argued that the “goal here was never to protect investors… instead, [it] appears to be to make headlines.”

He also demonstrated a genuine ambivalence towards the legal battle facing him and his company, making the case that “because Binance is not a U.S. exchange, the SEC’s actions are limited in reach.”

Binance called the accusations “baseless“, although evidence has been surfacing for some time that they may in fact have plenty of merit.

Reuters has previously released two reports that highlighted illegal activity and dishonest business practices from the digital asset exchange company.

Indeed, evidence has surfaced that Binance was well aware that they were not playing by the rules, with internal messages confirming “we are operating as a fking unlicensed securities exchange in the USA.”

Not only this, but they deliberately attempted to slow enforcement down by complicating the methodology of categorizing securities.

How Has This Affected Bitcoin?

Whilst altcoins have generally suffered the largest losses, the price of bitcoin has dropped below $26,000, its lowest since March 2023.

$27,000 had been the support up until this point, but with that shattered, future price action could be difficult to predict.

There has been disappointment among Bitcoiners that the lawsuit has affected the price of bitcoin since laymen are apparently unaware of the delineation between bitcoin and altcoins.

A common saying amongst Bitcoiners is “bitcoin not crypto,” which seeks to disentangle the world’s leading decentralized currency from the thousands of altcoins that make up the rest of the cryptocurrency industry.

The vast majority of these are pump-and-dump schemes, and none are decentralized, sound money digital currencies like bitcoin.

Bitcoin is the only digital asset with intrinsic value, decentralized in nature, and with the potential to fix the monetary system of the world.

However, a layman does not necessarily understand that bitcoin does not belong in the same category as other digital assets.

There are calls to put a greater emphasis on educating people, including governments, about Bitcoin’s lone status as the only digital commodity.

If this is successful, the price of bitcoin may well be impervious to legal battles such as this, which don’t in any way affect the asset’s utility or security.

When the world knows that bitcoin stands alone, its price will decouple from that of the altcoins.

Only then will it take its place as the world’s true reserve asset.

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Debt Ceiling Suspended Until 2025 As Senate Passes Bipartisan Bill

The United States has finally brought the debt ceiling crisis to an end, at least until 2025, as the Senate passes a bipartisan bill agreed between Democrats and Republicans.

Bipartisan Agreement Gets Bill Over The Line

Despite President Biden initially claiming he would not negotiate on his budget in order to get the debt ceiling raised, he eventually was forced to come to the table and make concessions to Republicans.

However, many Republicans, as well as some Democrats, voted against it in both the House of Representatives and the Senate due to what they perceived as unacceptable compromises.

Republicans were hoping for more dramatic spending cuts, whilst Democrats wanted spending on welfare and environmental concerns kept whole.

In the end, the House passed the bill 314 to 117, with 149 Republicans and 165 Democrats voting in favor.

The Senate then ensured its passage into law with 63 votes to 36.

Both Democrat President Biden and Republican Speaker of the House McCarthy are claiming the agreement as a victory, despite more Democrats than Republicans voting for what was supposedly a “conservative victory.”

Debt Ceiling Crisis Over Until 2025

The bill does not actually raise the debt ceiling.

Instead, it suspends it entirely until 2025, a year after the next presidential election.

It’s a classic case of kicking the can down the road and allowing unlimited spending in the meantime, something governments are used to doing in the fiat financial system.

Whilst the U.S. is one of only two countries in the world that has a debt ceiling (the other being Denmark), in reality, it never actually amounts to anything.

Congress always votes to raise or “temporarily” raise the ceiling, allowing for more unfunded spending and more debt growth.

Other countries don’t even pretend to try and limit their debts.

In the fiat world, central banks can print as much money as they like, and governments can always issue more debt.

In this way, nations can run eternal deficits, perpetuating the fiat Ponzi scheme of paying off old debt with new debt.

In order to keep funding the debts, countries have to keep increasing the money supply, raising inflation.

This essentially means that citizens all over the world get constantly poorer as time goes on.

Whilst the rich benefit from the new money supply, the value is being drained from ordinary people’s holdings.

Eventually, this will become unsustainable and hyperinflation will take hold, perhaps all over the world.

In the meantime, the only thing we can do is try to put as much of our savings as we can into sound money, rather than trust the banks to keep our fiat safe for us.

It’s undeniable at this stage; fiat money isn’t safe anywhere. The value is being diluted on a daily basis.

Bitcoin is the only sound money in the world capable of facilitating global trade in the modern digital era.

Until central banks, traditional financial institutions, and commercial interests get the memo, all we can do is keep stacking sats and preparing for the fiat house of cards to come crashing down.

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Bitcoin Headed For Price Volatility As U.K. Inflation Poses Problems

Inflation in the U.K. remains stubborn, leading to suggestions that the Bank of England will raise interest rates further. Prolonged high rates are expected to cause significant volatility in asset prices, including bitcoin.

What Is The State Of Inflation In The UK?

Inflation in the U.K. remains far above the Bank of England’s targets of 2% per year, although it has fallen from 10.1% in March to 8.7% in April.

Food inflation is still above 15%, considerably worse than other G7 nations, though this tends to be far more volatile than other inflation metrics.

Core inflation, which excludes food and energy, has risen to 6.8%, the highest level since 1992.

How Will This Affect Interest Rates?

Inflation is still far too high for the British central bank to consider dropping interest rates from the current level of 4.5%.

The Bank of England has raised interest rates 12 times since December 2021, and the chances of lowering them seem to be getting slimmer.

In fact, it’s been suggested that the opposite is more likely, with a hike to 5.5% being expected by the markets.

How Will This Affect Bitcoin?

Whilst high interest rates are expected to put a damper on inflation, it will potentially mean fewer investments in assets such as bitcoin.

Bitcoin is generally considered a risk asset by markets, meaning people are more likely to buy it if they’re less able to get high returns elsewhere.

With interest rates remaining high, people will feel more comfortable keeping their money in savings accounts and will therefore feel less of a need to invest in assets to store value.

Higher interest rates will also raise the cost of borrowing, and mortgage payments will increase. This means people will have less disposable income, which tends to negatively affect prices in the stock market.

Whilst bitcoin has recently lost its correlation with the stock market, it is likely to be affected in the same way unless there is a particularly strong urge to buy bitcoin as a hedge against the failing fiat monetary system.

Ultimately, as a series of situations converge, such as the banking crisis, U.S. debt ceiling crisis, and high inflation in not just Britain but Europe and North America, the price of bitcoin could experience some serious volatility.

Volatility is something long-time bitcoin hodlers are used to, but new investors might be put off by the rollercoaster journey we’re about to embark on.

Ultimately, time will tell if this troubling situation turns out to be the on-ramp for bitcoinization in the western world.

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El Salvador Upgrades As Saifedean Ammous Joins Bitcoin Office

El Salvador has taken yet another step toward full bitcoinization as the author of “The Bitcoin Standard” Saifedean Ammous joins the National Bitcoin Office as Economic Advisor.

Who is Safedean Ammous?

El Salvador’s new Economic Advisor Saifedean Ammous is famous amongst Bitcoiners as an economist of the Austrian school of economics.

Holding several degrees, including a Ph.D. from Columbia University, he was also a professor of Economics for a decade.

He’s published three books, including “The Bitcoin Standard” and “The Fiat Standard”, which offer contrasting views on a world based on a Bitcoin monetary policy versus the current fiat monetary system we have now.

His economic pedigree has made him a respected figure in the Bitcoin industry, and his recent appointment to the National Bitcoin Office of El Salvador is surely down to his world-renowned expertise.

Why Has El Salvador Approached Him?

El Salvador is leading the world in bitcoinization, the process of moving from a fiat standard to a monetary system built on the sound money of bitcoin.

As a well-respected voice in the world of bitcoin and an established Austrian economist, Saifedean could be a shrewd appointment as the South American country attempts to navigate what no other country has tried to do.

With two books that explore the contrasts between the bitcoin world and the fiat one, there is perhaps no one in the world better suited to help President Bukele steer El Salvador through the unknown waters of dropping the fiat standard.

As the Bitcoin Office itself tweeted out when announcing the new partnership, “When the author of the Bitcoin Standard met the leader of Bitcoin Country, great things were bound to happen.”

El Salvador refers to itself as “the winning team”, demonstrating unwavering faith in its ability to lead the world in hyperbitcoinization, the process by which the entire planet will transcend fiat currencies and move to the bitcoin standard.

If anyone can help them do it, it will be Saifedean Ammous.

What Will He Do As Economic Advisor?

The Bitcoin Office announced that Ammous would “advise on matters related to various economic policies.”

As time passes, more will likely become clear about exactly what his role will be.

Interestingly, it was also announced that he has declined remuneration for the role, and “is interested only in supporting President Bukele’s bold policy of economic liberty and bitcoin.”

Saifedean had said in an interview released earlier in the same day that El Salvador could potentially pay off its debts by adopting bitcoin as a reserve asset.

He said, “Starting to accumulate bitcoin little by little will make it possible to pay off many of the State’s obligations.”

As debts around the world continue to rise, and governments continue to pay off old debt by issuing new debt in the continuous fiat Ponzi scheme, more countries might look to follow El Salvador’s example.

Years from now, we might look back at this partnership as a key rung in the ladder towards a world based on a bitcoin standard.

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Biden and McCarthy Agree Debt Ceiling Suspension Until 2025

U.S. President Joe Biden and House Speaker Kevin McCarthy have agreed a deal to suspend the debt ceiling until 2025. The proposal must now be voted on by Congress and the Senate. Bitcoin benefits as the proposed DAME tax is blocked by the deal.

What Is The Debt Ceiling?

The debt ceiling is the limit imposed by Congress on how much debt the federal government can accrue.

The current cap on this debt is $31.4 trillion, which the federal government hit back in January of 2023.

Without raising or suspending the debt ceiling, the federal government cannot borrow any more money to fund government expenditures such as welfare or military spending.

The debt ceiling was implemented in 1917 to help the U.S. fund its participation in the First World War.

Since 1960, the U.S. has hit the debt ceiling 78 times, each time voting to raise or temporarily suspend it in order to carry on borrowing money.

This essentially allows the federal government to carry on borrowing as much as they want, paying off old debt with new debt in the decades-long fiat Ponzi scheme.

What Has Been Agreed?

Democratic President Joe Biden and Republican Speaker of the House of Representatives Kevin McCarthy have agreed a deal that would suspend the debt ceiling until January 2025.

This doesn’t actually raise the ceiling; it just means they won’t have to worry about it again until 2025, a year after the next presidential election.

In the meantime, the federal government can continue to borrow money to pay for its expenditures. Additionally, the debt ceiling crisis won’t interfere with the next election.

How Has This Affected The Budget?

There has been compromise from both Democrats and Republicans.

Democrats didn’t want any change to the budget at all, whereas Republicans were hoping to freeze spending for 10 years.

Instead, spending will have to remain flat for 2024 and can only go up by 1% in the 2025 fiscal year.

Defense spending will increase by 3%, but the White House estimates that overall spending will be reduced by approximately $1 trillion.

There have also been some slight tweaks to welfare, with some age requirements increasing as the Republicans were hoping for.

In another victory for Republicans, unspent COVID funds will be recouped.

As far as taxes are concerned, Democrats were able to secure spending on helping the IRS implement current taxes on the wealthy more effectively, but Republicans were able to ensure that no new taxes are raised.

It was also agreed that approval for new energy projects would be streamlined, including renewable and fossil fuel endeavors.

With energy projects being helped along and no new tax increases, the debt ceiling suspension deal is likely to be beneficial for bitcoin miners.

DAME Tax Scrapped

Biden’s controversial Digital Asset Mining Energy tax, which would increase the cost of bitcoin mining by 30%, appears to have been blocked by the proposed agreement.

Representative Warren Davidson confirmed on Twitter that blocking proposed taxes means that the punitive DAME tax will not be included in any new budget.

This represents a massive win for bitcoin miners, who had feared having to leave the United States if the tax had ever been implemented.

The fact that new energy projects will now be easier to get approval for will also be music to the ears of bitcoin miners.

Since miners seek out cheap electricity, and renewable energy often best fits the bill, anything that facilitates renewable energy build-out will only expand the opportunities for bitcoin mining.

Another perhaps less obvious effect of suspending the debt ceiling is that the U.S. government will be free to continue to add to the mounting crisis of inflation.

We will continue to see the dollar decrease in value over the years, which, whilst hardly a pleasant scenario, will only add to the proof that we need a new monetary system based on sound currency.

Nothing fits the bill like bitcoin.

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The Bitcoin Clothing Company Beautifully Encapsulates the Bitcoin Ethos

As Bitcoin becomes better understood and more widely adopted, savvy entrepreneurs are moving in to take advantage of the space. The men behind The Bitcoin Clothing Company are doing more than just that.

What Is The Bitcoin Clothing Company?

The BCC is an online merchandise store selling Bitcoin-related apparel and accessories.

Founded in 2021 the business is registered in Las Vegas, Nevada, where the two founders Nicolas Canella and Demetrios Alex met.

But it’s more than just a clothes shop.

The company is dedicated to being a benefit to the Bitcoin community. As such, they work closely with other projects looking to utilize the power of Bitcoin to do good in the world.

Featuring their own original designs, with a focus on creative style and high-quality material, the young startup is on a mission to deliver Bitcoiners what they need.

Co-founder and CEO Nicolas Cannella explains that he learned about Bitcoin from his tutor when studying for his Master’s in Finance.

He realized then, “This is humanity’s first chance to get it right.”

With a passion for making the world a better place, Nicolas realized Bitcoin was the perfect tool for the job.

“If you fix the money, you fix the world. The money right now is broken.”

With that in mind, The Bitcoin Clothing Company has a goal to educate more people on the benefits of Bitcoin, as well as provide financial support to others looking to use the network to make the world a better place.

What Is Their Mission?

With a share of the profits going towards altruistic initiatives, they’re not just looking to make a quick buck.

On their website, they set out their mission statement as being “To provide high-quality apparel and accessories that truly capture the character of the Bitcoin community in a way that directly supports the development of the Bitcoin Infrastructure.”

Talk is cheap, but can these entrepreneurs put their money where their mouth is?

The website states that 20% of profits are donated to The Human Rights Foundation’s Bitcoin Development Fund, launched in 2020 to support the Bitcoin network’s use as a tool for human rights activists.

Nicolas tells me it’s actually 21%; I almost wonder if it’s a subtle nod to the 21 million bitcoin cap.

What stands out to me when speaking to Nicolas is his sincerity in his belief in this mission.

He’s always had an entrepreneurial spirit, dating back to his youth, but more pertinently, he’s always had altruistic tendencies, having spent two summers volunteering in Ghana, for example.

There are two things that Nicolas keeps coming back to during our conversation:

The first – tell the truth. “What’s the strategy? Tell the truth.”

The second – make money in the right way. “When you’re on your deathbed, it won’t matter if you have one or two billion. What will matter is what gave your life meaning.”

The Bitcoin Clothing Company is a vehicle to do exactly those two things. It’s genuine; it’s meaningful; it’s the Bitcoin ethos manifested.


How Does It Capture The Bitcoin Ethos?

What is the Bitcoin ethos?

Bitcoin cannot be manipulated, it necessitates honesty in the network.

Unlike our fiat system, where governments and central banks can control monetary policy as they please, the Bitcoin network is decentralized and trustless.

Nicolas is passionate about reflecting this.

“Bitcoin is sound money; it fixes the inventive structure around money.”

Because it cannot be manipulated, it removes the element of corruption from the free market.

Nicolas is clear in his belief that Bitcoin enables the best form of capitalism. That seems beautifully encapsulated in the merchandise company.

They’re not Wall Street bankers or a Silicon Valley tech startup selling the next useless app. They’re an honest cloth brand with a mission.

It’s an innovative twist on the merchandising paradigm. When you buy a Star Wars mug, you know Disney gets that money. When you buy a Taylor Swift shirt, you can be sure she gets a cut.

But with Bitcoin, we all own it. It’s decentralized; it’s global; it’s free. No one has a monopoly.

The BCC, with its partnerships with Bitcoin initiatives such as Bitcoin Ekasi and The Bitcoin Tour, is an example of “Bitcoin capitalism” at its best.

Everyone who gets involved in Bitcoin is passionate about the network, and they all support each other generously to further the values of the collective.

Free-market capitalism does not have to be devoid of generosity, and these collaborations demonstrate this to great effect.

By taking advantage of its decentralized nature and lack of copyright, the startup can fulfill its mission of making money the right way and using it to do some good in the world.

Bitcoin is about the people. All of us. Not a corporation, not a government, not an alphabet agency.

The Bitcoin Clothing Company is the Bitcoin ethos in practice.

I can’t help but feel inspired when Nicolas shares his passion for what Bitcoin can achieve, imbuing me with his own sense of wanderlust when he tells me, “Imagine what humanity can do.”

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3 Presidential Candidates For 2024 Openly Support Bitcoin

Bitcoin has officially entered mainstream U.S. politics as three presidential candidates have made statements in support of the digital currency. Robert Kennedy Jr., Vivek Ramaswamy, and Ron DeSantis are all pro-Bitcoin.

Is This The First Time?

Robert Kennedy Jr. was the first of the three to announce that he would enact policies to protect the Bitcoin industry in America, should he be elected president.

He also announced that he would be accepting donations in bitcoin.

Despite many publications reporting that he is the first presidential candidate in U.S. history to do so, that honor actually falls to 2016 candidate Rand Paul.

The confusion comes because Kennedy announced at the 2023 Bitcoin Convention in Miami that his campaign would be “the first presidential campaign in history to accept Bitcoin donations through the Lightning Network.”

Reporting publications appear to have missed “the Lightning Network” and are instead giving him credit for being the first to accept bitcoin donations at all, which is false.

In any case, Bitcoiners will be thrilled to have a Democratic candidate so pro-bitcoin, whilst the other two are Republican.

This means there’s a chance that one from either party will win their respective nominations and go head-to-head in the election, guaranteeing a pro-bitcoin president.

Bitcoin Is Key To Freedom

All three candidates have argued that Biden’s plan to tax bitcoin mining is wrong, with Ramaswamy calling it “wrong and unfair and it is not an appropriate use of federal power.”

He has assured voters that he will ensure “the freedom to mine” and allow bitcoin to be used an as alternative currency by those who are wary of the waning U.S. dollar.

Kennedy also criticized the current administration and vowed to “reverse the government’s growing hostility” towards bitcoin.

He was keen to highlight the “link between Bitcoin and democracy and freedom”, ensuring that he will enforce the right to hold and use bitcoin.

DeSantis has perhaps the best track record of supporting the use of decentralized digital assets, whilst opposing the development of CBDCs whilst governor of Florida.

Whilst he has not announced that he is accepting donations to his campaign in bitcoin, he stated in his campaign announcement on Twitter that “we’ll protect the ability to do things like bitcoin” and that the current administration is in danger of “killing” the industry.

He made clear, “I don’t have an itch to control everything,” demonstrating a more libertarian approach to digital currencies.

This seems to be a theme for all three candidates, illustrating the inherent awareness Bitcoin advocates have of the ethos of freedom and decentralized power that encapsulates the digital currency.

Could 2024 Bring The First Pro-Bitcoin President In History?

For Bitcoin to have any hope, at least one of these three candidates will have to win their respective nominations.

DeSantis and Ramaswamy can’t both win the Republican nomination, but if one of those two wins, and Kennedy wins the Democratic nomination, then the United States is guaranteed to have a president in 2024 that will ensure the freedom to mine, hold, and use bitcoin.

It’s certainly no forgone conclusion that even one of them will win their nominations, but if three candidates are promising these policies in 2024, how many could be in 2028?

Whether the traditional establishment likes it or not, Bitcoin is only getting bigger.

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Bitcoin Attracts Investors As Correlation With NASDAQ Down To 0.26

Bitcoin’s recent move away from its usual correlation with the stock market has increased its appeal to investors as a portfolio diversifier.

A report by market analysts of digital assets has highlighted bitcoin’s divergence from its usual similarities to stock market price trends.

Its 30-day correlation with the NASDAQ is the lowest it’s been since December 2021. Currently, the world’s leading digital currency is correlating at 0.26 with the American stock exchange.

The correlation with the S&P 500 is also down, signifying bitcoin’s growing independence from market forces that dominate the stock market.

Trends such as these indicate that bitcoin is being treated as a separate asset class rather than an extension of tech stocks, as has been the case for some time.

This could suggest that bitcoin is finally being assessed on its own merits in the current meltdown of the traditional financial system.

With some of the largest bank failures in recent history and the U.S. debt ceiling yet to be raised, bitcoin is quite possibly preparing to take its place as the go-to asset for investors.

Alternatively, bitcoin may simply be returning to normal, as the correlation with the stock market was a recent phenomenon that began with the market turmoil in 2022.

In any case, its decoupling from the stock market has made it an attractive proposition for portfolio diversification, which could see an increase in demand of the digital currency.

Portfolios have traditionally performed better with a small percentage of BTC, and now that its price action is independent again, investors are likely to want to add bitcoin to their holdings.

This, along with the supply squeeze caused by the all-time highs of HODLing, could push up the price of bitcoin and kickstart a new bull run.

A variety of factors appear to be coming together at the same time, as instability in the fiat financial system combines with growing confidence in a new bitcoin bull run.

Time will tell if this turns out to be the case, but everything points to now being a good time to buy bitcoin.

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Continued De-dollarization Sparks Hopes For Bitcoin Dominance

The U.S. dollar continues to wane as the global reserve asset, sparking hopes that bitcoin could soon replace the greenback. Alternative currencies are filling the gaps in the meantime.

What Is De-dollarization?

De-dollarization refers to the global decrease in the reliance on the U.S. dollar as the standard currency to use both in trade and as a reserve asset.

Currently, the dollar amounts to just under 60% of the world’s foreign exchange reserves, but this number is slowly going down.

The United States has used its position as the issuer of the global currency to impose sanctions on other countries, such as Russia, by restricting trade and freezing reserves.

Currently, 29% of the global economy is being sanctioned by the U.S., which is using the dollar as the weapon to enact these sanctions.

This has led to fears across the globe that relying on the dollar as a reserve currency leaves a country vulnerable to American economic dictatorship.

How Far Has It Gone?

Several countries have been making moves to distance themselves from the use of the dollar in recent months.

China and Brazil have agreed to settle trades in their own currencies, rather than using the dollar as an intermediary.

Argentina has also declared it will deal with China in Chinese Yuan as opposed to the greenback.

China and France are also making trades in Yuan, rather than the dollar.

But it’s not just China getting on board with de-dollarization.

Iran and Russia are exploring issuing their own digital currency backed by gold, so as to circumvent U.S. sanctions.

India and Malaysia are now trading in Indian Rupees, furthering the demise of the dollar.

The BRICS members (Brazil, Russia, India, China, and South Africa) are also exploring issuing their own currency, making the dollar redundant in their dealings with each other.

Clearly, many countries around the world are trying to move away from needing the dollar to do business.

Who Is Filling The Space?

It seems like the Chinese Yuan would be picking up the slack left by the dollar’s decline.

This is the case to some extent, but other reserve currencies such as the Euro, British Pound, and Japanese Yen are also being traded in place of dollars.

Mainly, the world is falling back on the oldest reserve asset in history.


Gold is trading at all-time highs, with central banks buying up record amounts in 2022 – over 1000 metric tons.

This is expected to continue as central banks lose faith in fiat currencies as secure and stable reserve assets.

Is De-dollarization Overblown?

For now, the dollar is nowhere near losing its status as the global reserve currency.

Alternative currencies or assets like gold and bitcoin are simply not in the necessary position to supplant the global hegemon.

However, with the U.S. banking and debt ceiling crises, as well as geopolitical tensions reaching recent highs, de-dollarization is likely to continue.

It’s very unlikely that another fiat currency will take its place. It would simply have all the same problems.

That leaves only gold or digital gold, bitcoin, as viable options.

Since bitcoin has all the benefits of gold and none of the drawbacks (such as being difficult and expensive to transport as well as easy to seize) it seems clear that bitcoin is best placed to take advantage.

If a changing of the guard is to take place, bitcoin has all the qualities to become the next number one.

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Bitcoin HODLing Taken To New Heights As Fiat Fears Grow

More bitcoin is being HODLed than ever before, with a record amount of BTC sitting untouched. It’s perhaps no coincidence this comes at a time when uncertainty in the fiat system is at an all-time high.

Bitcoin Is Being Held

A record 68% of BTC has been held for at least a year, with 55% held for two years and 40% for three.

This demonstrates that bitcoin HODLers have more faith than ever in the long-term potential of the world’s leading digital asset.

Not only this but with the U.S. banking crisis and debt ceiling impasse currently unfolding, more people are looking to store their savings in assets that can act as a store of value.

Bitcoin fits the bill to a tee.

As the only digital asset with intrinsic value, thanks to the Proof of Work consensus mechanism, bitcoin is the perfect safe haven asset to ride out the fiat storm.

Also, as the only digital currency not being considered a security by the SEC, bitcoin is safe from the kind of regulatory scrutiny other digital assets are falling prey to.

All this has given bitcoin HODLers the confidence they need to hold on to their BTC and ride out the bear market.

Are We At The Start Of A New Bull Run?

MicroStrategy CEO and famous bitcoin bull Michael Saylor has argued that “Bitcoin’s found the bottom… I think we’re on a bull run.”

The fact that more bitcoin is being held than ever before, and for longer than ever, does suggest bullish market trends, as a supply squeeze could push up the price.

With the network also approaching the next halving, the current inflation of bitcoin supply will also be reducing.

These factors, coupled with the current economic uncertainty of the fiat world, all point to bitcoin growing its dominance in the near future.

Saylor also argued that we will soon be seeing more mainstream institutional adoption of bitcoin as traditional financial firms warm to the idea of holding it on their balance sheets.

If bitcoin really does gain mainstream adoption as a reserve asset, HODLing will be taken to new heights, even surpassing the current peak.

Long-term Bitcoiners might be starting to feel a bit smug at all the naysayers who have claimed bitcoin has no intrinsic value and will eventually go to zero.

The way things are going, the dollar will hit zero before bitcoin does.

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U.S. Debt Ceiling Impasse Could Prove Problematic For Bitcoin

Democrats and Republicans are “nowhere near a deal” in raising the debt ceiling and preventing a catastrophic default for the U.S. government. Premature rumors of progress had caused a surge in the price of bitcoin.

U.S. Debt Ceiling Explained

The United States government has a limit to how much debt it can put the country into.

The current limit is $31.4 trillion, which was reached earlier this year.

If the debt ceiling isn’t raised, the government will have to either dramatically cut spending or raise new revenues, neither of which is likely.

The U.S. has been running a deficit almost continuously for decades, and cutting the deficit to a surplus is practically impossible.

Without a surplus, raising the debt ceiling is the only way for the U.S. government to continue paying its debts to bondholders, as well as paying its staff and other expenses.

The government will default on its debts as soon as June 1st if the ceiling isn’t raised before then.

The Democrats are hoping to preserve as much of their spending plans as possible, such as Biden’s climate legislation, a cornerstone of his presidency.

The Republicans, however, are looking for drastic cuts in spending, and potentially even a cap on future spending.

What Does This Mean For Bitcoin?

Standard Chartered Bank has suggested that bitcoin could become a safe-haven asset, and could go up in price by 70% in the event of the U.S. defaulting on its debt.

Investors may see bitcoin as a hedge against inflation, and might, therefore, invest in it more as the U.S. economy suffers.

However, this seems unlikely.

Investors would probably sell any holdings that are deemed even slightly risky, whilst instead putting investments in more traditional safe-haven assets like precious metals, or productive assets such as real estate.

It is considered likely that gold would benefit more than bitcoin from a debt default.

A default may well cause a stock market crash, huge unemployment levels, and a recession.

The price of bitcoin has traditionally been correlated with the stock market, partly because people invest in these assets when they have disposable income.

A recession would be bad for bitcoin because people would have less disposable income to invest, putting far less buying pressure on bitcoin.

They might also need to sell their holdings to cover expenses, meaning selling pressure on bitcoin would increase.

All this could lead to a crash in the price of bitcoin.

Rumors Of Debt Ceiling Progress Increase Bitcoin Price

Rumors that progress had been made in reaching an agreement on raising the debt ceiling, and thus avoiding a catastrophic default, seemed to lead to a surge in bitcoin price.

Whilst these rumors turned out not to be accurate, the price has not since decreased.

We can’t be sure exactly which way the price will go if the U.S. does default on its debt, but the prevailing wisdom seems to be that it won’t be good.

If the government does manage to find a solution, however, bitcoin could benefit as people are saved from the recession but continue to lose faith in our fiat-driven system.

Whatever happens, the cracks in the traditional financial system are becoming clearer.

Bitcoin will be waiting to fill the void.

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Argentina’s Fiat Fiasco Proves Bitcoin’s Worth

Argentina is currently facing cataclysmic levels of inflation and absurdly high interest rates. Bitcoin’s price in Argentinian Pesos has reached record highs as hyperinflation proves its worth.

What’s Happening In Argentina?

Argentina’s annual inflation is currently at 110%, having reached the worst levels since 1991.

Interest rates are at a staggering 97% after several hikes in quick succession, though this has seemingly done nothing to curb the country’s hyperinflation disaster.

The Argentinian government is currently on its third economic minister since July 2022, as it struggles to bring the crisis under control.

This problem isn’t entirely new. The South American country has spent more time in recession than any other nation in the world since the 1950s.

Roughly 40% of Argentinians live in poverty, and in 2021, more than 50% were unbanked.

How Is Bitcoin Helping?

Bitcoin has been suggested as a potential lifeline for Argentinians because of its properties as a hedge against inflation.

Its status as a store of value makes it far more useful than fiat currency for keeping savings, and Argentinians have been buying it up for this very purpose.

The fact that the Bitcoin network is available to anyone with an internet connection also means it has the potential to bank the 50% of Argentinians that are currently unbanked.

Bitcoin has seen increased adoption in Argentina, as well as other South American countries struggling with high inflation, for this very reason.

When priced in Argentinian Pesos, bitcoin’s price is currently at an all-time high.

Bitcoin is especially useful for international remittances. Citizens of Argentina, as well as Columbia and Venezuela, have been making use of this functionality to bypass currency controls from the central governments.

The Argentinian Government Has Reacted

The Central Bank of Argentina has recently barred payment service providers from facilitating transactions involving bitcoin and other digital currencies.

They excuse this authoritarian reaction by arguing that it is to protect citizens from the risks associated with dealing in digital assets.

Worryingly, this is a trend that has been seen elsewhere in the world, with the UK Treasury Committee recently arguing that bitcoin poses similar risks to gambling.

Since digital currencies are completely unregulated in Argentina, they all fall under the ban, including bitcoin.

Could Bitcoin survive the ban?

Fintech companies have opposed the ban, and many Argentinians are likely to find ways around it.

After all, the Bitcoin network doesn’t need third-party operators to work.

If bitcoin can solve the problems that Argentinians are facing, which it seems to be doing to some degree, it will survive.

If it turns out to be the lifeline some hope it is for the citizens of the South American country, it could be a signal to the rest of the world that bitcoin really is the future of the global financial system.

The post Argentina’s Fiat Fiasco Proves Bitcoin’s Worth appeared first on Bitcoin News.

UK Treasury Committee Completely Clueless On Bitcoin

The UK government’s Treasury Committee, made up of cross-party MPs, has suggested that the Treasury should regulate Bitcoin as gambling, rather than as a financial service. They base this on the ignorant notion that investing in bitcoin carries the same risk.

What Does The Treasury Committee Claim?

The claims of the Committee can be summarized as the following:

  • Bitcoin’s use cases are limited to improving the speed and efficiency of making payments, especially those that are cross-border.
  • Bitcoin has no intrinsic value.
  • Bitcoin offers no clear benefits to the financial system, whilst posing genuine risks to consumers.
  • Investing in bitcoin is speculation and therefore poses a risk to consumers.
  • The risk posed to consumers is the same risk posed by gambling.
  • Bitcoin should therefore be regulated as gambling, rather than as a financial instrument, under the principle of “same risk, same regulatory outcome.”
  • Regulating bitcoin as a financial asset would create a “halo effect” and thus give it undeserved legitimacy.
  • The digital asset industry is a “wild west.”
  • The government and regulators should attempt to keep up with technological innovations in the digital asset industry.

How Legitimate Are These Claims?

In a few words? Not at all.

One might expect that a taxpayer-funded committee of elected officials, whose job is literally to do their research, might actually do their research.

Apparently, one would be expecting too much of the government.

Despite hearing evidence from industry experts, the Committee, headed by Conservative MP Harriet Baldwin, has simply repeated the same ignorant myths that have been debunked a thousand times before.

Seemingly, they need to be debunked at least once more.

What Are Bitcoin’s Use Cases?

Bitcoin is more than just a digital asset.

Dogecoin is a digital asset. But that’s about it. It has no use, no functionality, and no intrinsic value.

Bitcoin is different; it has inherent usefulness.

A Store Of Value

Firstly, it’s a store of value. Its quality as a store of value is supported by its intrinsic value (more on that later) because anything with intrinsic value will necessarily hold that value relative to the money supply.

Of course, the idea is that, in the end, one bitcoin will equal one bitcoin. But for now, we’re still living in a fiat world. So, for now, rather than holding bitcoin for use in transactions, people hold bitcoin to convert back into fiat when they need it.

As a store of value, the worth of the bitcoin relative to fiat will have gone up at least in line with inflation. Whilst short-term volatility is high, over the long term, bitcoin performs even better than traditional stores of value such as gold.

In fact, bitcoin was the best-performing asset of the 2010s, beating the NASDAQ 100 by 10x.

A Monetary System That Can’t Be Inflated

This goes hand in hand with bitcoin’s status as a store of value.

One of the reasons it performs so well is that it can’t be inflated. Whilst bitcoin is currently increasing in supply, everyone knows that supply will eventually reach a peak of 21 million bitcoin.

People have faith in a currency that they know can’t be inflated beyond a certain point. If the government can increase the money supply, at no cost to themselves, and thus dilute the value of your savings, you can’t hold those savings with confidence.

People will naturally gravitate towards using a currency that isn’t under the control of any centralized authority because it means no individual entity has the power to dilute the worth of their holdings.

Bitcoin fulfils this criterion perfectly. No one controls the Bitcoin network, and no one can decrease the value of your savings by inflating the supply.

Amongst others, this is one of the reasons why people in Venezuela made use of the Bitcoin network when facing hyperinflation.

A Trustless, Peer-to-Peer Network

Bitcoin doesn’t require a centralized, third-party entity to operate. There is no other financial service in the world that operates this way.

The traditional financial system relies on huge digital and physical infrastructures to provide financial services.

Bitcoin is peer-to-peer. There are no middlemen, and the physical infrastructure is far smaller and less energy-intensive (despite what the mainstream media will have you believe) than the Bitcoin network.

Because of this, transactions are more efficient, and therefore quicker and cheaper, on the Bitcoin network than in the traditional financial system.

Many of these costs and inefficiencies in the centralized system are hidden from you. For example, a microtransaction with your debit or credit card appears instant and free.

What you don’t see is that the transaction actually takes days to be cleared by the financial institutions involved, and those costs are dispersed throughout the system.

A Bitcoin financial system is quicker, cheaper, better for the environment, and, best of all, doesn’t require anyone to trust in any middlemen.

Better For The Environment

The Bitcoin network has a use that seems completely counter-intuitive to anyone who reads about it in the mainstream media.

Bitcoin is actually good for the environment.

This is partly because, as already mentioned, the system is far more efficient than the traditional financial system. Where financial, material, and manpower costs go down, so too do the costs to the environment.

As a store of value, bitcoin is also a far better option than gold when it comes to environmental devastation.

But beyond even this, Bitcoin’s Proof of Work consensus mechanism dramatically increases the economic viability of renewable energy infrastructure.

This is because bitcoin miners are:

  • Location agnostic – they always set up close to the source of electricity, limiting waste through transmission
  • Buyers of last resort – they buy up electricity that would otherwise be wasted
  • Utilizing wasted methane gas – this decreases the emissions of CO2e
  • Interruptible loads – a study by ERCOT found that flexible load centers led to a decrease in CO2e emissions and facilitated renewable energy build-out

Overall, a financial system on the Bitcoin standard is far better for the environment than the centralized fiat system we have now.

Bitcoin Has Intrinsic Value

The myth that bitcoin has no intrinsic value is so often repeated, and has been so thoroughly debunked each time, that it makes me wonder whether these people actually know what intrinsic value is.

The question has to be asked: if bitcoin has no intrinsic value, what intrinsic value does fiat currency have?

The funny thing is if you google “Does fiat currency have intrinsic value”, the answer that appears right at the top of the results is a resounding “no.”

Fiat money isn’t backed by anything; it costs nothing to create, and can therefore be inflated at no cost.

Yet, for some reason, this isn’t a problem at all to the bitcoin critics.

To them, bitcoin having no intrinsic value is a massive issue, making it dangerous to consumers. But the cash in their pockets having no intrinsic value? No problem.

These people either don’t understand money (likely), don’t understand bitcoin (very likely), or don’t understand either (almost certain).

The concept of intrinsic value is, in itself, controversial and somewhat subjective. What should not be controversial at all is that bitcoin has a whole lot more of it than fiat currency does.

If we can argue that something has intrinsic value because it’s useful, then fiat currency does have some intrinsic value because we use it as legal tender and to pay our taxes.

However, it could be argued that this is actually extrinsic value – value we derive from something else, in this case, its usefulness.

Bitcoin has this because, as previously discussed, it’s useful. So it has at least as much value as fiat currency does (arguably more, and certainly more if and when we start paying taxes in it).

But what gives bitcoin true intrinsic value, value in and of itself, is the Proof of Work consensus mechanism.

Bitcoin Is Costly To Produce

Fiat money can be produced ad infinitum for no actual cost.

The central bank and commercial banks can simply issue credit by updating numbers on a spreadsheet and, hey presto, new money.

It’s not tied to anything in the real world. Nothing had to be expended to bring it into existence.

Imagine you could do this with gold.

Rather than having to high workers, buy machinery, dig it up out of the ground, separate it from its ore, then smelt it into ingots or mint it into coins, imagine you could simply snap your fingers and have limitless gold at no cost to you whatsoever.

Would gold continue to be valuable?

Well, that depends.

If anyone could do this, gold would become worthless immediately.

If you can force people to use gold as currency and pay you taxes in it, and no one else can make gold appear with the snap of their fingers, congratulations: you’re a rich man.

This is how the central bank works.

Fiat currency only has value because we all have to use it and we can’t create it ourselves. When we do, it’s called counterfeiting, and it’s illegal.

When the central bank does it, it’s called inflation, and they actually have government-mandated targets to inflate the currency each year.

Gold has historically increased in supply (inflated) by 2% each year, roughly the same as fiat currency inflation targets.

However, the gold supply could only be increased by expending capital to dig it up. And rather than a centralized authority having a monopoly on this, there was free-market competition.

Bitcoin is similar to gold in this way.

Currently, the bitcoin supply is growing, as we haven’t hit the 21 million cap yet. However, miners compete in a free market to be the ones to get the block reward.

They do this by expending capital in the form of electricity (and, to some degree, mining equipment and other operational costs).

In this way, the increase in the supply of bitcoin is tied to the real-world expenditure of resources.

When you expend value to create something, it becomes imbued with the value that you had to spend.

Because of this, bitcoin is imbued with the value of the electricity used in the Proof of Work mechanism.

Unlike fiat currency, there are real-world, physical resources that have to be used to create bitcoin and maintain their existence.

Even when the 21 million cap is reached, the network will still rely on miners for security, decentralization, and the processing of transactions.

Proof of Work also prevents double-spending, thus ensuring that bitcoin is uniform (cannot be counterfeited), durable (cannot be destroyed), and trustworthy (acceptable as a form of payment).

In this way, the Proof of Work mechanism ensures that bitcoin has the necessary characteristics to be considered money.

If the miners stopped, the network would shut down, and the bitcoins would become worthless.

This is fundamental proof that bitcoins have intrinsic value as determined by the resource expenditure of the Proof of Work mechanism.

For anything to have value, it must be costly to produce.

Unlike fiat money, bitcoin fits the bill.

The Financial System Would Benefit From Bitcoin

As previously stated, we’re living in a fiat world.

We can dream of a day when bitcoin is the world reserve currency, and the traditional financial system is no more.

For now, the traditional financial system could benefit from a reserve asset with intrinsic value.

There are currently 23 public companies holding reserves of bitcoin.

Clearly, more institutions are catching on to the benefits of a hard-money reserve asset backed by physical resource expenditure.

Central banks around the world are also unloading their dollar holdings. This is an inevitable, and unstoppable, slide for the US dollar.

As a fiat currency, it has no real value. For this reason, central banks are starting to get skittish about holding so much of it to back their own currencies.

Backing your money with something that has no value is starting to look less and less attractive.

Bitcoin solves this problem.

The financial system, both central and commercial banks, would benefit from holding bitcoin as a reserve asset because, unlike dollars, it’s tangible.

The asset itself may be digital, but the Proof of Work consensus mechanism ties it to the real world and gives it intrinsic value that can’t be matched by fiat currencies.

The UK Treasury Committee may argue that bitcoin isn’t backed, but this isn’t just wrong, it misses the point.

Not only is bitcoin backed by the energy expenditure required to create and maintain it, it’s also the thing that should be doing the backing.

Using bitcoin to back the value of a currency, much like how the gold standard worked in years gone by, would provide economic stability and prevent hyperinflation to any country using it.

Bitcoin is more than useful for the financial sector, it might actually be the savior of it.

Bitcoin Is Not Gambling

The UK Treasury Committee argues that investing in bitcoin is like gambling and should therefore be regulated as such.

They argue that, because of the price volatility and the risk of losing your investment, it should be considered gambling under the “same risk, same regulatory outcome” standard.

It’s unclear whether they don’t understand bitcoin, investing, gambling, or all three.

They cite the dramatic fall in the price of bitcoin in 2022 as evidence that the digital asset industry is like a “wild west” and that consumers who invest are in a dangerous game of speculation.

It’s a wonder they didn’t make the same argument about buying mortgages after the housing bubble collapse of 2008.

How many times has the stock market crashed over the centuries? Does this mean that investing in the stock market is akin to gambling?

Is forex trading gambling, considering it’s trading in fiat currencies that have no intrinsic value?

No, obviously not.

All industries have ups and downs, and anything that involves consumer investment has the possibility of forming a bubble, which is what happened in 2021/22 in the digital asset industry.

But over the 14 years of Bitcoin’s existence, it has demonstrated massive growth and has leveled out after its late-2022 slump, even making some gains since the turn of 2023.

Clearly, the volatility is short-term, and the price is not random, but tied to the general economy and the cost of mining.

This ultimately means that investing in bitcoin is not at all similar to gambling, certainly no more so (and possibly even less so) than investing in the stock market, mortgages, or international currencies.

Bitcoin is a financial instrument and should be regulated as such.

Politicians And Regulators Must Do Their Research

The UK Treasury Committee made the point that the government and regulators must keep up with innovations in the digital asset industry.

No one can disagree with this.

The odd thing is that it appears to be a clear case of the pot calling the kettle black.

It’s odd for a committee to call on others to be informed and educated on these issues in a report that so clearly demonstrates their own lack of knowledge and understanding on the matter.

Clearly, there is much to be done for those of us in the Bitcoin space to educate those outside of it.

Cynical people might believe that they don’t want to learn.

They’re anti-bitcoin because they don’t want to lose the power that the traditional fiat system and centralized power structures have given them.

Whilst that may be true, the only productive thing to do is to provide as much information as possible and put it into terms they can understand.

In this way, perhaps politicians and regulators who actually do have good intentions can be brought around to seeing the benefits of Bitcoin.

The post UK Treasury Committee Completely Clueless On Bitcoin appeared first on Bitcoin News.

U.S. Chamber of Commerce Slams SEC for Regulatory Uncertainty

The Chamber of Commerce in Washington, DC has criticized the Securities and Exchange Commission (SEC) over a lack of clarity on which digital assets are considered securities under federal law. This comes as Coinbase and Ripple threaten to leave the U.S. due to a “lone crusade” from SEC Chair Gary Gensler.

The Digital Asset Industry Demands Regulatory Clarity

The digital asset industry is worth $1 trillion and is only getting larger each year as more cracks start to appear in the traditional financial system.

The SEC has ordered companies associated with the industry, such as the exchange Coinbase and blockchain service Ripple, to “come in and register.”

However, the federal commission is being sued by Coinbase for lack of clarity on how exactly to do just that.

Coinbase is arguing that the SEC has not actually offered any regulatory framework for the digital asset space to operate under, nor any instructions on exactly how to register, nor even who needs to.

The lawsuit simply asks the SEC to clarify which digital assets are considered securities, as those would come under the jurisdiction of the Securities and Exchange Commission.

The Court of Appeals has since allowed other companies to offer their support to Coinbase, and the industry is uniting against the “lone crusade” being fought by SEC Chair Gary Gensler.

On top of this, and in further evidence of Gensler’s isolation in his war against the digital asset community, the U.S. Chamber of Commerce has also slammed the Commission for its ambiguity.

The Chamber has argued that the obscurity of the SEC’s position, both on which digital assets they are concerned with and how companies are being regulated, is only doing harm to the industry.

The SEC Refuses To Explain Its Position

Coinbase initially asked for clarity in July 2022 but was completely ignored by the SEC.

This prompted the lawsuit, which simply seeks to force an answer, whatever that answer may be.

In the past, Gary Gensler has implied that all digital assets other than bitcoin are securities — Bitcoin is considered a commodity — which would place them under the remit of the SEC.

However, this has never been formally defined, and the industry is unsure how to move forward, stifling progress.

Another fear from the industry is that they will end up sued by the SEC for breaking rules they never knew applied to them.

The Commission has taken legal action against Coinbase, Kraken, Paxos, and Ripple, accusing them of violating securities regulations.

This comes despite there being no clear regulations to begin with, nor any definitive statement of who they apply to.

Could The Industry Leave The United States?

Despite what some might think, companies crave regulation — or at least clarity.

A clear rulebook allows them to plan ahead and make moves that they know won’t result in punishment from the government. The SEC’s refusal to make that rulebook clear has made the U.S. a far less attractive place to do business, and some companies are threatening to leave.

Brad Garlinghouse, CEO of Ripple, has mentioned the U.K., Switzerland, Singapore, Japan, and the U.A.E. as potential destinations.

Coinbase’s CEO, Brian Armstrong, has also stated that the U.K. has been “very welcoming,” making the British market an attractive proposition.

While it’s generally deemed unlikely that these companies will leave the U.S. entirely, it has been suggested that expansions abroad will take a higher priority than they otherwise would have unless regulation is made more transparent in the United States.

The U.S. market is huge, and currently, 50 million Americans own digital currencies.

Threats to leave can probably be considered sabre-rattling for now, but they could become more serious if the situation isn’t sorted out soon.

Is Bitcoin Safe?

The one digital asset that seems safe from Gensler’s crusade is bitcoin, which the chair himself recently confirmed is not a security.

While the war rages on in the altcoin communities, the world’s largest first and largest digital currency sits safely on its throne.

Bitcoin, unlike other digital assets, is not under the control of a small development team. Nor was there ever an ICO (initial coin offering) to launch the decentralized currency.

For these reasons, those who buy bitcoin are not expecting profits based on the actions of others. This, among other signifiers, makes bitcoin a commodity rather than a security, making it safe from Gensler’s grasp.

This should be a comfort to bitcoin hodlers, as well as those looking to invest in bitcoin now or in the future.

Bitcoin was already looking like a lifeboat in a storm, but as the traditional finance world continues to unravel, it’s looking more like a spaceship with an asteroid approaching.

As the fiat world continues its collapse, with the U.S. currently in the middle of three separate crises (the banking crisis, the debt ceiling crisis, and this regulatory crisis), bitcoin is looking more attractive every day.

The post U.S. Chamber of Commerce Slams SEC for Regulatory Uncertainty appeared first on Bitcoin News.

Ledger hardware wallet ‘hacks’ itself with latest update growing ‘backdoor’ concerns

Hardware wallet maker Ledger has sparked an online fiasco by introducing a new seed phrase recovery feature called Ledger Recover, which critics say completely defeats the purpose of a hardware wallet.

Ledger has introduced an optional subscription for $9.99 a month, which allows owners of the Nano X wallet to store a backup of their seed phrase with three separate third-party entities.

CTO Charles Guillemet assures users that this is entirely voluntary and will never be forced on any customers, now or in the future.

He also stated that many won’t need it, and self-custody maxis will definitely prefer to look after their seed phrases themselves.

However, the thought process behind the move is that as digital assets become more mainstream, newer customers will want to outsource some of their security rather than take on all the responsibility themselves.

The feature works by splitting the recovery phrase into three segments, cryptographically encrypting them within the Secure Element Chip within the wallet, and then sending each segment to a different third party.

“Your private key is never at risk”, Charles assures customers.

“There is no backdoor for anyone… even for a very gifted hacker.”

Ledger was established in 2014 and is estimated to have sold around 4.5 million wallets and has introduced six wallet models.

Despite being such a mainstay of the digital asset self-custody industry, users have concerns about the security of this new feature.

Mudit Gupta, chief information security officer at Polygon Labs, stated on Twitter:

“It’s a horrendous idea, DON’T enable this feature.”

“Anything secured by ID verification is inherently insecure.”

“I still recommend [Ledger’s hardware wallets] to everyone. Just don’t enable this feature.”

Bitcoin investor and entrepreneur Alistair Milne questioned whether or not the feature made cold storage completely redundant.

“Sure, you *could* use Ledger’s new ‘Recover’ service and give them your private keys controlling your assets as well as a copy of your ID and other personal information… but why then bother with a hardware wallet in the first place?”

Ledger has hit back at the criticisms, suggesting the issue is being blown out of proportion.

Ian Rogers, Ledger’s Chief Experience Officer, has suggested the fear is “perhaps unjustified.”

CEO Pascal Gauthier said, “I’m sorry, but the piece of paper is a thing of the past and Ledger Recover is a thing of the future… there is no compromise to security.”

In some countries, government-issued I.D. is required to use the feature, leaving many customers nervous about linking their personal identities to their seed phrases.

Ledger has a history of personal data leaks.

In 2020, the personal information of over 270,000 Ledger customers was exposed by a hacker, including phone numbers and physical addresses

One million email addresses were also exposed.

However, Charles Guillemet has assured customers, “There is no direct link between your seed and your identity.”

Time will tell if this turns out to be the security nightmare critics are suggesting or the way of the future, as Ledger seems to believe.

The post Ledger hardware wallet ‘hacks’ itself with latest update growing ‘backdoor’ concerns appeared first on Bitcoin News.

Bitcoin Has Real Value: Beyond the Ponzi Scheme Narrative

“Bitcoin is a Ponzi scheme!” “It has no intrinsic value!” “It’s a speculative investment!” The internet is full of so-called “experts” deriding bitcoin as a useless asset with no real value. All the while, the money we use in our day-to-day lives is gradually going to zero. The fact is this: Bitcoin has more intrinsic value than any fiat currency.

What Gives Money Value?

We’ve all grown up in a world where money is a tool of the state. The government is in complete control of monetary policy, a central bank issues the currency, and the rest of us simply use it day to day without any understanding of how it works or why it matters.

Of course, we’re all familiar with terms like inflation, and we’ve all made reference to “printing money” at some point. But most of us never really think about what the government is doing to the cash in our pockets every day.

We accept that money has value because, to us, that has always been the case; currency has value because the government says so. (Or is it because we say so?) If we decided the government was wrong and our (their?) money doesn’t actually have value, who would be right?

The Origins of Money

Historically, money was any commodity that could be expected to hold its value over time.

According to Carl Menger in “The Origins of Money” (1892), the ancient Egyptians and Mesopotamians used commodities such as barley, shells, and livestock as mediums of exchange.

In Ancient Greece, iron bars were used. Eventually, coins were minted from gold, silver, and other precious metals as a way to transfer value.

That’s essentially what money is: a means of storing and, thus, transferring value.

If I work, I’m contributing value to the economy. I can be paid in food, or some other commodity that I need, in proportion to the value that I contributed.

However, money affords me the option of holding that value so that I can cash it in later in exchange for something that might not have been available when I was paid, or that the person paying me might not have had.

It also gives me the option of storing value and saving it up so that I can exchange a lot of value for something very expensive.

Money naturally evolved to enable people to store value across time so that they could cash in on that value when they needed to, and for what they needed.

The intrinsic value of a currency is determined by what it’s backed by. It may have a market value that is higher than its intrinsic value, for example, if there is high demand compared to the currency’s supply.

Mostly, a currency’s value is determined by how useful it is and how scarce it is.

Why Were Precious Metals Chosen For Money?

Precious metals are a form of “hard money,” literally money that is hard to produce (and therefore inflate).

Not all societies used precious metals for currency. It largely depended on the availability of these metals and the ability to mint them into coins, bars, or jewelry. In East Africa during the 1800s, glass beads were used instead.

However, precious metals were often used for a number of reasons:

  • Scarcity: Precious metals like gold and silver are rare and difficult to separate from their ores, making them difficult to produce.
  • Durability: Gold does not corrode or degrade over time, making it perfect for storing value over long timescales.
  • Divisibility: Precious metals can be easily separated into smaller quantities. A gold bar can be melted down into smaller units or even just cut in half.
  • Acceptability: Precious metals have luster, a shine to them that makes them attractive and gives them an innate value. Money must have social acceptance to be a useful unit of exchange.
  • Uniformity: Because precious metals are easily recognizable and verifiable (it is easy to test if a coin is solid gold or gold-plated lead), they are difficult to counterfeit.
  • Portability: Precious metals can be minted into coins. The need to store and carry money makes coins ideal.

For anything to be considered money, it must fulfil these requirements. Currency naturally took the form of precious metals because they tick all these boxes.

It just happened; there was no central authority that decreed it must be so. Money is a natural phenomenon, and it arose because these six characteristics are necessary for exchanging value in a functional economy.

Money has value because it does this job.

Introducing Fiat Money

For thousands of years, currency was something organic. All over the world, societies of differing sizes and technologies used different commodities as money according to the ability of those commodities to satisfy the requirements of a currency.

Then came fiat money.

Fiat money refers to a currency that isn’t backed by an actual commodity. Fiat is Latin for “let it be done” and is sometimes translated as “by decree.”

Historically, money had value because a commodity was found to fulfil the six needs of money previously established. Currencies naturally arose that could meet the task of storing and transferring value.

Fiat money changed that. Fiat money has value “by decree,” or essentially, “because the government says so.”

What Gives Fiat Money Value?

Fiat money must have value, otherwise, no one would use it. We wouldn’t accept payment in a currency that was worthless.

And we know inflation happens, which is when a currency becomes less valuable. But how can it become less valuable if it has no value to begin with?

So fiat money must have value.

But if fiat money isn’t backed by any actual commodity, how can it be worth anything?

Simply put, fiat money has value because we all agree to use it.

There’s some degree of choice in this, but ultimately we’re pretty much powerless to do anything about it.

If you live in the U.S. then you use dollars. U.S. dollars are fiat cash, created by the Federal Reserve or the banking system it holds under its wings. Theoretically, if everyone decided to stop using dollars, they would be worthless. In practice, it’s more complicated.

The U.S. government pays its employees in dollars. Taxes have to be paid in dollars. Fines and tariffs are all paid in dollars. The dollar is also legal tender, meaning merchants have to accept it.

In essence, the government has tools to ensure that dollars get used. As long as they get used, they’re worth something.

This is what gives fiat money value. The fact that we have to use them because the government says so, and we’re all used to this, so we don’t even question the value of the cash in our pockets. Because we don’t question the value, we have faith in it, and this collective faith also gives the currency value.

Sounds fine then, right? If it ain’t broke, don’t fix it.

The problem with fiat is not that it has no commodity to back its value. The problem is how that value changes over time.

Government-Mandated Inflation

Most governments have inflation targets. The Bank of England in the U.K. and the Federal Reserve in the U.S. both set inflation targets of 2% per year. This is typical of advanced economies.

What this means is that the central banks of most counties aim to devalue their currencies by an average of 2% per year.

But why? Why would a country have a deliberate policy of aiming to make its currency less valuable every single year?

There are many potential answers to this question, and which one you believe may depend on how cynical you are.

A Keynesian economist will tell you that a small amount of inflation is healthy for the economy because it stimulates growth by encouraging people to spend or invest their money rather than save it.

An Austrian economist will tell you it’s all a cover to keep the public naive to the fact that they’re being robbed.

Whether or not you believe in government conspiracies or collusion between the rich and powerful, it’s important to examine the actual effects of long-term inflation.

Why Can Inflation Be Good?

One somewhat understandable rationalisation for inflation is that, as the economy grows, more cash is needed to provide liquidity for transactions within that economy.

Imagine there was only $100 in the entire U.S. economy. Each dollar would be worth billions in today’s dollars because there would be so few to spread over the entire economy.

It would be extremely difficult to trade because each dollar would be worth so much and can only be divided into 100 cents each.

Also, most citizens would not have any money at all as even one cent would be so valuable that it would exceed the net worth of most citizens.

The logical solution would be to print more money. That would devalue each dollar, but it would allow more dollars to be shared around so everyone has enough liquidity to facilitate business and trade. If the economy grows, it might be useful to expand the money supply to lubricate economic activity by ensuring that there are enough dollars for everyone to make the transactions they need.

This means ensuring that individual dollars and cents are low enough value that you can make microtransactions at the lower-value end of the economy.

Expanding the money supply ensures that the currency doesn’t become too unwieldy as the economy grows.

The problem is with how the new money is distributed.

How Is New Money Created?

Central banks can “print” new money in several ways:

  • Lowering reserve requirements for commercial banks.
  • Providing loans to commercial banks.
  • Quantitative easing (purchasing assets from the private sector).

Government bonds are essentially government-issued debt. Someone (a citizen, institution, or another central bank) buys the bond, and the government promises to pay them back with interest after a period of time.

Until the loan is paid back, new money enters circulation when the government spends it.

Commercial banks also add to the money supply when they issue loans to their customers. They just add numbers to your account, and viola! New money is created out of thin air.

Commercial banks are only allowed to loan out a certain multiple of the money they actually have in reserve. This is called fractional reserve banking.

If the government mandates a 20% reserve, a bank can only loan out five times what it has in deposits because it must always have in reserve 20% of what they’ve loaned out.

If the government lowers the reserve limit to 10%, banks can now loan out up to ten times what they have in reserve, meaning they can increase the money supply by double what they could before.

Similarly, central banks can provide loans to commercial banks to bail them out of bankruptcy or keep them afloat during economic hardship.

Quantitative easing is a mix of government bonds and loans from the central bank. Essentially, the central bank creates money by issuing credit, except instead of issuing this credit to a commercial bank, it uses it to buy government bonds.

This amounts to a government issuing debt to itself, which it can theoretically do indefinitely and never run out of money. Since it can always pay off the debt with new debt, there’s no limit to the potential money supply.

Inflation Is Theft

When the money supply increases, but your personal wealth stays the same, your money loses value.

Think of each dollar in the U.S. economy as a share of the total money supply.

When central banks “print” new money, they dilute your share of the money supply with new dollars — new “shares.”

If you have $1 in an economy that only contains $100, then you own 1% of the money supply.

If the central bank prints another $100, but you still only have $1, your share in the money supply drops from 1% to 0.5% because you now have $1 out of $200 instead of $1 out of $100.

Essentially, the central bank has just stolen 50% of your wealth.

This is what happens every time the central bank creates new money by issuing government bonds, or a commercial bank adds to the money supply by issuing a loan.

Theoretically, the new money is distributed throughout the economy in the form of government spending and commercial credit.

In reality, commercial banks get larger and larger shares of the money supply to buy up real estate and loan out to businesses, and the government can spend huge sums on things like new aircraft carriers.

All this is paid for with your money. Remember, when they print new money, they haven’t actually added value to the economy.

When the Federal Reserve prints new dollars, the value of all the dollars already in circulation is reduced by the value of all the new dollars.

All they’ve done is diluted the value of your wealth and taken the difference for themselves.

Money is being taken straight out of your pocket: It’s the greatest heist in human history.

Eternal Inflation

It seems logical that inflation can’t last forever. If you continuously devalue a currency, eventually, it becomes worthless.

When this happens very quickly, we call this hyperinflation. However, this is happening very slowly (although it’s now speeding up) all over the world.

The entire world economy is built on an inflationary model where growth is fueled by debt, and the debt is constantly outpacing the growth.

This is intrinsic to fiat currencies. Fiat money isn’t backed by any commodity. It has no intrinsic value beyond the use we have for it and the faith we have in it.

But what if that faith disappears? What if we no longer see the dollar as a safe store of value? What if we no longer need it because there are alternatives that are better suited to fulfilling the role of money?

If inflation continues (as all central banks aim for with their annual inflation targets), then the value of the inflating currencies will continuously fall.

The main force fighting against this is economic growth. As economies grow, their currencies become more valuable, assuming all else stays equal.

If economies stop growing, however, and the money supply continues to increase, then the value of the currency can fall dramatically.

Looking at the purchasing power of major currencies like the U.S. dollar or the British pound over the past 100 years, it is clear that the value of these currencies has dramatically decreased even relative to the growth of their economies.

And this was during 100 years of near-constant economic growth and a golden age of peace and global commerce from the end of the cold war to the Russian invasion of Ukraine.

The money supply is increasing faster than ever, and economic growth is slowing down. Clearly, eternal inflation is not sustainable.

Bitcoin: The Best Money There Is

Bitcoin is the most perfect form of money that has ever existed.

Unlike fiat money, there is no government “decree” that says it has value. Governments don’t order taxes to be paid in bitcoin, nor do they mandate that it must be accepted as legal tender.

Unlike every other currency in the world issued by a central bank, people use bitcoin for one reason only: It works.

Bitcoin’s Ability To Function As Money

Bitcoin satisfies all the requirements of money:

  • Scarcity: Bitcoin is coded to have a supply cap of 21 million. It cannot be inflated and is, therefore, inherently scarce.
  • Durability: Bitcoin cannot be destroyed. The network is maintained by miners expending huge amounts of energy, and as long as the network is up, anyone can transact with their bitcoin.
  • Divisibility: Each bitcoin is divisible into 100 million satoshis, up to 8 decimal places. This means there is a cap of 2,100,000,000,000,000 (2 quadrillion and 100 trillion) satoshis.
  • Acceptability: The number of people holding bitcoin and the number of merchants accepting it as a means of payment continues to grow. It is already an established currency and is legal tender in El Salvador.
  • Uniformity: Each bitcoin is equal to every other bitcoin, and the security of the network means they cannot be double-spent (counterfeited).
  • Portability: Bitcoin is the most portable currency in the world. It can be sent anywhere with an internet connection, and the information to access your holdings can be carried in the form of keyphrase information on paper or even by memory.

Clearly, bitcoin does the job that money evolved to do. Mechanically, it works great as a currency.

Bitcoin vs Fiat vs Gold

Gold is obviously a great choice to use as money. Or, at least, it was historically.

It’s scarce, durable, it has intrinsic value, and a long established history as being the basis for entire economies for thousands of years.

Fiat currency does have some advantages over gold, though.

It’s easier to digitally divide fiat money into smaller values than it is to physically divide gold. Fiat can also be transported electronically, whereas gold is expensive and difficult to physically transport.

Both gold and fiat have some deficiencies. They can both be seized by governments or powerful bad actors. They can also both be counterfeited by producing convincing copies. Fiat money can also be inflated, which is essentially legal counterfeiting (or counterfeiting is illegal inflation).

Bitcoin combines the best of both and avoids all the flaws.

It’s inherently scarce, like gold. In fact, it’s more scarce, since the global gold supply increases by about 2% per year. Fiat can be printed infinitely, and can therefore be inflated into oblivion. Bitcoin can never be inflated once it reaches the cap of 21 million bitcoin.

Bitcoin also has the divisibility and portability of fiat currency, owing to the fact that it’s a digital asset and so doesn’t suffer the physical limitations of gold.

Similarly, the Bitcoin network has been shown to be remarkable robust. The network is secured by vast amounts of electricity (more than the consumption of many countries) which means even entire countries could not hope to attack the network.

As long as the network is up (it has a historical 99% uptime, which is unprecedented for such a large data network) then the bitcoin are secured, making Bitcoin incredibly durable.

This same energy-backed security makes it impossible to counterfeit bitcoin, making it more verifiable (or uniform) than either gold or fiat.

Does Bitcoin Have Intrinsic Value?

It’s tempting to think that bitcoin is like fiat money in that it has no intrinsic value.

Fiat money only has value because we have to use it (due to legal tender laws and taxes etc.) and because of the faith we have in the issuing government.

But we don’t have to use bitcoin, and there’s no issuing government, central bank, or any central authority.

So if bitcoin doesn’t have value because we’re forced to use it, nor because we have faith in an institution issuing it, why does bitcoin have value?

What Backs Bitcoin?

In a literal sense, bitcoin are given value by the marginal cost of their production.

Miners have to invest capital in the form of electricity costs, mining equipment, employee salaries, and property costs in order to mine bitcoin. They do this with the understanding that they will be able to sell the bitcoin they mine at a profit.

This initial investment gives bitcoin value in a similar way to how our faith in fiat money gives it value.

Except bitcoin miners actually have to demonstrate that faith beforehand by investing the capital to set up a mining rig. This means bitcoin have inherent value as capital had to be expended just to bring them into existence.

The price of bitcoin is correlated with the cost of production because miners will hold their bitcoin if they can’t sell it at a profit.

This creates a support in the price of bitcoin which keeps it above the cost of production.

If the price does drop below that cost, miners will switch of some of their mining rigs to lower costs.

In these ways, the price of bitcoin is kept higher than the cost of production. The cost of producing bitcoin therefore provides it with intrinsic value in much the same way that physical commodities have intrinsic value tied to the cost of producing them.

Gold, for example, is expensive partly because it’s scarce, but partly because it’s very expensive to dig up and separate from the earth.

Bitcoin thus achieves the “hardness” of gold without the environmental effects of having to dig it up. This makes bitcoin an incredibly pure form of hard money.

Bitcoin’s Electricity-Secured Value

Every aspect of bitcoin that makes it so useful as a currency is enshrined in the code of the Bitcoin network.

The Bitcoin network is maintained by nodes, which keep complete records of the blockchain, and the miners, who process transactions and add blocks to the chain.

The miners use the Proof of Work consensus mechanism, in which computational power is used to solve mathematical puzzles in order to decide which miner proposes the next block.

As more miners join the network, the more difficult the puzzle becomes. This is to maintain an average block time of ten minutes.

The hashrate (computational power) of the network is what secures it against bad actors. Anyone wishing to attack the network would need 51% of the hashpower. For anyone to join the network and try to attack it, they would need to generate double the current hashrate plus 1%.

The Bitcoin network currently uses more electricity than most countries, and that electricity is powering specialised processors that are specifically designed to generate as high a hashrate as possible as efficiently as possible.

This makes it an almost impossible task to attack the Bitcoin network. For this reason, counterfeiting bitcoin by doublespending is practically impossible.

It also adds to the trustworthiness of the network, as users can be sure that the infrastructure that supports their transactions is secure.

Because of these factors, bitcoin’s usefulness is secured by its electricity consumption. Thus, the electricity consumption of the network provides bitcoin with intrinsic value because value must be expended (in the form of electricity) in order for bitcoin to exist and be used.

Fiat money has no intrinsic value because nothing has to be expended in order to bring it into existence. With bitcoin, just like physical commodities, its existence is dependent on expending resources.

Why is Bitcoin Useful?

The Bitcoin network is a modern marvel beyond just the usefulness of bitcoin as a currency.

The network itself provides a decentralized, trustless, immutable, transparent, peer-to-peer payments settlement system to anyone on the planet with an internet connection.

More than half the world’s population lives under an authoritarian regime.

To those of us living in economically developed democracies, Bitcoin might not seem necessary. To people facing strict monetary controls at the hands of tyrannical despots, it can be essential.

In 2021, 1.4 billion people worldwide were unbanked, leaving them without modern financial services that so many of us take for granted.

As stated, the Bitcoin network provides anyone with an internet connection a way to send and receive remittances in bitcoin.

Bitcoin has already been tried and tested in this area. Venezuelans relied on bitcoin to hedge against hyperinflation and circumvent central authoritarian monetary controls

While remittances in dollars were subject to government fees and could take weeks to process, remittances in bitcoin have only small miner fees and are nearly instantaneous.

Bitcoin has also been used as a hedge against hyperinflation in Zimbabwe, as well as for avoiding financial surveillance in China, escaping financial censorship in Russia, and getting access to remittances in refugee camps.

As a store of value, bitcoin is capable of replacing gold while being far less damaging to the environment to produce, despite what critics say about the electricity consumption of the Bitcoin network.

In fact, bitcoin mining has been shown to be beneficial toward facilitating renewable energy build-out.

Why Do Critics Call Bitcoin a Ponzi Scheme?

We can’t know for sure why critics of bitcoin continue to claim that it’s nothing but a speculative investment propped up by the “greater fool theory,” the idea that its price is only going up because new “fools” keep coming along to invest in it.

It could be the case that they genuinely don’t understand bitcoin, why it’s valuable, or why money even works the way it does.

How many people can explain fiat money? How many people have even heard of fiat money, despite using it everyday?

There are plenty of people who believe the Earth is flat or that the moon landings were faked, purely because they don’t understand it.

There are millions of people who will never accept something they don’t understand. Unfortunately, in the case of bitcoin, many of the people who don’t understand it are politicians, journalists, and even economists.

Even Warren Buffet, who can hardly be called a fool when it comes to the world of investment, has said some pretty ignorant things about bitcoin.

Of course, it’s possible that something far more sinister is happening.

It may well be that the politicians who oppose bitcoin are doing so because it gets in the way of their ambitions to further centralize power and monetary control.

It’s no coincidence that bitcoin’s rise has seen the advent of a new form of money: Central bank digital currencies (CBDCs).

Decentralization of power, financial freedom, and privacy should be concerns for all of us. Bitcoin might just be our best hope of steering away from the potential dystopia that centralized digital currencies are sure to create.

If nothing else, Bitcoin gives us a hope for a better, freer future.

That’s what I call value.

The post Bitcoin Has Real Value: Beyond the Ponzi Scheme Narrative appeared first on Bitcoin News.

Bitcoin Surges Towards Net Zero With Texas Gas Flaring Bill

The Texas House and Senate have passed Bill 591, allowing bitcoin miners to use flared gas to power mining operations. The bill is set to lead to a reduction in carbon emissions, helping the Bitcoin network move toward net zero. The move contradicts earlier efforts in Texas to hamstring bitcoin miners by removing their tax incentives, demonstrating renewed enthusiasm for the world’s leading digital currency.

Texas Reasserts Love of Bitcoin

Texas has reestablished itself as the most Bitcoin-friendly state in America after the House and Senate passed a bill allowing bitcoin miners to use otherwise wasted natural gas to power bitcoin mining.

The World Bank estimates that 140 billion cubic meters of methane gas is flared every year as a waste product. If all this were harnessed worldwide, it could generate enough energy to power the Bitcoin network several times over.

While bitcoin miners were always free to utilize this energy source, and some have been doing so, this bill has ratified tax exemptions associated with the gas recycling process.

The move has been hailed as a brilliant move on three counts.

Firstly, the tax exemptions mean that energy producers that generate natural gas as a waste product can now charge less for the electricity they generate or the oil they produce.

This means cheaper energy for their customers, passing the savings onto others.

Secondly, it encourages bitcoin miners to set up near these sources of natural gas, using an otherwise wasted resource and providing more profits to the energy providers, who can then pass further savings onto their customers.

Thirdly, using this gas to power bitcoin mining results in a net decrease in emissions of carbon dioxide equivalents (“CO2e”). This is because the flared gas is generally methane, which is 100 times more potent as a greenhouse gas than carbon dioxide in the short term.

The bill seems to contradict Bill 1751, yet to be passed into law, which would remove tax abatements for bitcoin miners in Texas.

Clearly, Texan Bitcoin advocates are keen to fight back and maintain their leadership position as the pro-Bitcoin state of America.

How Does This Affect Bitcoin’s Environmental Impact?

Signatories of the Crypto Climate Accords are hoping to bring the Bitcoin network to net zero in terms of carbon emissions by 2030.

The Bitcoin Mining Council currently estimates that the network uses around 60% sustainable energy, far higher than the U.S. national grid’s 20%.

Overall, bitcoin mining has been found to be far more beneficial to environmental initiatives than is usually reported.

This bill will only go further in showing the world how useful the Bitcoin network can be in achieving net zero globally.

Estimates currently suggest that Bill 591 will lead to a 63% reduction in carbon emissions — a dramatic reduction of Bitcoin’s energy footprint.

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Texas Set to Enshrine Bitcoin Ownership in Bill of Rights

Texas has taken another step in asserting Bitcoin dominance in the United States as the House of Representatives voted 139-2 to enshrine the right to own bitcoin in the Texas Bill of Rights.

Amendment to Bill of Rights Protects Bitcoin

Representative Giovanni Caproglione put forward the amendment that would add a clause to Texas’s Bill of Rights, securing “the right of the people to own, hold, and use” bitcoin.

“No government shall prohibit or encumber the ownership or holding of any form or amount of money or other currency.”

The motion was overwhelmingly successful, with 139 votes in favour and just 2 against.

There needs to be one more vote in the House of Representatives before it gets passed onto the Texas Senate.

The amendment would ensure that citizens are free to use the currencies, financial services, and payment systems of their own choice, rather than being forced to use what the government tells them to.

The move is sure to be popular with libertarians, regardless of their association with Bitcoin.

Bitcoin Is a Libertarian Dream

Generally speaking, libertarians are fans of the digital currency since it offers them a peer-to-peer, permissionless, trustless, open-source, globally accessible payments system with its own digital currency.

The freedom afforded by the Bitcoin network and its associated currency is a key attraction for millions of people all over the world, and freedom lovers in Texas are hoping to have the right to own it guaranteed by law.

This move comes as Texas also voted to ratify tax exemptions on using flared gas to power bitcoin mining.

The Lone Star State has long been a safe haven for Bitcoin in America.

If this amendment is passed, the digital currency bringing financial freedom to people all over the world, from Venezuela to Nigeria, will be untouchable by the federal government.

If more states follow suit, Biden’s plan to tax bitcoin miners 30% of their electricity expenditure might face fierce pushback at the state level.

A back-and-forth about Bitcoin appears to be materialising in the land of the free, and Texas is currently leading the charge in Bitcoin’s favour.

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DAME Tax Could Be The End of America’s Bitcoin Supremacy

Joe Biden’s White House administration has proposed a Digital Asset Mining Energy (DAME) tax which would force bitcoin miners to pay tax to the amount of 30% of their electricity costs. The move has been slammed by bitcoin advocates and political opponents alike as the thin cover of environmentalism fails to hold water.

What is The DAME Tax?

The Digital Asset Mining Energy, or DAME tax is a proposed tax that would add 30% to the electricity costs of bitcoin miners.

Bitcoin mining firms would have to disclose to the government how much electricity they use, the source of that electricity, including whether or not it is renewable, and the cost of purchasing the electricity.

Interestingly, this would also apply to electricity produced off-grid, such as from natural gas that would otherwise be flared or vented – in other words, wasted.

The key aspect is that any bitcoin mining operations in the United States would become more expensive by almost a third, a huge increase to the operational costs of the firms, putting them at a huge economic disadvantage compared to miners in other jurisdictions.

How Would The DAME Tax Affect Bitcoin Mining In The United States?

Operational costs in bitcoin mining come almost entirely from purchasing electricity.

The tax would add 30% to this expenditure, making bitcoin mining almost a third more expensive than it would be in other countries with similar electricity prices.

Bitcoin miners are location agnostic and always seek the lowest electricity prices, so this tax wouldn’t affect them as much as it would other industries, but this would still be a massive blow.

Such a huge increase in costs could force bitcoin mining firms in the U.S. to curtail their current expansion plans, shrink their current operations, or even move out of the United States altogether.

When approached for comment, Satoshi Action Fund CEO and co-founder Dennis Porter was damning in his assessment of the proposed tax, arguing, “The White House’s proposed 30% tax would result in the United States losing its position as the global leader on bitcoin mining. We would lose out on the future growth of this evolving tech industry.”

Is There A Precedent For This In Bitcoin Mining?

The United States is currently the global leader in bitcoin mining by hashrate, boasting a colossal 35.4% of the network’s total.

However, once upon a time, China was the global powerhouse when it came to bitcoin mining.

When China banned the practice in 2021, nearly half the Bitcoin network went offline and moved abroad, with the U.S. being the largest beneficiary.

It should be stated, however, that approximately 21% of Bitcoin’s hashrate was still coming out of China in May 2022, despite the ban.

The DAME tax would be a different story.

Rather than banning bitcoin mining, the Biden administration simply wants to make it a lot more expensive.

Instead of having to hide your mining operation (something much easier to achieve in China anyway), the exact opposite is true here.

The government wants all the information about bitcoin mining operations that it can get, and it wants to tax them into oblivion.

The effects would likely be even more dramatic for the United States, with an even greater proportion of the Bitcoin hashrate leaving the country’s shores.

Porter continued in his scathing assessment of the proposed tax, “Imagine if the United States had put a tax on the Internet and Internet data centers in the 90s. All of the jobs, talent, and economic impact would have left this country and gone to nations like China and Russia.”

How Is The White House Justifying This Tax?

The White House claims the tax is “Making [bitcoin miners] pay for costs they impose on others.”

The report makes the case that bitcoin miners create costs for citizens and businesses in the U.S. “in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate.”

It also claims the tax “encourages firms to start taking better account of the harms they impose on society” and that bitcoin mining “has negative spillovers on the environment, quality of life, and electricity grids” where they set up their mining operations.

The White House recognizes that other industries use as much, or even more, electricity than bitcoin mining does, but that those other industries have positive effects on society, whereas the “broader social benefits [of bitcoin] have yet to materialize.”

The report states that local tax income from mining firms is more than offset by energy price increases that result from the electricity demands placed on the grid by bitcoin mining.

Biden is hoping to rake in $3.5 billion in tax revenue from the DAME tax over a 10-year period.

A well-established goal of this White House administration is getting to net-zero carbon emissions, and environmental concerns have been front-and-center since Biden took office.

Whilst the report recognizes that the DAME tax might push miners into other countries with more carbon-intensive energy grids, the hope is that other jurisdictions will enact similar legislation, leaving bitcoin miners with nowhere to hide.

How Realistic Are The Stated Goals of The DAME Tax?

To put it bluntly, the DAME tax has no chance whatsoever of achieving its aims.

The tax would prevent bitcoin miners from facilitating the build-out of new renewable energy production infrastructure and make it unfeasible for them to participate in the grid-stabilizing programs they currently partake in.

In this way, the tax actually makes it more difficult, and less economically feasible, to make the U.S. energy grid net-zero through renewable energy generation.

A study by ERCOT found that building flexible load data centers, including bitcoin mining operations, actually leads to a decrease in carbon emissions, even in cases where total electricity generation increases.

This is due to the fact that bitcoin mining operations can shut down when demand becomes too high, give energy back to the grid, and act as buyers of last resort, buying up electricity that would otherwise be wasted.

Because of this, renewable energy production through wind and solar, which have intermittent periods of generation that often don’t match up with periods of demand, becomes profitable when it otherwise wouldn’t be.

By driving bitcoin miners out of the U.S. with this punitive tax, the opportunities for green energy initiatives are dramatically decreased.

The U.S. power grid is currently only 20% renewable, whereas the Bitcoin network is estimated to be approximately 60% renewable by the Bitcoin Mining Committee.

Signatories of the Crypto Climate Accords aim to get the global Bitcoin network to net zero by 2030.

At this rate, they’ll manage this impressive feat before the U.S. does.

Despite the Bitcoin network and the United States government seemingly wanting the same thing, the DAME tax is only going to make it more difficult for either one to achieve its goal.

Does The Tax Unfairly Target Bitcoin Mining?

Critics of the tax argue that it places the responsibility for the grid’s carbon emissions on the purchasers of the electricity, in this case, bitcoin miners.

Bitcoin mining uses less than 1% of electricity consumed in the U.S. every year, yet no other industry is being targeted by a punitive tax.

If the White House wants to make the energy grid more renewable, then electricity producers should be the target of legislation, not one particular industry that purchases the electricity.

Bitcoin miners often set up in rural areas, away from residential buildings, thus avoiding the “local environmental pollution” claimed by the White House.

It should also be noted that such “pollution” is limited to the noise pollution made by fans, or, in some cases, water pollution from drained coolant.

Other industries, such as manufacturing or heavy industry, cause more noise and more types of pollution, such as air pollution. Yet these industries are also not the subject of penalizing taxes.

Because bitcoin miners also set up close to the source of electricity production, they are dramatically more efficient than other purchasers of electricity because of how much energy is lost in transmission.

In this way, bitcoin miners are able to buy less electricity from producers than other industries.

This actually results in savings for other customers, not increased prices, when compared to the effects of other industries.

Bitcoin mining is actually far less damaging to the environment than is often reported, and far more useful to the goal of increasing renewable energy build-out.

In short, there is no possible justification for the precise targeting of the bitcoin mining industry by the DAME tax, which is nothing more than a sanction on miners.

Is There Any Political Opposition To The DAME Tax?

Republicans have generally been more favourable to Bitcoin than Democrats, and the tax will face its fiercest opposition in the Republican-controlled House of Representatives.

In general, Republicans have been eager to strip back Biden’s environmental initiatives, which has been a subject of hot debate in the ongoing discussion over the debt ceiling crisis.

On the Democrat side of things, presidential candidate Robert F. Kennedy Jr has opposed the planned tax.

He posted a lengthy thread on Twitter condemning DAME, arguing, “bitcoin [is] a major innovation engine. It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere.”

He went on to call the proposed tax “a bad idea” and made the case that bitcoin mining uses the same amount of energy as video games, yet there are no proposed attacks on the video game industry.

This furthers the notion that bitcoin mining is being unjustly targeted.

He also argued that the environmental argument is simply a cover to go after “anything that threatens elite power structures.”

He identified Bitcoin specifically as an example of a technology that the establishment might be afraid of, as it threatens their hegemony over monetary policy.

Additionally, he stated, “We need cash and [bitcoin] to ensure freedom” and that “a diverse ecology of currencies, not just a single, centrally controlled one”, is essential to a resilient economy.

He finished his Twitter thread by saying, “We are seeing today how fragile our over-centralized system is.”

Bitcoin advocates can hope that if Bitcoin-friendly Republicans don’t win the next presidential election, Democrat candidate Kennedy will.

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Why Your Bitcoin Transaction Is Stuck On Pending

Have you sent someone bitcoin, but they’re yet to receive it? Are you waiting to receive some yourself, but the transaction just says it’s pending? As more and more people wake up to the usefulness of Bitcoin, more and more people are going to be clogging up the network. Here’s why your Bitcoin transaction is stuck.

How Do Bitcoin Transactions Work?

Whenever someone makes a transaction on the Bitcoin network, it’s broadcast to all the nodes.

The nodes keep a full record of the entire blockchain, as well as a collection of all the transactions yet to be confirmed in a block and added to the blockchain.

This collection of unconfirmed transactions is known as the mempool.

Technically, each node has its own mempool, as well as each miner.

Miners use the mempool to prioritize which transactions they want to include in the next block, assuming they win the chance to propose the next block by finding the correct hash during the mining process.

If your transaction is stuck on “pending,” it’s because it hasn’t been included in any of the blocks mined so far.

This is probably because miners are prioritizing other transactions to include in the next blocks they will add to the blockchain.

How Do Miners Prioritize Transactions?

Miners aren’t charities; they’re businesses. They need to make money.

Besides earning the block reward (currently 6.25 BTC), miners want to maximize their revenue.

They do this by giving priority to the transactions that pay the highest fees.

If the mempool is full of unconfirmed transactions, then the block space will be full and not all pending transactions will make it into the next block.

If the number of transactions added to the mempool grows faster than what the blockchain can handle, the number of pending transactions will grow.

Miners choose to include the transactions with the highest fees. These fees are voluntary and aren’t necessarily correlated to the size of the transaction.

Someone transferring just a few sats could choose to pay a higher miner fee than someone transferring several bitcoin.

Paying the minimum miner fee will mean your transaction will always be at the back of the queue.

This means your transaction will get stuck as “pending” until the number of unconfirmed transactions in the mempool shrinks or your fee becomes high enough relative to the fees of other unconfirmed transactions for miners to prioritize. If new transactions pay higher fees than you,  your transaction could get stuck pending indefinitely, as it will constantly get moved to the back of the line.

How Long Do Stuck Transactions Stay Pending?

There is no definitive time for how long a stuck transaction will remain pending.

The mempool has a maximum size limit of 300MB. If the mempool fills to this limit, nodes will “forget” transactions with the lowest fees.

In this case, it will be like the transaction was never broadcast. Your funds return to your wallet, and you can try sending the transaction again.

Even if the mempool never fills up, your transaction can be rejected and bounce back if it takes too long to be included in a block.

This is because nodes won’t hold transactions in their mempools for more than a few days. The exact amount of time varies, and your transaction may be stuck pending for some time before either being included in a block and confirmed or rejected.

How To Make Sure Your Transactions Are Always Confirmed

There is one definite way to make sure your transactions never get stuck pending and even ensure that they always get chosen to be included in the next block.

Pay higher miner fees.

The minimum fee is based on how congested the Bitcoin network currently is and how much space your transaction will take up on the blockchain.

If you have an urgent transaction to make, you have to be the highest bidder on the fee market. A general rule of thumb is to pay priority fees or higher to ensure your transaction will make it into the next block and be confirmed quickly.

Remember, if you’re paying a higher fee than anyone else, your transaction will always be included in the next block.

Most modern Bitcoin wallets will automatically calculate the cost for the fees and give you options for economic and priority fees. There are also ways to analyze the mempool to work out the best fee to balance between keeping your costs down and getting your transaction confirmed.

You don’t have to pay the highest fee — just high enough that you aren’t constantly at the back of the line.

If the mempool is empty enough that the next block won’t be full anyway, feel free to pay the minimum fee.

But as more people start using bitcoin and more transactions get proposed, the competition to get included in the next block will only increase.If you want your transactions to be confirmed instead of getting stuck pending, you’ll want to familiarize yourself with the mempool and how to use it to determine what fees you should be paying.

How To Avoid Stuck Bitcoin Transactions

There are only three options to avoid stuck Bitcoin transactions. 

Option 1: Wait

The first one is not to avoid it and just accept it. If you are not in a hurry and don’t want to pay high fees, you can simply wait. Your money is safe, and if your transaction is not confirmed, it will bounce and be returned to your wallet. Using minimum fees is a great option if you have the time and want an economical way to send your money.

Option 2: Pay higher fees

The second option is to adjust to the fee market and pay higher fees. If the network is congested, only the highest-paying transactions will be added in the next block. If you are willing to pay high fees, this will ensure your transaction is confirmed in a timely manner.

Option 3 – Use the Lightning Network

The Lightning network is a second-layer payment network on top of Bitcoin that allows for instant and cheap transactions. You will need to pay blockchain fees to open and close a Lightning channel, but once it’s opened you can transact for very low fees. Take a look at all the custodial and non-custodial Lightning wallets.

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3 Reasons Bitcoin Will Stick With Proof of Work

Bitcoin switching from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS) is never going to happen. Ok, article over, let’s go home. On a serious note, calls for this transformation are growing ever louder and from increasingly influential sources. Here are 3 reasons these people don’t know what they’re talking about.

Proof of Work is More Secure

There’s considerable debate about this. Ethereum claims that “Overall, proof-of-stake, as it is implemented on Ethereum, has been demonstrated to be more economically secure than proof-of-work.”

Considering that this claim was made before Ethereum even fully switched to PoS with “the Merge”, and that the Merge is currently less than a year old, it’s difficult to see where the basis of this claim originates.

It should also be noted that “as it is implemented on Ethereum” is an important qualifier here, as not all PoS consensus mechanisms are implemented in the same way.

PoS is not naturally secure. It doesn’t have the intrinsic security of PoW because there’s nothing to keep it grounded in the real world.

For example, forking is naturally disincentivized by PoW because to operate on both forks, you would need to split your mining power in half.

On a PoS network, forking would duplicate your stake onto both forks, meaning you can continue to operate on both forks with no problems. This is referred to as the “nothing-at-stake” problem.

It’s also far more difficult to centralize power on a PoW network due to the fact that you need more than just capital to run a mining operation. You need the physical equipment and access to cheap electricity.

If someone else can acquire electricity at a cheaper price or has access to more efficient ASICs (mining machines), then they can produce more hashes than you can despite potentially having less capital.

A decentralized network is a more secure network because individuals have less of an ability to influence the network in their own favour at the expense of others.

Proof of Work is More Decentralized

As covered, a decentralized network is more secure than a centralized one. But security isn’t all that decentralization offers.

A decentralized network is far more censorship-resistant than a centralized one.

This is because it’s far easier for a government, financial institution, or regulatory body to exert influence over an individual or small group than a large network of individuals all over the world.

Although it has since made progress in rectifying the issue, the Ethereum network immediately saw a huge percentage of its transactions censored after the move to PoS.

It’s also the case that the SEC in the U.S. deems any coin on a PoS network to be a security, whereas Bitcoin is considered a commodity.

If Bitcoin were to move to PoS, it would immediately become a security and thus would be subject to much more intense regulation.

Decentralization is of the utmost importance to the Bitcoin mission statement. Bitcoin is supposed to be trustless, without third-party influence, and permissionless (i.e. uncensorable).

PoW networks more naturally tend towards decentralization because diseconomies of scale create ceilings to the size of the largest mining operations, giving smaller operations a chance to catch up or at least keep pace.

In a PoS network, there are no such limitations. In fact, the opposite occurs. Those with larger stakes accrue more validating rewards, thus growing their stakes, and so on.

Proof of Work Gives Bitcoin Intrinsic Value

Critics like to claim that Bitcoin has no intrinsic value. If Bitcoin ever were to become a PoS network, they might have a point.

As for right now, the PoW consensus mechanism is actually imbuing each bitcoin with genuine intrinsic value.

Something can have value for a variety of reasons. If it’s useful, desirable (attractive, decorative, a status symbol), or if we all simply agree on it, anything can have value.

However, a more concrete method of determining if something has value is by asking, what had to be expended in order to bring it into existence.

Gold has value for all these reasons. It’s useful as a store of value because it doesn’t tarnish or degrade, and also because it’s divisible. It’s attractive because it has a natural luster, a sheen. But it’s also valuable because significant resources have to be expended in order to acquire it.

We can’t just snap our fingers and produce gold. We have to dig it out of the ground and then separate it from the earth. Value has to be spent in order to get gold. In this way, gold is imbued with the value that had to be expended to produce it.

Similarly, bitcoins are imbued with the value that has to be expended by miners, firstly when the bitcoin was first mined, and secondly by the constant expenditure of miners keeping the network running.

Bitcoin has value because value (in the form of capital, real estate, and electricity) has to be spent in order to produce each bitcoin and maintain the network.

In a PoS network, none of this is the case.

To Conclude

Proof of Work provides a multitude of benefits, these simply being the largest and most obvious.

Bitcoin is not Ethereum, nor any other altcoin. Bitcoin has a goal in mind: to replace the fiat-corrupted, government-dominated, corporate-serving traditional financial system with one that’s decentralized, censorship-free, peer-to-peer, and based on a digital commodity with genuine value.

None of these things is possible with a Proof of Stake network.

This won’t stop the critics. They don’t want to learn. They don’t care about Bitcoin’s ambitions. They’ll continue repeating the same inaccurate talking points for years.

But if you hear a friend or family member repeat these talking points, these three reasons why Bitcoin will never move to Proof of Stake might help you set them straight.

The post 3 Reasons Bitcoin Will Stick With Proof of Work appeared first on Bitcoin News.

Bitcoin Recovers From Mystery Crash After False Alert

An alert on Twitter caused panic in the Bitcoin market after prices crashed 7% in just one hour. The alert stated that wallets linked to the now-defunct exchange Mt. Gox and the U.S. government had been activated, leading to speculation that a huge amount of bitcoin was about to be dumped.

Why are Mt. Gox and the U.S. Government Significant?

Mt. Gox was an exchange platform that shut down in 2014 due to losing bitcoin from customer accounts in a series of thefts.

There are still dormant accounts holding large quantities of bitcoin, and movement is expected with these accounts after some of them were activated earlier this week.

The U.S. government is also currently waiting to sell nearly 42,000 bitcoin it seized from fraudulent silk road user James Zhong. It has plans to do so in four batches by the end of October 2023.

These are both considered “supply overhangs” within the bitcoin community, as traders anticipate a dip due to the selling of large quantities of bitcoin.

Twitter user DB sent out an automatic alert that wallets associated with Mt. Gox and the U.S. government were activated, leading to the belief that large quantities of bitcoin were being sold.

Were the Alerts Accurate?

Both DB and Arkham Intelligence, the blockchain analytics firm that sent DB the alert in the first place, have since stated that the alerts were sent as the result of a bug fix.

Arkham later clarified that the alerts were not false, but they had been falsely labelled by DB. DB had set parameters for alerts that would trigger for movement of more than $10k but had not ensured they would only be associated with Mt. Gox or U.S. government wallets.

A bug at Arkham had prevented these alerts from being sent out. When this bug was fixed, DB received alerts that appeared to show that Mt. Gox and the U.S. government were moving bitcoin.

This turned out not to be the case, as blockchain explorers showed that no bitcoin has been moved from wallets linked with Mt. Gox, and any movement linked with the U.S. government has also been declared false.

Did the Alerts Cause the Price Crash?

Arkham Intelligence also claimed that the alerts could not possibly have caused the price crash, as the tweet was sent out after the crash had already reached its bottom.

“Neither the alert nor the tweet could have caused the sharp BTC price drop today, as the drop occurred between 19:17 and 20:01 UTC, and the alerts and tweet were sent afterwards at 20:07 UTC and 20:08 UTC respectively.”

The timing is certainly a massive coincidence, but it does seem that unless some traders can see one hour into the future, the tweet couldn’t possibly have caused the crash.

What did cause the crash is currently unknown, but considering the price of bitcoin has almost entirely rebounded in the hours since, traders and hodlers alike are unlikely to be too worried.

The post Bitcoin Recovers From Mystery Crash After False Alert appeared first on Bitcoin News.

El Salvador’s Volcano Bonds Could Be Explosive for Bitcoin

On 11 January 2023, El Salvador passed LIDA — the “Law of Issuance of Digital Assets” — that brought President Nayib Bukele’s dream of Volcano Bonds closer to reality. Now in April, Bitfinex has been granted the first Digital Asset license, allowing them to act as an issuer and service provider for the country’s digital assets, including the innovative “Volcano Bond.”

What is LIDA?

LIDA, the Law of Issuance of Digital Assets, establishes the legal and regulatory framework for issuing digital assets other than bitcoin. The new legislation covers tokenized securities, altcoins, and businesses that deal with these assets.

Alongside establishing this regulatory framework comes a number of benefits for individuals and institutions involved in the digital asset industry:

  • Yields and income from digital assets will be exempt from levies, duties, taxes, rates, and contributions (capital gains and normal income not taxed).
  • Issuers, certifiers, and registered digital asset service providers are exempt from VAT, income tax, municipal taxes, or any other tax, regardless of their nature.
  • In the case of legal entities, the tax benefits will apply to the partners and shareholders individually considered, with respect to profits or dividends from the aforementioned activities.

The aim of this legislation is to increase financial and technological innovation, as El Salvador aims to become the crypto hub of Latin America.

The bill also establishes a National Commission for Digital Assets. This regulatory body is responsible for issuers, service providers, and participants involved in the public offering process of digital securities.

Finally, the Bitcoin Fund Management Agency was also created. This body is responsible for the funds from the public offerings of digital assets made by El Salvador and its autonomous institutions, as well as the returns from these offerings.

What are Volcano Bonds?

Volcano Bonds, more accurately referred to as Volcano Tokens, are digital assets that act as government bonds. Essentially, this allows the government of El Salvador to raise funds for public investment.

In the case of Volcano Tokens, the “bonds” are backed by bitcoin. The goal is to raise US$1 billion through these tokens, which will go towards paying the country’s sovereign debt, building new bitcoin mining facilities, and constructing the “Bitcoin City.”

Bitcoin City is a planned build-out of urban infrastructure (schools, shops, energy, housing, etc.) in a region of El Salvador close to Conchagua Volcano. The geothermal energy from the volcano would power the city, as well as the bitcoin mining that would take place within it.

Volcano Tokens will be backed by the revenue generated from the bitcoin mining.

Some have warned that these tokens will not be attractive to potential investors.

The IMF has stated that the “legal risks, fiscal fragility, and largely speculative nature of crypto markets” makes the token a risky bet.

However, El Salvador remains bullish on bitcoin and its associated tokens.

Milena Mayorga, Salvadoran ambassador in Washington, said that “big companies” will buy the bonds.

Since the bonds are backed by bitcoin mined with geothermal energy, they ought to be attractive investments to ESG investors who are concerned with the environmental effects of their business dealings.

Bitcoin in El Salvador

El Salvador is leading the world in Bitcoin integration. In September 2021, Nayib Bukele made it the first country to adopt bitcoin as a legal tender alongside the U.S. dollar.

The goal was partly to provide Salvadorans with a hedge against inflation and to lubricate the ability to send and receive remittances from outside the country.

Although only 1.6% of the almost $8 billion in remittances El Salvador received in 2022 was in bitcoin, that still totals around $124 million.

Considering bitcoin went into a bear market in early 2022, it’s no surprise it hasn’t gained too much traction in El Salvador so far.

In 2022, 74% of the population was not using bitcoin. Although this has protected them from bitcoin’s crash in price, it has also made it a less attractive monetary proposition for Salvadorans.

The government has invested $103 million since first buying bitcoin, now holding 2,381 BTC. However, in the current bear market, this is only worth $39.4 million.

The nature of impermanent loss is that these losses will only become real once they decide the sell the bitcoin. If Bukele HODLs until the next bull market, those investments could turn out to have been a masterstroke.

While the futures of Bitcoin and El Salvador are far from clear, what is obvious is that they are closely aligned. No country has gone so far in integrating bitcoin into its financial system as El Salvador, and if they pull it off, the rest of the world will be looking to them for the future of finance.

The post El Salvador’s Volcano Bonds Could Be Explosive for Bitcoin appeared first on Bitcoin News.

Why Texas’ Anti-Bitcoin Mining Bill Is Powerless

The Texas Senate Committee has just approved Bill 1751, which places a limit on the participation of Bitcoin miners in demand response initiatives and bars them from tax abatements.

The bill was sponsored by Lois Kolkhorst, Donna Campbell, and Robert Nichols, three influential Republican state senators. It was passed unanimously, without a single vote in opposition, which Satoshi Action co-founder and CEO Dennis Porter believes was due to members of the committee being “swayed by the influence of the powerful bill sponsor.”

How Does the Bill Affect Bitcoin Mining in Texas

Bill 1751 affects Bitcoin miners in 3 key ways:

  • Miners are limited to 10% of the total participation in ERCOT’s demand response initiative.
  • Miners are no longer eligible for tax abatements.
  • Mining operations exceeding 10 MW must register with Texas as a large flexible load centre.

Demand Response Cap

Demand response is a service employed by the Electric Reliability Council of Texas (ERCOT) in which power customers can reduce their electricity consumption in exchange for credits to be applied to future electricity bills.

In this way, load centres can help balance the power grid and reduce consumption during high-demand or low-supply periods.

Bitcoin miners are flexible load centres (i.e. those who can turn off or turn down their electricity consumption on demand).

An ERCOT study found that flexible load centres don’t just help balance the power grid by participating in demand response, but also facilitate new renewable energy build-out and reduce greenhouse gas emissions.

The rationale behind capping Bitcoin miners to 10% of the total participation is not well understood. Satoshi Action had the following to say:

“We do not know the logic behind the arbitrary 10% number other than that miners are so good at participating in this program that it may be out-competing other industries to the extent that they may be lobbying the government to limit our industry’s ability to participate.”

Satoshi Action also stressed that ERCOT should be looking to add more flexible load to its grid, not less, on the basis that it improves the reliability and reduces the cost of maintaining the grid, saving ratepayers money.

When asked how this 10% limit helps the Texas grid or Texas as a whole, Dennis Porter responded, “It doesn’t benefit the grid or Texans.”

Bitcoin Miners Barred from Tax Abatements

Cities, counties, and special districts in Texas are allowed to offer tax abatements to industries in order to “attract new industries and to encourage the retention and development of existing businesses through property tax exemptions or reductions.”

There is no legislation on which industries can be awarded these tax abatements or not. If Bill 1751 passes the next stages and becomes law, that will change, as Bitcoin miners will no longer be eligible for them.

Considering Bitcoin mining operations are not the largest benefactors of these tax abatements, and there are currently no plans to bar any other industries from receiving them, Dennis Porter considers the bill to be “clearly targeted, discriminatory, and anti-competitive.”

When asked why miners should be ineligible for tax abatements enjoyed by other industries, Dennis Porter commented, “That is what we are saying. There should be equal treatment.”

About the rationale behind why miners are being unfairly targeted, he said, “We do not know, we can only assume that other industries want to see miners restricted from competing because we are eating their lunch.”

A New Registry for Large Flexible Load Centres

The bill will require all flexible load centres above 10 megawatts to register with the state. They must also provide the location of their facility and the expected electricity demand over the next 5 years from the registration.

This doesn’t appear to apply only to Bitcoin miners, but to all flexible load centres above 10 MW, making this the only part of the bill that isn’t discriminatory.

Other than adding a layer of bureaucracy, it’s unclear what this part of the bill aims to achieve.

What’s Next for the Bill?

Because it was passed unanimously, Bill 1751 is extremely likely to pass swiftly through the Senate and onto the House of Representatives.

Dennis Porter and Pierre Rochard of Riot Platforms spent 8 hours at the capitol in Austin, Texas to speak to 18 offices, educating them on the problems associated with the proposed legislation.

The Satoshi Action Fund is currently on a mission to educate lawmakers and representatives to ensure that they know what questions to ask in the next round of discussion.

The Fund is also preparing to lobby the governor to veto the bill should it get that far.

Why is There Opposition to Bitcoin Mining

Bitcoin mining comes under a lot of flack because it uses a Proof of Work (PoW) consensus mechanism, which uses an ever-increasing amount of electricity to provide security to the Bitcoin blockchain.

PoW continues to be a hot subject for legislators and campaigners surrounding the Bitcoin industry. Its energy-intensive nature has made it a target for environmentalists, and many are calling for a move to Proof of Stake (PoS), which uses a tiny fraction of the electricity of Proof of Work.

However, there are no plans for Bitcoin to move from PoW to PoS as Ethereum did. Considering Bitcoin is far more decentralized than Ethereum, with no clear leaders in programming or coding developments, it’s not even clear that such a switch would be possible. It certainly wouldn’t be easy.

As for whether or not it would even be a good idea, there are good reasons to believe Bitcoin is better off with PoW. The PoW consensus mechanism:

  • Creates diseconomies of scale that limit the centralization of mining operations.
  • Secures the blockchain with computational power, making bitcoin “energy-backed money.
  • Disincentivizes fraudulent activity, such as forking, through game theory.

Many so-called “experts” (usually finance and economics experts, not blockchain or Bitcoin experts) have called on Bitcoin to move to PoS. However, these “experts” never provide any indication that they understand the benefits of the PoW mechanism.

Dennis Porter told me, “We should always be educating, especially on the benefits of Proof of Work.”

Punitive Legislation Will Not Stop Bitcoin

When asked if miners will move out of Texas if the bill is passed, Dennis Porter assured me, “Miners won’t move, but it could dramatically cool off future growth.” As for whether miners might cool off the U.S. as a whole if other states pass similar legislation, “No, it will just slow growth in Texas. There are many other opportunities in the USA.”

Andrew Myers of Satoshi Energy states that, if passed, “these bills will not end bitcoin production in ERCOT because demand response revenue is only one part of reducing total energy costs.”

Reducing energy costs is essential for bitcoin miners because “the profitability of bitcoin production is driven by the value of bitcoin produced relative to the all-in cost of energy.”

“We continue to see growing demand for projects that can utilize low-cost excess renewable energy from wind and solar.”

Myers is clearly hopeful that Bill 1751 will not put much of a damper on mining operations. “We look forward to ongoing work with ERCOT market participants to enable a reliable, low-cost Texas power grid.”

It seems that whether the bill passes or not, bitcoin mining in Texas will live on. Currently, Texas is the jewel in the American crown when it comes to bitcoin mining. However, it could well be that new mining operations start looking at other states if the bill does become law.

Whether in Texas or elsewhere, the march towards bitcoin dominance continues.

The post Why Texas’ Anti-Bitcoin Mining Bill Is Powerless appeared first on Bitcoin News.

Warren Can’t “Throw Darts” At Bitcoin Because It’s Just Code

An interview Elizabeth Warren did last year with NBC News is doing the rounds on social media as bitcoin advocates mock her for saying art is more valuable than bitcoin because “I can throw darts at it.”

Warren is back in the news as her war on Bitcoin continues. With new legislation in the pipeline that would put huge regulatory burdens on anyone involved with bitcoin business, Warren is once again the target of discontent from Bitcoin advocates. 

An interview she did with NBC News a year ago has resurfaced and is doing the rounds on social media as it highlights her apparent misunderstanding of what Bitcoin is and where its value comes from.

Warren blasts Bitcoin as speculation

Speaking to NBC News in April 2022, Democrat Senator Elizabeth Warren made the case that buying bitcoin is no different to “buying air.” She made the case that it’s purely speculative. People buy bitcoin because they hope the price will go up so they can sell it later on for a profit.

“There’s no thing that backs it up… it’s just belief.”

In Senator Warren’s mind, bitcoin must have no actual value because it isn’t backed by a government or physical commodity.

She likens bitcoin to the 2008 housing crisis, where a credit bubble led to a collapse in the world financial system. As far as Warren is concerned, bitcoin is a speculative bubble supported only by confidence.

Her opposition to the digital hard money is, supposedly, to protect consumers from the danger of that bubble bursting.

Government is as good as gold

It’s also clear from her statements that she believes a government promise to be as good a backing as a physical commodity. A “government promise” is a “thing of value”, as far as she’s concerned.

So whilst U.S. dollars aren’t backed by any physical commodity, such as gold, they are still inherently valuable because the U.S. government backs them.

What she actually means by “backing” is unclear. If everyone decides not to use U.S. dollars anymore, no amount of “government promise” is going to change the fact that those dollars won’t be worth the paper they’re printed on.

She states that bitcoin is only backed by the confidence of its buyers, but appears to believe that the power of the state is enough to provide value to the dollar. However, if confidence in the government itself fails, where then does the dollar stand?

Clearly, the dollar is also only supported by confidence, except it’s even worse for the dollar than for bitcoin. With bitcoin, the confidence is based on math, the verifiable issuance rate, the hashpower turning energy into digital scarcity, and in the network itself.

Confidence in the dollar exists by proxy through the U.S. government.

As the dollar’s value decreases due to inflation, people will spend it as quickly as possible but won’t want to save it. Bitcoin, on the other hand, is mostly hoarded rather than spent. This is Gresham’s Law, that bad money drives out good money because people want to spend money that has less long-term value and hoard money that has more.

Thiers’ Law works in reverse. Good money will drive out bad money because noone wants to accept the bad money anymore. This happens when a currency becomes nearly worthless due to hyperinflation. If this happens with the dollar, people will simply stop using dollars.

In that eventuality, bitcoin might replace the dollar since it has long-term value that doesn’t decrease due to inflation.

Warren believes Bitcoin doesn’t solve problems, proposes CBDCs instead

Warren acknowledges that commercial banks have failed customers over the years. Considering her position as a progressive Senator in favour of more and more financial regulation, this isn’t surprising.

Her anti-bitcoin stance makes her proposed solution even less surprising: Central bank digital currencies.

Warren states that the only “problem” bitcoin can solve is the issue of sending money internationally in a fast, frictionless way.

She proposes CBDCs as an alternative since they fulfil her gold standard (almost literally) of being “government-backed”.

To Warren, there are no benefits to a payment system that is decentralized, peer-to-peer, immutable, transparent, and with its own globally liquid currency. Remember, Warren believes that bitcoin is a Ponzi scheme. It’s only valuable because people keep buying it.

If we ignore its use cases as a hedge against inflation in Venezuela, streamlining supply chain costs in Nigeria, or facilitating renewable energy build-out in Texas, Warren’s argument is almost believable.

CBDCs are certainly gaining traction worldwide at the bureaucratic level. 100 countries are currently at some stage of researching and developing them. However, they are not being widely adopted, with only a few examples across the globe.

Opposition to the concept of a digital currency controlled completely by the central government is fierce, and private digital currencies, such as bitcoin, are far ahead in terms of adoption and public acceptance.

As Warren herself admits, people don’t want the government to have such control over their money. CBDCs are a massive threat to personal autonomy and privacy. Warren, however, invokes the argument that if you have nothing to hide, you have nothing to fear.

What’s backing bitcoin?

Despite Senator Warren’s assertion that buying bitcoin is less useful than buying a painting (“I can throw darts at [a painting]”), bitcoin is backed by just that: its usefulness.

Pyramid schemes come and go, they don’t last 14 years and counting. If all bitcoin had to back it up was belief from a few gullible people, it would have collapsed by now.

As a store of value, Bitcoin rivals gold (and wins). As a remittances payments system, it’s more accessible than any other currency on the planet with superior network effects compared to proprietary remittance services. It’s freer than any other payments network, existing outside the control of a corrupt or inefficient centralized authority.

By removing third parties, bitcoin is cheaper and more efficient than traditional finance. By maintaining pseudonymity, bitcoin retains the privacy of physical cash whilst enjoying the “fast and frictionless” perks of digitized currency. By being accessible to anyone with an internet connection, bitcoin provides financial services to those left out of the traditional, centralized banking system.

Bitcoin has value because it’s useful. That’s what backs bitcoin.

If it stops being useful, people will stop using it, people will stop buying it, and its price will crash to zero. Or near zero to be precice, since hascash inventor Adam Back still has a running buy order for 21M Bitcoin at $0.02.

I don’t see that happening. Clearly, Elizabeth Warren agrees. If Bitcoin becomes nearly worthless and nobody uses it, what reason could she have to want to regulate it? Of course, if Bitcoin is very useful, and therefore becomes very valuable, then having control over it would put regulators in a very powerful position.

Does Elizabeth Warren want to regulate something she thinks is useless, or does she want power over something she thinks people are going to start adopting as the dollar drops?

The post Warren Can’t “Throw Darts” At Bitcoin Because It’s Just Code appeared first on Bitcoin News.