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The Dangerous Implications Of Central Bank Digital Currencies

Natalie Smolenski is a senior advisor at the Bitcoin Policy Institute and executive director of the Texas Bitcoin Foundation, and Dan Held is a Bitcoin educator and marketing advisor at Trust Machines.This article is an excerpt from the Bitcoin Policy Institute whitepaper “Why the U.S. Should Reject Central Bank Digital Currencies (CBDCs),” written by Natalie Smolenski with Dan Held.CBDCs are digital cash. Unlike traditional (physical) cash, which can be transacted anonymously, digital cash is fully programmable. This means that CBDCs enable central banks to have direct insight into the identities of transacting parties and can block or censor any transaction. Central banks argue that they need this power in order to combat money laundering, fraud, terrorist financing and other criminal activities. But as we will see below, the ability of governments to meaningfully combat financial crimes using existing anti-money laundering and know your customer laws (“AML/KYC”) has proven woefully inadequate, at best, while effectively eliminating financial privacy for billions of people.The ability to block and censor transactions also implies its opposite; the ability to require or incentivize transactions. A CBDC could be programmed to only be spendable at certain retailers or service providers, at certain times, by certain people. The government could maintain lists of “preferred providers” to encourage spending with certain companies over others and “discouraged providers” to punish spending with others. In other words, with a CBDC, cash effectively becomes a state-issued token, like a food stamp, that can only be spent under predefined conditions. Means testing could be built into every transaction.But censoring, discouraging and incentivizing transactions are not the only powers available to central banks with programmable cash. Banks can also disincentivize saving — holding digital cash — by capping cash balances (as the Bahamas have already done for their CBDC) or by imposing “penalty” (negative) interest rates on balances over a certain amount. This can be used to prevent consumers from converting too much of their M1 or M2 bank balances — credit money issued to them by commercial banks — into cash (M0). After all, if too many people rush to demand cash (hard money) at once, commercial banks will be deprived of funding and may dramatically reduce their lending if they can’t find other sources of capital. Central banks understandably wish to prevent these “credit crunches,” which often result in economic recessions or depressions. However, their policy interventions also deprive people of access to M0 currency — the hardest and safest form of money under a fiat currency regime — leaving billions of people, especially the poorest, without recourse in the event of monetary crises.Of course, negative interest rates can be imposed by central banks on all cash holdings, not only balances over a certain amount. While the objective of imposing negative interest rates is, again, to prevent recessions by stimulating near-term consumer spending, this objective is achieved at the cost of accelerating the destruction of private wealth. We can take the world’s current economic situation as an example. Central banks intervened during the COVID-19 pandemic to prevent recession by monetizing growing levels of sovereign debt, which flooded markets with fiat money. This has resulted in more money chasing fewer assets, a reliable recipe for inflation. The world is therefore seeing the highest sustained global rates of inflation in 20 years, with some countries experiencing rates much higher than the global average. Inflation already incentivizes spending, because people understand that their money is worth more today than it will be tomorrow. By implementing negative interest rates, central banks further erode the value of people’s savings, creating a perverse incentive for them to spend their already-dwindling resources even faster. This vicious cycle does not end in economic prosperity, but in a collapse of the currency.While penalty and generalized negative interest rates are both methods central banks can use to incrementally confiscate money from individuals and private organizations, these are not the only methods available to them. Once CBDCs are implemented, there is nothing technically or legally preventing central banks from imposing direct haircuts on, or repossessions of, anyone’s cash holdings, anywhere in the world. Central banks could directly confiscate private digital cash to pay down their sovereign debt, to discourage the use of digital cash, to decrease the money supply or for any other reason. Although this possibility has not been openly discussed, it is built into the political and technical architectures of CBDCs.Finally, central banks can programmatically require tax payments for every CBDC transaction. Some economists have argued that this measure is necessary to recover tax revenue that is sometimes avoided when physical cash is used, and then rather optimistically note that governments could take advantage of the recovered tax revenue to lower effective tax rates.76 However, there is no indication that revenue strapped governments already incentivized to harvest private wealth would take any measures to lower taxes. Instead, CBDCs will most likely be used to generate additional tax revenue for the state at onerous cost to individuals.Imagine: With mandatory taxation on every CBDC transaction, you would be taxed for giving your neighbor $20, or giving your children an allowance, or for every item you sell at a yard sale. A person paying their friend $50 to change a tire or $100 to look after their home while they are away would be taxed for these activities. This “informal” economy is not only a necessary mode of intimate interpersonal relating, but a lifeblood for millions of people who rely on it to survive day to day. It is morally unfathomable to imagine a homeless person selling flowers on the street being taxed for every transaction.SummaryRetail CBDCs are programmable cash.Programmable cash gives central banks direct relationships with consumers.Direct relationships between central banks and consumers enable central banks to:Surveil all financial transactions.Flag, block or reverse any transaction at any time.Determine how much cash anyone can hold and transact with.Determine what products and services cash can be used to buy, and by whom.Directly implement monetary policy (like negative interest rates) at the level of private cash holdings.Confiscate privately held cash.Enforce tax collection on every cash transaction, no matter how small.To read the entire whitepaper, which goes into further detail on how Bitcoin relates to CBDCs, click here.This is a guest post by Natalie Smolenski and Dan Held. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

How Satoshi Nakamoto And Bitcoin Mirror The United States’ Founding Principles

This is an opinion editorial by Buck O Perley, a software engineer at Unchained Capital helping build bitcoin-native financial services.This is Part Two of a two-part article set that describes crypto-governance and the dangers of faction. Part one can be found here.What Does All Of This Have To Do With Cryptocurrency?Most of this discussion so far has been theoretical. A lot of it has been about the nature of humanity and how that should be considered when devising governance schemes. What I’d like to do though is to try and tie this into cryptocurrency as it is presently thought about and implemented (or should be), and I’d like to touch on this in two respects. The first is how I believe the structure of the Bitcoin ecosystem, including much of its political divisions, reflect the ideas and concerns outlined above by the U.S. founders and other Enlightenment thinkers, and how this is one of its greatest strengths. Second, I will look at the ongoing block size and hard fork debate that has been raging for the past two years.**Editor’s note: Part One of the series details that this article was originally written in 2017.I make no claims to Bitcoin being a perfect implementation of human governance in code or for being a Bitcoin maximalist. I am simply making a comparison between the two systems and how the parallels lend themselves to Bitcoin’s strengths.Bitcoin’s Checks And BalancesComparing Bitcoin to the United State’s system of government is not a new idea, but I think it bears repeating in the context of the philosophy that gave birth to that system as outlined above.First are the remarkable number of parallels between the contexts in which they came about. Neither was the first attempt at a radically different view of human liberty (non-governmental, digital currencies had been worked on for decades prior to the advent of Bitcoin) and thus reflect many decades of work, research and thought. Both were launched in response to what their respective creators viewed as overreaches of the prevailing systems they would later seek to subvert and both came about in adversarial circumstances such that every contingency had to be taken into account in order to assure their respective survivals.The Declaration of Independence was an airing of grievances against the crown and a declaration of intention of the colonies for self-governance. Similarly, in Satoshi’s original white paper, the inadequacy of our legacy payment systems are laid out and a proposal for rectification put forward.Just as the Constitution and Bill of Rights were the realizations of the vision put forward in the Declaration, so too was the open-source reference implementation of Bitcoin the realization of the ideas from the white paper by Nakamoto. In another parallel, neither remained in their original form with both subject to needed change (Amendments for one, Bitcoin Improvement Proposals, or BIPs, for the other).For the past 20–30 years we have been used to thinking of code as a product. Even open-source projects are often run as if they are proprietary, just with more transparency. Maintainers decide the road maps, choose which changes do and don’t get incorporated, and address (or ignore) the issues of the users at their discretion. Code, like laws, can be changed and as code increasingly comes to take on more of the responsibilities previously handled by laws (read Nick Szabo’s writing on “wet” vs. “hard” code for more on this) it is important to consider how changes can and should be affected.So how does this work in a distributed network where a code change often isn’t as simple as an automatic upgrade to your iPhone? How do you account for a system meant to take a diversity of opinions and priorities into account, where it’s not clear who has the “right” answer, and how do you coordinate changes where if the network isn’t in unanimous agreement it suffers a split that can cause real financial harm?Just as the U.S. Founding Fathers devised mechanisms to allow for change in a system absent an absolute ruler, so too did Satoshi Nakamoto take this problem into account:“The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.”The analogy would be:Proprietary code = absolute dictatorship.Open-source projects for non-distributed systems = parliamentary monarchy.Decentralized consensus networks (like Bitcoin) = constitutional republic (or popular democracy depending on the implementation).“If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.” — James Madison, Federalist No. 51The Branches Of GovernanceThe system of checks and balances devised by the founders represented an important mechanism to both enable governance while also inhibiting overreach from any of the competing branches of government.In Bitcoin, full nodes are those “participants” in the network that contain the full history of the blockchain and the verified unspent transaction outputs (UTXO) set that are needed to verify transactions. Like the executive branch of the U.S. government, it is their job to “faithfully execute” the rules of the underlying protocol and “to the best of [their] Ability, preserve, protect and defend” the network.Next up is the proof-of-work security provided by miners. While they don’t make the rules, similar to the American judiciary, miners enforce the rules of the network and ensure its continued smooth operation. Without the security brought by miners to the transmission of transactions, the value of the underlying token (e.g., bitcoin) decreases thus decreasing the value of the rewards they receive for bringing the security in the first place. This is a dual incentive relationship that undergirds much of the game theory for most stakeholders in the system.Finally, we get to the third branch of a constitutional republic — the legislature. Much as in the U.S. system, this has evolved into a two-pronged, and sometimes competing, structure. Playing the role of the House of Representatives are the entrepreneurs, businesses, infrastructure developers (wallets, graphical interfaces) and investors. Like their government counterparts in the U.S., these will tend to be the most “democratic” of the branches representing the widest diversity of viewpoints as they are in more regular and direct contact with everyday users of the currency. Some conflicts may arise in the area of short-term profits versus long-term health of the system, but, overall, businesses both bring long-term viability to the network by providing services such as exchanges, marketplaces, wallets and accessible security and most benefit the more useful the currency becomes in the long term.The final arm of the legislature in the U.S. system is the Senate, a role played in Bitcoin by the developers. As originally envisioned by the founders, this chamber was meant to be one more step removed from the people than the House of Representatives as they were elected by the state legislatures (until the very misguided 17th Amendment which transitioned to direct popular election of Senators and is likely a large contributor to our present increased partisanship and misguided populist movements). Similarly, developers can be supported by companies in the ecosystem or can contribute from their own free time. Much of their authority comes from their experience in the industry.A very rough and simplistic diagram of Bitcoin’s governance model.The incentives of developers, however, are less straightforward than the other “branches.” Value for them is derived from two primary sources — first are any holdings of the cryptocurrency token (bitcoin) which they already hold and will correspondingly be worth more as the utility of the token and demand for it increase and second is the power and influence that comes with being a lead developer for a project worth billions of dollars.This comes with three areas of asymmetric incentives.First is that developers are the only economic stakeholders (aside from full nodes which play a purely passive role in the system) that do not earn more of the underlying token that they are supporting. This skews incentives towards incumbents being more conservative (not necessarily a bad thing, especially as it can counterbalance any tendency towards short-termism of businesses) as they benefit from the value of their holdings increasing — something that can be manipulated with the perception of value — rather than increased utility. This can result in its own form of more narrow, short-term thinking.Second is it incentivizes the crowding out of new developers from entering the space as the bias is towards incumbents. Developers are attracted by interesting projects and welcoming environments and, in fact, more short-term profits can be realized by new developers who move to newer projects where the potential short-term gain from the launch of a new cryptocurrency token is much higher. Incumbent developers meanwhile are incentivized to have their proposals take precedence while also being incentivized to increase complexity which further increases the barrier to entry of competing and newer developers entering the space (thus further increasing the value of their expertise).The final risk of this incentive scheme is the potential to foster cults of personality. As experience becomes more concentrated and more scarce, there can be a tendency to put trust in the hands of those who we believe are the most altruistic, doing things for the longest time for the good of the system. The problem though, in the words of C.S. Lewis, is:“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”This comes with the added risk that it makes the “citizens” of that system dangerously complacent towards leaders with whom they agree, and more antagonistic and partisan towards those with whom they disagree, dividing the community further by rewarding and promoting the loudest, and usually more extreme voices (something the U.S. and much of the world is currently experiencing as well).Again, the lesson of the U.S. founders is that all power must be distrusted, no matter how good the motives. Conversely, differing opinions should be welcome or at least understood to be inevitable and do not necessarily come from malicious motives.The last piece of this comparison has to do with the mechanisms for change. As outlined earlier, it should be hard to make changes in a governing system. In the words (again) of Calvin Coolidge: “It is much more important to kill bad bills than to pass good ones.” In Bitcoin these mechanisms take two forms — first are forks (both soft and hard forks) for implementing changes and second is the proof-of-work difficulty adjustment for making any contentious change expensive. The difficulty adjustment essentially acts as Bitcoin’s barrier to overcome for “Constitutional Amendments” (i.e., protocol updates) in order to be passed ( deployed to the network). The way proof-of-work difficulty works as a disincentive is that without a supermajority of mining power and an economic majority backing it, the rate of blocks mined can drop precipitously which means that the rate at which transactions can be confirmed also drops and thus the utility of the coin itself goes down (usually though not necessarily leading to the value also decreasing, which often depends on the motivation behind the fork, i.e., forks viewed as malicious or untrustworthy are less likely to hold higher value). The difficulty for mining new blocks adjusts based on a target of a new block being mined on average every 10 minutes. If there are more computers mining Bitcoin, the cryptographic difficulty goes up in order to maintain this average, and down if miners leave. This “retargeting” only happens every 2,016 blocks though, which means that a fork with a significant minority of hash power could be stuck at hour-long wait times for weeks or even months.This makes the cost of a fork without significant buy-in from more than one branch of the governance system prohibitively expensive. Several upgrade proposals such as BitcoinXT, Bitcoin Classic and Bitcoin Unlimited had some buy-in by miners (never over 40% though) and very little from the business ecosystem or developers and thus never activated. Segregated Witness was an upgrade deployed on the network by the Bitcoin Core developers in 2016, but, due to a lack of mining support (never much more than 30%) stemming from a distrust some held towards the developers most vocally in support of the change, it went a year without activation. It was finally activated only after some “parliamentary” shenanigans, a compromise between the business community, some developers and miners for a later hard fork in exchange for activation and threats of a “user-activated soft fork” initiated by full nodes on the network which promised to reject blocks from miners not in support.It wasn’t until Bitcoin Cash forked in August 2017 that a contentious fork was finally executed and sustained a split. Notably though, in order for their fork to survive, they had to change proof-of-work retargeting so that miners would be able to find blocks faster than the default retargeting time would allow. This resulted in some crazy price swings and price manipulations by miners jumping between chains making the chain less reliable and its token less valuable. And even with the change, Bitcoin Cash miners were losing money, hundreds of thousands of dollars by some counts, for the first couple weeks by forgoing mining on the main chain.Most importantly to me though about the Bitcoin Cash fork is that by making it easier for a minority of miners to break off from the majority of the ecosystem, it is, therefore, easier for those in the future who want to similarly break off (which we now know with the benefit of hindsight is exactly what happened). This makes consensus essentially irrelevant and breaks one of the primary governance mechanisms of Bitcoin. If it’s hard to fork and prohibitively expensive to impose contentious changes on the network, you are more protected from making bad decisions, more likely to be inclusive of differing opinions and more able to adapt for the long term regardless of whoever is governing in the short term. While forks can be harmful and disruptive to the network, the threat of forks is an important governance mechanism that should be respected and leveraged to make a more universal and inclusive system.The Risks Of FactionsThe final point I’d like to make on all this is an attempt to tie all of the above together with regards to how viciously partisan those in the community have become, seemingly to the point of religious fanaticism. Debating about what Satoshi Nakamoto’s “original vision” for Bitcoin was or that the Real Bitcoin™ is the one supported by some subset of the best known developers completely ignores the quite effective, and frankly proven, governing system that has been put into place. Reasonable people can disagree while still having the best intentions for the network as a whole at heart. Character assassinations do nothing but divide the community to the point where, when you feel you have nothing left in common, the community decides it’s better off splitting rather than coming to some common ground. It makes no sense to, on the one hand, say that the Real Bitcoin™ will be enforced by the economic majority and then at the same time say you will leave the community and sell all holdings if the economic majority chose a path you did not agree with. Price, utility, public perception and checks and balances that assume disagreement and lack of 100% consensus are demonstrably built into the governance mechanism.If there is no way to deviate from a path that you may happen to agree with but the economic majority deems harmful to the network, then there is conversely no mechanism to defend against bad actors you do see as harmful. These mechanisms must be objective to the point where your side is equally capable of being a target of them. Anyone who thinks the experiment failed because their side lost is being dogmatic and ultimately leaves themselves open to tyranny. Instead, you should make your case as best you can and, after that, simply trust the system. If you don’t trust the system, then we’ve already lost.Jameson Lopp wrote a great article earlier this year on how no one can truly claim to know what the Real Bitcoin™ is. See these tweets that seem to be inspired from said post, “Nobody Understands Bitcoin (And That’s OK).”Link to embedded Tweet one and two.One Final Observation:Satoshi Nakamoto Is Our George WashingtonIt is often taken for granted today how revolutionary it was at the time for George Washington to step down as the head of the U.S. government. When the news made it to Great Britain, Rufus King quotes King George III as saying that the resignation “placed him in a light the most distinguished of any man living, and that he thought him the greatest character of the age.”Of course, in Bitcoin, we have experienced a similarly unique phenomenon, when, in 2010, after having been developing and helping to run the live Bitcoin network for two years, Satoshi Nakamoto’s online accounts went black. Not only that, but as the first and only miner on the network, Bitcoin addresses associated with Satoshi have funds that are today worth around $20.5 billion. The most remarkable thing is that these funds haven’t moved since Nakamoto went silent.It is unclear why Nakamoto left the community or if it was even voluntary since we don’t even know who he/she is (while there are plenty of theories and there have been several “unmaskings,” none have been definitively proven and none have been widely accepted by the community). But what is clear is that like George Washington, Nakamoto left the Bitcoin ecosystem in a very unique circumstance. Just as it was unique for a person who was in a position to grab ultimate power to abstain from grabbing it (as Napoleon later would take power in France), Bitcoin remains the only major cryptocurrency where the creator is not just unknown but retains zero influence over the direction of the community. As outlined above, experienced developers hold an inordinate amount of power over the direction of a cryptocurrency, and none have more experience or influence than the original developers who can affect massive swings in the market with a simple announcement.Ray Dillinger did one of the first code reviews and security audits of the Bitcoin code back in 2008, and he writes an incredible piece reflecting on how monumental what Satoshi built was and how unique it was that he left. In “If I’d Known What We Were Starting” he writes:“[T]he Trustless nature of Bitcoin was the main thing that convinced me Satoshi wasn’t scamming. He built a highway with no toll bridge. People could use Bitcoin without creating any obligation to pay him anything ever. He wasn’t selling coins, he was giving them away for solving hashes. He reserved nothing for himself.”“He wasn’t trying to line his own pockets at the expense of others. In fact I don’t think I’ve ever encountered someone so completely uninterested in personal wealth. You know the old saw about being able to get a lot done if you don’t care who gets the credit? Satoshi doesn’t want the credit. Two years later he walked away and left the pseudonym behind. And hard as this may be to believe, it looks like he doesn’t even want to be paid for it. As far as we can tell he mined approximately a million Bitcoins and has never sold a single one of them.”Many decry the fractious environment that exists in Bitcoin today, but I would argue that much like how the messiness of political debate in a free society can feel exhausting when compared to the surface efficiency of authoritarian states, to abandon that messiness can also leave you vulnerable to the risks of tyranny itself, even one exercised for our own good. So while being without a uniting “supreme leader” may leave a community at each other’s throats, it is also important to remember that divisions are an opportunity to make us stronger as long as we avoid the temptation to view opposition as an existential threat and retain a sense of common purpose.“The Mischiefs Of The Spirit Of Party” And “The Duty Of A Wise People”This was a long essay series. If you made it this far, I commend you and thank you for bearing with me! There’s plenty I tried to address in here and hopefully at least some of it came across coherently enough to add something constructive to the discussion. Unfortunately, it feels like Enlightenment political philosophy and the lessons of the founding of the U.S. have become increasingly niche areas of interest despite the immeasurable contribution they’ve made towards advancing human liberty across the world. Hopefully I was able to make the case for their relevance today even in as bleeding-edge a space as Bitcoin. In fact, as this technology leads us into a new stage of the evolution of human self-governance, it’s probably more important than ever to look back and reflect on lessons already learned but easily taken for granted.To close off, I’d like to share George Washington’s remarks from his farewell address on September 17, 1796. In his speech, the first president devoted much time to a farsighted admonition against the dangers of faction and offered a sobering reminder of its consequences. It is a warning that I believe resonates even today and even in the crypto world (and especially in Bitcoin). It presents a strong and enduring indictment against the all too human temptation of putting “party” over principle and the damage this can ultimately inflict on liberty.“The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries which result gradually incline the minds of men to seek security and repose in the absolute power of an individual; and sooner or later the chief of some prevailing faction, more able or more fortunate than his competitors, turns this disposition to the purposes of his own elevation, on the ruins of Public Liberty.”“Without looking forward to an extremity of this kind (which nevertheless ought not to be entirely out of sight), the common and continual mischiefs of the spirit of party are sufficient to make it the interest and duty of a wise people to discourage and restrain it.”None of this is by any means a settled debate but hopefully it can become a more civil one. If you have any thoughts of agreement or contention I’d love to hear your comments and to further the discussion for a better and freer future!This is a guest post by Buck O Perley. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Public Bitcoin Miners Have Shed $14 Billion In 2022, But There’s Bullish Upside

Public mining companies are entering the final quarter of 2022 battered and bruised after nine months of bear market brutality. At the end of Q3, the total market values of all U.S.-listed mining companies dropped by over $14 billion from the start of the year, according to data compiled from YCharts. Whether the year’s end will offer a respite for these companies is a very open question as the headwinds from macroeconomic tumult seem unabated in the face of historic inflation and scrambling central bankers desperate for quick financial fixes. This article overviews the downtrend in share prices for public mining companies as the final quarter of the year begins.2022 Mining Market RecapOver half of the total $14 billion erased from the market values of public mining companies is attributed to just five companies, according to data from YCharts: Core Scientific, Marathon, Riot, TeraWulf and Hut 8. The bar chart below visualizes each company’s change in total market capitalization from the start of Q1 to the end of Q3 of this year.This year, $14 billion has been erased from the market values of public bitcoin mining companies.Compared to bitcoin itself, losses suffered by public mining companies are small. Since January 1, bitcoin’s total market value has slipped from $900 billion to below $400 billion at the end of September, according to data from TradingView.Readers should know that these charts only show public mining companies that trade on American markets, namely the Nasdaq, one of the most liquid and actively-traded markets in the world. But other relatively high-profile public companies in non-U.S. markets have also suffered significant losses, including Northern Data and Cathedra.Any future price woes for mining companies depends completely on bitcoin’s price. Mining stocks are still closely correlated to bitcoin’s price, as this author noted in a previous article for Bitcoin Magazine, and continue to underperform. The line chart below visualizes share prices for all the mining companies included in the previous bar graph priced in bitcoin since the start of the year.Share prices for public bitcoin mining companies priced in bitcoin since the start of the year.Bullish Hope Springs EternalDespite already being one of the longest and harshest bear markets in bitcoin’s history — especially for miners, as difficulty continues to soar to new heights while the price continues dropping — there is still hope for the public mining sector over the long term.For one thing, so long as Bitcoin is bullish, bitcoin mining companies will also have a bright future despite intermittent periods of bearish market conditions. Even if some mining companies fail, others will take their place. For another, even the traditional finance analysts see potential in the mining sector, with some analysts calling for “major upside” among public miners, according to CoinDesk, and others praising the “fantastic” fundamentals of some miners. And those fundamentals — for many companies — continue to improve. In September alone, for example, CleanSpark acquired a 36 megawatt site in Georgia, Aspen Creek raised $8 million to expand its solar mining, Rhodium plans to go public, and mining veteran Jihan Wu set up a $250 million fund for distressed mining assets. The mining sector is far from dead. Opportunity From ImmaturityIn many ways, the past couple years represented the very first market cycle for a significant share of the mining market, and nothing ever goes well during the first time roundtripping a market’s ups and downs. Losses will be suffered, valuations will plummet and some companies will collapse completely. But winners always emerge from periods of market immaturity. And the public mining market’s immaturity is easy to see. For example, every mining stock’s price continues to move nearly in lockstep with bitcoin despite each company having enormous differences in operational strategies, outstanding debts, number of machines online, and more. This shows that the market cares more about bitcoin’s price than the company’s fundamentals. But this immaturity also means there is tremendous upside for growth and maturation. If that isn’t enough reason to make you bullish on mining, nothing will be.This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Are Bitcoin Miners Selling The Bottom?

Buy low then sell high is one of the most basic components of investment advice in the history of financial markets. Bitcoin is now 10 months into its current bear market cycle, and plenty of investors and companies that didn’t “sell high” are probably regretting it. Miners stand apart from all other market participants, however, because they are in effect always buying (paying for electricity to earn more bitcoin) and, depending on their corporate strategy, always selling, too (selling bitcoin to pay for capital expenses and operating costs).So how are miners faring in the current bear market? This article takes a look at some miners’ financial decisions over the past couple of years — during both the latest bullish and bearish periods for bitcoin — and evaluates where some improvements could be made on how the average mining company decides to hold, sell or buy its bitcoin.Cliff Notes On Bear Market MiningHere’s a quick rundown of the current state of mining economics — things aren’t great.Hash price is down 69% so far in 2022, and with it goes machine profitability. Old hardware like Antminer S9s, for example, are so unprofitable now that the amount of total network hash rate they contribute has dropped from 30% to less than 5% this year, according to Coin Metrics. Difficulty continues hitting new record levels as more miners add more hash rate, and the latest downward adjustment was the first decrease in months. Some miners are also sitting on exceptionally large amounts of debt, according to data compiled by Jaran Mellerud, a mining analyst at Arcane Research. Some miners are even selling the purchase contracts for yet-undelivered hardware while other miners, like CleanSpark, are buying them at a discount. And the past two months have seen two companies file for bankruptcy: Celsius Mining and Compute North.Managing A Bitcoin Mining TreasuryOne of the most important considerations facing every miner is whether to hold or sell their bitcoin. Other operational questions proceed this of course before the miner starts earning coins for their work. But what to do with block rewards is the focal point of any mining strategy.Some miners hoard as many as they can while waiting for the price to go up. These miners usually take out loans to finance their operational expenses. Or they become lenders themselves and earn yield on the coins they mine. Other miners sell every coin they earn and want to simply operate profitably without any exposure to bitcoin’s upside or downside. Most miners are somewhere in between these two extremes — holding what they can afford to and selling what they need to.All of these decisions are made based on a miner’s treasury management strategy, and each team has a different approach. Luckily for readers, public mining companies broadcast these decisions to investors and the general public.In the bull market, miners weren’t only building new facilities, hoarding bitcoin and announcing record purchases of hardware. Some of them even went out and bought bitcoin at market prices to add to their treasuries. Marathon bought 4,812 BTC in January 2021. Argo Blockchain also bought 172.5 BTC in the same month. To say miners were bullish would be an understatement. Bitcoin is now trading roughly 30% lower than its lowest price point in January 2021, however. These miners didn’t quite “buy the top,” but it was relatively close.In the bear market, miners are selling a lot of their bitcoin — in some cases even more than they’re mining, signaling their acute reaction to the bearish conditions by even liquidating their reserves. It’s important to note that the total quantity of bitcoin these companies are selling is well into the thousands, but it’s a very small amount compared to the daily trading volume of most liquid bitcoin markets. From Riot to Cathedra, large and small bitcoin mining companies alike were selling large amounts of their bitcoin holdings.Bulls Of Last ResortInstead of selling bitcoin at $20,000, wouldn’t a miner prefer to sell it at $69,000 — the all-time high? In theory, this makes perfect sense. But in practice, executing that preference is more difficult. For one thing, miners are not the most sophisticated market participants. For another, treasury management strategies are still very simple (hold, sell or lend) and often incomplete. For example, many miners have ways to hedge against bitcoin’s price, but almost none of them can hedge against bitcoin’s hash price, which would be a much more valuable financial product.It’s also important to note that miners are supposed to be uber bullish even when others aren’t. Miners are in many ways Bitcoin’s bulls of last resort. Home miners especially demonstrate this by continuing to mine despite horrible market conditions. Even though miners would have a stronger balance sheet by selling more bitcoin at a higher price than they did months ago, for better or worse their role is somewhat to ride the price wherever it goes.What Does The Next Mining Cycle Hold?In years to come, bitcoin mining companies will surely be better about treasury management. Many companies will learn their lessons from the past two years and focus on better profit maximization strategies. Some of this might include hoarding fewer coins. After all, gold miners are not known for hoarding copious amounts of the precious metal on their balance sheets. It’s hard to imagine bitcoin mining companies acting differently in the future. But bitcoin miners have an almost mythical status in the industry. Bullish miners who hoard their coins are a psychologically reassuring thing for many market participants. Even small rumors of “miners are bearish” or “miners are selling” send waves of fear across social media. Even if miners do sell coins at a higher price, however, everyone would prefer to have well-capitalized miners at the bottom of the bear market than underwater, over-leveraged companies struggling to stay alive.This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Why Every Real Estate Investor Should Own Bitcoin

This is an opinion editorial by Leon Wankum, one of the first financial economics students to write a thesis about Bitcoin in 2015.PrologueThe following article is part of a series of articles in which I aim to explain some of the benefits of using bitcoin as a “tool.” The possibilities are endless. I selected three areas where bitcoin has helped me. Bitcoin helped me take my entrepreneurial endeavors to the next level by allowing me to easily and efficiently manage my money and build savings. This allowed me to build self-confidence and look to the future with more optimism. I’ve developed a lower time preference, meaning I value the future, which leads me to act more mindfully in the present. All of this has had a positive impact on my mental health.When I was new to Bitcoin, so many people helped me that I want to share some of my positive experiences with you. The three-part series includes this article, aimed at real estate investors, as an introduction. Part Two looks at the positive implications for mental health and general well-being when one adopts a “bitcoin standard,” e.g., using bitcoin as a unit of account. Part Three will explain why bitcoin is a better savings vehicle than an exchange-traded fund (ETF), which has been one of the top inflow savings vehicles over the past few decades, and the positive impact bitcoin can have on retirement savings. Why Every Real Estate Investor Should Own BitcoinBitcoin is digital property and should appeal to any real estate investor as such. Real estate capitalizes on scarcity in the physical realm. Bitcoin introduced scarcity to the digital realm. Bitcoin established the first instance of digital ownership. Bitcoin is digital property. Digital property rights bring the connection between the internet and the economy into modernity. Therefore, real estate investors whose business is the acquisition and construction of physical property are destined to hold bitcoin as it is the digitized form of physical property. This statement may surprise you, but who would have thought in 1995 that most retail stores would eventually also have a digital business in the form of a website or e-commerce store? Of course, e-commerce websites and retail stores are more alike than bitcoin and real estate, but it’s the best comparison to show the need for real estate investors to get involved with bitcoin. I find such comparisons helpful to explain complex and new technologies like Bitcoin in an understandable way and to show why the adaptation of such a technology is important.As I explained in my article “Why Bitcoin Is Digital Real Estate,” one of the many things real estate and bitcoin have in common is that they both act as a store of value. In theory, owning real estate is desirable because it generates income (rent) and can be used as a means of production (manufacturing). But for the most part, real estate now serves a different purpose. Given the high levels of monetary inflation in recent decades, simply keeping money in a savings account is not enough to preserve its value and keep up with inflation. As a result, many people — this includes wealthy individuals, pension funds and institutions — typically invest a significant portion of their disposable cash in real estate, which has become one of the preferred stores of value. Most people don’t want real estate so they can live in it or use it for production. They want real estate so they can store value. However, real estate cannot compete with bitcoin as a store of value. The properties associated with bitcoin make it an ideal store of value. Its supply is limited, it is easily portable, divisible, durable, fungible, censorship-resistant and noncustodial. It can be sent anywhere in the world at almost no cost and at the speed of light. On the other hand, real estate is easy to confiscate and very difficult to liquidate in times of crisis. This was recently illustrated in Ukraine. After the Russian invasion on February 24, 2022, many Ukrainians turned to bitcoin to protect their wealth, bring their money with them as they fled, meet their daily needs and accept transfers and donations. Properties had to be left behind and were largely destroyed. This could mean that once bitcoin has reached its full potential and people worldwide understand that it is a superior store of value when compared to real estate, the value of physical property may collapse to utility value and no longer carry the monetary premium of being used as a store of value. It may take a long time, possibly several decades, but the probability is there. Therefore, it makes sense for you as a real estate investor to get involved with bitcoin at an early stage. It is well known that those who adopt new technologies first will benefit the most. Source: Bitcoin MagazineReal estate investors are experts at using existing properties as collateral to raise debt for the purchase and development of new properties. As I detailed in my article “Is Leveraging Legacy Assets To Buy Bitcoin A Good Strategy?” using existing real estate to incur debt and buy bitcoin is potentially an even bigger business opportunity as the value of bitcoin is likely to grow faster than the real estate. Thus, a higher return may be achieved. Real estate (fully rented properties) is the perfect collateral for taking on debt to buy bitcoin since rent generates income. Therefore, you never have to sell your bitcoin to pay off debts, instead you can use the rental income. If my forecast seems too bullish to you, you can also use a small part of your real estate portfolio for such a project, so the risk is relatively low, but the upside potential is still large.This should not distract from the profitable business of real estate development. I’m not asking you to stop developing real estate, I’m asking you to add a bitcoin strategy.Real estate development is highly dependent on the ability to build creditworthiness. Bitcoin can help here too. The continued adoption of bitcoin is fuelled by its superior monetary properties. The increasing adoption is accompanied by a price increase as the supply of bitcoin is limited. There is a positive feedback loop between adoption and price. When demand goes up and supply remains nearly constant, price must increase — mathematically. For you, as a real estate developer, this means that the more bitcoin you own, the more collateral you have to then fund real estate construction in the future. Bitcoin should be part of every real estate investor’s strategy as it is a pristine collateral that will help you build your creditworthiness over the long term.Sensibly using your real estate as collateral to borrow money and buy bitcoin may solve another problem: liquidity. Real estate is an illiquid and immovable asset. In German, real estate translates to “immobilien,” which literally means “to be immobile.” Using your immovable liquidity in your income-generating properties to buy bitcoin can be a good business opportunity — and an option to protect your wealth from confiscation should you need to relocate. Of course, you could just sell real estate to buy bitcoin, but that’s a bad idea for two reasons. First, historically money is made from income-producing real estate by buying it and holding it for the long term. Second, a real estate investor typically purchased a property with a loan, so the rental income is needed to service existing debt obligations.ConclusionI believe that the “worlds” of real estate and bitcoin will merge sooner or later. Both assets share similarities and complement each other. Real estate is an income-producing asset (rent), but it is very immobile. Bitcoin does not generate income but is highly liquid and mobile. The two are a good match.Bitcoin’s volatility shouldn’t distract from the opportunity it represents. Those who rejected the internet missed out on one of the greatest business opportunities of their lives. Those who reject bitcoin will likely meet the same fate.In addition, we will most likely not see the same type of returns on real estate investments as we have in the past. Since 1971, house prices have increased nearly 70 times. This corresponds to the “Nixon shock” of August 15, 1971, when President Richard Nixon announced that the United States would end the convertibility of the U.S. dollar into gold. Since then, central banks began operating a fiat-money-based system with floating exchange rates and no currency standard.Monetary inflation rates have risen steadily ever since. Real estate served as an asset for many to preserve the value of their money. However, bitcoin serves this purpose much better. This can result in two things: First, real estate could lose the monetary premium of being used as a store of value. Second, if bitcoin (digital property) continues its adoption cycle and replaces real estate (physical property) as the preferred store of value, its rate of return will be many times higher than real estate in the future, because bitcoin is only at the beginning of its adoption cycle. In conclusion, as Satoshi Nakamoto said, “You might want to get some just in case,” or to paraphrase Mark Twain, “Buy bitcoin, they’re not making it anymore.”This is a guest post by Leon Wankum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Is A Green Energy Battery For Wasted Electricity

This is an opinion editorial by Mickey Koss, a West Point graduate with a degree in economics. He spent four years in the infantry before transitioning to the Finance Corps.In a prior article I discussed probability-based energy systems, how they can negatively impact the grid and how Bitcoin helps solve some of the problems associated with wind and solar power. In this article, I would like to address the most frustrating critique that I hear all the time: Bitcoin is a waste of energy.What Else Are You Going To Do With It? The fact is Bitcoin doesn’t use that much energy. The big brains at Harvard estimate that the Bitcoin network only consumes about 0.55% of global electricity production. Comparatively, it is estimated that 6-10% of electricity production is lost in transmission and distribution alone. If Bitcoin used an order of magnitude more energy, it still wouldn’t be an issue. What most people don’t understand is that if you don’t use energy, you lose it, so what the hell are you going to do with it all anyways? Actual batteries? Good luck with that. California plans to achieve carbon-neutral goals through extensive use of industrial-scale battery usage. This plan directly conflicts with its own goals, necessitating the mining of millions of tons of raw materials in order to produce said batteries. Furthermore, the goal only allows them to power about a million homes for four hours. To achieve their goal, it would require a battery capacity that exceeds current global capacity by five times. That’s a lot of batteries. The fact is that currently, there is no good way to store the enormous amount of power that goes unused every day. That is, until Bitcoin and bitcoin mining came around.Bitcoin Is The BatteryEnergy production is an expensive and complicated business. Energy producers must maintain enough capacity to service not only the most energy-intensive days of the year, but also enough capacity to allow for expected population growth over long timespans. This means that on most days, most companies are operating well below capacity. Bitcoin mining allows electric service providers to monetize all of their unused capacity, only releasing the electricity to the grid that is needed to satisfy demand on any given day. This allows companies to slow or stop the pace of rate increases. It helps companies to help those who can least afford a larger energy bill. Companies don’t even have to hold onto bitcoin. The market is liquid; by mining and immediately selling the coins, they can achieve their revenue goals, help secure the network and help those in lower income brackets buffer their monthly budgets. It even adds to a wider distribution of mined coins because large miners will no longer be sole-purpose mining companies or de facto bitcoin ETFs. With more cash on the balance sheets, grid operators can also put more money into maintenance and development, making the grid more resilient, and dare I say, sustainable, for future generations.So for those who say Bitcoin uses a lot of energy, who cares? It uses a lot less than we waste every day. I say they should stop wasting energy and money though leaving capacity idle. Convert the energy into a different kind of battery for a more sustainable future. The battery of human time, effort and ingenuity: money. Through using bitcoin mining as a sponge for excess and unused capacity, we can help those who need it the most and we can help a future of abundant and reliable electricity for all. This is a guest post by Mickey Koss. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Five Advantages Of Using Bitcoin To Pay Rent

Jenna Hall is a content marketing coordinator at Redfin. Redfin does not provide legal, tax, or financial advice. This article is for informational purposes only and is not a substitute for professional advice from a licensed attorney, tax professional or financial advisor.Over the past few years, an increasing number of companies worldwide have started allowing customers to pay for their products and services with bitcoin. While bitcoin used to be considered a niche asset, it’s now emerged as a highly popular currency and is treated as a viable alternative to cash and credit for many major retailers. Now that you can use bitcoin to purchase almost anything, some are wondering how they can use their digital currency to buy a home or even pay their rent. With bitcoin becoming more intertwined with real estate transactions, you may be wondering if paying rent with bitcoin is a good option for you. Whether you’re a landlord or a tenant, here’s what you need to know.How Does It Work?Currently, there are two ways landlords can collect bitcoin rental payments. The first is by using a property management platform that leverages technology to process bitcoin payments. The second is by simply transferring peer-to-peer with the tenant.For payments made through property management software, both the tenant and landlord must have an account with the platform. The landlord can then send the tenant a payment request and the tenant can choose how they want to pay. They can transfer bitcoin directly through a brokerage like Coinbase or scan a QR code of the payment request and pay through their digital wallet. It’s important to note that most property management platforms don’t hold any digital currency, they simply convert the coins into U.S. dollars and transfer payment to the landlord as such.Without a platform, tenants can still rent an apartment with bitcoin by transferring their holdings into the landlord’s digital wallet. Landlords and tenants should keep in mind that transferring bitcoin peer-to-peer leaves no paper trail. So it’s a good idea to create documentation that includes evidence of payment records to avoid any potential issues.Five Advantages Of Using Bitcoin To Pay RentWhether you’re a landlord or tenant, there are many advantages to using bitcoin for rent payments. Here are the top five benefits to help you decide if it’s a good option for you:More FlexibilityRenters are looking for properties that give them more payment flexibility. According to a recent study from the Motley Fool, more than half of renters surveyed said that they would pay more in rent to have more convenient payment options. Payments with bitcoin can be fully digital and made on a phone, computer or tablet. Unlike traditional banks, bitcoin payments can be made and received 24/7. This means that landlords won’t have to wait until business hours or after a holiday weekend to receive their rent payment. Simpler Payments For Those Renting AbroadRenting abroad can be tricky, especially when the landlord and tenant use different currencies. Transferring money in traditional ways likely means paying wire transfer fees, foreign transaction fees and currency conversion fees. On top of that, landlords and tenants must consider foreign exchange rates and the time delay it often takes for money to transfer internationally. However, bitcoin can be used internationally instantly with little to no fees, saving time and money for both the landlord and the tenant.Fewer Transaction FeesMost online rent-paying platforms charge a fee to pay rent with a credit card. This fee is typically 2.5%-2.9% of the rent amount and is paid for by the tenant. Even third-party platforms like Venmo and PayPal charge a fee of about 3% for business transactions like accepting rent payments, which landlords have to pay when accepting payments.Renters and landlords can avoid these transaction fees altogether by transferring bitcoin directly, which could save each party hundreds or even thousands of dollars over a few years. If tenants and landlords choose to transfer bitcoin via a property management platform that supports bitcoin transactions, they’ll likely still need to pay transaction fees. However, those fees are meager compared to credit card processing fees.Added Privacy For TenantsBitcoin payments are great for tenants who prioritize their financial privacy. Bitcoin uses anonymous addresses that change for each transaction, so payments don’t require any personal information, traceable credit card numbers or account numbers.Given the pseudonymous nature of the blockchain, bitcoin payments are ideal for those who are privacy-forward and wary about sharing their personal information.Potential First-Mover AdvantageBitcoin is increasingly becoming more accepted in mainstream markets, with many companies beginning to accept bitcoin as payment. However, there’s still some work to be done before it becomes a financial norm.Landlords who are forward-thinking, tech-savvy and want to remain at the front of upcoming trends may want to consider being early adopters. Potential renters may see the value in a property that accepts bitcoin and be more inclined to rent with those properties. What To Keep In Mind When Using Bitcoin For RentHere are some final things to consider if you plan on using bitcoin for rent as a landlord or a tenant:Cashing Out Versus HoldingIf you’re a landlord accepting bitcoin, you have the choice of either cashing out or holding. It’s a good idea to consider the pros and cons of each. Bitcoin is known to be volatile and the amount a tenant pays in bitcoin could change quickly. Landlords should examine their financial goals and consider speaking to a financial advisor to see which option works best for them.Rent Amount Could FluctuateSince the value of bitcoin fluctuates, so will the monthly rental amount. This means that the amount of bitcoin you give or receive for rent could change month to month.Keep DocumentationGiven the nature of bitcoin that makes it more challenging to trace, landlords and tenants should protect themselves by keeping records of rent payments using bitcoin to the best of their ability. Suppose landlords and tenants plan on transferring peer-to-peer. In that case, it’s a good idea to consult with a legal professional to ensure proper paperwork and documentation about a rental payment agreement is created.This is a guest post by Jenna Hall. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

The American Bitcoin Revival Takes Root In Nashville

This is an opinion editorial by Evan Price, a software engineer of 15 years and advocate for privacy rights.Americans love a good revival. A revival is religious fervor that spreads across the land, often leaving new churches and social movements in its wake. Revivals start with a deep and pervasive sense of dissatisfaction with the status quo. Then a few luminaries step up and begin preaching a new and better way to believe and to organize. These early folks preach to the masses and recruit a following. They take their message on the road and evangelize to as many people as they can reach. In the wake of a revival, the social and legal landscape is irrevocably changed. New churches spring up and old ones are forced to splinter, shrink and adapt. Laws are passed and social institutions are forced to reckon with a newly organized and dedicated constituency. Related social movements fork off and forge their own path for societal change. Eventually, the religious fervor dies down as everyone adapts to the new reality of their country. I think we are in the early stages of another American revival. Unlike past revivals, this one is not religious; it is monetary in nature.I recently spent some time at Bitcoin Park in Nashville, Tennessee, getting to know other Bitcoin meetup organizers from all over the U.S. and Canada. We were invited by ODELL and bitkite to an event called Grassroots Bitcoin to collaborate and discuss how we can increase bitcoin adoption and support local communities. I met dozens of other meetup organizers. We swapped stories and learned about each others’ motivations, goals and hopes.We saw presentations covering a variety of topics:Bitcoin as a tool for human rights.Bitcoin as a tool for small business.Strategies for how to grow your bitcoin meetup, both technical and social.Tools for self-sovereign cold storage.Tools and advice to help you buy, sell and manage bitcoin.How and why to work with politicians to advance our common goals.You can listen to some of the discussions here.There was an abundance of Bitcoin culture on display, from complementary pelican cases to the ultimate Bitcoin social event: a beefsteak dinner. I don’t subscribe to all of the beliefs adopted by Bitcoiners. For example, I drove hours to get my first COVID-19 vaccine and I usually try to eat more vegetables than meat. But other common Bitcoin beliefs make good sense to me: Grow your own food and learn to shoot a gun because it could literally save your life one day. I think a growing social movement requires a vibrant cultural identity and Bitcoin is no exception.One thing that struck me about this group was the diversity of personalities and backgrounds on display. There were city folks and country folks; Christians, Muslims, Jews and atheists. I saw brogrammers rubbing elbows and sharing meals with ranchers. There were HVAC repair men, former cops and flight attendants. Bitcoin truly attracts men and women from all walks of life. Toward the end of the event, when a former pastor took the stage and declared that bitcoin is his new church, it dawned on me that we are in the early stages of another American revival. For a revival to catch on, it needs to appeal to a broad and deep cross section of society. That is exactly what I saw in Nashville.Bitcoin’s social movement is small and vigorous, rooted in a deep uneasiness and suspicion of the top-down forces at work in our society. I think a sea change has taken place in the past few years. Most of the meetups represented in Nashville were founded in the wake of the COVID lockdowns. I think our national response to the pandemic sparked a lot of skepticism that is now taking root at these meetups. I’ve been a Bitcoiner for longer than I like to admit. I have had many conversations with no-coiners and their reactions ranged from mild interest to a visceral rejection. Over the years, I stopped initiating these conversations. In the past week, my eyes have been opened to the fiery, impassioned core of the movement. I have never talked to a group of Bitcoiners with greater conviction or sense of purpose. I think we’re turning a corner; there has never been a better time to seek out bitcoin fence-sitters and give them the nudge they need to install a wallet and begin their journey.Throughout the event, participants shared tales and pictures of all the normal folks they orange-pilled. It became a badge of honor to talk your waiter into downloading a bitcoin wallet and receiving their first tip in sats. Bitcoiners are hungry for converts and they carry a very compelling message in times of high inflation and rising autocracy. I think of 2020 as a drought in American society. People were told where they could go, how to behave and what to wear. For a freedom-loving populace, in a country founded on the ideals of individual liberty, this kind of environment is bound to provoke a counter-cultural reaction. Bitcoin organizers are the tip of the spear of a growing social movement. I see a fire burning in these folks and they are carrying these embers to the masses one person at a time.Forest fires always start small. If conditions are ripe they grow at an exponential pace. Slowly at first, but if you stop paying attention, you will be caught off guard by the rapidity and intensity of the conflagration. After the fire passes, a new season of growth and renewal springs up from the ashes. Don’t be caught off guard. Join your local Bitcoin meetup and let’s fix the root of so many problems in our society. Let’s fix the money.One last note. I believe America’s robust culture of individual liberties uniquely positions us to be the home of Bitcoin. The home of freedom money. But this is far from guaranteed. In order to get there, we need the support of politicians. A revival can be a powerful tool to accelerate political careers. Invite your political representatives to a Bitcoin meetup. Show them first hand the potency of this social movement. Talk to them about the challenges you face trying to grow bitcoin adoption and how they can earn your vote. They are listening. Make sure they hear the right message.This is a guest post by Evan Price. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Block By Block: Facing Life In Prison, Bitcoin’s Resilience Inspires Me

This is an opinion editorial by Ross Ulbricht, the founder of pioneering Bitcoin marketplace Silk Road, who is currently serving a double life sentence plus 40 years in federal prison.Much more is being said about Bitcoin these days than when I was put in prison. On October 1, 2022, I started my tenth year locked in this cage. Right now, as I put pen to page, the afternoon sun beams through the bars of my window and the murmur of the other prisoners snakes under my cell door. Over the years I have heard people say all kinds of things about Bitcoin. I have heard that “Bitcoin is dead” and that “Bitcoin is the future.” I have heard that “Bitcoin is bad for the environment” and that “Bitcoin will set us free.” But I’ve noticed that Bitcoin doesn’t seem to care what we say about it. Not the exchange, of course — that’s driven by the whims of people like all financial markets. I’m talking about Bitcoin itself.Bitcoin doesn’t have ears. What we say doesn’t change it. Barring a society-level catastrophe, Bitcoin will keep adding a block every ten minutes, forever. That’s the whole point. Through all the ups and downs since Bitcoin’s birth more than 13 years ago, despite the hype, despite the naysayers, despite everything, Bitcoin has never faltered.I can’t say the same for myself, but then again, I am merely human. A couple of years after Bitcoin got started, I made the biggest mistake of my life: I made Silk Road (an anonymous online market). Of course, at the time, I didn’t know it was a mistake. I thought it was a great idea. I thought I was putting Bitcoin to good use and giving people privacy and freedom. When illegal drugs were listed, I thought that was OK too, because I believed drugs should be legalized. Nevermind that they were outlawed and I was risking everything I held dear.A couple of years later, I was thrown in prison for drug trafficking and given two life sentences without parole, plus 40 years. I was falsely portrayed in the media as a violent drug kingpin. The story of Silk Road was reduced to a cops and robbers cliché. I more than faltered, I hit rock bottom. I’ve been here ever since.Bitcoin never faltered. Through the rise and fall of Silk Road, through the relentless years of my incarceration, through competition and catastrophe, Bitcoin keeps going, one block at a time, like clockwork. As Bitcoin has marched on, I have struggled to rejoin the world outside of my cage. Year after year, my family, friends, supporters and I have been working toward my freedom, so I can have a second chance at life. But I am tired. I am burned out, I want this nightmare to end, and I don’t know if it ever will, no matter how hard we work at it. Before I came to prison, I knew nothing of hard drugs. Since then, I have been locked in 8-by-10-foot cells with lifelong addicts for months on end. I’ve heard their stories and seen what’s become of them. I have faced the fact that, by making Silk Road, I played a role in damaging many lives. I don’t even think about drug war politics anymore. I just know I could never promote drug use again, whether legal or illegal. How could I, if I would never touch them myself? How could I, if I’d be horrified to learn that someone I loved became addicted? All I would think of is the men I’ve come to know whose lives have been ruined.I’ve been through many phases during my imprisonment: hopelessness, fear, guilt, acceptance, boredom, feverish desperation, and all the while Bitcoin keeps going. Today, I take inspiration from Bitcoin. I will keep going, day by day, just taking the next step over and over. I will keep adding the next block. Either I’ll regain my freedom or, at the end of my life, I can look back and say, “At least I tried.”This is a guest post by Ross Ulbricht. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Volume Spikes With Market Uncertainty In The UK

The below is a direct excerpt of Marty’s Bent Issue #1269: “Interesting reaction out of the U.K.” Sign up for the newsletter here.via CoinsharesHere’s a chart that has been lingering in my mind throughout the week. It was shared by the team from Coinshares and highlights bitcoin trading volume in the U.K. earlier this week while the British pound was in free fall. As you can see, volumes exploded to just under $900 million, reaching their highest level in more than two years. It’s hard to discern the intent of those who were trading bitcoin in size over in the U.K. It could have been people looking to take advantage of quickly developing arbitrage opportunities, people looking to sell bitcoin to get liquidity to service failing trades or people looking to purchase bitcoin as a hedge against rapid currency debasement.We can’t say for sure, but if the volumes were driven by those seeking safety in bitcoin, it would represent a very interesting turning point for the nascent digital monetary good and how it is being viewed by the broader market. One has to imagine that there are foreign exchange traders surveying the landscape of rapidly debasing fiat currencies across the world who are beginning to panic, especially when currencies like the pound and the yen are faltering in the way they have been over the last couple of weeks. Even though the dollar is ripping, it is the most polished piece of shit on the pile. Its relative strength doesn’t seem so strong when you consider the problems that exist throughout the U.S. economy: inflation is high, energy policy is suicidal and rising rates are beginning to put a massive beat down on U.S. consumers — particularly home owners and those with significant amounts of credit.With all of that taken into consideration, it isn’t hard to believe that more and more people are beginning to wake up to the fact that bitcoin is a very attractive asset to leverage as a hedge against this insanity. The network is distributed, its supply is finite and it is easy to possess without taking on any counterparty risk. When compared to other currencies, bonds and stocks in a world on fire, bitcoin’s superior properties standout like a sore thumb. Who knows whether or not the exchange volume out of the U.K. is indicative of a growing acknowledgement of bitcoin’s value proposition, but you should definitely have this potential trend on your radar, especially considering how much wealth has been destroyed so far this year.(Source)