What Does Coinbase’s Listing Mean For Bitcoin?

What Does Coinbase’s Listing Mean For Bitcoin?

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Coinbase’s direct listing legitimizes bitcoin in the global financial, legal, and political landscapes.

The financial press will cover the Coinbase story from many angles. However, the greater conclusion to garner from this chronicle in Bitcoin’s history is the following: Coinbase’s direct listing further incorporates Bitcoin into the worldwide financial landscape and will act as a deterrent to any potential future U.S. government action against Bitcoin, such as a ban. Ultimately, this listing represents an important step towards the legitimization of bitcoin as a mainstream financial asset.

Coinbase is not without controversy in the Bitcoin space, and some prominent Bitcoiners certainly have reservations regarding some of Coinbase’s practices as a company. One of the more troubling situations regarding Coinbase is the company’s close ties with the U.S. government, as evidenced by its sale of a proprietary surveillance tool named Coinbase Analytics to both the Drug Enforcement Administration and the Internal Revenue Service. Although cooperating with the government is a necessary evil of a regulated cryptocurrency exchange, it would be to Coinbase’s advantage to push for stronger privacy rights for Bitcoiners, as doing so would shore up the company’s reputation among the very demographic that is responsible for its success.

Bitcoiners’ other bones of contention with Coinbase include the company’s marketing of altcoins to its customers and the fact the organization holds a trivial amount of bitcoin on its balance sheet relative to its market capitalization. Bitcoiners would welcome more Bitcoin-centric decisions by Coinbase that keep the firm more in line with its Bitcoin roots; accordingly, placing a bigger bet on Bitcoin by increasing its bitcoin holdings would be well-received. To summarize, Coinbase CEO Brian Armstrong should never forget that Bitcoin has played a large part in the company’s success and will be a key driver for its future successes.

All differences aside, Coinbase receiving the SEC’s blessing for a public listing represents a paradigm shift for Bitcoin’s adoption, especially in conjunction with the seemingly looming approval of a Bitcoin ETF. With this listing, Bitcoin is becoming entrenched in the financial system with the government’s approval. The positions of prominent U.S. government economic officials regarding Bitcoin are still antiquated (and some would argue antithetical to the spirit of American liberty), but it is far less likely that the government will seek a bitcoin ban after this Coinbase direct listing has occurred. Bitcoin cannot actually be banned, as it is simply computer code that stores information; however, even a symbolic ban of Bitcoin by the U.S. would certainly be a major setback for its adoption. Any event that makes a Bitcoin ban in the U.S. less likely is a positive event for Bitcoin, and this Coinbase listing appears to do just that.

As for how the Coinbase listing could affect the price of bitcoin, it may be best to think conservatively. The price of bitcoin might respond positively if Coinbase’s stock price soars, but the day-to-day trading of Coinbase stock is unlikely to have a direct, outsized impact on the bitcoin price. If anything, Coinbase’s share price could track the bitcoin price to a degree, but far less so than that of a bitcoin mining company or MicroStrategy, as Coinbase holds a negligible amount of bitcoin on its balance sheet relative to many other companies that hold a bitcoin treasury.

Moreover, if you buy Coinbase shares, much of what you are buying is the company’s performance as a financial intermediary. According to Coinbase’s S-1 filing, the company does not intend to issue a dividend “for the foreseeable future,” and therefore, investors are speculating that Coinbase’s core business performs well enough to warrant appreciation of the share price, as shareholders are unlikely to be given access to any of Coinbase’s cash flows anytime soon.

To further clarify the trading aspect of Coinbase stock, buying shares of Coinbase as a bitcoin proxy trade, as some do with MicroStrategy, would be inefficient (really, both companies’ stocks are inefficient bitcoin vehicles), as Coinbase does not hold a considerable amount of bitcoin relative to the company’s size. Therefore, the amount of bitcoin attributable to each share is negligible and would likely trade at a high premium relative to the spot price.

Bitcoin maximalists may have their qualms with some of Coinbase’s business practices, especially with regard to the organization’s privacy practices and their foray into altcoins. However, these qualms aside, the Coinbase direct listing is positive for Bitcoin because it further ingrains Bitcoin into the existing financial infrastructure and makes heavy-handed government action against Bitcoin less likely. In 12 short years, bitcoin has gone from an obscure novelty of the internet to a trillion-dollar asset that is responsible for the meteoric rise of what will become a major publicly traded U.S. firm. No matter how you feel personally about Coinbase as a corporation, this moment is a major milestone in Bitcoin’s journey to revolutionize the world of money.

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


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Speedy Trial Has Been Merged Into Bitcoin Core, Potentially Setting Path To Taproot Activation

Speedy Trial Has Been Merged Into Bitcoin Core, Potentially Setting Path To Taproot Activation
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Speedy Trial has been merged into Bitcoin Core, offering a path toward the Taproot protocol upgrade is miners signal their overwhelming support.

According to a GitHub pull request, a BIP 9-based implementation of Speedy Trial has been merged with the code for Bitcoin Core, offering a potential path for activating the much-anticipated protocol upgrade Taproot.

As the Bitcoin Core dev community has debated the best way of implementing Taproot, which would add smart contract flexibility and privacy to Bitcoin, Speedy Trial has emerged as a potential solution.

“Speedy Trial would give miners three months to signal support for the Taproot upgrade with their hash power,” as Aaron van Wirdum and Sjors Provoost explained on a recent episode of Bitcoin Magazine’s “Van Wirdum Sjorsnado” podcast. “If a supermajority of miners signals support for the upgrade within these three months, Taproot will activate a couple of months later… If miners don’t signal support within three months, the upgrade will expire and a new upgrade path can be considered.”

There were two potential paths for getting Speedy Trial integrated into Bitcoin Core — through BIP 9 or through BIP 8, with some notable differences between the two methods. Bitcoin Developer Luke Dashjr, who has been active in community discussions regarding Taproot activation, noted his dissent around this BIP 9-based implementation of Speedy Trial on Twitter.

“Community came to consensus on BIP 8,” he wrote in a reply to a tweet sharing the GitHub pull request. “These devs are IGNORING that and pushing their own agenda instead. It is an attack on Bitcoin, not a good thing.”


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Bitcoin: The Ultimate Opportunity Cost

Bitcoin: The Ultimate Opportunity Cost
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Upon realization of Bitcoin’s true value, one must reconcile their economic opportunity cost with their new reality.

Attention, fellow bitcoin wealthy plebs; I’ve been summoned to write about the corn, and there is one topic that’s constantly in the back of my mind, creeping into every decision:

The Bitcoin opportunity cost.

Whether you’ve just started your journey down the rabbit hole or you’re already telling billionaires to “have fun staying poor,” by now, you’ve learned about the functions and characteristics of money. This is one of the first things about Bitcoin that stood out to me, as I hadn’t learned about it before. The money a society uses should function as a store of value, a medium of exchange, and a unit of account. Diving deeper, I learned about money’s different characteristics (scarcity, divisibility, transferability, etc.) and started to understand how societies grade money based on these characteristics to decide which forms of it are more desirable than others. 

Many have come to the conclusion that Bitcoin earns the best overall grade on the characteristics-of-money test, and this makes it the best form of money ever (cc: @thisisbullish). I fully subscribe to the thesis that bitcoin the asset is currently functioning as the best store of value in existence, and that this delays bitcoin from fulfilling the other two functions of money. Why would people use bitcoin to exchange value at scale when it is serving as the best store of value right now? In the future, when Bitcoin’s volatility calms down and global adoption is above 80 percent, people won’t feel like they’re giving up generational wealth when they use bitcoin as a medium of exchange, and then Bitcoin the network will shine. This is all to say that we are still very much in the adoption phase, and we are lucky to be here this early.

If you agree with that thinking, you may have entered into a new wormhole mindset in the last few years, as I did. When you go down this wormhole, you stop thinking about bitcoin as an investment, which implies you’re trying to exit at some point after squeezing out more money than you put in. Instead, you start to think about Bitcoin as the money, which exists in a better system that improves incentives, trade, friction, efficiency, saving, time preference, freedom, innovation, politics, and community. Once you get to that point, the opportunity cost of not owning Bitcoin creeps into every single decision.

Today, money managers use the risk-free rate of treasury bills to calculate opportunity cost of financial decisions. This calculated yield basically represents the maximum amount of money you could make without taking any risk, and decisions should be weighed against this.

If you factor in the 2.3 percent annual government-targeted inflation rate via the Consumer Price Index (CPI), then most interest rates are already negative.

Now factor in the CPI being a farce.

Now factor in that nothing is risk-free and this yield is subject to a counterparty that operates like a failing business.

Finally, you have an opportunity cost that can’t ever be verified or agreed upon. As a result, we can’t trust the benchmark against which most investment decisions are calculated, and this leads to complete mispricing of assets.

Say you’re a bank and your group of investment analysts, pictured below, ignore all of that.

You are using the absolute worst-performing “risk-free” investment available as your opportunity cost. Bitcoin is basically a social experiment to see what happens if you try using the best-performing asset of all time as your opportunity cost instead.

Bitcoin Magazine’s @nikcantmine wrote about how he weighed his personal Bitcoin opportunity cost against college tuition. I went to college, and I can justify it because, in my opinion, it was a great time and I hadn’t heard of Bitcoin yet. But if I had, I probably would have made the same decision as Nik. In my mind, most purchases won’t outperform Bitcoin, so if I’m buying something, it better give me a large amount of enjoyment, and if I’m ever selling Bitcoin, it better be in exchange for large amounts of time. I’m not sure if it’s a blessing or curse to be at the point where every single decision, financial or otherwise, comes down to “Hey man, you should probably have more bitcoin instead.”

In summary: enjoy the ride, $500,000 is bearish, pleb forever, team surferjim, pray for Miami.

Thanks to @BTCization for the nod.

Play me off.

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


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Gryphon Raises $14 Million For Zero-Carbon Bitcoin Mining Operation

Gryphon Raises $14 Million For Zero-Carbon Bitcoin Mining Operation
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Gryphon Digital Mining has raised $14 million for a zero-carbon bitcoin mining operation.

According to a release, Gryphon Digital Mining has raised $14 million in a Series A fundraise for the launch of a zero-carbon footprint Bitcoin mining operation.

“At Gryphon, our long-term strategy is to be the first vertically integrated crypto miner with a wholly-owned, 100 percent renewable energy supply,” said Rob Chang, CEO of Gryphon Digital Mining, per the release. “Our vision is to further develop and use economically viable, renewable, off-grid energy.”

The announcement noted that institutional investors made up more than 30 percent of the Series A and it closed in a little over two weeks. It also noted that Gryphon has partnered with a data center that grants it access to electricity costs as low as $0.013 per kilowatt hour (kWH). At launch, it expects its mining operation to have 730 petahashes per second (PH/s) of processing power which it thinks can grow to more than 2,000 pH/s by the end of the year.

The release did not detail the specific energy sources that Gryphon expects to leverage, but it did position the firm as one that sees opportunity in fueling the practice through green energy.

“Gryphon has the opportunity to become a market leader by providing reliable, low-cost mining while relying on renewable energy to minimize Bitcoin mining’s carbon footprint,” according to the release.

While there is a popular belief that bitcoin mining is a waste of energy that unduly contributes to issues like climate change, projects like this are demonstrating that Bitcoin mining can actually incentivize and drive use of renewable energy sources.


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VanEck Launches ETF Offering Exposure To Bitcoin-Focused Companies

VanEck Launches ETF Offering Exposure To Bitcoin-Focused Companies
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The Digital Transformation ETF launched by VanEck provides investors with exposure to the likes of MicroStrategy, Square, Riot Blockchain and more.

VanEck, an assets management company with roots in the cryptocurrency space, has long desired to offer a bitcoin exchange-traded fund (ETF) on the public market. The U.S. Securities and Exchange Commission has, however, not approved its filing to do so (or any other such filings, for that matter).

But in the meantime, VanEck has launched a new ETF that allows eager investors access to the Bitcoin market, albeit in a less direct way.

The new ETF, called the Digital Transformation ETF, is designed to provide investors with exposure to companies that have invested in or provide services for “the digital transformation of the world’s economy.” For many of the fund’s primary holdings, this means companies that are all-in on bitcoin.

The Digital Transformation ETF offers exposure to the likes of MicroStrategy, Riot Blockchain, Square and others that have directly allocated their treasury assets to bitcoin or directly contribute to the Bitcoin ecosystem in some way.

Would-be investors should note the clever distinction between direct bitcoin exposure and this product. They are not investing in cryptocurrency, either directly or indirectly, through derivatives. Instead, they are investing in relevant digital asset companies that participate in the cryptocurrency space.

To be eligible for inclusion and tracking in the ETF, a company must generate half of its revenues from digital assets projects, generate at least half of its revenues from projects that have the potential to generate half of their revenues from digital assets or digital assets projects or have at least half of its assets invested directly in digital assets or digital assets projects.


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Bitcoin’s Kimchi Premium Bubble: Inflation, Deflation and Consequences

Bitcoin’s Kimchi Premium Bubble: Inflation, Deflation and Consequences

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Bitcoin often trades at a premium in South Korea; what happens when this bullish spread quickly dissipates?

The Kimchi premium—the spread between Bitcoin price on South Korean exchanges and Western exchanges—has always been an indicator attracting people’s attention in the bull market. The source of this spread is rooted in the inability to easily get a substantial amount of USD out of the country due to institutional frictions. Thus, this lack of arbitrage opportunities coupled with a huge demand for bitcoin among Koreans makes bitcoin trade at a premium on Korean exchanges when speculative frenzy hits the masses.

As with any bubble, at one point, when money inflows stop propping up the price, it is going to crash or at least correct somewhat. Sometimes, even a small pin is enough for the bubble to start deflating. This is exactly what happened today when Upbit suspended its deposits and withdrawals. The premium has fallen from 21 percent and hit 10 percent at its lowest point.

Chart via Tradingview

This is not the first time this bubble emerged and popped. In the peak of the 2017–2018 bull run the Kimchi premium reached 51 percent before it all came crashing down. Caution from this event is one of the reasons why the market has thrown a tantrum today. Traders see the Kimchi premium correction as a top signal and the harbinger of an overall market correction.

Chart via Tradingview

However, this is exactly a case of the tail wagging the dog. According to CoinGecko, the total bitcoin trading volume of the five major Korean exchanges—Bithumb, Upbit, Coinone, GOPAX, Corbit—makes up to 3.2 percent of the global bitcoin trading volume. Even in a case of the collapse of the bubble on Korean exchanges, it should not affect the global price much. Local bubbles come and go, which is not that significant.

What is significant, however, is the attention people pay to these sorts of things. Risk-on assets such as bitcoin are dominated by narratives and the Kimchi premium narrative is still a powerful one, if the amount of major media outlets and Twitter accounts mentioning it is any indicator. As with any narrative, though, it usually takes several invalidations for it to stop occupying people’s minds.

Will today’s premium correction make the premium disappear? Probably not. The bullish narratives for bitcoin are still untouched, the demand for bitcoin didn’t go anywhere, and the institutional frictions to withdraw money from the country are still in place. All this makes a perfect cocktail for the bubble to continue existing.

It is also worth noting that the Kimchi premium is not specific to bitcoin and is present for some other cryptocurrencies too, reflecting the arbitrage opportunities taken by traders and the overall bullish sentiment among Koreans.

The Kimchi premium can be a good and reliable indicator of the demand for bitcoin when taken within the context of its origin and combined with other factors affecting bitcoin’s price. On the other hand, used separately, it can give birth to false narratives and bring a lot of misinformation and damage. As with any indicator, one should be cautious to use it and never make any investment decisions based on this particular piece of data alone.

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


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Value Creation In Bitcoin

Value Creation In Bitcoin
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The incentive structure created by Bitcoin introduces new potential for value creation in society.

In 2009, Satoshi Nakamoto invented the greatest store of value ever seen in human history. His creation, bitcoin, has firmly secured its place as the hardest form of money in the new digital economy and the bedrock of a new open, global financial system.

Bitcoin has already won.

What remains relatively unexplored is the way in which Bitcoin, the monetary network, will incentivize new forms of value creation and unlock new methods of value capture never before seen in human civilization. This piece explores the ways in which Bitcoin’s structure of incentivizing long-term holding among its token holders collides forcefully with its open monetary network to systematically create more value for society and lead to an eventual cultural renaissance.

All second and third order effects related to Bitcoin come from its elegantly designed incentive structure. Miners are incentivized to honestly mine blocks, and network participants are incentivized to HODL. Bitcoin’s supply growth is decreasing over time, leading to a capped supply and the one true digitally scarce substance on this planet.

Bitcoin’s deflationary monetary policy and NgU tech increases each bitcoin’s purchasing power in the long run, which creates a model that incentivizes its holders to put off unnecessary spending, save for the long term and invest prudently. This model runs in stark opposition to the incentive scheme of the fiat regime, where constant debasement of currency and inflation incentivizes consumption and rampant speculation.

Each participant in the fiat system today is in a frenzy to dump their cash, either by protecting it in some safe haven, immediately spending their rapidly decreasing purchasing power, or speculating in riskier and riskier assets. Bitcoin, with its capped supply and fixed, open and deflationary monetary policy provides the most elegant system to opt out of this madness.

While its holders are incentivized to continue holding for the long term, potential new participants to the network are incentivized to get in as quickly as possible whether by purchasing or earning coins in the marketplace. As supply decreases over time and demand continues to build, the value of each coin continues to rise: Number Go Up. We know what happens to those opting to purchase coins in the marketplace: they pay a higher price. What happens to those earning coins in the marketplace? As of yet this exchange is quite uncommon, so the answer is unclear.

My theory, however, is that this will lead to the creation of higher forms of value across many spectrums of society. Let us continue to explore how an open monetary network addresses the idea of value creation and further price discovery.

To understand how open software networks function and evolve we must take a look back at history. The early days of the internet opened up a world of possibilities in the realm of information sharing, allowing anybody to communicate their ideas freely over an open data transfer protocol. Over the past several decades, incredible amounts of software has been written to build critical infrastructure on top of these protocols, building what we know and use as the modern day web. This has served as the foundation for today’s modern day social networks, which serve as hyperscale information sharing and talent discovery tools. In a similar way, an open monetary network allows any participant with access—in the case of Bitcoin anyone on the planet with a bitcoin wallet—to engage in free commerce on a scale that has never been possible before.

In the same way that the large social networks of today are talent and information discovery mechanisms, Bitcoin is a price discovery mechanism for everything it touches. Any possible economic transaction that involves human decision-making and interacts with the Bitcoin network will in time come to a perfect price equilibrium as determined by the other users of the network. For a network user and long-term token holder to part with their satoshis requires a creation of value that far exceeds the potential return on each parted unit over the coming period of time that the account projects for. In turn, what this leads to is true price discovery for the essential things that matter most: human time and knowledge.

The microprocessor, modern day high speed computing, the internet and social media have reduced the barriers to entry in many walks of life and allow anyone to create and share value. The internet protocols that have allowed for this explosion of innovation have been built for the transfer of information but not the transfer of value. What we see as a result are megacorporations and walled gardens that act as the high priests facilitating the flows of value between creators and consumers in the new digital economy. Bitcoin cuts out these middlemen and enables those creating value to directly capture the value that they are creating.

In order to capture value in the new economy and entice bitcoin holders to part with their precious satoshis, creators must push the boundaries of creation and create such value in such proportion that true believers are compelled to part with what they believe to be the hardest asset ever invented.

In the end, only the very best will survive.

True meritocracy of value is the end result, enabling true capitalist forces that the world has not seen in many decades. Bitcoin culture is one of low time preference, a mindset that encourages long-term thinking and saving. At the same time, the Bitcoin network opens up a world of opportunity for value creators to capture that value, forming a meritocratic haven where bold ideas and beautiful creations reign supreme.

This new monetary system will enable excellence and beauty to a degree never before seen. The culture of Bitcoin combined with the capabilities of a global monetary network is set to unleash a force upon the world that reshapes every element of society for the better, creating value for everyone involved and pushing forward the trajectory of humanity.

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


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Bitcoin Optech #144: Taproot, Bitcoin Core Meetings And More

Bitcoin Optech #144: Taproot, Bitcoin Core Meetings And More
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This week’s newsletter covers progress on Taproot activation, a Bitcoin Core PR Review Club meeting and more.

The Bitcoin Optech newsletter provides readers with a top-level summary of the most important technical news happening in Bitcoin, along with resources that help them learn more. To help our readers stay up-to-date with Bitcoin, we’re republishing the latest issue of this newsletter below. Remember to subscribe to receive this content straight to your inbox.

This week’s newsletter summarizes recent progress on code to activate taproot and contains our regular sections with descriptions of a recent Bitcoin Core PR Review Club meeting and notable changes to popular Bitcoin infrastructure software.

News

  • Taproot activation discussion: since our last update on discussion about activation methods for the taproot soft fork in Newsletter #139, the Speedy Trial proposal became the focus of attention among those interested in activation. PRs were opened for two variants of it: PR#21377, using a variation on BIP9, and PR#21392, using a modification that became part of BIP8. The main technical difference between these PRs is how their start and stop points were specified. PR#21377 uses Median Time Past (MTP); PR#21392 uses the height of the current block.
    MTP is normally roughly consistent between Bitcoin’s main network (mainnet) and its various test networks, such as testnet, the default signet, and various independent signets. This allows multiple networks to share a single set of activation parameters even if they have vastly different block heights, minimizing the work of keeping those networks’ users in sync with mainnet’s consensus changes.
    Unfortunately, MTP can be easily manipulated in small ways by a small number of miners and in large ways by a majority of hash rate. It can also revert to an earlier time even by accident during a block chain reorganization. By comparison, heights can only decrease in extraordinary reorgs.1 That generally allows reviewers to make the simplifying assumption that height will only ever increase, making it easier to analyze height-based activation mechanisms than MTP mechanisms.
    These tradeoffs between the two proposals, among other concerns, created an impasse that some developers thought was preventing either PR from receiving additional review and, ultimately, getting one of them merged into Bitcoin Core. That impasse was resolved to the satisfaction of some participants in the activation discussion when the authors of the two PRs agreed to a compromise:
  1. To use MTP for the time when nodes begin counting blocks signaling for the soft fork, with counting starting at the beginning of the next 2,016-block retarget period after the start time. This is identical to the way BIP9 versionbits and BIP148 UASF started counting blocks for the soft forks they helped activate.
  2. To also use MTP for the time when nodes stop counting block signaling for a soft fork that hasn’t locked in yet. However, in a difference from BIP9, the MTP stop time is only checked at the end of retarget periods where counting was performed. This removes the ability for an activation attempt to go directly from started to failed, simplifying analysis and guaranteeing that there will be at least one complete 2,016 block period where miners can signal for activation.
  3. To use height for the minimum activation parameter. This further simplifies analysis and also remains compatible with the goal of allowing multiple test networks to share activation parameters. Even though height may differ on those networks, they can all use a minimum activation height of 0 to activate within the window defined by MTP.
  • Although some discussion participants expressed their displeasure with the compromise proposal, its implementation has now received reviews or expressions of support from over a dozen active contributors to Bitcoin Core and the maintainers of two other full node implementations (btcd and libbitcoin). We hope this momentum to activate taproot continues and we’ll be able to report additional progress in a future newsletter.
  • Bitcoin Core PR Review Club

    In this monthly section, we summarize a recent Bitcoin Core PR Review Club meeting, highlighting some of the important questions and answers. Click on a question below to see a summary of the answer from the meeting.

    Introduce deploymentstatus is a PR (#19438) by Anthony Towns that proposes three helper functions to make it easier to bury future deployments without changing all the code paths that check a soft fork’s activation status: DeploymentEnabled to test if a deployment can be active, DeploymentActiveAt to check if a deployment should be enforced in the given block, and DeploymentActiveAfter to know if a deployment should be enforced in the following block. All three work with both buried deployments and version bits deployments.

    The review club discussion focused on understanding the change and its potential benefits.

    • What are the advantages of a BIP90 buried deployment over a BIP9 version bits deployment?
        • A buried deployment simplifies the deployment logic by replacing the test that governs enforcement with simple height checks, thereby reducing the technical debt associated with deployment of those consensus changes.
    • How many buried deployments are enumerated by this PR?
        • Five: height in coinbase, CLTV (CHECKLOCKTIMEVERIFY), strict DER signatures, CSV (OP_CHECKSEQUENCEVERIFY), and segwit. They are listed in the BuriedDeployment enumerator proposed by the PR in src/consensus/params.h#L14-22. One could argue that the Satoshi-era soft forks are also buried.
    • How many version bits deployments are currently defined?
    • If the taproot soft fork is activated and we later want to bury that activation method, what changes would need to be made to Bitcoin Core, if this PR is merged?
        • The main change would be greatly simplified compared to the current code: move the DEPLOYMENT_TAPROOT line from the DeploymentPos enumerator to the BuriedDeployment one. Most importantly, no validation logic would need to be changed.

    Notable code and documentation changes

    Notable changes this week in Bitcoin Core, C-Lightning, Eclair, LND, Rust-Lightning, libsecp256k1, Hardware Wallet Interface (HWI), Rust Bitcoin, BTCPay Server, Bitcoin Improvement Proposals (BIPs), and Lightning BOLTs.

    • Bitcoin Core #21594 adds a network field to the getnodeaddresses RPC to help identify nodes on various networks (i.e. IPv4, IPv6, I2P, onion). The author has also proposed that this lays the groundwork for a future patch for getnodeaddresses that takes an argument of a specific network and returns only addresses in that network.
    • Bitcoin Core #21166 improves the signrawtransactionwithwallet RPC, allowing it to sign inputs in transactions which have other signed inputs that are not owned by the wallet. Previously, if the RPC was passed a transaction that had signed inputs not owned by the wallet, the witnesses to those inputs would be broken in the returned transaction. Signing inputs in transactions with other signed inputs can be useful in a variety of situations, including adding inputs/outputs to bump the transaction fee.
    • LND #5108 adds support for making spontaneous Atomic Multipath Payments (also called Original AMPs) using the low-level sendtoroute RPC. Original AMPs are non-interactive (or spontaneous) by nature as the spender selects all preimages. Spender preimage selection is also a part of keysend-style spontaneous payments, which have been used for singlepath spontaneous payments. Follow-up PRs are expected to make spontaneous multipath payments available to the higher-level sendpayment RPC.
    • LND #5047 allows the wallet to import BIP32 extended public keys (xpubs) and use them for receiving payments to LND’s onchain wallet. In combination with LND’s recently updated support for PSBTs (see Newsletter #118), this allows LND to operate as a watch-only wallet for its non-channel funds. For example, Alice can import the xpub from her cold wallet, deposit funds into that wallet using an address LND gives her, request LND open a channel, sign a PSBT opening that channel with her cold wallet, and then have LND automatically deposit funds back to her cold wallet when the channel is closed. That last part—depositing closed channel funds back to a cold wallet—may require extra steps, particularly in the case of non-cooperatively closed channels, but this change brings LND most of the way towards being fully interoperable with PSBT-compatible cold wallets and hardware wallets.

    Footnotes

    1. If every block on the block chain had the same individual Proof of Work (PoW), the valid chain with the most aggregate PoW would also be the longest chain—the chain whose latest block had the greatest height yet seen. However, every 2,016 blocks, the Bitcoin protocol adjusts the amount of PoW that new blocks need to contain, increasing or decreasing the work needing to be proved in an attempt to keep the average time between blocks around 10 minutes. That means it’s possible for a chain with fewer blocks to have more PoW than a chain with more blocks.
      Bitcoin users use the chain with the most PoW—not the most blocks—to determine whether they’ve received money. When users see a valid variation on that chain where some of the blocks on the end have been replaced by different blocks, they use that reorganized chain if it contains more PoW than their current chain. Because the reorg chain may contain fewer blocks, despite having more cumulative PoW, it’s possible for the height of the chain to decrease.
      Although this is a theoretical concern, it’s usually not a practical problem. Decreasing height is only possible when a reorg crosses at least one of the retarget boundaries between one set of 2,016 blocks and another set of 2,016 blocks. It also requires a reorg involving a large number of blocks or a recent major change in the amount of PoW required (indicating either a recent major increase or decrease of hash rate, or an observable manipulation by miners). In the context of BIP8, we don’t believe a reorg that decreased height would have any more impact on users during an activation than a more typical reorg.

    Find the original post here.

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    A Case For Buying More Bitcoin — A Letter To Ruby

    A Case For Buying More Bitcoin — A Letter To Ruby
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    Having seen $1.5k grow to $100k, it’s time to double down and invest in my daughter’s financial future with conviction.

    Originally posted on Jakeeswoodhouse.medium.com 

    Ruby Rose and I, Melbourne, January 2021

    This article was inspired by a letter I wrote in January 2021 to my 6-month-old daughter, Ruby Rose.

    I am sharing this publicly in the hope it might assist other families as they plan for their long-term financial future.

    Note:

    • It is now April 2021, so the references and prices are old; however, the rationale remains valid.
    • I have edited this version from the original I wrote, keeping some of the investment details private.
    • I use Twitter to learn about Bitcoin, and you can follow me there. I would love to hear from you!

    Dear Ruby,

    First, I love you, and being a parent to you with your mum has been the happiest part of my life so far.

    This is a letter that you might find boring, but it was necessary to organize my thoughts, which helped to make a major financial decision that will form part of your inheritance in the future.

    I will discuss inheriting wealth, the problems with preserving it, and the solution that has only recently been invented: Bitcoin. Throughout, you will find links to information written by experts in the field whom I’ve researched and trust.

    1. Unexpected Inheritance

    On January 1st, 2009, my father, your Grandfather, died. He had an unexpected heart attack while working in the forest near our home, aged only 48 years.

    This was one of the hardest times in my life, not only because I was grieving for my father, but also because a large financial responsibility was pushed onto me as the eldest son.

    What were we going to do?

    In 2010, we decided to sell our home, a property that had been in our family for three generations, leading to an unexpected portion of the inheritance being converted to fiat currency.

    2. The Inflation Problem

    On receipt of GBP (£) in cash by way of an inheritance, what do you do with it?

    You want to keep it safe, accessible, and pass the value onto the next generation—but how?

    1. You could keep the GBP in a bank
    2. You could invest it

    “Why not just keep it in the bank,” I hear you asking? “You can access it anytime, it’s safe, and you don’t need to take any risks with it!”

    Well here’s the problem: GBP is losing its value over time due to inflation.

    What is inflation?

    Inflation is a currency’s decline in purchasing power over time.

    As an example: if an apple costs £1 today, it’s possible that it could cost £2 for the same apple 1 year from today. This would effectively decrease the time value of money, as it would cost twice as much to purchase the same product in the future.

    Inflation is caused by a number of different things, including changes in the demand and supply of goods and money, the latter of which is the major problem we face today when saving to preserve wealth.

    What has the UK’s inflation rate been?

    The UK government uses the Consumer Price Index (CPI) as the “basket of goods” against which it measures inflation. Analysis of its long-term trends suggests that the UK’s inflation rate is not a problem and in line with the Bank Of England’s targets (i.e., the cost of living is increasing at the intended rate of approximately 2% annually).

    Source: Office for National Statistics

    What is the truth?

    In my opinion, the government manipulates the CPI to help achieve its inflation targets, and therefore, the CPI does not reflect the real changes in prices.

    For example, take “shrinkflation,” in which a chocolate bar continues to be sold for the same price of £1, but the manufacturer reduces its size over time. This means your £1 buys you less real value than before, and although the Office for National Statistics claims to factor this in, I am not so sure.

    As a further example, Tanay Jaipura makes an interesting point by citing the Chapwood index.

    Wow, 10%–12% inflation! But why?

    The money supply.

    The source of most of the inflation we see today is the monetary policies set by central banks, whether the Bank of England, the United States Federal Reserve, or the Royal Bank of Australia.

    The last decade has seen huge quantitative easing (QE) programs, in which central banks create new money and increase the total money supply in circulation.

    For example, if an economy had £100 in circulation, and the central bank created £10, then the money supply would increase by 10% to £110. This means that the purchasing power of any money you had has just been eroded by 10%.

    Please see this excellent presentation by Parker Lewis that explains how the United States Federal Reserve has been “debasing” the USD. In March 2020, the Fed created $2.9 trillion in new money, and Parker predicts that this will happen again. He goes on to explain why bitcoin is exciting.

    What’s next?

    So, if I were to simply save GBP in the bank until it was time to pass it to you, your inheritance would have lost huge amounts of value in real terms: somewhere between 2% and 12% per year, according to our data.

    What does this mean?

    One has to invest.

    3. Investment History

    For 10 years, I’ve been working to preserve our wealth prudently for you, investing across different asset classes with a number of services.

    Property

    I made three real property investments: one is the house in which we now live, and the others are apartments. I leveraged the buy-to-let mortgage market, renovated one flat, and had tenants rent when possible.

    Public Markets

    I used wealth managers Ruffer and Tribe to invest in public markets, giving me exposure to financial products such as commodities, currencies, debt, equities, and funds.

    Private Equity Angel

    I joined an angel investment syndicate, Green Angel Syndicate, to invest in cleantech startups. I deployed a small amount of capital into multiple high-growth, high-potential technology companies.

    I am happy to say that I’ve made more good decisions than bad, in that I’ve not lost all our money, but it has not all been smooth sailing.

    4. Investment Problems

    Investing is not easy, and I came across a number of problems:

    Property

    1. Management is expensive. Rental agents charge 12% of each year’s rent to manage a tenancy, and unexpected operating expenses and vacancies happen, so yields are inconsistent.
    2. It is illiquid, with high transaction costs. They are not easy to buy or sell, and even when you can, there are very high transaction costs (approximately 10%–20% of the asset value can be lost to agents, lawyers, and taxes).
    3. Strong regulations. For example, the UK government now asks for 6 months’ notice to end a tenancy, so to sell your asset, you now have to wait out that period.

    Public Markets

    1. Poor transparency of investment. Once annually, you are given a portfolio report by your wealth manager that includes a complex dataset on how your GBP was invested, which is hard to decipher.
    2. Misaligned fee structure. You have to pay an annual management fee of approximately 1%, regardless of performance, so there is no recompense for poor performance.
    3. Strong regulations. For example, certain assets can only be accessed by regulated entities, meaning that you have to use a wealth manager rather than invest personally.

    Private Equity Angel

    1. Illiquid. It is only possible to make a positive return after the startup has a liquidity event, such as an acquisition or IPO.
    2. Long-term. Because of the amount of time required to build a profitable business, it is unlikely that you will get a return before 10 years, if not longer.
    3. High-risk. Investing into pre-revenue or pre-profitable businesses is by nature very risky, with a high chance that your investment will fail, and in that case, you receive no returns at all.

    Remember: the objective of all this investing is to store value over time, which because of inflation rates means your investments need to gain more than 12% per year.

    Akshay BD nicely summarizes the situation into which I have been forced:

    5. Dad’s Bitcoin History

    It’s about time we talk about Bitcoin. In December 2015, thanks to the influence of my friend Dan Burke, I purchased 13 bitcoin at approximately $450 per coin. Frankly, it was a gamble on an interesting new technology about which I knew very little.

    Over time, I sold off 75%:

    • October 2016 — to pay for a trip to Japan with your mum
    • May 2017 —to pay for travels in South America with your mum
    • July 2017 — out of fear that the Bitcoin Cash hard fork would negatively affect the price
    Screenshot showing the dates and prices of my bitcoin trades

    The story you will likely find most amusing is of when I used my Bitcoin Cash to buy a 1980’s Mercedes SL350 from a rapper called “Black the Ripper.” I didn’t want the coins after the hard fork, so while browsing eBay in January 2018, I found a car advertisement stating that the owner was “willing to exchange for crypto.”

    The car broke down on day 1, used to leak on your mum’s side, and was a nightmare for the 2 months we owned it.

    At the time of writing, we still own 3 bitcoin, each valued at $31k. 

    (Editors note: bitcoin is now worth more than $60,000.)

    Screenshot of bitcoin portfolio performance, 2015–present

    The value of each bitcoin has gone up almost 7000%, or 70✕, in just 5 years.

    These gains can be attributed partially to the inflation problem we’ve discussed, but also to the newfound demand for bitcoin as the technology matures.

    Without a doubt, bitcoin is the best performing asset I have ever owned, and this experience has laid the foundation for my conviction in its future.

    6. What Is Bitcoin?

    I’ve just finished reading two excellent books, both of which were written since my first bitcoin purchase in 2015 and are representative of the number of intelligent people who have since been drawn into the space:

    Inventing Bitcoin takes just a couple of hours to read and is a nice summary of the technology. Here are two excerpts from the book that explain what Bitcoin is:

    1st excerpt from Inventing Bitcoin
    2nd excerpt from Inventing Bitcoin

    The Bitcoin Standard is also one of the most mind-blowing books I’ve ever read, and it has been a critical basis for my newfound conviction in the asset. I love the history of money, its relevance in today’s macroeconomic scenario, and the theory of “hard money.”

    If you’d like to hear a podcast that covers many of the questions most people have about Bitcoin, then have a listen to “Bitcoin Common Misconceptions” with Preston Pysh and Robert Breedlove. They cover many of the misgivings I initially had with Bitcoin, discussing the essence of money, how the technology works, and the lack of potential for government intervention.

    I also recommend reading this article, “The Number Zero and Bitcoin” by Robert Breedlove. It provides an amazing historical recap of what money is and how it has evolved, including the revolutionary impact of the invention of zero in mathematics. The concept that people used to only be able to view the world in fractions and not move through zero into negative or make multiple subdivisions with a decimal point is fascinating. Breedlove frames Bitcoin as being as potentially revolutionary as the concept of zero.

    7. Bitcoin’s Impact

    Bitcoin has the potential to have a huge positive social impact on people. Yan Pritzker made the interesting point that people who are unbanked in developing countries adopt Bitcoin, among other use cases.

    Alex Gladstein made the case for Bitcoin as a human rights issue here:

    The final slide summarizes his points nicely:

    Parker Lewis is very concise in his analysis here. He contends that Bitcoin has far-reaching ramifications as far as reduction of the power that modern governments wield today, which I personally support:

    8. Why Buy Bitcoin Now?

    Since 2015, so much has changed in the Bitcoin space, which is very exciting.

    • Stock-listed companies are buying bitcoin: This podcast featuring a conversation between Raoul Pal and Michael Saylor was what triggered my most recent dive down the Bitcoin rabbit hole. Specifically, I was attracted to the way Saylor spoke about how to preserve his company’s wealth for 100 years from now, which is the exact lens I have been using for the past 10 years, and the problem he was facing with regard to inflation. The upshot was that he discovered and researched Bitcoin, and then persuaded his US stock-listed company board to buy $450m worth of bitcoin from their cash reserves. (Wow!)
    • Tech investors are openly buying bitcoin: I follow Shaan Puri, who has an excellent take on all things startups, and he is very open about the positive case for bitcoin and his personal asset allocations here:
    • High-net-worth money is buying bitcoin: Mexico’s 2nd-richest man recently announced that 10% of his liquid wealth is in bitcoin after having read The Bitcoin Standard.
    • Institutional investors are buying (more) bitcoin: This is an example of an institutional investor (Skybridge Capital) that has already invested in bitcoin raising funds for additional bitcoin investment.

    PlanB is another interesting analyst who is very bullish with his modeling here:

    • Exchanges are bullish: The Winklevoss brothers, Tyler and Cameron, were very early adopters of bitcoin. They see it as the “money network,” which is interesting considering their involvement in the world’s most famous social network, Facebook. This is another podcast with Raoul Pal in which they talk of bitcoin at $20k being the “trade of the decade.” Their business, Gemini, sees itself as people’s portal into digital assets and also aims to be the custodian of their assets. Thus, they aim for their clients to avoid the need to self-custody their bitcoin. (Beware the mantra of “not your keys, not your coins,” which is what I am following)

    Finally, I like Mark Moss and how simply he puts the use case for bitcoin here:

    (Note to reader: I built a website with links to all the bitcoin research I have conducted, www.bitcoinwithjake.com. check it out for articles, podcasts, and videos!)

    9. Features of holding bitcoin:

    Bitcoin is going to be easier to manage than my previous investments because of some clear differences:

    • Liquidity
    • No management fees
    • No operating expenses
    • Transparency

    10. How Do We Buy Bitcoin?

    I use an exchange called CoinFloor to exchange my GBP for bitcoin and then send it digitally to my wallet.

    In this podcast, the founder of Coinfloor, Obi, talks well about where we are on the adoption curve: very early. In particular, I am fond of his point about how many smart businesspeople are still wrapped up in their day-to-day roles and haven’t had a chance to study Bitcoin and learn of the benefits it could bring them.

    11. How Do We Store Bitcoin?

    Bitcoin allows you to take total control of your money, hence “self-custody,” meaning that we must look after it with the utmost care.

    “Not your keys, not your coins.”

    I researched and found Unchained Capital to help set up a multisig wallet, which stores our bitcoin.

    This means there is no single point of failure, and our wealth is protected by multiple people with multiple keys in multiple places.

    (Take note, potential thief! Even if you bash my door down, you can’t access our bitcoin, as the required keys are spread across multiple locations.)

    12. The Risks

    Of course, there are risks involved, which I pondered long and hard. Here are the main ones:

    • Inheritance: In the case of my sudden death, like what happened to grandpa, what happens to our bitcoin? This was hands-down my greatest concern.
    • Loss: What if you send your bitcoin to the wrong place? Or lose access somehow?
    • Theft: What happens if someone hacks you? Or, what if someone pretends to be someone else and defrauds you?

    Well, the answer to these first problems has been the multisig setup that Unchained Capital provides. I cannot recommend them strongly enough.

    • Regulation: Governments like to control the money supply, even though they all claim that their central banks are independent, so there is likely to be some kind of regulatory pushback in the future. Unchained Capital will keep us fully up-to-date with regulatory changes, and I also advise you listen to the “Common Misconceptions” podcast with Robert Breedlove about why it’s impossible to actually shut down Bitcoin.
    • Volatility: In Parker Lewis’ presentation, he explains why volatility will decrease over time. Because we are taking a long-term position, near-term volatility doesn’t bother me.

    13. Going Long Bitcoin

    According to the table below, bitcoin has been the best performing asset of the last decade:

    Source: Charlie Bilelloundefinedhere

    While angel investing, I came across a great thesis: “Invest in lines, not dots.”

    In the context of startup investing, this means to watch for teams that progress extremely rapidly, and then supercharge your capital with them.

    In my opinion, the progress bitcoin has made between 2015 and 2021 is the best “line” I have ever seen. Imagine it at 70✕ from here… If it performs how it has the last 5 years, that’s where it will be in 2026!

    It’s time to double down, have conviction, and invest in your long-term financial security.

    It is my belief that bitcoin is the best form of money humans have ever invented, represents the most effective store of value over time, and will outperform every other asset class.

    So, here’s the plan: I am going to buy more bitcoin. Initially, this will involve simply buying with cash reserves, but I will also sell down our investment property until we ultimately end up with a 33%/33%/33% split between bitcoin/private equity/property.

    14. Conclusion

    As Michael Tanguma of Unchained Capital explained, there are three key pillars to bitcoin belief:

    I hope that this letter has not been as boring as I thought you might have found it! I wonder what will have happened once you read this!

    Lots of love,

    Dad


    Thank you so much for getting all the way to the end. I hope you found this useful! If you have any questions, please follow me on Twitter.

    Best,

    Jake

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


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    Interview: Escaping The Cloud With Bitcoin Sign Guy

    Interview: Escaping The Cloud With Bitcoin Sign Guy
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    Christian Langalis, aka Bitcoin Sign Guy, joined the „Bitcoin Magazine Podcast“ to discuss his latest work with Urbit.

    Watch This Episode On YouTube

    Listen To This Episode:

    This week for the “Bitcoin Magazine Podcast,” host Christian Keroles sat down with the legendary Christian Langalis (aka Bitcoin Sign Guy). The two Christians opened up the podcast by discussing Bitcoin, lockdowns, human freedom and Langalis’s historic moment of holding up the “Buy Bitcoin” sign behind Janet Yellen at a 2017 Federal Reserve testimony hearing. At the time, Yellen was the chair of the Federal Reserve and now she is the U.S. Secretary of the Treasury.

    Since Langalis’s immediate rise to Bitcoin meme legendary status, he has taken his passion for Bitcoin and freedom to the Urbit project, where the team is working on reinventing the computer in a way that removes all of the legacy technical debt and starts over with a fresh language and architecture to optimize computing for personal servers and peer-to-peer interactions. Urbit is pioneering the future of personal computing and running personal servers and Bitcoin is at the heart of it! Urbit has reached a point where it has several key usability primitives like storage, messaging, Bitcoin and more.

    If you want to learn more about Urbit visit https://urbit.org/ and reach out to support@tlon.io. 


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    Jameson Lopp Highlights Bitcoin’s Market Cap In Comparison To National M1 Money Supplies

    Jameson Lopp Highlights Bitcoin’s Market Cap In Comparison To National M1 Money Supplies
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    According to rankings compiled by Casa’s Jameson Lopp, bitcoin would be a top-10 global currency by liquid money supply.

    Bitcoin could be considered a top-10 global currency based on its “stock of narrow money” or M1, the money supply that is composed of the most liquid forms of assets, according to a ranking created by Casa’s Jameson Lopp and made to resemble a CIA webpage.

    Bitcoin’s market capitalization (the USD value of one bitcoin multiplied by the current total supply of bitcoin) of $1,185,601,872,889 would put it above Canada in estimated M1 supply, per Lopp’s rankings, leaving it just behind Spain, which has an estimated $1.5 trillion M1 supply.

    Per the ranking, which appears to be derived from the code of an out-of-date CIA webpage and is hosted on Lopp’s personal website, M1 “is the total quantity of currency in circulation (notes and coins), plus demand deposits denominated in the national currency, held by non-bank financial institutions, state and local governments, nonfinancial public enterprises and the private sector of the economy. The national currency units have been converted to U.S. dollars at the closing exchange rate on the date of the information.”

    Most of the information for the countries ranked on the list have reference dates of December 31, 2020, while Bitcoin’s listed market cap is up to date as of the time of this writing.

    Though the ranking could be considered an apples to oranges comparison between a cryptocurrency market cap and a nation’s liquid money supply (and it does not actually reflect a public CIA ranking of bitcoin in comparison to national stocks of money) it does serve as a signifier of just how valuable the bitcoin market has become.


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    Crypto Council For Innovation Report: Criminals Will Move Away From Bitcoin

    Crypto Council For Innovation Report: Criminals Will Move Away From Bitcoin
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    A recent report co-authored by an ex-CIA director has found that criminals will increasingly move away from using Bitcoin.

    A recent report published by the pro-cryptocurrency lobbying group Crypto Council For Innovation and co-authored by former CIA deputy director Michael Morell analyzed the degree of illicit activity associated with Bitcoin and concluded that criminals will decreasingly leverage bitcoin to launder money.

    The report, titled “An Analysis Of Bitcoin’s Use In Illicit Finance,” noted the fact that Bitcoin is pseudonymous (as opposed to completely anonymous) as a reason that other cryptocurrencies that better protect user privacy represent a “far larger” percent of total transaction volume for illicit activities than bitcoin.

    Furthermore, it highlighted the fact that fiat currencies are often better tools for obscuring criminal activity than bitcoin is.

    “A currently serving official at the [Commodity Futures Trading Commission] added that it ‘is easier for law enforcement to trace illicit activity using Bitcoin than it is to trace cross-border illegal activity using traditional banking transactions, and far easier than cash transactions,’” according to the report.

    And, Despite the fact that some regulators and news outlets have highlighted the potential for cryptocurrencies like bitcoin to be used as media for financing terrorism, this report found the contrary.

    “On the key issue of terrorist financing, [a] former CIA terrorism expert was quoted as saying that ‘the hype is much greater than the reality and that cryptocurrency is not yet an important platform for terrorist organizations,’” per the report.

    Finally, the authors of the report asked themselves the question: “In light of the conclusions we have reached, why do we see such alarmist statements and articles about the threat posed by Bitcoin?”

    Firstly, the authors attributed these statements to a lack of understanding of the technology behind Bitcoin, the propensity for “bad” news to drive perception and the fact that “Bitcoin and its decentralized nature seem to pose a disruptive threat to traditional financial institutions.” 


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    Republican House Leader Wants Regulators To Embrace Bitcoin

    Republican House Leader Wants Regulators To Embrace Bitcoin
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    In a recent interview, U.S. House Minority Leader Kevin McCarthy said lawmakers should not ignore bitcoin, but understand its future role.

    While many regulators around the world hope to deny the growing importance of Bitcoin to their economies and the world at large, some in the United States have realized that the decentralized asset can no longer be ignored.

    This sentiment was shared by the Republican leader of the U.S. House of Representatives, Kevin McCarthy, who recently told CNBC that the country’s policy makers should no longer ignore Bitcoin, but embrace it.

    “They tried to ignore it to make it go away,” McCarthy said of frequent Bitcoin critics like U.S. Secretary of the Treasury Janet Yellen and CEO of JPMorgan Chase Jamie Dimon. “They should not ignore it… This is something that those who regulate, those who are in government that make policy, better start understanding what it means for the future because other countries are moving forward, especially China. I do not want America to fall behind. I want the next century to be ours, that’s why I want to look forward, not backwards and keep my head in the sand.”

    This recent statement by McCarthy is yet another recent indication of Bitcoin’s growing importance to the financial sector. The asset is being adopted by both retailers and institutions alike due to its ability to serve as a payment method and also as a viable hedge against inflation.

    More U.S. lawmakers, like McCarthy and Senator Cynthia Lummis, appear to be recognizing the fact that Bitcoin is an inevitable movement that cannot be tempered by regulation. As the U.S. Securities and Exchange Commission’s Hester Peirce recently articulated, lawmakers cannot ban Bitcoin (though they can make it difficult to utilize). That means that embracing it and creating an environment in which the U.S. can thrive as Bitcoin grows is the superior option.


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    Using Discreet Log Contracts To Attack Bitcoin Forks

    Using Discreet Log Contracts To Attack Bitcoin Forks
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    Currently, various factors disincentivize attacks of minority chains; DLCs might create a workaround that returns the incentive to these attacks.

    Currently, there are many blockchains with miniscule amounts of hash power compared with Bitcoin’s, and yet, they rarely see attacks. I believe that this is because of external factors that prevent miners from taking advantage of this potential revenue stream. Discreet Log Contracts (DLCs) are a method to mitigate these external factors so that miners have the ability to attack minority blockchains.

    The Problem

    If one wanted to attack a minority blockchain (e.g., BSV), the current best way would be to steal bitcoin from an exchange. This could be done by depositing some BSV into an exchange, selling it for bitcoin, withdrawing said bitcoin, and then executing a 51% attack such that the original BSV deposit never happened. At the end of this, the attacker has received Bitcoin without having to spend any BSV.

    There are a few problems with this attack scenario that make it difficult to execute. One is that most exchanges require know-your customer (KYC) procedures for trading and withdrawals. This means that if such an attack were perpetrated on a blockchain like BSV, the exchange could see exactly who was doing it. Another problem is that the attacker would clearly be stealing from the exchange, which is immoral, and it could destroy a miner/mining pool’s reputation if they were to execute such an attack.

    Collectively, these factors mitigate and arguably remove the incentives that large-scale miners would need to find such attacks to disrupt minority blockchains worthwhile.

    Solution

    DLCs provide a way to establish contracts on Bitcoin that are contingent on a set of oracles’ attestations. If one wanted to attack minority blockchains, it would be useful to be able to bet that they will experience 51% attacks, or to better quantify such attacks, one could bet that a blockchain reorganization (reorg) greater than or equal to 100 blocks will occur. Once a miner has made such a bet, they have an economic incentive to attack the minority blockchain, as it would allow them to receive the payout without having to steal from an exchange. Such a miner could then attack the blockchain themselves to force a 100-block reorg to occur, after which the oracles would attest that the event occurred, and the miner could then claim their reward by executing the DLC. Thus, the miner could attack the minority blockchain and get paid for it while not having to steal from anyone.

    The only thing missing is that the miners need someone to fund the other side of this contract by betting that the minority blockchain will not experience a large reorg. Anyone could take this bet, whether holders of the actual coin or simply gamblers. The non-malicious miners of the target blockchain would have a large incentive to take this side of the bet, as they are the defense system that prevents these large reorgs from happening. In the event that the attacker fails, or no attack ever comes, the bet would provide free extra income for the minority blockchain’s miners.

    If a market developed around this, it could create a signalling mechanism that would show when a block reorg attack is about to occur. If a miner were about to execute a large reorg on a blockchain, they would likely purchase any available contracts betting that the reorg will occur. This mass buying of the contracts could signal to the market that a reorg is coming, and entities like exchanges could temporarily halt deposits and withdrawals to mitigate risk.

    In summary, today Bitcoin miners do not have a way to profit from attacking minority blockchains without stealing from a regulated entity. DLCs provide an alternative that could function as a marketplace for pricing the cost to attack minority blockchains.

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


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    TIME Magazine To Hold Bitcoin

    TIME Magazine To Hold Bitcoin
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    Legacy media institution TIME Magazine will be paid for a cryptocurrency video project in bitcoin and hold the asset on its balance sheet.

    The CEO of digital currency investment firm Grayscale, Michael Sonnenshein, has announced a partnership with TIME Magazine to produce a video series about cryptocurrencies, with the publication being paid in bitcoin and choosing to hold BTC on its balance sheet.

    “Thrilled Grayscale is partnering with TIME on a new video series coming this summer explaining the crypto space,” Sonnenshein tweeted. “Equally as important, [TIME Presiden] Keith Grossman and TIME has agreed to be paid in bitcoin — and will hold the BTC on their balance sheet. A first for our media partnerships!”

    The New York-based publication recently indicated its leanings toward Bitcoin and other crypto assets when it revealed that it was seeking to employ a chief financial officer that had “comfort with Bitcoin and cryptocurrencies.” In the job listing, the publication cited the fact that its industry was undergoing an evolution and that it needed the guidance of a CFO who would help it keep up.

    “The media industry is undergoing a rapid evolution, TIME is seeking a Chief Financial Officer who can help guide its transformation,” per the listing.

    Apart from this, the publishing house also had three of its covers sold as nun-fungible tokens (NFTs), another indicator of the firm’s growing pro-crypto leanings.

    According to TheStreet Crypto, “TIME represents the first legacy media brand that will hold bitcoin.”

    Notably, the firm would be joining the likes of MicroStrategy, Tesla, Square and a host of other top firms that hold bitcoin on their books. Many of these firms believe that the digital asset could serve as a hedge to protect them against rising inflation.


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    Bitcoin As A Pressure Release Valve

    Bitcoin As A Pressure Release Valve
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    As currencies inflate in value, Bitcoin serves as a pressure relief valve, allowing capital to escape.

    As small-cap currencies inflate, Bitcoin gains adoption.

    Bitcoin is the first fully sovereign digital currency. This means that anyone in the world with an internet connection and a computer can download the protocol and start running it. Maybe they want to invest in the technology, maybe they want to store their wealth, or maybe they are using it as a form of payment. Whatever the reason, Bitcoin doesn’t discriminate on the basis of race, creed, or nationality.

    This is especially attractive for people in countries with a history of inflation or even hyperinflation. What is hyperinflation? It is when a country’s government or central bank, by printing more and more money to supplement their needs, increases the supply of the currency at a rapid and excessive pace. When the supply of money increases more rapidly than the demand, the price of goods nominally rises. A good example of this has occurred during the last year: food prices have risen dramatically, in part due to the monetary expansion of the world’s currency supplies.

    Image Source

    Price increases of bitcoin in fiat terms can also be seen when the supply of fiat currency expands. Extreme increases in national currency supplies cause the prices of everyday goods to rise. Two recent examples of this are Venezuela and Zimbabwe: prices have risen so dramatically that Zimbabwe is now printing 100 trillion dollar bills and even using paper bills in more utilitarian ways, such as using them as fire starters.

    Image Sourceundefined

    Many times, countries shut down access and use of the US dollar. Because people change over to a more reliable currency, demand drops and so does the value for the currency being left behind. In turn, closing off the escape route to other currencies cripples the people’s ability to save and destroys the economy. People aren’t allowed to buy USD,so they are forced into using it on the black market

    When countries‘ currencies hyperinflate, countries have blamed the US dollar. In 2010, Hugo Chavez signed a currency law, pegging the Bolivar to a certain exchange rate. Since then, inflation has only risen, and citizens have been forced into using dollars on the Black Market.

    Image Source

    In November, 2020, Zimbabwe’s Secretary for Finance, told business leaders Zimbabwe wouldn’t return to the USD, saying “One of the biggest mistakes was dollarizing and removing your own currency,” according to a Bloomberg report.

    Bitcoin solves this. With the use of bitcoin, people have an option to escape their collapsing, hyperinflated currencies and hold their wealth in a decentralized network that is independent of the current financial system. You cannot stop someone from buying bitcoin, you cannot stop them from transacting in bitcoin, and you cannot stop them from holding bitcoin. There are ways in which a government could constrict the use of bitcoin, but in the past, this has increased adoption. And to stop Bitcoin all together, you would need to shut down the Internet. We all know that doing that, would mean there would be no GDP. When a currency collapses, and people adopt Bitcoin, the incredible value of its use case is revealed in both theory and practice. This increases adoption and could help propel people to create more Bitcoin infrastructure.

    The more countries that have hyperinflated currencies, the more capital gets eaten up. Because Bitcoin was created to be the scarcest asset in the world, it is the best instrument to which people can turn. The people who see its value the most are the ones closest to the problem. The first likely event is that impoverished countries adopt Bitcoin as a store of value that is less volatile than their own currencies. Although USD is great for this, Bitcoin allows for better digital transacting. As Bitcoin’s market cap grows, it becomes a more stable form of money. Then, eventually, we could see a cascading effect as an exponential amount of adoption occurs. In Argentina, the inflation rate has increased by 40% in 1 month (January–February 2021). They have a history of inflation, and Paxful, a trading exchange, has been onboarding people there in a rapid manner.

    Image via Coin.dance 

    This is known as leapfrogging. When a new technology is introduced to a poorly developed country, they leapfrog the entire costly infrastructure of the previous system and adopt the new, less costly one. A good example of this is the introduction of cell phones in less developed countries. Building the infrastructure and wiring for traditional telephones would have cost large amounts of money that these countries simply didn’t have. Then, cell phones came around, and building their communication towers carried only a fraction of the cost. This is very similar to the situation with banking infrastructure. So, the first dominoes of adoption to fall could be the smaller, less developed countries.

    Historically, the US dollar has been extremely stable, so seeing this specific use case in the US is difficult. However, in a country whose currency loses 40% of its value year over year, Bitcoin would seem stable. As countries with less stable currencies start to adopt Bitcoin and add to its market cap, the network will slowly become less volatile until price fluctuations are reduced to stable levels. This is already visible on the network today.

    This all seems very far away, but adoption generally occurs slowly, then all at once. This is the nature of network effects and exponential growth. Ultimately, Bitcoin can be a tool for liberty and freedom from currency abuse, empowering the world and its people. The more efficiently people can store their time and energy as money, the more efficient the world economy will be. 


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    Interview: Building A Career In Bitcoin With BtcCasey

    Interview: Building A Career In Bitcoin With BtcCasey
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    Bitcoin Magazine’s BtcCasey hops on „Meet The Taco Plebs“ to talk about how Bitcoin has changed his life.

    Watch This Episode On YouTube

    Listen To This Episode:

    For this episode of Bitcoin Magazine’s “Meet The Taco Plebs,” I was joined by BtcCasey (@BtcCasey), a young gun who loves to write about Bitcoin.

    The other week, Casey flew into town with the rest of the Bitcoin Magazine team and I got the chance to meet him in person. Casey, the team and I hung out all week and got to know each other a lot better, and I knew I just had to get him on the show.

    Casey is a Bitcoin zoomer, writing about Bitcoin and making a career out of it. I think it’s fantastic to see other young people pursuing their passions and aiming to be successful. Casey has a bright future and is making really smart moves right now that are building a foundation for his future self to really excel. If you’re not reading his articles, you probably should be.

    In this interview, Casey discussed how getting involved in Bitcoin changed his career path, as well as his educational goals. He was previously in the healthcare industry and realized he wanted to leave to pursue writing, and he did just that. His time preference has lowered, which has influenced the way he thinks about this future. He knows adopting a low time preference at a young age comes with lots of benefits, and he’s trying to capitalize on all of them.

    He shared his thoughts on the leverage that Bitcoin gives individuals to view the world in a different light. Bitcoin is extremely powerful and has the ability to give people freedom from that leverage. The task of achieving financial freedom is pretty difficult under a fiat standard, but Bitcoin fixes this.

    Below are some of Casey’s most interesting thoughts shared during the interview. And be sure to check out the full episode for more.

    How Did You Find Bitcoin And Fall Down The Rabbit Hole?

    Starting in 2020, I took advantage of the circumstances created by the pandemic surrounding my life and began to invest all of my money as a means of supporting myself. Upon discovering that bitcoin was the superior asset to invest in every conceivable way, I went all in and never looked back.

    How Has Bitcoin Changed Your Life?

    Bitcoin has given me freedom, both economically and philosophically, and it has enhanced my life in so many ways. My entire career path has been rerouted in dedication to Bitcoin, and therefore my future is closely intertwined with the technology.

    What Is The Most Amazing Thing About Bitcoin To You?

    It is so immensely simple that it hampers intellectuals’ ability to understand it.

    What Are You Most Looking Forward To In The Bitcoin Space?

    Getting to know all of the amazingly smart people involved in the space and watching it grow into the hyperbitcoinization blackhole we all know it will.

    What Is Your Price Prediction For The End Of 2021 And The End Of 2030?

    End of 2021, $350,000, end of 2030, $500 million-plus.


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    Bitcoin Miner Manufacturer Canaan Expects Major Growth In 2021

    Bitcoin Miner Manufacturer Canaan Expects Major Growth In 2021
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    In a 2020 financial results release, bitcoin mining rig manufacturer Canaan laid out a case for major profit growth in 2021.

    Canaan, a Bitcoin mining equipment manufacturer, has released its unaudited 2020 financial results, including an estimate of $5.9 million in total net revenue for the fourth quarter of last year and total net revenue of $68.6 million across 2020.

    And the company went on to say that it expects its total net revenue in the first quarter of 2021 to nearly match that of the previous year as a whole.

    “As the price of bitcoin started to move up in the fourth quarter of 2020, the company believes that its revenue will be substantially improved in 2021 and expects that its total net revenues in the first quarter of 2021 will be not less than RMB400.0 million [about $61 million],” per the release.

    Canaan also noted that it sold 6.6 million terahashes per second (Th/s) in computing power, down by 37.1 percent from 2019’s 10.5 million Th/s. Still, based on the rise in value of bitcoin and growth of the bitcoin mining industry across the last year, Canaan has reason for optimism in 2021.

    According to data from Blockchain.com, miner revenue has reached above $60 million at certain points this year, up from highs around $27 million in 2020.

    “Although the outbreak of COVID-19 caused supply chain disruptions and thus negatively impacted our revenues in the fourth quarter of 2020, our market leadership has enabled us to attain $174 million of contracted orders with $66 million of cash advance from customers as of December 31, 2020, thus laying a solid foundation for substantial revenue growth in 2021,” Naneng Zhang, CEO of Canaan, said, per the release.


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    Southampton F.C. Can Now Pay Player Bonuses In Bitcoin

    Southampton F.C. Can Now Pay Player Bonuses In Bitcoin
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    English Premier League team Southampton has reportedly signed a deal with Coingaming Group that would let it pay player bonuses in bitcoin.

    Bitcoin continues to creep into professional soccer as Southampton Football Club signed a three-year deal with Coingaming Group to be the club’s main partner, which will see Sportsbet.io remain its jersey sponsor, according to a report.

    This partnership allows Southampton’s players to receive their yearly performance bonus paid in BTC and is the biggest sponsorship in its club history, per the report.

    Let’s put into perspective how bullish this can be for Bitcoin: The Saints’ star striker Danny Ings’ salary makes him about $5.35 million (£3.9 million) per year. If he’s paid a 5 percent bonus, for instance, that would net him about $268,000 (£195,000) in bitcoin.

    All 24 players on Southampton’s roster will be eligible to receive bitcoin as their bonus payments. Southampton plays in the English Premier League, which has massive sums of money going to players left, right and center. The potential for these salaries to be paid in bitcoin is extremely bullish, as that would be a significant amount of BTC being taken off the market, and one can only assume that the players who do opt into accepting bitcoin will store it in cold storage.

    This was Southampton’s first season with the Sportsbet.io logo on their uniforms, and the CEO of Coingaming Group, which operates Sportsbet.io, Maarja Pärt has been very pleased with the results.

    “Our first season as Southampton FC’s main club partner has already exceeded all expectations,” per the report. “We’ve been inspired by the passion of the club and its fans, and it was an easy decision for us to extend our partnership with the Saints for another three years.”

    Last year, Watford F.C. had a Bitcoin logo on its jersey sleeves. Now, with this news from Southampton, it’s clear that Premier League clubs have shown that they are open to Bitcoin and it’s only a matter of time before more teams follow suit.

    Southampton is leading the way for Premier League teams on the Bitcoin front, and this could potentially bring in lots of income, allowing it to attract more talented players and compete at a higher level. So, the next question is, does Southampton hold bitcoin on its balance sheet? 


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    COPA Suing Craig Wright Over Bitcoin White Paper Claims

    COPA Suing Craig Wright Over Bitcoin White Paper Claims
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    The Cryptocurrency Open Patent Alliance (COPA) has announced that it is suing Craig Wright over his Bitcoin white paper copyright claims.

    The Cryptocurrency Open Patent Alliance (COPA) has announced that it has initiated a lawsuit to declare that Craig Wright does not have copyright ownership over the Bitcoin white paper.

    „Today, COPA initiated a lawsuit asking the U.K. High Court to declare that Mr. Craig Wright does not have copyright ownership over the Bitcoin white paper,“ COPA tweeted, along with an image of a High Court claim form.

    Earlier this year, lawyers representing Wright demanded that some of those hosting the paper take it down, as Wright is the real person behind Bitcoin’s pseudonymous creator Satoshi Nakamoto and publicly hosting it violates his copyright. Bitcoin Core developers initially removed the white paper from bitcoin.org, for instance, for fear of legal retribution.

    “The Bitoin white paper was included in the original Bitcoin project files with the project clearly published under the MIT license by Satoshi Nakamoto,” according to a followup statement from bitcoin.org, upon rehosting the paper. “We believe there is no doubt we have the legal right to host the Bitcoin white paper.”

    Wright has continuously claimed that he is Satoshi and has been met with sustained incredulity from the Bitcoin community.

    Now, COPA — which was formed by Square last year to combat stifling industry patents — is taking the legal battle to Wright.

    “We stand in support of the Bitcoin developer community and the many others who’ve been threatened for hosting the white paper,” COPA tweeted.

    In February, COPA shared the letter that its lawyers sent in response to Wright’s cease and desist letter regarding its own decision to host the Bitcoin white paper.


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