Welcome to issue #42 of the Bitcoin Breakdown, where we understand that true ownership means unconfiscatable wealth, immune to external control and influence.
In this week’s Top Stories edition:
🚀 Bitcoin surges to an 18-month high with its available supply reaching a new historical low
🔧 Swedish Bitcoiners targeted by armed criminals because of short-sighted national laws
🏦 Banks without bankers: exploring cryptography, incentives, and agency in a Bitcoin financial system
📑 Fidelity addresses common Bitcoin criticisms and misconceptions in new report
🔋 Peer-reviewed paper says Bitcoin mining serves as a bridge to foster investments in renewable energy
🌀 Simulacrum of the Bull: Ayahuasca insights into financial abstraction
💰 Why the rich won't sell their BTC
👁️ The rise of financial surveillance: digital privacy in the age of Bitcoin
🌱 Land and Bitcoin: a symbiosis in sovereignty
❓ What is Sophon?
💡 What is a Universal Money Address (UMA)?
Please provide feedback on today's issue by participating in the poll located near the end or leaving a testimonial here. Happy readings! 👽️
Bitcoin surges to an 18-month high with its available supply reaching a new historical low. As Bitcoin’s price hits $37,000 for the first time since May 2022, 68% of its supply hasn’t moved in over one year and 30% hasn’t moved in over 5 years.
The rise in Bitcoin's price can be attributed to a combination of factors, including renewed institutional interest, growing adoption, and a favorable macroeconomic climate.
Amid global economic uncertainties, investors see Bitcoin as a hedge against inflation and currency devaluation, valuing its decentralized, secure nature.
A Swedish middle-aged couple was recently bound, robbed, and physically abused in their home by four masked individuals, with the intent to steal their BTC. Similarly, last month two well-known Swedish Bitcoin personalities were targeted in their homes by armed assailants.
These alarming incidents appear to be connected to Sweden's Offentlighetsprincipen laws, which permit public access to personal information including residential addresses and tax records, potentially facilitating such crimes.
Data broker firms globally now compile extensive information trails from smartphones, social media, vehicles, and wearable trackers. This data, encompassing everything from location history to app usage, is so detailed that it rivals traditional surveillance methods, leading even US intelligence agencies to use it for monitoring citizens.
Remember to take your OpSec seriously, plebs. Here’s a springboard to that end.
🏆 TOP STORIES
Eric Yakes (author of The 7th Property: Bitcoin and the Monetary Revolution) discusses how a layered protocol stack is emerging as the basis of a Bitcoin-native banking system as envisioned by Hal Finney. Writes Yakes, ‘Imagine a system where users cost-average into Bitcoin via Ark, use federated technology for custody, use eCash as the private cash balance for everyday transactions, and on the backend all service providers are clearing balances between one another via the LN.’ The option of decentralized custody and functionality around P2P finance preempts an otherwise inevitable centralization in banking. At this rate, censorship and inflation alike are slated to become obsoleted by technology.
Fidelity, the third largest asset manager in the world, addresses some common Bitcoin criticisms and misconceptions in a new report, saying that Bitcoin has asserted its store of value status. Overall, the report presents a positive outlook on Bitcoin, highlighting its strengths such as robust network effects, suitability for high-value transactions through high settlement guarantees, and the growing adoption of the Lightning Network for smaller transactions. They also mention a few risks that have a certain, albeit small, probability of occurring, including a potential flaw in Bitcoin's code; strict regulations that could slow down adoption; waning public interest; and ‘unknown unknowns.’ Fidelity is currently awaiting approval for their Bitcoin spot ETF.
A new peer-reviewed paper by a research team including a PhD student from Cornell University and professors from Western and Cornell, led by Prof Fengqi You, proposes mitigation of climate change by investigating the potential for bitcoin mining to serve as a means of utilizing surplus renewable energy from planned installations before grid integration. The paper concludes with a powerful statement, suggesting ‘Bitcoin mining, an activity often criticized due to its energy-intensive nature, could serve as a bridge to foster investments in renewable energy’. The paper is not available via Sci-Hub but Murray Rudd, Science Advisor for Satoshi Educate, provided a comprehensive overview here.
Peruvian Bull recently embarked on an Ayahuasca journey to the edge of consciousness, leading to some mind-shattering realizations about himself. In this piece, he draws an analogy with financial markets, questioning whether abstraction has similarly superseded reality. He explores Jean Baudrillard's concept of the Simulacrum and discusses Jorge Luis Borges' fable 'On Exactitude in Science,' which demonstrates how representations can overshadow reality. He connects the Simulacrum to the financial market's reliance on derivatives and abstract representations of real assets. Ultimately, the piece serves as a warning about the dangers of detachment, suggesting that significant economic hardship or a new system might be necessary to break free from the current financial simulation, now disconnected from the underlying real economy.
Rip VanWinkle eloquently explains in this short post why the rich won't sell their BTC. Bitcoin is increasingly recognized as a valuable form of collateral by the wealthy and financial institutions, who are investing in it not necessarily out of a deep commitment but for portfolio value preservation. The wealthy are likely to hold and leverage BTC as collateral, rather than selling it. The high valuation of it as collateral offers advantages such as appreciation potential, spending weaker currencies while retaining hard money, and avoiding taxable events. This aligns with Hal Finney's vision of Bitcoin becoming a key reserve currency for banks, suggesting it might underpin the global economy in the future.
Kudzai Kutukwa discusses the rise of financial surveillance due to government control over monetary systems and the increasing use of technology for state and corporate surveillance. He also addresses the potential threats posed by anti-privacy legislation like the Financial Technology Protection Act of 2023 and FinCEN's rule proposal, which mandate extensive surveillance and reporting requirements. There is a need to build more decentralized, privacy-focused technologies and to raise awareness about the importance of financial privacy to counter these invasive trends.
Ben Gunn, in an article for Ungovernable Misfits, shares a personal narrative that intertwines his experiences in land ownership and engagement with Bitcoin; both being factors integral to obtaining sovereignty. He shares lessons learned from buying a forest, managing the woodland and reflects on the connections and insights gained from both land ownership and his involvement with Bitcoin. Land, as a physical asset, offers tangible security, whilst Bitcoin, as a decentralized and secure form of currency, allows financial independence from traditional economic systems. The symbiosis between Bitcoin and land ownership offers a path towards personal autonomy and independence from state-sponsored systems. Part 2 deals with the Baby Boomer generation and conifer plantations, and Part 3 is on Hardwoods and Hard Money: a vision for forestry on the Bitcoin standard.
📖 GUIDES & EXPLAINERS
The Bitcoin Manual explains that the ‘Sophon’ is a sniping bot created to counteract the spread of BRC-20 tokens on the Bitcoin blockchain. These tokens, emerging from the Ordinals protocol, led to increased transaction activity and fees, but also raised concerns about blockchain bloat and deviation from Bitcoin's core value proposition. The Sophon bot operated by detecting and front-running BRC-20 token deployments with higher fee bids, thereby rendering these tokens ineffective. This tactic temporarily reduced the prevalence of BRC-20 transactions, but the Sophon's operation was costly and eventually ceased, leading to a resurgence in BRC-20 activities. The Sophon exemplifies a community effort to self-regulate and mitigate perceived negative impacts on the Bitcoin network.
The Bitcoin Manual also explains that the Universal Money Address (UMA), introduced by Lightspark, is a novel open-source standard in the Bitcoin ecosystem, designed to simplify digital asset transactions. Built on the Lightning Network, it provides a universal address for various assets, enhancing user experience with increased security, interoperability, and cost efficiency. While facilitating easier Bitcoin adoption, UMA however raises privacy concerns due to its KYC components. Nonetheless, its adoption is growing, offering a significant advancement in digital financial transactions.