“If we can get these people beyond survival mode, then they won’t have to choose between renting a child out for the night and feeding the others,” Richard Swisher, Motiv President told me in an interview. He offered that bitcoin is helping do just that.

Motiv is a nonprofit working to empower communities and reduce dependencies with bitcoin. Their goal is to drive economic independence in underserved communities. In doing so, Swisher says that these efforts will reduce vulnerabilities in the area.

According to analysis provided by The World Bank, 70% of Peruvians are either poor or at risk of falling into poverty. Between 2004 and 2019, poverty fell 66% due to strong economic growth. Poverty rates have since increased 26%, largely due to the Covid-19 pandemic fallout.

Peru is now experiencing poverty risks not seen since 2004, putting large swaths of their populations in a vulnerable state. According to a 2019 Reuters report, Peru has become a hotbed for human trafficking in the face of increased pressure from economic shortfalls.

The article states that poor and hungry girls and women are most likely to become victims of sex trafficking in Peru. These individuals are typically lured in by false offers of free travel and well-paid work as waitresses, dancers, or cooks. Desperation in areas like this, driven by poverty induced vulnerabilities, are a significant concern for countries across the region.

Building Communities With Motiv

Swisher said his journey started when him and a friend discovered a nontrivial percentage of kids in a Peruvian village were dying from exposure due to inadequate foot ware. “If it wasn’t so cheap and easy, we probably wouldn’t have done it. $2500 solved the entire thing,” he said about the start of Life Saving Steps, the program that preempted Motiv.

After the kids received quality shoes however, Swisher noted a positive feedback loop in the community and economy. Kids could now stay in school. They were also able to provide more help with agricultural work in the mountains, fixing the village’s food shortage. Shortages soon turned to surpluses, allowing the village to bring food to market, increasing net economic activity in the village.

Motiv is now focused on empowering individuals in order to improve communities. The program includes education on health and life skills, with an emphasis on entrepreneurship, according to Swisher. Their target population is predominantly women, especially mothers, as a means to improve the lives of the children in the area.

Students will receive scholarship money in bitcoin and use that bitcoin to pay for classes on entrepreneurship. Swisher claims that making the women pay for their classes results in them being more engaged. “We want them to realize that things of value are not given to you,” he added.

He described a skeptical woman who now has her own baking business after participating in the program. She was then able to expand her house, and added a wall to protect kids, allowing them to play outside safely.

Swisher also spoke about a rural pizza maker who was able to invest in a portable oven. Their business has now expanded into a traveling catering service. The ability to serve more wealthy clients outside of the village has positively impacted the entire community.

In remote villages like the ones Swisher works in, people may not have any way to prove their age or citizenship. This makes the traditional banking system unrealistic for many in the area.

By leveraging bitcoin, Motiv is able to create burgeoning economies in un-bankable areas of South America. “People are realizing the impact is beyond finance; it’s changing their minds about the future outlook,” Swisher concluded.

Bitcoin Is Spreading In Latin America

Bitcoin focused journalist Joe Hall has spent the past few weeks in Peru, exploring some of the communities which Motiv has impacted. “People with no hope and awful economic opportunity are using a tool that connects them not only to their local communities but globally,” Hall said about his experience.

Hall has been documenting bitcoin’s impact in Latin America on his YouTube channel. In September, he published a short documentary on bitcoin usage unfolding in Cuba. Though bitcoin is often characterized as a speculative risk asset in the West, it is increasingly considered a lifeline for those experiencing high inflation and government instability.

In countries like Argentina, bitcoin has already surpassed it’s 2021 all time high when priced in the Argentine peso. Unsurprisingly, prominent Artentine Presidental hopeful Javier Milei is a staunch bitcoin supporter. According to U.S. News, Milei is leading in the most recent election polls, a sign the Argentine people are opening up to change.

Though bitcoin remains volatile, educators like Swisher and Hall remain optimistic that their grassroots efforts will continue to make a positive impact. With El Salvador already recognizing bitcoin as legal tender in their country, it may be only a matter of time before other Latin American countries follow suit.

Grayscale Offers A Lot More Than Bitcoin

With the approval of a spot bitcoin ETF in the U.S. becoming increasingly likely after digital asset manager Grayscale won a massive court victory over the Securities and Exchange Commission, investors are debating whether the time is right to purchase GBTC, shares of the firm’s closed-end bitcoin trust, which it wants to become an exchange-traded fund. These shares, which trade at an 18.94% discount to net asset value, could represent an intriguing short-term buying opportunity if GBTC is allowed to turn into an ETF (which removes the discount) in a few months.

However, GBTC is not the only product offered by Grayscale that is trading far away from NAV. The firm offers similar trusts that provide exposure to assets such as ether, ether classic, zcash, horizen etc, that are trading at ranges from premiums above 600% to discounts as large as 47%, which could be interesting to investors.

Key Background

GBTC, launched in 2013, is the world’s oldest and most popular digital asset investment vehicle with $16.2 billion worth of bitcoin under custody.

Grayscale offers 14 single asset trusts plus three diversified products, which means that only accredited investors and institutions can create shares with the firm. After a period of six months for products such as GBTC and ETHE, and 12 months for others, shareholders can sell their assets on OTC markets to anyone.

GBTC traded at a premium above 100% years ago and stayed at 30% from the period between 2019-2021. However, it flipped to a discount in early 2021, shortly after the first bitcoin spot ETF was approved in Canada, providing more advantageous fees and price tracking than GBTC. Since then, competing ETFs have been launched in Australia and Europe, making GBTC’s construct seem antiquated and restrictive.

After the announcement of Grayscale’s recent lawsuit win against the SEC’s ETF decision, the discount on the GBTC exchange traded product narrowed from 29% to 17%, a sign of optimism from markets that the ETF is one step closer to approval.

Outlook and Implications

The outlook for these products depends on a few items, starting with the current stage of the market cycle and a historical assessment of how well each trust has correlated with the spot market of the underlying asset. The record is mixed, with Grayscale products having much higher volatility (beta) with their underlying assets, even if directionally they move in similar directions, as depicted on selected charts provided by Grayscale’s website.

There are other a-cyclical factors to consider, such as regulatory clampdowns. The Financial Times reported in July that the SEC asked Coinbase to halt trading in all cryptocurrencies other than bitcoin prior to suing the exchange. Such steps could depress demand for these tokens, and every asset listed at Grayscale is available for trading with Coinbase. The exchange is fighting the SEC, but other firms such as Robinhood have started to delist assets, including Solana, which is offered by Grayscale. Congress also is trying to create comprehensive legislation to provide regulatory clarity, but the short-term outlook is unclear.

Finally, any additional price movement for a trust with its underlying asset could depend on the likelihood that Grayscale will be able to convert it to an ETF. ETHE seems to be the only near-term candidate right now, as applications are currently pending before the SEC from other issuers for spot and futures ETFs. In fact, Grayscale just applied for permission to trade a second ETF based on futures, this time based on the Securities Act of 1933, which is primarily used to authorize commodities based products to complement an application filed under the more common Investment Company Act of 1940. While this progression may not last forever, the fact that no other assets even have pending applications before the SEC suggests that it will take a long time for virtually every other Grayscale trust will take multiple years to return to NAV.

Decision Points

Investors should use caution in trying to take advantage of Grayscale premiums or discounts over the short term given the regulatory uncertainty. This is particularly true to trusts with high premiums that trade on relatively thin liquidity. Be particularly cautious of Filecoin and Solana’s trusts. As you can see in the first chart, their AUMs are $300,000 and $2.1 million respectively. GBTC has $16.2 billion under management, making it much more liquid.

Furthermore, the Filecoin product’s performance has a low correlation with the underlying asset and trades less than 2,000 shares per day. In other words, the fact that these trusts are so illiquid explains why they trade at nosebleed premiums.

In addition, Solana and XLM have been on wild rides recently. XLM surged on the back of it being a close substitute to XRP, the native token of the Ripple protocol that received a favorable judgment over the summer from a federal judge in its suit against the SEC. Solana has been resurgent this year following a collapse at the end of 2022 due to its close affiliation with Sam Bankman-Fried. Both could be candidates to revert back to the mean.

Regarding assets that trade at discounts, it is important to note that unlike holding assets directly, Grayscale shares are not able to provide yield through decentralized finance protocols or staking activities that can cut into the potential benefit of the discount.

Finally, ETHC is an asset to be particularly cautious about given its anemic level of activity compared to Ethereum. It is also important to note that Grayscale’s parent company, Digital Currency Group, is a strong backer of Ethereum Classic. In fact it owns 20% of the shares in ETHC, which is one of Grayscale’s largest products with $175 million in AUM. Given the company’s financial troubles due to the bankruptcy of its lending arm Genesis Global Trading, there could be added downside pressure to any Grayscale shares owned by DCG, including GBTC.

If you invest in any of these tokens, purchases should be made with the expectation of holding them for years for the discount to pay off. Of course, in that situation you will also have to take into account the potential for further regulatory clampdowns, foreign ETF competition, and future underperformance when compared to bitcoin as a benchmark measure.

“[Bitcoin’s] going to grind up to replace gold… but there are three things that cause a massive acceleration… they take us to $5 million a coin,” MicroStrategy
MSTR
Executive Chairman and Founder Michael Saylor said in a 2021 interview.

Those three things Saylor referenced were the approval of a spot bitcoin ETF, a change to fair value accounting for bitcoin balance sheet holdings, and increased prevalence of bank custody and collateralized lending.

As the previous MicroStrategy CEO, Saylor spearheaded the effort to add bitcoin to the company’s balance sheet in the fall of 2020. The nascent digital asset is now the company’s primary reserve asset. At the time of writing, MicroStrategy now holds 152,800 bitcoin, worth nearly $4 billion.

Interestingly, the criteria laid out in Saylor’s interview are starting to come to fruition. With Jay Clayton, former SEC Chair claiming the inevitability of a bitcoin ETF approval, let’s take a look at the other two conditions laid out in Saylor’s bold prediction.

Fair Value Accounting

Bloomberg Tax reported a recent change to the way bitcoin is treated with respect to accounting rules. In the past, bitcoin had been treated as an intangible asset which forced companies to capture losses but prevented marking gains to market as the price recovered.

The new rules proposed provide for fair value assessments, allowing companies to mark their holdings to market, which allows for capturing gains in price. This development is significant because it no longer treats the volatile asset punitively with valuation adjustments for price declines only.

According to Greg Foss, an institutional market veteran turned bitcoin advocate, the prior treatment was unfair. “Not being required to mark your book to market when there is a fluid, liquid reference punishes stakeholders,” Foss told me in a short discussion about the development.

“When a liquid market exists, the value of assets should be recorded accurately, for fair market evaluation and interpretation,” Foss concluded. Though the rule does not come into effect until 2025, companies have the option to start applying them early. This development could lead companies to look more closely into adding bitcoin to their balance sheets to capture positive price action.

Banking and Lending

Big banks are starting to demonstrate interest by jumping into the custody game. CoinDesk reported last week that Deutsche Bank has partnered with fintech platform Taurus to provide custody for bitcoin and crypto assets.

According to the CoinDesk article, Deutsche Bank global securities services head Paul Maley thinks the cryptocurrency space will likely become a priority for investors and institutions and expects the market cap to grow into the trillions of dollars.

With Coinbase’s recently announced institutional lending service, the tide may be turning with big money interest in the space. The Coinbase product has already garnered $57 million in investments according to a report from Reuters earlier this month.

Custodial structures however may still give investors pause. In 2022, Coinbase experienced some controversy surrounding its customers’ characterization as unsecured creditors. Details came out following unfounded rumors of a potential Coinbase bankruptcy amid the 2022 market turmoil.

Custodia, a Wyoming-based Special Purpose Depository Institution is looking to change the custody game for institutions. “SPDI’s are required to be fully reserved. They do not allow for lending of fiat on deposit.,” Lisa Hough, Vice President of Strategic Relationships at Custodia said in our interview.

Hough added that customer digital assets, like bitcoin, are held in a bailment, meaning assets remain under the legal ownership of depositors. Custodia appears to be targeting bitcoin and crypto businesses with their banking services, however, their digital asset custody structure is something that may help traditional businesses feel more comfortable entering the space.

Macroeconomic Mixed Signals

Some are predicting an imminent Fed policy pivot in the face of a quietly simmering regional banking crisis. The increased liquidity would be a boon for bitcoin as it moves towards its halving.

Every four years, the amount of newly issued bitcoin is cut in half, a condition which is widely believed to precipitate bull markets. Macro analysis from The Bitcoin Layer, however, paints a stark contrast to the bullish conditions spelled out above.

“Cuts are simply a hope right now,” Nik Bhatia, business economics professor and founder of The Bitcoin Layer told me in an interview. He cited relatively healthy credit markets and a still growing economy as key metrics for this opinion.

Bhatia says that the Fed risks its reputation by pivoting too soon, especially with the recent rise in inflation. He assessed the probability of a pre-halving policy rate cut at 20% to 25%.

Though Bhatia does expect eventual rate cuts, the sentiment surrounding its pre-halving timing are not realistic in his opinion. Considering the macroeconomic environment, investors may have to wait a bit longer for liquidity conditions to improve before experiencing price action even close to Saylor’s prediction. Only time will tell.

Merchants could soon be paying an extra $502 million annually in payment processing costs according to a recent article by The Wall Street Journal. The reporting predicts that merchants will pass along at least some of those costs to consumers, an unfortunate development in the face of rising inflation.

The WSJ article also mentioned that more small businesses are beginning to offer discounts to shoppers who pay by debit card, cash, or check. Amboss, a bitcoin Lightning Network service provider is working to add bitcoin to that list.

“Business owners are only just beginning to understand the potential for Bitcoin’s Lightning Network, with Lightning reducing fees by 99%,” Amboss co-founder and CEO Jesse Shrader offered in a discussion about their developments.

The Lightning Network is a second layer built on top of bitcoin that facilitates instant and cheap payments. According to Amboss data, the average lightning fee is .003%. This stands in stark contrast to the 1.5% to 3.5% fees credit card companies typically charge, according to data from Bankrate.

Amboss just announced the release of a new product called Hydro. Hydro will automate liquidity on the Lightning Network, making it easier for businesses to set up and manage Lightning payment infrastructure. By eliminating the need for credit, Shrader is confident the fee savings will incentivize greater acceptance of bitcoin as a medium of exchange.

“Lightning helps accelerate the movement of bitcoin to a speed that’s more appropriate for daily use,” Shrader concluded in our interview. Shrader is optimistic that through making Lightning easier, more businesses will be willing to accept those payments as a strategy to cut costs.

Other companies have expressed recent interest in the Lightning Network as well. Coinbase CEO Brian Armstrong posted this week about plans to integrate lightning into their platform.

Prominent bitcoin advocates like Jack Dorsey have been critical of Coinbase’s reluctance to do so, but it seems the pressure has finally paid off. Bitcoin bull and Ark Invest CEO Cathie Wood noted in a recent post that Coinbase’s integration with lighting will give access to 100 million users. A significant development that may help bolster the trajectory of Lighting adoption across the globe.

“A retired fire chief I know used to say that the best part about being a firefighter, is we get the opportunity to change the way the story ends,” Dom Bei told me in our interview.

Bei is a Santa Monica firefighter turned bitcoin advocate who is now working with pension funds to incorporate bitcoin into their investment strategies.

Bei assisted the Santa Monica firefighter union in becoming the first union to ever collectively self-custody bitcoin. He is now turning these efforts into Proof of Workforce; a nonprofit Bei created to support bitcoin education for blue collar workers and pension funds.

His efforts have also expanded into the podcasting realm. In addition to being a regular guest speaker on the Cafe Bitcoin Podcast, Bei has also spearheaded the effort to create The Nakamoto Gauntlet podcast.

The Nakamoto Gauntlet podcast is a live discussion between bitcoin advocates and portfolio managers as they explore adding bitcoin to their investment.

They leverage the Nakamoto Portfolio, an open-source tool created by Swan Bitcoin’s CIO, Raphael Zagury. It allows portfolio managers to analyze the impact of adding bitcoin to their portfolio.

Bei believes that the next wave of bitcoin adoption will come from large institutions like pension funds. To ensure longevity in this endeavor, education of the participants of these institutions will be more important than ever.

He remains optimistic that bitcoin adoption will only continue to grow, and that as the market cap expands, more pension funds will be able to invest.

Blue Collar Bitcoin Advocates

“We think Bitcoin should be, at the very least, a small part of every portfolio, and that it may be especially important in the decades to come for our demographic,” Dan and Josh told me in our interview, expressing the importance they place on the nascent asset.

Dan & Josh are firefighters and paramedics who work together in Illinois. After their passion for economics led them to bitcoin, they decided to start the Blue Collar Bitcoin Podcast in 2021 to help educate others.

“Our overall mission is to assist in educating the everyday investor, wage earner, and entrepreneur regarding economics, finance, and… bitcoin,” they told me in our interview, explaining the intent behind their podcast.

Their weekly podcast centers on economics, finance, and the bitcoin protocol and network. Blue Collar Bitcoin also records a monthly Bitcoin Basics Series which may be helpful for those just beginning to learn.

“Like many podcast stories, we started with just a few of our buddies listening and we’ve scaled to what we’ll call medium sized, with about 50,000 listens a month,” they said about their growth. To date, Dan and Josh have produced 126 episodes.

Pensions In Distress As Interest Rates Soar

Current monetary policy may be taking its toll on the financial security of blue collar workers across the world. Bonds and interest rates have an inverse relationship. The higher interest rates rise, the lower bond prices go, depressing one of the key assets held by pension funds.

Nearly one year ago, the Bank of England executed emergency measures to prop up bond prices in the wake of a pension crisis. Eventually the treasury announced that they would “fully indemnify” losses, in an attempt to stem the bleeding.

The domestic situation appears less dire, but there may be issues developing beneath the surface. “As things stand today, the five state pension systems collectively have… a staggering unfunded liability of $139 billion,” Ralph Martire stated in an August article published by the Chicago Sun Times.

“Bitcoin sits in a position to help workers all over the world by changing the way our financial story ends,” Bei concluded. Advocates like Bei and the Blue Collar Bitcoin team hope that as bitcoin grows, pension funds and blue-collar workers will be able to turn to the asset as protection against future uncertainty.

“Think about how since 1923, the majority of our books have been written, majority of knowledge about astronomy gained, majority of human population have been born,” bitcoin advocate Luke Broyles said in our interview. His observations reference the exponential growth in economic and societal development over the past 100 years, but according to Broyles, this is just the beginning.

Broyles works for The Bitcoin Advisor, a company that assists individuals with bitcoin self-custody. He explained in our interview how bitcoin is fundamentally changing the relationship between property rights and legal jurisdictions.

“Three keys on three continents under three jurisdictions means this asset is unlike anything ever before,” Broyles said about the custody structure that their company provides.

Bitcoin allows for multi-signature wallet structures, requiring multiple digital signatures to approve an outbound transaction. By geographically distributing the keys, holders are able to add a layer of security through jurisdictional diversification.

Boyles also commented on the ability to “time lock” bitcoin, removing it from the jurisdiction of present to sometime in the future. “For all useable purposes, it is the first asset that can be teleported into the future,” Boyles concluded.

The unique characteristics that Broyles describes are why he thinks that the money of 2023 will not survive the transition into the future.

Crowdfunding Reimagined

Another example of bitcoin’s growing utility is the ability to raise funds for causes instantly from around the globe, circumventing banking restrictions and censorship regimes.

Geyser Fund has been operational since November 2022 and is doing just that. To date, Geyser has facilitated over 24 BTC, or $600,000 in crowdfunding according to data provided in our interview.

“The cool thing is that 50% of contributions come from non-crowdfunded regions of the world, and 40% of projects also lunched from there,” Geyser said about their demographics. According to their estimates, companies like GoFundMe, are excluding 85% of the world’s population, something that Geyser intends to fix.

Broyles is also leveraging this technology to raise funds for a documentary titled The Case For Bitcoin. While Broyles has used traditional methods like GoFundMe, the bulk of the funds have originated from his Geyser Fund efforts, with over 250 contributors from around the world.

A New Take On Social Networking

The Orange Pill App is bitcoin centric company paving a way for a different kind of social media. “We refer to OPA as a social network rather than social media because it’s entirely focused on real life connections,” Brian De Mint, OPA’s Cheif Marketing Officer offered in our interview.

According to a post from De Mint, social media users provide up to $32 worth of data per day to big tech firms like Meta and X, which these companies sell in order to remain profitable. OPA has taken the opposite approach to traditional social media by charging users to join the network.

In doing so, De Mint says they’re able to filter out spammers, scammers, and bots, creating a flourishing ecosystem for building relationships. He said this quality over quantity approach has worked well, with the app experiencing 700% growth year to date.

Organizations like the Intention Alliance are also looking to fix current social media incentive structures. Intention Alliance allows participants to opt in to adverting through providing their intentions. After providing intentions, users are able to earn money for interacting with advertisements.

The efforts will be focused on decentralized social media platforms like NOSTR, with payments fulfilled with bitcoin. According to Tania Lea, a bitcoin business developer associated with the project, the Intention Alliance is already in talks with companies like Walmart and Oxxo, the largest chain of convenience stores in Latin America.

This impact on the way that individuals are able to custody their wealth, build communities, and turn the tables on modern advertising models are trends that are only beginning to shape the way the future looks.

“It has taken us 4,000 years to bring property rights to 1.5 billion people in the year 2023. Bitcoin could easily triple that number to 4.5 billion in the next few decades,” Broyles concluded. He remains optimistic that the positive impacts of these nascent technologies are only just beginning.

“What makes Texas different than the rest of the world is that Texans love freedom, and so do digital asset bulls,” Texas Senator Ted Cruz said in our interview about the growing role of bitcoin in the Texas economy.

He said that he was especially bullish on bitcoin because it enhances freedom by being uncontrollable. Senator Cruz believes this is the characteristic which has triggered governmental resistance, referencing China’s bitcoin ban as an example. Bitcoin’s uncontrollability is achieved through the way the network is secured.

The Bitcoin Network is secured through proof of work where a geographically distributed network of computers expend energy in order to solve a cryptographic puzzle. This method was intended to serve as a fair issuance mechanism. As an open-source software and network, anybody is free to opt into the network and contribute their computing power.

In return for contributing computational power to the network, these computers are rewarded with the newly issued bitcoin, as well as the transaction fees for propagating confirmed transactions across the network.

While some may criticize the amount of electricity consumed, the Bitcoin Network has unique attributes which are providing some positive externalities in the energy sector.

Grid Balancing and Demand Response

“Texas is a hub for jobs, innovation, and freedom, and those things make it the natural oasis for the digital asset industry worldwide,” Senator Cruz said in our interview, alluding to the drastic growth of bitcoin mining in his state due to inexpensive and abundant electricity.

Senator Cruz spoke to the positive benefits bitcoin mining is having on the Texas grid this week on Fox News Radio. Cruz said that bitcoin mining can operate like a battery, describing bitcoin miner’s role in demand response programs.

Bitcoin miners are able to monetize the excess capacity that would go to waste on an average day, but that capacity can be curtailed in seconds, releasing the energy back to the grid when needed.

“It’s essentially an emergency reservoir of power. I think that’s one of the tools we can utilize to enhance resiliency in the grid,” Cruz concluded in the Fox interview.

The emergency reservoir was on full display this August as Riot, a large bitcoin mining company in the state curtailed 95% of their power consumption in order to release power back to the grid during a recent heatwave.

Bitcoin miner electricity consumption allows for an economically viable way to keep excess capacity on line that may only be needed occasionally throughout the year.

Bitcoin Is Revitalizing Rural America

Marty Bent, co owner of Standard Bitcoin host of the TFTC podcast spoke optimistically about bitcoin mining’s ability to fill the gap left in the wake of manufacturing globalization. “We target areas with falling population rates and look for substations that were once servicing manufacturing facilities that have left,” Bent said in our interview about the company’s electricity procurement strategy.

In doing so, Bent says that their operations are able to monetize the excess energy and keep rates lower for the consumers in those areas.“There are [energy] companies starting to reach out to us, and I think that will become an underlying theme of on grid mining,” he continued.

Bent also spoke to the impact of their off-grid operations capping stranded and abandoned oil wells, which mitigates methane emissions. “Bitcoin mining ensures wells are being maintained and ensures they’re producing value,” he said.

Senator Cruz is optimistic about the potential environmental and economic impacts of bitcoin mining as well. “Half of the natural gas being flared in the U.S. is burned in West Texas because we don’t have the pipelines and necessary infrastructure to use it. This is wasted energy,” he told me.

Cruz said that we can kill two birds with one stone and help the environment by reducing flaring and capturing this wasted energy to power on-site bitcoin mining.

CleanSpark, another mining company has put the economic and social impacts front and center in their business models. According to CleanSpark Data, during the first six months of 2023, they have delivered nearly $3 million in sales tax revenues to small towns in Georgia.

“City officials have told me that these funds are going to remodel schools, support parks, and build out city amenities and other infrastructure improvements,” says CleanSpark Chief Communication Officer Isaac Holyoak​.

In addition to tax revenues, CleanSpark has created jobs and directly invested hundreds of millions of dollars into rural communities. Investments include funding projects from substation improvements to power line and pole replacement.

The arrival of bitcoin miners in these towns has an economic boon for the region. As bitcoin miners pursue cheap energy and infrastructure development, it might just be the economic incentive that revitalizes the Rust Belt and rural America.

If you’re concerned that you’re late to bitcoin, insights from The Bitcoin Layer and Trammell Venture Partners tells a much different story. Something that may be lost on relatively stable western nations is that despite price action, bitcoin has been a lifeline for citizens experiencing unstable currency regimes.

“Trading bitcoin as if it were the Nasdaq is a luxury reserved for people in countries with stable currencies,” Nik Bhatia and Joe Consorti said in April edition of their Bitcoin Layer newsletter. Bitcoin use has continued to grow in these countries depsite the bear market.

According to TBL’s newsletter, nearly one in three citizens of countries like Argentina and Nigeria now own and use bitcoin regularly. It also discussed a recently published research report by Trammell Venture Partners, a bitcoin focused venture capital firm.

TVP’s research report highlights the disparity between crypto and bitcoin venture capital investments. Though bitcoin made up 42.1% of the total crypto market capitalization at the end of 2022, it only captured 1.31% of venture capital invested into the space.

TBL attributes this phenomenon to market distortions from zero interest rate policy, claiming that creative destruction is starting to right the ship. Regardless of the cause, the tides are beginning to turn.

“For venture capital dollars allocated in this sector to date, the obvious incentive has been chasing short-term returns,” Said Christopher Calicott, TVP Managing Director said about the disparity between bitcoin and crypto VC investments. He added that the high returns on crypto investments have been largely ephemeral in nature.

Despite 2022 price action, TVP research showed that bitcoin venture deals increased by 52.9%. This serves as a potential signal that sophisticated investors are beginning to recognize bitcoin’s staying power in the face of negative price action.

“The Bitcoin tech stack is increasingly buildable. Founders wishing to build lasting companies have to avoid platform risk. Bitcoin is the clear ecosystem of choice.” Calicott offered as an explanation behind the phenomenon.

Companies like Nodal Power have continued to build in the space, leveraging the Bitcoin Network for productive endeavors like renewable power generation. In their recent press release, Nodal announced a successful $13 million seed round for their landfill gas power plants.

“Everyone is getting more savvy when it comes to diversifying their mining business with power markets,” Bryan Black, CEO of Nodal told me in an interview.

Black offered that mining is becoming more intertwined with wholesale power markets and power plant development. Due to bitcoin’s real-world economic impact, he is unsurprised investments in the space have continued. Black posits that the mining space will continue to have a significant impact on power development for many years to come, especially in the renewable sector.

Despite the negative headline, a recent Morningstar article published this month highlighted the power of adding bitcoin to a portfolio. According to their research, a 5% allocation to bitcoin in a traditional 60% Stock, 40% bond portfolio would increase the Sharpe Ratio, a measure of risk adjusted return, from .77 to .96, an increase of nearly 25%.

This article was not all positive however. “A 1% allocation to bitcoin… can quickly spiral into a 60% allocation if investors fail to reap what they’ve sown,” the author stated, citing the difficulty they may experience when trying to rebalance their portfolios. Though the author did not respond to requests for comment, the rebalancing concerns cited may be the variable holding back many investors from taking the plunge.

This article comes in the wake of newfound interest in a 2022 BlackRock publication that found the optimal bitcoin allocation to be a whopping 85%. Though rebalancing may be difficult, the long-awaited bitcoin ETF approvals may make it easier for traditional investors to jump in.

Raphael Zagury, CIO of Swan Bitcoin is working to educate those who would seek to use bitcoin as a portfolio strengthening asset. His website, Nakamoto Portfolio, is an open-source and free to use tool which can help financial professionals model the effect of bitcoin on a portfolio.

Zagury created the website after producing a one-page report for a friend, similar to what hedge funds produce to show their periodic returns. “He started looking at bitcoin much like another investment in his portfolio, setting aside some of his fundamental doubts,” Zagury said about the initial report.

After his report convinced the friend to take the plunge, Zagury decided to create the website as a tool for institutional investors. It is being well received by institutions, showing them how a bitcoin allocation can improve their risk adjusted returns according to Zagury.

“The key is sizing it appropriately… [the website] can walk them through different allocations in real time and they can see the results,” he concluded. By speaking in the language of financial mathematics, Zagury is optimistic that the narrative surrounding bitcoin will start to change for the better, especially in the institutional space.

Bitcoin has been around for over a decade, but it still has not achieved widespread adoption. One of the biggest impediments to adoption is a lack of education about bitcoin. Many people do not understand what bitcoin is, how it works, or why they should use it.

This lack of education can lead to fear and distrust of bitcoin, which prevents people from adopting it. There are a number of bitcoin non profits working to close the education gap and promote greater adoption.

These organizations offer educational resources and are actively working to dispel myths about bitcoin and educate the public about its benefits. As more people learn about bitcoin, it is likely that its use will increasingly permeate society. The following two nonprofit organizations are doing just that.

Bitcoin Today Coalition

“The Bitcoin Network is the technical representation of equality, freedom, and opportunity,” Says Amada Cavaleri, a member the board of directors for the Bitcoin Today Coalition. Bitcoin Today Coalition is a nonprofit organization that strives to increase bitcoin literacy within America’s legislative and regulatory bodies.

Cavaleri posits that these values are essential for humanity to thrive and said that America has the potential to guide the inevitable global adoption of bitcoin. She said politicians have been open minded about bitcoin as they come to realize that it is a system of rules that no one person is able to control.

“Many have gone from passing judgement via fear-based headlines to doing their own research and ‘going down the rabbit hole’ as we call it,” Cavaleri said about her interactions with politicians. She added that bitcoin is now being recognized as a powerful tool to enhance innovation, global competitiveness.

Cavaleri told me that their mission will be a success when the majority of Americans not only own bitcoin, the commodity, but also use bitcoin-native companies, daily. “This will allow America to keep its edge in innovation, especially as draconian CBDCs and their symptoms make their entry onto the global stage,” she concluded.

Generation Bitcoin

“Amidst the turmoil of the days, the uncertainty that lies ahead, GenZ needs to know a solution exists, that there is hope and that bitcoin is that hope for them,” Ella Hough of Generation Bitcoin told me in our interview.

Hough is currently pursuing a degree in Cognitive Science at Cornell University, studying the dynamics of bitcoin’s diffusion through society. Her passion for bitcoin has translated into her multiple roles as a blogger, Bitcoin Magazine contributor, and ultimately project lead at Generation Bitcoin.

“Bitcoin’s future lies with GenZ. For this reason, GenZ must be educated about bitcoin, and how they can grow, develop, and participate in the ecosystem,” Hough offered as the inspiration behind their organization.

Generation Bitcoin is composed of GenZ students who are working to teach their generation about bitcoin. In doing so, they hope to support the next generation of bitcoin innovators.

“Often though, GenZ hears that bitcoin is only for Computer Scientists or Economists, if they hear about bitcoin at all,” Hough said in our interview. Generation Bitcoin is actively trying to change that frame of thought.

Hough says that bitcoin is a disruptive innovation that will change how the world works for the better, and something that will affect all facets of the future economy and society. Through teaching GenZ about bitcoin, the Generation Bitcoin team hopes to prepare GenZ to lead in the new world they will inevitably inherit.

Some bitcoin thought leaders like Alexander Svetski have theorized that it may take generations for bitcoin adoption to fully play out. His thesis spelled out in an article earlier this year offers a three generation, or 60-year time horizon.

Organizations like Bitcoin Today Coalition and Generation Bitcoin are actively working to accelerate that timeline. Through making bitcoin more accessible and understandable to the public, organizations like this will play a key role in the adoption of bitcoin in the years to come.

As Wall Street firms race for bitcoin ETF approval, bitcoin advocates urge participants to consider self-custody as a lower cost alternative. Bitcoin
BTC
is a unique asset. Though it exists only in the digital realm, it is also a bearer instrument that does not require any third party to hold or own.

By taking custody of your bitcoin, you not only maintain exposure to price action, but also eliminate the slow bleed of management fees and the catastrophic risks that counterparties provide.

After purchasing from an exchange, bitcoin holders are able to generate a wallet that only they control. The wallet is generated from a set of random words. Many wallets will generate these words for you, but for extra security, participants may elect to generate the words themselves by generating randomness.

Common techniques for generation include coin flipping or rolling dice. Proponents of this technique posit that it is the only way to ensure true randomness in the wallet generation, eliminating trust in the software that would generate this randomness for you.

Depending on what type of wallet you are generating, you will either generate a 12- or 24-word string. These words comprise what is known as your private key. When entered into a bitcoin wallet device or software platform, a unique address is created which allows you to receive bitcoin and custody it without counterparty risks.

The private key is also the mechanism which allows individuals to send bitcoin from their wallets. The words must be kept secret and serve as a backup for your wallet if your interfacing mechanism is ever lost, destroyed, or becomes inoperable.

There are numerous methods for backing up your keys. A common solution is Black Seed Ink, a company that sells metal etching plates to protect your seed words from water and fire, as well as technical failures from storing them online. There are several other companies that sell metal backup plates in different forms as well.

The recommended method for interfacing with your keys is through a hard wallet, otherwise known as cold storage. There are a multitude of hardware devices that are available for purchase which store your private keys and allow you to interface with the Bitcoin Network by sending bitcoin in a peer-to-peer fashion.

Popular bitcoin only hardware devices include the Foundation Passport, ColdCard, and Blockstream Jade. Though some come with proprietary software interfaces, those are not required in order to use the devices. Open-source software solutions like Blue Wallet and Sparrow also exist as way to interface with bitcoin’s open-source ledger.

Though this list is certainly not all encompassing, it should be enough to begin your self-custodial journey into bitcoin. Though daunting at first, self-custody is the only way to ensure your bitcoin is truly safe.

Luckily, there are personalities like BTC Sessions who have dedicated their lives to educating others on how to properly use these software and hardware applications. His video library can be found on YouTube and is an essential first step in developing your individualized plan on how to secure your bitcoin.

Presidential Candidate Robert F. Kennedy Jr unveiled a significant announcement this week involving bitcoin. The plan included cutting taxes and to begin backing US debt with bitcoin, among other assets.

“My plan would be to start very, very small, perhaps 1% of issued T-bills would be backed by hard currency, by gold, silver platinum or bitcoin,” Kennedy said according to Bitcoin Magazine’s coverage, reported by TheStreet.

The excitement on bitcoin twitter was palpable, with some taking a more measured approach. Christian Keroles, Bitcoin Magazine General Manager honed in on Kennedy’s comments about bitcon taxes.

“Bitcoin’s tax statues in the US have been a barrier for its adoption as a currency for payment,” Keroles told me in our interview. He believes that this narrative helps legitimize bitcoin as a new form of money.

Alex Stanczyk, host of the Cafe Bitcoin Podcast joined the conversation as well. “The significance of this is not that these candidates might change the laws regarding bitcoin, the significance here is that they are talking about it at all,” Stanczyk, told me in a discussion over twitter.

An interesting development considering that three presidential candidates for 2023, from both sides of the aisle now openly support bitcoin. This is according to Gregory Gosson, of BitcoinNews.com.

“Not only is bitcoin becoming a mainstream topic of political discourse, but also a bipartisan one,” Brandon Green, head of the Bitcoin Conference told me in a discussion about the development. Kennedy, Vivek Ramaswarmy, and Mayor Francis Suarez of Miami, along with former Presidential Candidate Tulsi Gabbard all spoke at the 2023 Bitcoin Conference this year.

‘Two Republicans, and two Democrats,” Green pointed out. For a movement historically characterized as right of center, this newfound cross-aisle interest is an important development that may help facilitate greater use and adoption.

Though laws are not likely to change any time soon, I mirror Stanczyk’s sentiment. The fact that politicians are speaking positively at all is a big news, and a potential sign that voter sentiment is changing as well.

The Lightning Network might be the greatest payment network you’ve never heard of. It is a second layer network built on top of bitcoin that facilitates instant and cheap bitcoin payments without the need for intermediaries. Lightning is being leveraged to send money globally faster, better, and cheaper than with traditional financial rails.

“The Lightning Network is a payments technology that democratizes access to the global economy, making it quicker and cheaper to reliably transact on or offline,” says Alyse Killeen, founder and managing partner of Stillmark VC. Stillmark was founded in 2019 as the first bitcoin-focused venture capital firm.

Killeen is bullish on the lighting network in a number of different ways. With lightning, businesses can expand their total addressable markets to the unbanked. Money can also be sent in smaller payments, de-risking and reducing costs in the remittance market.

As bitcoin use expands, so too does its impact. The following two founders are creating opportunity in South America in the payments and remittance space, expanding financial services into areas where traditional means are unable.

Osmo

“Latin America and the Caribbean received more than $140 billion in cross-border payments. If we are to achieve wide adoption, we need to simplify the process,” Piero Coen explained about the inspiration behind his company Osmo.

Osmo is a mobile payment company that leverages the lightning network to help people in Latin America send and receive money using a mobile app. It’s goal is to make digital payments faster, cheaper, and more accessible, particularly in countries with a high number of unbanked individuals.

The bitcoin received is immediately and automatically converted to the local currency of the user. “They don’t need to understand bitcoin; they just need to know it’s as easy as sending a Whatsapp or an email,” Coen told me in our interview.

“We believe that universal participation in the financial system is a human right,” he concluded in our interview. Applications like Osmo are helping to bank the unbanked in locations where people might not be able to participate in the legacy system. A feat made possible by leveraging bitcoin and lightning as payment rails, rather than holding the asset

IBEX

Ibex is a bitcoin infrastructure company that specializes in providing enterprise solutions for bitcoin’s lightning network. They offer their clients Lightning-as-a-Service infrastructure for quick, scalable deployment, which is essential in helping them leverage the lightning network to send value globally, instantly and at any scale.

“Imagine a world where transactions are processed instantly, disrupting existing norms and paving the way for a more efficient future,.” Ibex CEO Jose Lemus told me in our interview. The instant nature of the lightning network is especially pertinent in South America, reducing settlement risk and transaction fees for small businesses.

Headquartered in the USA, IBEX also has offices in El Salvador, Guatemala, and Mexico, enabling them to provide their services to clients worldwide. Most recently, the company secured a partnership with Grupo Salinas to adopt lightning network in its conglomerate, adding to their growing list of strategic alliances with businesses looking to expand globally by embracing emerging technologies.

“This transformative technology defies tradition and opens up new possibilities, creating a future where real-time payments reshape the foundations of commerce,” Lemus concluded in our interview. An optimistic tone.

Both companies facilitate instant value transfer over bitcoin’s lightning network. Payment recipients either don’t, or don’t have to receive bitcoin. It is simply the tool that facilitates the transaction.

Leveraging bitcoin and lightning as payment rails will become increasingly common as people begin to realize the power and efficiency of these methods. As bitcoin continues to permeate underdeveloped economies, the next wave of adoption might just come from people who don’t even realize they’re using bitcoin.